Unstoppable

by Sonu Bhasin

  Gurbachan remembered that when Kuldip and he first spoke to Surinder, the instinctive response was, ‘Tussi tan dukaandaar ho, company kis terhan sambhaaloge [You guys are shopkeepers. How will you manage a company]?’

  ‘I knew they were doing well in exports but Berger was a multinational. I wondered if Kuldip had the wherewithal to buy such a company,’ admitted Surinder. Surinder Singh today is one of the largest distributors of liquor in India. He is also one of the largest importers of wines and other liquor. He had started his business when Vijay Mallya’s father was running the show. He had, thus, seen Vijay grow up, work with and then head the liquor company. Surinder was fairly familiar with the liquor baron and Kuldip wanted to exploit this proximity.

  ‘Vijay Mallya used to sponsor the Derby in Bombay every year. It was held on the first Sunday of February every year. So, I knew that I would meet Vijay in the next few days,’ said Surinder. He told his friend Kuldip that he would speak to Vijay Mallya and try to set up a meeting.

  ‘That’s all I wanted. A meeting with Vijay Mallya,’ said Kuldip.

  On 4 February, which was the first Sunday of the month, the glitterati of Bombay went to Mahalaxmi Race Course, which is the venue of the Derby. Surinder found Vijay Mallya surrounded by his friends and associates, which was nothing unusual. He managed to catch Vijay Mallya’s eye and conveyed to him through a hand gesture that he wanted a moment.

  ‘What is it, Surinder?’ asked Vijay.

  Surinder told Vijay about his childhood friend who was one of the biggest exporters to the Soviet Union and now wanted to buy Berger Paints.

  ‘But you know that the deal is almost done,’ said Vijay sounding a bit irritated that one of his business associates was talking about an unrelated business deal.

  ‘But Sir, all he wants is a meeting with you. After that it is your call anyway. And if he is ready to pay you more than what you are already getting . . .?’ Surinder let the sentence trail away.

  The shrewd businessman in Vijay Mallya saw an opportunity to negotiate for a better deal. ‘Tell your friend that I am in Delhi next week. We can meet at home,’ Vijay said in Surinder’s ear as he turned to greet some new friends in his booming voice.

  Surinder quickly called Kuldip with the news and promised to set up the meeting. ‘But I was still quite sceptical,’ said Surinder candidly. He had known Kuldip as a child and then had kept in touch with him sporadically through the intervening years. ‘But I had not met him for at least the last three years,’ said Surinder. He, however, had seen Kuldip’s cousins who lived in Golf Links. The cousins were all traders and Surinder believed that Kuldip too was following the family tradition of trading in paints.

  He was not sure if Kuldip would be able to take forward the discussion about buying a company like Berger. ‘I told him that I had a sensitive relationship with Vijay Mallya’s company. My entire business depended on him. I did not want to be in a situation where we went in deep and then Kuldip backtracked because he could not carry forward the deal,’ he continued.

  Kuldip assured him that not only did he have the money to buy the company but also he had the intent to do so. ‘I was still sceptical but then I trusted my friend,’ admitted Surinder.

  ‘Gurbachan and I went to meet Vijay Mallya at his Sardar Patel Marg home,’ remembered Kuldip. Surinder was also present at the meeting. ‘We reached his house and Vijay was sitting in his large room having beer,’ remembered Gurbachan.

  ‘Come on, guys, have a cold one,’ offered Vijay to his guests.

  ‘But we had gone for work, how could we have beer?’ asked Gurbachan as he related the story. The beer offer notwithstanding, the conversation got going from the start.

  Vijay Mallya knew Surinder was a common factor. Kuldip found Vijay Mallya to be a very smart businessman, a far cry from the flamboyant and larger-than-life image that was later to become the trademark of the liquor baron.

  ‘We talked about the paints business and then talked about many other things,’ said Kuldip.

  Surinder added, ‘We completely sidestepped the fact that we were there to negotiate a buy-out. Vijay Mallya kept asking us about our Golf Links days and then our college days. We talked of many things, laughing and chatting. I think of the total time we spent, only 5 per cent went in talking about Berger Paints.’

