“Besant Systems Limited (BSL)”

CASE STUDY
January, 2010
About This Case Study

This case study is has been written as a basis for group discussion, with the purpose of
bringing out certain key elements that influence the functioning and administration in an
organization rather than illustrating either effective or ineffective method of handling particular
situations.

The case study focuses on the different dimensions that lead to the effectiveness of any
organization, namely its leadership, work culture and processes and systems. It is an attempt
to bring out the importance of people process maturity in ensuring a strong and sustainable
business performance of an organization.

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Introduction
Shiv Pascalraj looked out of the high-ceiling glass window onto the sea waves breaking on the
shore. It was Christmas eve. Fun and merriment filled the air, but his mind was occupied in
intense thoughts, eye-brows knit together and face a sea of worry.
At 35, Shiv Pascalraj was the MD, Besant Systems Limited (BSL) and it had been a good 10
years that he had taken over the reins of the company founded by his father, Mr. Besant
Pascalraj, three decades ago. Besant Systems Limited was founded on his ancestral property
near Chennai out of a skeletal building. BSL started off with the manufacture of castings for
the replacement market. Venture into castings was quite a diversion from the transport
business that his father was previously in. The initial years were difficult but a good market
understanding and distribution network ensured that BSL survived. The vision and hard work
of Besant Pascalraj ensured that BSL grew over time. When Shiv returned from USA after his
studies, he became involved in the daily working of BSL. In 1999, Shiv took over the reins of
BSL due to his father’s illness.

Strategic Changes
After taking over, some of the first things that Shiv did was invested in technology so that he
could build a niche for BSL. He procured the best of machines, even sourcing some from
abroad. The focus on technology paid off very well in the initial few years with the business
booming. Shiv bought another piece of land adjacent to his plot for enhancing capacity.
By 2008, BSL had become one of the largest manufacturer of machine and painted castings
and forging in South India, while being a market leader in the replacement market. Today it
had revenues of close to 630 crores with a bottomline of 71 crores.
Despite the recent growth, Shiv’s appetite was not yet satiated. He wanted to take BSL to the
world. He was sure that in order to achieve the desired growth, the strategy would have to be
that of product portfolio enhancement and market expansion.

Work - Culture
BSL, since its inception had a very patriarchial culture. Mr. Besant took care of all his
employees and interacted with everyone – be it a workers, supervisors or managers. Besant
also developed a lot of people within the company. The present Operations Head – Mr. AP
Nair and the Marketing Head – Mr. Rishabh Gawde grew under the aegis of Mr. Besant. The
company was also known for working with dealers, who were a part of the ‘family’.
When Shiv took over in 1999, there were around 200 employees, all of them permanent as
Besant believed that quality could only be achieved if the workers were fully engaged in all
respects with the company and made to feel a part of the company. Growth demanded that
the employee count also increase proportionately. Blue collar and white collar were recruited
as and when the situation demanded.
In 2004, labour unrest took seat in BSL. Workers started demanding a raise in pay. The
management met with workers’ representatives and offered a differential increase of salary
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commensurate with the no. of years they had been with BSL. Workers on the other hand
demanded a uniform increase for everyone. Shiv asked for the opinion of his top management
committee and as per their advice, went against the labour demands. Consequently workers
decided to go on a flash strike within the BSL facility. The strike was started by those who had
completed the second shift and they were joined by others who had come for the third shift.
Finally the management yielded to the demands and the strike was resolved but the
relationship between the workers and the management started deteriorating since then.
Post the strike, on the advice of his management committee, Shiv instructed the hiring of
contractual workers. Today BSL has close to 950 people working, with around 150 being white
collared employees, 320 blue-collar and another 480 outsourced workers. The worker mix
went from full permanent in 2004 to a ratio of 40:60 between permanent and outsourced in the
present scenario.
An influx of workers demanded that facilities be created for them. Hence, in 2006 a separate
and bigger canteen was build for the workers, while the older canteen was refurbished and
reserved for management with all the right amenities and an elaborate menu.

