Read Passport of Gujarat: Hazardous Journeys
"GSFC is Just like a Titanic Ship. Each and Every body Smell their Death.
An Angel called Shri .Mr. A.K.Luke come to Our Rescue and He saved us.
After three yrs. Each and every body can sleep with peace of mind.
May God Send thousands Of such Angels to make Sare Jahan se Acchha HIndustan Hamara.
Good BYe Sir, We salute You, We Never Forget You."
- A GSFC employee
Six months after I joined this shattered company, GSFC was given a repayment package in September, 2003 for its
Rs 1000 cr. long term debt - Pay back in 10 years. We paid back Rs 1000 cr. debt in 30 months. No outside assistance. An unsung miracle. Never such elsewhere.
India's finest ever corporate turnaround ?
- A.K Luke
"I worked for those who could not pay me
I fought for those I did not know" - A.K. Luke
An Excerpt from the book
(Gujarat Alkalies and Chemicals Ltd.; Diwali, 1998)
Meanwhile back at the plant, there was some serious labour unrest to add to the excitement. For the first Diwali after I joined, we had no money to pay the kind of bonus they were expecting. We were literally spending yesterday’s collection to pay for today’s purchases. The workers had been paid ` 16,000 as bonus the previous year. As Diwali approached, they requested for bonus. In a reasonable tone they, appreciating the company’s difficult position, said they would not ask for an increase over last year, the same figure would do. I countered with an offer of ` 2,500, which I said may be paid with difficulty. This set them off on to 5 days of protest. My office was on the ground floor separated from the courtyard by a large pane of green one way glass. The company security instead of preventing the workers from agitating inside the plant assured me the glass was unbreakable. This was soon put to the test. One morning, when a demonstrator tried to rip off my air conditioner, he found some sort of a pipe in his hand which he threw at the glass. It held firm. After getting his name from the security, I suspended him on the spot. My senior officers at this stage came to my room and pleaded with me in an anxious manner not to be so stubborn and take back the suspension. Meanwhile, the din was continuing outside. The suspension would stay, I said. The next day the boy’s father came with him saying he had made a mistake and was sorry and it would never happen again. The boy gave an apology in writing. Based on this, the suspension order was revoked. My authority was restored. By now the officers were urging me to stand firm to the demands of the workers saying they were with me. They were probably feeling a bit sheepish about what had happened the previous day. Diwali was just two days away. So one section of the workers were saying that what the MD was offering was not unreasonable and let us be more flexible. The next day they brought Shri Madhu Shrivastava to plead their case. He had a sinister reputation around Vadodara and was known for ‘settling disputes’, whatever that meant.
He met me in my office along with two of his heavies. Two officers remained with me. Shrivastava put his hands on the table revealing big rings on each finger which looked like knuckle dusters to me. He was very reasonable that day though once or twice things threatened to explode between him and me. He was wearing some sort of a cap which he took off in a huff at one stage informing me that the cap would come back only after his will had prevailed or some such nonsense. His expression at times was that of a pious man whose patience was being tested to the breaking point. I told him the entire position of the company, its precarious condition and how we were committed to see that the workers long term interest was safeguarded. I talked to him as I would to a quick-witted business analyst and he showed by his gestures that, yes, he grasped everything I was saying. I do not think he put much importance to what I was saying even if he understood it. He was looking at my expressions to see if I was levelling with him. I kept on ordering tea and snacks for him. This went on for three hours interspersed with him going out to explain to the workers. His two sidekicks did not say a single word except to smile and nod whenever I looked at them. I began to look at them whenever I stressed a point and, sure enough, they nodded. At six thirty in the evening Shrivastava took leave of me with great politeness and went out. He reportedly told the workers that their MD was a good man and they should accept what I was giving. Then he left.
It was around 7.30 and quite dark.
Four days Diwali holidays were beginning the next day. I thought it was the right time to make my move. The workers were standing at the gate, leaderless. One of them came to my room and suggested I meet them. I decided to go to the gate and talk to them. The security officer advised me against it. But I felt one had to strike when the iron was hot. I talked to the workers at the gate. I asked them to trust me as the company was in a precarious state. Together we could rescue it. Nobody interrupted me which was a good sign. Then one of them said I should not have to stand in the open; we could go inside where they would listen to me. In my room about 50 workers had squeezed in along with my officers and a couple of police officers; the others were in the corridor. They listened to me for ten minutes and then one of them said my decision was acceptable to them because they trusted me. Our administrative officer announced that the amount would be paid the next day morning. Then they left. We decided to increase the amount to ` 3,500. In addition ` 1,500 would be paid as interest-free loan. They would have a good Diwali. In addition to this small gift, they were comforted by a hope that the future would be honestly fought for.
