The Private Billionaires

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The Private Billionaires

Going beyond stock market wealth, we look at some individuals and families and the companies they own

Nevin John & P B Jayakumar

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T.S. Kalyanaraman

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One of corporate India’s biggest ironies is the asymmetry of information about its entrepreneurs. On the one hand are the 5,000-plus companies listed on our stock exchanges. Corporate database queries can easily tell you which is the biggest among them — by revenue, profits or market capitalisation. Though only a handful of them is known to create wealth (see BW Super Rich issue, 30 July 2012).

 

But alongside this palpable world of listed companies is a large arena of private companies whose promoter-entrepreneurs have built their organisations for decades through loans and internal accruals, without raising money from the public. In some cases, they are much larger than their listed counterparts and have often created wealth far quicker than their public brethren.

 

Not so long ago, Tata Group’s money-making machine Tata Consultancy Services was very much a private company. Even today, Pune-based unlisted firm Serum Institute of India, owned by the Poonawalla Group, has significant value residing in the company.

 

Many of the promoter billionaires have shown remarkable resilience through the years. They have driven businesses with core knowledge as their USP and have often beaten off bigger competition. Here we present a random pick of not-so-well-known private billionaires (revenue of around $1 billion, or Rs 5,500 crore, as on 31 March 2011, 2012) and their unique businesses or business models. One such is 65-year-old Murlidhar Gyanchandani, whose ‘Ghari’ detergent powder is one of the largest selling in India. Prithviraj Saremal Kothari of RSBL and Puranmal Bansal of MD Overseas are both bullion kings.
 

This may not be a comprehensive list of India’s private billionaires, and it certainly does not include the better known names such as the Bhatias of InterGlobe Enterprises that owns IndiGo Airlines, or the Poonawallas of Serum. But we do promise that this is only the beginning.

 

Volume Over Margin

TS. Kalyanaraman, the 61-year-old chairman of Kalyan Jewellers, is often seen taking off and landing at the Kochi airport in his seven-seater Embraer Phenom 100. The private jet is emblematic of the success of his business, which generated revenues of Rs 9,500 crore in 2011-12 and a profit of over Rs 200 crore largely through sale of jewellery from 36 stores, and some amount of export (Gitanjali Gems’ revenue was Rs 7,755 crore in 2011-12 and net profit was Rs 258 crore. Tribhovandas Bhimji Zaveri’s was Rs 1,385 crore and net profit of Rs 57 crore). 

 

KALYAN JEWELLERS PROMOTER:T.S. Kalyanaraman,chairman BUSINESS:Jewellery TURNOVER:Rs 9,500 crore

He now plans to expand in the north, and has roped in Amitabh Bachchan and Aishwarya Rai Bachchan as brand ambassadors. The advertisements are being aired. Kalyanaraman’s journey as a businessman started at the age of 12 when his father began taking him to the family textile shop in Thrissur. “My family has been in business for the last 110 years,” he says. 
 

He profitably ran the family textile business, Kalyan Textiles, until the early 1990s. In 1993, he started a jewellery store with an investment of Rs 75 lakh and named it Kalyan Jewellers. Later, his two sons joined him and opened stores in Tamil Nadu, Karnataka and Andhra Pradesh. Initially, he sourced ornaments from Kolkata, Rajkot and Delhi, but later started his own manufacturing units in Thrissur and Coimbatore.

 

Kalyanaraman’s business mantra: smaller margin and higher turnover. His company was the first in Kerala to put the BIS hallmark on its jewellery, as well as price tags. “We mention the making charges specifically,” he says. 
 

His goal: a Rs 15,000-crore turnover by March 2013. “By 2013, we plan to have 50 stores and increase the number to 100 in the next two years. Our debt is just Rs 700 crore and that allows us to grow further,” he says, adding that he may go for an initial public offering by 2014.

 

SANDESARA GROUP PROMOTER:Nitin Sandesara BUSINESS:Oil & gas,pharma, healthcare, etc. TURNOVER:Rs 12,000 crore (BW Pic By Subhabrata  Das)

Global Yet Local

Nitin Sandesara, 52, chairman of Vadodara-based Sandesara Group, was an untiring chartered accountant in the 1980s. But what he wanted was to start a business, which he did in 1985. He formed Sterling Tea, acquiring tea gardens along with younger brother Chetan. The group has since diversified into pharmaceuticals, healthcare, oil and gas, engineering and the onshore rigs business.

