Business Today
DCM has survived splits and a hostile takeover bid
Despite internecine fights, splits and a hostile takeover bid, DCM has survived and hopes to thrive.

Sumant Bharat Ram's office is a nondescript room in Vikrant Tower, a commercial building a few minutes walk from the Rajendra Place Metro station in New Delhi. His office commands a view of the Bara Hindu Rao area, where his greatgrandfather established one of North India's largest cotton spinning mills more than a century ago. The mill has long disappeared, forced out of the city in the 1980s by pollution control laws. Today, cranes tower over the site, where a large multi-use realestate project is coming up. Bharat Ram's company, DCM, has a big stake in the venture, along with the Singapore-based Pure Earth. In a few months, another gleaming glass-andsteel structure will loom over the area, reminding Delhiites of the DCM name all over again, and the legacy behind it.

History lesson
1889 The Eiffel Tower opens in Paris to celebrate France's industrial achievements. Notable births that year: Jawaharlal Nehru, Charlie Chaplin
Even Delhiites with little interest in business would have heard of DCM, thanks to Sir Shri Ram, who joined what was then Delhi Cloth and General Mills in 1909, and soon after took over the company, renaming it the Delhi Cloth Mills. Sir Shri Ram's family founded two local institutions of higher education that are among the country's most reputed: the Shri Ram College of Commerce, and the Lady Shri Ram College for Women.

(Both have been repeatedly voted India's best college in Commerce and Arts respectively by our sister publication India Today, in its annual survey.) Besides, in the days of the controlled economy, DCM was to Delhi what Tata Sons was to Mumbai. But the past three decades have not been kind to DCM. The company was wracked by one of the earliest fraternal disputes of corporate India. It even faced a strong hostile bid for a takeover by UK-based businessman Lord Swraj Paul in the 1980s. The internal wranglings ended with the group splitting twice, once in 1990 into four separate companies, and again in 1999, when Shri Ram Fibres parted ways.

Today, however, Bharat Ram, who is in his early forties, proudly states that the mother company is back on its feet, having posted revenues of Rs 700 crore in 2010/11, and made a modest net profit to boot. "We missed the bus after economic liberalisation," he says. "My family found it anathema to use political contacts for business. People today do not have the scruples we did."

The problems are not all over yet. "We may have the legacy and the heritage, but believe me, we also have all the legal cases," jokes Bharat Ram. He cites the example of an income tax dispute the company is still engaged in that dates back to 1977. Asked to analyse the reasons for DCM's travails, Bharat Ram, an MBA from the University of Michigan, in the US, says the conglomerate had been poorly structured.

"Everything was owned by DCM Ltd," he says. "The holding structure was horribly planned, which made it difficult to raise funds, and damaged the equity structure of the holding company. Then, gradually, the promoters' holding declined." It was this reduced holding that encouraged Paul to make a hostile bid for the company in 1986.

Established in 1889

Rai

Rai Bahadur Ram


1889: Rai Bahadur Ram Kishen Das Gurwale starts the Delhi Cloth & General Mills Company in New Delhi

1909: Lala Shri Ram joins the company, and eventually acquires it and changes its name to Delhi Cloth Mills

Shri

Shri Ram College of Commerce


1932: The Shri Ram family starts the Shri Ram College of Commerce, followed by Lady Shri Ram College (recent photo, above) in 1956. Both are now among the top educational institutions in India

1941:
The British monarch, George VI, awards a knighthood to Lala Shri Ram, making him Sir Shri Ram

1986: The company, already in dire financial straits, is targeted by UK-based businessman Swraj Paul for a takeover. A bitter struggle follows. The family holds on, but finds itself deeper in debt

1990:
Four firms emerge from the first split: DCM, DCM Shriram Industries, DCM Shriram Consolidated and Shriram Industrial Enterprises. A second division follows in 1999

1995: DCM's deal with Toyota, struck in 1983 to build light commercial vehicles, ends abruptly (factory photo, left). DCM then ties up with Daewoo to make cars

2001: Despite the success of the Cielo and Matiz, DCMDaewoo collapses after the Korean parent goes bankrupt
 
2002-10: DCM settles cases with several creditors. It ties up with a Singapore-based firm to develop its Delhi properties


Ironically, DCM was going through a resurgence at the time, after years of internecine battles, thanks to a tieup with Japanese auto major Toyota to make light and medium commercial vehicles. Staving off the takeover - which it succeeded at - proved, however, financially damaging for the company, leaving it heavily indebted. To make things worse, the next partnership with South Korean giant Daewoo to make passenger cars also floundered - despite the success of its models Cielo and Matiz - when Daewoo collapsed in 2000/01. DCM's finances were in tatters, and led to a number of defaults, particularly on a series of partially convertible debentures in the late 1990s.

Shri

Shri Ram Centre for Art and Culture in Delhi


Things looked bleak, and Bharat Ram, who had begun his career with Toyota in Japan and was working with his uncles and cousins at Shri Ram Fibres - now known simply as SRF - was brought back to the parent company by his father, Vinay Bharat Ram. "In another life, my father would never have been a businessman," he says. Vinay Bharat Ram, grandson of Sir Shri Ram, was academically inclined and taught at iit-Delhi for a while. "As for me, if I had the choice, I would have been a psychologist." He has told both his sons they are free to pursue any career they choose. One of them wants to be a chef.

Managers

Managers at the DCM Toyota plant at Surajpur in Uttar Pradesh


"My vision for DCM is to make it a $1-billion company in the next decade," he adds. "Then I'll form a trust to run it." Differences in business, he says, do not impact personal relations in the family. "Whatever their differences in the boardroom, my grandfather and my greatuncle (Charat Ram) remained close till they died. Every Dussehra and Diwali, we still celebrate together. We're now around 80 of us."

Today, the fourth generation of the Shri Ram clan is waiting for the fifth one to come of age. Successive splits have led to different branches of the family competing in some sectors. DCM split for the second time in 1999, with one part under SRF now run by Arun Bharat Ram. DCM Shriram Consolidated is headed by Ajay and Vikram Shriram, DCM Shriram Industries by the family of Vivek Bharat Ram, and Siddharth Shriram runs Shriram Industrial Enterprises. Still, while DCM has been through tough times, if all the businesses of the empire Shri Ram founded are considered as one enterprise, their consolidated revenues run into billions of dollars.

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