MARBLE MAHARAJAS
Wholesale grain merchants from Ulara village in Rajasthan, the three Patni siblings—Ashok, Suresh and Vimal—spotted the potential of marble mining in the late ’80s. A calculated strategy of leasing mines, including the sprawling one at Morwad in 1993, acquisition of two mines in Vietnam along with imported equipment helped the Patnis change not just their own
fortunes, but also that of their native Kishangarh, making it the marble city of India, its stone eclipsing the more famous cousin from Makrana.
Over time, the group moved from manufacturing marble to becoming sole importers. Today, they produce two-thirds of the white marble in Vietnam and export it to 75 countries. Suresh’s sons—Vikas, 42, and Vinay, 37—handle the RK Marble segment.
Having established their supremacy in the marble business, the group has diversified into other areas. Vineet, son of eldest brother Ashok and chairman of the RK Group, launched Ninety Degree Stone in 2012, which deals with exotic stones, surface finishes and lightweight slabs.
He also launched Boddess last year, a platform offering 200 different cosmetic brands. The children of youngest sibling Vinay—Vivek, 30, and Rishabh, 27—oversee the group’s cement business that was launched in 2012. Wonder Cement is now the group’s fastest-growing product, accounting for the biggest share in the company’s turnover. The group still leases marble mines in India, but leaves most of the raw production to others.
The group’s latest venture, Wonder Home Finances, has in four years totted up a loan book of Rs 633 crore through 60 branches and 7,648 customers with an average loan size of Rs 9.5 lakh. “We give loans to those who cannot get it from anywhere,” says Ashok Patni. In November, their Rs 200 crore plant to produce putty will start operating in Nimbahera, also the site of their cement plant, where annual production has risen from 3.5 million tonnes to 18 million tonnes in 10 years.
Though different members of the family handle different divisions of the group, all decisions are taken in consultation and through consensus. Ashok has been the group’s public face, Suresh handles sales and Vimal mining and now cement production.
Where they invest profits
“In quality,” says Vimal
in the years after liberalisation made glistening cities out of once laidback Bengaluru, Hyderabad and Pune too. Not just Indian corporations but also multinational companies eager for a slice of India’s fast-growing consumer market set up home in these neo-metropolises. But away from the spotlight, in India’s relatively smaller cities such as Ajmer in Rajasthan, Udupi in Karnataka, Indore in Madhya Pradesh, Surat in Gujarat or Bhubaneswar in Odisha, another set of entrepreneurs were quietly but surely carving out a unique business presence. They bought up massive stretches of land, set up world-class facilities, created millions of jobs and changed not just their own fortunes but also of the places they came from, bringing to them schools, malls, healthcare facilities and infrastructure. Today, private equity players and venture capitalists line up outside their doors to support new ventures and invest a part of their wealth in future enterprises. “India is seeing a very exciting phase, where innovation is moving deeper into the country, beyond the metros and Tier I cities,” says Vikram Gandhi, a senior lecturer at the Harvard Business School and co-founder at Asha
Ventures, a platform for high net worth individuals engaged in impact investing. Validation came from another source, the Hurun India Report, which counted 178 people from small towns and cities among the 1,036 individuals whose wealth exceeded Rs 1,000 crore (see A Rich Countryside).
A Breed Apart
An arm of the UK-based Hurun Report, a research, luxury publishing and events group, Hurun India has been compiling an annual India Rich List for the past 10 years. While its first list in 2012 had just about a hundred names, the 2022 edition listed more than a thousand people who had a net worth of Rs 1,000 crore-plus, a 10-fold growth. And small town tycoons made up 17 per cent of the total number of entrepreneurs. Engaged in businesses ranging from manufacturing to financial services to packaged foods to even gems and jewellery, the total wealth of these self-made businessmen stood at Rs 6.37 lakh crore as of March 2022, higher than India’s defence budget of Rs 5.25 lakh crore for 2022-23. Of course, there’s every possibility that we are undercounting the Rs 1,000 crore club. The list, says Hurun India and Middle East founder Anas Rahman Junaid, though rigorously compiled via extensive research into annual reports of listed companies and supported by direct information from the companies concerned, perhaps captures only a third of such wealth creators. There could thus be at least 3,000 individuals in India who qualify for the Rs 1,000 crore and above bracket. A good number of these could be from India’s small towns. Since most of these Hurun listers own companies that are listed on the stock exchanges, a major chunk (90 per cent) of their wealth is assessed on the basis of the shares they hold in their respective firms. Additional wealth is ascertained on the basis of their personal assets, share sales and annual dividends.
