Hormis

Title: Hormis – Biography of K P Hormis, Founder of Federal Bank

Author: K P Joseph

Publisher: DC Books, 2016 (First published 2005)

ISBN: 978812641117

Pages: 294

 

This book is the biography of Kulangara Paulo Hormis (1917 – 1988), founder of Federal Bank, the largest private sector bank in Kerala. Even though unable to attract industry, Kerala was a fertile land for financial institutions of various kinds. With an early flourishing of money economy, the need to develop institutions to avail credit was felt among the local people and associations for running chit funds were fairly popular even almost a century ago. These funds slowly evolved into banks, but the very large number of such firms engendered instability and crashes. Eventually, consolidation among banks took place by mergers and takeovers. The Federal Bank rose as a very prominent enterprise in central Kerala led by Hormis, who rose from an ordinary family involved in agriculture and small scale trade. Hormis graduated in law and took over the bank to grow its business and assets manifold. The bank and its leader faced crippling restrictions during the Indira Gandhi era in which high growth would have made the government take over the bank ‘in national interest’. Hormis led the bank through severe crises and remained at the helm till Parkinson’s disease debilitated him. K P Joseph, who is the author, is a former civil servant and one-time consultant of FAO, UN. Joseph has worked in several places in India and abroad and is related to Hormis through his daughter’s in-laws.

 

Hormis had a good education by the day’s standards, having studied at Trichy and Thiruvananthapuram. After attaining a legal degree, he found that refurbishing a failed bank was easier than starting one from scratch. This saved him the legal lacunae in building up a Greenfield financial institution. Travancore Federal Bank was formed in 1931 at Thiruvalla, but had become dysfunctional a few years after. Hormis took over the bank in 1944 and transplanted it to Aluva. He rechristened it as Federal Bank in 1947. Unlike the typical businessman, he openly took sides in politics. Hormis always supported the Congress party and he made a brief foray into electoral politics through that party. In 1954, he contested and won from Perumbavur constituency of Thiru-Kochi assembly, defeating the reputed administrator-cum-writer Malayattoor Ramakrishnan of the CPI. He did not return to politics after that term was over, but lent support to the people’s liberation struggle to oust the EMS ministry in 1959. Hormis retired in 1979, but declined send-off as he waited for a re-appointment by RBI which did not arrive. This shows the amount of discriminatory power wielded by regulatory agencies over private enterprise. Hormis’ outlook for the bank was to promote economic development of the country with particular emphasis to Kerala. He wished to do intensive banking in the state by a network of branches in its every village linking them with branches in all important cities of India.

 

Even though a businessman, Hormis let his political opinion be known to everybody by running for the assembly elections on a Congress ticket. However, he respected the sincerity of early Communist leaders in Kerala, but bemoaned their utopian idealism, senseless violence and fundamentalist approach to problems. Gherao as a strike tool was first used in Kerala against Hormis. He was also manhandled by striking workers. This was only a small price to pay for entrepreneurs who chose to start business in Kerala in the 1960s and 70s. Hormis never believed that a violent revolution would liberate the poor from their poverty. It will only be through empowerment of the poor like inculcation of saving habit, development of social capital, promotion of entrepreneurship and extension of credit to ordinary people. The book presents a very short description of what happened to the banking sector under the first Communist ministry in Kerala. The credit-deposit ratio sank abysmally due to lesser advances. Stagnation in industry and agriculture ate into the profit margins of banking. The economic downturn is attributed to uncertainties in economy due to concerns over the state government’s policy. It also interfered with the deposit regimes of the banks insisting on atrocious and unheard of ratios regarding deposit liabilities and paid up capital (p.163).

 

Hormis was a devout Christian who faithfully practiced what his faith demanded. In addition to regularly attending church services, he contributed his sincere hard work to auxiliary church bodies like the Marian Sodality. While studying for law in Thiruvananthapuram, he joined the Catholic League and stayed in a Catholic hostel run by priests. This religious affiliation prevented him from joining political movements. Diwan Sir C P Ramaswamy Iyer banned political organisations clamouring for responsible government. This left the student community seething in anger. The church was also poised against the diwan due to his perceived antipathy to Christian entrepreneurs in the state. But at this time, Archbishop Mar Ivanios became friendly with the diwan who then gave permission to start a school which later developed into the Mar Ivanios College. Even though a fairly religious person, Hormis retained his power to spot talent in others. While in the bank, he employed people of all faiths in positions of responsibility. His thoughts sometimes proved prophetic. He recommended disinvestment of government equity in existing industries as a way to finance new industries. He had done the homework well and suggested in the legislative assembly to liquidate the shares in Travancore Rayons and Aluminium Industries at 60-70% profit per share and reinvest the money.

