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Building on a 150-year-old legacy
Posted

by: Mitali

shah Posted

date: August

11,

2015 In: Features, Uncategorized | comment : 0

Shapoor Mistry, chairman, Shapoorji Pallonji, and his team chart the
companys growth and share their vision.
BY JAYASHREE MENDES
The concept of genius, be it in the artistic or business realm, continues
to fascinate, thanks to its rarity and the uncertain nature of how it arises.
Without a sense of professional purpose, starting a business that will
outlive several generations cannot be a morale booster. And so its with
Shapoorji Pallonji. The Indian-based infrastructure conglomerate, with
interests in infrastructure, real estate, textile, power, biotechnology,
among many other things, started out as a partnership firm in 1865.
Even way back then, the company built projects that continue to stand
today as iconic structures in the city where they have been built. As of
now, the company has many firsts to its credit and has remained at the
forefront through the decades and tops several of its rivals in some
regards.
Today, Shapoorji Pallonji joins the exclusive club of companies to have
survived 150 years, a rare feat accomplished by constantly adapting
through the tumult of recessions, technology shifts and succession into

new

ventures.

Speaking about the 150-year brand, Shapoor Mistry, chairman,

Shapoorji Pallonji, says, As we celebrate 150 years of our existence, I
am reminded that enduring institutions like ours learn from the past
and do not lean on the past. Indeed, we use the past to build the future!
Today, the group stands tall in key areas of the economy such as
construction and engineering, infrastructure, real estate, water, oil & gas
and renewables, amongst several other businesses, as we are ready to
take

on

new

opportunities

in

India

and

overseas.

Staying on top of any industry is a feat. But adding to Shapoorji Pallonjis

accomplishment is the fact that its the only Indian-born company to have
a worldwide presence in 43 countries with a 35,000 workforce and
continuing to execute mega infrastructure projects globally that help
chart

countrys

vision.

At a time when trends are moving so fast that many companies in the
industry tend to rise fast only to flame out, Shapoorji Pallonji
demonstrated a strength shared by a handful of 150-year-old companies:
the ability to change. Jai Mavani, group M&A, strategic finance and
family office, Shapoorji Pallonji, says, To a large extent the senior
management in SP Group is highly empowered. Every deal has its
own parameters and requires a nuanced balancing of our own
competencies iterated with external scenarios be it market,
commercial, political or regulatory. Every decision taken must have a

perspective that we are living in complex times and there is a Black

Swan lurking somewhere. It is extremely important to have a Plan B
in

place.

The Indian-born-gone-global firms legacy as one of the nations most

enduring companies has been due to its rare blend of ingenuity,
persistence and a strict adherence to its core objectives summarised by
its motto, Built to Last. It has risen over the years riding the surge of
building mega infrastructure projects such as Indias first FPSO (floating,
production, storage & offloading), Terminal 3 for the Delhi International
airport (interiors, electrification and DG back-up), the Valarpadam rail
bridge (Indias longest rail bridge stretching 4.62kms), the Samalpatti
power plant (a 106MW liquid fuel fired power plant and the first in India
certified for Work Place Organisation system by AOTS Alumni 5S Forum
India)

and

all

this

without

abandoning

its

core

tenets.

The FPSO Armada Sterling is functional for Oil and Natural Gas
Corporation Limited (ONGC) at the D1 field, 200km offshore from
Mumbai. It presented the company with major challenges such as
designing a permanent mooring system for the extreme monsoon off the
west coast of India. The internal turret mooring system, the first for the
company has been specifically designed for severe monsoons prevalent
in the field with maximum wave height of 21.4 metres.
Sustainability has always been part of its smart business practice.
Actions to use renewable energy, recycle building materials, reduce

waste and conserve water are grounded in economic decisions to

help reduce operating expenses and mitigate energy price risks.
It is our focus on relationships, our technological excellence, our
willingness to try new things and a culture of persistence to achieve our
goals

that

makes

us

stand

apart,

says

Mistry.