People
Under Besant, BSL took a great deal of pride in being employee focused and had a very open
culture. Besant had maintained an open door policy for all its employees. Shiv, as a leader,
had a slightly different and reserved style of functioning. However, he did make sure that he
attended the annual function. He would go on rounds of the factory once every week. He was
quite a workaholic and expected the same out of his team.
The people who had been with his father had been serving him well. They were his connect to
the organization and he relied a lot on their wisdom for taking decision. While the top
management was quite experienced and almost all of them had been with BSL for over 25
years, there had been times when Shiv clearly felt the need for greater energy and fresh
thinking to happen at that level. It seemed to him that they were still doing things the way they
did 2 decades ago.
As the organization grew, more departments were created and silos formed. The old
employees closely guarded their turfs and maintained distance from fresh hires. In the past
few years, the divides as per organizational levels got clearly demarcated. Gone were the
times when one could see supervisors and workers having tea together and chatting casually.
Despite growing to such a size, there were only 2 junior managers, 1 looking after HR and the
other looking after IR and 1 senior manager to take care of the overall HR/IR – all of them
reporting to the Administration head – Mr. Venkat. Mr. Venkat belonged to the days of the
license raj and a firm believer in the efficacy of the stick. Shiv relied on Mr. Venkat for all his
people related matters.
The focus on technology also meant that the people needed to be adequately trained. In the
present scenario, the trainings at BSL were restricted to the technical ones and were
administered as and when required to the select few. Most of the trainings were conducted by
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the line managers and supervisors themselves and learning largely happened on-the-job, even
for the new entrants. Also due to a high turnover in the supervisor cadre, often quality issues
arose as proper inductions and trainings of supervisors were not carried out. This also
impacted the performance, training and monitoring of the workers. Apart from this a proposal
by some managers on having a separate career track or grade for the more qualified/high
performing employees (a prevalent practice in other competitors) was also turned down by
Shiv as he felt that it would create more bad blood and divide within the employees.
BSL also had a Performance Management System, which was used to set the broad for the
employees. Understaffing of HR meant that often it was left to the managers to ensure their
adherence and monitoring of targets/achievements in their departments. Besides, there was
little to link the performance of white collar employees in terms of their productivity, quality etc.
to their salary or incentives. BSL usually paid a decent amount of year-end bonuses and had a
select very limited recognition practices as well.

Recent Happenings
In 2008, Shiv had gone for a Europe tour to attract the attention of the major automobile
companies and increase business. After much persuasion and many conversations, one of the
leading automobile manufacturers agreed for a bulk contract of a component, to be custom-
made and delivered within stringent timelines. A section of workers who had been raising
issues about inadequate employee benefits, medical facilities, insurance etc. tried to disrupt
the line with go-slow tactics. Shiv asked Mr. Nair to deploy a mix of permanent and semi-
skilled outsourced workers to complete the order in time. However, the damage was done.
The consignment failed the tests on quality and other technical parameters. This was a major
setback for Shiv.
Also during the last week, the HR manager had come up to him with a chart of quarterly
employee productivity and other related metrics. The zooming attrition figures caught his eye.
It was a known fact that Sriperumbudur had emerged as a major electronics hub and many
other large automobile and allied manufacturers had set shop in and around Chennai, which
was now known as “the Detroit of South Asia”. The effect on BSL had not been particularly
good. It seemed that the young employees were using BSL as a training ground and a jumping
board to well paying jobs. Shiv was at a loss to understand the high attrition figures, despite
the fact that BSL was a decent paymaster across levels.

Looking Ahead
The present business landscape was turning extremely competitive. Presently there were
around 500 organised and many more unorganised players in the industry. Given this context,
sustaining the past growth was going to be a tough challenge for Shiv and BSL.
A lot of thoughts were occupying Shiv’s mind on this Christmas eve:
1. What were the key present problems, their root causes and how should he solve them?
2. How would he ensure improved quality of products?