Fri 11 Apr 2008
From March 30, 2008
By Dean Nelson in Delhi
The assembled businessmen wore black ties and listened politely to a string quartet under crystal chandeliers in a magnificent ballroom. The room buzzed with talk of the old country, but more importantly with commercial speculation about their new domain. What was to be their next takeover target in the local economy?
It could have been a sepia print of the British East India Company, which effectively ruled India as a private colony for 100 years, but a closer look revealed a different kind of burra sahib. More Chandigarh than Cheam, the men gathered at the Grosvenor House hotel in Mayfair, central London, last year were the representatives of a new Indian raj, powerful men intent on buying up chunks of the homeland of their old imperial masters.
They included the host Subodh Agrawal, dealmaker for some of India’s tycoons, and the Hinduja brothers, fourth on The Sunday Times Rich List. An aide to Lakshmi Mittal, the world’s wealthiest steel baron, was there, along with the Birlas and the Jindals, representing India’s oldest industrial families. Britain’s new Indian aristocracy – such as Mike Jatania, who bought Yardley cosmetics – were also in attendance.
They have been called the Indian Billionaires Club and last week one of its celebrated members pulled off the most symbolic corporate takeover in Indian history.
When Tata, the Mumbai-based conglomerate headed by Ratan Tata, bought Jaguar and Land Rover from Ford last week, a nation still reeling from a few cannabis-infused bhang lassis over the Hindu festival of Holi extended the party. The £1.15 billion takeover was worth far more than the money paid. The acquisition of Jaguar – a symbol of British style and engineering superiority, albeit until last week owned by Americans – was a moment of national triumph almost matching India’s victory in last year’s Twenty20 Cricket World Cup.
Tata has been buying British since 2000 when it purchased Tetley, which had been selling Indian tea to the UK since 1856. Last year it completed the £6.2 billion takeover of Corus, the British steel giant, in the biggest foreign takeover by an Indian company.
Its purchase of Jaguar and Land Rover was smaller in scale but greater in symbolism. The Indians had bought the makers of James Bond’s new wheels, Inspector Morse’s classic and the workhorse of the British Army for a song. “It took a company from a former colony to come to the rescue of a beleaguered British brand,” said The Times of India with undisguised pride.
Tata is not the only Indian firm on a buying spree in Britain. In the past year Vijay Mallya, the airlines and breweries magnate, has bought Whyte & Mackay, the Scottish distiller which makes the Dalmore and Isle of Jura single malt whiskies as well as Vladivar vodka.
Last week Hichens Harrison, Britain’s oldest independent stockbroker, announced that it was considering a £49m offer from Religare, a Mumbai-based stockbroker which wants to cash in on the Indian rush to buy British companies.
The deep pockets of the reverse colonists is revealed in the bidding for Jaguar. Had Tata not been successful, next in line was Mahindra, its Indian rival.
Britain is beginning to look like a significant outpost in a new Indian empire.
WHEN Agrawal told executives of an American finance company in 2001 that Indians would be involved in $10 billion takeovers in Britain by 2010, his audience had laughed. Spurred on by their disdain he set up Euromax Capital in London in 2003 to finance Indian takeovers and has already become a multi-millionaire on the back of it.
Britain is the beneficiary of the startling growth of the Indian economy, which is often overshadowed by the attention focused on that of China. Last year India’s economy grew at 9% and Goldman Sachs, the US investment bank, has predicted that the size of the country’s gross domestic product will outstrip that of Britain between 2015 and 2020 if it continues at the same rate. Germany and Japan would be overtaken in the following decade.
China has spent more on global takeovers than India – in 2007 it bought 84 companies for $21 billion, compared with India’s 110 deals for $17 billion – but when it comes to Britain, the shared history of empire gives India a clear advantage. It is now the third biggest investor in the UK after the United States and Japan.
Agrawal said this latest Indian takeover spree had been made possible by the immigration of senior Indian bankers, lawyers and entrepreneurs in the 1980s and 1990s. Mittal, the Hinduja brothers, Naresh Goyal, the airline boss, and Anil Agarwal, the aluminium tycoon, made vast fortunes in Britain during this period.
