January 8 to 29, 2010
We recently returned from India, having enjoyed a truly
wonderful trip to this fascinating country with a terrific
group of fellow travelers. We hope you will enjoy some of
our recollections, images, and experiences, as described
India truly has enormous contrasts. It has people living
with enormous wealth and in the direst poverty. Yet, while
famines were common several decades ago, most Indians have
enough to eat today. While it has highly trained software
and hardware engineers and technicians, it cannot make its
airports and highways work efficiently. Seeing American tourists
able to spend whatever they want on luxuries must be very
difficult for the hundreds of millions of very poor Indians,
but every Indian we met, no matter what his or her circumstances,
treated us with the greatest courtesy. Above all, we loved
the Indian people.
We arrived in Mumbai an hour late (at 2:30 a.m.), without
our luggage. So, this being India, internet capital of the
world, but unwired and unconnected in its most important
infrastructure, I spent 2 hours getting our claims filed
amidst a furious mob of people all trying to get someone's
attention at 3 a.m. Every form had to be filled out by hand
and signed several times and the 2 Lufthansa agents were
frantic because they not only had to deal with the enraged
crowd, but also had to fill out 3 different forms in long
hand and then take each customer through customs. So, I made
sure I kept my place in line and finally got all our paperwork
done-at 5 a.m. We arrived at our hotel at 6 a.m. and decided
to forget about sleeping and just get cleaned up and go out
Our favorite place in Mumbai was the Gandhi Museum, which
chronicles Ghandi’s life with photos, dioramas,and
quotations from his many writings and teachings. One particularly
memorable exhibit was of 2 letters he wrote at the beginning
of World War II to Roosevelt and Hitler asking them to avoid
war but saying he would not support Hitler's evil.
A startling aspect of every city in India is the large number
of people living and sleeping on the streets. As we drove
to our hotel (the Taj Mahal-the one that was attacked by
terrorists last year), we saw people rolled up in blankets
and quilts, sleeping right next to one another on the sidewalks.
During the day, they protect their spaces by squatting on
their spot and begging, washing, and cooking-if they have
We spent a full day in meetings our second day in Mumbai,
with a private equity partner, the U.S. Commercial Counsellor
(the senior Dept. of Commerce foreign service officer in
Mumbai, who has served twice in India, twice in Indonesia
and once in Italy), a very large business outsourcing company-WNS
Business Services, and the largest new real estate development-shopping
center, office and residential towers. Very interesting day.
We were all pretty tired when we finished, but our driver
must have been exhausted because the traffic is horrific
and traffic rules are virtually ignored.
We had dinner with Gautam Patel, the friend of one of our
fellow travelers, and his wife at their home, which was really
fun for everyone. Before dinner, we met Gautam at his club,
an old British club that still looks and feels like colonial
Meeting with Gautam Patel, private equity investor
Gautam Patel, the friend of one of our group members, has
been a private equity investor in India for a number of years,
after spending a decade in the U.S. in school and business.
He told us that only 5% of Indians own stock. The top 100
Indian companies represent 95% of the Indian market’s
value and activity.
India has a goods and services tax and a value added tax.
Individual states can levy their own taxes on goods and services
as well. There is a big need to make taxes national and uniform,
a reform the Indian Parliament hopes to complete in 2010.
Clearing title to land is one of India’s biggest property
problems. In order to build new factories and subdivisions,
developers must displace farmers and slum dwellers. States
are now competing for private investment, so are helping
investors to clear title to land.
Agriculture is a huge part of the economy. It is very dependent
on the monsoon, particularly as most farming is subsistence
level. India imports wheat and crude oil. The government
has tried seeding clouds during weak monsoon years.
Private equity has seen a big decline since the global recession
began. Deal sizes are way down. Information technology and
business services are the biggest sources of deals. There
are caps on the amount of foreign ownership in some sectors—amounts
varying with the industry. Private equity is beginning to
perform as well as in other markets. In India, the private
equity investment time frame is 5 to 25 years.
The Indian middle class will increase twelve-fold by 2025,
to 525 million people (out of an expected population of 1.3
billion by 2025). The rural population is moving to the cities,
but infrastructure growth is not keeping up with the demands
of the growing urban population. Government’s focus
is moving people up economically.
