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Last Updated : Jul 19, 2018 09:33 AM IST | Source: Moneycontrol.com

Podcast | The business of family — The Hindujas

The Hindujas who have navigated many a twist and turn to reach an enviable state of stability and they have done it without a single crack in the family edifice. Here’s their story

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Every Indian family loves a little bit of dramatic ebb and flow in the Karan Johar tradition of Kabhi Khushi Kabhi Gham and when the family in question is a business empire sprawled across continents, the capricious twists and turns acquire a certain intensity that is truly cinematic.

This is Seetal and in today's Moneycontrol podcast, we will talk about one such group, yes the Hindujas who have navigated many a twists and turns to reach an enviable state of stability and they have done it without a single crack in the family edifice.

The beginning

All empires begin with the seed of an idea and the transcontinental Hinduja story began over a century ago in a small town called Shikarpur, now in Pakistan’s Sindh province. The company was founded in 1914 by a young dreamer called Parmanand Deepchandh Hinduja who was at that time trading commodities.

He smelt potential in the business and travelled all the way from Shikarpur to Bombay and even to a Persian region that we now know as Iran. Both these areas were buzzing with enterprising merchants before India became independent and Parmanand milked the opportunities by importing carpets, dried fruits and saffron and exporting textiles, tea and spices.

His business instincts were spot on the first Hinduja office in Iran began raking in profits. Soon the Hindujas ventured into merchant banking.

By the time, India achieved independence, all four of Parmanand’s sons were being groomed to join the family business. Srichand and Gopichand Hinduja became part of the inner workings of the company in 1952 and 1959, respectively and subsequently Ashok and Prakash Hinduja joined them too.

In 1978, the Hindujas established their most ambitious venture, a brand new finance company in Switzerland which was proudly named as the Hinduja Bank. Subsequently, in 1994, the Hinduja Bank (Switzerland) Ltd redefined itself as a Swiss banking institution.

But a little dark cloud was looming ahead.

Entrepreneurial fortunes are always tied closely to political realities and as the Islamic Revolution of 1979 brought Ayatollah Khomeini to power in Iran, the Hindujas decided to cut their losses and begin afresh in London, which till date continues to be the nerve centre of their empire.

The Hindujas were defined by one key difference from many other Indian business empires founded in India in the pre-independence era. They had always had their fingers in international ventures and boasted a global outlook . But post their shift to Europe, they began to look towards India and in 1984, acquired Gulf Oil International Ltd to make a rather big splash in the oil and gas sector.

An uneasy time of discord

As always, growth and expansion were marked by something contentious. A vibrant free press and the leading investigative journalists of that time implicated the Hindujas in 1986 in the Bofors defence scandal along with Indian politicians and defence officials who were accused of receiving kick backs in lieu of contracts to buy the howitzer canons. The sale of of 400 howitzers was estimated at $1.3 billion.

The Hindujas were accused as one of the middle links to have received money from Bofors to convince the Indian government to go ahead with the transaction.

The pressure from the press and lawmakers was intense, proving to the Hindujas and the world that Indian democracy was a force to reckon with.

Along with the bad press that came their way, they continued with their business expansion and in 1987, acquired Land Rover Leyland International Holdings (UK), or LRLIH, from Britain’s Rover Group.

In 1993, the company expanded its portfolio by establishing Ashok Leyland Information Technology and in 1993, launched IndusInd Bank and cable television with Indusind Media and Communications Ltd in 1995.

Ashok Leyland became a major money spinner and went on to become a $2.5 billion flagship company.

In 2007, Ashok Leyland and Nissan Motor Co. of Japan got into a joint venture to build light trucks.

However, the group’s efforts to enter the telecom sector have not been very successful. Hindujas, sold their 5.1% stake in Hutchison Essar to parent company Hutchison Whampoa in 2006. Even though they expressed an interest in buying a majority stake in Hutchison Essar, Vodafone beat them to it.

The shadow of the Bofors scandal however continued to stalk them and in 2000, the Hindujas stated formally and that the money they received from Bofors had nothing to do with the gun contract. Though the CBI or the Central Bureau of Investigation refuted that claim and charged the Hindujas with serious corruption, cheating and criminal conspiracy, subsequently a Delhi high court cleared them of all charges.

Srichand, Gopichand and Prakash Hinduja were the ones to face the heat primarily during the Bofors episode and when in 2005 the High Court in Delhi discarded all charges against them, Judge RS Sodhi memorably said and we quote: "I must express my disapproval that 14 years of trial and Rs 2.5 billion ($37 million) of public money was spent on the case. It has caused huge economical, emotional, professional and personal loss to the Hindujas."

But vindication in one space did not end more controversies in others.

The British press reported in January 2001, that a UK Minister Peter Mandelson had telephoned Home Office minister Mike O'Brien on behalf of Srichand Hinduja, who was at the time seeking British citizenship. The controversy led to the resignation of Mandelson on 24 January 2001 though an independent enquiry later approved that no impropriety in any manner had been committed.

But at the same time, it was revealed that Keith Vaz, Member of Parliament for Leicester East and also a Foreign Office minister, and some other MPs, had also contacted the Home Office on the behalf of the Hinduja brothers.

