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STORY OF Dr. Keki Hormusji Gharda, a CHEMICAL ENGINEER

(For students, a life story of a CHEMICAL ENGINEER.)

May 12, 2007

Dr. Keki Gharda is a chemical engineer, businessman, and a

technologist. He is also an iconoclast as a human being. He was

born on September 25, 1929. He completed his chemical engineering

in 1950 from the Bombay University, Masters from University of

Michigan and his PhD from University Of Oklahoma. Battling the

business climate of the '70s and '80s, he has built a business through

sheer innovative brilliance.

In 1965, he started his company in a small rented shed with a drum

as a table and a carboy for a chair. Over the next four decades

Gharda Chemicals has repeatedly flummoxed multinationals like

Sandoz, Bayer and Hoechst by making their products at a fraction of

the cost through technological virtuosity.

In the process it has recorded many firsts in dyestuffs, pesticides,

veterinary drugs and polymers which have fetched dozens of awards

from the government and industry. In 2004 Gharda became not only

the first Indian but also the first Asian to win the prestigious Chemical

Pioneer Award from the American Institute of Chemists for his

extraordinary achievements in the chemical industry.

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He is now [in 2007] setting up his dream project, a top-notch technical

college a few hours drive from Mumbai.

Excerpts from an interview with MoneyLIFE editors Sucheta Dalal

and Debashis Basu that was punctuated by many jokes, wisecracks

and funny anecdotes from a young man of 77.

Let us begin with your background. We gather you are born and

brought up in Mumbai and that you have two older sisters?

Yes, so legally I am a 'Maharashtrian', but can't speak the language. I

had two sisters but one of them is already dead. One sister is still

alive, she is about five years older than me and she is the mother of

the children who, shall I say, don't see eye to eye with me.

Of course, we meet at family functions. Let me tell you about them.

From practically nothing, they are both worth about $ 5 million each,

but they think it is too little. They hold some shares in the company

and I have told them if you settle for that value, I can get you the

value. They say they are worth more. So I said, okay, if that is so,

wait until you get it (laughs heartily). Incidentally, they have received

more than a hundred times the initial investment of their father by way

of dividends.

Even at 77, I come to office everyday and work from around 10.30 to

6 pm. Of course, occasionally I get to catch a nap for an hour.

And you find time to read all these books lined up in your office?

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Yes, it does look like I run a bookshop as a side business doesn't it? I

don't (laughs). I don't read here. But yes, I have a rather catholic taste

in books and subjects to read. I have read widely and by the age of

15 or 16 I had read all the English classics and all the German and

Russian Classics in English.

I could read a 500-page book in a day, it is a peculiar form of rapid

reading that I have evolved myself. I would glance through the page

almost line by line and if it is a description of a house or a room, or

the protagonist, I would skip through. In around eight hours I could tell

you reasonably well the contents of a 500-page book.

Can we go back to your childhood so that we go a little

chronologically?

Well okay, my father was a government servant and my mother was

a housewife. Not just a housewife. Although she was taken out of

school when she was 12, she had a very high degree of curiosity and

her father was a practicing medical doctor. He had a superb

collection of books and was very widely read. The remarkable thing

about him was not only his collection of books - they were all literary

books - he could even quote the act and the scene from Shakespeare

of a quotation.

Even at that age he had a tremendous memory and I have inherited a

significant amount of that. Nobody in my company, or even nobody

that I know, remembers as many melting and boiling points that I

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know. It is not a conscious act, it just registers, once I have read it.

On the other hand, don't be annoyed if I don't recognize you after 15

days or a month. Its selective, you know!

Another thing about my grandfather was that although he had a

flourishing practice, he did not charge the poor any money. In fact, he

would give them money to buy milk or food so that the medicine was

more effective. That influenced me in a big way.

Sub-consciously, I believed that if you are clever or gifted, that does

not belong to you. I am not modest about my talents. Over a period of

time I have realised that I have unusual talents. To put it in another

way, if I see a document on any subject, I see something in it that

nobody else sees. It is a gift, that's all.

You know the Stradivarius violin? It auctions at over a million dollars

today. Somebody asked him, 'Senor, what is the secret of your

talent'. He reportedly said, 'all talent comes from God, but even God

needs a Stradivarius to make a good violin'. Hence I feel that

although I have unusual talents, they don't belong to me. I am just a

trustee.

