Making It Big

  He rose from his seat and pointed to a map of the Jebel Ali project. ‘Tell me, which building do you want?’

  The properties were not yet officially in the market, and this man was asking me to choose the property I wanted! That was the first real estate project of Cinnovation.

  Here, I would like to mention that eventually this project proved all my concerns right—such as no appreciation, no sales, and delays—but it also proved my intuition and gut feeling correct as it became one of the very successful projects, giving us identity in market and decent returns on our investment.

  And all this happened during my brief, unplanned stay in Dubai.

  The first impression is the last impression. This adage, which I have been hearing since childhood, applies perfectly to business.

  My meeting with the head of Nakheel illustrated this. That meeting helped establish my stature in Dubai’s realty market. My meeting with the head of Dubai Properties, Hashim al-Dabal, was equally fruitful.

  The meeting was set up with al-Dabal as part of my plan to expand my business in Dubai. He was the CEO of Dubai Properties which was the master property development arm of Dubai holdings. They had all the strategic land banks and plots in the so-called New Dubai vision. Ahead of the meeting, I discussed what I had in mind with my colleagues, asking them to prepare a presentation that clearly mapped out our plans and goals.

  On the day of the meeting, as we stepped into a lift in Dubai Properties Tower to get to al-Dabal’s office on the twentieth floor, I asked my colleagues, ‘Are you guys ready for the presentation?’

  They looked at each other and both turned red with embarrassment.

  ‘What’s up?’ I was surprised.

  ‘I haven’t prepared the presentation,’ one of them said and, pointing to the other, added, ‘I thought he was going to do it.’

  I turned to the other. He was pointing to the first one. Nobody had prepared the presentation! I was exasperated. I am already in the lift, the meeting is due to start in ten minutes and I have nothing to show! It had taken a great deal of effort to secure even the short meeting we had been granted. If we did not go ahead with it, we might as well say goodbye to Dubai’s realty market. It was a now-or-never situation for me.

  The lift was gradually ascending. Nobody spoke a word. My colleagues were completely embarrassed while I was trying to focus and decide in just a few minutes how to conduct myself during the meeting. By the time the lift reached the twentieth floor, I had readied myself physically as well as mentally. When I recall that moment, it gives me an insight into what has helped me achieve success. When the two were struggling for an excuse for their blunder, I was thinking and planning to avail this opportunity in our favour even without having the desired ammunition and with a team of lost soldiers.

  As we sat in front of Hashim al-Dabal, my colleagues were at their wits’ end. They did not know how I would handle the meeting. As for me, I felt calm and composed.

  ‘Sir, I know you are a very busy person. Each and every minute is precious to you. That’s why I don’t want to take up your time with a formal presentation. It’s not possible to explain my business plans and models to you in a meeting so brief as this. We can meet some other day for that. Today I want to only explain my business idea to you since a business idea is everything. Other frameworks, work plans and presentations are trivial things in comparison. I can email them to you to read at your leisure. I feel that when you get to know of my idea about a partnership between us, you’ll be interested in learning more.’ As an entrepreneur, I take my business decisions on the basis of idea and conviction. Number crunching by an accountant or impressive presentation from management graduates is only required to support the decisions taken. That’s why I would like to avail every minute of our meeting to share my conviction in the business idea and commitment towards our partnership.’

  I spoke for exactly fifteen minutes. In those fifteen minutes, I told al-Dabal everything—about the establishment of the Chaudhary Group to the leap we have taken into the field of hospitality and our dreams for Dubai real estate.

  ‘I am quite impressed with you, Mr Chaudhary, and would like to thank you for utilizing this time in meaningful discussion rather than colourful presentation. I come across that every second meeting,’ al-Dabal said, taking a long breath.

  At the end of the meeting, I signed an MoU with Dubai Properties. A presentation was never required after that.

  That is what I meant by saying that the first impression is the last impression.

  Following the Jebel Ali property deal with Nakheel and the MoU with Dubai Properties, we were ready to take Dubai’s realty sector by storm. We formed a new company to look after this venture—Sunstar Developers, an autonomous company under Cinnovation.

  We did not make the profits we hoped to from Nakheel’s property. The project got delayed. The buyers who had promised to purchase the property changed their mind. There was cut-throat competition in the market, with real estate projects mushrooming everywhere. Some of the projects started after ours were completed before ours! We could not sell our property for a premium price even after waiting for six months. As millions of dollars were locked up in the first project, we did not dare opt for a second one.

  A good thing about the realty market is that even if one cannot sell one’s property in time, it does not entail a complete loss. You can always recover a portion of your investment by selling the property at a lower price. If you want to recover all your money, you have to wait for the market itself to fully recover. You have to be financially very strong for that. Those who can keep themselves afloat eventually come out of crises.

  It was not easy for us to wait for very long with an investment worth Rs 200 crore at stake. We waited for a few months. Eventually, we decided to dispose it of by breaking it up into smaller units. We learnt a good lesson from that first project in Dubai.