When I got out of my room to get into the car the workers were all round me. It was past nine. They wanted to shake my hand. I wished them all a happy Diwali. Even when the car began to move towards the gate they ran alongside waving to me. Sitting in the car I thought over the extraordinary events of the day and saw it as an ethical victory where everybody had won. The events were cathartic and I felt the exhilaration of a sudden draining away of tension. Madhu Shrivastava had behaved decently. He had asked me to increase the offer from ` 2,500 to ` 3,000 so that he could convince the workers but I had not agreed then though later on that evening we raised it to ` 3,500. Perhaps, I appealed to his good side, he had a good side and he sympathized with my difficulties. I was now convinced miracles could happen. We had won, we had all won, I had not won over them, I had won them over. Looking back today I see this evening as my finest hour.
Matter Of Ethics
PASSPORT OF GUJARAT: HAZARDOUS JOURNEYS
By Alexander K. Luke
Manas Publications, New Delhi, 2015, pp. 374, Rs. 795.00
VOLUME XXXIX NUMBER 10 October 2015
Books can often be likened to cricket matches. A T20 game is light and frothy. The results come in a single setting. A test match is leisurely. You need to invest both time and energy, but at the end, more often than not, it is far more pleasurable as your sense of participation and involvement is far greater.
Passport of Gujarat: Hazardous Journeys best resembles a leisurely test match. You require to read it carefully. And you should. It is about Ethics: practical ethics, in management of state owned commercial enterprises. Also in institutions like the Gujarat Housing Board, Fisheries, Labour Commissioner (and his fight to ensure minimum wage act implementation), Water Supply (everyone loves a good drought!) and revenue appeals, Riots and Tribal Development and others.
Alexander Luke was a bureaucrat but more often called a ‘turn around’ specialist. He was associated with, and credited for the turnaround of a number of enterprises: Gujarat State Fertilizers and Chemicals Ltd (GSFC), Gujarat Alkalies and Chemicals Ltd (GACL) et al. As also, Sardar Sarovar Narmada Nigam Limited, (The Dam!) comatose as it then was (in mid/late 90s) due to court cases and controversies regarding resettlement. The book is about these turn around stories and about why they could not have happened, unless the executive, the CEO, the doctor had not first imbued himself into ‘Ethical Behaviour’ in the truest sense. Fair play is playing fair with all stakeholders associated with the activity, not with one’s own self.
Luke was successful but not as a bureaucrat. He could not be. He did not play fair to his self-interest, often rubbing seniors on the wrong side. He was not a good bureaucrat. So he never rose high in the hierarchy and yet each time, there was a distress call, he was sent in. And once in, secured fair play, efficiencies and stakeholder satisfaction. Perhaps a sinking ship is like having a stone when there are two birds available. Send an ethic mired person in. If the ship sinks…well it is an ill wind after all that blows no good! But if he succeeds in reviving it, well… ‘That is a relief’. So wait till the storm has passed and it’s all clear. In today’s India, there are so many good bureaucrats around. Always ready to oblige. Send one of them in. And that difficult chap out!
But this is not a book about back-biting but about how to eradicate failure, to secure healthy organizations which are successful in meeting the stated objectives and benefit society at large, and as automatic corollary, eradicating corruption within the system. How do you build a healthy, successful, corruption free organization? Successful teams are built by empowerment, delegation and trust. By removing square pegs from round holes and placing them appropriately. Trust is possible, only if the CEO is aware, on a continuous basis of what is happening within it. In every square inch of it. He has to apply himself. All the time. Even if it involves visiting shops to compare market price of branded high quality taps /pipes etc., with that procured on considerations of ‘economy’/ climbing up and down the stairways of a newly built colony to physically inspect each house or even scrutinizing the ice packs required for long distance transportation of fish! It is personal. It results in institutional change.
In the commercial enterprises, Luke re-created the famed Marwari system of daily balance sheets and cash flows; which costs were fixed and inescapable; which were variable and thus controllable; why sometimes it made sense to sell just above variable cost, but below ‘average cost’ just to get higher turnaround and thus better coverage of fixed costs. He ensured everyone in the organization was so made aware. If the organization knows where the money is earned and where it is spent, everyone works at securing efficiencies in areas under their control. Empowerment secured enthusiasm of marketing teams to sell at whatever was the best selling price, even if it fluctuated daily without feeling scared of making errors. Ditto for the purchase and production teams. Knowledge and transparency eliminates dark corners where corruption flourishes. Treating unequals differently, and yet transparently and fairly, eliminates unhealthy rivalry and practices. Transparency with vendors and buyers and other stakeholders and an unbending commitment to fair play and quality benchmarks builds reputations—in any organization, in all organizations.