The illiteracy rate is 40 – 45% in rural areas. Microfinance
is now a big focus in an effort to improve living standards
in rural areas, even with the low literacy rates. Financial
inclusion is a government priority. The goal is to give more
people access to capital. When women get micro loans, their
husbands often steal it to buy alcohol, so the women lose
Indians don’t have anywhere to save small amounts
of money. There is a huge base of microfinance customers,
but these are only women, on the model of Bangladesh’s
Grameen Bank. Fifteen million Indian women participate in
microfinance lending. The loans are distributed by people
on motorbikes with backpacks full of money. The cash is disbursed
at town meetings, attended by several thousand women. The
banks won’t disburse more money if the previous week’s
or month’s payments have not been made.
India has about 50,000 small and medium sized enterprises
(SME’s). About 7% of GDP is going to infrastructure
today. Of this, 45% pays for machinery and equipment. Gautam
thinks the best opportunities for growth companies are among
the SME’s. The investment market is very inefficient.
An investor needs to go to secondary markets to look for
entrepreneurs and good deals. Entrepreneurs are very savvy.
Investors should start with the premise that they can’t
trust entrepreneurs and that 90% aren’t backable. To
be successful requires lots of searching and building relationships.
Entrepreneurs are just beginning to understand that they
have to give up some equity to get the cash they need.
Meeting with Richard Rothman, U.S. Commercial Service
Richard Rothman heads the U.S. Commercial Service in Mumbai.
This is his second tour in India. He has also served twice
in Indonesia and once in Italy. He brought two colleagues
with him, who were also very knowledgeable about Indian business,
politics, and economics.
There are now many private equity companies in India, a
country of 1.1 billion people. Before 1991, the economy was
very closed. The government licensed everything, which meant
there was no real economic growth and no real competition
for 40 years. In 1991, the government liberalized the economy
and ended the licensing requirement for starting a business.
Old companies had to reform or go out of business.
The economy became private-sector driven, modern and well
run. Active capital markets developed, with more trading
of shares in India now than anywhere else except the U.S.
The corporate sector is more Westernized and competitive
than in China.
The infrastructure and legal system remain backward. It
takes 20 years to settle disputes via the courts. There is
lots of corruption. India has big labor problems, with laws
similar to those of Europe. To date, India has not been a
manufacturing destination. It is service-focused.
Because of the liberalization of telecom, there are between
400 and 500 million cell phones in use today. India has good
connectivity. There has been a big increase in English speaking,
well-educated people. However, India fails at basic education.
The labor unions are run by semi-gangster types. Manufacturing
is successful in industries where high tech, low labor is
possible—steel, for example. These companies hire engineers,
not low-skilled workers. They contract out product manufacturing.
American companies are targets of labor unrest and extortion
attempts, notably Cummins and John Deere.
In India, a country with a huge impoverished population,
democracy means that sympathies go with labor over capital.
People don’t understand that restrictive labor policies
Agriculture hasn’t done well. The growth rate is only
3-4%. Many farmers are committing suicide because they can’t
make their loan payments. The Congress Party has a policy
of forgiving agricultural loans. They provide jobs for part
of the year to farmers.
The BJP is more free market oriented. Policies are constrained
by a democracy with poor voters. India is very slow to change.
There is not much room for further liberalization now. For
example, the government can’t let giant retailers put
tiny shops out of business.
In India, it takes 10 years to build a project that China
could build in 3 years. The government is trying to set up
special economic zones, but that is very hard in a country
where every inch of land is occupied (even if not owned).
There is no imperative to share commercial cell towers,
which is what lets you make money on towers. Cell phone usage
in India is the cheapest in the world. There are many rumors
about the harm radio waves can do. India already has enormous
cell phone coverage, with many subscribers getting free incoming
calls for a lifetime. So, the explosive growth is over. Probably
400 million Indians can’t afford a phone. It is a brutally
competitive industry, with charges being a fraction of a
cent per minute per call.
The auto sector is phenomenal. Until the 1980’s, there
were 2 auto manufacturers, Premier Auto and Hindustan Motors.