 

The author was a civil servant and this book is probably his first. Joseph has employed a condescending style in the book. After writing a paragraph on Hormis, he would churn out several pages on Indian history or political movement of the time even though these may have no relationship to the subject under discussion. The shortsightedness of the author’s vision is amazing. He quotes from a speech made by Sonia Gandhi – whom he calls the architect of the new government that took over in 2004 – and claims that Hormis’ vision was not different from Sonia Gandhi’s! I am sure Hormis wouldn’t have felt flattered had he been alive. Moreover, the author shows an unwarranted partiality to Christian religion throughout the narrative. In one instance, he takes pride on his religion not recognizing castes. While describing the funeral services of Hormis, the author remarks that ‘of all the religions, Christianity is unique in dealing with human life here and hereafter with great optimism and sense of triumph. Of all Christian denominations, Catholicism treats death with the greatest of dignity’ (p.280). He then goes on to reproduce verbatim the church service with prayers and all devotional chants.

 

This book builds a biography up from scratch even though the author seems to be not personally acquainted with the protagonist. For the first thirty years of his subject’s life, the author does not have a clue and looks like using information from a biodata to make the biography. He has not bothered to interview people who had personal friendship with Hormis. This omission leads to a bland narrative that doesn’t do justice to the legendary person. To make up for the shortcoming, Joseph uses his imagination to fill the gaps in. For example, he tells that Hormis went into a reverie of his past life while lying in a hospital bed in a serious condition from which he never recovered. He then lists out a summary of his life as the dying man’s ‘thoughts’. In another part, the speeches made by Hormis and other VIPs on inauguration of new bank branches are reproduced in full. Then comes lengthy quotations from the Bible, Indian and Kerala histories and works of Nehru. These material fill up almost half of the book. Writing sixteen years after the death of his subject, the author is hard pressed to make reading material. The overall impression is that the author has failed to do justice to Hormis’ memory in this book. Incidentally, the book’s reluctance to discuss the thorny issue of bank nationalization in 1969 and how it threatened the comparatively larger Federal Bank is highly disappointing.

 

The book is recommended.

 

Rating: 2 Star

 

The Story of FACT Ltd

Title: The Story of FACT LTD - A Study in Public Sector

Author: T T Thomas

Publisher: Excel Books, 2004 (First)

ISBN: 8174464034

Pages: 212

September 30, 2001 dawned as an uneventful Saturday for the employees of the Fertilisers and Chemicals Travancore Limited, one of the leading state-owned fertilizer companies in India and located in Kochi, Kerala. Being the end of the month, a few people were bound to retire from the services of the company on that day. Little did they know that in a government office far way in the national capital of New Delhi, an order was signed the previous evening reducing the retirement age of the company from 60 to 58 overnight. At the stroke of a pen, this nullified the services of 378 people who had already crossed the age of 58. A confidential order was prepared in the company, listing out the names of the 378 unfortunate personnel under the strict supervision of a General Manager of the HR department, whose name was the first in the list. The people knew of the decision only after they reported for duty in the morning. Some were on leave that day and one person was on an official tour to central India. Such excuses did not avail, all of them had had to leave the company that day itself. The shock, consternation and dismay felt on that day were simply indescribable, somewhat comparable to what 9/11 must have appeared to Americans just 19 days before. Some of them were literally shattered by the decision, but put up a brave face for their colleagues. In fact, their co-workers were inconsolable at the end of the day. Setting aside the human factor for a while, don't you think that a company which takes such momentous decisions on the fly would be among the Fortune 500 list, or at least an incumbent among the Maharatna companies in India? Unfortunately, nothing is farther from the truth. It still pulls on, wiping away the last rupee of its net worth in a mounting burden of debt and losses. This book is the story of the company as told by one of its Chairmen-cum-Managing Director of the company. T T Thomas joined FACT Ltd in 1963 as an executive trainee and climbed steadily up the corporate ladder till he adorned the topmost position. He was also the president of the All India Management Association (AIMA) and treats us with a very pertinent survey on the state of public sector enterprises in India prevailing in the year 2003. The story of FACT is generally representative of the state of public sector in India.

