Dutts Foundry

Group 2: Ashvin Patil, Kumar Abhishek, Mayank Kumar, Pratyush Raj, Saurabh Singh, Shashank Shekhar

Brief Summary: Sunil Dutt hailing from Jamshedpur due to some adverse circumstances of his family i.e. untimely death of his father was forced to work at TISCO after completing Intermediate Science. But he was soon noticed by senior management due to commitment and passion for technological innovation. During industrial unrest an idea of new venture came and with help of the then GM of TELCO was formulated, as setting up an ancillary unit for TELCO. Inception of CALTECH with support of A. Chakravarthy as MD and Chandrakant Gaggar as major equity donor took place. Due to differences in thinking and decision making rift was developed between Dutt and Chakravarthy which led to exit of Dutt to being a consultant in Indore Tube Industries Ltd. Later due to huge losses Caltech crashed in three years. Dutt again started a consulting company along with Bhatia called Sigma Equipment P. Ltd. But later this company also faced some cash flow problems.

Key learning:
y Dutt as a success story tells us entrepreneurs with money at hand are not the one who achieves success but entrepreneurs are inventors, born with amazing capabilities not necessarily from any ideal background but can come from diverse background with a mindset and capability to stick to the process. While choosing a new venture one need to take into account factors like establishment cost, time, option for expansion and return on investment. In case of Caltech the supply was dependent on one customer without being in any formal contract with them and hence having limited bargaining power. A good manager is not necessarily a good entrepreneur. Managers are given resources to optimize while entrepreneurs acquire the resources optimizing them with time being a critical factor. Chakravorthy was a perfectionist but this led to setback in time management. Good entrepreneurs learn from failures. This learning comes from the success of Sigma over Caltech which was setup later. Dutt did not invent everything but used resources from earlier company. He focused on early profits. Generally we focus on sales and not on profits but during the initial period of any project we need profit. Also we need to do ample amount of marketing and hire financiers and hard working laborers to execute the plan successfully. In a new venture initial cash flow is important and should be in surplus initially. We need to take all the stakeholders benefit into account especially financial stakeholders. We need to take them in our team and keep them informed and stay networked. Lastly we should never induce people on key positions from outside firm as was the case in Dutt foundry where they induct senior person from Maruti who made the processes more formalized and also a joint venture which led to share holders not getting share of benefit.

y y y