K Subrahmanian, VC & MD, Afcons Infrastructure Ltd, says, The growth

has been driven mainly due to diversification. Since 2005 we have
diversified into segments like offshore oil & gas, underground
metro, increasing order books of Rs 600-plus crore, entrenching
ourselves firmly as an EPC player, and steadily increasing our
footprint in the international market. Our strong alliance partners in
the global market have helped us bag bigger and more complex
projects. Afcons, the infrastructure arm of Shapoorji Pallonji, has
formed strategic alliances with global EPC players like Saipem, IHI,
Strabag S E, Transtonnelstroy, Technip, Gunanusa, etc. Currently,
the company is executing some complex and interesting projects that are
under execution: Rohtang pass tunnel, the longest tunnel in the world at
an altitude of 13,000-plus feet; Chenab bridge, the tallest railway bridge
in the world; Chennai Metro; Kuwait Sulphur Jetty; and Lucknow Agra
expressway.
In all this, safety ranks first for the company and is in its DNA. The
company has well formulated guidelines and EHS policy which is in
line with international standards. The management has fully

empowered project teams to take all measures to ensure a safe

environment. The systems have been also certified as per ISO
14001:2004 (for EMS) & OHSAS 18001:2007 (for Occupational
Health & Safety Management). Irrespective of the size of the project, to
ensure safe working conditions of the staff, the company takes many
measures. From establishing site safety to implementation of companys
HSE policy at site with a safety plan, safety induction, hazard
identification

&

risk

assessment

(HIRA)

are

some

activities.

The increase in market potential has not only resulted in vast business
opportunities but also increased international competition. M D Saini, MD
& CEO, Shapoorji Pallonji International FZE (SPINT), says, As
compared to India, what is unique to Middle East North Africa
(MENA) region are cultural diversity, adequate skilled resources,
stringent regulatory environment in some countries, and wideranging

contractual

obligations.

With a strong sense of purpose, the company upgraded its offerings

by developing in-house design capabilities. Today a considerable
proportion of the order-book is on design and build. In another move, it
constituted

an

exclusive

technical

excellence

team.

The

responsibility of the team is to ensure all value engineering on the

project and bring in relevant new technologies to expedite the work
for timely completion.

Its imperative that any global company with an international

footprint undertake a robust customer and project due diligence
built on strong internal goals so as to push limits. Pawan Parikh,
CEO, Shapoorji Pallonji Engineering Procurement & Construction, says,
Before we bid for a project, we carry out detailed due diligence of the
project and the sponsors. We also take support, in some cases,
from major consulting firms to evaluate project risks and probable
mitigation measures. Sometimes, if we find the project to be risky,
we

decide

to

not

bid.

At the Group, the team periodically evaluates the portfolio of

businesses it is in on several dimensions, including the market
dynamics and outlook, the competitive positioning and capabilities.
This throws open ideas in terms of existing business lines that
need greater focus (in terms of investment, talent and other
capabilities), adjacent business lines to be considered for entry, or
even new opportunities, says Shankar Krishnan, group head, strategy,
Shapoorji

Pallonji.

The company has had, for some time, the practice of holding strategy
conclaves for key businesses. This is an immersive and
interactive process of discussion, engagement and, eventually,
alignment amongst the senior executives on the strategy. It has
been my endeavour, and that of my colleagues in the group
companies and the group centre, to take this process forward and

institutionalise

adds

it,

Krishnan.

Umesh Khanna, group head, coordination, says, A prime focus when

negotiating contracts is on quality and ability of client to reciprocate to
quality, lifetime cost benefits, and relationship; obligations and
earnestness

thereof

to

deliver

and

acknowledge

the

perceived/committed benefits within agreed time & cost line; and the
balance that terms related to payments, timeliness, LDs, etc. create to
assure

win-win.

Companies that last almost always put making money secondary to a

broader and more ambitious stretch goal. In this light, a strong focus
and a recent foray has been the companys entry into solar power.
The Indian government has announced an ambitious target of
achieving 100,000MW of solar capacity by 2022. With the groups
financial strength and in-house expertise in taking up EPC work for
such projects, it has plans to significantly increase participation in
solar

generation

projects.

Mukundan Srinivasan, MD, Shapoorji Pallonji Infrastructure Capital Co.

Ltd says that in the power sector, we invest in and develop projects
offering long term power purchase agreements (PPAs) with credible
counterparts, thereby providing stable revenue streams. For
instance, our solar projects have PPAs for 25 years, hydro for 35
years and in case of thermal power projects between 22 and 25
years.

