The Billionaire Raj

by James Crabtree

  Still, if the battle was half finished, it was also half won. Longtime observers of Indian corporate life saw a change. The tycoons’ “divine rights” that Rajan attacked in his first speech as governor—to stay in charge no matter what, and to misuse bank funds to do so—were no longer quite so sacrosanct. Attempts to bring debtors to book caught a few big fish, with Vijay Mallya in exile. Other tycoons were feeling pressured, as banks pushed for asset sales and debt recovery deals. The billionaires featured in “House of Debt” might not have paid back their loans, but they were also unlikely to get new ones on anything like the same favorable terms. The security of the old world—the sense that connections and guile would allow them to keep their empires intact—was at least in doubt. Where once India’s tycoons were brimful of optimism, now they looked ever more anxious.

  CHAPTER 9

  THE ANXIOUS TYCOONS

  The India of Our Dreams

  Standing on a platform high up on a steel tower, Naveen Jindal pointed off towards a distant hill, blanketed in trees. A giant industrial facility sprawled out far below: the three red and white striped chimneys of a power plant; a steel mill; and a sponge iron facility, topped off with a lofty viewing area made of rust-colored metal, reached via a slow, rickety lift. Jindal wore a hard hat, along with an expensive-looking powder blue shirt. It ought to have been a moment of triumph: the young billionaire, gazing down at his nearly completed mega-facility. But then he looked the other way instead, where there was nothing but forest. “It is out there, the coal block, maybe a few miles that way,” he said, as a frown crossed his face. “Because of the coal, that is the reason we are here.” He turned back around and gestured towards the plant below, the hot morning sun glinting off his sunglasses. “That is the only reason all of this is here. And then they canceled it, and we were stuck.” He paused, and then flashed a cheerful grin, as if suddenly conscious that he was being too downbeat: “So this happens, and then you have to say, ‘Oh! What to do?’ ”

  Jindal’s plant at Angul, in the mineral-rich eastern state of Odisha, was to be one of the largest in India: an integrated complex churning out millions of metric tons of steel and thousands of megawatts of power each year.1 At its launch it seemed a fittingly ambitious project for a glamorous tycoon. The youngest son of Om Prakash Jindal, a steel maven in the decades before liberalization, Naveen Jindal inherited a portion of the family business when his father died in a helicopter crash in 2005, and when he himself was only in his mid-thirties. Jindal quickly acquired an image that was part young Turk entrepreneur, part playboy: a snappy dresser, polo player, champion marksman, and for a time, the country’s best-paid businessman, awarding himself an annual salary as high as Rs730 million ($11 million).2 He followed his father into politics, too: at the time of his death the elder man was a minister in the government of Haryana, a state to the west of New Delhi; the younger became a Congress MP in 2004, representing Kurukshetra, a seat in the same region, which his father had held roughly a decade before.

  Critics accused Jindal of conflicts of interest, given that his company relied on land and minerals that only the government could provide. He denied it. Unlike fellow elected tycoon Vijay Mallya, he also carefully avoided raising issues related to his businesses in parliament. Even so, when coal rights were handed out during the 2000s, Jindal Steel and Power Limited (JSPL) won more than any other company.3 The flip side of that good fortune only became clear in 2014, when the Supreme Court canceled all of those licenses during the “Coalgate” scandal, along with dozens of others belonging to other industrial groups. The decision hammered Jindal’s share price and saddled him with a half-built facility at Angul with no coal to fuel it.

  Three years later I went to have coffee at Jindal’s headquarters in New Delhi, to find out how his attempts to rescue the business were going. As I was about to leave, as if on a whim, he asked me to fly down with him to see the plant the following day, telling me to turn up at the VIP terminal of New Delhi’s airport. Having arrived a little after 6 a.m., I was ushered into a sparse private lounge, with marble flooring, cream leather couches, and garish floral art. A plastic model of a private jet stood beneath a Pyrex dome in the middle of the room, in case a passing dignitary wanted to buy it. There was a second secluded area in one corner, hidden behind frosted partitions and presumably reserved for especially important persons.