  Vijay Mallya understood, astutely, that the Dhingras were very keen to acquire Berger Paints. He upped his asking price. The figure Vijay asked for was found to be much more than what Kuldip and Gurbachan had anticipated. However, both parties were unwilling to put an end to the negotiations. Finally, the deal was agreed in principle but subject to conditions laid down by both sides. It was agreed that Surinder would take the necessary steps to take this further.

  It was February 1990, and Kuldip was neck-deep in his exports business. He had to leave for Moscow the night after his meeting with Vijay Mallya. Before leaving, Kuldip and Meeta went to meet Surinder at his farmhouse to discuss strategies and numbers.

  ‘I tell you I was so impressed with Meeta! She was so supportive and she kept asking such intelligent questions about the deal. I was surprised,’ Surinder continued.

  Meeta, Kuldip and Surinder discussed various aspects of the business deal. ‘I remember telling him that it was a mistake to let Vijay Mallya know how much Kuldip wanted to buy the company. The numbers had to go up obviously,’ said Surinder.

  However, Kuldip had made up his mind to join the big boys of the paints industry. Kuldip asserted that while he was an emotional man he took business decisions non-emotionally and said that the decision to buy Berger was an unemotional, cold business decision.

  While many people intuitively understood Kuldip’s desire to be part of the corporate world, they found his keenness to buy Berger perplexing. The Indian paints industry had not been in the best health since 1988. The paints industry was in a crisis because excise duty had been increased from 20 per cent to 45 per cent. To add to its woes, the V.P. Singh government had increased the import duty to 110 per cent. Manmohan Singh and his liberalization-driven budget was nowhere on the scene.

  Kuldip certainly did not have any foreknowledge of excise and import duties falling after the mid-1990s. These were the years when the business was actually de-growing and the problem was compounded by Berger being a Vijay Mallya company. While Vijay Mallya may be known for a great many things, running a tight company and adhering to corporate governance rules was not among them. But Kuldip did not care about any of this. He simply wanted to work on a larger canvas.

  Kuldip had no doubt in his mind that Rajdoot would eventually get in the list of top five paint companies in India. However, he knew that it would require time and money. Kuldip had the money and was a man in a hurry! With his export profits, Kuldip wanted to shorten the time to get to the top five. Buying Berger, with its ready-made business and management team, would enable him to do just that. When he considered the net present value of the money it would take Rajdoot to get to the top five, the deal with Vijay seemed in the range, though the numbers were just about pushing the boundaries.

  He shared his thoughts with Gurbachan before leaving for Moscow and told him to continue the discussion for further action with Surinder and their lawyer—Rajive Sawhney. ‘In less than forty-eight hours we had the broad details of the deal that would be workable with numbers in line with our respective mandates,’ said Surinder.

  ‘I called up Kuldip very excitedly to give him the news that the deal was through,’ said Surinder. He was surprised by the reaction from Moscow.

  ‘What? The deal is finalized? Have you confirmed with Vijay Mallya? How can companies be bought and sold like this? At least take the details to Vijay and let him go through it. The owner should agree and only then can the deal go through,’ Kuldip told Surinder. The shopkeeper-turned-exporter was quite at a loss to understand the workings of multinationals where the entire company could be sold off without the owners even meeting to shake hands!

  It was decided tha
t Gurbachan would meet Vijay Mallya at his Safdarjung Office in the evening.

  Rajive and Surinder had a sheet of paper with the details. Vijay looked at the sheet and said, ‘Hmmmm . . . looks OK. Wait, what? My CEO will go along with the company? And what’s this, I am to remain the chairman for the next six months?’

  Surinder and Rajive advised Vijay that it would be better for continuity for the current chairman and the current CEO to stay on in their respective positions for at least half a year.

  ‘OK then, let’s shake hands and finalize the deal,’ boomed Vijay delightedly. He needed funds for his other businesses and this deal would help with that.

  Gurbachan was delighted as also was Kuldip. They were going to be the owners of a multinational company!

  Did Kuldip imagine, as he sat in his shop in Amritsar selling British Paints, that one day he would be the owner of the company that owned British Paints?

