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Satish Pai

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If he had been given his own way, Satish Pai would have been in the army. But his mother’s intervention saw the future chief executive officer of Hindalco Industries Limited pivot towards engineering and set him on a path that has since taken him around the world.
Pai was living in Calcutta, West Bengal, at the time, and was not particularly keen on the more traditional routes open to him. “In Calcutta in 1978, you had three choices: doctor, engineer or chartered accountant. I did not want to be a chartered accountant, so in theory it was a doctor or engineer,” he told Metal Market Magazine.

He had his sights set elsewhere. He took, and passed, the entry exam for the National Defence Academy and was considering going into the military. His mother, however, had other ideas.

“I told my mother I had passed the exam and wanted to join the NDA. She said, ‘You’re my eldest son, no way I’m going to send you to the army!’ At that time, children still listened to their parents – she was in charge!” he laughed. “She said, ‘No, you’re going to be an engineer, go and study for the Indian Institute of Technology (IIT) entrance exams,’” he added.
So Pai concurred, slogging for the next two years to be one of the 2,000 people selected from 200,000 applicants to one of the country’s five IITs. To the delight of his parents, and especially his mother, he was given a place.

Born in Bombay in 1961 into a middle-class family, Pai was the eldest of three sons. His father, who was an engineer himself, moved around with his job, which meant the family had also lived in Delhi. But it was Calcutta, the birthplace of India’s political Left Front and home to numerous poets, artists, musicians and film directors, that had a huge impact on the young Pai.

“I spent most of my formative years in Calcutta, which is a very cultural place with strong political roots. Art, politics, music were a big part of my life growing up and it has made me who I am,” he said.

Long before the influential nudge towards engineering, Pai’s mother was the driving force behind his education, pushing him to study hard and instilling in him the drive to succeed from an early age. He had attended St Lawrence High School, a Jesuit school for boys in Calcutta. It was, Pai recalled, a lower middle-class school with very strong educational credentials, and one of the few schools in a large Indian city with a large playground.

Pai’s other passion was sport, which is something that has continued throughout his life. He was captain of his school soccer team, played cricket and studied karate, all the while managing to keep up with his “very academic” group of friends, he said.

University days

After being accepted to the IIT programme, Pai had to decide which of its campuses to attend. Keen to escape a small Calcutta apartment where he lived with his brothers, Pai opted to attend the IIT more than a day’s train ride away, in Madras, Tamil Nadu. “I wanted to be independent and get away from home,” he said.
Pai embarked on a five-year mechanical engineering degree. “I really believe I was no great student, but when you’re surrounded by 50 other good students it drives you to perform so you can stay with the pack. I didn’t want to get left behind,” he told Metal Market Magazine.

It was a stimulating yet intense, academic environment, punctuated by exams three times each week. “At that time, I was sweating, trying to study and pass exams. It was a very competitive environment – you could achieve 90% and still get a C grade, because the top 10 performers would get A, the next 10 got B and so on,” he recalled. “When I completed my degree, I said I was finished with study!” he laughed.

Amidst all the hard work, he still managed to have fun. Pai was once more the soccer captain, and regularly played basketball, cricket and various other sports. “When I look back as a manager now, the team-building nature of sport taught me a lot of managerial skills that are important in my career and life,” he said.
As he was about to enter his fourth year of the course, Pai made a very savvy decision that probably changed the course of his life. His five-year degree was the last the IIT would run, and he was due to graduate at the same time as the inaugural four-year batch of students.

“I got worried that if two groups graduated in the same year, the competition for jobs would be intense,” he said. So Pai and a couple of his friends decided to take extra credits during their vacation months. It meant that Pai was able to graduate after four-and-a-half years instead of five, putting him six months ahead of the rest of the pack. “I had respectable grades, a good sports record, and I was looking for the next step – a decent job,” he added.

Those extra courses served him well – as he graduated early in December 1984, global oil and gas services conglomerate Schlumberger arrived in Madras to recruit graduates who could start immediately. It was, Pai said, one of the most sought-after jobs in engineering, in part because it gave its employees the opportunity to travel the world.