  After about half an hour I walked through a private security line, along with various JSPL executives and half a dozen other men in ill-fitting suits, who turned out to be from a large bank. We all emerged into the early dawn light, where a fleet of white cars with orange flashing lights picked us up and drove across the tarmac at thrilling speed, weaving between stationary commercial airliners to bring us to our own waiting plane. It was only then that Jindal himself arrived, bounding out of an SUV to shake hands with his staff, before walking over a short length of red carpet and leaping up the steps.

  The cabin inside was comfortable, with twenty leather executive-style seats, polished walnut paneling, and a cupboard by the door where you left your shoes. A single stewardess busied herself handing out juice as we taxied down the runway. Jindal huddled in a separate cabin towards the rear with the bankers, who I later discovered were employed by one of JSPL’s big lenders, and were visiting the plant to discuss the loans Jindal needed to tide the troubled project over. It was no great secret that he needed money—Jindal claimed the coal cancellation had cost him $1 billion or more—although in this he was hardly alone.4 Many industrialists hoped that Narendra Modi would help them to revive their moribund projects. But by the time Jindal and I met, more than two years after Modi’s 2014 election triumph, disappointingly little had changed. Laden down with debt and facing intractable political obstacles with existing investments, many once-buccaneering tycoons had in effect gone on strike, and simply stopped deploying new capital at all.

  Our plane landed around two hours later at Savitri Jindal airport, an isolated airstrip and terminal building named after Jindal’s elderly mother, a few kilometers away from the Angul plant. Two dozen company salesmen were waiting to greet him outside the terminal, having flown down from Rajasthan, where they sold rebars, the thin steel sticks that provide the reinforcement in reinforced concrete. Jindal’s face visibly brightened: although no longer an MP—he lost his seat three years earlier, swept aside by Modi’s wave—he still enjoyed the backslapping of retail politics, and posed happily for selfie after selfie. Jindal looked almost boyish, a small, lean figure surrounded by heavyset mustachioed men. As if settling into an old routine, he gave a brief speech, complementing the salesmen on their efforts. “I believe if we keep working that India can become the country of our dreams,” he said towards the end. “And you are all part of that.”

  Settling into the back of a bulky white Toyota jeep, Jindal used the ride to the plant to tell me about its many misfortunes. He had decided to build the place only after having secured rights to the “Utkal B1” coal block, the same one he would later point to from the tower. He visited the area at first by helicopter—there were no roads—and found only isolated villages, scrubland, and forest. But he pushed on, attracted by coal deposits large enough to supply his facility for a quarter of a century or more, and began construction in 2008. By the time the coal licenses were canceled six years later, the facility was already well behind schedule, having sucked up the best part of $3 billion.5 Industrial projects elsewhere in Odisha often had problems with Maoist Naxalite rebels. But in Angul, before the coal cancellations at least, the headaches had been more humdrum: project delays, environmental protests, regulatory wrangles, and the odd local villager, unhappy with the money they had been paid to leave their land. As we pulled up at the plant office, I got out of the car and struggled to shut the door. “It’s armor-plated, so there is a reason they are hard to close,” Jindal said, before adding with a smile: “You can’t be too careful.”

 
For the next few hours Jindal led the various bankers on a tour of the plant, driving from one huge industrial building to the next in a fleet of cars. The coal cancellations had forced him to mothball part of the planned facility, he explained, but he decided to spend more money and build a new steel blast furnace instead. Then he had to buy expensive coal on the open market, in order to get both his steel and power plants up and running. Even this was no panacea: global steel prices were depressed at the time, and he complained often about cut-price Chinese steel imports, to supportive nods from the group. Jindal’s image was everywhere around the plant, peering down from placards and staring into the middle distance from safety posters. One billboard showed his smiling face with the slogan “Our leader: he knows the way, shows the way and goes the way.”

