An Incredible Success Story wrapped up in an unusual inherent sense of humility. So understated, he might be the young man next door. Except that his group has already invested over Rs. 10,000 crores, with a promise of another Rs. 12,000 in the next 6 years. Soft spoken, focused upon making the difference, Prasoon is that Delhi boy who has gone global. Read his views on the Indian story going forward!
To start with, it might be useful to understand your current portfolio, your interests globally and within India. So, just give us a snapshot.
We are headquartered in Singapore. Singapore is very convenient because it is in between Indonesia and India, where our largest stakes are. And currently our businesses are into a few verticals, but our main business is in real estate, but in a different form. We have so far finished almost 20 million square foot of real estate development in Eastern India. This includes business parks, residentials, high rise, bungalows. But now we have moved on from residential to the business of logistic parks. And we are also in the business of data centres. This is in India.
In the logistics part, the advantage is that it not only good for business, it also creates huge employment. In 100 hundred acres or so, 3 million square ft of logistic farm, in a poor country or a semi-developed country like India, you create 15,000 jobs. So, it is a huge job creator.
But you are creating these logistic parks for whom?
For us. We only build the warehouses. And then we put them on rent. So, in some of our parks, there is Honda, there is Flipkart, so they are the ones who rent the place. And we have partnered with ASR of China. Now, we are now in partnership with Capital Land, which is the biggest real estate investment company in Asia Pacific, owned by the Singapore government. Logistics parks is that one thing we have started only recently. We have also got into the business of data centres. Today, everything is about data and the demand for data centres is huge. We have started developing a data centre in New Town, Calcutta, where we are developing a 27-megawatt data centre. But we are also looking at the opportunity of data centres in Uttar Pradesh, in Assam and the more states.
Then, what is in Gujarat? You have interests there, as well?
In Gujarat, we have land in Dholera, in the Special Investment Region, where we are building a special economic zone. We have signed an MOU to build renewable energy. We are creating a park to generate 500 megawatt of solar power with an investment of around Rs. 2300 crores.
If we look at the overall investments in India so far, what would they total?
It will be around 10,000 crores already invested. I think now, including Uttar Pradesh, Gujarat and West Bengal, we have committed to invest another 12,000 crores over the next 6 years. So, the scale of investment will more than double in much shorter time span.
And, your Indonesia operations? That is your mainstay?
In Indonesia, we are mainly in partnership on a very large coal concession.
So, if you see a company like the Tatas, TCS is the holy cow which enriches every other enterprise, which may be producing yet or not producing. In your system, is it the coal mines?
No, no. I think in our system it is the crude oil trading company. That is where we make most of our money.
What is the kind of cash generation you see happening?
That is where we get our equity from, to invest. Because the rest is all long-term investment. If you really look today at a group like ITC, 67% is non-cigarette, 33% is. So, we want to come to a stage when we will be 10% crude and 90% non-crude.
When do you anticipate that to happen?
I think in 10 years’ time. That is what our goal is and we are working very well towards that.
I get a feeling that your primary area of interest is land oriented?
In infrastructure and now into new technology. Land is a very controversial topic in India, but you cannot build a project in air. You want to build a logistic park? You need, 1,250 acres to build 500 megawatts of power. If you want to build a data centre, you need four acres of land in a good place where there is good grid connectivity. So, I think, land is a basic ingredient, which you need to have. I think this whole mindset of India that land is a dark chapter in any business is actually, completely ill founded.
What is your basic modus operandi? You are buying land or doing joint ventures with the states?
We buy only government land because we are Singapore based and we don’t want any controversy on any land. And the states are supporting.
Which other state would you look at, going forward?
Currently I’m very bullish about all the four states we are in. And I come from Bengal and I just spoke at the Bengal conference and I said it is in the last 12 years, we have built 20 million square foot of business in West Bengal. I also think the Uttar Pradesh government is very encouraging. Gujarat has been always very promising to us. We have just entered Assam and it’s also very promising. In the future, we might look at Telangana.
Are you going to do your own projects like say DLF has projects going under its own name, which they develop and then sell. Are you under working upon anything like that?
We have done one project where we have done everything in our name but I think some of the projects we also partner, for example, with Shapoorji Pallonji or Unitech at some point. We do not shy of being a partner with anybody; ultimately you need to create the fastest value. You might take over, say a hundred acres of land, and take some five years to develop on your own; with a partner, we deliver it in three years. Those many jobs created, economy is doing better, in shorter time. We are not shy of sharing our profit. We remain open to good partnerships. With Salim, we are now partners in the business of coal in Indonesia for 30 years.
What is your sense of India at this moment in time?
I think in India, the growth is steep. Every state needs investment. Everywhere, the government has done a lot about building infrastructure. Focus on connectivity is huge. So, airports are coming everywhere, port connectivity is increasing. India’s story is the global conversation.
What would you like to see more?
I definitely think that there should be a better tax structure in this country. Investors feel that to get any dividend out of the company, you pay out almost 50-55%, and then you pay income tax. People like me, who are non-resident Indians, who have business here to manage, also getting funds from overseas. The reason that you are an NRI is not that you want to save taxes, but you also, like, I am based in Singapore. I have till now had two very large partners from Singapore. I had Capital Land, I had ESR, they’re all Singapore based companies.
They are huge funds, huge companies. So that helps facilitates our business in India. But this 120 days’ limit of being here, it restricts your activity. You are always ready to run out of the country, finishing or not finishing half of your work. I do not know the reason why government changed it to 120 days, but I think that that needs to be re-looked at.
I think it was a bureaucratic mistake. I think that need to be looked at again, tax structures need to be better.