In addition to the super critical 1,320MW power project in Gujarat,

Shapoorji Pallonji is pursuing gas-based power generation projects in
Africa and South East Asia. We are also implementing grid
connected solar projects in India and Africa. Renewable energy is
our focus and we are working to scale up our development
activities in the area of grid connected solar and hydro power
projects,

Srinivasan

adds.

The Africa venture appeared on the horizon when Shapoorji Pallonji was
awarded a contract to construct an IT Park in Mauritius. Buoyed by the
Mauritius foray, the company decided to venture into other countries in
Africa, Latin America and Southeast Asia. The outcome was the Africa
Business Centre (ABC) set up in 2007 to play a catalytic role to win
contracts. We bagged the first job in Ghana to build a seat of the
government. The ABC has helped group companies penetrate the
region and spread their footprint across Africa, including Sierra
Leone, Liberia, Cote dIvoire, Nigeria, Zambia, Rwanda and
Ethiopia. Products made by SP Group companies are also being sold in
Africa, says S Kuppuswamy, advisor, group finance and special projects,
Shapoorji Pallonji.
Construction has always been at the forefront of the Shapoorji Pallonji
Group. However, doing business in a resource driven economy has its
own challenges. Kekoo Colah, CEO, Shapoorji Pallonji Real Estate

(SPRE), says, Despite the challenges, our focus remains on delivery

excellence: on time, with the best quality, delivering on commitment and
further building upon the huge bank of goodwill and reputation. Our
projects like SP Infocity Pune, SP Infocity Chennai, Shukhobrishti, and
The Imperial have been recognised by national and international bodies
for

excellence

and

uniqueness.

SPRE has also been a pacesetter in evaluating alternatives to

conventional

construction

methodologies.

From

deploying

aluminium modular formwork systems like Mivan, Kumkang, Peri,

Doca and Durand to reduce slab cycle time to being the first to
introduce power distribution thus using rising mains and reducing
the number of cables, the companys real estate projects
incorporate them all. In 2006, way before affordable housing became a
buzzword, SPRE signed a development agreement with West Bengal
Housing

Infrastructure

Development

Corporation

Ltd

to

build

Shukhobrishti in Kolkata, the largest mass housing project in India.

Its well-known that long-lived companies dont take wild risks with
their businesses. They carefully protect their finances as well.
Considering that a large number of older companies take on
enormous projects, they often have huge capital needs and
widespread operations, yet they resist the temptation to load up on
debt.
Mahesh Tahiliyani, finance controller, Shapoorji Pallonji, says, The

controller has to organise a team for details, but get into details only
when necessary. The key is to get the right people who will deal with
technical

issues

in

commercially

savvy

manner.

Lasting companies have goals that keep their employees motivated

through the decades. They routinely have new businesses strategised in
group meetings and are constantly pursuing future businesses.
Innovation is a prerequisite to survive. Vasant Sanzgiri, group head, HR,
Shapoorji Pallonji, says, A multinational group like ours will always
require a steady pipeline of leaders and creating this is of paramount
importance. We follow a three-pronged approach to meet this
requirement: Hiring people with experience from top business
schools; developing our middle management to prepare them to
take up senior management responsibilities; and a programme for
senior managers to take top responsibilities. This, we believe, will
create a pipeline of leaders in the group who will steer the group to its
next

level

of

growth.

In many ways, Shapoorji Pallonjis pursuit of working is symbolic of what

makes companies last. Its not surprising that the company is moving
ahead because they are innovators. They would not be here if not for it.
JAI MAVANI, GROUP M&A, STRATEGIC FINANCE & FAMILY OFFICE
You spearhead acquisitions for the group and look after M&As.
Considering that Shapoor Mistry is known to have a keen eye for
diversification and expansion, what are some of the experiences you

bring

to

the

table?

Strong corporates like Shapoorji Pallonji are always preferred port of calls for
investment bankers. Especially in times like these, where significant distress
opportunities are doing the rounds. The challenge is distinguishing between pure
financial plays and opportunities which bring in a long term strategic fitment,
be it in terms of technology, market segment or newer geographies.
This calls for a disciplined analysis and a conviction to walk away whatever be the
temptation, if it does not fit into the strategic investment criteria. Else, one may be
exposed to the same risks which many infrastructure companies in India suffer when
they bid for projects with a valuation perspective instead of a sound cash-flow
analysis.