The controversy reached a bubbling point when  even the then Prime Minister Tony Blair was accused of prejudicing the independent inquiry into the Hinduja passport affair and Keith Vaz's association with the Hinduja Foundation also came under scrutiny and this led on 11 June 2001,  to the dismissal of Vaz from his post as a minister.

In 2005, Ashok Leyland announced an agreement to supply 100 army vehicles to the Sudanese Defence Ministry but it was alleged by arms campaigner Mark Thomas that this contravened UK arms export legislation, as a number of the company's directors were UK residents or citizens.

It was however business as usual for the Hindujas

The Hindujas continued to thrive.

Despite their inability to successfully bid for Satyam Computer Services Ltd in 2009, or to dominate the information technology services in India, the Hinduja Group today has a presence across areas like foundries, trading, motor vehicles, banking, call centres, power, media, real estate, surgical healthcare solutions and more. The company employs around 70,000 people in over 37 countries.

The Hindujas have also listed Gulf Oil Lubricants India Ltd, the demerged lubricants business of Gulf Oil Corp. as a separate entity on Indian stock exchanges.

Most notably, unlike many business empires, it continues to present a united front to the world through thick and thin, and that may be its biggest success.

Despite many ups and down, some of which we have already recounted, the Hinduja Group currently is one of the largest diversified groups in the world with a distinctive presence in India and abroad.

Interbrand India nominated Ashok Leyland as the 38th most valuable brand in India.

The company became the first truck and bus manufacturer outside of Japan to win the Deming Prize for its Pantnagar plant.

It's after all, all in the family

Today, the Hindujas have become the quintessential, multi-generational business family with the second and third generations taking care of various interests.

Ashok Hinduja for instance looks after the group’s Indian operations while Prakash Hinduja chairs the family's European Group of Companies in Europe.

Srichand Hinduja is the chairman of Hinduja Group of Companies, Hinduja Bank of Switzerland and Hinduja Foundations.

Gopichand Hinduja co-chairs the Hinduja Group of Companies and chairman, Hinduja Automotive Ltd, UK.

The fourth generation of the Hindujas is also involved in the business.

The brothers  we hear could star in an updated version of Sooraj Barjatya's film Hum Saath Saath Hain minus the acrimony because they are all devout men of faith, eat only a vegetarian diet, are  teetotallers, and dress in surprisingly similar styles down to the kind of glasses they wear and  sticking to the family's  favourite colour of choice.. black when they wear business suits.

Media observers have designated certain roles to the key members of the family.

According to an article published in the Telegraph UK in 2001, the engine of the family is Srichand or SP and the networker is Gopichand or GP.

All four brothers despite their religious beliefs lead lavish lifestyles and the Telegraph article stated and we quote, "They view wealth as something to be displayed: they have homes in Manhattan, Geneva, London, Bombay, Cannes and Teheran and companies in many countries, including tax havens such as the Bahamas, Panama, Liberia, Liechtenstein and the Dutch Antilles. They travel in chauffeur-driven Rolls-Royces or private jets.

The Hinduja parties are legendary. Their annual Diwali party at Alexandra Palace has become part of the London social calendar.There was GP's 60th birthday at Harrods where all the guests received silver plates. There was the wedding of three Hinduja sons at Bombay's racecourse, transformed with grottos of dry-ice waterfalls, caparisoned elephants and white horses with golden livery, and attended by 10,000 guests flown in from 58 countries." Unquote.

The family is known to own a 67000 sq feet heritage mansion called Carlton House terrace in London near Buckingham palace, making them one of the richest Asian families in the U.K.

A little more in-depth look in their ventures shows us the volume, expanse and depth of the Hinduja empire.

The Hinduja empire includes commercial explosives, detonators, explosive bonded metal clads and special devices for defence and space applications across eight plants in India. The Hinduja Hyderabad plant is the largest detonator manufacturing facility in the world and happens to be the largest exporter of explosives and detonators to 21 countries.

In 1993, the Hindujas set up the wing that is now the second largest private sector lubricant oil manufacturer in India. The business deals also with greases, and car accessories.

They also have major stakes in coal and iron ore mining and speciality chemicals and manufacture active pharmaceutical ingredients, intermediates, and finished forms such as tablets, capsules, injectable and liquids.

Ashok Leyland, which as we have already told you is a flagship business of the Hinduja group, is the 2nd largest manufacturer of commercial vehicles in India, the 4th largest manufacturer of buses in the world and 16th largest manufacturer of trucks globally.

In the year ending March 2016, Ashok Leyland amassed a sales turnover of Rs 19,877 crore.

In 2016, Ashok Leyland launched India’s first electric bus in order to enter the electric/hybrid vehicles market.

The Hinduja group has also floated Ashok Leyland Defence Systems to design and develop defence logistics and tactical vehicles, defence communication and other systems.

Ashok Leyland incidentally is the largest supplier of logistics vehicles to the Indian Army and has supplied more than 60,000 and counting of its Stallion vehicles.

Gulf Oil International, is one of the leading petroleum companies in the world and operates in more than 83 countries and employs over 3000 people worldwide.

