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BEYOND THE BOTTOM LINE

Rubber Soul

01 December 2005

Mumbai businessman Rajendra Gandhi has made recycling a matter of moral principle. Like many in India, Rajendra Gandhi looks forward to the day when India might stage Formula 1 motor racing. He has a special interest, for his company would be in the market to recycle the worn tyres.

'Creating wealth out of waste', as he puts it, appeals to Gandhi, Managing Director of Gujurat Reclaim and Rubber Products Ltd (GRRP). What better product to do so than rubber? It is non-biodegradable, so recycling it is environmentally friendly. Old tyres and tubes 'from buses and bicycles, cars and coaches, tractors and trucks' as well as used latex gloves and worn hose pipes all pass through the company's two plants in the states of Gujurat and Maharashtra.

GRRP is India's largest rubber recycling company and is among the top four in the world. It supplies the world's major tyre companies: Bridgestone Firestone, Continental Tyres, Cooper, Dunlop and Pirelli.

But what also appeals to Gandhi is running a company without the compromises of corruption. He founded GRRP in 1973 after reading a World Bank report which said that recycling would be an up-and-coming business in developing countries. 'I was quite fired up by that thought,' he says. But in those days Prime Minister Indira Gandhi ran a much more centrally-controlled economy than today's liberalised one. That might have meant having to pay bribes, says Gandhi.

'If I had gone into any other industry I would have come under a quota system in the controlled economy,' he explains. 'I would have needed a quota license for getting raw materials, and it was customary to bribe government officials to get the maximum quota. But my raw material was scrap rubber and I didn't need to bribe anyone to get that as it was readily available.' A liberalized economy, he implies, is a potentially less corrupt one. He relies on a network of agents who supply the scrap rubber from all over India .

Gandhi also pioneered the design and manufacture of machinery for rubber recycling in India. Again, his motive was to avoid the corruption involved in importing technology from overseas. 'To get an import license you had to pay bribes to officials in New Delhi.' So Gandhi asked a rubber technologist, WG Desai, if it was possible to make the machinery himself. Desai said it was. 'It was a big risk for me as I had no knowledge of the industry,' says Gandhi. 'But with his help and with the support of bank loans we started to put the technology together.'

He needed seven million rupees (then $US250,000) in start - up capital, which came from bank and family loans as well as a public issue of shares. The company's launch was delayed when Prime Minister Indira Gandhi declared a State of Emergency in 1975, which included restrictions on paying dividends. Rajendra Gandhi's plan to raise the capital through a public issue collapsed. He finally raised the money needed in 1977, after the Emergency ended, and went into production in 1978.

The process involves pulverising the old rubber into powder and sifting out any metal and fabric. The powder is treated with oils and chemicals under heat and the resultant soft rubber is made into flat sheets, cut to size according to the customers' packaging requirements, and sold by the ton. The company processes some 27,000 tons of reclaimed rubber per year, out of India's total of 80,000 tons.

None of this might have happened had Gandhi not overcome his fear of his father, a process of which he speaks frankly and openly. Vadilal Gandhi was the owner of Ashok Silk Mills in the Mumbai suburb of Ghatkopar, and a local Congress politician. He had a reputation for philanthropy but at home had a fiery temper. He sent his son off to boarding school at the age of nine and from there Rajendra went to live in a student hostel at Mumbai's prestigious Indian Institute of Technology (IIT), where he studied metallurgy. His father remained a remote figure.

Traveling on a bus one day, the young Gandhi found himself sitting next to a Westerner who was reading a copy of a magazine called Himmat. 'The fact that he was travelling on a bus amused me,' says Gandhi, as whites usually went by taxi. He engaged him in conversation. The man, from Wales, was working on the staff of the magazine in India . He invited Gandhi to see a film produced by Moral Re-Armament (now Initiatives of Change), which was going to be shown in a downtown apartment on Marine Drive .

Rajendra thought that it would be a Hollywood movie. But it turned out to be very different from what he expected: a drama dealing with racial conflict in colonial Africa. A young Indian at the film show invited Gandhi to the opening of a new residential block at the MRA centre in the hill town of Panchgani. The centre, a day's drive from Mumbai, was being built by Rajmohan Gandhi, a grandson of Mahatma Gandhi, who at that time was the Editor-in-Chief of Himmat.

'There I was challenged to look at my life,' says Rajendra Gandhi. 'I had the clear thought to share my life with my parents. I was very afraid of my father. So I wrote a letter to him in a tone of honesty and apology.' Rajendra had been spending his monthly pocket money on movies and vulgar books whilst telling his parents that it was going on text books. He wrote in the letter to his father: 'This is the type of son you've had and I have decided to change my life'. He gave the letter to his mother to give to his father, 'because I didn't have the courage to give it to him', he recalls.

When his father read it he summoned his son from the hostel to his room at their home. For five minutes his father didn't say a word. Then he said, 'I feel very sad that you have been up to all this mischief?. He gave his son a piece of his mind, but Rajendra noticed that he didn't flair up into a temper. Then, to his surprise, his father began to talk about the things he had got up to his own childhood. 'As he talked I could feel the generation gap, that wall from him, breaking. And I felt a respect for him, coming out of love instead of fear.'

Not long afterwards Rajendra borrowed his father's new transistor radio, when he was away on business and without his permission, 'to listen to the cricket commentary. Within a day it was stolen from his room at the IIT. He was overcome by fear of facing his father again. 'In a time of quiet reflection I knew I must own up by going to him straight away. When he returned two or three days later I told him and said I was sorry. He really raised hell and said I was an irresponsible young man. I knew I had to take this with humility and face the consequences.'

The effect of all this on Rajendra was to remove the fear he had of his father. He found it gave him the courage to discuss and disagree with him on business matters.

Rajendra Gandhi graduated in metallurgy in 1971, and at first joined his father's silk mill. But after reading a World Bank report on recycling, he asked his father's permission to start his own business.

'He really supported me,' says Rajendra. 'I didn't want to live in the legacy of what my father was doing. My decision to be honest with him gave me the courage to approach him; otherwise I might have remained under his shadow and control. Instead he allowed me to use family money to start my own business.'

GRRP made a cash profit of US$1.5 million in 2004 - 05, on a turnover of over $10 million, and now exports to 35 countries. But what most satisfies Rajendra Gandhi is to know that his plants, in Ankleshar, Gujurat, and Sholapur, Maharashtra, have given jobs to 500 people 'at well above the minimum wage'.