They had quotas of 50,000 cars per year. Maruti-Suzuki started
making the “farmers’ car” in the 1980’s.
It is 50% government owned, with the rest of the shares being
traded in the market. Now it sells 100,000 cars per month.
It is focused on small cars.
Tata started making cars 10 years ago. The quality is not
good. Maruti has a Japanese partner, which has helped it
with quality. Now all the major carmakers are here. The taxes
on cars are high—30-40% of the price.
India has started to expand its road network. These are
not big highways, but there are both 4 lane and 2 lane roads.
Bombay has many bomb blasts each year, but rich people don’t
get killed, so no one hears about them. The attacks on the
Taj Majal and Oberoi hotels last year caused a momentary
Rich people don’t vote. The voters are poor and lower
middle class Indians, so the government panders to them.
They get something for their vote. Rich people think politicians
are scumbags. Half of the urban population lives in slums.
The political class tends to come up from the bottom or are
offspring of political families.
The country is run by bureaucrats on the British system.
The Indian Administrative Service is highly respected, is
selected through very competitive exams, and is highly educated
and very high quality up to the level of minister. There
aren’t political appointees to carry out policies,
so each new government has limited impact. Things get done
when the government steps aside. When American companies
in India have problems, they don’t go to politicians
for help. They go see the bureaucrat in charge of the department
that impacts them.
The U.S. Commercial Service looks at the best sectors for
American exports. Sectors that are past their prime in the
U.S. are often big opportunities in India. Private education
is a phenomenal business here. It would be a good investment
area. There is a law pending to allow investment in higher
education. All education in India is booming, as is health
care, 75% of which is private.
India is importing corn, soybeans, and lentils. The top
sectors for U.S. exports are: nuclear, solar, education,
autos, higher education, information technology, financial
services, software and hardware, and aviation.
Meeting with Neeraj Bhargawa, CEO of WNS, business
WNS has 22,000 employees worldwide. In India, WNS provides
transportation for its employees because of the heavy traffic
and lack of good public transportation. A woman is never
the last employee to be dropped off in order to assure her
safety. During the night shift, there are always guards.
The company provides door-to-door service at night. Meals
There are centers in Costa Rica and the Philippines. WNS
will only go outside India if there is a potential client
and then will build a facility or take one over for that
client. They are looking for a good location in China.
Warburg Pincus was the first investor in WNS in the mid
1990’s. British Airways and GE were their first clients.
At the beginning, they had 1000 employees, mostly airline-related.
They have grown from a $50 million business to a $400 million
business. In 2006, WNS did an IPO.
Their primary focus was on the travel industry, from airlines
to travel agencies. They take care of lots of operational
transactions, such as crew scheduling and rebooking flights.
There are 80 different processes they handle.
It is too risky to be focused only on the travel industry.
WNS had its first appointments with travel companies in September,
2001. For 9 months, they had no response. They began to shift
to an insurance focus, which now makes up 40% of their business,
while travel is 25%.
Insurance services they perform include: claims processing,
change of address, premium collections, customer complaints,
and accounting. Anything with clear rules can be done by
WNS. They are real experts in these processes.
WNS also supports CFO’s activities. If there is a
critical mass of work, taking more than 100 people, the process
is worth outsourcing. They can provide centralization and
standardization. For example, GE closes its books in India.
WNS has a big Six Sigma focus thanks to GE. There are more
Six Sigma experts in India than in the U.S. Clients come
for cost and stay for quality.
A new field is market research. Clients started sending
survey forms to WNS to tabulate and analyze. That brought
more complex work on analytics and market research. They
do lots of data mining, financial research and analytics
for investment banks, supply chain analysis. Analytics are
now about 11% of their revenue. In India, outsourcing is
a $30 billion industry out of $50 billion worldwide. WNS
has growth potential with existing clients and industry expansion.
They have a big investment in security systems, including
physical security. Some clients have closed circuit cameras
observing each desk at WNS. They don’t have competing
activities in the same building.
Employees need good processing skills. They must be able
to read and speak other languages fluently. Most employees
are BA’s from second tier colleges. Call centers require
English skills, which makes the Philippines a good location
since it is culturally close to the U.S.
