by Sonu Bhasin
Kuldip was also upset, but his mind continued to look for a solution to the new googly thrown at the business. ‘This was the first time that I saw, first-hand, his mind at work. He called me for a meeting and said, “Why don’t we become a division of Berger Paints?”’ Sunil’s initial reaction was to wonder how it would work. There was no example of one company with two competing brands. But the more he thought about the idea, the more it appealed to him.
On 1 October 1998, Rajdoot became part of Berger Paints. Sunil Sharma, the CEO of Rajdoot Paints, became a part of Subir Bose’s team. ‘The market was amazed at this decision. They all thought that we had gone mad,’ said Sunil. However, it made complete sense to Kuldip. Rajdoot was a regional company with brands that sold in the mass-market segment. Berger did not have a product range that addressed this segment. Together, the company would be able to address all segments of the market without eroding the equity of the premium brand. Rajdoot Paints would be able to take the advantage of the distribution network and be able to transform into a national brand, leaving its regional-only identity behind. The advantage to the dealers was that they would be able to address the needs of all segments under one large umbrella brand.
Rajdoot Paints became a division of Berger Paints but the name ‘Rajdoot’ was jarring to the company employees. Very often they would complain to Kuldip about the fact that Rajdoot did not sound premium enough. It is a fact that even in a mass market, customers aspire for a premium brand!
This was when Kuldip brought out the British Paints brand from its hibernation. When the Dhingras had bought Berger Paints, the brand of British Paints had come along with it. The right to use the brand belonged to the Dhingras. However, amid all the immediate tasks and efforts to turn around the company, the brand of British Paints had been forgotten. It was many years later, after the merger of Rajdoot Paints into Berger Paints, that Kuldip remembered the brand.
‘Mr Dhingra asked me if renaming Rajdoot Paints as British Paints would make sense to us,’ said Sunil. ‘Of course, it did!’ he added enthusiastically. Thus, in 2008 Rajdoot Paints was renamed British Paints, which continued to be a division of Berger Paints. It is ironical that Berger Paints that was once bought by British Paints turned a full circle and became the parent of it!
Kuldip had understood the value of incentives and recognition even when he was a one-man company operating out of Golf Links, selling the material produced by the Amritsar factory. The 2 per cent scheme that he launched for the Delhi dealers and then subsequently offered to Madame Shayk had paid rich dividends. His streetwise tactics complemented the corporate strategy drawn up by the management teams. The dealers saw some aggressive sales incentives come their way. However, this was counterbalanced by a reduction in credit period and rebates offered to the dealers.
The new thinking continued to manifest itself in the products that Berger Paints offered to the market. Starting from Luxol Silk, a premium emulsion sold in the market, Berger brought out new products based on active research. Breathe Easy was one such innovation that caught the interest of the market. This was a paint made from low volatile organic chemicals and was therefore suitable for schools and hospitals. People who suffered from breathing problems and the elderly would be the obvious customers for this product. WeatherCoat AllGuard, a silicon-based exterior paint that had water-resistant properties, and Easy Clean, the most washable interior paint, soon saw the share of Berger Paints rise in the decorative-paints segment. And then came Express Painting Solution, a cleaner and faster painting service that freed the clients from the clouds of dust and remnants of smell associated with house painting.
The innovation and the focus on only paints with prudent capital management alone could not have taken Berger out of the hot water. The strategies had to be executed on the ground. ‘What is absolutely amazing is that the entire turnaround took place with almost the same team that Kuldip inherited. He did not sack anyone like many new owners of business do. He empowered the existing team to do things differently,’ said Brinder Singh, a family friend. Indeed, with the exception of Biji Kurien, the senior team has largely remained the same.
‘This degree of separation of ownership and management in Berger Paints is rare compared to other companies,’ said Abhijit Roy, the current MD and CEO, Berger Paints. Even the vendors and suppliers commend this separation of ownership from management.
‘I have met Mr K.S. Dhingra only once when the foundation stone for their Pondicherry factory was being laid,’ said A. Kumar, owner and managing partner, Gemini Paints, a vendor of more than thirty years with Berger. All his dealings are with the management team though he knows that Kuldip is always kept informed. ‘But I have never seen him interfere in the process,’ said Kumar of Kuldip.
This is a refreshing change from power-hungry promoters not only in India but across the world. Berger Paints was run by professionals before the Dhingras bought the company, and it continued to be run by professionals thereafter. The new owners continued to let professionals run Berger Paints and have given their guidance through the board. The day-to-day executive role is not for them.
Kuldip and Gurbachan grew up seeing the working partner model in place in their business. One of the incentives for the working partners was a share of the profit. In a listed company, it was not possible to have a similar arrangement. However, attracting and retaining talent was one of the problems Berger faced. At each annual budget meeting, the fact that the company was losing good people would come up. Kuldip could not understand why the company was not able to retain good professionals. He told the management team to work on a stock option plan. Kuldip thought that the professionals would jump at the thought of getting stocks and waited for the scheme to be brought to him for discussion. But Kuldip did not see even a draft employee stock ownership plan (ESOP).
