EDITORIAL

THE RICHEST INDIANS
A ranking of 391 billionaires

WELCOME TO THE CLUB
India’s most exclusive club has been flooded with new entrants, with as many as 89 entrepreneurs paying the billion rupee admission fee

BILLIONAIRES NEXT
Quite a few are set to storm into the Billionaire Club. We catch up with a few of them

THE OTHER BILLIONAIRES
The interesting unlisted billionaires

SALARIES UNLIMITED
140 new CEOs join the list of those who earn more than Rs 1 crore a year

TOP GROSSERS
Definitive list of India Inc's top earners

METHODOLOGY & INDEX
How we estimated the wealth and earnings of billionaires

FAST FORWARD

India’s billionaires have had an extraordinarily good year, with fascinating strands to the overall weave of wealth, reports B G Shirsat

Seven years ago, when Business Standard compiled for the first time a list of the wealthiest people in India, the Ambani family (father and two sons) was worth Rs 5,046 crore. It seemed a big number then, but it is less than what Sajjan Jindal, the steel tycoon, is worth today (Rs 5,582 crore). Jindal is no out-performer, because there are 20 others who are worth more today than the Ambanis were in 1999–when they ranked third in our list.

THE BILLIONAIRE OF THE YEAR MUKESH AMBANI, the runner up in six of the last seven years, has climbed to the top this time, with a net worth of Rs 765.09 billion ($16.56 billion). Two factors helped Ambani. While the market price of his flagship, Reliance Industries, surged 46.4 per cent in a year, there was a change in our methodology to compute promoters’ net worth. Instead of removing the entire market value of crossholding from the promoters’ net worth, this year we have added back the promoters’ share in crossholding as their net worth.

In comparison, Mukesh Ambani today has a personal wealth of Rs 76,509 crore, and younger brother Anil another Rs 23,721 crore (all numbers are based on stock prices at the end of August). Between them, the brothers now have wealth that is marginally more than Rs 100,000 crore and they have therefore multiplied their assets 20-fold in seven short years. That’s an annual rate of growth of more than 50 per cent. Mukesh, in particular, has done better than anyone else at or near the top of our list, in terms of the increase in total wealth.

Azim Premji, who topped the list in 1999 and in all but one of the lists from then till before this latest list, has seen his wealth grow from Rs 17,607 crore to Rs 59,557 crore today – an annual growth rate of a relatively sedate 20 per cent. Premji is second on our list this year.

Increasing your wealth by 20 per cent a year is sedate? Well, the full list of 391 members of this year’s Billionaire Club has a combined wealth of Rs 634,457 crore. In comparison, the 100 members of our first list of those with wealth of Rs 100 crore and more in 1999 were together worth Rs 83,800 crore. Amazingly, we now have 99 people whose wealth is more than Rs 1,000 crore each (10 times the threshold of seven years ago). And there are now 23 Indians with wealth of over Rs 4,500 crore, making them dollar billionaires. In 1999, there were only three: Azim Premji, Shiv Nadar and Dhirubhai Ambani.

Any way you look at it, the first years of the new millennium have been very good for the members of India’s most exclusive club. Thank the boom on the stock market, as these people’s wealth is calculated on the basis of their holdings of company stock. No fewer than 45 people have entered the list this year because of the 4000-point surge in the Sensex over the past year. Indeed, Mukesh Ambani’s wealth has gone up by two-thirds in the last one year, in part because of some restructuring in the wake of the split with his brother, and fresh stock market listing. Anil has done even better in percentage terms – a 140 per cent increase in his wealth, bringing him at the fifth spot as he enters the list for the first time. Stock prices, in general, have multiplied manifold – reflecting how companies have done very well in the past three years in particular, and seem poised to continue on their rapid growth curve. If India emulates some countries where the total value of companies listed on the stock exchanges equals GDP, then India’s billionaires will see their wealth climb rapidly in the future as well, and many more billionaires will be added to the list. It’s not just shares, for land prices have moved up even faster in most cities. So is this merely a case of general asset price inflation because there is so much money sloshing around? Perhaps, and with individual house prices in the toniest parts of New Delhi beginning to fetch more than Rs 100 crore, even the owner of a house in the capital can count himself a billionaire on the strength of that asset alone! But the high road to riches in India seems to lie in starting a company, making it successful and then taking it public at the right time: fully 35 members out of the 391 this year have joined the club by doing a public share issue in the last 12 months, starting with Tulsi Tanti of the amazing wind energy firm called Suzlon. Tanti enters the list at the sixth rank, with a wealth total of Rs 23,665 crore. In that sense, the wealthy have to be distinguished from those with fat pay cheques. Even though CEO salaries have ballooned in recent years, and there are an estimated 800 or more people earning a crore and more per year (see our separate list on this), the fact is that income does not equal wealth – as is the case in other economies.