When it came to my teachers too I just knew what they were

teaching. For instance, when I studied at the Royal Institute of

Science, one of my professors was quite a pompous man who

expected us to take notes when he was teaching. But I used to just

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write the title of the lecture on the page and didn't take notes, since I

already knew it.

One day, he noticed I wasn't taking notes and said, 'Mr.Gharda, I

assume you know what I am teaching'. I politely replied, 'Yes Sir'.

That made him furious. He said, 'In that case, why don't you go to the

board and finish what I am doing'. He was writing some theorem or

equation. I went to the board and finished it. He was dumbfounded

and there was tittering in the classroom. But being a normal human

being, he naturally didn't like me.

Were you a topper in college?

I was a topper in school but not always at the top of my class in

college.

Was it because you were reading more, or were you more distracted

with other things?

I didn't like the way one needed to study to get to be the first in class.

So I used to read widely about the same subject and other things. But

I was not low down...just second, third or fourth. There is an

interesting story about my rank.

The person who stood first in the matriculations in my batch was

Madhu Patwardhan (once chairman of NOCIL). I became quite

friendly with him later. I stood 48th or something. Madhu Patwardhan

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was a thorough gentleman, with long sideburns and all that. I am also

a gentleman of sorts but not a thorough gentleman (laughs).

We were both in Elphinstone College. He got the top scholarship and

I didn't and that was fair. We left inter-science in the same year and

both of us joined the Royal Institute of Science. There, oddly enough,

we had the same number of marks. There used to be small

scholarship of about Rs 100 a month. We both applied for it and he

was given the scholarship and I wasn't. So, the same professor I

talked about earlier, was the Principal. I went to him and said, 'Sir,

you have given the scholarship to him and not to me. Neither of us

really needs the scholarship, but it is a matter of prestige. You could

have divided it into two". He said, "His performance was better in

matriculation. He stood first". I said, "All the more reason you should

give it to me. I have come up while he has gone down". Mind you I

was 16 at that time, but I didn't take any gaff from anybody.

You have said somewhere that you went abroad because you didn't

get along with your Ph.D. guide. What is the story behind that?

The guide was Prof. G P Kane. His father was a very famous Sanskrit

Scholar (a Bharat Ratna). He was a very clever man, but then I was

also a clever man. And while I was usually right in what I said, he was

often wrong and I had the gall to point it out.

Naturally, he didn't like it. He once said that a particular problem in an

American textbook couldn't be solved because there wasn't enough

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data. I went home and studied the problem and found it could be

solved. He wasn't malicious. In fact, he even acknowledged that I

was bright.

You have also mentioned that you used to sell chemical reagents to

your college. Tell us about that.

When I was in college, I used to leave home around 8.30 am. My

father used to give me some money for snacks - about Rs 5 or Rs 10

per month, I don't remember. At that time the British were at war with

Germany. Most of the chemical reagents we were using were

suddenly cut off. The British didn't make any reagents. So whenever I

asked for a chemical it was not available. So I said, let me start

making them at home.

From my pocket money I used to buy chemicals such as caustic

soda, sulphuric acid, nitric acid etc, muddled around at home and

made reagents and I would sell them back to the college. If the

college maintained records from 50 years ago, you can see receipts

of Rs. 5 or Rs 7 or Rs. 7.20 made out to me. I used to make around

Rs. 50 a month.

After this, I graduated in chemical engineering from Bombay

University in 1950 and stood fourth. By the way, the first Dr. Keki,

Gharda rank holder went broke 15 years later owing me money,

which I did not attempt to recover out of sentiment (laughs).

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Then you went to Michigan University?

Yes. I will tell you why I went to Michigan University. I had applied to

both MIT and Michigan, both of which had top chemical engineering

departments. I got admission in both. But MIT said that admissions

for that September semester were over and they would admit me only

the next year. Michigan gave me admission for the same year and

the fees were also much lower. So I went there.

My father paid my expenses in the first year. After that I appeared for

a qualifying exam. Very few of the natives used to pass that exam

(laughs, and explains that he used to call the Americans, natives),

even though they did their under-graduation there. It was a peculiar

exam, because they could ask you any random question - physics,

chemistry, mathematics or even local politics.

