Osian’s Neville Tuli is making a quiet comeback after his art fund ran aground. He talks to Gargi Gupta about the lessons he has learnt from the failure and his plans for the future.
After lying low for more than a year, when even his close friends and associates say they didn’t hear from him, Neville Tuli, the founder of Osian’s, the art auction house, resurfaced at the India Art Summit in New Delhi in January. Only days later, he was in Davos, taking delegates of the World Economic Forum through the 81 contemporary Indian canvases at the Congress Centre.
Tuli has always been something of an unknown quantity in the Indian art world — the outsider who came in, seemingly from nowhere, and made good. Ask his friends and they’ll tell you how Osian’s, which he started in 2000, has helped grow the domestic art market, about his extensive archives. Speak to his detractors and they’ll make much of his grandiose plans that fell flat, and his arrogance. And then, of course, there are the controversies — the to-do over shahtoosh, the allegation of fakes in an auction and so on.
But that’s nothing compared to what Tuli has battled this past year and a half. It began with the Osian’s Art Fund, the first and, at Rs 100 crore, India’s biggest art fund, posting disappointing results with a final NAV of 111.72 in July 2009. (It had touched a high of 139 in September 2008.) Worse, a year and a half after the fund closed, Tuli has not yet paid back all his investors in full.
Then in December 2009, Osian’s filed a case against Christie’s in a US court, alleging that the international auctioneer had not delivered artworks it had paid for. Early last year, the English courts heard another suit filed by Abraaj Capital, a Dubai-based private equity fund that had bought 9.4 per cent in Osian’s in 2008 for $20 million (or Rs 90 crore, valuing Osian’s at over Rs 900 crore). Abraaj claimed that Bregawn Jersey, an offshore company started by Tuli, owed it $23 million, much of it given to buy art for the proposed India Asia Arab Art Fund (which didn’t take off), art that was not delivered.
It has been a “tough year”, says Tuli, “tough to the point of breaking”. We’re speaking in his home, a two-storey bungalow in a wealthy residential area of New Delhi, seated across sofa and plastic chair on a small landing crammed with artworks. There are large canvases by Jatin Das, Arpita Singh, Ram Kumar and others lining the floor and walls; the space is littered with sculptures, rare puppets and masks from all over the world.
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So what went wrong? Tuli’s explanation is predictable — “the intangible nature of art valuation”, the “illiquidity” of art, and the fact that the market is greatly dependent on a handful of people, a combination of factors made worse by the “immense liquidity and confidence destruction” in the art market post-August 2008.
“No one had thought in 2009 that the world would collapse,” he says. He had a feeling, he says, back in 2006 when his fund was launched, that things might go wrong. Quite right, because the market was then at a peak, with prices breaking records at every auction, and unlikely to continue to hold. This would pose problems when the time came to liquidate his fund.
The art market moves hand-in-hand with the stock markets. The stock market crash of 2008 not only eroded hundreds of thousands of crores of wealth but also brought art prices crashing down. The meltdown made the art market highly illiquid. As Tuli’s fund was almost 10 per cent of the market in the country, experts say there were bound to be problems in selling the artworks. “But what could I do?” Tuli agonises now. “I couldn’t go to my lawyers, the regulator, or the media.” Extending the fund was not an option, says Tuli, since the regulations require 75 per cent unitholders to approve it and getting 656 investors from 39 cities to Mumbai was not easy. “In hindsight we become wiser,” he adds.
His topmost priority now, Tuli says, is to close the fund. “The process is ongoing. Some of the investors had said that we... don’t mind taking artworks in lieu of [money]. So, all unitholders were given that option and some are exercising it. That is also, to some extent, helping the process of redemption. Everyone, hopefully by the end of March, will be paid.”
