The inside story of how Wipro’s founder meticulously put in place the plan to give away his fortune to charity
India’s most generous citizen is no accidental philanthropist. Azim Premji isn’t the kind of man who gets up one day and stricken by conscience, decides to give away a part of his wealth to charity. The giving away of his fortune was as carefully thought through as the making of it. Indeed, Premji rarely does anything unplanned. This is a man whose calendar is filled months in advance. Even the idea in 2001 of setting up a charitable foundation, which is now backed by an endowment valued at $21 billion making it among the five largest endowments across the world, took over six months of discussions with executives who would be running it.
The outcome was the Premji Foundation which today trains thousands of teachers across 50 districts in six states, such that students can be taught better in government schools. Its impact cuts across domain, straddling pedagogy, education policy besides of course the mechanics of philanthropy and is the reason why Nandan Nilekani, chairman, Infosys Ltd. calls him “a giant figure”.
It started with an initial endowment of Wipro shares worth $125 million to the foundation in 2001. But that modest beginning was preceded by years of planning, vitally making the money that he would eventually gift. Before the first act of giving, Premji, a businessman known for his austere lifestyle and equally severe business style which includes worrying about the money being spent on tissue paper used in the company’s bathrooms, grew Wipro from a company with just $2 million in sales in 1966 into a $11 billion giant corporation selling software services to the world and consumer products to Indian customers.
The company he inherited, Western India Vegetable Products Ltd, was founded by his father Mohamed Hasham Premji in 1945, and was listed on BSE (then Bombay Stock Exchange) the very next year. Hasham Premji ran the company until his death in 1966 whereupon Azim, who was in the second year of engineering at Stanford University, came back to take over its reins. At that point the family owned about 50 percent stake in Wipro.
Back then, it was a different India, one in which business was arbitrary and wholly dependent on government largesse. In 1977, the then socialist-leaning Janata Party government of Morarji Desai sent International Business Machines packing as New Delhi believed the company was dumping old machines in the country. Fledgling companies like HCL Technologies Ltd and Wipro saw an opportunity in the vacuum that was created and quickly got into assembling and marketing IT hardware.
Western India Vegetable Products Limited’s name was also changed to Wipro Products the same year. “The company has been issued a letter of intent for the manufacture of microprocessor based system mini computers and is taking necessary steps for effective implementation of the project,” reads a statement from Wipro Products Ltd’s annual report for the year 1980. That year its total revenue was just Rs 43.1 crore, up from Rs 7.2 crore a decade earlier in 1970.
The making of a billionaire
It was only by the end of 1982 that Wipro started the manufacturing and marketing of microprocessor- based computer systems and Wipro Products was renamed to Wipro Ltd. Next year, in 1983, Wipro reconstituted this Information Technology Division into a wholly-owned subsidiary.
Premji, according to executives who have worked with him, had little knowledge of the IT business. To best understand this business, he decided to learn from the people who he hired to run and build the business. It’s a trait that’s come to define the man who executives say is in perennial learning mode. “At that time of my joining and even for many years after that, Premji used to sit in the interviews of all new recruits,” said Mindtree executive chairman Krishnakumar Natarajan, who joined Wipro in 1981 as a fresh engineering graduate and worked there till 1999. “I believe this was because he focused on building talent and at the same time, he realized he could understand the IT business”
The Y2K bug fear at the turn of the century presented a perfect opportunity for companies like Wipro to start deploying armies of engineers to help global companies rewrite computer code and maintain the IT infrastructure in case of the feared catastrophe. Business surged and with Premji continuing to increase his personal holding in Wipro from the dividend he got from his shareholding, by 2000 his 75 percent holding in the company helped him emerge as the richest Indian with a fortune of $30 billion.
By the end of 2002, Premji held almost 84 percent shares in Wipro, up from 50 percent when he took over the company as managing director in 1966. Later, the market regulator capped promoter holding at 75 percent and Premji, over the years, had to bring down his ownership.
That’s also the time that the man, who prefers to live a short walk through-the-woods away from the Wipro office in Bengaluru’s distant Sarjapur, started his next innings which would see him emerge 16 years later as the one of world’s foremost philanthropist.
Even as he diluted his holding for regulatory purposes, he also transferred some shares to the Trust or the Foundation he had set up in 2001. All told, between 2001 and 2019, Premji donated Wipro shares worth nearly $12 billion in a staggered manner to the endowment. This includes the announcement made by Premji earlier this year, where he made the country’s single-largest donation, transferring economic ownership of 34 percent of his shares in Wipro worth $7.5 billion to Azim Premji Philanthropic Initiatives and Azim Premji Trust.