For specialized accounting work, WNS hires people with BA’s
in business and accounting. For analytics, they hire MBA’s.
Entry level salaries are $5–10,000 per year. Starting
lawyers get $6-7,000 per year. Neeraj explained the compensation
pyramid at WNS. The top tier leaders get 80-90% of U.S. salaries
for the same position. Managers get 40-60%; specialists,
15-35%; and workers, 5-20% of U.S. salaries.
WNS offers all kinds of degrees inside. Vocational training
in India is inadequate to provide a modern global workforce.
Visit to High Street Phoenix, major retail, office,
High Street Phoenix is a huge shopping mall development
with office and residential towers as part of the complex.
60% of India’s population is under 29. Today, organized
retailing is taking hold, moving away from only family-owned
shops. The retail market was $353 billion in 2008. In 2010,
it is expected to be $416 billion. Shopping malls have 12%
of that market.
Phoenix Mills, the owner of High Street Phoenix, focuses
on larger cities. They have 50 million square feet of development.
Another company serves medium-sized markets, while a third
company works in small markets, such as Agra, Varanasi, and
The High Street Phoenix complex is 3.1 million square feet.
It is a market city concept, with a Shangri La hotel and
2 Marriotts, all 5 star hotels, and all attached to the shopping
The company has 19 malls in various stages of construction.
This is the only one that is finished. Others will come online
this year. There is no complex in Delhi, primarily because
of the difficulty of getting land there. The choice of land
is the key. The company has prime locations in every city
it serves. But, in Delhi, the city is very saturated with
There are 4000 stores across all their projects. Their retail
space is 80% leased and the office space, 40%. Phoenix Mills’ investors
are Germans, a private equity fund in Mauritius, and Indian
investors via the Bombay stock exchange.
We flew to New Delhi and left immediately for a tour of several
auto parts manufacturing plants. The traffic quickly came
to a complete stop. We battled broken down trucks blocking
a full lane of our two lane side of the road so that passing
took forever. Finally, after 3 hours, we told our guide to
turn around because it was now 4 p.m. The general manager
of the plants we were going to visit was very disappointed,
but kindly got on our bus with us and talked about their
company and about India generally for the 2 hours it took
us to get back to the hotel.
Traffic is the overwhelming factor in Indian travel logistics.
They are pumping out cars at record paces and even further
clogging the roads. The railway system is not geared towards
freight, as ours is, so most goods are carried on trucks,
most of which are ancient, rusty, smoky, smelly, with constant
breakdowns in the midst of the traffic lanes. It can take
hours to go 10 miles.
Jet Airways is India's primary competitor to the dreadful
Air India. It is a superb airline, with great service, good
food, very helpful staff. Now, however, there are low cost
airlines starting up which threaten its business pretty severely.
In addition to visiting the Red Fort in Delhi, one of the
stunning old fortress palaces in India, we visited a spectacular
temple, Swaminarayan Akshardham, just outside Delhi. It is
huge and relatively new, with magnificent stonework and carving.
A favorite part for all of us was a row of elephants carved
in the stone surrounding the main temple. There were charming
quotations about the beliefs of the Hindu sect that built the
temple, recording their values and ways to live a good life.
We followed our visit to the Red Fort with a ride through
Old Delhi’s seething market in bicycle rickshaws as
our drivers kept pointing out “old building”, “old
building”. We ended up at the main mosque in Delhi,
where the women in our group had to put on brightly colored
robes to make us more modest. There was a funeral in the
works inside the mosque courtyard, with male relatives of
the dead person performing ritual washings in the fountain.
