I wanted to be independent of Manu, Mallya: Liquor baron KR Chhabria
Kishore Rajaram Chhabria is the man behind the success of the Indian whisky brand, Officer’s Choice. In an interview to HT, he talks about why he fell out with his brother, the late Manu Chhabria, and Vijay Mallya.business Updated: Dec 07, 2014 23:47 IST
Feisty is an adjective that is often used to describe Kishore Rajaram Chhabria (better know in industry circles as KRC), the man who fought running battles with his elder brother, the late Manu Chhabria and UB Group chairman Vijay Mallya over the last two decades — and won. He is also the man behind the success of the Indian whisky brand, Officer’s Choice, the world’s largest selling whisky (it sells 24 million cases per year to Diageo’s Johnnie Walker, which sells 20 million cases).
Now India’s numero uno homegrown liquor baron, after Mallya’s sellout to Diageo, he reveals for the first time, in an exclusive interview to HT, why he fell out with his brother and Mallya and also shares his plans for the future. Excerpts:
You are synonymous with corporate battles in India. How and why did you fall out with your brother Manu Chhabria?
We were very close as brothers. Manu (that’s how I used to address him, not bhaiya) was very affectionate and caring. Though he was a very sharp businessman, a great risk taker, a brilliant strategist and an extremely successful corporate raider, he could also be very gullible at times and never trusted people.
People began filling his ears against me, spreading all kinds of poison. After a while, he began believing these people. Then, his wife and I didn’t get along. That didn’t help matters. Things got worse when my company, BDA, and its whisky brand Officer’s Choice, began to do better than Director’s Special, the competing brand from his company (Shaw Wallace & Co or SWC).
Since I was running both companies, people told him I was expanding my brand at the expense of his. This made him insecure and he wanted to take control of BDA too.
You finally walked out on him with BDA. Why?
I didn’t own a single share in Manu’s business empire and was working as a salaried employee, earning only Rs 7,500 per month (there was a salary cap of `10,000 per month in the pre-liberalisation days). This, naturally, made me insecure about my future and that of my family. I would often ask Manu to do something to secure my family’s future.
But my brother had this streak in him that made him want to control everyone around him. After much persuasion and effort, he gave me BDA, which was a small, semi-defunct company in the early 1990s. It was a dot in front of SWC and initially I was reluctant. I told him that giving me BDA was like giving a child a lollipop to stop him from crying but finally gave in.
But it was destiny that Officer’s Choice began to do well. People around him fed him with stories about how I was allegedly neglecting SWC to expand BDA and this increased his insecurity. He wanted to take control of BDA. He offered to give me Gordon Woodroffe (a leather company that Manu had taken over in the 1980s) but I refused as I knew nothing of the leather trade.
You then joined hands with Vijay Mallya, against whom you had fought a running battle on behalf of your brother. Why?
An enemy’s enemy is my friend… That’s why I joined hands with Vijay (Mallya) – for protection. I had a written agreement with Manu giving me ownership and control of BDA. So, I took BDA into the Mallya group in return for a 26% stake in Herbertsons (a Mallya company).
The deal was that we would each hold 26% in the company and jointly run Herbertsons. Mallya gave me a very handsome salary package, a Mercedes and the title of vice-chairman, but he had no intentions of sharing control and gave me no responsibilities.
Soon, we had disagreements over how to run the company. Around this time, I received information that Mallya had started buying Herbertsons shares from the open market. I, too, started increasing my stake. I finally ended up with 51% in the company and was in a position to take control.
What happened then?
While all this was going on, I had opened conciliation talks with Manu. We managed to settle all our disputes and legal cases except the one over BDA.
Manu badly wanted to be India’s No. 1 liquor baron. He now saw an opportunity. He already controlled SWC. If he could convince me to part with BDA and my 51% in Herbertsons he could dethrone Mallya and occupy the top spot. He offered me a 60:40 partnership but I refused as I wanted to be independent of both Manu and Mallya. Manu died shortly after that. I soon settled with Mallya, sold him my stake in Herbertsons but retained control of BDA.
What lessons did you learn from these corporate wars?
Manu was a fearless corporate raider but didn’t trust people. That’s why he couldn’t build institutions. That was a lesson for me. I try to put my faith in people. As a result, my people stay with me. I’m not the best paymaster in the industry but my secretary has been with me for 44 years, and more than 15% of employees at Allied Blenders & Distillers (ABD,the new name for BDA) have been with me for 15 years or more.
Mallya’s empire is also in trouble (he has sold USL to Diageo), leaving you as the biggest Indian liquor baron. Do you feel vindicated?
(Smiles) It is destiny.
Where does ABD go from here?
I don’t interfere with the day to day affairs of the company. That’s handled by professionals. My son-in-law is part of the business. My family will succeed me to the ownership of this company (KRC owns 95% of the shares; the balance 5% is with CEO Deepak Roy), but my feeling is that the management should be left to professionals. But that’s a call I’ll take in future. We’re expanding our operations at a cost of about Rs 1,200 crore. We don’t own a single distillery, so that’s an obvious area of expansion. Then, we will launch a couple of new whisky brands, including one in the premium segment, soon. I also hope to complete the takeover of Mansion House (India’s largest selling brandy brand that is currently caught in a legal dispute between its European brand owner and its Indian licensee). We may also go in for an IPO when the time is right. My dream is to leave behind an institution.