That entrepreneurial energies in India are not restricted to its bigger towns is something we have always known. A survey conducted by the Economist Intelligence Unit (EIU) in January 2020 only confirmed the trend when a handful of small cities in South India secured a place on the list of the world’s
fastest-growing urban areas. Of the six Indian cities that were listed, four were from Kerala—Malappuram, Kozhikode, Kollam and Thrissur. The others were Surat in Gujarat and Tiruppur in Tamil Nadu. Malappuram, in fact, topped the rankings, with a 44 per cent change between 2015 and 2020. It provoked industrialist Anand Mahindra to tweet: “Good to see that the fastest growing in India are not the monster metropolises, Mumbai, Delhi, Kolkata etc. When smaller towns and cities grow, it signals that a wider distribution of wealth and job opportunities is underway. We need more smaller towns to Rise!”
The Driving Force
What has changed? Experts attribute the rise of the small town to rapid urbanisation and the appearance of education centres across the country, which is enabling both entrepreneurship and skill enhancement. Financial consultant Ashvin Parekh estimates that as many as 230 such education centres, or regions, have emerged across the country since the early 1990s. India also has 3,000 incubation centres currently, which enable new business to stand on their own feet at the earliest. The mushrooming of professional colleges and technical institutes in small urban centres has widened the country’s skill base, making it possible for companies to set up world-class manufacturing facilities anywhere in the country, without having to worry about attracting talent from top institutes alone.
Parekh discerns two clear kinds of individuals to track in these places. The first are those who are getting a better education and entering new areas of businesses. Their business models find good backing from venture capitalists and private equity players. The second are the traditionally wealthy who are putting in their money to fund new businesses in their home towns and cities. “Entrepreneurs in these places get the initial capital they require to drive their businesses from other wealthy entrepreneurs. Gone are the days when such
investors could be found mostly in the metros,” he says.
Digital connectivity has been another enabler, breaching barriers of time and distance. A report published by the Internet and Mobile Association of India this July put the number of active internet users in India at 692 million, of which 351 million are in rural India. The number is expected to go up to 900 million by 2025. As many as 346 million Indians are engaged in online transactions, including e-commerce and digital payments, a higher number than the 331 million people engaged in digital transactions in the US. It’s a metric that is helping not just start-up enterprises in small towns but also conventional ones to reach newer markets in a swift and cost-effective manner. This has fed the burst of entrepreneurial activity in the country, reflected in data from the corporate affairs ministry, which recorded the number of registered companies in India in 2021-22 at 167,076, a 7.5 per cent increase over the previous year.
The curse of the Covid-19 pandemic proved to be a boon for the expansion of digital infrastructure in the country, connecting factories with the end market seamlessly. And as the small towns and cities grew and connectivity improved, so did the quality of life for their people, be it in terms of health or education infrastructure, or in avenues of entertainment. “There is a lot of enterprise that is booming all across the country,” says Madan Sabnavis, chief economist at the Bank of Baroda. “Doing the same thing in metros is an expensive proposition. In smaller towns, the infrastructure tends to be better. Firms are also able to hire local talent that comes cheap.” Property, too, is relatively cheaper in Tier II or even smaller cities. For instance, the average price of property in Nagpur, as per Housing. com, is Rs 4,401 per square feet com
pared to Rs 17,975 per sq. ft in Mumbai. Not only does this help entrepreneurs acquire cheaper land parcels for setting up industrial units, it also makes homes more affordable for their staff. The commute in these places too is shorter, making for a better work-life balance.
Starting ’em Up
The same holds true for the start-up universe coming up in smaller towns. Some of them have made it to the Hurun List too—30-year-old Alakh Pandey, for instance. The founder of PhysicsWallah, an affordable online ed-tech platform, is from Prayagraj, Uttar Pradesh, a college dropout who started with one YouTube channel providing study material to students. Today, his firm runs 27 YouTube channels and 21 offline coaching centres, which have given him a net worth of Rs 4,000 crore. “From only Bangalore and NCR being startup ecosystems historically,” notes Gandhi, “nearly 30 per cent of the start-ups today are being built outside the established hubs as per Nasscom’s Startup Report 2021.”
