CIOIN

Interview Questions

Full Interview with R. Sarabeswar

R. Sarabeswar:

CCCL started in 1997, when India was experiencing an economic slowdown of sorts. In fact, most of our colleagues were startled to hear we were starting out despite the recession. But we were possessed by a mad entrepreneurial drive. We didn’t have a lofty mission—we wanted to take up projects others were running away from. For the first three months, we didn’t have any assignments and our first job was worth Rs 14 lakh. That year, I remember, we did jobs worth Rs 4 crore.
When we started, we focused on our core strength: Building factories. Two years ago, when the recession set in, we turned to other avenues for business. The turning point came when we got our first big government project from the Airport Authority of India to build an extension arm for the Trichy airport. Since then, there has been no looking back. Today, we are working on seven airport projects. Our biggest project, the one that we are most proud of, is the Adyar over-bridge terminal for the Chennai airport. This is the first time in the country that an A380 flight will take off from a river bridge. This project is a testimonial to the government‘s faith in our credentials. The work on the bridge is near completion and should be operational in January 2011. In addition, we have 6-7 power plants and other civil projects. We have also bagged the Chennai Metro Railways order for 10 stations.
Today, roughly 55 percent of the jobs we do are in the private sector and the rest are with the government or government departments. Technology has helped us immensely in cutting out a lot of bureaucracy and the ‘blame game’ that exists in large construction projects. We have brought everything in house—the electric division, interior division, and the design division and provide a single solution to the client. The client no longer needs to worry about project management and co-ordination with contractors—that onus is now on us. This set up is also advantageous for us because it gives us higher profitability.

R. Sarabeswar:

IT is the brain of this company. From the very beginning, we invested heavily in IT and the returns have been multi-fold. The efficiency that IT has introduced allows us to take on large projects that would have been otherwise impossible.
Today, we are also ready to roll out our own homegrown ERP and take it to the market. One of our divisions started working on an in-house ERP software to constructively use some spare capacity we had. Today, we are ready to start selling this ERP to the market. It’s a new revenue stream for us.
The CIO stopped being a technology guy long ago. Our CIO hails from IIM and has an MBA in HR. The CIO role is about co-ordinating between departments and ensuring the smooth implementation of projects. He links different departments to a single business goal and brings them in sync to execute business plans.

R. Sarabeswar:

The CIO role demands a mix of skills, management being the most essential. His knowledge of core skills helps us in the smooth operation of projects. But it is his ability to deal with people and articulate the business value of IT that makes him a good business leader.

R. Sarabeswar:

There are two main problems. Between 1993 and 2003, the country experienced a brain drain of civil engineers most of whom moved to the more glamorous IT industry. As a result, there is a severe shortage of mid-level managers in construction today. Either you have people with 25-plus years experience or fresh engineers. Which means that companies like ours end up spending a lot of money on training.
The other problem is that in India, we traditionally believe in employing laborers in much larger numbers than our western counterparts. For example, my partner in Canada is building an airport with 750 laborers. For an airport of the same size, we use 4,050 laborers and contractors still complain that there aren’t enough laborers. We don’t have skilled laborers in India. We have man power, but very few employable people. Today, we have started our own training center both for mid-level managers and for laborers.

R. Sarabeswar:

We operate on the L1 model where a tender is announced in the newspapers and a contactor quoting the lowest price gets the job. So, I don’t see any scope for corruption. The delays in completing projects can be attributed to a number of reasons. Sometimes, clients don’t have money to pay contractors, sometimes they don’t have a decision making process in place. A bulk of the time, delays are the result of the non-availability of laborers. This is big problem during a boom time.

R. Sarabeswar:

Mechanization costs money. In India, infrastructure contracts are awarded to the company that quotes the lowest price. Whether this is a good strategy is debatable. But in this race to keep costs competitive, it is difficult to bring in any mechanization which will cost more than laborers.

R. Sarabeswar:

It’s true we have been affected by the fluctuating prices of raw material. Cement has gone up by over Rs 100 per bag and the price of other materials like sand have shot up. At a time like this the only way we can remain profitable is by keeping tight timelines. In the first five years, our projects were dead on schedule. But today most of our projects suffer from an average delay of 33 percent.

R. Sarabeswar:

Globally India ranks 9th in construction and aims to be number three by 2020. Our objective, too, is similar. Currently, we are ranked 9th among Indian construction companies and we hope to reach the number three spot by 2020.
Our strategy is to grow horizontally rather than vertically. We will stay with our 18 percent year-on-year growth, but will be expanding to new businesses like power infrastructure, pipeline jobs, and low-cost housing development, where business opportunities are large.