FOR A WEALTHY MAN who lives in a lavish house at the end of a private road in the upscale Borugh of Harrow on the Hill in northwest London, Sanjiv Mehta has slept in some unusual places in his 49 years. On a cold night in 1991 in the port of Saint Petersburg, he dozed off on a wooden bench near the customs clearance area of the warehouse, inside which lay containers filled with coffee he was exporting to Russia. The coffee had arrived from Kotka in Finland, and was due to be shipped to Moscow the next day.
With the collapse of communism, Russia was turning into a Hobbesian state, a land of no norms, in which every transaction was assumed to be the last, and nobody wanted to give an inch. Mehta was in Saint Petersburg that night because he was troubled by a series of thefts that had emptied entire sealed containers of his goods. He had lost three shipments so far, each with goods worth $90,000. It was uncanny, and seemed impossible, because once the paperwork was done, the containers were padlocked and sealed in Kotka, and the keys were sent separately to the buyer to prevent the goods from being pilfered along the way.
And yet, when the containers reached Moscow they were empty, even though their locks and seals were intact. There was no sign of forced entry, no fingerprints that could be traced back to the criminals. The insurance companies refused to settle the claim: without evidence of damage, Mehta couldn’t prove that the goods had been stolen.
Mehta examined the containers closely and found that the thieves had figured out a brilliant way to steal his goods. They would unhinge the door of a container, remove the door, take out the goods, and bolt and reseal the door after replacing the hinges. The padlock was still in place, like a clueless nightwatchman unaware of what was going on behind his back.
So when the next shipment was scheduled to depart, Mehta flew to Finland. He saw the container being loaded properly in the truck in Kotka, and sat with the driver during the journey to the port. He travelled with the container on the ship all the way to Moscow, saying nothing. It was an arduous journey, and a dangerous one: the Russian mafia was infamous for its violence. (Mehta had already been threatened once in Yekaterinburg.) In the end, nothing happened—the thieves knew he was on board. But they got the point, and the thefts stopped.
“The Russian commodities boom was a good one,” he said. “But there were risks.”
Traders spy opportunities before others do. They gather data, collect information and process what they’ve absorbed. And then they take steps after calculating the risks. A good trader likes to win. More importantly, he hates to lose. And Mehta hates to lose. I know; I went to school with him. One of our classmates, now a diamond trader in Antwerp, still recalls playing carrom with Mehta. “It was difficult to beat him at anything; he set his heart upon winning something, and he usually got it,” our classmate said.
Mehta’s latest coveted treasure is an unobtrusive store on Conduit Street, a tiny lane which lies at the edge of Mayfair, the fashionable district in central London. The upscale Mayfair, with its fine restaurants and discreet offices of boutique consultants, connects Regent Street with New Bond Street, with Oxford Street running to its north and Piccadilly to the south. These names are redolent with imperial grandeur; any child who has played the board game Monopoly can recall them with ease, although real estate today is a bit pricier than on the Monopoly board. (At school, Mehta was also an astute Monopoly player; he beat me the few times we played.)
There are nearly 300 shops in this area, with monthly rentals running anywhere between £200 and £900 per square foot (roughly `14,000 to `65,000), making this golden rectangle one of the most expensive retail districts in the world. Conduit Street has Vivienne Westwood, the doyenne of quirky British design; Rigby & Peller, which supplies undergarments to the Queen; Belstaff, which made the overcoat worn by Sherlock Holmes in a BBC television series; Oliver Sweeney, who shod the Ashes-winning English cricket team; and Berluti, the home of handmade shoes. Jutting out of Conduit Street is Savile Row, where old-fashioned tailors, one of whom actually wears a monocle, continue to make bespoke suits for gentlemen of discerning taste. Posh restaurants and hotels like Claridge’s, The Ritz and The Connaught are nearby, as are the boutiques of Burberry, Chanel, Hermes and Ferrari.
Mehta is very proud of his shop on Conduit Street. It is called The East India Company.
Yes, the same one. In one of history’s ironic twists, a Gujarati man born in Bombay now owns the company that was set up at Leadenhall Street at the end of the 16th century by British traders and merchants who went around the globe looking for a good cuppa and some spices and ended up colonising half the world—including India, the jewel in the crown—before collapsing in 1873. The company has been revived, but now it sells luxury teas, coffees, chocolates, jams, biscuits and chutneys. The minimalist 2,000 sq ft shop has a staff of 35, and aims to rake in £6 million (`433 million) in its first year.
