| Ponty's
World |
| Slain
businessman Ponty Chadha built from scratch a Rs 10,000 crore business and
forged close ties with many politicians. His son, Monty, wants to steer the
business in a new direction |
| Surajeet Das
Gupta / New Delhi Nov 24, 2012, 00:15 IST Source: Business Standard |
|
Gurdeep “Ponty” Chadha,
liquor baron,
real-estate developer,
sugar mill owner and
Coca-Cola bottler, could tell with accuracy the outcome of
elections in
Uttar Pradesh. He was the first to sense the rise of
Mayawati in the state. So Chadha built bridges with her before
anyone else — a relationship that may have helped him gain control of liquor
distribution in the state years later. A few days before Diwali, he had told a
friend that the
Samajwadi Party would lose at least 15 seats to Mayawati’s
Bahujan Samaj Party if general elections were held right away.
The liquor vends he and his associates ran in the state gave him valuable
insights into the popular mood. His people were instructed to observe and report
what they saw and heard. Chadha would tell friends this was his “Gallup
poll”.
But his intelligence network failed last Saturday when he went down in a hail
of bullets allegedly fired by his younger brother, Hardeep, who was also killed
in the gunfire. A week after the ghastly shootout in a south-Delhi farmhouse,
there is still no clarity on the chain of events that day. The presence of
musclemen, personal security officers and hangers-on has muddied the
picture.
What
is certain is that the dispute between the brothers was not just over one
farmhouse — it was over dividing the around Rs 10,000-crore business that their
father,
Kulwant Chadha, had started and Ponty had assiduously built
over the years. (Ponty did nothing without his father’s advice, except when he
decided to celebrate his wedding in style, which included booking a south-Delhi
five-star hotel. Kulwant didn’t approve that he had borrowed money from friends
for the bash.) Friends of the Chadha family say Hardeep wanted to opt out of the
family business. Sources say a Rs 1,600-crore settlement was being worked out
for Hardeep. But the two brothers died before it could be closed and signed.
At the moment, it seems that a division of assets is not the family’s
priority. The Chadha family put out one advertisement to announce the two
deaths. The Bhog ceremony, held at the historic
Rakab Ganj Sahib Gurdwara in Delhi, not far from Parliament
House, had the entire family in attendance. If there are undercurrents of
tension in the family, these weren’t visible at the ceremony. Ponty’s younger
brother, Rajinder,
aka Raju, is expected to be chairman of the group.
He was Ponty’s trusted lieutenant and used to look after the day-to-day affairs
of the liquor business. The business will be driven by Ponty’s son, Manpreet, or
Monty.
Thirty-something Monty is a school dropout but suave, polished and courteous
to a fault. In contrast to his father who would go to office only late in the
afternoon, preferring to work in the morning from his 10-acre farmhouse in
Chattarpur, Monty reaches office at 9 o’clock in the morning. Monty has engaged
international consultants for his key projects. He took the help of an
international consultant when he decided to change the name from Chadha group to
Wave group. The consultant also gave the group a new logo. When he wanted to
sell his ambitious 152-acre Wave City Centre in Noida, he hired Dubai-based
Modelcraft, a creative solutions company, to come up with an interactive model
of the project that he could show to prospective buyers. He forked out over half
a million dollars for the model, it is learnt.
Monty is not a control freak. When
Gurdeep Khandhari, Coca-Cola’s bottler in Amritsar, needed
financial help to run the unit, Ponty picked up a majority stake in it. Monty,
who is married to Khandhari’s daughter, had the option of becoming the managing
director, but he refused and asked his father-in-law to continue running the
business. Sources in the soft drinks industry say: “They were keen that the
business be run by professionals and took the help of Coca-Cola to identify
somebody to look after the plant.”
* * *
It is difficult to picture Monty running the family’s liquor business. No
consultants, no sophistication, fear holds the key in this business. “In a
system where the person at the liquor vend has to send cash to a centralised
location day after day, any breakdown can lead to havoc. So you have to instill
fear that no one will default or break the rules,” says a businessman who was
close to Ponty.
Ironically, country liquor was the family’s first business in the 1960s when
Kulwant, Ponty’s father and Monty’s grandfather, got the licence to run a shop
in Moradabad. The turning point came in 1997, during the Akali Dal regime in
Punjab, when Adesh Pratap Singh Kairon (now food and supplies minister) was
excise and taxation minister, and Ponty got the licence to run the liquor trade
in the state. It was a win-win situation for both: the government wanted to
replace the existing syndicate and Ponty wanted to expand. Yet, he was not
beholden to just the Akalis; Ponty’s good run continued when the Congress came
to power in the state. People close to him say that he offered to double the
Punjab excise department’s revenues from liquor every year in return for
distribution rights in the state. His monopoly ended only in 2006 when a new
excise policy was introduced.
