Podcast | Digging Deeper with Moneycontrol— Lohias: The poster children of immigration

Immigration has now turned into a contentious global issue that has political, economic, social and human ramifications. The world today perhaps needs many stories of hope, assimilation and inspiration that emphasise the beauty of our shared humanity rather than division more than ever before.

Today, we will talk about one such business family of Indian origin. A family that has written an uplifting story about the universality of ambition and aspiration and how borders mean nothing for those intent upon treating the world as a playground where everyone has an equal opportunity to win.

When a man called Sri Prakash Lohia, born in Kolkata and educated in Delhi University, made his way to Indonesia along with his father, Mohan Lal Lohia, in 1975 to set up a business, little did he know that he was initiating the stirrings of an empire. That by the time, he turned sixty, he would be presiding over Indorama Corporation, a $10 billion textile and petrochemical conglomeration present in over 39 operations in 24 countries and counting. The company is headquartered in Singapore and today happens to be the largest producer of polyolefins in the western Africa region.

Lohia is now one of the richest men in Indonesia, was named the 288th richest man in the world by Forbes in 2017 and since then his wealth has expanded from $5.4 billion to $6.1 billion. The company is one of the top polyester producers in the world.

There have been investments worth hundreds of millions of dollars in a fertilizer plant in Senegal, Mexico, and basically across four continents in different capacities.

The Indian identity of the company and that of its founders has remained undiluted all along. Starting with the name of the company. Indo stands for Indonesia and Rama for of course God Rama! Needless to say, Prakash Lohia is a staunch vegetarian and fundamentally traditional in his lifestyle.

Though like all good old Indian narratives, there have been the occasional twists and the turns and divisions in the Lohia story as well.  The upsides include Prakash Lohia and steel tycoon Lakshmi Mittal coming together in a fateful connection since both began their trajectories in Kolkata and spread their wings in Indonesia.

Prakash also went on to marry Mittal’s younger sister Seema and like him became the face of affluence in London where he now lives.

As one of the world’s biggest collectors of art and rare books, he is rumoured to have a 16th century edition of The Holy Bible and an 18th century version of the Quran and rare lithographs dating back to the 17th century . He is also supposed to have the world’s second largest collection of colored lithographs and wants to digitize his vast collection.

In Mayfair, he reportedly spent $75 million on renovating a 243-year-old mansion over a period of  five years and was called by the amused

British press as “the Maharajah of Mayfair.” This despite the fact that he is famously reclusive and unlike other billionaires in his club does not welcome media scrutiny.

The downside of the upside

The journey to great wealth and a global presence has not been without set backs. The Lohia empire was divided in the late 1980s by patriarch Mohan Lal between his three sons. Om Prakash set up Indorama Synthetics in India. Aloke Lohia moved on to Thailand to set up Indorama Holdings, a company involved in producing wool yarn. And Prakash focused on his own empire.

Not all business decisions though worked out swimmingly well for him either.  In 2007, Prakash and son Amit invested in a state-owned mill in Egypt but the  series of protests and demonstrations across the Middle East and North Africa in 2010  that came to be known as the Arab Spring put a spanner in the proceedings.

Indorama’s compensation claim of $156 million for the mill’s renationalization did not get fully honoured either and the company just got $54 million.

Along with the success, comes also the pointed argument about just how much wealth is enough for one billionaire  as when Oxfam, an NGO committed to working with questions about poverty and the uneven distribution of wealth stated that just four billionaires including the Lohias had cornered as much wealth as the bottom 40 per cent in Indonesia. Equitable distribution of wealth is a question that is beginning to chase the Forbes anointed rich in a world where social and economic inequality is expanding and causing widespread concern.

The rise and rise of Prakash Lohia

The point that we started with was just how immigration and the questions connected with it can be addressed by including positive stories in the debate and Prakash Lohia could well be the perfect narrator of one such story.

Prakash was born in Kolkata on 11 August 1952 to Mohan Lal Lohia and Kanchan Devi Lohia.

He has three brothers—Om, Ajey and Aloke and one sister Aruna.

He studied commerce at the University of Delhi before graduating in 1971.

He was just about 19 when he left India for Indonesia and went on to find fame and fortune in his adopted country as the chairman and managing director of Indorama Corporation. Things could not have been easy though as Indonesia was then under the military leadership of general Suharto and the economic climate of the country was not exactly liberal or welcoming.