Premji had taken his time to announce his intent, but the desire to do give back to society, had always been there. It was fired by the spirit of his mother, Gulbanoo M.H. Hasham Premji, a trained doctor who spent a lifetime helping set up a children’s orthopaedic hospital at Haji Ali in Bombay, even while she served as chairperson of Wipro after the death of her husband in August 1966.
“Amongst the key influences on him were his mother’s example of having set up and run a charitable hospital for children for 50 years, and Mahatma Gandhi’s idea of trusteeship of wealth,” said Anurag Behar, chief executive officer of Azim Premji Foundation. “He actively started thinking of philanthropy in 1999-00 including setting up the Foundation”
Among the four areas initially discussed between founder CEO of the Trust Dileep Ranjekar and Azim Premji were education, nutrition, healthcare and some initiatives in governance as possible areas of work. Primary education was finally selected as the Foundation’s focus of work because it was a critical factor that significantly impacted other issues in the country. “We saw education as the most important method and process for empowerment of people, clearly there were other important areas of work possible, however this very fundamental nature of education was the determining criteria,” said Behar.
An early realization that for philanthropy to be meaningful it had to bring about large-scale change or at least initiate the process of transformation, guided Premji’s vision and he refused to “cut out cheques” merely to appease his conscience, said an executive, on the condition of anonymity. This single-minded approach to philanthropy is no different from his approach to business. Over the years, he has rarely agreed to serve on boards of companies, or take up other assignments, according to former chief financial officer Suresh Senapaty, since Premji believed that the business needed all his time and energies.
The endowment now owns 14 percent of the promoter’s shareholding in Wipro and also has economic ownership or the right to receive all money earned from 53 percent of promoter shares. This means the endowment gets money earned from 67 percent of promoter shares in Wipro, leaving Premji, his wife Yasmeen Premji, and two sons, Rishad and Tariq, with monetary gains from only 7 percent of their 74 percent equity in Wipro.
“Azim Premji’s commitment to philanthropy, which began with the cause of education for disadvantaged children, has been a strong message to corporations and businessmen. His recent commitment will contribute towards meeting his vision of inclusive development,” said Ratan Tata, Chairman Emeritus, Tata Sons.
Today, the foundation is training teachers in government schools even as another philanthropic arm has started giving grants to non-government organizations and founded the Azim Premji University. Premji’s philanthropic entities are run by Anurag Behar, co-chief executive officer of the foundation, along with Dileep Ranjekar. Now they will have his undivided attention, a huge benefit that comes with attendant alarms for he is known to be unrelenting in his questioning and often drills down to the basics of every transaction. He is also completely hands-on, often visiting schools in remote locations to get a first hand feel for the subject. Annual treks have kept him fit for his 73 years.
As he prepares to step down as chairman of the company he’s steered for over 50 years and devote himself wholly to his other passion, Premji has prepared meticulously and assiduously. The Foundation has now been functioning for 18 years, has an excellent, handpicked team in place, is adequately funded and is bulletproofed against any fall in the fortunes of Wipro.
The two philanthropic trusts, Azim Premji Philanthropic Initiatives and Azim Premji Trust, earned Rs 11,357 crore ($1.65 billion) over the past nine years by way of dividends, share sales and buybacks, becoming one of the richest and largest charitable trusts in India.
Simply put, even while it owns 67 percent economic interest of Wipro’s stock and in turn gets the dividends that accrue from this holding, its primary source continues to be returns from Azim Premji’s family office, Premji Invest which has between $5 billion and $7 billion in funds under management, having delivered returns upwards of 30 percent over the last two years.
Premji has over the years put in place this carefully crafted cushion to ensure the business of the philanthropy isn’t dependent on the fortunes of Wipro. In the future, the core aim of the foundation which is to use education as a force multiplier to create a more just society will just get magnified.
“He has been most successful in creating a very successful IT company. However, his greatest legacy he has passed on to the corporate world is philanthropy. He does not throw his wealth around and has a very simple living and has shown that the wealth does not always have to go to the family and can be given to the charitable cause,” said Anu Aga, chairperson, Thermax, the Pune-based engineering firm.
From selling vegetable oils to changing the way millions of children are taught in , Azim Premji has always been an exemplar for business and society.While India may find a few more entrepreneurs to emulate his feats in business, his philanthropic endeavors are unique and truly special. In redefining philanthropy by putting his money where his heart is, Premji has shown the way for billionaires not just in India but across the world.
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