To be sure, The East India Company had ceased to operate when it was dissolved in 1873, its balance sheet smeared with red ink, as its income simply could not cover the cost of maintaining the empire it had built. After setting up trading operations in India in the 17th century, it had rapidly transformed from a mercantilist trading firm into a state, taking over territory, minting currency and maintaining its own army. The Sepoy Mutiny of 1857 (as the British view what Indians call the first war of independence) delegitimised the company’s political role in the eyes of the British establishment. Queen Victoria took over the governance of India in 1858; 15 years later, the debt-ridden company was dissolved.
But sometime in the 1980s, a group of British investors came together, and sought government approval to begin trading using the company’s title, in effect reviving it. Few knew about it then; the investors didn’t make any plans public, keeping a low profile.
One of the commodities they traded in was tea, and it was to Mehta that they turned for the trades. He saw huge potential in rebuilding the brand, even though he knew buying the company from a group of investors would be a daunting, time-consuming project. He understood the political significance of an Indian trader taking over the company that had once colonised India, and he was aware of the negative connotations the company’s name suggested for many patriotic Indians. Why should an Indian revive a company that enslaved Indians and sent them to far-flung places as indentured labourers?
Slowly, step-by-step, Mehta began buying over the investors, and after nearly three years, he bought out the last investor, acquiring full control of the company in 2006. At the same time, he studied the company’s history, consulted experts, talked to brand consultants and began assembling in his mind the architecture of the company that would no longer be an embarrassment, but would nurture the brand.
Mehta is sentimental about the venture and the company’s past, but he is also a trader: above all, he sees the business potential in creating a niche of high-quality products sourced from around the world, and sold, eventually, on its great retail boulevards, like London’s Oxford Circus, New York’s Fifth Avenue, Tokyo’s Ginza or Paris’s Champs Elysees. This is how an empire strikes back, he thought. The $12.5 billion Mahindra Group also sees value in the venture, as it has made a small, strategic investment in Mehta’s company. The politics and the past aren’t easy to shake off, but the business challenges are no less formidable.
It is an audacious investment in many ways. Mehta hasn’t had firsthand experience of retail, except for the mail-order businesses he ran a few years ago, and he comes from a family of jewellers and diamond traders, where trading experience is usually acquired away from the glare of the High Street, in the back alleys where deals are struck with a handshake among people who like to keep a low profile. The East India Company is entering the crowded and fiercely competitive luxury goods market, where a higher profile is necessary. Building and nurturing brands costs a lot of money and takes a long time.
Then there are location-specific hurdles. The shop is in a competitive retail zone, dominated by bigger stores with venerable traditions, like Fortnum & Mason at Piccadilly. Mehta’s acquisition has also become a double-edged sword. While there are Brits who feel nostalgic and misty-eyed when they see the Union Jack rise, who wave at the Queen and wait for hours to catch a glimpse of the brand-new Duchess of Cambridge, who savour what remains of Britain’s fading imperial glory, and who might be cheered by East India Company’s revival, their mood might sour if they discover that the man doing the reviving is an immigrant from India. Meanwhile in India, many have applauded Mehta’s acquisition as another example of ‘chak de India’, another India Shining moment—whatever that means—and others are pained by the rebirth of the company that colonised and humiliated India. Mehta may dream of the kind of global dominance the erstwhile East India Company enjoyed, but he knows it is a different game and a different age. But marketing experts are betting that Mehta is on to a good thing and can create a niche. Many people know of The East India Company; few know it still exists. Some hate it for its colonial history; others see the acquisition as vindication. The competitive marketplace—and the size of Mehta’s deep pockets—will decide the outcome. It is risky, but Mehta is a trader.
MEHTA COMES FROM A FAMILY that has traded in diamonds for four generations. His grandfather, Gafurchand Mehta, who lived in Belgium in the 1920s and set up a diamond trading enterprise, could speak Flemish, French and Gujarati, but not English. Mehta’s father, Mahendra, was born in Antwerp in 1933, and Gafurchand brought his family back to India in 1938.
The international diamond trade is built on trust—the stones are tiny, indistinguishable to the untrained eye; but they have high value, and multiple transactions take place every day. Trust keeps those wheels moving. Many traders share family ties; and most are from one of two ethnic groups—Orthodox Jews in Antwerp and New York, and Gujarati Jains from Palanpur.
