Unstoppable after sixty

He was clear in his mind when he joined Vikram Sarabhai Space Centre (VSSC) shortly after graduation that he would do something on his own in a few years. A short stint at VSSC, but his heart was in Bharat Heavy Electricals Ltd at Tiruchi, where he had gone as an engineer-trainee, while still in college. Sure enough, he joined BHEL in 1975 and quit four years later, to start a business on his own — as a sub-contractor to the public sector company.

Today, the company that he started along with some of his friends has grown in size, competing for orders with BHEL itself and has attracted private equity investment.

This is Mr K. Subburaj, Chairman, Cethar Ltd. “From my childhood I wanted to do something on my own,” says the 61-year-old Mr Subburaj, son of an agriculturist from Virudhunagar in Tamil Nadu.

“As an engineer I am highly satisfied,” he says, as he talks about Cethar Ltd (till recently Cethar Vessels Ltd), where he charts newer businesses for the 30-year-old company. He quit BHEL in April 1979 and started Cethar with a seed capital of Rs 13,000, as a sub-contractor to BHEL for piping work. In the first full year, Cethar employed about 50 people and reported a turnover of Rs 8 lakh. Last year, it ended with a turnover of Rs 2,436 crore and hopes to touch about Rs 3,250 crore this financial year. “This year we initially felt we would do about a billion dollars — Rs 4,500 crore — but many of the projects are not moving the way we anticipated,” he says.

Wasn't there any opposition from his wife and family when he quit a secure public sector job? “I never consulted anybody. I told my wife in the evening after I had resigned,” he says matter-of-factly.

In any case, Mr Subburaj was confident that he would do well as a sub-contractor to BHEL. Even if he failed, he knew he could join some other company. That is why he decided to locate his venture too in Tiruchi and all of Cethar's expansions have been in the same place. Now, Cethar is getting ready a plush office, its own, also in Tiruchi, where it will move to shortly.

Mr Subburaj's journey as an entrepreneur has not been without its bumps. When he started making power plant equipment, he started off trying to popularise a technology that was widely used. He relied on the private sector rather than the State utilities for orders. He believed that technology can be sourced from anybody, which is what he has been trying to convince the power sector administrators in the country. He has had a few tie-ups for technology, learning along the way and now competing against the big boys for supplying power plant equipment.

Why the name Cethar? Each letter of the name stood for a line of business that the company was in. Now that it is entering new areas, Mr Subburaj says businesses will have to be found for a few letters in the company's name. Cethar has hired consultancy firm Deloitte to draw up a business plan. To begin with, Cethar will enter the construction business and hopes to start marketing this business by the third quarter of this year. It hopes to get into the roads sector. Also on the anvil are a 30-bed speciality hospital that will open shortly and a 300-bed multi-speciality hospital by 2013 end. You guessed it right, both of them in Tiruchi. Cethar will have another company Cethar Electricals, which will get into electrical balance of plant (all those equipment other than boiler, turbine and generator).

In 2010, Cethar raised Rs 370 crore from private equity firm Barings with an option for Rs 100 crore more, giving about 20 per cent of its stake to Barings. “We wanted capital and we wanted somebody who will give the company a good valuation,” says Mr Subburaj. “We felt quite comfortable with them. Any investment of this kind will give some visibility — to your bankers, to the investing community.”

Mr Subburaj says that he is not involved in the day-to-day running of the company. His brother Mr N.K. Pothiraj and other senior professionals take care of that, while he devotes his time to business development, charting out new areas to enter. Next year, he expects his brother's son, who is studying management in the US and who has a post graduate qualification in thermal engineering, to join the company.

Management professionalism exists in the company, he says. He does not buy the argument that an owner or a promoter, especially with a professional qualification, cannot be described as professional in approach. “If you have 40-50 per cent stake, how would you not participate in the day-to-day management,” he asks. “Professionalism,” he adds, “is about how you manage the company, have you set business rules and how the decision-making is done.”

Most engineering graduates are happy doing something in IT rather than hard core manufacturing. Why is that? He admits that it is a lot harder for engineering graduates to become entrepreneurs in the manufacturing sector now, than what it was when he started out. That is because the banking system has changed, he says. Earlier, lending institutions were into development banking. But, now, they want the ventures they fund to start making profits from day 1. “It is commercial financing. Not development banking. That is the biggest challenge for an entrepreneur,” he says.

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