The initial years were predictably challenging and Indorama Synthetics started as a producer of spun yarns at a facility in Purwakarta, in the West Java province of Indonesia.

Slowly though the manufacturing facilities began to expand and in 2014, the company recorded net sales of $726 million with a net profit of $4 million.

We know of one famous polyester king back in India but Prakash too is occasionally referred to with the same appellative.

Polyester is a primary raw material and for years, the Lohias imported  it from Taiwan but then Prakash in a big, bold move  bought multiple polyester plants that included Dow Chemicals in Italy, Dupont in the US and SK Chemicals in Poland and Indonesia.

In 2006, he also sensed opportunity in the then nascent petrochemical industry and picked up an underperforming, state-run Nigerian company Eleme Petrochemicals for $225 million, turned it around and the form went on to produce over 350,000 tonnes of polyolefin annually and became a case study for successful privatization across the world.

Because of the plant,  plastic manufacturers no longer needed to import resins and thousands of jobs were generated.

Major  drama however ensued when two Indian engineers working for Eleme Petrochemicals were ­kidnapped in 2007 and Prakash Lohia got personally involved in the gruelling negotiations that led to their release . A lesson was learnt and the plant went on to make security a top priority to avoid similar incidents in the future. Huge amounts of funds were allocated to beef up security with state-of-the-art apparatus and this ability to learn from seemingly disastrous situations has held the company in good stead.

There is also the risk taker in Prakash that gets it right most of the time and  son Amit Lohia, who is  Indorama Corporation’s group managing director, once commended his father for his unerring gut instinct and his ability to not just take risks but to pull them off spectacularly.

As  when in the mid 1990s,  Prakash diversified Indorama Synthetics into the polyethylene terephthalate (PET) zone, which is used for manufacturing plastic bottles of beverages, including colas.

Simply put, Indorama makes the resin that is used to make plastic bottles and Lohia once said that one in every three bottles in the world is made from his resins. The impact on the environment of this amount of plastic notwithstanding, the Lohias continue to thrive with multiple plants  in Europe and the US.

In November 2017 Indorama also made overtures to buy Tata Chemcials' phosphatic fertilizer business for $58 million.

The future is here

Amit Lohia is the face of the future and as is the tendency of the press, a convenient adjective of “the prince of polyester” has been attached to him. Having been born into a thriving business family, he has had an easier start than his father and graduated magna cum laude from University of Pennsylvania’s Wharton School of Business.

He is currently, as we mentioned before, the Managing Director of Indorama Corporation and a director in various Indorama companies. Lohia’s daughter, Shruti Hora, graduated from Babson College and lives in Singapore. As is the case in most Indian business empires, the sons get easier access to business reins than daughters.

After completing his undergrad studies in 1995, Amit worked at Merrill Lynch but the lure of the  family business was too strong.

He was 21, a little older than his father when he first came to Indonesia,  and was raring to go. He was not however given a plum assignment instantly but put in charge of a loss making small textiles unit.

A 2014 Forbes article quoted Prakash on why this was done and we requote the father, “A lossmaking business with all its challenges is a great teacher. Amit was forced to learn on the job.”

Amit did learn some key lessons over the next seven years and we quote him from the Forbes article, “Businesses like garments and fabrics are not meant for people like us. We're good at capital-intensive, mass production."

He spent the next two years understanding the nitty gritty of marketing and at the age of 30,   was given the managing director’s post  and got his first big break.

The break if we can call it that was a new plant in Thailand that produced an acid compound used in making polyester but was besieged with problems.  The emissions and smells from the plant were creating a lot of backlash from other businesses and Amit pitched his tent in Thailand for over six months, in order to figure what was going wrong despite stringent adherence to environmental norms.

Even a trained European firm could not find an answer to the issue but  Amit traced the source of the problem  to a chimney that was discharging a toxic steam mixed with stench inducing organic compounds. He learnt on the job that successful businesses are not glamour driven but labour intensive, often requiring an ear to the ground and a nose to the chimney literally.

Amit was also part of the crisis management team that oversaw the release of kidnapped engineers in Nigeria and we quote him from the Forbes article, “Honestly, each day was like a month.” The experience made him self-confessedly paranoid about the safety of his employees.