  ‘What a stupid question! Of course not,’ snapped Kuldip but with a broad smile!

  1990–92

  ‘While Mr Vijay Mallya was quite hands off, Mr Dhingra knew his stuff about the paints industry. His inputs and guidance proved invaluable to Berger Paints’—an old-timer at Berger Paints.

  Thirty-nine

  ‘The BMW Came in the Dowry’

  ‘I must tell you that we were absolutely horrified when we heard that the Dhingras were in talks with Mr Mallya,’ said Subir Bose, the former managing director of Berger Paints. He joined Berger Paints in 1984 and was the head of operations in 1990.

  Subir had heard the rumours around the sale of Berger Paints. ‘We were proud to work for a multinational company. Rajdoot was a very small company and Kuldip Dhingra’s family business had included paint shops and some manufacturing units. There was no comparison between them and us,’ he said candidly.

  ‘We all thought that we should leave but the job market was very tight then,’ continued Subir. ‘I knew what the people in the company thought and how they would react if I suddenly made an appearance and took charge. That was one of the reasons why I wanted Vijay Mallya to stay on as the chairman and Biji Kurien as the CEO,’ said Kuldip.

  After his meeting with Vijay Mallya at Sardar Patel Marg, Kuldip sat down with Gurbachan to discuss the way forward. He knew that he had to continue to travel to Moscow for the export business. He explained to Gurbachan about the need for continuity of business at Berger.

  He realized that dealing with a set of professionals working in a multinational company would be very different from dealing with the trade and dealing with the Russians. Therefore, he believed that a slow initiation for himself and his brother would be best for all. He was relieved when Vijay Mallya agreed to continue as chairman and also agreed to let Biji Kurien continue as CEO.

  After the two in-person meetings between Vijay Mallya and the Dhingras, the intent on both sides was clear but the paperwork remained. ‘There was a mountain of paperwork that had to be done. Agreements, shareholder documents, and then some more documents,’ Surinder shared.

  Kuldip along with Rajive Sawhney, their lawyer, moved to London for a couple of weeks. The complex documents were scrutinized by Kuldip, who by now had valuable experience of agreements. ‘I was signing a new agreement for business almost every day and I could look at a document and know which clauses were going to be painful,’ laughed Kuldip.

  The paperwork finally finished, and Kuldip and Gurbachan became the new owners of Berger Paints India. However, there were no major headlines, nor was there breaking news about this deal.

  ‘The media was largely absent in 1990,’ explained Surinder. The focus on business news and 24/7 news came in the mid-1990s. In fact, the financial papers too were not read as widely as they are today. The deal between Vijay Mallya and the Dhingras went under the radar of most people.

  However, there was a buzz of gossip within Berger Paints in Calcutta (now Kolkata). ‘We knew that the company was in a financial mess. We knew that Vijay Mallya was really not interested in the paints business. We also had heard that he wanted to sell off Berger Paints,’ remembered Subir.

  There was reason within the ranks at Berger for the alarm bells to go off. ‘We were a true blue-blooded British MNC and we were in Calcutta. You can imagine the life for all of us,’ laughed Subir. The headquarters of the global operations were in London. Biji Kurien—the global CEO—used to shuttle between countries and the professional managers ran the businesses. ‘It was a sahib-life totally,’ said Subir. ‘You can imagine—lots of cocktails and dinner parties. A bit of stiff upper lip actually.’

  The basic fear of the management of Berger Paints was that there would be a shift in culture. The professionals were used to a hands-off approach. Vijay Mallya had inherited Berger Paints from his father but his interest really lay elsewhere. As chairman, he was often missing. ‘I remember one particular evening in the 1980s. Invitations had gone out from the chairman of Berger Paints to all business heads and industrialists of Calcutta,’ said Subir. The evening was a typical Berger Paints event. At a posh venue the glitterati of Calcutta were present in sharp suits; their spouses in chiffons or jamdanis and pearls. Cigarette- and pipe-smoking men stood in groups with their cocktail glasses while the women sat in another part sipping delicately from their crystal glasses. Everyone knew everyone and there was a general air of bonhomie in the air. ‘However, there was an air of anticipation as well. We were all waiting for the host to make his appearance,’ said Subir.

