Jindal’s predicament was just one extreme example of the stormy recent history of India’s conglomerates more generally. Sprawling organizations like JSPL had long fallen out of fashion in the West. Business schools there taught the virtues of core competencies, drawing on the work of Indian-born management thinker C. K. Prahalad, among others. Financial investors also marked down diversified companies with a hefty “conglomerate discount,” believing them to be bloated, unfocused, and, in the case of family-owned businesses, unduly prone to the whims of their founders.
Yet family enterprises had dominated commercial life for so long in India, as they had in the rest of Asia, that they seemed almost part of a natural order. Secure in their own ownership, their Indian heads were meant to be able to make bold, long-term investments, ignoring the short-term demands of shareholders. Their admirers claimed they exhibited a sense of stewardship, showing loyalty to workers and communities that went far beyond what might be expected from a typical Western PLC. They also often had long-established political relationships, a clear competitive advantage in a country like India, where the good graces of government often meant the difference between commercial triumph and disaster. Most important of all, men like Jindal were meant to be adroit judges of risk, not least because they were so often using their own capital to invest, and thus were said to have “skin in the game.” Over the years, there had been plenty of Western experts who thought the Indian conglomerates would gradually fade away, to be replaced by a more orthodox Anglo-Saxon model, with diffuse corporate ownership and clear splits between managers and shareholders. But for all their frequency, these predictions never actually seemed to come to pass.
There were plenty of cultural and historical theories to explain the conglomerates’ successes, but mostly it came down to what Swedish economist Gunnar Myrdal once called India’s “soft state.”16 Western companies could raise capital through financial markets, and rely on the state to build good quality infrastructure. They also hired graduates from good universities and used the courts to settle disputes. In India, all of this was different: capital was expensive, infrastructure dilapidated, talent scarce, and the judicial system typically creaky and unreliable.17 Many businesses decided they needed to do these things themselves.
There was then a wider “institutional void” where the state should have been, in the words of Tarun Khanna, the author of a widely quoted Harvard Business Review article back in 1997, which explained the success of diversified businesses in emerging markets.18 Financing was a particular challenge. Because raising capital was so expensive, Indian tycoons became masters at shuffling money between their various businesses, often doing so covertly, as Raghuram Rajan discovered during his tenure as the head of India’s central bank. Raising more money from within their own company also allowed India’s promoters to keep complete family control, rather than diluting their ownership by selling any more than a small quantity of shares to outside investors. At their worst, these kinds of enterprises were mockingly dubbed “lala” companies, using a Hindi word implying a business operation where the family owners were basically in sole charge, while signs of professional management and good governance were basically absent.
If conglomerates prospered because India’s state was weak, they also came to thrive because it was mighty. Back in the days when Jindal’s father ran their family’s businesses, the government controlled production using industrial licenses. They were handed out sparingly, encouraging entrepreneurs to snap up any they could get their hands on. This created odd-looking companies, with operations stretching across entirely unrelated industries, such as the one built by Vijay Mallya in his earlier days, which stretched from whiskey and beer to pizza retail and industrial electronics.
Incoherent though this licensing system was, it often proved oddly popular with business owners, who viewed their licenses as a means to protect themselves from potential competitors. More often than not, the system also encouraged influence peddling. Business houses built up lobbying operations in New Delhi to win new licenses and tweak regulations. As prime ministers, both Jawaharlal Nehru and Indira Gandhi wanted to use the state for good socialist purposes by curbing the power of big business. Perversely, their policies had the opposite effect, as politically connected major industrialists proved skilled at navigating the bureaucracy in ways that smaller businesses simply could not match. Meanwhile the shape of the state the two leaders created—intrusive in many areas, but barely present in others—provided the ideal conditions for conglomerates to flourish.
Rising competition after 1991 did then push some older Indian business houses into decline, but to others liberalization proved a bonanza, allowing real estate businesses to launch mobile phone arms and newspaper magnates to build power stations. Anand Mahindra, one of India’s more cerebral tycoons, told me once that his Mahindra conglomerate, which he insisted on describing as a “business federation,” had gone on to thrive. “C. K. Prahalad used to come here and berate a lot of Indian companies for their lack of focus,” he said. “And I used to go for this voluntary flogging every year. He used to say, ‘Why don’t you stick to your knitting?’ ” But with the old licenses gone, Mahindra said wide-ranging businesses like his own—which now dabbled in everything from cars and solar power to aerospace and holiday resorts—could actually provide the best means of launching new and innovative ventures, which he claimed could be incubated within other, older business lines.
There was something to this argument, but even after 1991 most of India’s conglomerates seemed to prosper rather more for the same old reasons they always had. The state still did a poor job providing basic infrastructure, pushing industrialists like Jindal or Gautam Adani to build their own railways and roads, just as America’s nineteenth-century tycoons did before them. Lobbying for industrial licenses was no longer needed, but as the economy boomed there were plenty of other regulations and rules that could be gamed, keeping the industrial embassies in New Delhi busy. “Elements like environment rules became the new playground for whimsical government conduct, a new kind of license-permit-Raj,” as author T. N. Ninan put it.19 Rather than predictions of decline, the conglomerates actually became more dominant, making up “a whopping 90 percent” of the country’s fifty largest companies by revenue in 2013, according to a study by McKinsey management consultants.20 Credit Suisse, the investment bank, calculated that two thirds of the country’s larger listed companies were family-run too, the most of any major world market.21 For all the travails faced by Naveen Jindal and his fellow tycoons, their sprawling conglomerates still dominated India’s new Gilded Age, just as their equivalents had in America more than a century before.