The real estate and infrastructure business is all about perception of risk,
and creating a market for investment grade assets. How does this work
in

your

role

at

SP

Group?

Both the infrastructure and real estate sectors in India are in its second stage
of evolution. The first was based on irrational exuberance on the back of
deluge of foreign capital and irresponsible investment approaches mainly
between 2005 and 2008. Very much like one saw during the dot-com boom and
bust of early 2000 which was thankfully followed by a more responsible
approach to investments. Hopefully, we will see a similar approach in infrastructure
and

real

estate

as

well.

Already there are green-shoots of regulatory reform (e.g. real estate regulatory bill)
as well as financial evolutions (REITs, 5/25 schemes for infrastructure finance, etc.)
Being involved as an advisor and consultant while many of these reforms were being
drafted helps me in bringing a holistic overview as opposed to a transactional
approach. Also understanding global good practices (and mistakes) is useful.

K SUBRAHMANIAN, VC & MD, AFCONS INFRASTRUCTURE LTD

What are some of the methods you employ to ensure that you complete
your

projects

on

time,

which

is

your

USP?

To ensure continued success in international EPC environment, our philosophy of

operational

excellence

is

necessity.

The operational excellence model encompasses operational efficiency,

productivity, innovation and commitment to delivery to all stakeholders.
As a part of our execution strategy our mantra is simplification. Through an indepth study of the design and methodology, we work towards developing
solutions

that

lead

to

simpler

construction

methods.

We have even gone beyond our scope and proposed changes in design when we
feel it leads to earlier delivery of projects.

You have often stressed on your commitment to the environment. What

were

some

of

the

steps

adopted

to

pursue

this

goal?

Afcons believes in supporting communities impacted by its activities. Initiatives taken

at sites include

skilling of local labour, fulfilling local infrastructure

requirements, and assistance during difficult conditions such as flooding, etc.

In Liberia, we developed the local workforce. As against employing 30% locals,
we employed 77%. We installed hand pumps at Buchanan site, donated two
ambulances, constructed markets and huts for villages, among other things.
In India, we dug two borewells every kilometre of the entire 64-km stretch during the
execution of the Jammu-Udhampur Highway project, refurbished a school (at
Sangaldan) and an old-age home (Ulundurpet). We have been an ardent supporter
to flood victims in Uttarakhand and J&K.

KEKOO COLAH, CEO, SP REAL ESTATE

You have earned a reputation for building landmark buildings. In an

environment that is so nebulous, how does it feel to conduct business in
an

economy

that

brings

its

own

challenges?

Even as the Real Estate division has earned a reputation, it faces challenges. For
one, real estate development, like some other sectors of the economy, is cyclical.
Other issues such as land acquisition, seeking developmental rights and certainty of
titles, to obtaining permissions and complying with all statutory requirements, is a
tedious,

complex

and

time

consuming

process.

Real estate sector depends primarily on capital, labour and materials.

Minimising uncertainty in availability of any of these resources is the key to
operating in this environment. To that extent, a differentiating strength of SPRE
has been its ability to add value to its clients and customers across the real
estate development value chain by utilising the services of other group entities
design, construction, faade materials, MEP, HVAC, solar power, water.

At a time when affordable housing is the focus, it is a common refrain

that land should also be made affordable. How can such projects be
executed

with

ease

in

city

limits?

Land costs are one of the most important determinants of affordability in real
estate. With affordable land available sparingly within city limits, such projects tend to
be located on the outskirts of metros. As employment opportunities continue to be
provided mainly within city limits, it becomes imperative that the government along
with other stakeholders incorporate holistic economic planning for each of our cities.

M D SAINI, MD & CEO, SHAPOORJI PALLONJI INTERNATIONAL

FZE

You have completed 30 years with Shapoorji Pallonji. Could you sum up
your

learnings

as

the

Group

celebrates

150

years?

Ive always looked at challenges as opportunities and learnt to give 100%. If one can
develop a passion for what one is doing, then I think any obstacle can be overcome.
My vision was to develop the company into an internationally reputed, total solutions
company, which delivers best quality, based on superior technical expertise and
project management capabilities. Today, with an order book of around $4.0 billion
and expected revenue of over $1 billion in 2015-16, we have established the
foundation for another 150 years.