They basically tested you if you had an inquiring mind. Coincidentally,

during those exam days an "art" cinema, showed operas and ballets.

Since I didn't expect to succeed - nobody usually succeeded the first

time - I used to visit the cinema almost every other evening. But I did

get through the very first time and got a scholarship.

So my father didn't have to send me money anymore. Interestingly,

one year I got a Dow Chemicals Scholarship, one year I got a

Monsanto Scholarship and one year the Dupont Scholarship - I don't

remember in what order. Gharda Chemicals is competing with all of

them. I even tell their officers that you bred a viper.

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You came back when your father passed away?

I came back primarily because I had not visited my family for seven

years. But when I returned, I discovered that my father was in the

hospital. My mother had not informed me, lest I worry. I already had a

permanent job as a college teacher at the University of Oklahoma.

My father died soon afterwards, catching an infection after an

operation. My mother was all alone and although she was clever in all

ways, she just couldn't manage the finances. So she requested me to

stay on. My sisters were already married and had left the house. So I

stayed. I wrote to the college and told them about the family

circumstances. The University offered to hold my job for a year, but I

knew I wouldn't be able to go back so soon.

I taught for a while at UDCT (University Department of Chemical

Engineering). There too, like in the US, I followed an unorthodox

teaching method. I said, 'I won't teach you what is in the textbooks.

You are all going to hold responsible positions in the chemical

industry, where there will be a huge price to pay for any mistakes that

you will make. So I will not give you any special credit for the right

answers, but heavy penalties for the wrong ones'.

But you didn't get a permanent job at UDCT.

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Yes, I applied a couple of times, but for various reasons I was not

given the job. I was never a full time employee. I only gave certain

lectures, and I was fiddling around doing some consulting work for

the chemical industry. There too, because I loved my work, I used to

solve the problem first and then ask for money. That was a foolish

thing to do. It is still a foolish thing to do.

So I didn't get paid most of the time. Luckily, since I come from

middle class background, I had a home and my mother used to feed

me. Soon after, I also got married without an income. My wife was the

daughter of a college professor, who oddly enough, didn't consider

money as important, so he allowed her to marry me. So we got

married and we were both kept by my mother. That was around 1962.

When did you start Gharda Chemicals?

In 1965. For the first two years, we were a partnership company.

Around 1967 it was reorganised as a private limited company.

How did the idea come to you to start your own company?

Although the small scale sector didn't pay me, they knew me very

well and recognised my talent. So they used to come to me and say,

why don't you make this compound, it is not available, or make that

compound because it is in short supply. So I thought of making

phthalogen brilliant blue, which is a dye pioneered by Bayer.

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At the time I made it, the dyestuff department of UDCT was in

existence for over 10 years. But I don't think they knew how to do it,

because by that time Amar Dyechem and Indian Dyechem Company

were already in existence. And as the saying goes, fools rush in

where angels fear to tread.

I thought I would be able to make it. I did make it and that was the

beginning. But I had to work all hours since I was the only technical

person in the company. I often used to work past midnight.

Where did you function from at that stage?

At that time we had a 2000 square feet rented shed at Vakola (near

the domestic airport in Mumbai), which was completely illegal, with

uncertain electric power and supplies and no sanitation facilities. I

used to pay the fellow rent, but the owner was running it illegally - the

water connection was illegal, the power connection was illegal and if

he didn't bribe the authorities, they would cut off the connection.

Sometimes I had to rush to the police and have it restored. My desk

was a drum and my chair was a carboy and we had 10 uneducated

workmen to make the product. Hence I had to work 16 hour shifts in a

primitive factory. I was the procurement manager, sales manager as

well as being the production manager.

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Without any experience in dye stuff technology I realized that the

product was a physical mixture of an organic moiety di imino

isoindoline and chelated copper complex. I was the second in the

world to make this product and within two years Bayer's exports to

India had become uneconomic and I was competing with them in

their other major market in Africa.

Did you face resistance from Indian buyers?

It took two years for our product to get accepted. Initially, there was a

lot of phobia about Indian products versus those of multinationals.