  Vijay Mallya was missing from his own party. The invitees waited, and then had dinner and went away. The senior management could not leave as they did not know if their chairman would indeed make an appearance. The last thing they wanted was for Vijay Mallya to walk into an empty room! ‘We waited for some time after the guests had gone. The chairman did reach the party but it was only us by then,’ said Subir. Vijay apologized to his team present and admitted that the Berger Paints party had slipped his mind.

  The management had become used to this lack of attention. They did not like it but they also learned to make the best of it. The lack of interest from the chairman, and a CEO who was more out of the country than in, meant that the daily pressure was off. The chairman and much of the board did not understand the paints business and the business heads were largely left to themselves to run the company. ‘The company needed serious infusion of funds to keep the operations going,’ said Subir. He was the head of operations during the late 1980s.

  The business at Berger had moved away from marine and rail applications, and the company had decided to put its financial and management muscle behind Luxol Silk, the first acrylic emulsion paint from Berger Paints. Luxol Silk took on products like Dulux Velvet Touch, Apcolite from Asian Paints, Shalimar Paints Superlac and Jenson and Nicholson’s Special Effects. Using some smart and sustained advertising by Lintas, one of India’s largest and most respected advertising companies in the eighties, Luxol Silk gained market share. While this focus did take Berger Paints up the ranking charts it also meant that the company needed more funds.

  ‘We were running a very tight ship those days. Working capital was just enough to keep the operations going and we were just about breaking even as a company,’ Subir said. The senior management in the company was quite sure that things needed a change. They, however, were not quite sure if they wanted a change that included a Delhi- and Amritsar-based businessman as their new boss! ‘Those were some very stressful times,’ laughed Subir as he looked back at the 1990s.

  Times were stressful for the Dhingras as well. While they could not take the focus away from the Russian business, the acquisition of a well-known company needed to be handled. Kuldip, even with his outgoing personality, is a private person at heart. He did not want to make a public announcement about his new acquisition. But he realized the momentous nature of the transaction. In one fell swoop, Gurbachan and he had moved from being mere businessmen-exporters to the owners of a blue-chip company. Kuldip wanted to share the excitement with people he co
uld trust.

  Kewal, Kuldip’s friend from Hindu College, remembered getting a call from Kuldip one day. ‘Kuldip said, “Why don’t you come over home this evening?”’ Kewal remembered.

  ‘What’s the occasion?’ asked Kewal.

  ‘Oh nothing really. Just wanted to share some news with you. Shaami aa jaana. Sab gal-baat shaami karenge [Come over in the evening and we’ll chat then].’

  Kewal went over to Kuldip and Meeta’s house that evening. At their home he saw the snacks laid out and the bar ready. A champagne bottle was chilling in the ice bucket.

  Kuldip looked very excited and welcomed his friend with a broad smile.

  ‘Oye Kuldip, ki hoya? [What’s happened, Kuldip])?’ asked Kewal.

  ‘I have just bought Berger Paints from Vijay Mallya,’ said Kuldip.

  ‘The glass I was holding nearly fell from my hand. I was very surprised,’ said Kewal. ‘Vijay Mallya? And you say you have bought a whole company from Vijay Mallya?’ Kewal was not sure if Kuldip was serious. ‘I kept thinking to myself—I know Kuldip is doing well. I know he is dealing with the Russians. But buying Berger Paints was something that was out of the blue. I was very happy for Kuldip and I needed to know more,’ admitted Kewal.

  After popping the bubbly and raising a toast, Kuldip asked, ‘You know what is even better?’

  ‘Now what could be better than this?’ wondered Kewal. He shook his head. Kuldip excitedly pulled Kewal by his arm and said ‘Chal tennu dikhata hoon [Come, I will show you].’

  Both friends went down the stairs into the portico. ‘I saw an old metallic silver BMW parked there,’ said Kewal. As he was wondering what the old car was doing there, Kuldip pointed to it and with a broad smile said, ‘I got this as part of the deal. Isn’t this wonderful?’