Varanasi, formerly Banares, is the spiritual center of India,
holy to Hindus and Buddhists because it is on the most sacred
part of the Ganges and is where Buddha preached his first
Varanasi is very hard to describe. It is like a movie set
of every Indian movie I've ever seen-only this is real. The
city has 2 million people and they are all in the narrow
streets all the time. This is a city of constant motion and
unbelievable crowding. The streets are very narrow and filled
with rickshaws, bicycles, pedestrians, buses, cars, cows,
dogs, and roadside stands (blankets spread on the ground
piled with goods) right up against the asphalt. Everyone
drives in the middle of the road and swerves at the last
minute to avoid hitting someone or something. Our guide said
there are only 3 driving rules in India: have a good horn,
have good brakes, and have good luck. The other predominant
rule is that, yes, there are rules and you follow them only
if you want. Here in Varanasi, there are no stop signs and
no traffic lights. Everyone goes as fast as possible and
careens off at the last moment to avoid an accident. It is
a maelstrom of bicycle carts, rickshaws, motorcycles, pedestrians,
cars, trucks and buses all filling the very narrow space
of the streets that are wide enough for about 1/4 of their
There is lots of color. Markets are filled with mounds of
bright red carrots, long white radishes, purple onions, giant
cauliflowers, lime green cabbages, green onions, oranges,
guavas, and then women in beautifully colored saris searching
for just the food they want for that day's meals. In most
markets, this is all piled either on the ground or in the
backs of bicycle carts. Cows wander amidst all this chaos,
munching whatever they can find. I saw one cow go after a
lovely green cabbage, only to get scolded and shooed away
by an alert merchant. The trash is monumental-scattered and
piled everywhere. Cows and dogs rummage through the trash
for anything they can find to eat.
The dogs are very sad. They have sweet faces and usually
horrible mange all over their bodies. They fend for themselves.
To keep warm all the people on the streets hover over little
fires made of paper or leaves or sticks. When these burn
out and the ashes have cooled enough, the dogs curl up in
the ash piles to get warm. We saw one little mother dog curled
up in the ashes with 2 puppies nursing. I saw one man cut
off a plastic bottle and pour milk into it for another dog-that
was a lucky one. I don't know how they survive in the crowded
streets. Many don’t.
Our first night here we took rickshaws through the center
of the city, all bustling with human and animal activity.
Everything was, as always, extremely crowded and very dirty.
Our rickshaw drivers (on ancient bicycles) raced one another
for about 3 or 4 miles to the banks of the Ganges. We all
loved it, though it is a bit more thrilling than one would
expect, given all the obstacles you nearly hit.
The walk down to the Ganges is unforgettable. Thousands of
beggars crying out for money. They are huddled along the
steps down to the river, crouched in every doorway, filling
every available space. Our guide says that some of them are
legitimate beggars, unable to work. But, many of them are
large families that have begged for generations, and have
lots of children to add to their ability to garner money.
I'm sure some of that is true, but India also has very high
unemployment, a very poor public education system, and intense
poverty, so millions of people beg because they have no other
way to live. We are told constantly to avoid buying anything
from the street vendors and to refrain from giving anything
to beggars because we will be swarmed by more beggars if
we do. Don slipped a little money to one little boy and was
quickly a star attraction. It's very hard to see this human
misery, but it is such a fact and way of life in India. People
see themselves as born into a position, thanks to the continuing
caste system (illegal, but real), and if they live this life
well, the next one will be better.
We took a rowboat up the Ganges, looking at all the people
bathing in the filthy water, lit up by lovely little bowls
full of flowers and a candle floating on the river. You can
buy these, make a wish, and put the bowl in the water, so
there are hundreds of little lights all across the wide river.
Our boat stopped at the most significant cremation spot on
the Ganges, where every Hindu in India would like to be cremated.
Inside a temple up the high river bank, there is a fire that
has been burning for thousands of years and has been tended
by the same family all that time. That is where you go to
get your torch for the cremation.
There were 16 fires along the banks when we were there. Between
200 and 300 bodies are cremated each day, so it is first
come, first served. You have to wait your turn. Only the
men participate since Hindus think women are too emotional
to be there. First the body is covered with natural oils
(butter, usually) so it will burn, then it is carried to
the water and washed-dipped and sloshed, really-and then
placed on a pile of logs (which the family buys from a vendor).
