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| Bhupesh Bhandari: Bye-bye India | | Many Indian businessmen have moved abroad, and more will follow in the days to come |
| Bhupesh Bhandari / New Delhi May 07, 2010, 00:53 IST |
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The news is that Malvinder Singh is relocating to Singapore. Fortis, the health-care company he owns with younger brother Shivinder, had recently bought Parkway Hospitals of Singapore for over $650 million. This was a company the Singhs had coveted for several years. Once the deal was done, the two brothers, along with friend and confidant Sunil Godhwani, decided that while Malvinder will look after Parkway, Shivinder will run Fortis and Godhwani will manage the affairs of Religare, the financial services company. This has caused Malvinder to shift base to Singapore from Delhi. It looks like a neat arrangement between the three ambitious businessmen.
It has also come to light that Ravi Ruia of Essar has been spending much of his time in London to spearhead the group’s international operations and scout for opportunities outside India. Prashant Jhawar of the Jhawars of Usha Martin too has made London his base. He looks after the family’s international business interests, while Rajeev, his cousin, takes care of Indian business. Prithvi Raj Jindal had shifted base to the US to run his steel pipe mill there, till he sold it to JSW Steel of his brother Sajjan Jindal. L N Mittal, of course, left his family in India many years ago to seek his fortune abroad, and what he has accomplished is well known.
More will follow in the days to come. These are not project-specific assignments. These people have gone abroad for the long haul. This is a sea change from the past when family members could at best do short stints abroad for the sake of exposure, often in companies known to the family. Finally, they had to come back to the heat and dust of India. An extended stay abroad was little else than escape from familial responsibilities, and was frowned upon by the elders. The exceptions to the rule were the Chettiars of Tamil Nadu who established themselves well in Myanmar and the Gujaratis who set up large businesses in Africa. But that happened a long time back when India had little to offer. Now, families want to expand abroad, even though business prospects have never looked better in the country. There are three dimensions to this phenomenon.
One, most families have become alive to the opportunities that exist abroad. They are confident that they cannot just buy assets abroad, but also run them efficiently. In most asset sales abroad, names of prospective Indian buyers come up with unfailing regularity. Increasingly, Indians are doing big-ticket acquisitions abroad. Often, the fundamental logic of that business needs to be changed. Should production be moved to low-cost countries like China and India? Are the products reaching in sufficient quantities growth markets like the BRIC countries? The stakes have become bigger. This requires promoters to be close to the business.
Essar, for instance, owns a steel plant in Canada and has invested in iron ore reserves in the US, cold-rolled steel in Indonesia, coal mines in Mozambique, BPO outfits in the US, Costa Rica, the Philippines, Australia and Africa, oil and gas assets in Vietnam, Nigeria, Madagascar and Australia, a Kenyan refinery, and telecom in Kenya and Uganda. It has recently entered into an exclusive negotiation with Shell for buying its refinery at Stanlow in the UK and Heide and Harburg in Germany. At the moment, Essar’s business outside India is small. But that will likely change in the days to come. All this has made Ruia operate out of London.
Two, the choice of London is important. That is where Ruia, Mittal and Jhawar have set up offices. The reason is not far to seek. London is the financial capital of the world. If you have ambitious plans to grow and need money for that, London is the place to be in. Presence in London, it is now accepted in business circles, improves your access to financial resources.
Three, according to Indian School of Business Professor K Ramachandran, the foremost authority on family business in India, some people have shifted abroad because of the better lifestyle it offers. They may have got exposed to that lifestyle while studying abroad, or they may have come under pressure from their spouses to move out of India. In such cases, the justification to set up an overseas office often follows the decision to relocate. Ramachandran calls it a business solution to a family situation. He recounts the case where a family sent a youngster abroad to study. Once his studies got over, the lad was reluctant to return. The family was left with no option but to set him up abroad.
Is there a fourth dimension to it as well? Could this be a way to reduce friction within the family? Proximity breeds contempt, after all, and distances build bonds. Most families deny it — these are just demands of the business and nothing else, they insist. Ramachandran thinks there could be some truth in it. The fact is that it is a good way to divide responsibilities. It gives elbow space to family members who could have otherwise fought with each other. Whatever be the reason, expect more Indians to settle down abroad in the days to come.
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