Apart from running its signature filling stations, the company markets car batteries, car care products, vehicle air filters, lubrication machinery, and speciality chemicals in many countries.

Gulf Oil International is also one of the biggest petroleum product traders in the world.

IndusInd Bank happens to be the only Indian bank to have been founded by NRIs (Non-resident Indians), and the only commercial bank in India to receive ISO-9001:2000 certification for its branch network.

It began its operation in 1994 with a capital of Rs 1 billion ($15 million) and its capital has grown to over  Rs 10 billion ($150 million) with assets of around Rs 200 billion ($3.0 billion). Its  customer base boasts over of 1.5 million people across a network of 400 branches spread across over 141  locations in India and has banking relationships with 335 banks worldwide.

Hinduja Foundries was founded over five decades ago and serves the casting needs of the automobile OEMs in India with three manufacturing plants in Southern India. Around 30% of the vehicles in India including cars, commercial vehicles and tractor have major castings supplied by the company.

Hinduja Global Solutions Limited (formerly HTMT Global Solutions) initiated IT operations in 1993 to provide outsourcing solutions including back office processing, contact centre, and customized IT services to a global clientele comprising several Fortune 500 companies.

HTMT’s acquisitions have made the company into one of the top Business process outsourcing (BPO) companies in India, with a customer base of 65 clients and revenues of $200 million.

InCablenet is part of the Hinduja's entry into Media and Communications.

In the medical realm, the P. D. Hinduja National Hospital and Medical Research Centre, Mumbai has earned its credentials as a multi-speciality tertiary care space covering investigations and diagnosis to therapy, surgery, and post-operative care. It is the first tertiary care hospital to have been awarded ISO 9002 certification from KEMA, Netherlands, for Quality management systems, and was awarded the "Golden Peacock Global Award" for philanthropy in emerging economies (2006).

Philanthropic initiatives 

The group attributes its interest in humanitarianism to the philanthropic work of Parmanand Deepchand Hinduja, the founder of the Hinduja Group.

In 1944, Parmanand established a charitable educational trust, the Shrimati Pahunchbai Deepchand Hinduja Trust, in the memory of his mother. Today, this trust runs the K.P.B. Hinduja College of Commerce in Mumbai.

Post the partition in 1947, Parmanand  set up relief centres, settlements, and medical care units. In 1951, he gathered resources and set up an outdoor clinic in Mumbai which developed into the P. D. Hinduja National Hospital and Medical Research Centre, about which we have already told you.

The Hinduja Foundation was founded in 1968 as a public charitable trust and by 1971, when Parmanand Hinduja passed away, a legacy of thriving institutions and enterprises had already been created.

The primary  Foundation now works in tandem with Hinduja Foundations in the UK and the USA.

The Hinduja Foundation also self-confessedly also aims.. and we quote, "to protect, preserve and display India’s priceless antiques to provide opportunities for research and education to historians and students from across the world."

And just who is the Srichand Parmanand Hinduja, the man at the heart of the company's entrepreneurial and social initiatives?

Srichand was born on 28 November 1935 in Karachi, Sindh province, British India. The second son of Parmanand Deepchand Hinduja and Jamuna Parmanand Hinduja, he was educated at Davar's College of Commerce and RD National College Mumbai.

He began his career in his father's textile and trading businesses in Mumbai and Iran. An interesting bit of trivia is that he is keenly interested in cinema and  in the early 1960s,  had acquired the overseas rights of Raj Kapoor's epic love story Sangam starring Raj himself with Vaijayathi Mala and Rajendra Kumar.

Hinduja distributed and promoted the film in Middle Eastern markets and supposedly made millions.

But it was because of the acquisition of Ashok Leyland (from British Leyland) and Gulf Oil (from Chevron) in the 1980s and the establishment of banks in Switzerland and India in the 1990s, that Hindujas became one of India's best known business families  alongside the Tatas, Birlas, and Ambanis.

SP is known to be a conservative tycoon who supposedly brings his own vegetarian food to the Queen's banquets at Buckingham Palace, but he also has a keen eye on new business and investment opportunities.

As of March 2016, Forbes ranked SP and GP Hinduja as the 58th richest in the world, with a net worth of $15.2 billion.

The October 2013 issue of Forbes Life estimated the Hinduja home in London's Carlton House Terrace down the Mall from Buckingham Palace to be worth $500 million, making it the third most expensive private home in the world.

Apart from various business challenges, SP has also survived the suicide of his only son Dharam Hinduja.

Future questions

In an interview with the Hindu in 2017, Gopichand Hinduja, co-chairman of the group, accompanied by Ashok Hinduja, the chairman, spoke about the global economic environment, and the post-demonetised Indian economy.

They spoke about the complexity of doing business in the post-Trump and post Brexit era and also how in recent times, industrialists and business people are less than confident about investing more money in India.

Still they feel and we quote, "Despite all uncertainties, India is still the best destination for investment because of its long-term potential. If they (the government) make our lives easier and if the slogan ‘Make in India’ is changed to ‘Made for India’, it will make India’s economy stronger." Unquote.
First Published on Jul 19, 2018 09:33 am
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