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The Hinduja rate of growthSuman Layak Edition: Feb 20, 2011

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Gopichand Hinduja, Cochairman of the Hinduja Group , skipped his annual vacation in the Maldives

last December. Instead, he visited Chennai, Rajasthan, Nagpur and Delhi. At 70, the second of the four

Hinduja brothers is eager to get a fresh feel of India. "We have larger stakes abroad, but gradually we

are coming towards India," says GP, as he is known within the group and the family.

The $40 billion group (by market capitalisation) has only 20 per cent of its business in India. GP

believes this will change. "2010 was our best year and this year we will take off," he says. But will they

really, given their recent track record in India? Some threeand-a-half years ago, the group announced

plans to invest $50 billion (Rs 230,000 crore) in India, which was likely to be scaled up to $100 billion

(Rs 460,000 crore). This included an unsuccessful $20 billion-bid (Rs 92,000 crore) for what was then

Hutchison-Essar's wireless operations.

Today, the group is talking of a relatively modest though yet ambitious investment

programme of $30 billion (Rs 138,000 crore) by 2014. Harish H.V., Partner at Grant

Thornton India, who has dealt with the Hindujas, says: "If the projects take off, this $30

billion may scale up to $40 billion. But if they don't, we will be asking the same

questions."

For the Hindujas, while thinking big is not unusual, the approach is always conservative.

As GP says, "We do not believe in high leveraging. We want solid, sustainable growth."

Eldest brother and Chairman S.P. Hinduja explains his investment strategy: "In 1986, I

could foresee what was about to happen in Europe. By 1987-88, I started liquidating our

risks there. Today I am liquid and secure." Third brother Prakash attributes this trait to

the family's genetic make-up; the brothers have inherited from father Parmanand - the

instincts of a trader who never underestimated the value of liquid assets.

In 1987, the Hindujas

acquired Ashok

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S.P. Hinduja

Leyland Ltd, or ALL,

and since then they

have also promoted a

bank in India, IndusInd.

The group has five

listed companies (see

The India Presence)

with a combined

market cap of Rs

21,100 crore. That's

too small compared to

their global stature. In a

bid to scale up their

Indian operations, the

brothers have signed a

series of joint ventures

and made a string of

acquisitions to ride the

India story in the next

10 years.

Power, infrastructure,

realty and defence are

the new mantras and

the acquisition of a

"small, well-managed"

infrastructure firm is

set to be announced

soon. Most interesting

is a joint venture

between ALL and

Hinduja Group India to cater to the defence sector. As SP and GP are British nationals

and Prakash is based in Switzerland, ALL was considered foreign owned, with the

promoters owning 52 per cent. Current norms cap foreign direct investment, or FDI, in

defence at 26 per cent. Hinduja Group India has Ashok Hinduja, the youngest brother and an Indian

passportholder, as chairman.

'Corruption has exceeded all limits'

Edited excerpts from an interview with S.P. Hinduja, the eldest

among the second generation Hindujas

How would you describe your investing strategy now? Are you

moving towards India?

Our group philosophy has been to diversify - by sectors and

geographically. We are looking at eight to 10 sectors. The

percentage of investment in India is changing according to time, but

there are no set rules.

You seem to have fi nally laid the Bofors ghost to rest...

All that was a game - politics and economics go together everywhere. Business tycoons and

our rivals are to be blamed for that. Even when we acquired Ashok Leyland, there was a huge

hue and cry.

Do you think it is now easier to invest in India?

In India corruption has exceeded all limits. It was always there, but now it has become

dangerous. Evil seems to exceed the good. Now you have to make people accountable. We

are never pro or anti any political group anywhere in the world. We always look at whether

(what we do) is in the best interest of the host country and the mother country.

Power is where the Hindujas hope to ride the biggest wave and the man at the helm is Ashok Puri, a

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8/8/13 The Hinduja rate of growth - Business Today - Business News

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Dheeraj Hinduja (left), Chairman, Ashok

Leyland

former chairman of BHEL. "South and west India will be focus areas," says Puri. The group has already

closed the financing for its Vizag project - a $1.2-billion (Rs 552 crore), 1,040-MW unit that is slated to

go on stream in two-and-a-half years. The group hopes to install 10,000 MW by 2016 and Puri says he

is scouting for projects on hold. He is also in talks with Karnataka, Gujarat and Madhya Pradesh for

greenfield ventures.

The power venture will soon try for an India listing, as will the realty arm that has 800 acres on which

the plan is to build 27 million sq. ft. of commercial and residential space.

But first off the blocks will be IndusInd Media & Communications, which, the Hindujas say, is the largest

and only profit-making multi-system cable TV player in India. The Hindujas are eyeing a valuation of

$1.5 to $2 billion (Rs 6,900 to Rs 9,200 crore) and the listing is likely in early 2012. Managing Director

Ravi Mansukhani says around Rs 100 crore of private equity has poured in and efforts are on to tie up

another Rs 500 crore borrowing. Plans are afoot for broadband and related services, and acquisitions

are also on the radar.

Do such plans excite investors? Says Vinod Sharma, Head of Private Broking and Wealth Management

at HDFC Securities, "The market still does not value the Hinduja companies to their full potential."

The Hindujas may not be in the top league in India but, unlike

many domestic family-owned groups, the brothers have stuck

together. While the second generation is still active, five

members of the next generation have taken up their posts. SP's

daughter Vinoo heads the healthcare foray, another India-focused

venture that is expected to be a 2,000-bed operation soon.

Prakash's son Ramkrishan heads the BPO, IT and media arms,

while another son Ajay heads banking and finance and is on the

board of IndusInd Bank. GP's sons Sanjay and Dheeraj head oil

and gas and automotives, respectively.

Automotives, essentially ALL, has the biggest plans, including going global. The company has

inaugurated new plants in Pantnagar in Uttarakhand and Ras al Khaimah in the UAE. Dheeraj chairs

the ALL board and spends 10 days a month in India. Outside India, the group had reentered Iran in

2008, which was its base under the Shah regime before the shift to London. But US sanctions have

made the group cautious, although it is there via a joint venture with ONGC. At home, the Bofors ghost

has still not been exorcised, what with the Income Tax Appellate Tribunal recently ruling that Ottavio

Quattrocchi and Win Chada had indeed received kickbacks for the deal. The Hindujas would be

relieved that there was little mention of them.

That would allow GP to travel across India and get a feel of the country without the burden of history

weighing him down.

Additional reporting by N. Madhavan

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