After a long while, a Modi had hogged the limelight in the world of business
Lalit Modi is finally on an uncertain terrain. Old friends have ditched him, and the investigative arms of the government have begun to probe his business. The Indian Premier League (IPL), which he has run with style and success for three editions now, will probably have a new driver soon. It is too big a brand to let die and too much money is at stake. Apart from the fate of the cricket carnival, spare a thought for his surname. After a long while, a Modi had hogged the limelight in the world of business. Accolades came thick and fast for his innovations in marketing, the money he earned for the Board of Control for Cricket in India and how he built a multi-billion dollar brand from scratch. If he is ousted, it will be tough for him to claw his way back into those hallowed portals.
The Modis were once one of the wealthiest industrialists in the country. It was the Licence Raj and they made everything from sugar to textiles, lanterns, cement, tyres, chemicals and vanaspati. The rules of the game were different then. The competence of businessmen was counted in terms of their ability to get licences and put up roadblocks for their rivals in the corridors of power. Whatever was produced got sold. Then the Modis split in the 1980s. The business was sought to be divided between the five sons of Gujar Mal Modi and the three sons of his step brother Kedar Nath Modi. The Modi companies held shares in each other. It was a nightmare to disentangle the cross-holdings. As a result, when some of their companies went sick, it was difficult for banks and financial institutions to fix responsibility. Exasperated, the banks came out with the “group approach” — the Modis were blacklisted.
Very few of the Modis (apart from the eight brothers and cousins, their children are all in business) have since then tried to build a new venture. At least two of them got out of the Modi bandwagon to escape the group approach and get started in business one more time: Y K Modi (Kedar Nath Modi’s son) and his cousin B K Modi (Gujar Mal Modi’s son). Y K Modi had invested in tea, radio paging and coal bed methane.
B K Modi is perhaps the most enterprising of all. In the 1980s, when overseas companies were not allowed to come to India on their own, he formed a slew of partnerships with the likes of Xerox, Olivetti and Telstra to facilitate their entry into the country. Rightly he was called “Joint Venture” Modi. Once the rules for foreign ownership were liberalised, he exited these companies.
B K Modi then started mobile telephony in the Punjab and Karnataka circles under the Spice brand. This became his passport to riches. In 2008, he sold his stake of 40 per cent or so to Idea Cellular for Rs 2,720 crore. Since then, he has been looking for opportunities to grow in the new economy sectors in the emerging markets from Indonesia to Israel. First he tried to purchase Multi Screen Media (earlier known as Sony Entertainment Television) and then Satyam Computer Services. Both the attempts came to naught. He had also announced a film on the Buddha with Richard Gere and Shekhar Kapur.
In between, he lost control of Modi Rubber to his older brother, the Indian Institute of Technology Roorkee-educated V K Modi. Thanks to the fight between the brothers, the factory was shut for several years. The machines rotted, and the company’s share of the market plummeted to zero. Attempts to sell it to Onkar Singh Kanwar of Apollo Tyres too did not work out for the same reason. V K Modi has now restarted the plant. Though it was considered a good plant 10 years ago, it badly needs radial technology. The market buzz is that he is all set to induct Continental of Germany as a strategic partner in the company. That should give a new lease of life to the business. V K Modi also runs glass-maker Gujarat Guardian.
Very few people would remember an airline called ModiLuft. It was set up by S K Modi (also Gujar Mal Modi’s son). The name was clever as it suggested a strategic partnership with Lufthansa, which was not the case. This was the first airline rush of the mid-1990s, and many of those soon went belly up. Names like Damania, East West and ModiLuft are just distant memories now. S K Modi soon lost his airline to a clutch of investors led by the Kansagra family. He kicked and screamed but the business was gone. It is now called SpiceJet.
K K Modi, Gujar Mal Modi’s eldest son, owns Godfrey Philips, the tobacco company. It is smaller than ITC in size, but is run by a team of professional managers. K K Modi has two sons: Samir Modi, who is in charge of Modicare, a direct-marketing company built on the lines of Amway, and Lalit “IPL” Modi. It was Lalit Modi who put the family name on prime-time television and the front pages of newspapers one more time. He may do so for some more time, though not for the right reasons. Which of the Modis will take up the mantle next?
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