Mehta had a privileged childhood. At 11, he got to visit Disneyland with his family, probably the first among his classmates to do so. He remembers staying at The Dorchester in London in 1972, travelling around the city in a chauffeured Rolls-Royce. “Our lifestyle was lavish,” he admitted. “But money was never the end; it was the means to an end.” He mentioned that Gujarati poets like Suresh Dalal used to visit the family home during his childhood, and that classical musicians came to perform there. Mehta isn’t an exhibitionist, but he isn’t coy about his good life either. He quoted a couplet from Akbar Ilahabadi:
Sidhave sheikh Ka’abe ko, hum to Englishtan jayenge;
Wo dekhe ghar khuda ka, hum khuda ki shaan dekhenge.
(Let the devout sheikh go to Ka’aba, I will go to England;
Let him watch God’s home, I will watch God’s glory.)
Private tutors were brought home to teach Sanjiv and his brother Rajiv. The two learnt musical instruments: Sanjiv the violin and Rajiv the flute. They also learned Sanskrit poetry and the scriptures. Mehta loved ghazals and shairis, and even today he can surprise friends at a party by reciting Gujarati poems, many of which he knows by heart. He remembers flying kites as a boy, playing Holi and going around town with a group of school friends playing Dandiya Raas, the Gujarati folk dance performed with sticks during Navaratri, the festival of nine nights.
At 18, he did a summer course in psychology at Columbia University. Later, while at Sydenham College in Mumbai, Mehta began going to his father’s office to learn how to sort diamonds. The office would receive ungraded, rough stones, often in small packets. The sorter has to sift them by colour and clarity, and, in the case of larger stones, also by their cut. He started sorting polished diamonds. Then he travelled with his father to better understand the business, and watched him negotiate with international clients.
After graduating, Mehta went to Gemological Institute of America in Los Angeles. He found the business of jewellery exciting and began marketing it, taking products by the suitcase to industry exhibitions in the Gulf states, Hong Kong and the US, and set up a mail order trading business. That taught him about consumer tastes—how people decide, on a whim, to buy something they like in a catalogue. Mehta launched a mail order business in India too, in partnership with Diners Club credit cards, hawking jewellery at prices ranging from `1,500 to `2,500. His older brother Rajiv focused on industrial diamonds.
But pre-liberalisation India wasn’t easy for traders who felt constrained by boundaries. It was difficult to get access to hard currency. It wasn’t possible to ship goods from Singapore to Tokyo while operating out of India. Mehta had to follow stiff regulations about how much money he could take out, how much he could spend on promotions, whether he could entertain clients and whether he could take goods on consignment. He had to deal with the artificial gap between the local and international price of gold, which increased his cost of production, and he needed a larger cash balance in his working capital to keep his business going. Nor could he borrow from abroad, even if the interest rates were lower elsewhere. “Everything changed after 1991,” he said, referring to the economic reforms launched by Manmohan Singh when he was finance minister, “but I had left India in 1989.”
Mehta decided to strike out on his own, without seeking parental support, and moved to London. The early years offered a reality check. “On my first wedding anniversary, I had given my wife Amee a diamond ring. On the next anniversary we were abroad, I could only take her to Pizza Hut,” he remembers. His was an arranged marriage. He said, disarmingly, “I had no time to fall in love.” Amee had grown up in Mumbai; she is a trained microbiologist from Indiana University in Bloomington.
In London, Mehta first set up a mail order business, selling locally-made household products to consumers in the UK. Later, he moved to trading commodities. India had changed its import laws in 1989, allowing Indian mills to buy steel directly. Until then, they had to route all their imports through the state-owned Minerals and Metals Trading Corporation and the State Trading Corporation. Mehta took over a scrapyard in Newcastle-upon-Tyne, and started selling steel to smaller plants in places like Taloja in Maharashtra and Mandi Gobindgarh in Punjab, who purchased materials in quantities too little to get preferential rates from larger suppliers. Mehta would send shiploads of steel to India, divide the cargo in smaller quantities and supply those plants—reducing their inventory costs and picking up business the big players weren’t pursuing. And because he was one of the few players doing it, he could charge a premium.