 

It claims a valuation of $6.9 billion, and Sandesara claims that his companies are growing at 20-25 per cent annually, adding that the group’s annual revenue is in the Rs 12,000-crore range. 

 

Most of the group’s value lies in its oil and gas assets in Nigeria. Sandesara was the first Indian company to begin producing oil there, ahead of the Essar Group, ONGC Videsh and Oil India. “We produce 10,000 barrels of oil a day; it will go up to 25,000 bpd in the next financial year,” he says (Reliance Industries produces 15,000 bpd from KG-D6 and more than 30,000 bpd from Panna-Mukta). 

 

Group company Sterling Global Oil Resources has a licence to explore and produce oil from four onshore blocks in a 2,000 sq. km. area in Nigeria. The proven recoverable reserve here is 200 million barrels and has prospects for 1 billion barrels, says Sandesara. The company has Shell and Chevron as neighbours here. 

 

So far, Sandesara has invested $1.5 billion in this business, and backward integrated by setting up a drilling company, acquiring rigs, establishing a shipping company and developing a river terminal. He plans to invest $1 billion more to ramp up production to 100,000 bpd by 2015.

 

Sterling Biotech, a listed group company, has a 6 per cent market share in gelatin capsules globally, and 60 per cent in India, say analysts. Its revenue in 2010-11 was Rs 1,670 crore and profit Rs 19 crore. Another group company, PMT Machines, supplies to companies in Japan, Europe, the US, and others. 

 

“The global-standard quality of our products helped us earn a (good) reputation,” says Sandesara. The group is now developing a port at Dahej, which is expected to start operations next year. It is also building a multi-product special economic zone near Vadodara. The sudden growth invited IT scrutiny, but no instance of evasion was found, says Sandesara. Their business is about “global goals and local action”.

 

SAMVARDHANA MOTHERSON PROMOTER:Vivek Chaand Sehgal,chairman BUSINESS: Auto components TURNOVER:$4.14 billion (BW Pic By Tribhuwan  Sharma)

Partnering Success

Vivek Chaand Sehgal, 56, chairman of $4.14 billion (2011-12) Samvardhana Motherson Group, got his first taste of business when he was a college student. Sehgal’s grandfather, a silver trader, used to give him 1 kg of 1a silver every day to trade. He used what he earned from this to start a business, Motherson, along with his mother in 1975. 

 

It was the small Maruti car that changed his fortunes. In 1983, when Japanese engineers were unable to find a manufacturer for wiring harnesses, Sehgal made a mould of the product within a couple of days, and bagged the deal. This helped him enter an agreement with Tokai Electric of Japan (now Sumitomo Wiring Systems). The group has today grown to over 124 manufacturing facilities in over 25 countries, and nearly 80 per cent of its revenues come from outside India.

 

The success comes from Sehgal’s ability to form winning joint ventures — 36 so far, including the flagship publicly listed entity, Motherson Sumi Systems (MSSL), which had a consolidated turnover of Rs 14,702 crore in 2011-12 with a net profit of Rs 259 crore, and is a JV between Samvardhana Motherson Group and Sumitomo Wiring Systems (Japan).

 

In its main business — electrical distribution systems (wiring harness), rearview mirrors, polymer body parts and modules for vehicles —the company is one of the principal suppliers to the top 10 vehicle makers in the world. While mirrors contribute 56 per cent of the business, 30 per cent revenues come from wiring harness products. Thanks to two recent acquisitions, the group is now one of the largest manufacturers of rearview mirrors in the world. 

 

“As a group, we have been growing at 40 per cent a year for the past few years, and the target is to reach $10 billion by 2014-15,” says Sehgal, who loves golf and cars. 

 

Sehgal is now assisted by his son Laksh Vaaman, who heads the mirror business. “Why should I diversify when I am growing at over 40 per cent and 87-90 million cars are coming out every year?” asks Sehgal, whose passion is to use science for “creative diversifications”. To prove this, he picks up a stamp pen from his table, writes his name on a piece of paper, inverts the pen to show how at the press of a clip the back-plate withdraws automatically, and then proceeds to stamp ‘Motherson’ on the paper and says proudly, “This is our innovation.”

Shining Bright

Seven decades ago, Puranmal Bansal was just 12 years old when he started a small trading business at the Chamber of Commerce in Hathras, Uttar Pradesh. In the mid-1950s, he moved to Delhi and tried his luck in trading agri-commodities (physical and futures) such as pulses, edible oils, oilseeds and silver bullion.