Everybody used to wonder how this little fellow, not even a mosquito,

dare think he can compete with Bayer. But after a while people tried

our product and found it was very good. You really need one big

customer to accept your product.

At that time it was Century Textiles. If Century Textiles bought

something, it automatically meant a seal of approval. After a long

time, I persuaded them to test it by giving them the material for a free

trial. They found that it was as good as the foreign material and

cheaper.

What were the early lessons from the venture?

My first adventure in entrepreneurship taught me several things,

mainly that an unknown company manufacturing a high quality

product and selling it at cost based prices can compete effectively

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with a giant multinational company. After their sales in India and

Africa had dried up Bayer visited me and photographed our primitive

factory and went back shaking their heads in disbelief. Over a period

of time we made further modifications of this product. For this

technological achievement which appeared outstanding in India of

those days, we received our first P C Ray Award in 1970.

That was your first product?

Yes. After about five months, when we were well accepted, along

came a broker who offered to underwrite my entire production but

wanted a 7 per cent discount. I pretended to be amazed. I said, 'in

fact you should give me a premium.

You are buying it, not because you love me, but because you expect

to make money and it will give you a monopoly position if you have

my entire production'. This was a spontaneous idea but I eventually

became a serious student of Game Theory. I have a whole shelf of

books on Game Theory and can give a learned lecture to anybody

who doesn't understand it (laughs).

Where did you move to from Vakola?

We moved to Dombivli (a Mumbai suburb) and the facility still exists

there. Then we went into a joint venture with the Gujarat Government

in 1980 called Gujarat Insecticides Ltd., which is now fully owned by

us. For about Rs 3 crore (Rs 30 million) of investment they got a

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return of Rs 19 crore (Rs 190 million) over about 10-12 years and

most of the value came from our technology. And since, unlike most

businessmen, I don't put my hand in the till and skim money out, the

wealth grew.

You then set up a US operation?

No, that was only a marketing operation for our products. We have

never really manufactured anything in the US. We export our

products to them. The products that are manufactured in the US have

a very small market in India and I was capable of making all of them. I

am capable of making almost anything. Or, rather I should say we.

But then I don't have a large deficiency of conceit! (laughs heartily).

Tell us about your various fights with the multinationals?

They were not really fights. In the mid 1970s, India was just beginning

to use more advanced pesticides. The multinationals wanted

manufacturing licenses in the control raj. So the government had a

public hearing, chaired by a judge.

The MNCs made a big song and dance about how difficult and

dangerous it was and how these cannot possibly be manufactured by

an Indian company and so they should be given an exclusive license.

Somehow, the judge, Justice Rangarajan had heard about me. He

called me and gave me some papers to study. The products were

Isoproturon and synthetic pyrethroid. I said they were slightly difficult,

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but not as difficult and dangerous as the MNCs were claiming.

Anything is dangerous in the wrong hands. The judge personally

invited me to the hearing at Delhi.

For the first day, lawyer after lawyer, representing the MNCs, made

presentations. They gilded the lily, so to say. On the second day, the

hearing ended and the summing up started. The Judge said, you

claim that it is very difficult to make these products in India, but there

is a lone voice of dissent. I want Dr. Gharda, who is here at my

invitation, to give his side of the issue.

Is that the first time you spoke during the hearing?

Dr. Keki Gharda Yes, I had kept quiet all that time. I then stood up

and said, there is a lot of exaggeration going on here. These are

tricky and difficult products, but they are not outside the scope of an

Indian company to make. I for one, hereby make a public statement

that Gharda Chemicals is capable of doing it, and I offer to deliver it

within a years time and at 60 per cent of the price the MNCs claim is

necessary for them to make it. There was dead silence.

Justice Rangarajan waited for two minutes and said, 'What

Dr.Gharda has said is absolutely contrary to what you have said; why

aren't you dissenting'? Again there was a complete silence. I said,

they are not dissenting because what I have said is the truth. This

happened such a long time ago, but the lawyers who were there still

remember it. One of them, I recall, was Anil Diwan.

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Who were the MNCs?

Sandoz and Hoechst were there and there were two or three others.

Wasn't there another incident when a MNC copied a part of your

process?

