The Private Billionaires

 

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.

 

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). 

 

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.

 

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”.

 

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.”