Shiv Nadar: The Winner of the Dataquest Lifetime Achievement Award 2010

This man definitely belongs to the second category. Afterall he was the topper in engineering; in the early 70s, he was one of the highest paid executives in Delhi. One of Indias most successful entrepreneurs, he not only started probably the countrys most well known garage (or may I say barsaati) start-up that has turned into one of the largest business empires. He runs the biggest indigenous IT hardware company in the country, one of the Top 5 IT services companies, and is one of the biggest philanthropists in the country running schools and art galleries. From designing Indias first PC at the same time as global IT peers in 1978 to working on the Boeing Dreamliners Flight Management Systems, he has done it all...and excelled in almost every sphere of innovation. All these facts juxtaposed together leave little scope for doubt about the greatness the man achieved during his lifetime. Not surprising then that Dataquest has chosen to bestow the Lifetime Achievement Award on Shiv Nadar, the founder and scion of the HCL group.

To Begin at the Beginning

Nadars journey began with DCM, then among the countrys top 5 industrial groups, in 1968, in its textile division. Encouraged by his stellar show, Vinay Bharat Ram, the DCM scion, handpicked Nadar at the ripe young age of 23 in 1971 to head the new electronics wingDCM Data Products. Nadar was made head of sales and marketing of this new unit while another young executive, Arjun Malhotra, an IIT Kanpur product, was made his deputy. Subsequently, they launched the first indigenously made desktop electronic calculator in August 1972. Young Nadars stock was already on the rise: as Vinay Bharat Rams blue-eyed boy he was not only heading the prestigious project but even successfully delivering on the promise.

Nevertheless, the restrictive policies of the government around the time, specifically around MRTP and capacity restriction, was frustrating Nadar. In his own words, Though I was a success in all parameters at the timea high-paying job, enough responsibilities, a highly successful venture, but still the restrictions were frustrating. I was yearning to do something to bypass these restrictions. Venturing on his own was definitely an option, especially egged on by his future wife he was dating at that time, as well as his friend Arjun, though it would still take Nadar a few more years to tread that path.

In 1974, DCM Data Products released the 1080 PS model calculator with a capacity of 80 programming steps and 10 data storage. Nadar managed to sell some 300 odd units of this and this remarkable feat firmly established him as a sales and marketing wizard within DCM. DCMs second product was Indias first microprocessor-based computer DCM 1101, launched in 1975. Notwithstanding these successes, the Data Products division was facing problems within DCM especially with respect to funding. With the higher management not really appreciating the potential of the electronics division, Nadar was facing a lot of opposition within.

Nadar acknowledges the help he received from the Electronics Commission during this period. After consultation with them he zeroed in on either medical electronics or computers to start a new business venture. Finally closing on computers, Nadar, along with Malhotra, managed to convince 10 other colleagues (including a brilliant sales guy he had recruited named Ajai Chowdhry) and decided to go ahead. The parting from DCM was acrimonious with 10 executives tendering their resignations in a single envelope. Six of them stuck together to form a new companyShiv Nadar, Arjun Malhotra, Ajai Chowdhry, Subhas Arora, Yogesh Vaidya and DS Puri. They pooled a capital of `1,87,000 and set up a companyMicrocompin Nadars residence at Safdarjung Development Area.

Subsequently, they managed to get Arjuns maternal grandmothers barsaati in a Golf Links bungalowthe posh address for the corporate headquarters gave the company respectability. Meanwhile the girl he was dating in the early 70s during his days with DCM, had become his wife.

While the restrictive policies of the times meant getting a license for manufacturing was not going to be easy, the savior turned out to be Ved Luthra, proprietor of the Televista TV brand. Luthra proposed that Microcomp take up marketing and sales of Televista calculators on a profit-sharing basisthis in turn generated funds for the microcomputer project. In a short period of time Televista became the top selling brand of calculators in India. Nadars Midas touch was again in evidence.

