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Wadia Group: Two centuries and beyond

Perhaps India’s oldest conglomerate, the Wadia Group traces its roots back to at least 200 years before the country’s independence. The group’s journey from 1736 till date

Article by P.R. Sanjai & Madhura Karnik Live Mint

 

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A file photo of the Wadias (from left) Neville Wadia, Maureen Wadia, Jeh Wadia, Nusli Wadia and Ness Wadia. Photo: Hindustan Times

 

Mumbai: The Wadia Group, perhaps India’s oldest conglomerate, traces its roots back to at least 200 years before the country’s independence.

To put things in perspective, two of the group’s four publicly traded companies have been listed for more than a century. One of the two, Bombay Dyeing and Manufacturing Co. Ltd, has declared a dividend every year for more than 125 years and Bombay Burmah Trading Corp. Ltd (BBTC) was only the second Indian company to list on BSE, Asia’s oldest bourse.

The group’s journey began in 1736 when Lovji Nusserwanjee Wadia set up a marine construction company, which went on to build 355 ships including the first ships constructed for the British navy outside England.

In 1879, the Wadias set up Bombay Dyeing, which went on to become the group’s most popular brand. Around 1913, the Wadia Group acquired BBTC. After independence, it entered businesses including chemicals, engineering services, lamination and precision springs.

In 1952, Neville Wadia, the father of present-day chairman Nusli Wadia, joined the business after the demise of his father Ness Wadia. Twenty-five years later, in 1977, Nusli Wadia entered the business.

Corporate brawls

Nusli Wadia, who has been called a corporate samurai, fought some notable business battles in the 1970s and 1980s.

One of the opponents in his first corporate brawl was none other than his own father.

In 1971, Neville Wadia decided to sell Bombay Dyeing to another tycoon, R.P. Goenka. Nusli Wadia refused to accept the deal, which he eventually thwarted by garnering the support of the rest of the family, the employees and J.R.D. Tata.

His next battle was against Dhirubhai Ambani’s Reliance Industries Ltd (RIL). In the 1980s, Bombay Dyeing found itself struggling to compete with RIL in the polyester clothing business because of high input costs. Some business historians say RIL had used its influence over the government to increase duties on chemicals that were used by Bombay Dyeing. What ensued was a bitter lobbying battle that led to a political headache for the government then led by Rajiv Gandhi. Bombay Dyeing’s plant finally closed down due to lack of sufficient orders in 1986.

Another corporate battle waged by the group under Nusli Wadia was to acquire Britannia Industries Ltd in the late 1980s. When Wadia first tried to buy Britannia, then owned by US-based RJR Nabisco Inc., he made contact with the biscuit maker’s management through his non-resident Indian friend and cashew trader K. Rajan Pillai.

Nabisco ended up naming Pillai chairman of Britannia, rejecting the takeover attempt by Wadia. Friends turned into bitter foes. Pillai acquired Britannia and partnered with French food company Danone SA. But it wasn’t the end. Danone eventually fell out with Pillai, accusing him of fraud, and tied up with Wadia. After a bitter boardroom battle, Pillai was ousted and Wadia took over Britannia in the early 1990s. Pillai died in custody in an Indian jail.

The group faced another crisis when jute baron Arun Bajoria mopped up around 15% stake in Bombay Dyeing, in an apparent prelude to a hostile takeover through an open offer. The issue was, however, settled amicably.

Conglomerate@2014

Today, the group is present across sectors such as real estate, aviation, consumer products, plantations, chemicals and healthcare.

In 2005, the group entered the aviation business when it launched GoAir, a low-fare airline. GoAir has a market share of about 10% and operates a total of 19 aircraft.

In 2011, the group ventured into the real estate business primarily to monetize its 10,000 acres of land. The main objective of Bombay Realty, the group’s real-estate arm, is to develop this land into offices, hotels, serviced apartments, branded residences and hospitals.

Ness Wadia and Jehangir Wadia (Jeh), Wadia’s sons, are now actively involved in the business. Nusli Wadia is still at the helm of the group and a succession plan is yet to be finalized.

The group employs 15,000 people. Its four listed companies—Bombay Dyeing, BBTC, Britannia and National Peroxide Ltd—earned about `17,000 crore in revenue in the year ended 31 March.