Hit by tax raids, a lokayukta probe and Mayawati’s de­par­ture, Ut­tar Pradesh’s sugar baron is mak­ing new friends and start­ing new busi­nesses

India Today - - BUSINESS & ECONMY - By Shan­tanu Guha Ray

It’s early morn­ing, April 19. Gur­deep ‘Ponty’ Chadha, 52, has just re­turned to Delhi on a char­tered flight from a 6 a.m. ap­point­ment with Ut­tar Pradesh Chief Min­is­ter Akhilesh Ya­dav in Lucknow. Dressed in an Ar­mani suit, he sits in the liv­ing room of his 10-acre farm­house in Chat­tarpur, dis­play­ing a touch of fid­geti­ness. Ponty is fire­fight­ing on sev­eral fronts. He faces an on­go­ing probe by the Ut­tar Pradesh lokayukta for the man­ner in which he ac­quired four sugar mills in 2009 as part of the then Mayawati-led Bahu­jan Samaj Party ( BSP) gov­ern­ment’s dis­in­vest­ment process. On Fe­bru­ary 11, there were mul­ti­ple in­come tax raids on his of­fices across Ut­tar Pradesh. In March, Mayawati, his pa­tron-in-chief, was ousted as the Sa­ma­jwadi Party ( SP) swept the Assem­bly elec­tions.

But the man who con­trols nearly 80 per cent of Ut­tar Pradesh’s liquor busi­ness, es­ti­mated at Rs 14,000 crore in 2011 as per Ut­tar Pradesh In­dus­trial De­vel­op­ment Cor­po­ra­tion fig­ures, is a sur­vivor. As ex­otic cock­a­toos and macaws chirp in a wire en­clo­sure, he out­lines the next move for his Rs 10,000-crore, 24-year-old Wave Group. The liquor baron has made peace with the rul­ing SP. He was present at the swear­ing-in cer­e­mony of Akhilesh Ya­dav on March 15, a fact that sur­prised many who thought he was fin­ished with BSP’S ouster. “A change in the po­lit­i­cal land­scape never im­pacts busi­ness,” says Ponty.

New roles have been de­fined for ev­ery­one, in­clud­ing him­self. Op­er­at­ing from his farm­house, the best way to avoid public glare, Ponty will drive the Wave Group’s liquor busi­ness strat­egy while brother Ra­jin­der will shut­tle be­tween Lud­hi­ana and Ali­garh, home to the group’s brew­eries, and mi­cro man­age op­er­a­tions. The rest will be man­aged by son Man­preet ‘Monty’ Chadha.

Monty’s aca­demic record is not in­spir­ing—he dropped out in Class IX from Wel­ham Boys’ School, Dehradun—but his busi­ness acu­men could be an­other story. The 30-year-old has hur­riedly an­nounced two mega real es­tate projects in Noida and Ghazi­abad that will cost Rs 4,000 crore. He has al­ready cre­ated a stir among other builders by of­fer­ing homes for as lit­tle as Rs 19 lakh in Noida. Monty has also fi­nalised a Rs 350-crore foray into In­dia’s Rs 30,000 crore poul­try mar­ket with a four-acre plant in Noida. Poul­try plants in In­dia process 2,000-3,000 chick­ens an hour on an av­er­age. Monty will im­port Dutch cut­ters ca­pa­ble of pro­cess­ing 6,000 chick­ens in an hour. Ma­chines im­ported from Is­rael will also help him to keep hens un­der con­trolled cli­matic con­di­tions in­stead of open or semi-closed en­clo­sures as is the cur­rent prac­tice. His mod­er­ately-priced broil­ers—to hit stores later this year—may trig­ger In­dia’s first-ever chicken war.

If this hap­pens, Ponty will no longer be seen merely as Ut­tar Pradesh’s liquor king. “It’s the most chal­leng­ing phase of my life,” he says halt­ingly, read­ing from his copy of the Guru Granth Sahib af­ter ev­ery ques­tion. From now on, the liquor busi­ness, the fam­ily’s “back­bone”, will grow but take a back­seat. “No one in the fam­ily wants to han­dle liquor ex­cept me, not even my son.” He wants to re­po­si­tion him­self as a back­room strate­gist, a back­street mover and shaker.

Ponty has worked out his new Ut­tar Pradesh agenda, co­or­di­nat­ing with other in­dus­tri­al­ists to res­ur­rect the now de­funct Ut­tar Pradesh De­vel­op­ment Coun­cil ( UPDC), once headed by for­mer SP leader Amar Singh and packed with his close friends such as Anil Am­bani, Adi Go­drej, Subrata Roy and Amitabh Bachchan. Top­ping the re­vived UPDC’S agenda would be re­solv­ing the state’s


peren­nial power cri­sis. The blue­print, that has broad con­sen­sus among the state’s ma­jor in­dus­trial play­ers, has im­pressed Ya­dav so much that he has agreed to dis­cuss the is­sue soon with the state electricity reg­u­la­tory com­mis­sion.