Big Fat Tycoons
Naveen Jindal’s redbrick headquarters in New Delhi, like that of many conglomerates, had the appearance of a family shrine, with pictures of his father dotted throughout the building. Mukesh Ambani’s office in southern Mumbai had a similar feel, which was something more like a medieval court than a modern multinational corporation. The Tata group might no longer have been controlled directly by the Tata family, but its own offices, just up the road from where my wife and I lived, were still filled with their statues and portraits, demonstrating the way family ties in India continue to act as a powerful commercial glue.
Caste often plays a similar role, especially in the north of the country, where major business families are mostly drawn from just a handful of castes and communities. Some are Brahmins like Vijay Mallya, a proud member of a sub-caste known as Goud Saraswat Brahmins, or GSBs. But more numerous are the Banias and Marwaris, the two trading groups which dominate the upper reaches of each year’s Forbes billionaire list, and which include among their number the Ambanis, Gautam Adani, and the Ruia brothers of Essar. Indian business is controlled by a “Brahmin–Bania hegemony,” as one account put it.22 These bonds have built trust, making it easier to do deals or raise money, while creating business cultu
res that prize loyalty, history, and community as much as profits and revenues. Yet these same bonds of caste and kin have often provided an ideal backdrop for back-scratching and cronyism too, hence why even the word bania has highly negative, unscrupulous connotations.
“They bred not employees but cult members, whose motivation was not just money but glory,” as novelist Rana Dasgupta once wrote, describing what he called the “martial” enterprise culture that came to dominate many of the country’s larger commercial clans. “North Indian business families have always considered themselves to be at war, and the sight of calamity and destruction revives their spirits. The early twenty-first century shake-up allowed the more forward thinking of these families to greatly increase their economic reach.”23 The changes this shake-up brought were partly a function of scale, as small-time lala business owners suddenly found themselves transformed into full-blown tycoons, with global ambitions and vastly expanded fortunes. But they also followed shifts in attitude and style among the traditional business elite, a sentiment I once heard from Subhash Chandra, the charismatic media tycoon who founded Zee TV, and also the man with whom Naveen Jindal had conducted a brief feud. “Our country has come through four or five hundred years of slavery, right from the Mughals to the Portuguese, then to the British,” he told me once, as we sat in his office in midtown Mumbai. “Our people were suppressed for more than maybe eight hundred years…That is changing.”
That change of style manifested itself most clearly in a new culture of bling, as India’s once-dowdy business families began investing in a familiar panoply of luxury cars, private jets, and mega-yachts. Few things then demonstrated their success more clearly than an outlandish new family home, an area where Mukesh Ambani once again proved to be the pioneer: the first Bollygarch to display his wealth via a building no one could reasonably ignore. Not every Bollygarch built themselves a defining new pad: Jindal, for instance, lived in a spacious old bungalow in the heart of New Delhi, while also keeping a giant ranch-style home on the edge of town, with stables for his dozens of thoroughbred horses. Others bought older homes and did them up, for example elderly pharmaceutical mogul and horse-racing enthusiast Cyrus Poonawalla, who spent Rs7.5 billion ($113 million) to buy an old seaside palace in Mumbai’s Breach Candy neighborhood in 2015. Originally known as Wankaner House, the building had belonged to the Maharaja of Wankaner, a minor aristocrat. It was in a state of some disrepair when the Poonawallas bought it, with plans to turn it into a palace once again, in what was reckoned to be the most expensive residential property purchase in Indian history.24
Even so, it is the newer buildings that are most striking, a further example of which stands just down the road from Poonawalla’s planned mansion. A thirty-six-story residential skyscraper, it dwarfs the nearby neighborhood, casting a long shadow over Windsor Villa, the ornate house nearby where the young Salman Rushdie had once lived. In Midnight’s Children, the novelist recalled gazing from his bedroom as a child and watching pale European swimmers “cavorting in the map-shaped pool of the Breach Candy Club” just over the road.25 Now the newer building, dubbed JK House, looms over the club, having risen to become India’s tallest family home, even outstripping Antilia once it reached its full height of 145 meters. Its owner is Gautam Hari Singhania, the fifty-something heir to the Raymond Group, which among many other things owns India’s best-known chain of men’s suit and fashion retailers.
Rather than their size, it was the likeness between Antilia and JK House that stood out. Just like its more famous doppelgänger, Singhania’s building featured a cantilevered design, with numerous slablike balconies that jutted out from its main body. A newcomer to Mumbai might well have been forgiven for thinking that Ambani had in fact built himself two houses, rather than just one. Inside, Singhania’s interiors were said to be correspondingly lavish, with two swimming pools and a private museum to house memorabilia from his family’s textile dynasty. Purely coincidentally, Singhania had begun to develop plans for his home around the time Antilia was nearing completion. His building process was not smooth: in 2012 Mumbai’s city council halted construction at JK House, citing planning violations.26 Years of legal wrangling followed, leaving the building’s half-completed skeleton covered in dark green wrapping.