No not exactly copied, they just took out a small portion. It was

Sandoz. They were using a chemical to do oxidation and I had just

used air. It was an almost obvious thing to do, but it required some

amount of skill to realise the obvious. Four or five months after I

started this process, I head from sources that they had also stopped

using Hydrogen Peroxide and saved themselves about Rs 15 to Rs

20 a kilo.

What was the product?

It was 2 hydroxy quionxaline. There is also another interesting

incident. At that time Gharda Chemcals was making the same

product for them on a contract basis. They made 50 per cent and we

made the rest. We had settled on a 97 per cent purity because I was

confident of delivering that.

Occasionally, it used to be 96.5 per cent purity and they sent it back

saying purify it. We said, it doesn't make a difference even if it is 96

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per cent, but they said, 'No, the contract specifies 97 per cent purity'.

Then comes the funny part.

Their drier had failed and they sent their production to me for drying.

And I discovered that their product was only 93 per cent or 94 per

cent purity. I was furious and asked what was going on. But they said,

'a contract is a contract'. I said all right, my time will come and I will

show you. Within three to four years after I set up Gujarat Insecticide

they had to wind up that business. They couldn't compete.

Didn't you ever want to take Gharda Chemicals public?

No, for a very peculiar reason. I will gamble with my own money, not

with public money.

But you have always been profitable; there was no problem about

that.

Well, there is a saying, 'call no man rich until he is dead'. Yes, we

have been profitable, but somewhere in the late 1970s all the

products we were making suddenly became unprofitable because the

government imposed a 35 per cent excise duty on dyes and

intermediates. Since we were honest, we could not compete; many

others just evaded the duty.

That year we made a good solid loss. But in one year, we changed

our entire product profile and shifted from dyes and intermediates to

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agrochemicals. In fact, we have made losses, once every five to 10

years.

In agrochemicals you did pioneering work.

Yes, but we are not doing well. We had to get over the problem of the

monsoon affecting the sales. We started exporting. More than 50 per

cent of our revenue comes from export. We are selling to Canada,

Argentina, Brazil from the US office. We also have another office in

London from where we cover Europe and North Africa.

We also export and import from China and our balance of trade is

nearly equal. Our overseas foray has been very eventful too. In 1997

we started marketing Chlorpyrifos, an insecticide and Dicamba, a

herbicide - monopoly products of Dow and BASF and we paid them

about $5 million each as data compensation.

We had a tough time as they tried to convince our customers of the

unreliability of an Indian producer and gave them bonuses extending

into several seasons. But we have stuck it out and by now we have

almost 20% of the US market in both products and our customers

have grudgingly admitted our reliability and even our superiority.

You have also moved into polymers...

About six years ago, we started a high performance polymer division,

where we make heat resistant polymers, amorphous aromatic

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sulfones and semi crystalline aromatic ketones. We are number two

or three in the world in some of the products Polymers is totally

different from chemicals and we had to learn by ourselves a new

technology which had taken MNCs several decades to develop.

Hasn't any multinational offered to buy you?

Yes, many years ago Dupont offered to buy us at what I considered a

good price. But my relatives didn't allow it. I have only a simple

majority (60 per cent), but not the 75 per cent needed for significant

management decisions. The dissenting shareholders are around 33

per cent. I believe that Godrej also holds around 7 per cent of the

shares - directly or indirectly.

So what happens now? There is talk about you selling to the Tatas; is

that going to happen?

Well, we shall see.

What happened to the university that you planned to set up?

It is already there, we will admit students in July. It is on the Bombay-

Goa road, near Lote, pretty close to my factory. We Parsis consider

the Spring Equinox as important, so we had an inauguration on

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March 21st. It is not a university at the moment. It will be a college

affiliated to the Bombay University, under the All India Council of

Technical Education. We are starting with four courses including

chemical engineering and computer science.

How is it going to be different?

Well, for starters, it is going to be an honest university - no capitation

fees. Actually it is registered as a Parsi University. The permissions

were quicker under the minority quota. After all we are a genuine

minority and actually a dwindling minority (laughs).

Who will you bequeath your wealth to?

I am the founder of the company and now I am almost 78. So passing

it on to children would be the routine thing to do. But I have no

children. I have a few relatives who have children. They and I don't

get along well. They consider me a fool and I equally consider they

are fools.