What explains their success? A ground-level understanding of prob
lems households in lower-tier cities face, says Gandhi. Entrepreneurs here, therefore, build solutions catering to their unique issues. Asha Ventures has invested in Adda247, an ed-tech company that helps over 20 million students annually, 90 per cent of them from outside the metros, prepare for exams for government jobs. Then there is Ritesh Aggarwal of Oyo, the online hotel booking site, and Bhavish Agarwal of cab aggregator Ola Cabs, both Tier II townsmen who built organisations of scale.
Covid and the growth of the distributed workforce also fostered deeper innovation and wealth distribution, with a greater share of wages going into Tier II locations. “Meanwhile,” says Gandhi, “the Indian government, too, has been working with various stakeholders for more equitable distribution of capital by fostering innovation ecosystems in each state, helping startups connect with state governments and venture investors, and even holding annual rankings of innovation societies in these states to drive competition.” The Atal Innovation Mission is one such enabler, providing platforms and collaboration opportunities for different stakeholders in the country, through its 1,000-plus Atal Tinkering Labs and nearly 70 Atal Innovation Centres.
Small Town, Big Opportunity
An enabling environment certainly helps, but there is more that characterises the small-town entrepreneur. The Patni brothers of Kishangarh in Ajmer, for instance, were quick to sense a business opportunity in mining marble, inspiring a shift from their traditional business of wholesale trading in foodgrains to embark on a journey that has seen them become the largest producers of marble in the world, exporting to
75 countries. In Thiruvananthapuram, V.K. Mathews of IBS Software, acquired seven global companies in 25 years to become a leading name in providing travel solutions. Bhubaneswar’s Tara Ranjan Patnaik went against the tide to explore a future in marine exports. The Virani brothers of Rajkot, Gujarat, made a success out of setting up large distribution networks to reach customers faster—their company Balaji Wafers covers 40 per cent of the country. Yet others made a leap of faith and invested in the latest technology, aided by small loans from banks. Subhas Kamath of Udupi’s Abharan Jewellers says he was the first in India to import a gold testing machine to ensure the purity of the metal, convincing customers of the quality of the gold he sold.
Many have taken advantage of supportive state and central policies. In recent years, several states have been vying with each other to attract more investment, holding large business fairs, taking out roadshows in other states and overseas to showcase investment
opportunities and offering sops to specific businesses, including creating industrial areas and better infrastructure support. Telangana, for instance, is looking beyond Hyderabad for growth. IT nodes have come up in Karimnagar and Warangal and it is expanding incubation facilities for entrepreneurs to Tier II towns. The Madhya Pradesh Investment Promotion Policy, 2014, has provision for ‘geographical multiple’ in which proposals for investments in remote areas attract additional benefits. Moreover, investments in relatively backward areas are eligible for cash subsidies ranging from 10-40 per cent.
The thread that binds all these individuals, though, is foresight and perseverance. Many have reinvented themselves after having lost it all. Ask Rajat Agrawal of Jaipur, who has sunk to the very bottom several times, only to resurface on top— wiser, and richer. Some of them like to enjoy their wealth, moving from humble Ambassadors and Fiats to Mercedes SUVs, a chopper or a speedboat, palatial houses and designer wear. Others choose to live less flamboyant lives, pumping back profits into their businesses or paying off their liabilities to keep their companies debt-light. Most of them engage in philanthropy, often supporting education and health initiatives in their home towns.
The growth of the small town can only be a welcome trend. Especially as big cities get saturated and their infrastructure turns creaky. “Focusing on growth only in large cities leads to challenges for a growing country like ours,” says Gandhi. You only have to witness the deteriorating quality of life in the cities, plagued by air and noise pollution, and the exponential growth in vehicles that have clogged our roads. As per the World Air Quality report by IQAir in 2021, India was home to 11 of the 15 most polluted cities in central and south Asia. “Thus, mak
ing our over 60 million MSMEs (micro, small and medium scale enterprises) more competitive by helping them digitise, and supporting start-ups as distributed engines of growth will drive greater job creation and more equitable wealth creation as well,” Gandhi adds. More businesses then need to be encouraged to build unique playbooks to reduce income disparities.
Is this to say wealth creation is dwindling in our major cities? Not really, say experts—despite the fatigue building up in the bigger cities, wealth creation will continue to grow. What is needed is investment in infrastructure to support the growing population. And that means building up our small towns. Driving income and opportunity growth beyond cities will not only help them breathe, but also end regional disparity in wealth. More power, then, to the Small Town Tycoon. ■