  I believe that the Dubai market was a perfect match for my working and decision-making style. I made better returns on those investments where I took decisions on the basis of my intuitions rather than on market study or expert’s advice—be it investment in Taj, Wai Wai, hotels in Sri Lanka or CBD Projects in Dubai. I remember that we purchased ten villa plots in Dubai Land, which we sold with profit in due course unlike others who panicked and sold either at the cost price or less than that. We saved 2 per cent transfer charges by not getting it transferred in our name and letting it remain in the name of the previous owner. The seller requested my colleague for an appointment with me. ‘How can he keep such a huge investment in my name, without knowing or meeting me even once?’ he wondered. It was one of my decisions based on intuition.

  We then made acquaintance with the HDS Group of Dubai. We decided to build our own properties instead of buying structures built by others. Constructing a building on a plot of land owned by others would raise the cost of production, and you could not sell the property at a competitive price. This was one of the problems with the Jebel Ali property. Here again, when we were signing the deal, my team suggested that we were paying higher than the market rate. I replied that this was not our cost but our investment in the project and relationship. Over time, both the project and relationship have proved to be one of the strongest and most satisfying.

  Sunstar Developers started to work with the HDS Group on two projects in Dubai—HDS Sunstar Tower 1 and HDS Sunstar Tower 2. Before starting construction, we publicized the concept, layout and overall design so that interested buyers could get a fair idea of the project they were putting their money into. This idea worked.

  Huge presales in both the towers were enough to make us forget the pain of our initial loss. Location was the strongest point in the two projects’ favour. Both the towers are located in the business district of International City, which is considered the centre of Dubai. The location also easily connects to Sheikh Zayed Road, the main arterial road in Dubai. People have now started to stay in the towers.

  Sunstar is now
known as CG Realty. Meanwhile, Zinc Middle East is collaborating with Sunstar to set up hotels under the brands of Zinc and GLOW by Zinc, and also hotels in partnership with the Taj Group. The first hotel is coming up at Jumeirah Lake Towers in Dubai. We have a couple of local partners, Rajiv Shroff and Jayant Ganwani. We are planning to open Taj Vivanta by the beginning of 2016 as the premier hotel in that area.

  World Islands

  World Islands is a unique human creation.

  It is a network of small man-made islands in the Arabian Sea and is a microcosm of the world. The islands represent every country, including Nepal.

  Nakheel, with whose housing property we entered the real estate business in Dubai, is the creator of World Islands. Cinnovation, along with some partners, bought an isle called Nova Island and started construction work on it around seven years back. Our plan is to build a private villa on the isle on the crystal blue sea, and to sell it off at a premium price. We think its total cost will be in the order of US$200 million.

  Actually, the World Island I really wanted to buy was ‘Nepal’. Sadly, it was already sold, along with ‘India’. My wish to own a ‘Nepal’ in a world within the world could not be fulfilled.

  However, the entire World Islands project started to fall by the wayside in the wake of the global recession of 2008. Other mammoth projects such as Pam Jebel Ali and Water Front were also impacted by the crisis. Now there are more serious issues, such as erosion of the islands and problems related to compaction and connectivity.

  Taj Vivanta at JLT, Dubai

  Once I was invited by the ruler Sheikh Mohammed in Dubai to attend an international event. There I met a lovely gentleman named Raju Shroff, son of one of the top textile traders in Dubai who was also engaged in real estate. In the course of our conversation, we developed immense mutual fondness. We spent some quality time together. I kept in touch with Raju and introduced him to my boys. During my subsequent visits, Raju was kind enough to invite me to his house for dinner, during which he proposed to me his site at JLT districts. My mind was all the time in search of possibilities for a hotel in Dubai, but many of our earlier plans to establish Zinc there had fallen through for one reason or other. Dubai is not an easy or predictable market. My experience was that the local partner plays a key role, and that his reliability is paramount. I immediately asked Raju to show me the site. What I saw was unbelievable. The site’s location and positioning, with three sides open—one facing the golf course, the other the Burj Khalifa, and the third the Burj Al Arab—and surrounded by Marina View, Emirate Hills and Sheikh Zayed Road, was unique. I immediately deputed Rahul to meet up with Raju and formalize the commercial terms, which he did.

  Over the years, Taj had reached a point where decision-making had become complicated; there were too many opposing forces within the system trying to pull each other down instead of working together as a team. It hurt to see a great company like Taj, under the great banner of the Tata Group, suffering a destiny it did not deserve. Many decisions had seriously dented the company’s bottom line. For two consecutive years, Taj had to write off hundreds of millions of dollars annually. At a time when hotel companies were marking unprecedented price-to-earning ratios, Taj’s market shares were tumbling. Coincidentally, it was at the same time that a new leadership emerged at the Tata Group, with Cyrus Mistry taking over the reins from Ratan Tata. I had heard that Mistry brings with him a very down-to-earth and practical approach in doing business, and likes to work with the group partners. Shapoorji Pallonji, the family that Cyrus hails from, is the largest shareholder of the Tata Group. It was for the first time that a non-Tata person had been chosen to lead the globally renowned conglomerate.