The torch is secured from the temple. The nearest relative
(oldest son for the father, youngest son for the mother)
lights the fire. It takes about 3 hours for the body to burn,
with family members watching over it all that time. When
the cremation is complete, the remains, including the ashes
and coals, are shoveled into the Ganges. Most of the bodies
are covered or wrapped in something, but not all. I'm sure
that depends on what the family can afford. It was really
amazing to watch and to try to understand how all this ties
into the life of India. With the fire and smoke, the soul
is helped onward to the next life. Seeing all this in the
twilight and into the night was something none of us will
ever forget. You have to appreciate the reverence with which
this ritual is carried out.
We also spent an afternoon in Sarnath, where Buddha gave
his first teaching. There were hundreds of Tibetans there,
visiting the partially excavated site of the temple where
Buddha stayed and taught when he was in Sarnath.
Agra, home of the incredibly beautiful Taj Mahal, was foggy
and cold. We drove there from Delhi, where our flight from
Varanasi had been delayed by weather, so we arrived at our
hotel, the Oberoi’s Amarvilas, very late. Fortunately,
the hotel, as are all the Oberois, is gorgeous, with great
service and lovely rooms overlooking the Taj Mahal (too foggy
to see, unfortunately).
The sites of Agra are amazing, including Akbar’s Tomb,
Agra’s Red Fort, and, of course, the Taj Mahal. In
the mist, the Taj was ghostly and magnificent. The detail
of the carvings and precious stone work in the marble is
From Agra, we drove to the train station at Bharatpur, stopping
to see the abandoned 15th century city of Fatehpur Sikri,
cold, somber and deserted, on the way. Because of more bad
weather, our train to Ranthambore was 2 hours late. It was
cold on the open platform, but we amused ourselves by taking
hundreds of photos of the children, families, old men, cows
and dogs that filled the platform and the surrounding area.
You can see some of our favorite photos on the photo page
of this trip.
Finally, the train arrived. We had first class seats, which
aren’t much to brag about. One section had seats below
and bunks above. A man clambered up to the bunk above our
heads, quickly fell asleep, and rattled the windows with
his remarkably loud and varied snoring for the duration of
our trip.You can see some of our photos on this page.
The train was fun because we could see so much of the rural
part of Rajasthan, the state where we spent most of our time.
So much of the land is overgrazed that erosion is a monumental
problem everywhere. There are too many cows, goats, and sheep
for the available grassland. And too many children herding
them and not going to school.
This has to be a highlight for anyone visiting India. Ranthambore
is one of the tiger reserves. The last time we visited this
beautiful place, only some of our group saw a tiger. Now,
the reserve is divided into sections and you can only go
to your assigned section to look for animals. Fortunately,
our sections had several tigers, so all of us saw these gorgeous
animals during our 4 game drives.
There are only 39 tigers in Ranthambore right now. About
6 years ago, poachers killed all but 3 of the males, and
only one of those 3 actually bred females. So, they are struggling
not only to rebuild the tiger population, but also to broaden
the gene pool.
Ranthambore has several lakes, full of birds, several kinds
of deer, antelope and a rare small cat, the Caracol Cat,
which we were lucky enough to see late one evening. There
are also beautiful owls. We saw two, one very large brown
speckled owl and two tiny spotted owls peeking out of a large
hole in a tree.
We stayed at the Oberoi’s Vanyavilas, a “tent” camp
that is mostly magnificent concrete bungalows with canvas
roofs, set in gardens that are both wild and groomed, with
lots of peacocks, parakeets, and other birds.
Ranthambore also has an ancient fort high on a bluff, with
many temples inside. So, the local people visit the temples
daily, trekking many miles to do so. A few lucky ones have
motorbikes or cars, which are always piled with people. A
typical motorbike in India will have 4 to 6 people attached
to it somehow, while a small 4 seater car will have at least
10 people loaded inside. We were the fortunate ones in our
jeeps with 4 passengers each and a naturalist and driver.
The drive to Jaipur was long, but never dull as we avoided
every imaginable conveyance in the middle of the road. Lots
of camels, a few elephants, countless motorbikes, heavily
overloaded trucks lurching along under their burdens, ancient,
smoky buses with people hanging out windows and onto the
top and sides, pedestrians, cows wandering blankly in search
of anything to eat, and scrawny dogs lying on the pavement
One of the highlights of Jaipur is riding elephants to the
beautiful Amer Fort. The elephants are decorated with colorful
paint and topped with saddles and their mahout. Now, each
elephant can only make 3 round trips to the Fort. In the
past they were often overworked and sometimes became enraged,
hurting tourists or mahouts. They are remarkable animals,
very smart, watchful, and well-trained. This year, the lake
below the Fort was empty because of the drought, a real hardship
on the elephants who like to wade into the lake and spray
themselves with cool water after a day’s work.
