Turning Silver to Gold

Farha Khan

Dressed in neat, white traditional formals and seated in a giant swivel chair in his office at Nariman Bhavan, Mumbai, G L Modi is the epitome of the adventurous businessman. A fearless pioneer, Modi was the first Indian entrepreneur to manufacture high-voltage contacts locally and to set a new standard for silver exports.

Despite the inevitable highs and lows in his 47-year-long journey, Modi has never stopped learning. His motto: never say die and always stay one step ahead of the industry.

The Journey

When Modi earned his Electrical Engineering  degree, his family was trading in silver "for  speculation only, not physically". So in 1974,  when the Indira Gandhi government allowed the  export of silver, a young Modi decided to cash  in. "I started with an G L investment of just Rs.10  lakh and set up a silver refinery in Chembur,  Mumbai. I had small money, my outlook was  small and it was a one-man show. But within six  months, I became the biggest exporter of silver  in the country."

This was just the beginning. "I was only refining silver, not mining it, and I often wondered what would happen if there were problems in supply." Falling back on his formal training, the young electrical engineer diversified into manufacturing silver alloy wires, plates,strips and other contacts for the switchgear industry. With an investment of Rs.8 lakh, Modi christened his business Modison Metals Ltd.

"Customers welcomed me because there was then only one company which enjoyed a monopoly. The company insisted on advance payment and took an age to deliver orders," he explains, adding that this made him a darling among his customers. But not one to be complacent,Modi soon began to partner with companies like Larsen & Toubro for various electrical products and business was booming.

The Big Break

The turning point came during a business trip overseas. He was at an exhibition in Burlingame in the US in 1983, when he chanced upon the stall of a global leader in the manufacture of electrical contact materials, the German company, Doduco. Modi set up a technical collaboration with Doduco and opened a factory to manufacture low-voltage contacts in Vapi in Gujarat.

At the time, high-voltage contacts were not being manufactured in India - they were being imported from Doduco. A colleague of mine, who was an importer, said to me, "Look Mr. Modi either you make these contacts in India or some body else will make them. I import these contacts at a price of 1 DM and pay 0.75 DM for duty and other charges still I am able to sell them at profit, because the product has a premium but not after 5 years because the price has to come down."

Modi took the advice and spoke to Doduco. And what do you know? The German company gave him a license to manufacture high-voltage contacts locally!

Braving Competition

Unfortunately, Doduco was taken over in 1996 and Modi had to go it alone. He also looked at his silver business from a fresh perspective. Exporting the precious metal was no longer enough. "There were already two big competitors in the Indian market, National Refinery and Narayandas Manohardas. They had been in the business for 60 years," reveals Modi, who studied the market - and, in a manner of speaking, struck gold.

He realised that the standard for purified silver exported from India was 98.6 per cent, whereas the international standard was 99.9 per cent. Thus, Indian silver had to be re-refined overseas. Modi flew to England to learn to purify silver to international standards. When he returned, he was awarded ISI certification for his refining process and became the first in India to export the precious metal purified to the 99.9-per cent standard. Since then, Modison Metals has been making '999' Good Delivery Silver Bars in India for bullion trading and exporting refined silver to bankers and dealers in Europe and the US.

Today, the Modison Group has plants in Vapi and Silvassa in Gujarat and employs more than 350 people. It is the only company, globally, to manufacture electrical contact materials and finished contacts for the switchgear industry, all under one roof, from silver refining to producing all the contact materials.

Key Learning's

While setting up his businesses, Modi says there was one thought that never failed to see him through - "Stick to one project at a time and don't lose patience. Work on your problems and, one day, you will find a solution."