With Rs 350.34 billion net worth, Sunil MIttal remained at number three, with his mobile company Bharti Airtel increasing shareholder wealth by 33.7 per cent Anil Agarwal, ninth in 2005, climbed to the fourth spot (Rs 319.02 billion). Agarwal benefited from the spiralling metal prices and change in our computation of net worth. The demerged Reliance Industries unlocked the market value of Infocomm, and made the 45-year old Anil Ambani the fifth richest Indian (Rs 237.21 billion).

Wealth (at least that wealth which a market can assess – because let us not forget the former maharajahs who still own palaces and forts and vast quantities of jewellery and other family heirlooms) comes as a rule from owning a substantial chunk of shares in a successful, listed company.

A well-paid CEO can imitate the life of the rich by moving around in a luxury car, living in a swank apartment and going abroad for holidays every year, but many of the really wealthy shun those accoutrements and go about quietly running their business, without much show.

The real story here, therefore, is about India’s growing entrepreneurial class, and the fresh blood that you see in its ranks: the growing clusters of first-generation entrepreneurs. Who would have thought that a civil engineering graduate from the Indian Institute of Technology would be able to change the fortune of his low-profile real estate company so dramatically in just seven years? Valued at Rs 52 crore in 1999, Unitech Chairman Ramesh Chandra didn’t make the grade in our inaugural billionaire ranking. Today, his 75 per cent stake in Unitech is worth over Rs 12,670 crore, courtesy a steep 2,100 per cent increase in the stock price in the past year.

That takes him to the seventh position in the list of the richest Indians this year, up from 114th in 2005. Indeed, DLF’s K P Singh is arguably even wealthier, but his IPO has been deferred and so his wealth remains hidden from public view (except for those who visit Gurgaon and DLF City). Or take Punj Lloyd’s Satya Narain Prakash Punj, a new entrant into the Billionaire Club this year. In 1999, Punj Lloyd was a small engineering company with an order book of less than Rs 200 crore. Seven years later, the company has an order backlog of Rs 14,500 crore waiting to be executed over the next three years. Punj’s current market capitalisation is Rs 2,000 crore.

The extraordinary optimistic message that the rich list throws up is a simple one – with the opening up of the economy, opportunities have mushroomed in every field, and entrepreneurs have been quick to grab their chances. Over two-thirds of the promoters listed are from small and medium firms. And it would be a mistake to think that it is only hot new sectors like technology and telecom that are creating extraordinary wealth. While many of India’s richest moguls continue to be from software (44 billionaires) and other services sectors, pharmaceuticals, steel, automobiles and diversified businesses have spawned a large numbers of billionaires too.

A new feature of the list this year is the addition of people who do not run companies but who have invested well on the market, the cut-off being those who own over 1 per cent in various companies. Rakesh Jhunjhunwala and his family, with wealth of Rs 1,400 crore, tops the list of investor billionaires – no surprises there. But investor Nemish Shah, too, joins the big league with a net worth of Rs 158 crore.

While there are 86 new entrants in the 2006 list, Jet Airways Chairman Naresh Goyal is the most prominent of the losers. The promoter of India’s largest airline, who listed Jet last year to become the wealthiest new billionaire, has lost about Rs 4,500 crore on account of the Jet-Sahara episode and the downturn in airline fortunes. The other major losers in what has been a bull market are the promoters of Ranbaxy, who lost Rs 1,560 crore, and Habil Khorakiwala of Wockhardt who lost Rs 1,066 crore. In other words, your wealth is going to take a big hit if your company hits squally weather – whether because of bad business decisions or simply bad luck.

At the end of the day, then, the message is a good one for the system: run a company well, add value to the economy, share your wealth with other investors – and you will be rewarded with undreamt of riches.•

HOME    Business Standard • October 2006