by Sonu Bhasin
‘Your Holiness, one hears about attaining moksha. And the way to attain moksha is to go away from worldly duties; you go away to the mountains or to the forests and you start meditating and you get into the spirituality thing rather than doing all this that we are doing. Working, earning money. All these social obligations. If I did that, who would look after my family, who would look after all the employees that I think I am actually supporting, and in turn their families? If I was to be selfish and go and try and attain moksha for myself what happens to everyone else whom I, rightly or wrongly, feel responsible for?’ asked Kuldip of His Holiness.
The Dalai Lama looked at Kuldip, thought for a moment and said, ‘You are absolutely right. You don’t need to go and leave all this and your business because you are helping people in a much bigger way.’
‘But,’ Rishma paused dramatically and said, ‘he told Papa, “But, never indulge in any business that is connected to violence. Do not deal in any weapons or any goods used for wars.”’
‘The Dalai Lama actually said this? He told your father not to do any business in arms?’ I asked in amazement.
‘Yes, he said that. In front of our Russian and Turkish guests. He told Papa, “Never indulge in businesses that are connected to violence. If you do not deal in arms the wars will not stop; if you deal in weapons wars will not start. But wars are a curse for mankind and we need to spread the message for peace,”’ said Rishma.
Kuldip looked around to his Russian guest as the Dalai Lama finished speaking, and as soon as they walked out he told them that he would follow the instructions of His Holiness. To their credit, the Russian lady must have conveyed this message to the concerned people and the Russians stopped their conversations with Kuldip about defence business.
‘That day changed our lives. I think it also helped Papa structure his mind,’ said Rishma. ‘We still have goose pimples every time we think about it. Without any of us talking of arms or any such business, the Dalai Lama, out of the blue, spoke and solved Papa’s problems,’ said Rishma. ‘It really was a kind of divine intervention,’ she finished.
While the Russians stopped talking to Kuldip about selling arms for them, they built up another kind of pressure. After importing household chemicals, paints and other products through UK Paints from India and other countries, one large state firm wanted Kuldip to start sourcing household chemicals from Syria and Jordan. ‘I said to myself kithe hai Syria–Jordan aur kithe hoon main!’ said Kuldip. But the Russians had a trade surplus from these countries and wanted Kuldip to start exporting from those countries to recover their monies.
‘I knew it made good business sense but I could not handle it myself,’ said Kuldip. He also knew that the business was one that needed trusted hands on the job. Jean Claude was doing admirable work out of France and neighbouring countries. Kuldip wanted him to stay focused on that. The Dhingra ladies were managing the business from Moscow and Delhi. He realized that he did have a friend whom he could trust completely.
Jaspal Sawhney was running his own furniture business. ‘But I was getting tired of it as it was a very personalized business,’ said Jaspal. His friendship with Kuldip had only grown since 1984. Kuldip asked Jaspal if he would like to partner with UK Paints to set up an exports business out of Jordan and Syria. ‘I had absolutely no idea about exports till then. I was only dealing with the domestic market,’ said Jaspal. He came from an illustrious business family of Delhi and was a part-owner of the iconic Plaza Cinema in Connaught Place. An astute businessman, Jaspal understood the potential that the partnership with Kuldip offered. He agreed and became Kuldip’s business partner.
‘My first trip to Syria and Jordan was an eye-opener,’ said Jaspal. Syria was under emergency law and had been so from 1963. ‘The country was rich but the people were poor. The state was all powerful,’ said Jaspal. He had the onerous task of finding the right-profiled suppliers for products the Soviet Union wanted.
‘I had to find people who could produce in larger quantities and were not breaking any law of the land,’ said Jaspal. Kuldip had been clear from his early discussions with Jaspal. No law was to be broken and everything had to be done as per the system.
After visiting both the countries, Jaspal also understood the reason for Kuldip’s keenness to export from Syria and Jordan. Both these countries had a land route as well as a sea route to the Soviet Union. It also took less time for shipments to reach their destination from these two countries. ‘Kuldip had seen that the frequency of the orders increased if the deliveries were made faster. It was good business but for me it lasted only a couple of years,’ Jaspal said ruefully.