  Near the entrance we passed a roundabout with a giant Indian tricolor raised on a giant flagpole, allowing Jindal to stop and discuss one of his favorite political achievements. Having studied in Texas, he returned home to India impressed by America’s habit of flying grand ceremonial flags. At the time, India’s constitution allowed its citizens to hoist up their own only on a handful of national holidays. Jindal campaigned successfully to overturn the rule.6 The flag became a kind of personal symbol, as well as a useful political vehicle, given that it positioned him as the head of a patriotic movement with whose aims almost no Indians would disagree. Jindal always wore a flag lapel pin, as did all of his staff. His foundation paid for the construction of dozens of monumental poles around the country, topped with flags the size of swimming pools. “Two hundred and seven feet high,” he said, looking up with pride. “India has the most number of monumental flags of any country now. Thanks to us.”

  Well before he died, Om Prakash Jindal split his businesses between his four sons.7 Jindal’s portion was small, just a steel mill and a few mines. But he expanded quickly, showing an adventurous appetite for risk, and raising turnover from almost nothing in 1998, when he took over, to well over $3 billion in 2012, the year his troubles really began.8 He proved inventive, too, making a minor fortune setting up India’s first private sector merchant power plant.9 Acquiring scarce resources, notably coal and iron ore, was a particular skill. He expanded abroad, developing mines in Australia, Botswana, and South Africa, and signing a $1 billion deal to explore a vast Bolivian iron ore deposit.10 That deal collapsed in 2012; although by then Jindal had bigger problems after four of his coal blocks were mentioned in a report from auditor Vinod Rai.11 The licenses for all four were then canceled by the Supreme Court two years later. In the years that followed, police began to probe the tycoon’s various coal deals, raiding JSPL’s offices and launching official corruption cases.12 Jindal consistently denied wrongdoing, but the episode proved chastening, turning an unusually image-conscious tycoon into one of the most prominent faces of India’s long battle against cronyism.

  Later that day I watched as Jindal sat at the head of a boardroom table, with his various executives on one side, and the half-dozen bankers on the other, going back and forth over project milestones and delays. The discussions were cordial but tense. Jindal already had outstanding debts of nearly $7 billion.13 The bankers pressed to understand why yet more was needed. At times the talks reached an impasse, and all eyes turned deferentially to the head of the table, waiting for Jindal to find a way forward. Watching him, I was struck by the stress of his position: the billions in loans, the half-finished projects, and the thousands of workers who saw his face on posters and expected him to find a way to fix them. “The bankers all want your personal guarantee, the government wants you to do this and that,” he told me later, sitting in his sparsely decorated plant office. “For the good things that happen, the credit goes to the owner, and anything which goes wrong, all the burden as well, whether he deserves it or not.”

  In person Jindal was courteous and pleasant, showing no signs of a rumored other side of his character, one involving a short fuse and a habit of bawling out employees. Even so, it was clear that an impetuous streak lurked beneath the charm. In the midst of Coalgate, he once picked a public fight with Subhash Chandra, a fellow tycoon and owner of television station Zee News, which had run numerous critical items about JSPL. Seeking revenge, Jindal launched a sting operation, in which he sent executives from his company to meet two of the channel’s journalists, and recorded them soliciting bribes.14 The fallout was messy and did little to help the reputation of either man. It wasn’t hard to paint Jindal as a patrician figure, with his polo-playing, stables filled with horses, and a taste for immaculate black Nehru jackets, which made him look ever so slightly like a Bond villain. But it was an image that sat at odds with the everyman patriot persona of his political days. “In Kurukshetra, he sheds his well-tailored suits and aviator sunglasses,” essayist Mehboob Jeelani wrote in a profile in 2013.15 “He prides himself on his refusal to attack the opposition, and he shies away from the sort of hot-button topics that fuel shouting matches on prime-time television.”