As an overseas investor, do you see India emerging to be a growth engine globally?
I think there’s no other growth engine today besides India. United States has very old infrastructure, it is a country plagued with many kinds of problems. In the real sense, Indian GDP is already, we are already number three. Our prime minister is talking about being number three.
Does our democracy hinder our growth? Especially, when we see China where there is none?
No, I think the democracy actually helps growth. Because at the end of the day, if you are in China, you might not have scope to address something that isn’t fair. In India, you can. Look at this retrospective tax, which the government put forth and the Supreme Court overruled it. All these four pillars of our democracy really work very good for business. Today, we are a zero-debt real estate company, one of the rarest in India. I don’t think there are many companies like this in India. Democracy is definitely not a hindrance. It’s actually a step to progress.
What about labour laws?
It’s a poor country. You cannot have cheap labour and not pro-labour policy. Why don’t you go and manufacture your car in Japan? There is no hard and fast rule about retrenchment. You can go and manufacture something in United States, you can just give 15 days’ salary and ask somebody will go. That does not happen. They have unions. You cannot have cheap labour and no hard labour laws. It cannot be. So, a businessman wants to get benefit on all fronts? This is not being fair.
Secondly, I support any government. People are very critical about rolling out money free. I completely support it because these freebies, the money which goes to the poor people or the people who need it, actually drives the economy. One of the main engines of our growth is also because the governments have realized that they need to take care of these people by giving them support.
There’s one other issue. Capex. Last five years, particularly, the economy has been driven largely by government capital. Private sector investment has been relatively not coming through to the tune at least that we would like. There are some big-ticket announcements, but on the ground, the investment is not happening. Would you agree?
I think India also had gone through a very rough patch, when number of loans defaulted. Now big corporations have not yet come out of that shock. The corporates who are going to build capex, who need capital, so such people are loan shy.
Is there any reluctance or reticence on the part of industrialists to invest more because they feel in some way or manner there is some instability, or a sense of insecurity in investing more? Why are they shy of investing?
They are shy because they want to be very sure that they will be able to pay back the loan. That’s the only thing. The capex from private sector is going to take some time to come back.
Tell me in your DNA, you are a hotelier, right? What about the hospitality business?
We have got TGI Fridays and we are trying to expand that. I took over the franchise for Southeast Asia which includes India, Singapore, Thailand, Indonesia.
Any other arm in hospitality, like hotels?
We are thinking of doing budget hotels. In the land parcels, which we have, we are looking at doing hotels as such. And I think, building hotels in the next three years is going to be a reality for us. We might start with a Ginger brand!
Any land parcels in Delhi NCR?
No. We will probably start with West Bengal and then with Assam, and then with Gujarat. Perhaps NCR region, yes, but not right now.
Any learning curve that you may wish to share?
The learning curve is as businessmen, we are dreamers and know we are very aggressive in all our businesses. But I think that the hard patch which one had, with loans in the books, with delayed projects, it gives you a sense that you need to balance, you need to only chew as much as you can digest.
Those easy days of the bank giving you money to pay your interest is all gone. So, the real business has started in last five-six years in India, where the banks say, if you cannot pay the 10% interest, we take over your company.
What do you think is the single biggest factors can help Indian economy and India progress?
Consistency of policy. There’s no point, I come and invest in your country and then tomorrow you change the law and I start paying 60% tax. If you invite me today in telecom and say, I’m going to give you tax rebate, then the tax rate must stay.
Tell me how much of our policy making is done in your impression in consultation with the real stakeholders of that domain?
I don’t think so much. That is the problem.
If these laws have to become sustaining, they must have the blessing or the support or the approval, whatever you want to say, of the industry stakeholders.
Yes, but I don’t think that happens. But I think the government is quite open now about foreign investment. It takes its time. Again, otherwise, if everything is given at the wish, by the government with the industry there will be a disbalance.
But better balance is possible? Government wants investments, right? They want them to stay put. They want to contribute to the economy and to the lives of the people.
Yeah. But I think how much is, how much is also, because when I was growing up, I still remember George Fernandez’s speech once, and he said, everywhere there was ration and all this. And he said, this is after 50 years of our independence. But today, if you really see, we do not have much licenses anywhere.
Regarding loans and the NPAs, just one question. A lot of it was manipulated, not genuine fall of companies?
I think it was genuine, in most cases.
Was it not as much a connivance between the industrialists and the banks, an unholy nexus, that the present government exposed?
I don’t agree to that. I don’t think so.
No, you don’t.
No, I don’t agree. I think businessman and as usual, I being an entrepreneur, we are dreamers. We think that we can create wonders. I don’t think there was any intention that percentage of companies who have gone bankrupt or who defaulted in their loan, a genuine loan default in my opinion, they really wanted to build institutions. They wanted to expand. And I think the expansion mission, they defaulted in the loan payment, because there was a mismatch between the loan and the interest payment and the cashflow. In most cases, I think the assets were very good.
Your last word on TGI?
It is an iconic brand and we really want to grow it. I don’t think it is about growing one outlet and then another, but a bigger play. So, we will probably need to take a stake at the parent company level so that the parent company can invest in manpower, resource and everything and grow the brand bigger. But I am very, very confident of this brand here in India.
ABOUT
Prasoon Mukherjee is a first generation entrepreneur at Universal Success Enterprises which he founded in 1995. Widely sought for his views on global commerce, he has business interests in Indonesia, Singapore, Philippines and India, among others. The group is headquartered in Singapore; originally from Delhi, his latest acquisition is the India franchise of the prestigious TGI Fridays, the upmarket fine dining chain.