Within a couple of years of Jaspal and Kuldip’s partnership, the Soviet Union broke up.
‘I saw it happen. I was there,’ exclaimed Ashi as she remembered the night of 25 December 1991. ‘It was a momentous day when Mikhail Gorbachev resigned as the president of the Soviet Union and Boris Yeltsin took over as the president of the newly independent Russian state.
While his friend rues the day Soviet Union collapsed, Kuldip was ecstatic. ‘My mind and body had started protesting against my lifestyle. I was sure that I would die if I continued this lifestyle,’ said Kuldip. The continuous pressure of work spread across India, Europe, Syria, Jordan and, of course, the Soviet Union combined with the almost daily wining and dining of the Russians had taken a toll on Kuldip. However, he could not stop the business as not only was it very lucrative but there were also many others who were dependent on it.
It does seem that destiny has played an important part in the life of Kuldip Singh Dhingra. Just when Kuldip Singh’s mind and body had started protesting against his lifestyle, the Soviet Union disintegrated. And the booming export business screeched to a halt.
‘I went to Bangla Sahib and thanked Babaji the day Soviet Union collapsed,’ said Kuldip. ‘It saved my life,’ he said with complete seriousness.
1990
‘I remember that our house used to be full of visitors from the Soviet Union. Here you can see Papa with the officials of the Foreign Trade Office of the Soviet Union in India. Mr Vakulenko, foreign deputy trade commissioner, is the one with the dark glasses’—Rishma Kaur, Kuldip’s eldest daughter.
Thirty-seven
‘Berger Paints Is Being Sold and I Want to Buy It’
‘Surinder, have you seen today’s Economic Times?’ asked Kuldip, ‘The news says that Vijay Mallya wants to sell off Berger Paints. I want to buy it.’
‘Huh? What?’ Surinder (name changed to protect identity) asked.
Surinder was a neighbour of the Dhingras in Golf Links. Kuldip, the Dhingra cousins and he had spent their early childhood days together.
‘It was either 1 or 2 February 1990 and I was in Bombay. I had not seen the paper that morning,’ said Surinder.
‘Go and see for yourself. Berger Paints is being sold and we want to buy it. Please tell Vijay Mallya that we want to buy that company,’ said Kuldip again, unfazed by the response, or the lack of it, from his friend.
Surinder had been a business associate of Vittal Mallya’s, Vijay Mallya’s father, and was now dealing with Vijay. ‘I think he has already sold Berger,’ said Surinder, maybe trying to wriggle out of the conversation, and added, ‘I was in the room when Vijay was talking to the other party about the sale.’
‘No, no, no! I want to buy Berger Paints. Please get me a meeting with Vijay Mallya,’ said Kuldip urgently.
‘You are saying you saw the news in 1990? And you guys bought Berger in 1990?’ I asked Kuldip. ‘But the Soviet Union collapsed only in December 1991. So why did you want to be distracted in 1990 when you export business must have been going strong?’ I queried.
‘Oh yes, business was at its peak in 1990. But I knew instinctively that it was too good to last,’ said Kuldip. He certainly did not know that the Soviet Union would collapse a year later, but he was sure that the good times for exports would not last. ‘It was like a dream. But I know that it doesn’t take much time for a
dream to quickly end as well,’ said Kuldip sagely.
Kuldip’s sixth sense had been raising its head for a few months now. Business had grown from virtually zero to hundreds of crores of rupees. Kuldip was a star in the Soviet Union and he was a star in India.
‘I just knew that this could not last,’ he said, adding, ‘I used to discuss this with Gurbachan as well. That this just could not have lasted.’
As he was convinced that the export business was unlikely to be permanent he resisted the pressure Gurbachan was putting on him to set up more factories. ‘Gurbachan kept telling me that we can produce soaps, the detergents, the shampoos, the scouring powder and every other thing. Why was I letting others take the orders? He could set up factories in no time and start the production of all of these products,’ said Kuldip.
‘Of course, we could make everything that the others were supplying. Why give so much of money away? But Kuldip bhapa believed that it would not last,’ said Gurbachan.