 

MD OVERSEAS  PROMOTER:Puranmal  Bansal,chairman emeritus  BUSINESS:Bullion trading, real estate TURNOVER:Rs 10,000 crore for the past three  years (BW Pic By Sanjay Sakaria)

Today, he is a leading importer-exporter of gold and silver in India and heads the MD Overseas Group, whose average turnover was Rs 10,000 crore in the past three years. Bansal is the chairman emeritus of the group and the business is headed by his two sons, Satish and Vinod, who have been in the business since the 1970s. 

 

The Bansals saw a big opportunity in the mid-1970s when the government permitted the export of silver bullion.In 1976, they beat competitors to set up the first RBI-approved and recognised refinery in north India. But they hit a wall when silver export was banned during the 1978-79 period, and the Bansals were forced to diversify into trading of various other items including photographic colour films, chemicals, metals, yarns, textiles, etc.

 

When silver prices hit the roof in the 1979-82 period, they briefly returned to their original business and even entered the international bullion market by setting up overseas offices in Hong Kong and New York to buy and ship silver coins and scrap to European refineries.

 

Once liberalisation in India allowed import of gold and silver, MD Overseas turned its focus back to its old business — bullion trading. “Last year, we did a business of 600 tonne of gold and silver, about 200 per cent more than the 200 tonne the previous year,” says Atul Banshal, president, finance, MD Overseas, which deals with over 400-500 buyers and employs over 100 people.

 

From a turnover of $1.35 billion in 2007, the group touched $2.7 billion in 2009, thanks to rising gold prices. In two years, the group plans to have offices in 14 cities. “Buying gold at the right price at the right time is the key to success in this business,” says Banshal.

 

MD Overseas, which has membership in commodity trade exchanges such as MCX, MCX-SX, NSEL and NCDEX, plans to start online trading facilities. Another diversification is into real estate, through a group company, Young Builders, which is doing a residential project in New Delhi.

 

SUGUNA FOODS  PROMOTER:B.Soundararajan  BUSINESS: Poultry  TURNOVER:Rs 4,200 crore

Hatching Mega Plans

Chairman of Suguna Foods, B. Soundararajan, was recently in China and Africa to learn about cattle farming and newage agriculture. He says he wants to hand over his poultry business to professionals, so that he can travel more and find new opportunities. That is typical of the man whose impatience has taken Suguna to 8,000 villages in 13 states and to Bangladesh and Sri Lanka; it has its eyes on South-east Asia. In 2011-12, it posted revenues of Rs 4,200 crore and 3-4 per cent of that in profits. It also had a manageable debt of Rs 600 crore. “We have set a revenue target of Rs 20,000 crore for 2020,” says Soundararajan (revenue for Venky’s (India) was Rs 990 crore in 2011-12 and net profit was Rs 41 crore).

 

The beginning was modest, though. Son of a school teacher, Soundararajan set up a poultry farm at his hometown, Udumalpet, 70 km from Coimbatore, in 1984. “We had vast tracts of agricultural land,” he says, adding that he was later joined by his brother. Two years on, the two set up a trading company to supply raw material. In 1990, they started contract farming, redrafting their business model. From three farmers in Udumalpet, they now have 18,000 farmers. His success mantra is ‘forward-backward integration’, which reduced the cost to the poultry farmer. Suguna supplies day-old chicks to farmers along with feed and medicines. They raise the chicks for 45 days and ‘sell’ them to the company, which markets the product.

 

Today, Suguna produces 7.5 million chickens per week, has 600 distributors, and its customers include KFC, McDonalds and 22,000 retail shops. It also produces ready-to-eat products. “We have started making poultry vaccines. We are looking to extend the service to cattle, fish and pet food. Dairy segment will be another area,” says Soundararajan about his plans.

 

RIDDISIDDHI BULLIONS CO-PROMOTER:Prithviraj Saremal Kothari  MD BUSINESS: Bullion trading TURNOVER:Rs 22,950 cr (2010-11) (BW Pic By Umesh Goswami)

Striking Gold

Sundays are for social work. On other days, RiddiSiddhi Bullions’ (RSBL) managing director, Prithviraj Saremal Kothari, spends most of the day assessing gold and silver prices across the world. So, being a billionaire, what are his hobbies? “Making money,” says Kothari in a matter of fact way.