While the cash became available, the next challenge was to get a manufacturing license for its computer facility. Like many other state electronics corporations, the Uttar Pradesh Electronics Corporation, UPTRON, had a license to manufacture a range of electronic products, including computers, but it was only producing TVs. Microcomp approached UPTRON and a joint sector unit called Hindustan Computers Ltd (HCL) was set up in August 1976 in a new industrial township called NOIDA, coming up near Delhi. The HCL journey had begun.

Since HCLs thrust was on aggressive marketing, Nadar decided to recruit the best talent from IIM Calcutta and Ahmedabad. The salary offered was a kings ransom of
`2,000 per month and obviously it got some of the brightest talents. The reputation that HCL was the seeding ground for great sales persons (who later became entrepreneurs or served as heads of organizations) was born. Nadar has successfully mutated his DNA into the company he built. Incidentally, one of the brilliant guys he recruited during that period was Pradeep Gupta, a student of IIT Delhi and IIM Calcutta. Gupta was posted in Calcutta as the in-charge of all systems development activities in the eastern region. Gupta later founded CyberMedia, today South Asias largest specialty publishing house that brings out leading brands like Dataquest among others.

The Pioneer Expresses Himself

Nadars early focus was on raising revenues and what stymied him in the early days were that revenues for any activity could not exceed a certain amount, because all companies were licensed and had revenue ceilings. So, if you wanted to increase revenues, you had to be in a number of industries. For a firm to generate revenues of `100 crore was a dream. It took us 13 years to reach that level in computers. We did it by 1989. It took us another 10 years or so to reach `1,000 crore.

Nadar and HCL had many firsts to their credit. His goal was incidentally not a minicomputer but a microcomputer. And he announced a 8-bit microprocessor-based computer, named 8C, based on the PPS 8 microprocessor of Rockwell trough large advertisements in national dailies. It was an auspicious day by the Chinese calendar (8877), and on the same day newspapers carried the news that IBM was officially leaving Indian shores on June 1, 1978. So did IBMs departure help HCLs growth?

Nadar doesnt think so. In fact, he feels there was greater onus on HCL following IBMs exit. If IBM had stayed on, we would have grown faster. IBM knew how to create a market for computers. They created the market, and we went in and pitched for a share of the business. After they left, we had to create the market all by ourselves. At that time no one saw the computer as a necessity. It was a convenience.

Integration of the OS with the machine was a major achievement of Nadars R&D. Arguably, 8C therefore, became the worlds first personal computer (though IBM and Apple would disagree). Technically speaking as HCL preceded both in terms of OS and a floppy drive it would not be out of place to bestow on Nadar the sobriquet of father of the PC. The newspaper ad mentioned 8C price as
`83,500 making it perhaps the costliest product to be advertised in newspapersyou could buy an Ambassador then for `16,000.

In 1981, Rajendra Pawar, Vijay Thadani, S Rajendran started NIIT with Nadar playing the role of investor to address the then fast growing computer education market. Nadar remained the largest shareholder without retaining any management control. When the Indian government liberalized regulations for import of technology, the computer market was in effect opened for adopting new global technologies. Nadar utilized the opportunity to develop PC solutions (called Busybee) and UNIX platform based solutions. He also opened a subsidiary called HCL office Automation that quickly became Indias leader in office solutions. By 1987, HCL recorded revenue of `100 crore and featured as Indias #1 company.

Another of Nadars innovations was seen in the mid 80s when HCL thought of a novel way to supply customized software for its microcomputers to be sold in Singapore. Through 1984, Nadar made HCL focus on designing microcomputers and writing custom applications for clients on these systems. A small software exports division was set up in Madrasin humble ways that was the genesis of HCL Technologies, today one of Indias Top 5 IT services players. As Nadar admits, the software exports ballgame flopped for HCL at the beginning and the unit was disbanded subsequently. It would be more than a decade when HCL would again plunge into software exports.

