Kolkata: If a minerals trader isn’t a contrarian, he is only going to earn labour cost, says Vishambhar Saran, a mining engineer who quit his cushy job as director (raw materials) at Tata Steel Ltd in 1994 to found a minerals trading firm, VISA Ltd, with less than Rs10 lakh.
In the last 15 years, Saran’s firm, initially headquartered in London, has fanned out across the world. It is now eyeing mineral reserves in countries such as Indonesia, Australia and South Africa.
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Saran, who turns 62 in December, too has moved up the value chain. He has launched steel and power companies in India, and a ferrochrome business for which he has joined forces with Baoshan Iron and Steel Co. Ltd, China’s biggest steel manufacturer, popularly known as Baosteel.
Intrepid trader: Vishambhar Saran says trading calls can go wrong at times, and one has to pay for them. Indranil Bhoumik/Mint
So far, it would seem his trading strategies have reaped rich dividends. Yet, he says, “At times your trading calls are going to go wrong, and you’ll have to pay for them.” Saran learnt this the hard way soon after he started trading on his own.
In 1993-94, Tata Steel faced an exodus of sorts: key officials left the firm following a change in the top management. Saran, who had joined the company in 1969, was among those who quit. But unlike most others, he didn’t burn his bridges behind him.
Within months, Saran struck his first deal with Tata Steel. It was an unenviable start though, admits Saran, who lost a “quarter of a million dollars” in that transaction.
“It was a very small order—ferrosilicon worth $1.4 million (Rs6.5 crore now),” recalls Saran. “Tisco (the acronym by which Tata Iron and Steel Co. Ltd, now Tata Steel, was known earlier) wouldn’t have normally given me the order though I was the lowest bidder because I didn’t have a track record (as a trader), but because they knew me as an ex-colleague, they did.”
Order in the bag, Saran started shopping for funds in London since his company was based there. He was soon to realize that banks in the UK wouldn’t lend to a greenhorn like him. He eventually managed to seal the deal with money borrowed from a friend “for a fee”, but by the time the money came, prices had increased and Saran had to accept a loss.
“I could have backed out, but then it was my first deal, and that too with a company that had taught me the ABCs of minerals trading,” says Saran. “I would have allowed myself to be sold (out), but the commitment had to be honoured.”
The intrepid trader recouped his losses from another deal within a few days and managed to stay afloat. But it would be a while before his business stabilized.
There would be other issues over the next two years. In 1995, Saran’s firm was “doing well” in London when Visa Inc., the US-based financial services firm that operates a global electronic payment network, sent a legal notice saying he couldn’t use Visa as the name of his firm.