In terms of EPC, what are some of the design-build and construction

advancements

you

have

taken

ahead

globally?

As a strategy, we desire to increase Average Project Size at SPINT. It involved

many new initiatives and enormous efforts in capability building on many
fronts. Initiatives include establishing joint ventures with competent industry
players, considerable value engineering efforts through our design studio,
adoption of new technologies and inducting many international experts in the
team, resulted in executing the strategy of bagging big projects and increasing
our average project size.

MAHESH TAHILIYANI, GROUP, FINANCIAL CONTROLLER

How do you work through and advise on the financial and control
implications

of

delivering

the

strategy?

Goals set are (and have to be) common for all at the Group level. Each has to
contribute his strengths to make the strategy infallible. The understanding of
business models and the reasoning of the planned strategy helps to advice on
the financial elements required for delivering. For instance, during SAP
implementation, all businesses came together to ensure a harmonised system to the

extent possible. This enabled achieve standardisation of key processes. Adapting to

change and continuous monitoring of the performance and taking corrective actions
helps stay on the path to success.

Finance is fuelled by a changing regulatory environment and, budget

and

resource

constraints.

How

do

you

balance

your

tasks?

Change is constant in businesses. No one has access to unlimited resources.

Availability of unlimited resources has the risk of creating inefficiency in the system.
One has to anticipate change and consider best practices. The expectation of the
stakeholders like the government with respect to governance is increasing and so are
the challenges of the business. Creating awareness of the requirements amongst
businesses and the top management and the acceptance of the same is the
optimum way to get things moving in the right direction.

MUKUNDAN

SRINIVASAN,

MD,

SHAPOORJI

PALONJI

INFRASTRUCTURE CAPITAL
SP Infra Capital has several joint ventures for developing of
infrastructure

projects.

Please

detail

few.

We work with partners who complement our resources, skill and competencies. In
the gas-based power generation projects, we have strong local partners for
projects in Africa and South East Asia. Our Samalpatti power plant, was also
implemented in joint venture with Covanta Energy, USA and Wartsila, Finland.
In highways, we initially developed the Trichy toll way project in Tamil Nadu in
JV with IJM of Malaysia. We also have a joint venture with HPCL for developing
5mmtpa LNG regasification terminal at the proposed port at Chhara in Gujarat.

The government has big plans for infrastructure development. How do

you

plan

to

cash

in

on

this?

Our port will help us get into major logistics opportunities as they open up

with the governments Make in India campaign. The transportation sector is

seeing major policy announcements which would help us build upon its highly rated
development and construction skills to participate in on-going highway, rail and other
projects that would be offered to the private sector or on PPP basis.
We believe once the industry issues in the thermal power generation are overcome,
significant opportunities would be available to us.

PAWAN

PARIKH,

CEO,

ENGINEERING

PROCUREMENT

&

CONSTRUCTION
In terms of power plants, what are some of the tested and proven
processes

you

adopt

to

provide

reliable

power

solution?

It starts with engineering the solution well, which we achieve as a result of a

capable engineering team. The team conceptualises the solution and does
detailed engineering of solution. Although they come from diverse areas of
specialisation, they are equipped with the required design tools to do their job
effectively.
This is followed by disintegrating the complete solution (or system i.e. power
plant) into smaller sub-systems and selection of good quality equipment and
system suppliers while accurately managing the interfaces between these sub
systems

and

suppliers.

Finally, efficient execution, construction, erection and commissioning with all

safety measures ensure reliable power solution to customers.

Does EPC contracting need better risk management? How would you go
about

it?

Yes, it does. The most important part of project management is the risk. Identifying
risks and preparing a mitigation plan at an early stage helps us take proactive steps
to foresee a possible departure from the plan for e.g. a delay or increase

in costs. Effective risk management also helps us build stronger ties with our
customer as we are able to execute the projects better.

S KUPPUSWAMY,

ADVISOR, GROUP FINANCE & SPECIAL

PROJECTS
In terms of infrastructure and construction, what sector do you see
demand

coming

from

in

Africa?