‘I could not understand why. Usually it is the owner who does not want to part with equity as the owners’ share gets diluted,’ said Kuldip. ‘Here I was the owner who was asking the management to come up with a scheme but no one was forthcoming.’
At a subsequent annual budget meeting the subject of high attrition was brought up once again by the management team. Kuldip took this opportunity and asked management the reason for their lack of interest in the equity-sharing plan. ‘There was total silence around the table. Everyone’s eyebrows went up and they all turned and looked at one senior member of the team,’ said Kuldip. He realized then that the old-school ideas of senior members were coming in the way to execute this scheme.
Kuldip had decided that ESOPs had to be given and once his mind was made up, there was nothing that could come in the way. He engaged a consultant to work on a plan and the company launched the scheme. Berger was the first paints company to have an ESOP scheme and till today remains the only company with such a plan. ‘The additional benefit was that everyone started looking at the share price and the market cap of the company,’ laughed Kuldip.
Forty-seven
‘You Can Take Mr Dhingra Out of Amritsar but You Can’t Take Amritsar Out of Mr Dhingra’
One of the reasons that Berger Paints had been attractive to Kuldip was that it was a multinational. However, what he did not realize was that the multinational management were accustomed to their perquisites. Expense allowances, large homes and comfortable travel were perks that the management took for granted.
Kuldip and Gurbachan had grown in a different manner. ‘Money had been a scarce commodity, and so we had all learnt to make the most of what we had. Spending on unnecessary things was not something that we were comfortable with,’ said Gurbachan. The brothers flew economy and worked out of humble offices. The Dhingras may have acquired dollops of wealth but they remained grounded to their roots. The Zamrudpur office is a fairly nondescript building and Kuldip’s office there could be a general manager’s office in any company, domestic or multinational. The families neither grace the glitterati parties nor do they feature on page 3. It is almost as if there is an attempt to
keep out of the radar of people in general.
The 1980s and 1990s had seen the fortunes of the Dhingra brothers change greatly. In the 1980s the Dhingra brothers had to find their feet after Sohan Singh’s stroke and in the 1990s they had seen their brother suffer from another medical setback. In spite of trying to carry on as best he could, Sohan Singh passed away in the early 2000s. Kuldip Singh became the patriarch of not only the business but also of the family.
However, he never forgot his roots. ‘I was a shopkeeper in 1967,’ said Kuldip with pride. He was not ashamed of his humble past. From a shopkeeper to one of the biggest exporters of India and to the owner of a corporate company—Kuldip made this transition in twenty years. His values and the values of the family, however, remained rooted.
Kewal remembered an evening when Kuldip was over at his home for dinner. ‘My nephew and some other youngsters were present. Kuldip started talking about a new car he was planning to buy,’ said Kewal. Kuldip was very impressed with Mahindra Scorpio and thought it would be a good idea to buy one. ‘My nephew’s jaw dropped. Here was the owner of Berger Paints, worth I don’t know how many crores, and he wanted to buy a Scorpio!’ laughed Kewal as he found this conversation funny. The youngsters protested and told Kuldip that he had to buy a better car. ‘Ultimately he did buy a German car but he cribbed that it was very expensive,’ said Kewal, laughing as he remembered the conversation. ‘He kept telling me for days after that that my nephew made him spend so much on a mere car,’ he added. ‘It is just a means of transport,’ he said.
The sun was setting and the shadows were growing longer. The mood in the room was mellow as Kuldip and I talked about his businesses in other countries. ‘I love to travel and visit my offices, but I notice that I am starting to get tired these days,’ said Kuldip in a candid moment. ‘I am not forty years old any longer, you know. Waiting at airports is very tiring.’
‘Can Berger not invest in a company jet? It will enable you to travel but will cut out the time spent at various airports,’ I asked seriously.
Kuldip shook his head slowly, his face mirroring his emotions. He cannot even think of such an extravagance. ‘How can I do this? It is completely against our family values,’ he said.
I persisted, saying, ‘But it is not a luxury. You don’t drive in a Maruti 800 any longer, so why not just look at it as a mode of transport? Also, it will not be for you and the family only. The management of Berger could also use it.’
Kuldip looked at me with anguish. He was saddened that I could not understand. ‘What message will we be sending out if we buy a jet? We are not that kind of people,’ he said.
The management of Berger in the initial days was apprehensive about the new owners cutting down their lifestyle perks. However, the canny businessman in Kuldip understood that the perks were a small price to pay in return for his demand for better performance.
‘He does not ask anyone to travel in a particular way. He just tells you that he is travelling economy and leaves you to make your own decision,’ said Jerry laughing. ‘I remember that once we were travelling to Dhaka for our board meeting. Kuldip told me that he was travelling premium economy. I booked my ticket in the same class. But I saw some other senior employees and other directors on the board in business class, and Kuldip was OK with it,’ continued Jerry.
‘I am allowed to travel business class as the company policy but the culture ingrained in all of us is to conserve expenses. So, I book my travel accordingly,’ said Abhijit Roy, the CEO of Berger Paints India, with a smile.