“Mittal brought India and Indians to the forefront of the international stage and turned us from being perceived as second-class citizens to emerging as first among equals,” said Agrawal.
“Indians are most at home in Britain, especially London. The English language, friendly culture and familiar legal and commercial environment make it far easier to consummate deals here than anywhere else. Indians regard a UK acquisition as the biggest trophy prize.
“I don’t know if this can be termed a ‘reverse raj’ – I’d rather call it a coming home to the empire.”
There is more to the new Indian raj, however, than just money. There is culture and sport, too. The British Council in Delhi, which once celebrated English literature, music and drama, has been downgraded. It is closing much-loved libraries of Chaucer and Shakespeare around the country and instead selling English courses and A-levels to the young Indian tycoons of tomorrow.
The council also uses almost entirely British-Indian artists to promote the cultural life of the UK. The impression is that Britain is being sold as an Indian satellite – don’t be afraid, it’s just like India really.
Even cricket, the game that Britain’s high-handed sahibs introduced to Indians only to “teach them a lesson”, is slipping away from the grip of Lord’s. The new Indian Premier League has dangled previously unimaginable sums in front of the world’s best cricketers and the England authorities are being forced to fight a rear-guard effort to keep their stars in the domestic game.
As England cricketers consider flying out to play for new masters, India’s tycoons and Bollywood’s most glamorous film stars are preparing to come the other way.
At the height of the British empire, its officials used to escape the oppressive heat of Calcutta in the summer by decamping en masse to Shimla in the cool of the Himalayan foothills. Now the great and good of India are using London as their “summer capital” for the same reasons.
Karan Johar, India’s leading television interviewer and media player, and Shah Rukh Khan and Hrithik Roshan, the screen heart-throbs, are part of an annual migration to Chelsea, Knightsbridge and Mayfair which sees them arrive in June and stay until the monsoon brings relief a month later.
Sunil Mittal of Airtel, India’s biggest mobile phone operator, will be there along with K P Singh, the world’s richest property developer, the Birlas, the Ambanis, and the Ruias of Essar, all of whom have London homes.
According to Agrawal, “living in London is like living in a cleaner version of India”.
The shift in power has been noticed by Britain’s own Indian population, which migrated here in the 1960s to escape Indian poverty. In an echo of the time when Britons stationed in the subcontinent sent their children back to the homeland to be educated at public school, British-Indians are now sending their children to Indian boarding schools to make sure they are well placed to thrive in the new raj. At Woodstock, the 150-year-old boarding school built by the British in the old hill station of Mussoorie, teachers say they have had a sharp increase in applications from British-Indians who want their children to experience the country, absorb its culture and be prepared for a new future in India.
Jagjit Johal, 48, had been in Britain for more than 20 years and worked overseas for an investment company. But when he finished his last posting, he decided to return to India to make sure his sons were fluent in Hindi, unfazed by India’s street-level poverty and able to prosper in the motherland.
“We wanted them to be familiar with the Indian environment, the cultural aspect. The education standards are higher in India, it’s more rigorous. We’re British citizens, and it is home in so many ways, but with all of these mergers going on, the Indian-British community can play a much bigger role. As families with both cultures we can understand the subtleties and have a better chance of succeeding,” he said.
FOR many Indians, their country’s new-found wealth and the power over its old colonial masters bring with them a sense of a natural order being reestablished.
Pavan Varma, a former Indian diplomat and now head of the Indian Council for Cultural Relations in Delhi, said there was a sense of “historical vindication” in India at its return to global influence after centuries of submission.
“When the first British envoy came to meet Emperor Jahangir in the 17th century, he was not allowed to sit in the royal presence, he had to stand,” he said. “Then India controlled 24% of the world’s gross domestic product and a quarter of international trade.
“Now there’s a sense of pride that the wheel of history is changing. The biggest success of colonialism was the colonisation of our minds. It takes a great deal of time to reverse that, but there is a reversal.
“Indians take pride that the relationship is now one of equality, that India is an emerging power and Britain is a former power.”