 

Kothari and his brother Bhanwarlal Kothari started RSBL in 1994 in a 200 sq. ft space in the busy Zaveri Bazar, Mumbai’s gold and silver trade market. Today, RSBL is India’s largest bullion trading company with an annual turnover of over Rs 22,950 crore (2010-11), specialising in bars and coins of gold, silver and platinum. It has 17 branches across India, and over 2,100 jewellers as customers. It accounts for 10-15 per cent of the bullion trade in India, says Kothari. Compared to RSBL, government-owned MMTC, the largest trading company in India, had a turnover of about Rs 45,000 crore from bullion in 2011-12. The listed Bangalore-based jewellery exporter and retailer Rajesh Exports had a turnover of Rs 25,724 crore in 2011-12, with a net profit of Rs 407 crore, while Kolkatabased Shree Ganesh Jewellery House had a turnover of Rs 6,593.61 crore in 2011-12, with a net profit of Rs 293.58 crore.

 

The introduction of Special Import Licence (SIL) scheme in 1993-94, which allowed gold imports for a nominal fee of Rs 250 per 10 grams, transformed the fortunes of the Kotharis.

 

Kothari says his business has been growing at an average of 100 per cent every year, thanks to the boom in gold prices internationally, which have appreciated 10-18 per cent per annum between 2000 and 2012. RSBL is one of the 10 nominated agencies for import of bullion in India and also one of the few Indian companies to be associated with the London Bullion Market Association. Its flagship product, RSBL Spot, is India’s first fully electronic over-the-counter (OTC) delivery-based bullion-trading system. It also plans to enter diamond and jewellery retailing. The family also has a money exchange service and a real estate business, says Kothari. In the current financial year, he expects RSBL to cross Rs 25,000 crore in revenues.

 

The 49-year-old credits his success to hard work and trust among customers. That there is some truth in this can be gauged from the fact that his office in Zaveri Bazar near the Mumbadevi temple has now grown to a 20,000 sq. ft office space, and employs over 80 people.

 

ROHIT SURFACTANTS  PROMOTER:Murlidhar Gyanchandani,chairman and MD  BUSINESS:Detergents, soaps,footwear, etc.  TURNOVER:Rs 2,798 cr

A Clean Sweep

The 65-year-old Murlidhar Gyanchandani, chairman and managing director of Rohit Surfactants (RSPL), works out of a nondescript three-storey building at R.K. 

 

Nagar in Kanpur. Every day he comes to office with his younger brother, Bimal Kumar, checks the products that are under development, and gives instructions. The detergent brand he created, Ghari, is one of the largest selling detergent products in the country today.

 

The group’s detergent business clocked sales of Rs 2,576 crore in the previous financial year, when the group’s entire turnover was Rs 2,798 crore (including sales from Ghari detergent cakes, Xpert dishwash bar, Venus bathing soap, Red Chief footwear, Namaste India milk and ghee, wind energy and real estate). The earnings before interest, taxes, depreciation and amortisation (Ebitda) was Rs 275 crore. 

 

Ghari detergent is a major player in north, west and east India. For the first time, the group is venturing south, in Telangana. Gyanchandani says the growth has been because of their determination and commitment to customers. “Our focus is to produce quality products in a cost-effective way.” His journey started when he launched a laundry soap in 1966 with a capital of Rs 3,000, in Farrukhabad, near Kanpur. “I came to Kanpur in 1975 to sell the soap here. In 1987, we created the Ghari brand, launching detergents. The first year’s sale from detergents was Rs 1.4 crore,” he says. Gyanchandani started with distributing soaps and detergents in Kanpur on his bicycle. Gradually, he created a large marketing network across north India. “Experience has a major role in business. We started from zero, so we were involved in everything,” he says. His inspiration was Karsanbhai Patel, founder of the rival Nirma group. 

 

At the end of 2011, Ghari’s market share was more than Wheel’s, a brand that contributed over Rs 2,500 crore of the Rs 20,000-crore top line of FMCG giant Hindustan Unilever. 

 

RSPL has 17 detergent manufacturing units in India. Gyanchandani’s elder son Manoj, who started a leather business in 1992, says the company is diversifying. Bimal Kumar’s son, Rohit, who looks after the real estate business, plans to launch personal hygiene products. All members of the joint family look after different segments of the group. The chairman himself tests the quality of detergents and soap cakes and also gives them to office staff to test at their homes.