Like all the major cities of Rajasthan, Jaipur has magnificent
palaces and forts. The craftsmanship is so beautiful, including
gemstones, mirrors, glazed pottery, paint, colorful textiles,
and fine stonework.
We’d planned to fly to Jodhpur, but chose to take
our trusty bus instead because of the daily flight cancellations
through Delhi. A long trip of about 9 hours. But, at the
end of the day, we could see a fabulous palace on a hill,
which was our hotel, the Umaid Bhawan Palace, where one of
the maharajas still lives. Just below the palace is a large
new subdivision with big sandstone villas under construction.
It was clear that these would be occupied by an extended
family, with several separate entrances to private quarters
and big common spaces for the entire family.
Don took us to a textile shop in the old market. It is 5
floors, each level piled high with handmade shawls, bedspreads,
blankets, decorative wall hangings and on and on. The best
salesman any of us had ever seen took charge of our group,
making us comfortable on a pile of textiles.
First he showed us all his wares, gorgeous things, moving
from low end to high end. He told us he would explain the
prices later. After we had seen all the splendor, including
products he told us were made only for Hermes and Neiman
Marcus and so on, he told us the prices, which were very
low. Then, astute salesman that he was, he told us to raise
our hands as he went back through all the pieces if we wanted
that piece. That got the competition going as we, of course,
all raised our hands with virtually every piece he showed
us, and then negotiated with one another to get what we wanted.
As prices rose, so did our buying frenzy. A good day for
As we left Jodhpur, again in our bus rather than a delayed
airplane, we stopped at a dhurrie (woven cotton rugs) coop.
By the time we left there, the owner had almost no rugs left.
They are bright, colorful, handmade, unique to the local
village, and not too expensive, which made them very appealing
even if we couldn’t imagine where we would put them.
Driving yet again from Jodhpur to Udaipur, we stopped at
the largest Jain temple in India, a huge, heavily carved
structure in a remote area. The Jains do not believe in killing
any living creature. Some even wear masks or veils so they
don’t accidentally breathe in a tiny bug.
We arrived in Udaipur in time to take a boat across a lake
to our hotel, the Oberoi Udaivilas, a lovely sight after
a long day as it glowed in the sunset. This was everyone’s
favorite hotel with its lush gardens and large, comfortable
rooms with private patios. The next day we went to the City
Palace, which was so crowded with tourists in town for a
Jain convention that we literally couldn’t move in
the tiny passageways. We escaped as soon as we could. That
evening, we enjoyed cocktails with the Maharana of Udaipur
(see photo), a well-traveled, well-educated man who focuses
on trying to improve the economy of Udaipur while driving
his collection of sports cars. He and his son have started
schools in many villages and now support 2500 students. His
son goes to villages to speak to parents about the importance
of educating their children, including their daughters. The
Maharana entertained us on his terrace in one part of the
City Palace, overlooking the lake.
Devigarh is a small village near Udaipur. We stayed in a
palace overlooking the village and the fields, in a valley
surrounded by mountains. A spectacular setting. The next
morning, we were guided by a young man and numerous children
through the village and surrounding fields, walking by a
well where men were bathing and women were collecting water
in large buckets. It was an opportunity to see local village
life as opposed to the large cities where we’d been
staying. The village is full of children, cows, goats, shops,
old men talking, women doing laundry and cooking, young men
arguing, and Hindu temples. The fields are irrigated from
wells. Water buffalo provide the energy to pump the water
and till the fields.
Back to Mumbai
Our last two days were back in Mumbai. We had two interesting
Meeting with Blackstone, private equity investors
We met with the managing director in Mumbai, who is from
Rajasthan, but studied in the U.S. and has an MS in engineering
from Stanford. He started his career at Trilogy Software
with other Stanford alumni, then returned to India where
he started a used car exchange. He has an MBA from Harvard.
