In spite of strong headwinds, India's richest businessmen are thriving

The rise of neo-nationalism and protectionism hangs like a sword over Indian business. Donald Trump’s promise to put “America first” and “hire American” spells trouble for the info-tech Czars and pharmaceutical tycoons. Back home, demonetisation is said to have struck a body blow to the economy. Corporate earnings are under stress. Governance issues at Tata Sons and Infosys have sullied the reputation of Indian business houses. New-age e-commerce marvels have lost value and much of their shine.

For somebody who has just landed from an unconnected planet, things wouldn’t look rosy for our captains of industry.

Yet, as the Sensex climbed 11 per cent in the year to January 31, fuelled largely by domestic institutional investors, especially since November, India’s 100 richest businessmen saw their collective wealth rise 10.64 per cent to Rs 18.34 lakh crore — much more than the Rs 16.75 lakh crore worth of Rs 500 and Rs 1,000 notes demonetised by the Narendra Modi government.

On the list are 68 businessmen who would have been billionaires even if their wealth was computed in dollars, up from 59 last year. The final entry on the list is P K Jain of Gujarat Fluorochemicals with a net worth of Rs 4,538 crore. Last year, T T Jagannathan of T T K Prestige had brought up the rear with Rs 4,066 crore against his name. The bar for the coveted list is up over Rs 500 crore.

On top of the heap is Mukesh Ambani with a net worth of Rs 1.45 lakh crore — 8 per cent of the cumulative net worth of The Billionaire Club. During the year, he gained almost Rs 3,000 crore as investors applauded his audacious and disruptive telecom foray. The gap between him and the runner up, Dilip Shanghvi, is over Rs 55,000 crore.

Yet, the last one year saw businessmen steer clear of in-your-face extravagance. 

Unlike in 2015, when houses worth hundreds of crores were bought and sold, no big deals were announced this year. The market for luxury real estate slipped into somnolence.

In October, when SBI Caps put Vijay Mallya’s Kingfisher House, a three-acre beach-facing property in Goa, on the block with a base price of Rs 85 crore, there were no takers. This, in spite of the fact that the base price of the house, where Mallya held many a party including the one for his 60th birthday where Enrique Iglesias performed, had been slashed from Rs 150 crore.

The art market slowed down. Saffronart’s online auction on modern and contemporary South Asian Art in November sold just three-fourths of the 105 lots on offer. Many of the works, including those by Souza, Raza and Padamsee, sold at close to the lower end of their estimated prices. 

Christie’s’ two-part auction in December 2016 raised Rs 72 crore, way below the Rs 97.7 crore it collected in the previous edition. Delhi Art Gallery’s auction in the same month sold only 45 of the 70 lots.

After Mallya quietly fled to London in March, on a business class seat in Jet Airways along with seven heavy pieces of luggage, businessmen became somewhat circumspect. His indulgences, even though his defunct Kingfisher Airways owed the banks Rs 9,000 crore, had become a subject of national lampoon. Others thought it prudent to dive under the radar screen.

But old habits die hard. In October, former Karnataka minister and mining baron G Janardhana Reddy sent out invitation ‘cards’ for his daughter Bramhani’s wedding in Bengaluru — with an LCD screen showing the Reddy family singing against a lavish backdrop; each of these is said to have cost over Rs 10,000.

This was a just a preview of the grandness to follow. During Bramhani’s wedding to Rajeev, son of industrialist Vikram Deva Reddy, the Bangalore Palace turned into a fortress guarded by 3,000 men. With 50,000 people on the guest list, the whole affair is believed to have cost over Rs 500 crore. It featured 40 bullock carts and life-size replicas of Reddy’s home and village, among other things.

That apart, celebrations were subdued. No expensive jets and yachts were purchased, no glamorous calendars were printed. As Gaurav Dalmia says in a piece on page three (The thrill of making money): Money is far more exciting than anything it buys.

The biggest gainer on the list is Patna-born and -educated Anil Agarwal. As crude oil prices began to climb, investors drove up the share price of his Cairn Energy more than 100 per cent. He also gained from the steady rise in commodity prices. The accretion of Rs 40,392 crore to his wealth has catapulted Agarwal, an avid cyclist, from the 22nd spot last year to the 6th this year.