“They interviewed me; I got the job, and in February 1985 I joined Schlumberger. That’s when things changed for me – it could have been very different,” he added.

Success at Schlumberger

After he was recruited, Pai was sent to a village in Taiwan for a month. He had never left India; in fact, he had never been on a plane, having always caught trains because they were cheaper. Pai flew business class and sent his mother the food menu afterwards.
Next, Pai went to training school in Brunei; after finishing the programme, he was sent to Phitsanulok, Thailand. It brought Pai, now aged 24, more than just his first formal assignment. “It was a very important year for me, but not for my career – it’s where I met my future wife, Wanvimon. I started my career in her hometown,” he smiled.

But things were about to get difficult in the international oil markets. Oil prices had peaked in 1980 at over $35 per barrel but, by mid-1986 had fallen to below $10. “Half my graduate class got laid off that year,” Pai said. “I did a short stint back in Brunei and then I was transferred to India, because it cost less to the company to have me there than as an expat outside India,” he added.

He spent the next couple of years working on remote oil rigs across India. Although his ambitions were temporarily muted, Pai said his bosses from that period of his career were real mentors and “helped make me who I am as a manager today.”
One of them took Pai aside and recommended he become a petrophysicist. It was a break that Pai welcomed, taking him off the oil rigs and moving him to Paris to study at log analysis training school. It meant Pai could settle in one spot for a while, so he asked Wanvimon to marry him. The couple had wedding ceremonies in both Thailand and India.

After Paris, the newlyweds moved to Oman, where Pai worked as a log analyst, a multi-disciplined position that put his new training to full use. His daughter Nisha, now 30 and working in advertising, was born while the couple lived there, although his wife returned to her hometown in Thailand for the birth.

Oman was, he said, “fantastic”. “I still tell people it’s probably the most beautiful country on earth, with the most amazing mountains and beaches,” he added.

But after a while, Pai was on the move again. Thierry Pilenko, a senior Schlumberger manager based in Paris, visited Oman with a surprise offer for Pai: a move to Houston, Texas for a job in a software company the group had recently acquired. The catch, from the perspective of an engineer and petrophysicist? The role was in human resources (HR). “Pilenko convinced me to do it and today I tell people it was the most impactful job I’ve done in my career,” Pai said.

Now in the United States, Pai worked for three years with Rex Ross, whose company GeoQuest had been acquired by Schlumberger. He credits Ross for teaching him the basics of recruiting, training and compensation, skills that he discovered were a rite of passage within Schlumberger if you had management aspirations. Pai’s son Nikhil – now a 27-year-old computer science engineer – was also born during his time in Houston, once again in his wife’s hometown.

After his time in HR, Pai’s family moved in 1996 to Russia, where he was in charge of the group’s software division for Russia and the CIS. “I traveled all over Russia and to surrounding countries: Turkmenistan, Azerbaijan, Ukraine, Belarus. I had a little apartment in Tyumen, Siberia. Russia was a lot like Calcutta at the time – some of the best mechanical engineering brains in the world and surrounded by art and culture,” he reminisced. Moscow was “amazing,” Pai recalled. “You could see the Bolshoi ballet for nothing, and we went to so many art museums and galleries,” he said. “The children really enjoyed Moscow and have very fond memories of Russia,” he added.

His posting after that could not have been more different. “I got sent to sunny Aberdeen,” Pai laughed.

His new role was to run Schlumberger’s software for the UK, based in the northeast port city of Aberdeen, Scotland, which is also a home to the UK’s offshore petroleum industry. In an effort to see more of the country, the family also had an apartment near London Gatwick airport in West Sussex, England, to and from which Pai would regularly fly. But Pai had only been in Aberdeen for a year before his career changed again. “I was noticed by management,” he said.

It was 1999-2000, the dot.com boom, and the UK government wanted to create an online portal to sell oil and gas assets online. Pai led the team to bid for that business and created within Schlumberger an acquisition and development services company called IndigoPool.