FACT was founded in 1943 in the princely state of Travancore in South India in the immediate aftermath of the horrendous Bengal famine which killed an estimated 2.5 million people. The enlightened king of Travancore, who had granted temple entry rights to depressed castes seven years back, immediately saw the need to increase food production in the state by scientific means. The early years of the company witnessed some novel chemical processes instituted for the first time on an industrial scale. Trees were cut from the evergreen forests of Idukki, transported through Periyar River to Aluva and gassified to make ammonia for the production of ammonium sulphate. Gradually the company expanded its product range to include urea and complex phosphatic fertilizers. Quite unusually in the fertilizer industry, a second production division was granted to the company at Ambalamedu. In the 1980s, it diversified into petrochemicals with the production of caprolactam, a raw material for the manufacture of nylon filament yarn. A complex brew of internal and external factors made the company slip into the red with the setting up of an ammonia plant at a huge cost which was unnecessary and unwarranted by the circumstances. The loan burden and the crippling interests brought the company to its knees, which was somewhat alleviated by a loan write off and conversion of debt to the government as equity. It has since stopped the production of urea and caprolactam and struggles on under the wings of its legendary product Factamfos 20:20 which is an excellent nutrient in the farm sector and have a near universal acceptance in South India. The enterprise’s early years were of technological innovation and growth. It was financially strong and technologically advanced. This book tells the story of its journey from riches to rags.

Many of the managerial lapses described in the text specifically concern the operations of FACT and are not much relevant to general readers. Thomas condenses the illnesses afflicting the company on more than one occasion. Non-accountability of poor performance, assigning no value for time in decision-making, fear of crucifixion for bold decisions, observance of the rituals of procedures and an aversion to profits as a desirable objective are some of the things which he remembers from his career stretching to more than three decades. Decision makers had no sense of ownership of the company. There was also the pathology of satisfactory underperformance, a state of contentment where in the incumbent management is happy with the state of the company though it is underperforming on vital parameters like return on capital employed, profits, profit margins and so on (p.85). To add to the trouble, there was no stakeholder pressure on the company, the owner being the government. The author points to the presence of officers’ unions which vitiates the atmosphere. The trade unions were circumscribed by laws such as the Industrial Disputes Act, while managerial unions did not have these limitations. They often intimidated the senior management with tactics such as the threat of vigilance enquiry. Political intervention under the aegis of forums such as the Save Fact Action Committee eroded the clout of management. Unions and their political connections could decide things in the long term and management got marginalized. Thomas wants the workforce of FACT to open their eyes to truth. They wanted to believe that deregulation of fertilizer industry, globalisation, government’s ‘wrong’ policies or some extraneous factor did the company in. This may be true, but equally responsible are the internal issues such as excess manpower, low productivity, restrictive practices, total absence of cost consciousness, a floating group of workers and officers’ union office bearers and a generally laid back atmosphere. What still saves the company is an established customer base, a historically developed distribution channel and a strong brand.

Like any of the management experts in the post-liberalization era, Thomas blames the license-permit raj brought in by Indira Gandhi when she swerved the country’s economy dangerously to the left. FACT has been a victim of this flawed policy during its expansion phase at Ambalamedu. It wanted to establish an ammonia plant there. Proven enterprises in the UK, US and Japan were ready to transfer technology but only in lieu of payment through foreign currency. Indira’s regime was loath to part with foreign exchange. In its search for second-rung manufacturers, the company encountered Montecatini Edison of Italy, who agreed to provide financial assistance. They, however, did not have experience in designing large single stream ammonia plants. The plant was mechanically completed in 1971, but could be commissioned only in 1973 due to a long series of technical issues. It was also beset with problems from the very beginning of its operational career. The supplier’s credit on procurement limited the company’s ability to source critical machinery only from Italy. The plant could be run at full load for the first time in 1990, after a lapse of seventeen years since commissioning. A mirror image of the plant at Durgapur in West Bengal was closed down in 1994 while FACT’s plant was taken down in 2001 for good.