His wife taught at Stanford.
Blackstone opened an office in Mumbai 3 years ago. They
had looked at a number of Asian countries and chose India
because it’s a democracy with a very large market and
a record of successful business exits. Their global fund
is $21.7 billion, with $900 million invested in India over
the last 5 years.
With Indian companies, there is a big need to professionalize
management teams. Blackstone has 2 senior executives who
help manage and guide the companies in their portfolio.
They own the largest number of hotel groups in the world,
but have only 1 real estate investment in India. Since the
recession started in 2008, India has lost 1 million jobs
in the garment industry. The infrastructure is a big issue
for Indian manufacturers. In 2007, it took 7 to 10 days to
unload a container. During that time, the owner was paying
freight charges, so it was very expensive.
In India, investors can’t use debt to buy shares of
companies. So, they use offshore leverage, usually in Mauritius.
The awarding of contracts is 100% transparent for highways
when it is controlled by the central government. A model
concession agreement includes tolls and a 25 year term for
the contract. The lowest bidder wins in an open bidding process.
State governments have the same process, but can fudge bids
and customize a bid to a company’s strengths. Most
contracts are heavily sub-contracted. There are no union
India had a $500 billion stimulus package, of which the
largest component (25%) was power transmission, generation,
and distribution. Roads were 10%, then ports and airports.
Indian capital markets collapsed in 2008, the worst market
globally. In 2009, the markets were up 60%. The market is
driven heavily by foreign institutional investors, who have
huge impacts on the Indian stock markets.
The Indian railroad employs more than 1 million people.
The British invested heavily in rail, giving India a huge
The challenge of investing in India is that is it a “highly
discovered market”. There are several very large cell
tower companies with valuations that are too high. It costs
$50,000 to build a tower. To buy that tower is $250,000.
There are 550 million mobile subscribers, so there is not
a lot of room to grow the market. Tops would be 750 million
subscribers. India is now a voice only market, so the demand
for data will be the growth engine.
Personal computer penetration is very low, about 30% in
urban areas. Fewer than 5 million Indians use broadband.
But India is a young country and young people are rapid adopters
of technology. The social fabric of the country is changing
as a result. Parents no longer know what their kids are doing
or whom they’re talking to.
Indian exports are about 20% of the economy compared to
China, where exports are 50%. GDP per capita is about $1200.
An average middle class income is $5000 per year, for about
400 million people. Micro-finance is a powerful model to
help the poor. Many micro-finance participants have loans
from more than 1 provider.
India is still suffering from a brain drain and 25% of their
tech university graduates leave the country. Still, more
people are excited about staying in India as its economy
Meeting with Saffron Art owner, Minal Vazirani
Minal lived in the U.S. most of her life. She and her husband
founded Saffron Art, a very high end internet art auction
gallery. They wanted to make the pricing of art transparent
and increase access to art.
She described the 7 stages of modern Indian art, from the
19th century European school through the turn of the century
resurgence of “Indianness” to contemporary,
in which globalization is a constant theme.
Minal and her husband started Saffron Art in 2000 and had
sales of $2.8 million that year. By 2006, their sales were
$144.3 million, with a huge increase in volume and price.
They have exhibited Indian art in major world cities, often
the first time art patrons have seen Indian art. By 2007,
Christy’s and Sotheby’s had also become interested
in the Indian art market. Prices have fluctuated significantly
since then, based on the world economy and art speculation
(one client bought a painting for $36,000 and sold it 3 years
later for $110,000).
Museum interest is now increasing in contemporary Indian
art. Recently, Minal added jewelry in order to build an auction
market in India and the region and to expand their auction
categories. The business is technology driven. Bidders can
use an I-phone, social media, any electronic medium to bid.
We spent one of our last nights in India singing and dancing
with the patrons and waiters in the Taj Mahal coffee shop,
thanks to a beautiful Indian singer who loves American pop
and country and western music. As one of our colleagues said, “It
was a trip full of fabulous sights, lots of laughs, great
insights, treasured memories, precious friendships and just