“I went to Houston, started a little company for the group, began to do presentations on Wall Street in New York, and suddenly had the spotlight on me. As IndigoPool president, the Schlumberger CEO got to know me, and then my career took off,” he added.

A series of senior management roles followed over the next decade, eventually taking Pai from Houston back to Paris, which he said his family sees as a second home to this day. He ran Schlumberger Information Solutions, became the group’s Vice President Technology, then President Europe, Caspian and Africa, Vice President Worldwide Operations and finally Executive Vice President Worldwide Operations. The only role left was, it seemed, Schlumberger CEO.
But it wasn’t meant to be. “I was in the running for the CEO position. There were two of us; the company chose the other person. I was 50 years old, didn’t get the top role, and so had to decide, what do I do? I was too old to rock and roll but too young to die!” he smiled.

Deciding he still had a good second innings in him, Pai opted to try something else. “I stayed for two years to help support the new CEO and meanwhile started to look for new opportunities,” he said.

Hindalco beckoned

While on holiday in Phuket, Thailand in 2012, Pai got a call from the HR director at Hindalco, part of Indian conglomerate Aditya Birla Group, who happened to be in Bangkok. The pair met, and Pai was asked if he was interested in the role of Hindalco CEO. It would mean a move to Mumbai, India.

A few weeks later, and with a successful interview and job offer under his belt, Pai returned to his home country after almost three decades working outside India and started the process of learning a new industry to him: metals and mining.
The founding father of the Aditya Birla Group was Ghanshyam Das Birla, who moved the business from cotton into aluminium, textiles and fiber, cement, and chemicals. He eventually passed the reins to his grandson, Aditya Vikram Birla, who set about globalizing the predominantly Indian business giant, adding 19 companies outside India through the 1980s and 1990s.

Current chairman Kumar Mangalam Birla took over in 1995 after his father’s death and has since raised the group’s turnover from $2 billion to $46.3 billion, restructuring the businesses and making over 40 acquisitions. The group is now active in 14 different industries.

Pai was part of a Hindalco CEO succession plan that began in August 2013, when he became head of the company’s aluminium business. Three-month aluminium prices were around $1,800 per tonne on the London Metal Exchange; by 2015, they had fallen to around $1,450 per tonne.
“When I joined Hindalco, all the problems that can happen, happened straight away,” he said. Difficulties included the decision by India’s Supreme Court to scrap all but four of the 218 coal mining licenses awarded from 1993-2010 after finding they had been awarded illegally, temporarily removing the energy sources for the company’s smelters.

Hindalco had meanwhile invested $5 billion in setting up the Mahan and Aditya aluminium smelters plus the Utkal alumina refinery, but the assets still were not up and running when Pai joined. And the company had yet to fully-integrate Atlanta, United States-based Novelis Inc, a leading aluminium rolled products and aluminium can recycling company that Hindalco had acquired in 2007.

“I was learning at the deep end of the pool,” Pai said. But learn he did: first aluminium, then copper, which he now also headed after becoming deputy CEO in February 2014.

“By 2016, when I was taking over formally as CEO, people asked me to come and talk about aluminium, which was very interesting because I’d been an oil and gas expert for 28 years,” he told Metal Market Magazine. “My friends and former colleagues from those days are still quite amazed that people consider me now to be an aluminium and copper expert,” he laughed.

Fortunately, the copper business was doing well; until 2016, three-month prices remained above $6,000 per tonne, before going through some tougher times as aluminium prices started their recovery. “I quickly realized a diversified portfolio allows you to ride out the cycles,” Pai noted.
Now CEO, he was ready to make his mark and proposed a strategy to Aditya Birla chairman, Kumar Mangalam Birla. “I had found a good Indian company, but my time at Schlumberger meant that I was used to playing in the premier league, not the domestic league. I told the chairman that I was going to make Hindalco and Novelis combined into one of the best international aluminium companies,” he said.

“I wanted to be on the same stage as the other industry leaders and be respected for being the same level as them, not for being a good Indian aluminium and copper company,” he added. To do that, Pai set about ensuring Hindalco’s processes, systems, working culture, safety and sustainability were operating at the top level. He also worked on a corporate cultural transformation, creating a management framework and bringing in new, young talent from outside the firm.

