|Beneath the banyan tree|
|Sunday, 01 May 2011 00:00|
From the brink of bankruptcy: The DCM story
Neither rich not famous
Will this book make me
Nor will it ease my pain
But when all’s over
It will remind me
My years weren’t spent in vain
—Vinay Bharat-Ram, to his father, on a favourable review of his book
An accomplished classical singer. An economist. A Sanskrit scholar and poet. An industrialist. Which one of these best describes Vinay Bharat-Ram (VBR), the eldest son of the well-known industrialist Bharat Ram, the grandson of Shri Ram? Chances are the answers you’ll get will be either (1) or (3), even (2). Unlikely it’ll be (4). Yet, for 50 years of his adult life, that was VBR’s day job, the job that five generations before him did.
Compare the results of the family business, and not just the part that is run by the VBR wing of the family, with that of today’s top industrial houses and you know why Bharat-Ram ends this wonderfully poignant autobiography saying “we could have been part of India’s growth story, but that was not to be, at least not during the past fifteen years of my life”. The title of the book, From the brink of bankruptcy, says it all.
While comparing Bharat-Ram, or any of his brothers like the wonderfully warm Arun, with the Ambanis is natural, but unfair. The economist in VBR will understand why. It's called the Dutch disease – when a large natural gas field was found in the Netherlands in the 1950s and exports boomed, this strengthened the currency so much, its other exports and industrial sector became uncompetitive. Born with not just a silver spoon, VBR grew up under the towering shadow of the family name, its connection with every possible name you could think of, several great leaders of the freedom struggle came home for a meal, as did well-known academics, musicians, actors … Lakshmi was very much around, but Saraswati was the reigning goddess, and VBR’s lovely autobiography chronicles his journey to acquire the goddess’ blessings. A favourable review of his Theory of the Global Firm in the prestigious Economic Journal stands out as a personal triumph even as his company is filing a plan to restructure its debt in the Delhi High Court—if the plan doesn’t get passed, the company’s history. Ditto for the fact that he is taught how to sing by Annapurna, Pandit Ravi Shankar’s wife and the daughter of the legendary Baba Allauddin. When’s the last time you heard of a truly successful businessman, in India or elsewhere, exult over a book or an article he’s written?
Another law of economics, differently applied, is something VBR would know militates against the success of business families such as his – there are exceptions like the Bajajs, but we’re talking about the rule. It’s called Malthus’ law. In its original concept, it applied to the world running out of food since the amount of land available for cultivation could not grow while population would. In the context of business families, it means businesses grown in arithmetic progression, from 2 to 3 to 4, while families grow in geometric progression—2 brothers with 2 kids each means there are 4 different businesses needed in Generation 2; and if they have 2 children each, we need 8 different businesses in Generation 3, and we’re talking of seven generations of this family already. It’s hardly surprising, then, that few business families remain at the top after a few generations.
Families suffer from all manner of troubles, just look at the Modis—indeed, going by VBR’s accounts, he seems to have got off lightly. VBR does point to the problems caused by his brother Vivek’s ego-trip, partly to do with the fact that he and Rajiv Gandhi were classmates, and how the excessive debt he raised proved a costly mistake. That may be so, but both Malthus and the Dutch Disease suggest, the odds were always stacked against him. Had it not taken over two decades to get the township project at Bara HinduRao started—over the land of the erstwhile textile mill—it is possible the family’s fortunes would have been better (if this is what happens to one of Delhi’s best-connected families, you shudder to think of what happens to the rest), but there is little to suggest that the 6th generation of a successful family could have anywhere near the fire of a first or a second generation family of entrepreneurs.
Why talk of families, most of the big success stories of the last few years have been start-ups by complete unknowns – contrast the fortunes created by Google and Facebook with the increase in the fortunes of Microsoft.
The book itself has a nice structure, juxtaposing the family’s progress with major events in the economy. The US-induced financial crisis, you’d be happy to know, was actually good news for VBR as it allowed his son to negotiate a better deal with UTI! For the lay reader, the book is a historical walk from the days when, in 1821, Badri Das worked with the East India Company and acquired a large number of shops while doing so; to his grandson Gopal Rai who, in the 1880s, set up what was possibly India’s first joint stock company. There’s a lot of the later generation (in all, 7, including Badri Das), their promise (in the sense of business opportunity) and what they made of it—great lives, if not great businesses.
VBR sums it all in the beginning of the book when he recounts a journalist interviewing him: “It is said in the 1970s you pioneered the minicomputer revolution in India; in the 1980s you were the first to bring a major multinational, Toyota, as a joint-venture partner for making trucks; and in the 1990s you introduced India’s first mid-size luxury car in collaboration with Daewoo… What happened?” VBR wistfully repeats, “What happened indeed?”
All in all, a delightful journey for the reader. Going by VBR’s delight over his book, over how it was reviewed in the Economic Journal, the praise he got for his translation of the Meghdoot from Sanskrit to Hindi, the way his concerts went off, it was a delightful journey for him as well.