Not all stories along the way ended on a happy note though. Amit acquired a government-owned mill in Egypt in 2007 as we mentioned before  but it was faced by labour troubles and yes , the complications in the wake of the Arab Spring. This resulted in the premature  end of the project.

Prakash  insists that despite Amit’s modern approach and understanding of technology, what he  must adhere to always are the core values of the company though he is proud of the cool head with which his son has handled his success and failures.

Amit believes like his father and we quote him from the Forbes article that, “It's important to have assets that are well-diversified geographically so one mistake doesn't end up killing you. Going global has now become part of Indorama's DNA.”

The article also narrated how in order to manage the sprawling  Indorama empire, Prakash and Amit, moved out of Jakarta in 2008. While the father settled in London, Amit set up base  in Singapore, where the family's holding firm is headquartered.

We quote Amit from the Forbes  article, “We were spending so much time outside Indonesia, it made sense to relocate.”.

As the group managing director, he steered   new projects and acquisitions while monitoring operations

At the time the article was written, Amit also had a seat on  the board of polyester- and yarn-maker Indorama Ventures chaired by Prakash and run by his uncle Aloke.  Sri Prakash and Aloke combined forces  in 2008 to form this company, in which they hold 34% each.

However, the biggest responsibility  Amit was assigned was the management of Indorama's African operations, especially in Nigeria where billions have been invested.

It was Amit under whose watchful eye,  unfolded the acquisition of 66% of Industries Chimiques du Sénégal, a partly state-owned fertilizer unit in Senegal.

Philanthropic Outreach

Like many business houses, the Lohias too have tried to combine global business interests with  an intention to give back to the country that they still feel closest to.

The Lohia Foundation is no exception and is a charitable trust founded by Prakash’s father Mohan Lal Lohia and  focuses on areas concerning arts, education, entrepreneurship, and healthcare.

Mohan Lal believes that education is the most powerful weapon to fight poverty and social disorders and today

Prakash, Aloke and their families are involved in varying capacities in the Foundation’s work.

According to the Foundation’s website, some of the initiatives in field of education include scholarships, and education for girls in developing countries. Health initiatives include support for cancer patients, women’s health, and cataract eye camps. Preservation, translation, and digitization of old, even ancient, manuscripts on various subjects is also a passionate endeavor for the foundation.

At a time when history is a contested reality, a recent article in the Economic Times has reported on the attempts of The India Foundation for the Arts,  to preserve this alternative history which is dictated and we quote, “not by bureaucrats or politicians but by people themselves.”.

So what does the Lohia Foundation have to do with it?

According to IFA’s executive director Arundhathi Ghosh, a historical  archive — both physical and online will be launched in October  at RMV Stage II in Bangalore. A citybased digitisation company is working on the online interface, says the article and the project has received a four year-term funding of Rs 1 crore by the Lohia Foundation.

This is a hugely important contribution as it helps to archive the works of over 500 artists that the IFA grants have nurtured over the decades. And these works will address according to Arundhati Ghosh, questions about identity, otherness,  community, sexuality, gender and caste  across mediums like paintings, text, films, theatre, installations and performances.

Even in their business initiatives, the Lohia’s are beginning to think about the larger picture. This was evidenced when in a recent initiative, Europe-based consumer products maker Unilever announced a partnership with Ioniqa Technologies and Aloke Lohia’s  Indorama Ventures to pioneer a new technology designed to convert PET scrap back into virgin-grade material for use in food packaging.

This could be a game changing initiative for the environment as PET is most commonly  used to produce plastic packaging. Unilever estimates that about 20 percent of the material globally makes its way to recycling plants. The rest, is either incinerated, disposed of in landfills or leaks into the natural environment, according to the company.

The  new technology could take PET scrap and break it down to its base molecule level, while separating the color and other contaminants.  The molecules according to reports are then converted at Indorama’s facility back into PET that can be equal to virgin-grade quality.

If the technology succeeds at the industrial scale, it will have huge implications including the possibility that it will be possible in the future to convert all PET back into food-grade packaging. This fully circular solution could transform the industry and that is what all businesses can do fundamentally. To make things better at a molecular level for everyone and the Lohias may just be onto something here that could achieve just that.