“That’s the journey you’re seeing at Hindalco now – we’re now visible on the international stage, and people know what we stand for,” he said. “We’re a big Indian company, and we’re also now a big international company,” he added.

After bedding down the Novelis acquisition, Pai was a key architect of the deal to buy rolled aluminium products company Aleris. “I really pushed it,” he said. “I suggested to the chairman that rather than bring capital back to India, we should invest more in Novelis. The opportunities were so huge,” he added. Hindalco now owns the largest downstream aluminium company in the world, producing four million tonnes of rolled products annually.

Hindalco is focused on growing the combined group’s downstream business in India and deleveraging its balance sheet, supported by strong cash flows across the divisions. Its gross debt is estimated at $9.2 billion, or three times its Ebitda, and Hindalco has announced plans to trim this by $2.9 billion by the end of 2022, achieving a net debt/Ebitda ratio of 2.5 times.

Focus on sustainability

Environmental, social and governance (ESG) issues are at the forefront of commercial decisions worldwide as companies and governments seek to meet net-zero carbon emissions targets by 2050. For the Hindalco business in India, which uses the country’s coal-fired power for much of its operations, the pressure is certainly on.

“We know we’re weak in carbon emissions because the source of energy for smelting is largely coal. But we are going to be world champions in all other aspects of sustainability,” Pai said. “Unfortunately, some people think ESG is just about carbon, which is important, but there are so many other things you need to do. There’s also water, waste, red mud, fly ash utilization, biodiversity, recycling – so many other things to take care of,” he added.
Hindalco for instance uses all-aluminium commercial vehicles for logistics and freight, has implemented a zero liquid discharge program in all plants, and recycles its bauxite residue. The schemes cost millions of dollars, something that Pai said is lost in the ESG debate.

“When we pursue ESG initiatives, we’re investing, and our costs rise. But I know that in five to ten years from now, companies that don’t invest in ESG will not have a license to operate, so it’s not a choice. That’s why I ask we aren’t penalized with carbon taxes when we’re making an effort to get where we need to be,” he added.

Switching energy sources from coal will not be easy however. Pai pointed out that while hydroelectric power does not produce carbon emissions, dams can destroy natural habitats and damage water quality.
The group, which has a sustainable mining charter, has a core focus on sustainability through the supply chain. It operates across the value chain – from bauxite mining to alumina refining, aluminium smelting, rolling and extrusions through recycling, with Novelis recycling more than 74 billion used beverage cans annually.

Novelis has received Aluminium Stewardship Initiative certifications for both the Performance Standard and the Chain of Custody, while Hindalco has been ranked as the Aluminium Industry Leader for its sustainability performance in the 2020 edition of the S&P Dow Jones Sustainability Indices Corporate Sustainability Assessment rankings.

“When I talk to our investors, I tell them, to produce one tonne of aluminium using coal you use 16 tonnes of carbon, and that’s bad and needs to be reduced,” Pai told Metal Market Magazine. “But if that one tonne of aluminium can be recycled infinitely, then you take the carbon footprint across its lifecycle and you get a very different picture. That’s why I promote recycling so much,” he added.

Being an engineer, Pai firmly believes that technology will be central to helping India and other countries reduce their carbon footprints. That will include renewable energy, carbon capture utilization and storage, as well as inert anodes, which replace standard carbon anodes with inert, non-consumable materials.
But Pai said equally important will be changes in consumer lifestyles, consumption patterns and behaviours. Most consumers have not adapted their behaviours yet, however, he added.

MARKETS

With India still battling Covid-19, albeit with cases at a less aggressive rate than earlier in the year, Pai said his biggest lesson from the pandemic is the need to take care of employees and their families, plus the company’s broader stakeholder communities. “Your company will only survive and do well if your people are motivated in times of crisis,” he said, describing his employees as “Hindalco Covid Warriors”. “The way they kept our smelters running was incredible,” Pai said.