The big break came in 2008 when the BSP government gave Ponty the exclusive
rights to distribute country liquor as well as India-made foreign liquor in
almost the whole of Uttar Pradesh. The 54 distilleries in the state vied with
each other to stay in his good books. He also came to control 40 per cent of the
17,000-odd liquor outlets in the state.
Still, Monty wants to give the group a new direction by reducing its
dependence on liquor. “Today, liquor constitutes 70 per cent of our group’s
topline, I want to reduce it to 30-35 per cent in the next five to six years,”
he had told Business Standard a few weeks before his father’s death.
Actually, the liquor contracts in Uttar Pradesh come to an end in March 2013.
Since Ponty was close to Mayawati, there has been speculation that the Samajwadi
Party government in the state, led by Chief Minister Akhilesh Yadav, may end the
group’s monopoly in distribution. Lucknow Sharab Association spokesperson Anil
Agarwal says that the state government could revert to the earlier practice of a
lottery, wherein there were 20-25 wholesalers in the state. He says that will
“bring in more competition”.
The group has certainly faced some turbulence in Uttar Pradesh. Ponty had
bought five sugar mills of the Uttar Pradesh Sugar Corporation in 2007. The
Comptroller & Auditor General has said that these were sold at throwaway
prices and caused a loss of Rs 1,200 crore to the state. Chief Minister Yadav
has referred the matter to the Lokayukta for a probe.
That apart, Ponty had built bridges with the Samajwadi Party. He attended
Yadav’s swearing-in ceremony held in Lucknow earlier this year, and met
Samajwadi Party chief Mulayam Singh Yadav in Delhi to wish him on Diwali.
Insiders say that tension was brewing between Ponty and another well-known Noida
industrialist who is known to be close to the Samajwadi Party and who didn’t
approve of Ponty reaching out to the senior Yadav directly. But his annoyance
meant nothing to Ponty.
It is worth noting that True Value Food, a Wave company, has been contracted
by the Uttar Pradesh government to supply food supplements to over 28 million
children and pregnant women under the Integrated Child Development Scheme for
three years. The contract is worth over Rs 9,000 crore. (At the moment, the
scheme is in limbo in the absence of clear directives and a rival challenging
the award of the contract in the Allahabad High Court.) Ram Gopal Yadav, the
chief minister’s uncle, was at the Bhog ceremony at Rakab Ganj Sahib Gurdwara on
Thursday. “There are 35,000 families that Ponty looked after,” he was reported
as saying. “His death is a loss for society.”
Ponty had suffered reverses in Uttarakhand too. His group was allotted over a
dozen hydro-power projects, out of the 56 up for grabs, in the state with
capacity ranging from 5 Mw to 25 Mw in 2010 when Ramesh Pokhriyal Nishank of the
Bharatiya Janata Party was chief minister. Ponty had planned to invest over Rs
1,000 crore in these projects. Controversy erupted when the media reported
allegations that the government had favoured companies owned by Ponty in
awarding the projects. As the matter reached the courts, the government abruptly
cancelled all 56 projects within months of allotting them. Ponty had challenged
the decision in the Supreme Court.
Notably, in his last moments, Ponty was accompanied by Sukhdev Singh
Namdhari, chairman of the Uttarakhand Minorities Commission. It was Namdhari’s
bodyguard who is said to have brought down Hardeep. Namdhari, of course, has
been removed from his job by the Uttarakhand government. He was arrested on
Friday.
* * *
It’s not that Monty wants no part of any regulated business. He may not be
enthused by liquor, but he is upbeat on sugar — a highly politicised industry
where the government controls the input (sugarcane) price and also the output
price (through its monthly sugar release order). Monty says the sugar business
will only grow in the days to come and does not rule out acquisitions. His plan
is to eventually list the sugar business on the stock market. That would be the
first group business to list and open itself to public scrutiny. “We want to be
amongst the top five sugar companies in the country” says Monty. That might be
too ambitious, but he has finalised a blueprint to double capacity to 50,000
tonnes (of sugarcane) crushed per day.
But Monty is aware that he needs new businesses which will reduce his
reliance on liquor or sugar, in case something goes awry. That is why he is
aggressively pushing two key new business areas — real estate and retail. Monty
says that the group already has a land back of over 3,200 acres, mostly in north
India, and is scouting for private equity funds or other investors to bankroll
real estate developments. He hopes this business will generate sales of over Rs
15,000 crore in the next five to six years.
He is also getting into the hotel business and talks are on with Jumeirah of
Dubai and Swissotel for a partnership. He also wants to leverage his connection
with hundreds of thousands of sugarcane farmers to support a retail chain for
fresh vegetables called Wave Fresh. “The farmers with whom we have a long
relationship plant sugarcane in only half of the 150,000 hectares of land they
cultivate. We are telling them to grow vegetables which we will buy from them
and supply to our vegetable retail chain”, elaborates Monty.
It’s nothing short of a DNA change for the group — a tough call for its new
leader. But Monty will not have his father to advice him. He is left to his own
devices.
Sikkim Reporter
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