However, the real thrust into software exports came in the late 80s when Nadar floated a subsidiary, HCL America, in Sunnyvale to sell Magnum in the US. Cancellation of a large order and Yogesh Vaidyas (in-charge of the America subsidiary) heart surgery prompted Nadar to decide on closing the operations and Arjun Malhotra was dispatched to conduct the closing formalities. However, customers were not willing to let go HCL engineers and even offered to pay their salaries. Malhotra had to stay back and Nadar had to reverse the decision to close down HCL America. While it was another feather in his cap, he had definitely found another niche in software services.

HCL consolidated its market position in the early part of its second decade reaching an inflexion point in 1991 when the government liberalized the economy to provide a level playing field for foreign players. Nadar made HCL join HP and create a JVHCL HP Ltd. The JV built solutions to address the local computing market as well as gave HCL its first experience in outsourced R&D. In the mid 90s, Nadar added sale agreements with Ericsson and Nokia to distribute their products in India. By 1995, HCL became a complex organization with over 40 subsidiaries and Nadar quickly realized that global IT services was the way forward rather than IT hardware. HCL Consulting was formed to address the IT services and the R&D division of HCL-HP was merged into HCL Consulting. The company was renamed HCL Technologies in 1996, the same year the JV with HP broke off.

In Nadars own words the 1980s were the time HCL was at the peak of its creative work. Profits kept pace with growth and HCL gained credibility in the market. A look at Dataquest Top Ten (the precursor to Dataquest Top 20) shows how HCL always used to remain in the Top 3 (if not the top) throughout this era. Not a well known fact was that HCL even wrote the first relational database system called Genesis even before Oracle.

And unlike many other companies, Nadar never became afraid of or refrained from experimenting. This trait of experimentation and differentiation continues till this day. Note some of Nadars decisions: he never went for conventional body shopping when others plunged into the Y2K goldmine; instead even the software services venture went into newer areas like engineering services and aerospace. Most recently, it was the Axon acquisition that was part of HCLTs inorganic growth strategy dubbed blue ocean, to expand in high potential areas where competition is low. The acquisition of Axon shifted the balance of power in the world of SAP consulting, giving HCLT access to 60% more SAP consultants than its nearest Indian rival.

Charity Begins and Ends at Home

There is nothing called corporate philanthropy; the whole concept is individualwhat I personally want to give back. Even as a prominent stakeholder, I cannot force my shareholders to engage in donating money, believes Nadar. So Nadars philanthropic activities under the aegis of the Shiv Nadar Foundation are all under his own personal capacity and strongly resonates what Bill Gates has done. Nadar has committed to put aside well over 10% of his wealth for philanthropic ventures.

These ventures, under the Shiv Nadar Foundation, span building and running free schools, a proposed university and a museum of art. Nadars personal wealth, based only on his shareholding in listed companies, including HCLT and HCLI is pegged at about `15,000 crore. In the next five years, his philanthropic educational projects will entail an expenditure of `4,000 crore. He sold a 2.5% equity in HCLT this June this year and pumped the entire `585 crore proceeds into his philanthropic efforts. His daughter Roshni has also chosen social entrepreneurship and is not interested in running the group businesses.

Fifteen years ago, Nadar started his education venture via SSN College of Engineering, named after his father, and followed this up with three more SSN institutionsSSN School of Management & Computer Applications, SSN School of Advanced Software engineering in collaboration with Carnegie Mellon University, US, and SSN research center. Now, the focus is on completely free residential schools, a proposed Shiv Nadar University, and a Museum of Art named after his wife.

The first of the schools, called VidyaGyan, named after his wifes grandparents Vidyavati and Gyanchand, spread over a 20-acre campus, came up in Bulandshahar in UP about two years back. The Foundation has completed land acquisition for the second one at Sitapur (close to Lucknow) and two more will come up in the state. The proposed university will come up at Dadri in UP, with facilities to cater to at least 8,000 students in multiple disciplines, from arts to engineering.

Eventually, 5,000 students a year will study in the schools and the funding will come from the Foundations resources. On the other hand, the Kiran Nadar Museum of Art planned in Delhi will house Nadars personal art collection of over 300 paintings.

Rajneesh De
rajneeshde@cybermedia.co.in