  Jindal was equally careful not to criticize Modi’s government for his troubles. His prominent Congress ties made it unlikely he would get much help from the BJP in any case, although eventually he did hope to get back the Utkal B1 block, he said. There was a legal case winding through the courts about it, although he did not seem confident that it would produce a quick result. Where once he had denied that a conflict of interest existed between his roles as politician and industrialist, now he admitted that his choice created problems. “If people ask me, I would tell them, ‘Do not get into politics and business,’ ” he said, “although I couldn’t follow that advice myself.” From time to time as we spoke, again as if sensing that he might be coming across as too pessimistic, he would turn unexpectedly cheerful. “I believe we have to change to be the country of our dreams, otherwise it’s empty talk,” he said at one point, the third time he had used a variant of that phrase during the day. I asked if he wanted to return to parliament, which I sensed he did. (He still kept a political website, with a similar slogan—“committed to building the nation of our dreams”—plastered on its front page.) He smiled and dodged the question, saying he didn’t think it likely.

  In the public eye, Jindal and his fellow industrialists were viewed as consummate insiders with many helpful friends in New Delhi. It was striking how differently Jindal saw things, painting his own role as one of ceaseless struggle against official and technical obstacles. He was clearly still irked by the various corruption cases against him, hinting that they were politically motivated. “In a lot of places people expect you to pay them,” he told me. “We actually never did, and then they hold that against you, and they say, ‘OK, you are like this,’ and they find fault with you.” Most observers agreed that the original process by which coal blocks were handed out had been deeply flawed, and the new auction system introduced to replace it was both fairer and more efficient. But Jindal still showed especial annoyance with the idea that he had been gifted blocks for free. He pointed out more than once that he had won his coal under the rules that applied at the time, and that the right to mine itself was just the start of a decade-long process, and one marked by huge expense and uncertainty as you tried to dig the stuff out of the ground. “Our name has been so much sullied. Coal scam? We are committing a scam here?” he said at one point, pointing to the vast facility around him. “It’s like the Golden Gate Bridge in San Francisco, the scale of this, 30,000 people have been working here. And they say we are doing a scam?”

  Lala Land

  I pondered Jindal’s troubles, and those of India’s industrialists more generally, as I settled back into my seat for the return flight that evening. The stewardess served sparkling wine, and in the cabin at the back the tycoon and his bankers clinked glasses, suggesting their discussions had gone well. It was hard to feel too sorry for a billionaire returning home on his private jet, but Jindal cut a chastened and somewhat sympathetic figure even so.

  Few people
had encapsulated more clearly the adventurous spirit of India’s boom times. Yet here he was, parlaying with bankers and trying to keep the plates spinning, for fear he might now lose one of his most ambitious investments. His critics accused him of influence peddling and moving ahead illegally with projects without proper permission. Whatever the truth of those allegations—he firmly denied them all—they also embodied a different dilemma, and one faced by almost anyone trying to build big industrial projects in India: namely, that if you followed every rule and waited for each official green light, you could be reasonably certain that nothing would ever be built. Yet even behind that issue, there lay a different set of questions about the future of the kind of sprawling business that Jindal had built, and indeed the country’s industrial conglomerates themselves.

  For all his self-confidence, Jindal clearly felt underappreciated, as if his sizable fortune was not reward enough for the technical achievements of his projects, or for the acts of sheer will needed to transform patches of rural scrubland into forests of concrete and steel. Earlier I’d asked him what he had learned from the various difficulties faced by his business empire. “That you have to be really, really careful about everything,” he replied, after a few seconds’ thought.

  When he began building projects like Angul, banks were eager to lend and foreign investors were plentiful. There were few limits to what might be built: the country of our dreams seemed within reach. Jindal did not say this exactly, but I guessed it was also an intoxicating time to be a promoter, sitting amid a web of fund-raising and dealmaking, expanding his operations into new areas, and enjoying a period of industrial possibilities at a scale almost unimaginable to men of his father’s generation. Against the backdrop of two decades of hyper-globalization, when money was easy to come by and the political system flexible to their needs, he and other industrial titans had bet their businesses on India’s bright future. But then corruption worries flared up, bureaucrats got cold feet, and swings in global commodity prices left many of their power stations and steel mills unable to operate. Cash flows shrank and debts mounted. The heads of business houses who would once have expected to win handsome rewards for their boldness suddenly found themselves struggling to stay afloat.