The demand for infrastructure construction in Africa is estimated to be around

$93 billion per year over the next decade. Theres a need to exploit mineral
resources efficiently and build transportation links in the region. The entire
exercise depicts the huge scope for infrastructure in Africa. Simultaneously,
housing, healthcare and water also require a lot of attention, besides ensuring
affordable housing and construction of hospitals. Considering that the region has a
high degree of power deficit, much investment is needed to set up power plants
using coal, HFO, gas, solar and peat. One also needs good EPC contractors to
execute the work. Our groups EPC division is gearing up to start work on one such
job in East Africa.

How do you work out the financing and the logistics when you cater to
this

market?

Africa requires unique solutions and entails funding arrangements with Exim Bank,
the Government of India, international financing agencies and Africa centric funds.

SHANKAR KRISHNAN, GROUP HEAD, STRATEGY

What are the steps required to effectively deliver economic infrastructure
projects?
Infrastructure projects are typically high value and long gestation, with socioeconomic benefits over the long run. The key requirement is a spirit of collaboration
between the multiple stakeholders involved, including for instance, the client,

contractor, consultant and business partners. Often, local government is an

influencer, and hence it is important to seek alignment at the outset.

What is the starting point about thinking differently and developing great
strategy? Do relate this with respect to your role at SP Group.
The starting point, for a good strategy, is to be able to view ones own business
dispassionately. We have noticed that most business can do with a greater
emphasis on environment scanning and market intelligence, such that
business performance can be gauged by the yardstick of the market in which
the business operates. We have emphasised the critical need for market context
and external perspectives, in forming a view on our businesses and their strategy.
Almost always, we start our strategy discussions with this as the context.

SUBODH

DIXIT,

EXEC.

DIRECTOR,

ENGINEERING

&

CONSTRUCTION
What are some of the crucial elements that are necessary to fulfil design
build

contracts

effectively?

There are three-four key ingredients for success of a design & build project: Domain
knowledge and an efficient design; effective procurement of sub-contractors and
strong partnerships; and understanding the customers requirements and translating
their sometimes unstated intents and expectations in product development and
delivery.
Design & build is a strong three-way triangle of customer, D&B team and execution.
Finally the most important of all is a highly mature collaboration between design and
execution team members.

In terms of contracting model, what works best for SP EPC? What are
the types of contracts that work best for various types of projects?
There is no one right answer. The best contracting model is when a contract is drawn

in a very equitable manner between customer and contractor. More often than not,
Indian contracts are heavily tilted against contractors and these often create nonperformance, litigation, cash flow and project delays and recourse mechanism either
does not exist and/or is too slow.

UMESH KHANNA, GROUP HEAD, COORDINATION

As group head, coordination, I understand the role would imply working
closely with the promoters and group companies. Could you tell us a little
more

about

this

role?

This role has multiple dimensions. It is to facilitate and enable group companies to
derive inimitable advantages which intra business synergies provide. The art is to
do this with focus on achieving short term targets while remaining committed
to unleashing long term tactical advantages. It involves working alongside
businesses for enabling entry and or expansion in new business sectors and
markets, upscaling skills and project sizes. My role spans opportunity targeting
and securing, relationships management, technology and business alliances
management as also proactive interventions to improve the delivery efficiency.

What are some of the factors that matter when your company
approaches

international

business?

The factors that influence us while approaching an opportunity/market remain same

for home and overseas barring two safety of our people there and
undue/unmitigatable risks in respect of quality of deliver and finance.

VASANT SANZGIRI, GROUP HEAD, HUMAN RESOURCES

At a time when companies face high attrition, SP Group has a loyal set
of employees. As HR head, what would you attribute this to?
The topmost benefit of employee loyalty is that we have people who understand the
ethos of the SP Group and are completely aligned to it. The knowledge and expertise

acquired over the years working on different projects remains within the group and
people grow with the company, in the company.

What are some of the training facilities offered at your company

considering

that

the

job

requires

highly

skilled

persons?

Training and development is the corner stone for the success of any organisation and
SP is no exception. A combination of on the job as well as class room training which
includes practical inputs and practice opportunities, ensures we have knowledge and
skills enhanced on a continuous basis. We have made significant investments in
leadership capability
companies.

development over

the

years

across

our

group