Mumbai: London-based Hinduja Group, with $23 billion (Rs1.09 trillion) in revenue, plans to reduce its dependence on the crisis-hit European market and focus on the fast-growing Indian market, vice-chairman Gopichand Hinduja said in an interview.
India calling: Hinduja group vice-chairman Gopichand Hinduja. Sanjay Borade / Mint
We would like to increase our revenues from India to 25% of the total in the next five years and will invest heavily in power, infrastructure, develop real estate, and oil and gas exploration, Hinduja added.
India currently accounts for around 7% of the group’s revenue.
The group, which came into existence 98 years ago and built a presence across the world trading in commodities, gets most of its revenue from operations in 36 countries other than India. And trading accounts for just 3% of its revenue now, said Hinduja.
The Hinduja Group’s main overseas businesses are in petroleum and petroleum products (Gulf Oil International and Gulf Oil Corp. Ltd), and investment banking (Hinduja Bank in Switzerland). It recently acquired a Belgian private bank KBL European Private Bankers for €1.35 billion (Rs7,776 crore).
Hinduja said that there were enough assets going under the block internationally and that the group gets enough proposals.
The group’s plan is to finance overseas acquisitions through the Indian firms, he added.
The group will invest $12 billion to build plants that can generate 10,000MW of power, enter the lucrative road building business through the newly formed Ashok Leyland Projects Ltd and also grow its real estate business through Hinduja Ventures Ltd, Hinduja said.
He said that the company was still a relative newcomer in India and that it had spent much of its time here fighting the “Bofors case”. Hinduja’s reference is to the alleged role of the Hinduja brothers as intermediaries in India’s acquisition of guns from Sweden’s Bofors AB. Gopichand, Srichand and Prakash Hinduja were charged by the Central Bureau of Investigation for their alleged role as middlemen in this purchase. The brothers were acquitted by the Delhi high court in 2005 for lack of evidence.
A business strategy expert said that while the Hindujas had several things working to their advantage, they would still have to learn how to operate in an environment where there are significant infrastructure and regulatory challenges.
“The Hinduja Group is a multinational group company and cannot be compared to smaller Indian family businesses because of the resources at its disposal. The resources that it commands are huge and it can buy anything anywhere in the world. Indian companies will have to find the dollars, but the Hindujas already have the dollars,” said Sankaran Manikutty, who teaches business policy and strategy at the Indian Institute of Management, Ahmedabad.
Interestingly, despite the Bofors experience, the Hinduja Group isn’t averse to entering the arms business. Ashok Hinduja, the youngest of the four brothers, said the group had started talking to the Indian government to this effect.
“But in the defence sector, the foreign direct investment is capped at 26% and we are treated as a foreign company. We have made representations and they are trying to understand our point,” he added.
The Hinduja Group is in talks with a European manufacturer for sourcing arms to supply to the defence forces, Ashok Hinduja said.