Kuldip chose to go by his gut instinct. ‘I kept telling Gurbachan, “Eh export business khatam ho jayega ek din [This export business will end one day]. Then these factories will become white elephants,”’ said Kuldip.
The collapse of the Soviet Union was the last thing on Kuldip’s mind when he sat down to have his coffee and opened the financial daily for his morning update one late January morning.
‘I saw the news about Vijay Mallya selling Berger and I knew immediately that I had to buy that company,’ said Kuldip. ‘We had oodles of money. How much of property could I buy? We had to buy a business,’ he continued. He had been speaking with Gurbachan over the last few months about their future. The Rajdoot business had grown during the last ten years, but it was still in the range of Rs 10–15 crore annually.
‘We had many small factories, all under Rs 1 crore to reap the benefit of small scale. But the name Rajdoot was not a premium brand,’ explained Gurbachan. The two brothers had been bouncing around ideas about buying a running paints business.
‘We had been in discussions with some other paint companies. I even went to London to discuss the matter with the foreign owners of a well-known paint company,’ said Gurbachan. UK Paints was not a known company, Rajdoot was a small brand, and the Dhingras were low-profile people. The foreign promoters had a large business worldwide and were selling only their Indian operations. They did not like the idea of selling out to what they thought was a smaller company run by someone who did not understand corporate culture and had been running a shop in Amritsar till a few years ago.
‘I got the feeling that he was not even happy talking to us about it,’ said Gurbachan without any self-pity. The foreign owners eventually sold their company to a better-known and a bigger industrial family of Delhi.
‘But could you not use the money to focus on Rajdoot Paints which was your own company anyway?’ I asked Kuldip.
‘But Rajdoot would have to be managed by me if I wanted it to become even half as big as what Berger was then. And I simply did not have the time. Berger was a professionally managed company and had a good team—at least that is what I thought at that time. I believed that once we bought the company, apne aap chalti rahegi [it will run by itself],’ explained Kuldip.
Kuldip certainly did not have any time to manage any other business except his export business. The export business had given him ‘oodles of money’ as Kuldip put it, and it had also given Kuldip a world view of business. He was dealing with a cross section of professionals from around the world and he had become used to large businesses. Rajdoot, though one of the fastest-growing paint companies in India in the late 1980s, was at best a regional company. It was not a star or even an emerging star on the horizon. Kuldip, on the other hand, had become used to being a star! He was feted as an important businessman in the Soviet Union and was known as a big exporter in India. Should the export business wind down, he knew that he would continue to be very wealthy but he would feel stifled by the small, regional business of Rajdoot. He did not want to be clubbed in the ‘Others’ category in the domestic paints business. He realized he needed a larger canvas for his domestic business dreams.
‘I was doing business in hundreds of crores with the Soviet Union. And the total turnover of Rajdoot then was just Rs 10–15 crore,’ said Kuldip.
While he was exporting a variety of items to the Soviet Union, at heart he remained a paints-man. ‘There was only one business I understood well and that business was the paints business,’ said Kuldip. So when he saw the headlines about Berger Paints being sold, the instinct bulb in his head burnt bright.
Berger Paints has an interesting history that goes back to 1760. Lewis Steigenberger, a German citizen, moved to London from Frankfurt that year to sell Prussian blue, which he made using his own secret formula. For ease of business, he shortened his last name to Berger and became known as Lewis Berger. The Prussian blue was a success and he soon expanded the business to sell more than nineteen different pigments as well as black lead, sulphur, sealing wax and mustard.
Lewis Berger died in 1814 and his sons, John and Samuel, inherited a successful business. The third generation of the business, Lewis Berger’s grandsons—Lewis Curwood and Capel Berrow Berger—inherited the business after the death of John and Samuel. The fourth generation, Arthur, who was the son of Lewis Curwood, took over the business and kept it running. Lewis Berger and Sons, the company, was incorporated in 1879, almost twenty years before the Dhingras set up their first shop in Amritsar!
The newly formed company was headed by Arthur John Berger, who was the managing director of the company. The new board of directors, and Arthur in particular, made some decisions that did not take the business forward.
