The Story Of India Cements: From Birth To Acquisition

India Cements is an iconic name in the southern part of India. Its history dates back to the pre-Independence era. It was incorporated on Feb. 21, 1946. It was founded by SNN Sankaralinga Iyer and TS Narayanaswami.

It had a chance birth. On a visit to the hamlet of Thalaiyuthu in Tamil Nadu one day in 1942, when Sankaralinga stumbled on a stone, he analysed it chemically and found it to be limestone that could make cement. Narayanaswami, an officer in Indo Commercial Bank, became his trusted partner. They managed to get overseas help to set up a cement plant. Thus was born The India Cements Ltd. on Feb, 21, 1946, in technical collaboration with FLSmidth & Co of Denmark.

ICL was the earliest in the pre-Independence era to become a public limited company. Its first annual report appeared on April 21, 1947. And, its maiden public issue of equity shares for Rs 1 crore was oversubscribed.

The indefatigable N Srinivasan got into ICL by chance. Events conspired to drag him into ICL sometime in 1968. That was when his father Narayanaswami passed away. Just 23 years of age then, Srinivasan had to return to India cutting short his higher studies abroad to take up the pivotal position of his father and become joint managing director of ICL.

But the chemistry between the promoters was apparently missing. Indeed, his early tenure in ICL saw a rift between him and the company's Managing Director KS Narayanan, who was the son of founder Sankaralinga Iyer. Both had different mindsets.

Not surprisingly, there was never an easy co-existence between them in ICL. Other extraneous factors had only helped accentuate their uneasy relationship. All these factors—from within and outside—saw Srinivasan ousted from the company in 1979. Of course, the financial institutions played a key role in the ouster of Srinivasan from ICL.

It took him nearly a decade to return as managing director of ICL in 1989 following a truce between the promoters. After his ouster from ICL, the FIs had inserted its nominee TM Thomas, a retired general manager of Southern Railways, as the company's MD in 1981. A partial decontrol in 1982 saw ICL numbers improve. When Thomas's five-year term ended, he was succeeded by PV Raja Raman, IAS.

But a new policy allowing FIs to sell their stake in a company to another corporate body led to an attempt by FIs (LIC and UTI) to transfer a large number of shares of ICL (about 45%) to ITC at a negotiated price of Rs 30 per share. That was however strongly resisted by the promoters, who were negotiating to take charge of ICL.

Surprisingly, ITC backed out. The reasons for the volte face by ITC were still not known. And, the share sale by FIs was reversed. “The only thing I was certain of was that I wasn’t going to fail in my efforts to come back,” Srinivasan had said then. “Giving up was never an option. My father had worked so hard for the growth of India Cements. How could I let it go?”

In the wake of the thwarting of ITC bid and his return to ICL in 1989, the promoter groups somehow or the other managed to co-travel for a considerable time. Significantly enough, the journey of ICL thus far has been defined by a sense of co-existence. Whether it was peaceful or not is, however, a debatable matter.

In mid-2000, Srinivasan and his brother N Ramachandran were compelled to buy out N Sankar (son of KS Narayanan) of the Sanmar group (the other promoter) in ICL.

A few years down the line, in 2009, Srinivasan bought out his brother Ramachandran in ICL and became the sole promoter with over 28% holding. The buyouts on both occasions weren't planned.

Once in firm control, Srinivasan demonstrated a lot more aggression. A sense of urgency marked his aggression, and he embarked on a series of daring takeovers and expansions that would give the company a significantly larger geographical presence in record time.

The first of these saw ICL acquire the 1 million tonne per annum capacity Chilamkur plant of Coromandel Fertilisers (now, known as Coromandel International Ltd.), for Rs 105 crore in 1990. This plant became the third plant of ICL and its first in the then composite Andhra Pradesh.

The Chilamkur buy took the industry by storm. It was an audacious move by a company of the size of ICL in the face of intense competition from giants. An emboldened Srinivasan was clearly on a singular pursuit to solidify ICL’s position in the South.

In Oct. 1994, the company came out with a $49.5-million Euro issue. That helped acquire the underconstruction Malkapur cement plant from the Hyderabad-based Visaka Industries for Rs 60 crore in Oct. 1997. This was kept as a subsidiary known as Visaka Cement and later, in 2007, merged with India Cements.

In 1998, the company made a couple of more acquisitions in the composite Andhra Pradesh. In Jan. 1998, it first acquired 0.4 million tonne capacity Yerraguntla cement plant from the public sector Cement Corporation of India.