I watched JK House in its various stages of construction, not least when I went swimming in the pool at the Breach Candy Club, from where the building works, or the lack of them, were clearly on view. Eventually I became curious about its owner, and in particular the odd psychology that led Singhania to design a vastly expensive home that was little more than a pastiche. The changes sweeping over India were so profound that it almost no longer seemed remarkable that a wealthy man would build himself a huge residential skyscraper. Even so, Singhania fitted almost too perfectly the image of the playboy tycoon: a party animal, nightclub owner and lover of every kind of fast, expensive vehicle. He raced Ferraris, flew jets, and owned a quartet of speedboats, named variously after the James Bond movies GoldenEye, Goldfinger, Octopussy, and Thunderball. The patriarch of a Mumbai club for supercar enthusiasts, he was said to have included many floors of garages in JK House to house his own vast collection.
Singhania dressed flashily too, as one might have expected from a textiles tycoon. He agreed to meet me at his office, not long after construction of his home had finally been completed in 2016, and arrived wearing white and black slip-on loafers, and a striped purple and orange shirt. To my disappointment he politely declined to discuss his house, or indeed its curiously familiar design, although he chatted amiably enough about his love of motor racing, and plans for his Raymond conglomerate. The company made fibers and fabrics, but was best known for its suit shops, including a flagship store which occupied the bottom two floors of JK House. Much like Anand Mahindra, he said he didn’t like describing his business as a family-run conglomerate. He favored “family-managed professional organization,” he explained, meaning one in which skilled outsiders were hired in to run most businesses, but where the family held most of the equity and made the most important strategic decisions. Much as with Naveen Jindal, I sensed his slight irritation with the playboy image that he had spent so much money creating, as if he felt that his passion for expensive hobbies drained credibility unfairly from his more serious commercial plans.
Drawn from the Marwari community, the Singhanias had once been one of India’s oldest and most important business families, with textile operations dating back to the 1920s. But while their name remained storied, their businesses had more recently been eclipsed by newer, more aggressive rivals. I wondered if the sheer visibility of Singhania’s home was part of a simpler ploy to maintain his family’s place among Mumbai’s A-list. Although Singhania himself said he welcomed economic liberalization, at times he almost seemed nostalgic. “It used to be that when I went on a Mumbai-to-Delhi flight, I’d know pretty much everyone on board, and today I often know no one,” he told me. “There are many more opportunities but it is much more difficult to make money,” he added. “It is a different environment. There is no more licensing. Your skill set was managing the government in those days. Today it is managing a free economy.”
If modern-day palaces like JK House or Antilia act as physical displays of a tycoon’s achievement, their displays of wealth also often come in a more social setting: the big fat Indian wedding. Famous for their length and opulence, marriage ceremonies carry particular significance in a country long conscious of hierarchy and caste, but also increasingly stratified by symbols of wealth and taste. The preeminent responsibility of any Indian parent towards their children, even modest Indian wedding celebrations last for many days, and often involve guest lists stretching into the thousands. There is intense competition for desirable venues on auspicious days during the wedding season, which runs through the cooler winter months. Even middle-class parents will borrow heavily to ensure the perfect ceremony, which could involve half a dozen bridal costume
changes, and a white horse for the arrival of the groom. But among the business elite, where money is basically no limitation, the only question became: How big and fat could a wedding grow?
My first taste of this came when I was sent the fancy boxed invitation for the wedding of Gautam Adani’s son, not long after arriving in Mumbai. But even this seemed positively orthodox compared to the tens of thousands of luxurious blue boxes sent out in 2016 by mining tycoon Gali Janardhana Reddy, the most prominent of the Reddy brothers caught up in the iron ore scandals that hit the southern state of Karnataka. Reddy’s box opened to reveal a small television screen built into the lid. A video began in which the tycoon, alongside his daughter and her husband-to-be, performed a Bollywood-style song, set against a backdrop filled with CGI-generated bulls garlanded with flowers and dancing white horses.27
Even in a country famed for extravagant marriages, the wedding that followed was remarkable. Spread over thirty-six acres in central Bangalore, the venue included a mock-up of the mining baron’s hometown fiefdom of Bellary, in the east of Karnataka, complete with actors in costume, along with buildings designed to re-create the ruins of Hampi, a nearby UNESCO World Heritage Site. Some fifty thousand guests attended many days of celebrations, in which the bride’s saris and jewels alone were reported to have cost millions of dollars.28 The wedding’s total expense became the subject of escalating speculation, not least because it took place in the midst of the cash crunch caused by Narendra Modi’s “demonetization” drive—an experiment that itself played havoc with the old wedding tradition of using plenty of black money to pay for festivities. Reddy claimed a modest outlay of Rs300 million ($4.6 million); India’s newspapers suggested the entire affair came in at a rather grander Rs5.5 billion ($85 million).
The Billionaire Raj Page 27