Mumbai: Chairman of Godrej and Boyce Manufacturing Co. Ltd, Jamshyd Godrej, is an evangelist for green businesses and green buildings. In an interview, Godrej alludes to the possibility of emulating Infosys Technologies Ltd chief mentor N.R. Narayana Murthy and setting aside funds to finance entrepreneurs. He is keen that the Godrejs, one of Mumbai’s oldest business families, also launch a venture capital fund to finance entrepreneurs dabbling in risky green business initiatives.
The group has taken steps to convert its 37-year-old headquarters into a green building and is setting up a 1 million sq.?ft.?information technology building in the Mumbai suburb of Vikhroli incorporating environment-friendly features. Edited excerpts:
Jamshyd Godrej, Chairman, Godrej & Boyce Manufacturing. Abhijit Bhatlekar / Mint
We hear that the group is doing some cutting-edge work in fuel cells with a foreign start-up.
This is an investment by (venture capitalist) Vinod Khosla and others. We are only hosting it at Vikhroli. But the idea was to develop a portable fuel cell appliance which, when connected to piped gas, acts as a catalyst to generate electricity to power other appliances used for heating and cooling. That is the idea and they (US-based Bloom Energy Inc.) are still at it. For five years we’ve been doing the R&D (research and development) in the Godrej colony. They needed piped gas for the experiment and so we chose our colony.
You have been very active in promoting green buildings and green ventures.
(The) Confederation of Indian Industry (CII) has been running an energy efficiency summit for many years. It has resulted in huge benefits for industry to reduce costs of energy. There is enormous scope to reduce cost of energy.
In the last five years, we’ve been promoting green buildings in a very sustained way, through the Indian Green Building Council. After the US, India has the maximum number of rated green buildings. We have (a) large number of platinum and gold buildings. There are 450 buildings, which are already rated or in the process of being rated.
Is this (Godrej headquarters) a green building?
This building was built in 1972, so at that time the concept of green buildings was not prevalent. But we have a roof garden here, which is one of the essential aspects of a green building. It gives a lot of insulation.
Secondly, this building will get rated as a green building, but it is still in the process of getting there as we have to change the windows. Air-conditioning has already been changed. We are already getting the benefit of 30% less power costs. Eventually this will be a green building. Our CII building in Hyderabad has zero discharge of water. Every drop of water is treated and reused.
What is the next step in this initiative?
To go beyond the corporate sector to government. The government is a very large constructor. They have schools, colleges, hospitals and courts, offices. We are trying to influence the public works department to adopt green buildings. We would like Central and state governments to pass legislation to ensure minimum characteristics of a green building. If a few states pass a law, it would be a catalyst. Andhra Pradesh and Karnataka have responded well. In Delhi, Sheila Dikshit, the CM, has already said she wants all government buildings to be green buildings. We want Maharashtra and Gujarat to respond favourably.
How would CII or industrialists encourage entrepreneurs in the space of green business or get businessmen to fund start-ups?
Our experience is that most entrepreneurs are able to attract debt even for risky and early stage investments. There are investors who provide debt, but very few who fund through equity. So what we want to do is to develop this market. The risk is always higher in new businesses. Globally, we know that 90% of new businesses fail.
We need investors with high risk appetite. For instance, Narayana Murthy recently cashed in some of his shares in Infosys Technologies to set up a venture fund. We need many more. In the US, because of (the) Silicon Valley, they have a very good system of early stage investors.
The tax system they have for early stage investors provides tax credits. We have to develop the whole system of early stage investors and a tax system around it. For every Google that has come on the scene there are hundred entrepreneurs who never did.
What impedes entrepreneurship in India?
We are not doing as much as we should. Individuals have to come forward. For example, Hemendra Kothari of DSP Merrill Lynch cashed in and invested in green projects. For a corporate, this is not easy. It becomes a governance issue because there are other investors. If I am an individual investor, it is my money. Our tax laws don’t encourage such investments.
On your interest in creating a family fund for new green ventures?
It’s an idea. I personally feel that it is better for individuals to do it than organizations because organizational means and needs are very different from individual needs. I hope it will happen. Let’s see how it works out.
But aren’t Indians always wary of failure?
It’s a cultural issue. We don’t know how to accept failure. Every investment we make is not going to work. We have to develop public opinion that failure as an entrepreneur doesn’t mean that you are a failure as an individual. Our laws must allow that to happen. Closure of businesses has been a grey area... We’ve been arguing for an exit policy.
Is there no solution in sight?
Because the trade unions don’t want closures. Though de facto, closures happen. There are thousands of people entering new businesses and thousands of businesses that are closing.
But the trade unions don’t want to accept it as a legally binding norm. Today if we have a legal closure, one can pay them (employees) off. But today there is no legal closure and therefore nobody bothers to pay them.
CII has a programme called new ventures that supports green businesses. Can you outline the programme?
“New ventures” acts as a catalyst. CII puts entrepreneurs and funders together through this programme, which is a collaboration between CII and World Resource Institute in Washington. At least Rs100 crore has been invested in 12 start-ups by a variety of investors. We are still in a very nascent stage. In China, one investment in itself is in the range of Rs400-500 crore.
We look for entrepreneurs with ideas in energy saving or water saving devices and then match them with mentors. We’ll have to fine tune the business plan till it is funded for both equity and for debt. The corpus is flexible.
Would CII involve Murthy and others like him for such projects?
We haven’t talked to him yet. We would love to explore how these ideas of CII can work with his own ideas. I haven’t talked to him after he set up this fund. We work with anybody who has interest in such ventures. As an entrepreneur there are millions of ideas that one can go into. We are limiting ourselves to green businesses.
How do you manage your time between green evangelism and running a business?
The time I spent on such initiatives is not that significant. I still have enough time for my business. Businesses are not run by individuals. Organizations have enough professionals to run the day-to-day affairs of the business.