A well-documented side-effect of the pandemic has been the growth in the beverage can market as consumers stayed home. Coinciding with an ESG-led move away from plastic, the can sector – in which Novelis is a world leader – has boomed.
It has been a similar story for other areas that the company is active in, Pai said, ranging from increased demand for aluminium in electric vehicles and lightweighting in the automotive sector, growth in recycled packaging, booming electronics demand and a significant boost to hydrate sales in the water treatment chemicals industry due to Covid-19.

“All the sectors we are active in have done well. The Americas and China have been the strongest demand markets; Europe is just coming back, while India is not yet there,” Pai said. He has a slightly different view on the idea that aluminium and other metals are currently in a new super-cycle. “It’s not a super cycle, it’s an ESG cycle,” he said.

According to Pai, ESG concerns mean that no company is investing in new capacity right now, despite global growth and higher prices. The subsequent market tightness is therefore not generating the supply side response that would usually follow to bring down prices and continue the cycle.

“Aluminium prices are around $2,600 per tonne and it makes great sense to invest in a new smelter in India now. So what’s stopping me? I don’t have clean energy,” he said.

“This cycle, it’ll be interesting to see who puts in new capacity. You can’t start new mines or smelters due to ESG concerns. Many expected a supply response from China, but that isn’t possible due to net-zero targets,” he noted, adding: “People have to get ready to pay a lot more for many things, so inflation is also coming.”

Family support, hobbies and advice

While living around the world has brought huge happiness to his family, Pai is fully aware he could not have done it without the support of his wife Wanvimon.

“Sometimes families don’t want to move, but my wife embraced the changes as adventure and a good experience. She sometimes jokes that I owe her a lot because every time I said, ‘let’s go,’ she just packed the bags and we moved. Later on, she found out that many spouses were not as accommodating!” he laughed. “It was tough for Wanvimon to make new friends in every place we landed. She was incredibly supportive,” he said.

His own experiences have made him push his employees to move around the company’s operations when possible, citing benefits such as flexibility, compromise, and cultural awareness.
Having encouraged his children to pursue professions that made them happy, Pai said he would tell a new starter in the metals and mining world to “build a career in metals that have a future.”

“It’s very clear now that there are certain categories of metals that are going to have a long life, so get into those metals and pick a company that really believes in ESG, because that company will have all the right characteristics to give you a good career,” he said.

Pai said that the key to successful management is learning how to manage your own stress; sport is one of his ways of doing this. Pai said he started to hit the gym during Covid-19, and he also swims plus plays badminton with Wanvimon at weekends.

Having hobbies has also become more important to him as he starts to think about retiring one day in the future. “When you’re young you have a lot of hobbies and then you get into corporate life and your hobbies shrink because your work encompasses you. I realize as you approach the next stage in life you want to return to having other things besides work, because I see a lot of people walk out of the office into retirement and have no clue what to do for the next 20 years. I don’t want to do that,” he added.

Life in Calcutta also gave Pai a passion for music – and not just the millennia-old songs of Bengal. “When I was growing up there were two sides to my musical tastes: classic Bengali music, and then there was rock. I grew up playing the guitar. The late 1960s into the early 70s was the most creative period for rock music in the world – the Beatles, The Who, Led Zeppelin, among others,” he said. “I was very much influenced by rock and roll music and the scene at that time, as well as local classical music,” he added.
It is a love affair that has never left him – Pai still listens to vinyl records on his stereo system, and time at home during Covid-19 meant he picked up his guitar again after 40 years. “I’m playing the songs I knew that I can actually relearn – simple ones by The Beatles, and I’m currently trying to master Pink Floyd’s ‘Wish You Were Here’. I don’t have too much time to devote to it, but I’m trying to give it a little time when I can, usually before I go to bed,” he said.

Pai said if he could be a rock musician it would be either Roger Waters or David Gilmour, Pink Floyd’s singer-songwriter-guitarists. “Unfortunately, I don’t have the guitaring talent!” he laughed. “For guys like me in senior management, the music we make is with the impact on the people we manage and how we take care of and guide them. They will leave behind their albums – we leave behind people and companies,” he added.

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