In 1905, the financial health of the company became quite uncertain. The company gave the opportunity to a competitor, Sherwin Williams, an American paint company, to buy a controlling stake in the company but keep the brand of Berger going. The company was made a private company in 1908 and went public in 1926.
In 1960 the company merged with Jenson and Nicholson and the new company was called Berger, Jenson and Nicholson Limited (BJN). In 1969 BJN acquired British Paints and became the second-largest paint-producing company in the world.
At the time, British Paints was part of an American company, Celanese Corp. They had an Indian operation headquartered in Calcutta. The Indian company, British Paints India, too was sold as part of the larger company and became part of BJN. However, the company in India continued as British Paints India.
BJN as the second largest paint company had been on a roll with the acquisition of other companies. In 1970 it was the turn of BJN to be acquired. Hoechst AG, the world’s largest chemical company, was based in Frankfurt. Hoechst bought BJN in 1970 and in a sense the company turned a full circle. It was in 1760 that Lewis Berger moved to London from Frankfurt. Over two hundred years later, the business came back to Germany.
Hoechst was present in India through Hoechst Pharmaceuticals. Vittal Mallya, Vijay Mallya’s father had, along with two other Indian partners, tied up with Hoechst AG to promote the pharma company in India. Vittal Mallya owned 48 per cent of the Indian company and was the chairman of the board. He was an unassuming man, the son of an army doctor, who quietly built an empire by acquiring companies. Before his death in 1983, he owned United Breweries, McDowell and Carew, Kissan, Dipy’s, Finit and companies that produced Singer sewing machines, Cadbury chocolates and some of the most commonly used drugs of Hoechst and Roussel.
When the parent company Hoechst AG acquired BJN, Vittal Mallya became the owner, and subsequently the chairman of British Paints India as it was a part of BJN. Vijay Mallya was a teenager in 1970. However, his father wanted to groom him for the top job. He sent his son to the US for his studies and thereafter for getting work experience in Hoechst and Jenson and Nicholson. Back in India, Vittal Mallya renamed British Paints India as Berger Paints India Limited.
Vittal Mallya died in 1983 and Vijay inherited the diversified businesses. The
young man realized that the diverse portfolio of businesses was too much for him to handle. He decided to sell off some of the companies. Starting off with Kissan and Dipy’s he sold off many businesses that his father had built. However, Berger Paints was a company that he consolidated.
‘The CEO at that time, Biji Kurien, convinced Vijay Mallya to buy the global paints business of Berger/British Paints,’ said Subir Bose who led Berger Paints after Kuldip bought it. The opportunity to buy the global business came in 1988 when Hoechst AG sold BJN to William Holding. Allowing himself to be convinced by Biji Kurien, Vijay Mallya acquired Berger’s overseas operations, excluding Australia, Europe and the UK, through a leveraged buy-out.
Vijay soon realized that the paints business was neither easy to operate nor did he have any interest in it. United Breweries was his first love and he wanted to focus on it. The expansion of his core business was burning a lot of cash and as a result Berger Paints India was left wanting for funds. The business suffered and the company’s financial health began to deteriorate. Vijay Mallya thought it best to divest this business and use the funds received for his core business. Through some discreet discussions some interest was shown from paint companies of Bombay. The Dhingras in Delhi, and with Kuldip unconnected with the corporate world, had no clue of the impending sale of Berger Paints India.
Thirty-eight
‘Tussi Tan Dukaandar Ho, Company Kaise Sambhaaloge?’
‘YOU GUYS ARE SHOPKEEPERS. HOW WILL YOU MANAGE A COMPANY?’
‘I did not know anything about Berger except maybe the turnover and the fact that it was a professional multinational,’ said Kuldip.
Going back to that early February morning in 1990, Surinder said he was sceptical about Kuldip’s keenness to buy Berger. Kuldip did not know the details of the business units, the production in various factories, the debt Berger had on its books. ‘In short, he knew nothing except the brand and the turnover. It was like looking at a car and wanting to buy it without going on a test drive or even checking how much of mileage it had done already,’ said Surinder.