Not everyone is convinced, of course, by the assurances. “I have not heard from him in the past one and a half years,” says one investor, a Delhi-based retired chartered accountant who invested Rs 10 lakh in the fund. This investor had attended a roadshow for the fund in a five-star hotel in Delhi and was mesmerised by Tuli’s knowledge of art. He says he has been returned 85 per cent of the redemption value a year ago, but has not heard from Osian’s about the rest of the money. When the fund was doing well, Tuli had sent him a dividend of Rs 50,000.
Perhaps, now that sentiments in the art market are on the upswing, Tuli has reason to hope. Osian’s last auction in June 2010 of rare artworks netted Rs 27.99 crore, with 83 per cent of the lots sold. But it is through the sale of Minerva, the iconic Mumbai theatre Tuli bought in 2006 for around Rs 30 crore, that Tuli hopes to raise the funds he needs to pay off his art fund and other liabilities. Minerva was to have housed Osianama, the ambitious cultural complex that was an important plank of Tuli’s ambition to create “infrastructure and [a] model for the Indian arts and culture”. But the project, to have been completed in 2009, got mired in lawsuits with Brihanmumbai Municipal Corporation. “I didn’t realise what the real estate world was to deal with. After four years that’s a project that has failed in my view,” Tuli says.
What about people who invested in his company? Billionaire Gautam Thapar entered Osian’s at Rs 60 per share and was elated when two years later another investor paid Rs 1,400 per share. Those numbers, he knows, will not return in a hurry. Thapar says he finds Tuli knowledgeable and will stay invested. There’s been reprieve on other fronts, too, for Tuli. The court case with Christie’s has been resolved, he claims, and he has got back the art. Hannah Schmidt of Christie’s Press Office lets on that “Christie’s and Osian’s have resolved their claims amicably and to their mutual satisfaction.” As for Abraaj, “everything has been sold,” says Tuli. “All the art that they had paid for is being returned to them over the next few months. They will sell off that art and get their money back.” The Abraaj spokesperson refuses to comment but, significantly, the company continues to be an investor in Osian’s.
Tuli plans “to concentrate on consolidating and rebuilding the whole framework”. At Osian’s, he is jettisoning his earlier model of using profits from the auction house to subsidise other, non-revenue earning “infrastructure-building” activities such as its archiving and research division — a model that led to accusations of “conflict of interest”. Tuli has now decided to let Osian’s be what it originally was: an auction house. “Let it get its cash-flow model strong again,” he says. That will also prevent a downturn like that of 2008-09 from affecting his other activities, as happened with his investments in football infrastructure and Cinemaya, the Asian cinema festival, which was not held last year. Tuli plans to hold at least four auctions of modern and contemporary art from the next financial year.
Out next year will be a book compiling Tuli’s extensive research on India’s architectural monuments, his second title after The Flamed Mosaic. Tuli says he has photographed almost every monument in India, except a few in Kashmir, and interviewed tourists, durwans and locals, gathering even minute details such as what you can get for Rs 5 near Puri’s Jagannath temple.
Then, having given up on Osianama, Tuli has decided to take the online route to making his considerable archive of some 267,000 works of art, cinema memorabilia and antiquities accessible to the public. This will be undertaken by Osian’s Learning Experience, a division Tuli launched in 2009 and will now become a separate subsidiary operating within the “trust-charitable legal framework”. Osian’s archives will be transferred to it, and Osian’s existing investors will be issued a small lot of shares to raise funds to cover costs for a year.
Also on a non-profit footing is 7.4 (named for the ideal alkalinity of human body fluids), which Tuli will launch later this year. Ambitious, like his other ventures, in realising a “comprehensive developmental vision”, 7.4 will be “a forum for heritage, environment, energy”, including a platform for debating development with participation from the United Nations, the government, activists and academics. There will be a cultural festival, a film festival, and so on. Thus, Cinemaya is to be subsumed in 7.4.
Tuli, thus, seems ready to shake off his troubles. Ashok Vajpeyi, chairman of Lalit Kala Akademi, however, points out ruefully that the setback to his fund has damaged “the public credibility of art funds” as a whole.