Ponty also wants to dou­ble the ca­pac­ity of Wave mall-cum-mul­ti­plexes that he op­er­ates across Ut­tar Pradesh, Pun­jab and Delhi, to em­pha­sise that his growth is not linked to any party.

Liquor helped the Wave group at­tain its near in­vin­ci­ble sta­tus across Ut­tar Pradesh. The busi­ness, now mo­nop­o­lised by Ponty since March 2009, started way back in 1952 af­ter his fa­ther, Kul­want Singh Chadha, ob­tained a coun­try liquor li­cence in Mo­rad­abad. In 2008, the BSP gov­ern­ment cre­ated a spe­cial ex­cise zone com­pris­ing Bareilly, Mo­rad­abad, Meerut, Sa­ha­ran­pur and Agra and Ponty was given ex­clu­sive rights to run vends for both coun­try liquor and In­di­an­made for­eign liquor. Thanks to prox­ies and as­so­ciates, Ponty ended up con­trol­ling the liquor busi­ness in all 72 dis­tricts of the state through more than 450 vends. Older play­ers such as Jawa­har Jaiswal, who once dom­i­nated the Pur­van­chal re­gion of Ut­tar Pradesh, Ma­hesh Narain, Sub­hash Kumar and D.P. Ya­dav vir­tu­ally went out of busi­ness. Ponty added a markup on the max­i­mum re­tail price. The prac­tice con­tin­ued till the Fe­bru­ary IT raids. The spe­cial ex­cise zone con- tract runs till March 31, 2013.

Ponty’s liquor busi­ness grew in Pun­jab, Ra­jasthan, Delhi, Ut­tar Pradesh, Ut­tarak­hand and Ch­hat­tis­garh; but along­side, so did other branches—real es­tate, hy­del power, cinema halls, soft­drink bot­tling and ed­u­ca­tion. Monty is con­fi­dent that the new game plan will help his fa­ther ac­quire an im­proved im­age and trans­form the group into a con­glom­er­ate with in­ter­ests in sec­tors stretch­ing from real es­tate to sugar to ed­u­ca­tion to poul­try. Help­ing Monty in the makeover is Bar­bara Delinc, a Czech mar­keter poached from global real es­tate firm Jones Lang Lasalle, who will help the Wave Group ac­quire a new logo and a style state­ment.

The I-T probe wor­ries Ponty, even though in­ves­ti­ga­tors didn’t find any cash. A se­nior Cen­tral Board of Di­rect Taxes of­fi­cial lost his job as Ponty protested about the po­lit­i­cal na­ture of the raids. But the raids have made him wiser. He has in­structed his men to make fu­ture pay­ments in cheques.

Since March 2011, the state lokayukta has been in­ves­ti­gat­ing into the way Mayawati con­ducted the dis­in­vest­ment process of sugar mills run by the state-owned Ut­tar Pradesh State Sugar Cor­po­ra­tion Limited in 2009. Four sugar mills were of­fered to Ponty for Rs 206 crore. Their ac­tual worth, ac­cord­ing to the Comptroller and Au­di­tor Gen­eral’s cal­cu­la­tions in March 2011, was more than Rs 2,000 crore. Ponty, who al­ready has a sugar mill at Dhanaura in Mo­rad­abad dis­trict, im­mensely ben­e­fited from the ac­qui­si­tions, as mo­lasses, a byprod­uct of crushed sug­ar­cane, is a key in­gre­di­ent for coun­try liquor.

The probe by Ut­tar Pradesh Lokayukta Jus­tice (retd) N.K. Mehro­tra could be­come a po­tent weapon for the SP gov­ern­ment in a state where the pre­vi­ous gov­ern­ment is al­ready at the re­ceiv­ing end for ram­pant cor­rup­tion in the Na­tional Ru­ral Health Mis­sion, cur­rently be­ing probed by CBI.

But han­dling politi­cians as well as cor­po­rate ri­vals is a game he has played well for a long time. At his daugh­ter Harsheen’s Fe­bru­ary 15 wed­ding to Har­mit Walia, a Dubai-based naval en­gi­neer who is now into the lux­ury yacht busi­ness, politi­cians in at­ten­dance in­cluded Pun­jab Deputy Chief Min­is­ter Sukhbir Singh Badal, for­mer Pun­jab chief min­is­ter Amarinder Singh, for­mer Haryana chief min­is­ter Om Prakash Chau­tala, SP’S Ram Gopal Ya­dav, BSP for­mer MP Ak­bar Ah­mad and Delhi min­is­ter Arvin­der Singh Lovely. Politi­cians may be in and out of power but busi­ness­men go on for­ever.

REUBEN Singh/­di­a­to­day­im­



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