Luke was posted as MD of the Dam Project (SSNL) in January 1996. The Supreme Court stay at the behest of NBA due to inadequate rehabilitation effort had resulted in a near paralysis. The staff was sitting idle and demoralized. Contractors had not been paid for months and had stopped work. He spent time and effort in trying to understand what the project was about and the points of friction creating controversies. There were two parts of the project—building the dam itself. The disputes were regarding the permissible height and submergence differential. The second part was to build the canals to carry the water to the cities and farmlands. This was not under dispute. But all work had stopped. Luke realized that the canal work was more complicated and time consuming. It had to cross roads and rail tracks and river crossings. At places it would be like an aqueduct going over the river but in other places it would cross as a syphon wherever the river bed was higher. The engineering both for the dam and the canals was complex. But the contractors were also world class. It could be done. Whatever the dam’s height, canals were required. He got it going. The book tells how. For the dam, ethical behaviour required full and honest appreciation of concerns. Rehabilitation had to be actual and transparently self-evident. The book describes how this was achieved, stage by stage, foot by foot/ court session by session. The project moved and Gujarat changed.
There are 23 chapters, each about different situations and organizations. Each is readable. In between and in conclusion, Luke discusses and explores and evaluates the importance of ethical behaviour. And professionalism, work involvement and sustained supervision. Somewhat like how an ‘alaap’ by a skilled music entranced artist unfurls a ‘raga’. He distinguishes ‘ethical’ behaviour from the deceit practised by those who loudly proclaim their honesty but are silent (or maybe even unaware) of their own incompetence/lethargy. He brings out that the negative impact of a thoroughly and ruthlessly corrupt individual is often no more adverse on society at large than that of an ‘honest’ but ‘incompetent’ and/or an ‘indifferent’ one. In a number of places he evaluates what constitutes ‘bureaucratic successes’ and how oftentimes it is consciously secured even at the cost of societal harm. He talks about the ACR system, and how it is misused to promote mediocrity/ intra-service ‘tugs of war’ but also simultaneously exposes the myths bureaucrats create about ‘unbearable political pressure’ pointing out that it is used to explain away their own flexibilities oriented towards securing career (or other) interests and brings out that not once in his long innings did he ever experience even a hint of such a pressure. Only the willing are so pressurized! He brings out that ethical behaviour is both possible and viable for organizations, institutions, individuals and societies. And there are actually no costs attached. Only the will should be there. And the willingness to always proclaim: ‘follow me’.
There are two takeaways from the book: It can act as a useful tool kit for those who aspire to ‘serve’ while in public service. The second is implied. Luke was in service between 1975/2005. He feels and so do others, that Gujarat was a well administered state. If the fun and games he describes took place there, what would have been the case in the ‘Ahem! Ahem! ’ states? The votaries of a large State could profitably ponder. The scale of the state has exploded manifold faster than population/economic growth during the last 40 years. As has been the distress and the problems. Are only politicians to blame?
T.C.A. Ranganathan, an alumni of Delhi School of Economics and a former CMD of Exim Bank, is currently a freelance writer.
This review appeared in the periodical ViewsOnNews
TOUGH MEN DON’T LAST
BEING MORALLY UPRIGHT IN A WORLD OF BUSINESS AND POLITICAL MACHINATIONS IS NOT FOR THE FAINT-HEARTED. BUREAUCRAT ALEXANDER LUKE, LIKE MANY BEFORE HIM, LEARNT IT THE HARD WAY
BY VIVIAN FERNANDESWhen Narendra Modi became the chief minister of Gujarat in 2001, numerous delegations met him. Employees of Baroda’s Gujarat State Fertiliser Corporation (GSFC) was one of them. The company was making losses, the workers feared for their jobs and they beseeched Modi for the sake of their families. Modi sought some time as he was new to administrative matters. His officials said the choice was binary: loss-making state enterprises were closed down or sold off. Modi decided on a third alternative—that of reviving them.