  Nirvana had socially known Shapoor, Cyrus’s older brother, and had encouraged me to meet Shapoor many times. Somehow, that did not happen. Once the change became official, I asked Nirvana to arrange a meeting with Shapoor Mistry. Shapoor was unbelievably polite when I called on his office and, to my surprise, he knew exactly everything that was happening at the Taj Group. I did not realize that he was also on its board. He knew how joint-venture partners like us were being treated, and that many opportunities had been neglected. He gave me a completely new sense of confidence in rebuilding my relationship with Taj. He advised that I should meet with his brother Cyrus and work towards correcting the past; ‘correcting the past’ in the sense that we had done nothing new over a period of fifteen years, and remained where we had started—the Maldives and Sri Lanka. Although an investment in Phuket had been made, there was no headway there. On the contrary, there was a desire on Taj’s part to sell the land and exit. Despite sitting on a gold mine like Samudra with ten acres of land, opportunities had been wasted. Taj Asia, as the name itself signifies, was opened to create hotels in Japan, Korea, Hong Kong, Singapore, Indonesia and Thailand. But for years, it remained almost dormant. My frustration at seeing opportunities ripe for the picking but not being taken forward was eating away at my insides. That had pushed me to create our own brands and to do what we did. Still, my heart was always with Taj because that brand had given me my unique global identity as a hotelier and had also been my business school when it came to the hotel industry.

  I eventually met with Cyrus, a very unassuming man and a very patient listener, and yet very confident of himself. It did not take me long to understand that he had already done his homework. Not only did he know about us, but he was also aware of our background and history. He candidly asked me to wait for the new MD to take over and then work towards rebuilding our relationship with Taj. He went on to express his great respect for our partnership as one of the most profitable joint ventures of Taj and acknowledged the role we had played in keeping it that way. He not only offered to introduce the new MD of IHCL, Rakesh Sarna, to us, whom I am now working closely with, but also introduced us to the heads of many other verticals like Tata Power, Tata Communications and Tata Motors. Cyrus wanted them to grow with us in many sectors in Nepal. The letters he had written to all these functionaries illustrate Cyrus’s respect for our partnership.

  Subsequently, I received an invitation to an event for the formal induction of Rakesh Sarna as the new MD of the Taj Group and a farewell to Raymond Bickson. I decided to attend. It was a short but very impactful meeting with Rakesh. He immediately said we must meet and spend some quality time together without delay, giving me the feeling that he too knew the background pretty well. I had heard that during his thirty years of association in senior positions with the Hyatt Group worldwide, he was known for his quick decision-making, his commercial astuteness and his friendliness towards the hotel’s partners. It is no wonder that Hyatt thrives in partner relationships and maintains a huge respect for the role that the partners play in the growth of the organization.

  I met Rakesh soon over lunch, and had a very long, candid conversation with him, giving him the full background of the reasons why we decided to move on and create other joint ventures as well as our own brand, which he completely appreciated. But he was quick to state that what had happened was history and that we now had to work together, not only to strengthen our existing business and exploit existing opportunities, but also to re-execute the vision behind the creation of Taj Asia. We formed a task force and created a new road map to establish twenty new Taj’s in ASEAN, the Middle East, China and Africa (territories where we have already made significant headway). My request for an independent and dynamic CEO to drive Taj Asia was immediately addressed, and we are pretty much on track to move rapidly to once again make this company a very vibrant one.

  Today I get a great sense of pleasure in working with Rakesh. We speak almost the same language and think along the same lines. This has also reshaped the destiny of Taj Safari and, as a consequence, we have brought in our very high-end resort in Meghauli at the Chitwan National Park—which we wanted to open as a Zinc—under the Taj Safari fold. This will also help turn around Taj Safari as a company.

  To me, Taj as a hotel brand is no different from my own
brand Zinc. I have now started viewing opportunities objectively. Wherever we feel that the Taj brand fits in better, we bring Taj in. That was exactly what led to turning the Jumeirah Lake Towers (JLT) into a Taj Vivanta. I was amazed to witness the personal attention to detail Rakesh brought to the table. At a Mumbai meeting with the Taj Vivanta designers, Rakesh literally redesigned the JLT hotel right in front of my eyes. Later, I learnt he had also led the technical services department of the Hyatt Group and had built several hotels. We are both very keen to grow this relationship and hope to extend this to our new joint venture called Summit. Our vision is to make Summit the most iconic hotel in Nepal, and we are moving towards that goal.

  18

  The Globalization of Wai Wai

  Aim: A billion-dollar company

  I was waiting for my baggage at Dubai airport. A large number of Nepali passengers got off a Qatar Airways plane that had just landed. Most of them were young.

  I asked one group that had deplaned, ‘Where do you work, brothers?’

  I have forgotten the name of the company that had employed them but they had come to work in its security department.

  ‘And what has brought you to Dubai, brother?’ I was asked.

  ‘I am Binod Chaudhary. I have some business here.’

  ‘Oh,’ some of them responded, apparently not much interested in me.

  I then quietly waited for my baggage to arrive.

  The baggage belt started to move. Suitcases started to surface on the belt. As soon as the young men spotted their suitcases, they would run to grab them. In a while, I saw four or five cartons of Wai Wai noodles on the belt, and some of the young men rushed to grab those too.

  Placing my suitcase on a trolley, I moved towards them.