You could call it sweet revenge. Last year, Agarwal was the biggest loser, as his net worth tanked over Rs 31,000 crore, thanks to the fall in crude oil and commodity prices. A change in the cycle has revived his fortunes. Life has turned a full circle for Agarwal.

Naveen Jindal, the beleaguered steel maker, has snapped his losing streak and added Rs 1,237 crore to his net worth. But this is a fraction of the Rs 26,222 crore he shed in the previous three years. In the 2014 as well as 2015 editions of The Billionaire Club, Jindal had lost the maximum wealth. In 2016, he was placed fifth on the losers’ roll call.

The biggest loss this year has been suffered by Shanghvi as investors became weary of Trump’s intent to discourage inexpensive imports into the US. This cut Shanghvi’s net worth by Rs 20,609 crore. Last year, Shanghvi had lost Rs 6,682 crore.

In fact, most of the pharmaceutical bigwigs have lost wealth on account of the likely tightening of the US market: Desh Bandhu Gupta, Yusuf Hamied, Habil Khorakiwala. Functioning under stringent price controls in India, they had all sought to build their fortunes in the US that makes up almost half of the world market for medicine. Everything was going well but with Trump in the Oval Office, there are dark clouds on the horizon.

After slipping in the rankings for a few years, Mallya finally exited The Billionaire Club this time. Operating out of a sprawling estate in a village outside London, he continues to thwart all attempts to get him back to the country. 

In the public image, Mallya represents all that is wrong with business. India Inc’s image took a further beating when Cyrus Mistry was evicted from the chairmanship of Tata Sons by Ratan Tata, the very man who had brought him in a few years ago, on grounds that many didn’t find too convincing. 

The Ruia brothers, Shashi & Ravi, placed 9th last year, too are not on the list as their Essar Oil got sold to Rosneft. Amongst the other notable exits are Krishan Kumar Modi, Atul Nishar, Shishir and Kushagra Bajaj and Sanjeev Bikhchandani. 

Of the four Infosys founders in The Billionaire Club last year, one, S D Shibulal, is out. The other three — N R Narayana Murthy, S Gopalakrishnan and Nandan Nilekani — have seen serious erosion in their net worth as investors felt Trump’s rhetoric will reduce outsourcing to India and the advent of artificial intelligence will crimp the earnings of the homegrown info-tech companies that still depend heavily on body-shopping.

It is for this reason that Azim Premji too has lost almost Rs 13,000 crore, though he is still on the third slot. In the days ahead, India’s info-tech heavyweights will face their stiffest challenge ever. However, Shiv Nadar has added Rs 320 crore to his kitty.

In spite of the uncertainty in the US, the pharmaceutical sector has the maximum members on The Billionaire Club: 16. Of these, nine made gains during the year, though these were far outweighed by the heavy losses booked by the stalwarts. Kiran Mazumdar-Shaw almost doubled her wealth to Rs 12,733 crore, which helped her leapfrog from the 64th to the 41st position.

Pharmaceutical is followed by automotive (13) and FMCG (eight). All told, the billionaires represent 22 sectors of the economy.

As no unicorn debuted on the stock market this year, the startup whiz kids are yet to make it to The Billionaire Club. The flag bearers of e-commerce — Flipkart, Ola and Snapdeal — are all struggling to stem their losses and hold on to their fanciful valuations, and therefore their listing, and the entry of their founders into The Billionaire Club, looks like a distant possibility at the moment.

Amongst CEOs, Kalanithi Maran remains the highest paid with a package of Rs 71.47 crore in 2015-16. A notch below is his wife, Kavery Kalanithi (Rs 71.46 crore). The Marans are followed by AM Naik (Rs 66.14 crore), Pawan Kant Munjal (Rs 57.40 crore) and Sunil Kant Munjal (Rs 54.37 crore).

Several factors will impact the stock market in the year ahead, which will decide the fortunes of our billionaires. A stronger National Democratic Alliance in Parliament, good monsoon, and a lenient Trump administration could just take their wealth to new heights.