GUTSY BUREAUCRATAlexander K Luke, a bureaucrat, was the official chosen. He lived up to the trust. When he took over in May 2003, GSFC was bleeding. Losses for the previous financial year had piled up to `383 crore. The stock price in the Bombay STOCK EXCHANGE was `17. The company had sought legal protection from creditors. The Reserve Bank had agreed to its bank debt being restructured. By the time Luke quit in November 2006, GSFC’s stock price was `185. In between, it had closed at a high of `243. It had not taken any money from the government and had prematurely repaid a 10-year loan. No worker was sacked. Luke ascribes the turnaround to “ethical management” by which he means doing whatever is good for an organization, regardless of personal consequences. At GSFC, he claims, he braved the displeasure of Chief Minister Modi by not agreeing to contribute `10 crore to the Chief Minister’s Relief Fund, as it was beyond the company’s capacity (he was vetoed by the other directors). While holding additional charge of Gujarat Narmada Fertilisers, he refused to implement a government order transferring the managing director of a subsidiary because (a) transfers were his prerogative and (b) he felt the executive deserved to be rewarded, not punished. Upon assuming charge at GSFC, he renegotiated a supply contract and got a giant petrochemicals company (no prizes for guessing) to pay the market price (almost double) and also cancelled a dealership that sat in between because it was not adding value to the `50 lakh it was getting in commissions annually. Cheekily, Luke says, the dealership belonged to a person whose name was similar to that of a Gujarat minister who is related to the family that owns the petrochemicals complex! Luke has written a 1,70,000-word book on ethical management called, Passport of Gujarat: Hazardous Journey. It is a 30-year personal excursion through the innards of the government. The book published by Delhi-based Manas Publications is due for release in January. It can be more aptly titled, “Why Government Sucks”. As labour commissioner in 1990-91, Luke carried on a rigorous drive to enforce the Minimum Wages Act. This offended a well-known garment exporter with multiple factories in India and also in Sri Lanka and Egypt. For his pains, Luke was transferred to the cottage industries department, despite withering comment in the media. Harish Khare (who later became Prime Minister Manmohan Singh’s media adviser) named the industrialist in his Times of India report, says Luke. Ela Bhatt, the founderof Self-Employed Women’s Association, popularly known as SEWA,interceded on his behalf with the chief minister, to little avail.
SHAMELESS EMBEZZLEMENTAs cottage industries commissioner, Luke found his officers indulging in brazen embezzlement. In Saurashtra, they held a public event attended by three ministers to celebrate the installation of 1,800 handlooms in the district— the year’s target for the entire state. But an investigation revealed that all but 56 were fictitious. Of the 1,050 registered cooperative societies which got grants and subsidies, 955 were found to be non-existent. That was in 1992. When MLAs and other political heavyweights complained that the investigation went against Dalit welfare, the chief minister arranged a meeting. Luke countered the charges with facts and figures. After the meeting, the chief minister complimented Luke. A week later, he was ordered out of the department. “I was a person of average intrinsic ability,” says Luke on his website, www.ethicalmanagementluke.com. “Ethically armed, I won luminous victories.” Luke is being modest. He studied in IIT Mumbai and was awarded the distinguished alumnus award in 2001 along with Congress leader and minister, Jairam Ramesh. For Luke, ethical management is not a call to piety. He has no use for the honest leader who plays safe. “Mine was not a moral crusade but a managerial strategy,” he says about his stint in the labour department. It could not function effectively if officers were venal. After regular field visits and relentless exhortation, he saw a change of heart. The head of the officers association even confessed to him that many officers had decided to desist from corruption till he was in charge. Perhaps, Luke was being flattered. Perhaps, they had decided not to be brazen in their self-aggrandizement. An ethical manager is not a lone ranger. Luke does not suffer the delusion that he is the solution. There can be no success without everyone pitching in. He recognizes competence in others, empowers them to take decisions and assures them of his backing. There could be no dithering; every meeting had to yield a decision. At all the struggling companies he headed, emphasis was placed on sound management information. Daily production, the total cost and item-wise break-up, the sales inventory, the stock of raw material, prices, sales realization, the maintenance cost and such other details were displayed for everyone to see. Workers found this empowering. They saw a causal link between their efforts and the company’s perform- ance. Even loaders gave preference to trucks serving markets that yielded higher profits.
