How Metkem Silicon brought PM Rajiv to Mettur and all that

CHENNAI: The words of the mystic poet William Blake, “to see a world in a grain of sand,” could not have been more profoundly felt than in the evolution of modern electronics, driven by need for plenty of silicon.

Former Prime Minister Rajiv Gandhi, aided by technical wizards like Sam Pitroda, had a vision of taking India to the 21st century, “on the back of revolutions in the telecom and information technology sectors.” His government had in the mid-1980s’ decided to set up a ‘National Silicon Facility (NSF)’ for the purpose.

It was then a little known company in Mettur in Tamil Nadu, ‘Mettur Chemicals (MCIC)’, that was keen to foray into making polysilicon crystals to catalyse the electronics revolution in India, thanks to a team of scientists from the Indian Institute of Science (IISc), Bangalore, led by Prof AR Vasudeva Murthy, working in that area since 1960s’. They knocked at MCIC’s doors “asking if it could sell them, 10 kg of hydrogen for reducing silicon compounds to silicon.”

And therein began a new intellectual, yet arduous romance in innovative institute-industry collaboration that even forced the US Government to take notice, “that an unknown plant in India (MCIC) had managed to isolate silicon by means of some indigenous technology.” This coincided with the Centre also scouting for a technical collaborator for setting up the NSF.

When the MCIC-IISc combo efforts came to the Centre’s notice, there was a gradual rethinking over New Delhi’s efforts to rope in Hemlock Semiconductor Corporation of the US to set up a silicon production plant in India. While permission was granted to it to put up a plant with an annual capacity of 200 tonnes of silicon, IISc scientists pitched for domestically produced silicon being given a chance. The spotlight again turns on Mettur.

When MCIC was taken over by Chemplast of the Chennai-based Sanmar Group, a bigger, investment opportunity was seen with the blessings of the Government of India for silicon, as making of polysilicon crystals was also a strategic material. That led to the formation of a new company, ‘Metkem Silicon Limited’, the foundation stone for which was laid by then Defence Minister, R. Venkatraman, at Sanmar’s Mettur complex in October 1985.  

The plant came up in “record time” and when Metkem produced polysilicon, it took the help of Bharat Electronics Limited, Bangalore, to convert it into ‘wafers’. There was “jubilation all around” when the first batch of “indigenously produced silicon wafers” was presented to the then Prime Minister, Rajiv Gandhi and also to R. Venkatraman, who by then had become the Vice President of India.

Rajiv Gandhi was so thrilled that he “promised” to visit Mettur to see the facility. It happened sometime in June 1988 and “it was the first visit to any private sector unit by a Prime Minister in office in India after Jawharlal Nehru. It also brought to public notice that Metkem Silicon was a symbol of India’s technical excellence.”

However, but for a host of adversarial external circumstances, Metkem Silicon, which became a subsidiary of Chemplast during 1988-89, would have scaled even greater heights. As making polysilicon crystals with highest purity levels was power-intensive process, the government’s assurance to make available subsidised electricity did not come through.

There were other factors too like cheap Chinese silicon wafers being dumped in the domestic market. While Metkem did well in wafers used for photovoltaic panels for tapping solar energy, it “did not make the cut in terms of high quality polysilicon and wafers as demanded by the electronics industry.”

In the wake of the subsequent economic reforms in the early 1990s’, the change in import duty structures for wafers, amid international prices falling and cheaper imported wafers “flooding the Indian market”, Metkem Silicon took a severe hit. Yet the firm persevered, made a record 13.40 lakh wafers in 2007, looked for export markets and had even planned an expansion. But with too many unpredictable variables, Metkem made little headway.
 
All these little-known, yet exciting events and more have been meticulously and objectively chronicled in this detailed narrative on the history of the Sanmar industrial group, titled ‘Integrity and Excellence: The Sanmar Story’ by the well known writer, music lover and historian of Chennai, V Sriram. The volume was released to commemorate the golden jubilee of ‘Chemplast’, the flagship company of the ‘Sanmar Group’. ‘Chemplast’, a leading producer of PVC, was inaugurated on May 4, 1967. “The sequence of numbers 4/5/6/7, makes it an unforgettable date. That was also the day I had my first interaction with the company when I arrived at Mettur for the inauguration,” recalls N Sankar, Chairman of the Sanmar Group in this memorable book.

Associated with ‘Chemplast’ right from its inception, Sankar further recalls, “On this occasion I also remember my father KS Narayanan, the former Chairman-Emeritus of the Group, who underscored the importance of people in business long before HR and soft skills became buzzwords.”

The growth of ‘Sanmar Group’, which is substantially Chemplast’s tryst with making a versatile plastic, PVC, with hundreds of downstream applications, is an amazing, almost unmatched dialectic of challenge and response by a “conglomerate that is not flashy”, as retold by the author Sriram.

At different stages, key raw materials shortage like chlorine, alcohol, electricity, EDC (ethylene dichloride), besides foreign exchange blues, pollution snares, running from pillar to post for government clearances, logistical bugs as the mother plant at Mettur was land-locked, led Chemplast, from one step to another, to continuously innovate, think of parallel manufacturing processes, take risks with new acquisitions and diversify from their core business areas without losing synergy.

Sanmar sailing into shipping, building marine terminals for import of chemicals in bulk as in Karaikal and Cuddalore, challenges in setting up a green-field PVC plant in Cuddalore, moving to Egypt, its Engineering ventures and thinking ahead in Electronics- N Kumar’s brainchild-, have each been a rough road, eventually falling into a pattern. Sankar also pioneered a joint venture model to access new technology and capital that few Indian corporates did. And no short cuts in any of these, says Sriram.

Weaved into this large canvas are insights about the group’s roots going back to socially conscious, enterprising Brahmin families of Kallidaikurichi in Tirunelveli district when ‘Brahmins in business’ was virtual heresy.

The government-business interface pre and post-liberalisation, policy shifts that cost millions of rupees, have been unfolded by the author as bare factual, like a flat, yet clearly etched ‘raga alapana’ between momentous economic events. Sriram shows history can be engaging without being sensational.

 The narrative is laced with the anecdotes, like the Tsunami hitting Karaikal on Dec 26, 2004, when Sankar and his team was getting ready for the ‘Bhoomi pooja’ for the marine terminal facility there.

They speak for the glorious uncertainties of life itself. That journey began in the early 1900s’ by his never-say die ancestors Nanu Sastrigal and SNN Sankaralinga Iyer.

Sankar’s father KS Narayanan represented the next generation in that entrepreneurial line, with whom T S Narayanaswami was to team-up in a life-long business friendship.

The Sanmar group supporting educational and sports activities also finds a place alongside rare photographs. Sriram’s work is a huge contribution to Tamil Nadu’s business history.