Sometime in 2008, Bhupendra Kumar Modi sold his 40.8 per cent stake in Spice Telecommunications, which operated GSM mobile services in the states of Punjab and Haryana, to Kumar Mangalam Birla’s Idea Cellular for Rs 2,720 crore. Some part of the windfall went towards embellishments like a Rolls-Royce (the number plate of each of his cars reads 13; while most people are superstitious about the number, Modi feels 13 in Hindi, terah, means it’s all God’s, tera or “yours”). More than that, Modi was on the lookout for a new business opportunity.
The Modis, who at one time made everything from sugar to alcohol, textiles, vanaspati ghee and hurricane lanterns, went through an acrimonious split in the 1980s. Since they were unable to untangle their cross-holdings and assign responsibility for the various debts, financial institutions and banks blacklisted them. This is when Modi found a niche for himself. It was the Licence Raj and multinational corporations couldn’t set up shop in the country on their own; so Indian businessmen like Modi, because of their extensive contacts, became indispensable. Over the years, Modi got such heavyweights as Xerox, Olivetti, Guardian, Continental and Telstra to India. He came to be known as Joint Venture Modi.
After India liberalised foreign investment rules in the early 1990s, multinational corporations found little use for their Indian partners. For Modi, the next big thing was Spice Telecommunications. Once it was sold, he was back to square one. With money in the bank, he first tried to acquire Sony Entertainment Television (now called Multi Screen Media) which operates channels like Sony, SET Max and AXN. He initially offered $320 million to a clutch of investors who held 32 per cent in the company. His plan was to subsequently buy some more shares from other investors, including Sony Corp, and take his stake to above 51 per cent — to change the look and feel of the channels, after all, he needed absolute control. Sony Corp refused and Modi dropped the offer.
His eye next fell on Satyam Corporation. The stake of the promoters, the Rajus, had fallen to below 5 per cent towards the end of 2008, and the company had a number of high-profile customers. It was a strong brand with a thriving business. In other words, Satyam was a sitting duck for predators. Modi set up a team to do the due diligence. Days later, Ramalinga Raju confessed that he had defrauded the company and inflated its numbers for seven long years, and brought it perilously close to implosion. It then became a race for Satyam and Modi gave up in the final lap — Tech Mahindra bagged the troubled company.
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This was in mid-2009. Speculation has since been rife about what Modi will do with his money. Here are the details. In the last two years or so, Modi has built a business around mobile handsets, handset retail and value-added services for mobile telephony. Dilip, his son, says the group did almost $2 billion in turnover in 2010. Modi chooses to call the geography he has identified for business “I2I” — Indonesia in the east to Ivory Coast in the west. These are all similar emerging markets; hence, one strategy could fit all the countries. Dilip discloses that the group sells 2-3 million handsets every month in these markets. Once the annual number crosses 50 million, he reckons, it will be one of the largest handset sellers in the world. Rivals and sector experts acknowledge that players like Modi are here to stay in the handset market but add that they will always be restricted to the bottom end.
To grow this business fast, Modi has acquired handset brands in Thailand, Indonesia, Malaysia and Bangladesh. The next target, if his associates are to be believed, could be in Vietnam. In other markets, he plans to sell under his brand, Spice. “My ultimate excitement is creating my own brand,” says Modi, 61. “I have lost a lot of time creating a brand for others.”
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That apart, Modi has set aside Rs 500 crore for making films. Modi has long been fascinated by the silver screen. Many years ago he had talked of a Hollywood film on the Buddha. At different times Richard Gere, Deepak Chopra, Shekhar Kapur and Ashutosh Gowariker were said to be associated with the project. Now Modi has different plans, though he insists the Buddha project is very much alive. Like Hollywood studios, he wants to do up to 20 films a year. This, says he, will hedge his risks and bring in the benefits of aggregation. “Less than 10 films a year is not viable,” says he. Modi wants to acquire a studio in Mumbai and follow it up with one each in Malaysia and London. “I don’t want to start with a zero base.”
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The films will be made for people from Indonesia to Ivory Coast; Western themes are out and Indian values are in. And there will be no violence: “3 Idiots, India’s largest grosser, was a non-violent film,” he says.
Another large chunk of his money — almost Rs 1,000 crore — Modi has earmarked for his hospital. The Modis have for years run the Gujar Mal Modi Hospital in South Delhi. Modi says that he gave up all his claims to Modi Rubber, which he ran with his older brother, Vinay, so that he could get full ownership of the 100-bed hospital. Money will be spent to put up a new 500- to 550-bed hospital in its place. To attract doctors to the hospital, he plans to allow them to set up their own clinics. He wants the hospital to specialise in heart ailments.
The third piece of Modi’s plan is a university at Rampur in Uttar Pradesh. It will focus on innovation, says Modi. High-speed Internet will help students, he adds, link up in real time with the best teachers across the world. Prakash Nanani, who once worked with Modi Xerox, the joint venture company, and then relocated to Dubai to steer the Jumbo Group, has been put in charge of the university. About Rs 150 crore will be spent here.
Delhi’s business families, it is often said, missed the bus after liberalisation. Fattened by long years of protection, they didn’t have the skills to survive in a free market. Can Modi finally prove the detractors wrong?