Why would they think you are a fool?

Well, fool in this way, that I have a lot of other worldly interests and

they don't have any of those. So they feel that 'we are rich and still

have to live as poor, why do you force it on us?' I say, I am sorry, I

am the fellow who creates the wealth, so I am the fellow who decides

how that wealth is going to be used.

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Do they work with Gharda Chemicals?

No. Even my wife doesn't work with the company. And although she

is a director, she doesn't even draw a salary. I am a little Victorian in

my ethics, you see - No work no pay (laughs). For a number of years

I worked for the company free. I drew just around Rs 500 to 1000 a

month to live. After some time we began to be prosperous and I took

a salary of Rs 100,000 a year.

My wife has her mysterious ways - she still maintains me on just Rs

5000 a month. She also earns some money by way of dividend from

the company which she spends on all kinds of social work, which I

don't get involved with. We don't have any servants in the house. So I

wash my own clothes. Sometimes she washes some of mine and her

own clothes. Three out of four days, she does the sweeping and one

out of four days, I do it.

But why?

No particular reason. I don't think I am a masochist nor is she. We

are in a poor country and I just feel that the amount of money one

spends on minor luxuries can keep someone alive. Right up to last

year I used to travel by economy class and I always stayed in a 3-star

hotel. As long as there are only two or three bugs in the bed I don't

mind. More than that, I have to spend a lot of time throwing them out

(laughs).

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Long ago, when I was at an impressionable age, my mother said, "it

is your duty to make as much money as you can honestly, but you

have to die poor. You must give it all away to other people...obviously

not my hapless relatives, but more deserving people.

Further, it is my duty to fight evil. Secondly, from the balcony of

Elphinston College I had seen Mahatma Gandhi lead a morcha and I

must admit I was a coward... I didn't want to be in the morcha and get

beaten up by the police, but I had a great deal of admiration for him.

So, the question remains. What about the future?

I am in the final stages of forming a company called Gharda

Advanced Technologies Limited. There is the Gharda Foundation,

which is running the mobile hospitals, the rural work and the college.

As and when I sell my shares, which I do intend to sell, because I do

not have any capable successors, I will invest in Gharda Advance

Technologies. I have an excellent idea for this company.

Actually, it is more than an idea and we have almost got a patent for

it. The global production of iron and steel is around one billion tonnes

every year, with an average first stage price of about $300 a tonne. I

am certain that I can make a 10-15 per cent difference to cost at the

first stage.

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This means a savings of about $50 billion. Aluminium industry is

worth about $75 billion a year. I feel I can bring savings of about 30

per cent to that industry. That is another $18 billion. Then there is

Titanium which should be promoted. It is a much smaller market.

Why only these? Why not copper and other metals?

Well, I am only one person. These are my ideas and the first one is

novel but is so apparent. There is an interesting point of patent law. If

you combine known facts in a way not done before, each fact itself

may be known, but the combination can be patented. As I said, I can

see things in the public domain that others can't see.

My English patent lawyer, who is a rather conservative person, is

quite confident of us getting a patent on the iron project. We haven't

reached the lab scale as yet. An experimental model of what we are

planning will itself cost Rs100-Rs150 crores (Rs 1-1.5 billion). We

are gathering bits and pieces of the data on a lab scale.

How do you sell the idea? You have to demonstrate it and show that

it can work 8000 hours in a year. You don't want it to break down

every 100 hours because these are large continuous processes. So

you have to demonstrate reliability. This is what we are going to do.

At the moment we are spending around Rs 15 crore (Rs 150 million)

on aluminium and titanium processes where around 40 people are

working. All this will be put into Gharda Advance Technologies. I am

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not a fool, you know. Dr.R.A.Mashelkar, former Director General of

CSIR has agreed to become the chairman of the company, because I

have been able to convince him.

Will this new company be 100 per cent owned by you?

Yes, yes, yes, definitely. What I am planning to do is hold 75 per cent

of the equity and the remaining 25 per cent will go to some of my

employees - about 2 - 3 per cent to each of the scientists and other

managers. If this works, we will easily be able to get $100 million of

knowledge income in the first year. I am confident that the ideas will

work.