The book is graced with many annexures containing charts and tables supporting the major arguments. Detailed narrative of the author’s legal battle to get appointed as the marketing director of the company is superfluous in the larger scheme of things. The book’s sole focus is on the story of FACT, the evaluation of the public sector in India is mainly an extrapolation of the logic applicable in FACT’s case and presented as an afterthought. Some old photographs of the company’s early operations would have added immense interest and impact to the narrative.

The book is strongly recommended to students of management.

Rating: 3 Star

The Making of the Madras Working Class

Title: The Making of the Madras Working Class

Author: D. Veeraraghavan

Publisher: LeftWord Books, 2013 (First)

ISBN: 9789380118161

Pages: 358

The transition from feudalism to capital took place in India under British vigil. A large labour force was required to operate the industries set up by white and Indian capitalists. This void was readily filled by ruined peasants and artisans whose way of living was devastated by the socio-economic changes the country was undergoing. The workers experienced a whole new life in the factories and the squalid nearby slums where they had had to put up with unhygienic living space and fatal diseases. Unorganised as they were, they could not present any opposition to exploitative practices followed by the factory owners and their cautery. Eventually, they organised themselves and resorted to industrial action such as strikes. Trade unions developed later and provided much needed influence on people who mattered and extended coordination with workers in other industries. As the class consciousness grew among the labourers, the trade unions were co-opted to serve as mere appendages of the political parties. This book encapsulates all the trade union movements in diverse industries in Madras city (now Chennai) and its environs from their origins in 1918 to the outbreak of World War II in 1939. Dilip Veeraraghavan obtained BA, MA, M. Phil and PhD degrees and joined IIT, Madras as faculty in history. What makes this a unique achievement is the fact that he was the first visually challenged person to acquire a doctoral degree in Tamil Nadu. He suffered from retinitis pigmentosa, an eye disease known to afflict the offspring of close-kinship marriages from an early age. This incurable ailment snatched the faculty of vision away from him while in school. Veeraraghavan remained a staunch supporter of the left till the end.

The early phase of industrial work was characterized by long working hours. However, the claims of 20-22 hours in rice mills and 22 hours in printing presses are doubtful. The Factory Act of 1911 limited the daily hours to 12 and the legislation in 1934 further cut it down to 9. It is also to be kept in mind that until the Factory Act of 1891 came into effect, a seven-day working week was the norm. Remuneration was preferential and followed racial lines. European and Anglo-Indians were paid two to three times higher than Indian workers. Much heartburn and resentment brewed on the shop floor due to such racial discrimination. As a prologue to the main discussion, the book presents the cases of pre-Union strikes in Madras industry. The first ever strike took place in the Buckingham Mills in 1878. The strikers’ demand was to close the mill at noon on Sundays. In 1889, the striking workers at nearby Carnatic Mills wanted a weekly holiday. However the management imported outside labour and broke the strike. The collective action before the entry of unions was marked by sudden outbursts of violence and destruction, when the system lacked the institutional safety valves of grievance settlement procedures. On that count, trade unions ushered in an era that was conducive to healthy relations between the owners and workers of the factory. Agitations became more disciplined after the formation of trade unions making it better for the management to deal with the workers.

The First World War crafted great changes in society and the stage was set for something radical. The frenzy of war-time production gave immense profits to the industrialists and handsome dividends to equity holders. However, the wages inched up just a little while the commodity prices shot up through the roof. Madras city saw food riots taking place in its streets. Nationalist fervour in the newly rich Indians found expression as new factories. The October Revolution acted as a catalyst for organisation and unity among workers. The Madras Labour Union was formed in 1918 among the textile workers of B&C Mills under the guidance of Selvapathy Chettiar and Ramanjulu Naidu. Its first president was B P Wadia of the Home Rule League. The trade unions were formed for the specific industry or trade and not craft-based. Early worker movements did not go beyond economic demands specific to each factory. Social or national revolutions were not at all in the picture. The unions differed from trade guilds. As industry developed on capitalist lines, the guilds declined and a need arose for workers to combine separately from their masters. The growth of trade unions was attested by the Presidency-wide labour conference held in 1920 in which 13 unions participated.

