The Wrapper Tycoon
obody could have noticed the spark of entrepreneurship in the 16-year-old who stepped out of the train that reached Mumbai from Durgapur one day in 1988. Sudip Dutta checked into India’s financial capital as the sole breadwinner for his family after the successive deaths of his father and elder brother. He had just traded his dream of college education for the promise of economic opportunity in the big city.
Back in his hometown, he had the choice to either pull a tricycle rickshaw or wait at a restaurant, but his friends pushed him to go to the land of dreams where his cine idol Amitabh Bachchan had made his mark as an underdog many times on reel, and in real life.
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Image: Vikas Khot
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“I could have stayed back in my hometown Durgapur, a small city with small ambitions,” says Dutta. “But from my childhood, I have been very ambitious and from the family experience, I understood the value of money.” | |
“I could have stayed back in my hometown Durgapur, a small city with small ambitions,” says Dutta. “But from my childhood, I have been very ambitious and from the family experience, I understood the value of money.”
Today, he sits across a huge table in a plush room on the top floor of Ess Dee House, the corporate office of the Rs. 500 crore business he has built over two decades. His hair is parted from the middle, reminiscent of the trademark Bachchan style in movies like Deewar and Trishul. Dutta also resembles the star in height and the manner in which he holds his cigarette. Doubtless, he feels like a superhero.
Dutta had got his first break in Mumbai at a tiny pouching unit where he worked as a packer, loader and a delivery boy. It was just a 12-person operation and was making losses. But for him, it was an opportunity to learn the business inside out. It went on like that until the summer of 1991, when the owners announced they were going to sell out. Dutta moved in with his unique offer. He would pay his entire savings — all of Rs. 16,000 — and buy out the unit with the promise that any profit for the first two years would go to the original owners.
While that event set him up in business, it was his second acquisition 17 years later that would make packaging industry veterans sit up and take notice. More than a century old — it was the first to roll foils in Asia, way back in 1936 — India Foils is a well-known but loss-making company. Metals and mining major Vedanta Group, which has a turnover that is 60 times that of Ess Dee, bought it from the Khaitan group and tried to turn it around but failed. Even the turnaround reputation of Vedanta’s maverick founder Anil Agarwal and his deep pockets didn’t help.
So, the fragmented packaging industry was surprised when Sudip Dutta bought India Foils from Vedanta for Rs. 130 crore in November last year. If the venerable Agarwal could not fix things at India Foils, how could Dutta? “Dutta was relatively unknown and his Ess Dee Aluminium was a small company, even a tad smaller than India Foils. Ess Dee has a capacity of 18,000 tonnes of foil a year, while India Foils’ could make 1,000 tons more. So not many were convinced,” says a senior executive from a financial institution that once advised Ess Dee. More importantly, there were doubts about his ability to handle the touchy labour issues at the company that had its units around Kolkata, the hotbed of communism.
But for Dutta, the acquisition of India Foils was a calculated move. He had been eyeing expansion, but there was hardly any organised player for him to buy out. He had been watching India Foils several years and knew its problems. Dutta felt Vedanta had tried to radically change the profile of the company which led to complications. He knew he had no such need. He just wanted the company so that he could become the biggest foil maker in the country.
Within six months of acquiring India Foils, Dutta relisted the company on Bombay Stock Exchange and later reopened one of the three units in Kolkata and started selling its products. Earlier this year, the foil maker’s profit and loss account, in the red for the past nine years, turned positive at the EBITDA (earnings before interest, tax, depreciation and amortisation) level. “I do not have to prove anything to anyone but to myself. I had my eyes on India Foils since 1999, ever since the Khaitan group revealed its intention to sell the company. But I was waiting for my time,” says the 37 year-old who once worked on a daily wage of Rs. 15.
India Foils is yet not profitable at the net level (in fact, it dragged down Ess Dee’s consolidated profits last year by Rs. 25 crore). But its losses have come down from over Rs. 1 crore in the first quarter to Rs. 22 lakh in the quarter ended September. With the second unit of India Foils set to open by early next year, now even the pessimists have begun to believe India Foils is on its way to be in black. So what is Dutta doing?
The entrepreneur got that one thing right that had made his first acquisition successful – he knew his prey inside out. Since 1999, as he nurtured his company, Dutta had kept an eye on what was happening at rival India Foils. By 2004, Dutta had set up his first foil rolling mill in Daman and had crossed Rs. 100 crore in revenues. He had created a niche for himself among pharmaceuticals companies like Pfizer, GlaxoSmithline and Novartis. His rise was acknowledged by the competition. Indal, then a unit of Hindalco Industries, stopped supplying him with the basic raw material as the A.V. Birla company itself was in the packaging business. Dutta quickly started sourcing the material from an overseas company.
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