HUMANE APPROACHEmpowerment does not mean being ingratiating. At the height of labour unrest at one of the plants, Luke suspended a worker for destroying the glass door of his office with a steel pipe. Indiscipline is not tolerated. But the suspension was revoked after an apology. When workers demand Diwali bonus which is beyond the company’s capacity to pay, he takes the union leader into confidence and wins him over with his transparent honesty. They settle for a much smaller amount. Luke believes that the major problems of modern society are ethical, though they may appear in other guises. Their solutions lie in ethics. India’s fiscal deficit can be plugged if money is spent on welfare as intended; if project costs are not inflated and money siphoned off; if taxes are paid honestly…. A few score “ethicals” can change India. Luke believes national resurgence is impossible without a critical mass of ethical elite being on the vanguard. These are pathfinders who are willing to fight for public interest. They will be a fraction of the power elite. A country’s greatness is determined by the numbers willing to cross over. The ethical elite must act as fifth columnists or Trojans for the sake of the many who are not as fortunate, and become traitors to their privileged class. This is not an act of heroism. It is selfishness of a noble, creative kind. Luke believes that altruism, like material possessions, satisfies a psychic need. Honest achievement raises self-worth just as worldly goods increase one’s net worth. This is not a novel idea. In his December 1922 speech to the members of Poona (as it was then called) District Law Library, BR Ambedkar mentioned “public conscience” as one of the “conditions precedent to the successful working of a democracy”. By this he meant the “conscience that becomes agitated at every wrong, no matter who is the sufferer, and it means that everybody, whether he suffers that particular wrong or not, is prepared to join in order to get him relieved”. Early in his career, Luke saw how the Mumbai plant of the Gujarat’s fisheries department was made to bleed and its 3,500 square yard plot sold in 1983 through a rigged auction for `9.5 lakh—about the same price at which it was bought two decades earlier. There are quite a few such instances. Most of Luke’s postings ended in unpleasantness for him. To not lose heart, Luke decided to work for the “mythical citizen” who does not have any vested interest and measures the success of officials by the extent to which they uphold public interest. “This was the oracle I would turn to when I sought answers. There must be an objective good. Search for it continuously and you would know what to do,” Luke tells himself.
COMPROMISED SYSTEMIn the end, Luke’s inability to kow-tow to the powers-that-be LEADS to his premature retirement. The denouement happens at a review meeting of the drip irrigation programme, entrusted to him by Chief Minister Narendra Modi. Luke sets up the Gujarat Green Revolution Company to persuade farmers to do drip and sprinkler irrigation through novel management practices. They pay half the amount, while the rest is paid by the government. But no cash changes hands. All payments are made electronically so there is a paper trail. Suppliers cannot scoot after selling equipment; they have to market the concept and appoint agronomists to hand-hold the farmers. A year later, Luke expects praise from Chief Minister Modi; he is criticized instead. “I told him his assessment was wrong and the scheme’s implementation was exemplary and was being welcomed in the field. My daring to do so resulted in a stunned reaction in the room after which he (Modi) remained ominously calm.” Luke asserts that the players,bankers,drip equipment suppliers and most important, farmers, were happy with it. The mention of farmers infuriates the ministers even more. “How could a civil servant, and one who was not too civil, talk about the farmers and what they felt? That only a politician could do,” said Luke. This is the nub of the problem. Luke believes that a civil servant works for the interests of the people or rather public interest, and he should directly interact with the beneficiaries during the implementation of any scheme. But politicians consider themselves to be the intermediaries. They tell the civil servant what the people want and it is the politician’s instructions that the civil servant should follow. They want the civil servant to be not a servant of the people but an instrument in the hands of the politician. “I rejected this assertion, particularly looking at the calibre of our politicians. But it is a fiction many civil servants maintain for their own convenience. This is the conflict that is now raging all over the country,” Luke says. No one takes on the chief minister and survives. Luke ascribes Modi’s spleen to the reasons mentioned at the beginning of the article. There is professional jealousy as well; the chief secretary and Luke did not get along. Luke is transferred as principal secretary, posts and telegraphs. It is a promotion but no sooner than he receives the order by fax, Luke puts in his papers. The chief minister summons him later and persuades him to withdraw his resignation. Luke insists that his transfer be rescinded. In the clash of two headstrong persons, one had to give in. Luke buys a one-way ticket to Kerala and flies out in the second week of November 2006, two years before his retirement. He now lives as a gentleman-farmer. When Luke resigned, Business Standard described him as a turnaround man. His ethical success, Luke says, is a reproach to the many professionals who have achieved it conventionally. This is a book that some of the better-known publishers should have accepted. Luke sent them the manuscript, but they sat on it or turned it down. Perhaps the title put them off. He should have disguised it as a book on wellness.
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