Veeraraghavan lists out some anecdotes of labour relationships which we find difficult to conceive in this age of vigilant labour. Early delegations of workers were not given seats in the discussions with the factory bosses and were forced to present the case in individual capacities. The dearness allowance (DA) which is now an integral part of any pay package was unheard of when the workers were disorganised. The DA compensates for inflation and casts a safety net around workers from ever rising prices. It made its appearance in 1907 to keep up with the rising cost of living. During World War I, many companies opted to pay a ‘rice allowance’ to its workers. A curious case is that of the nationalist newspapers like ‘The Hindu’ which sided with the workers when they went on strike in other industries. But when their own employees downed tools, these newspapers fought them tooth and nail.

Trade unions and strikes were inalienable tools of the working classes to wrest their rights from the capitalists. While this fact is proven beyond doubt, the rise of militancy and irresponsible activism are evident in the 1920s itself. The tramway workers obtained higher pay by strike. This infuriated the employees of Madras Electric Supply Corporation who were inured to the belief that they were entitled to a higher pay than their brethren who drove trams. Their strike was so violent that the city plunged into darkness. Sabotage and intimidation of strike-breakers were rampant as were tampering with overhead lines, removal of fuses from public mains and damaging the insulators. Bus workers once resorted to action when the police started to book them for traffic violations. Demands to reinstate workers who were dismissed for stealing or assaulting their supervisors were common. However, the author treats such action as quite natural and essential for development of the class spirit.

Political parties are known to encourage feeder organisations among labour. This book traces this influence from its origins. The 1919 Amritsar session of the Indian National Congress decided to involve itself in the labour movement. The first umbrella outfit, the All India Trade Union Congress (AITUC) came into being on October 31, 1920. The author accuses the Congress leaders of not belonging to the working class. However, this applied brakes on labour militancy. Labourers were used in the mainstream political agitations of the Congress. However, the sudden withdrawal of non-cooperation movement in 1922 resulted in a period of lull and quiescence in the industrial sector till 1933. This was also on the heels of the collapse of big strike actions. After the provincial legislative elections were held in 1937, the Congress assumed power and the noted trade union leader V V Giri assumed office as labour minister. This emboldened the workers to resume militancy and increase their bargaining power. However, the author takes the few cases when the government had to intervene to preserve law and order to claim that the Congress government was anti-labour. This might be a politically motivated allegation. Support of political parties helped the workers to coordinate with their colleagues in other factories. When the employees of Madras University and SPCK press went on strike in 1920, the printing jobs were assigned to the government press, but its compositors refused to take up work which originally belonged to other presses.

A crucial milestone in the labour movement is the appearance of Communist parties which sought to assume the role of fighters of the proletariat. Veeraraghavan makes the event to be of profound significance, but nothing much seems to have occurred in the brief time period the book covers. Early work in this direction by Singaravelu and his Labour Kisan Party of Hindustan (LKPH) founded in 1923 are described. Amir Haider Khan, with his strong ties to the Communist International is another noted figure. His Young Workers League of 1932 unified young revolutionaries of South India. With Khan's arrest, P. Sundarayya assumed leadership of the socialists which was another moniker used by the Communists. The Great Depression of 1929 was a troubled period for capitalism. The communists ‘almost’ celebrated the fall of capitalism, raking up outdated predictions in Marxian theory. Industrial activity fell around the world leading to widespread retrenchment and wage cuts. It was also the time when Soviet Union was riding high on the wings of its false propaganda of the success of the Five-Year plans. Nobody knew about the horrific pogroms and wholesale human rights violations taking place in that country and Communism could parade its first colony as a haven for the world's proletariat.

The book sports a good foreword by A Venkatachalapathy which gives a synopsis of the author's life and brief carrier. He died at the age of 51. A very comprehensive list of the strikes taken by workers in various industries is included. A separate chapter to describe the legislative action which took place in the period would have added much value to the narrative. It also includes brief biographical accounts of prominent leaders of the trade union movement.

The book is highly recommended.

Rating: 3 Star