LUNCH WITH BS: Lalit Khaitan

Holding his liquor

Lalit Khaitan

The country's second-largest liquor baron prefers to remain non-committal about his tremendous clout.

When Vijay Mallya acquired his closest rival, Shaw Wallace & Co, from the Chhabria family last year, Lalit Khiatan, the chairman & managing director of Radico Khaitan, became the second largest liquor baron of the country. With annual sales of ten million cases, he might not really be a challenge to Mallya who sells 55 million cases; but in the last ten years or so, Khaitan has come up from nowhere to overtake established players like the Jayaswals of Jagatjit Industries and the Mohans of Mohan Meakins, writes Business Standard.

On the one hand, he distributes Ernest & Julio Gallo wines in India, and single malts like The Famous Grouse, Macallan and Highland Pak. On the other, he is the dominant player in the country liquor market in Uttar Pradesh. You may not have heard of brands like Masti and Jhoom since, gentle reader, your tastes are probably more refined "" Khaitan has now appointed Rabobank to acquire some brands in India and abroad.

"Why not at The Chambers," his office had suggested for our lunch. I found no reason to disagree. The exclusive club at the Taj Mansingh hotel is a quiet place to chat and the food is excellent. I arrived at the appointed hour and asked for Khaitan. The attendant looked a little unsure. "Maybe the gentleman sitting there," he pointed towards one of the sofas in the hall. There he was "" nattily dressed as ever in a dark suit with Montblanc cufflinks and a gold Patek Philippe.

I had first met Khaitan almost a decade ago when he had split from his family and walked away with the prized Rampur Distillery (thus the name, Ra-di-co Khaitan) "" the largest distillery in the country. At that time, the company's IMFL sales were restricted to the armed forces, where its Contessa rum sold in large volumes. Apart from that, it used to produce for a large number of other players including Shaw Wallace. Then it came out with 8PM whiskey, supported by an award-winning advertising campaign, and its fortunes never looked back.

Naturally, Khaitan was looking happy with himself. It was time to wet our throats. I ordered coconut water; so did Khaitan after going through the menu card. Did he look unfamiliar with the place or was I imagining things? "You like this place?" he asked me. "Been here a few times," I replied.

Apart from other things, Khaitan is known to enjoy enormous clout in Uttar Pradesh. Within industry circles, he is regarded as the man who got the state liquor policy changed, which led to an unprecedented boom in liquor vends in the state - over 10,000 for IMFL and another 3,000 for country liquor at last count. This has resulted in a sharp rise in the state's excise revenue and an even sharper rise in the sales of liquor companies.

"No, no. It was through our association of which I am only a member," Khaitan said when I broached the subject. For the record, he is a member of the high-profile state Development Council headed by Amar Singh. His words were still ringing in my ears a few days later when Uttar Pradesh granted full excise exemption to his new 30,000 tonne grain-based distillery at Rampur.

The club staff was ready to take our lunch orders. After reading the menu carefully (again the unfamiliarity), Khaitan ordered noodles and mixed vegetables. I opted for mutton in spinach paste with rotis. I decided to open another flank against him: "You have had only one big success; and that is 8PM. What next?" "We also have Whytehall," Khaitan answered. But clearly he wants to grow from here. He recently bought out Bacardi's 51 per cent in Whytehall India for over Rs 30 crore and then purchased the brands of Brihan Maharashtra Sugar Syndicate for Rs 35 crore.

"Weren't you also in the race to buy out Shaw Wallace when the Chhabria women had put the company on the block," I quizzed him about the open secret. "All those who had bid had agreed not to talk about it. So there is nothing I can say," he replied. The challenge to read between the lines was tough for me.

The staff had laid out our lunch in the dining hall downstairs. On our way, at the bar, I caught Khaitan scanning the brands at the shelf. Was he checking out if any of his products was there? Why should a member not know the bar stock?

Some years back, flush with the success of 8PM, Khaitan had firmed up plans to get into beer with a brand called X. What made you change your mind, I asked him as we started digging into the grub. He looked a little surprised at the "insider information". But then he recovered. "We were close to launching it. But then a ban was imposed on advertising. So we dropped the plans," he said, adding that he might tie up with a global brand for India as the challenges in developing a brand from scratch were enormous.

A nice cup of coffee later, we decided to call it a day. On our way out, Khaitan mentioned that he was a member of the Belvedere club at The Oberoi. Now his unfamiliarity with the place made perfect sense to me. "Aren't you a member here?" I asked. The expression on my face must have told him neither was I. "No problems," he said, taking control of the situation. He flashed a platinum card and asked the staff to settle the bill.

I needed a drink. "What about you," I asked Khaitan, as we stepped out of the lift. "I drink occasionally. I like Glenmorangie and Macallan 18 & 25," he said, asking me: "Which is your favourite drink." Even as I was trying to remember the label on the bottle of rum tucked away in a cabinet in my kitchen, Khaitan's gleaming white Bentley rolled in and saved me the blushes. "I like the good things in life," Khaitan had said. A few days later, sleuths from the income tax department had carried out raids at 24 of his offices all over the country.