The genesis, growth and evolution of the Amalgamations Group ran parallel to the final throes of India's freedom struggle. My grandfather S. Anantharamakrishnan, the then Company Secretary of Simpson and Company, won the admiration of the British management for his sheer brilliance, vision and dedication. They fondly called him 'J'. Foreseeing their impending departure from India, the British felt the need to entrust Simpson and Company in the hands of an enterprising visionary who would steer the organisation in the right direction. 'J' was the chosen one. My grandfather did not have sufficient funds to buy them out all at once, but they were so convinced in his ability and leadership that they enabled him to purchase the shares and pay for them from the earnings of the business.
'J' wasted no time in driving the organisation onto a rapid growth path using mergers and acquisitions as a tool. Soon, it was a conglomerate of companies in diversified businesses such as trading (Addison and George Oakes), book sales (Higginbothams), coach building (Simpson and Company) and tea plantations (Stanes group of companies). My grandfather hired highly competent professionals and empowered them to manage individual businesses. He initiated the idea of manufacturing as early as 1949 and decided to enter the auto component sector through a new company called India Pistons and followed it up with manufacturing diesel engines with technological collaboration from Perkins (UK).
His early and unexpected death in 1964 was a severe blow to the family. It laid the burden of heading a rapidly-growing diversified business and the family on the shoulders of a young Sivasailam (my father), who was barely 28 years old. While on the one hand my father had to manage a group of professionals, gain credibility with them, work with them as an effective leader in consolidating the business, on the other, he had to nurture, align and encourage the family to reach a common goal.
I believe his model of leadership has been unique as it is based on the overarching principle of fairness, ethics and trust. Everyone trusted him implicitly and he gained this trust with his inclusive style of management. After an initial phase of consolidation, he took the group further into manufacturing. TAFE, Bimetal Bearings, Addisons and AMCO Batteries grew rapidly. It was an era when indigenisation was the key to expanding manufacturing strength. At such a time, he acquired appropriate technology for growth through a host of joint ventures.
Growth in an era of controls and Licence Raj had its own unique challenges and I would like to share one example. I remember the period between late 1960s and early 1970s when there was a huge demand for tractors. The tractor industry, however, was subject to price and distribution controls. We were in the process of expanding our capacity at TAFE and the low prices severely affected our profitability. Translated, it meant that while we were investing in the business, the Government would decide where, what and to whom we could sell. These were really challenging times.
The core values and ideals my grandfather and father practised have stood us in good stead at all times—both good and bad. I learnt these values by watching them practise it. Today, as the group has grown in scale and size, we have formalised these values into a set of well-articulated guiding principles which we disseminate through the vision and value statements of our organisation. We have attempted to institutionalise these in a structured and collaborative manner using employees as our value champions.
In recent years, my father has taken on the role of a mentor with a view to grooming key professionals and family members by energising and empowering them. People like me have gained immensely through his mentoring. Transforming thought processes through subtle yet powerful one-liners has been his hallmark. Over the years, he has focussed on building strong relationships based on trust and transparency, the two pillars on which he evolved relationships into partnerships with stakeholders— employees, channel partners or vendors. This is reflected by the fact that we now have second and third generation employees, customers, dealers and suppliers. He has proven that strict adherence to ethics and nurturing long-term relationships is the foundation on which the success of the company rests.
After completing business school, I joined TAFE in 1985. Ever since, I have gained immensely from his mentorship. He gave me enormous freedom to experiment, explore and grow, but ensured that a security net was readily available. India opened up in1991 and this brought about a completely different set of challenges. Liberalisation attracted multinationals who foresaw significant potential for tractor sales in India. We have in our industry fierce competition from both the organised and unorganised sectors.
Our challenge to drive growth aggressively, scaling up sales and having a significant presence across the country and across segments were key to fueling this growth. This led us to the strategic acquisition of Eicher Motors' tractor business in 2005. My father's mentoring and our efforts led TAFE and its subsidiaries to grow from Rs 85 crore in 1985 to the Rs 4,700-crore we hope to close this fiscal.
One challenge which tested our mettle thoroughly was the cyclicality of our business. Monsoons are a key factor driving tractor sales and every time the monsoon failed, our fortunes dipped. The 1999-2004 period was really tough with tractor demand dropping by 15 to 20 per cent every year. That was when we decided to make our business model robust enough to generate profits even in the worst cycle.
We brought down the break-even levels, de-risked the business, invested in RandD and attained capability to develop products and explored other avenues of growth. From every cyclical downturn, we emerged leaner and fitter. Today we have a market share of 24 per cent in India and more importantly, TAFE has emerged as one of the most profitable tractor companies in the world. We have also laid the foundation for our global expansion. Our tractor plant in Turkey is under construction and our exports reach over 45 countries. We have leveraged and strengthened our association with AGCO, our partner for 50 years, for supply of components and aggregates to them, joint product development initiatives and marketing of tractors in select countries.
Every generation has had a unique set of challenges to over come. In fact, the challenge for the next generation, as the group crosses Rs 7,500 crore in this financial year, is to scale up further, through global expansion, learn to tackle different cultures as they operate in varied geographies, drive technological excellence, discover and develop the next wave of opportunities and ride that wave.
Historically, sustenance of the business poses great challenges for the third and fourth generations. As the generations evolve, different family members will have diverse aspirations, competencies and strengths as the six of us in the third generation (My cousins and I) do. The challenge before the family now is to integrate Gen Next's specific competencies and strengths with the needs of the business in a manner that addresses personal aspirations as well as group's growth objectives. We also need to ensure that our core values continue to remain the cornerstone of our business as the group moves on into the future.
— Mallika Srinivasan in the Director, TAFE
(As told to N. Madhavan)