‘You can take Mr Dhingra out of Amritsar but you can’t take Amritsar out of Mr Dhingra,’ said an old-timer at Berger. ‘He brought in the frugal approach to spending money on people from his Amritsar and Rajdoot days,’ he continued.
Maintaining some of the perks of the management certainly did help in alleviating their fears about the new owners. What won the new owners to the management was their approach to the work. ‘We are allowed to innovate and allowed to make mistakes. No one is berated or scolded; we are not told to follow a straightjacketed approach from the leaders. This helps in building an entrepreneurial feeling amongst all the employees,’ said Abhijit Roy. ‘But Mr Dhingra constantly pushes us for better performance all the time,’ he added.
The entrepreneurial approach and the freedom given to the management to execute their strategy works for Kuldip at two levels. One, this approach frees him to focus on the way forward. ‘If I get caught in the day-to-day routine I will not have time for anything else,’ he said.
The other way that this strategy works for Kuldip is that it takes away the reason most often used when agreed-upon targets have not been met. ‘Professionals are very clever. If I tell them to do something and it doesn’t work out they will just look at me and say that I had told them to do it. They are quick to pass the buck in case anything goes wrong,’ he said.
So Kuldip leaves them to make their own decision under the guidance of the board. The management is under no pressure to follow an instruction if they do not believe in it.
‘Abhijit, I think you should take out an ad about Russia using our paints for their stadiums and airports,’ said Kuldip. We were a few months away from the 2018 FIFA World Cup kicked off in Russia. The country had been getting its football stadiums and airports spruced up for the big international event. The paint being used in at least three stadiums and a couple of airports was from Berger Russia. Kuldip saw this as a great opportunity for brand building. He spoke to the CEO about it but was told that the marketing people were using digital media for this. ‘I don’t understand this digital-shigital. I can’t understand why they don’t want to release ads about this,’ Kuldip said to me before he dialled Abhijit Roy.
It was a Sunday and close to noon. Abhijit, in Kolkata, was on leave from work as he was preparing to go overseas for a family vacation. ‘I don’t know why professionals take so many holidays. I don’t like holidays,’ muttered Kuldip.
‘You know people in the government and in the embassies—they will all see the ads. I don’t know how many people will see your digital ads,’ urged Kuldip.
I could hear only one side of the conversation and inferred that Kuldip was being told that the marketing team does not think that the ads will add any significant value. ‘Chalo, dekh lo phir. See what you want to do,’ sighed Kuldip after a fifteen-minute conversation and signed off.
He turned to me and said, ‘I splashed Delhi with hoardings and took out large ads when the Moscow Olympics happened. I said in all my ads that Moscow Olympics was using Rajdoot Paints.’ The company and UK Paints was not a big company but they still made a lot of noise about their contribution to the international event. ‘I got many new contracts after that. A lot of people noticed us because of those ads,’ he continued ruefully. ‘But these professional people, they have their own ideas,’ he said.
‘You are the chairman of the company. You don’t want to instruct them to take out these ads now?’ I asked.
‘No, no. I don’t want to give instructions. They will tell me that they used up all their marketing budget for my ads and that’s why they did not have money for marketing and therefore they could not meet their business targets. The fact that the chairman of the board is calling someone on a Sunday afternoon should be indication enough of my intent but . . .,’ he trailed off.
Well you win some and you lose some!
Forty-eight
‘Even Though I Was Working for Him, Kuldipji Gave Me So Much Respect’
‘We were coming back to Delhi from Lucknow, where we had gone for a meeting together,’ said Ajit Singh Syali, who worked in an advisory capacity for some years with Kuldip Dhingra. Ajit’s wife, Brinda, grew up with the Dhingra children in Delhi. Brinda’s parents were friends of Kuldip’s parents and his uncles and aunts.
‘My family was originally from Amritsar, so there was that connection. And Sohan bhapa was a couple of years my senior at Modern School in Delhi,’ said Brinda. She married Ajit, who w
as working in the government and became part of the founding team of the Research and Analysis Wing of the government (RAW), the foreign-intelligence agency of India. Ajit later headed RAW for three years.
Kuldip and Meeta had kept in touch with Brinda and Ajit over the years. When Ajit retired from RAW, Kuldip asked him to come to UK Paints as a consultant. ‘I did not know anything about paints but Kuldip told me that he thought I knew a lot about strategy,’ laughed the mild-mannered Ajit.
Kuldip and he had gone to Lucknow for a meeting and were rushing to get to the airport for their flight back to Delhi. ‘Suddenly Kuldip looked at the shops on the road and said, “I have to stop for a moment. I have to meet Mr Sharma,”’ remembered Ajit. Kuldip used to deal with Mr Sharma, then a dealer for Rajdoot Paints. ‘I told him we were running late and we may miss the flight,’ said Ajit. But Kuldip was adamant. He had not seen Mr Sharma in years and he could not pass the street without stopping to say hello to him. ‘He had helped me a lot when I was just a small businessman,’ explained Kuldip as he instructed the driver to take a small detour to go into one of the narrow by-lanes. He remembered the exact shop and told the driver to stop.