As the Soviet Union began to fray, Mehta saw an opportunity. Amee’s father, Jasubhai Shah, had been selling pharmaceutical products to Russia, which increased Mehta’s comfort in selling there. Mehta started trading with the Russians, shipping the heavy crude oil Buzachinskaya from Mangyshlak in Kazakhstan. The oil could only be shipped in drums. The international price of oil at that time was as low as $16 a barrel. And Kazakhsatan was landlocked. Someone needed to figure out a way to shift that oil to refineries where it could be processed further. But no Western refinery wanted to touch it at the prevailing international prices.
So Mehta bought that oil and transported it in drums, leasing a railway line and 80 wagons. He then brought it to a Black Sea port and shipped it to a refinery in Genoa, Italy. “I made serious money in that deal,” he said.
But once oil prices spiked, other refineries showed interest in Kazakhstan, and Mehta moved on to do other things, like partnering with Hindustan Unilever and exporting Indian-made toothpaste, coffee and tea to Russia. “I have been to most towns in Russia with a population more than 100,000, and traded many products,” he said. “I have operated out of Taipei, Houston, Warsaw, Tehran, Dubai, and dealt in consumer goods, petrochemicals, oil, ferrous metals, garments and machine tools.”
Mehta felt inspired by the trades and his travels. He saw the world as his market, as his source. Subconsciously, he was acting like one of the traders of yore who became the early East India men, without being aware of it. In a world of many variables, he believed there were few constants—and trust was one of them. While the commodities and markets are different, the principles that guide a trader are the same—they are about relationships, trust and instinct, Mehta said. “Russia taught me that. Russian business is completely based on trust. Contracts have no meaning. Your word is your bond. Open your mouth, and mean each word you say. Judgements are formed based on what you say. You trade with people you know and the commodities you know. You hit the ground running. I have learnt a lot from my customers, suppliers and commodities. I size people up when they walk through this door,” he said. “Is the individual worth taking a risk? It is no different from the way the trader from The East India Company went to Canton and set up a trading post. I have traded with companies, people and circumstances totally different from each other. I have taken risks which most people would avoid. I was willing to go to remote parts of Russia without security. I live by my own consciousness and don’t get wavered by others’ opinions.”
Mehta’s son Arjun is 22, a graduate from Cambridge who works at a consulting firm in London; his daughter Anoushka, 19, is a student at Lady Margaret Hall in Oxford. Arjun says he hasn’t thought about working at The East India Company, but wouldn’t rule it out. Mehta said, “It isn’t important whether he gets into the company. It is for whoever is worthy of running it. I want to rebuild this company such that if you read the history of the company in 2200, you will see a continuum from 1600, with the period between 1874 and 2010 seen as an aberration in history. I have lived out of suitcases, visited remote parts of the world, taken risks and sometimes I have lived like a nomad.”
Mehta was an East India man before he knew he was an East India man.
He was 12 when he first heard of The East India Company in his history class at school. Our history teacher at that time, told engrossing stories about Sir Thomas Roe reaching Surat in the early 17th century, and then presenting his credentials at the court of the Mughal Emperor Jehangir; of Robert Clive setting up Fort St George in Madras; of Warren Hastings defeating Sirâj-ud-Daulah in the Battle of Plassey; of the series of treaties that cleverly expanded the company’s territory, enabling it to levy taxes; and of the doctrine it passed which transferred the sovereignty of princely states to the Crown when a king died without a male heir. If the state did not comply, the Company’s army did the rest.
Like many of our classmates, Mehta was fascinated by the drama and the politics. Many of us lamented the humiliation of India; Mehta told me that when he grew older he began to marvel at the size and scale of the company’s trades. “Owning East India Company is the next stage of my life’s journey. I traded at a young age; I grew up in a wealthy family; and I was used to a life of luxury. My journey, from China to Russia and now to London, the life I’ve led, it was all leading me to do this. It was as if the universe was conspiring to make me go through the school of life, to learn this enterprise, to make me worthy of owning The East India Company.
He then gets up, excited, to show me a box holding the Company’s original Merchant’s Mark, known as the “chop”, which was dipped in ink and stamped on the goods of The East India Company from the 17th century. He cradled the box in his arms, as if it were an infant. “Imagine, the East India Company. It is mine.”
At that moment, late in the evening, when all his colleagues had left for the day, Mehta no longer seemed like a middle-aged businessman. He was back to being the schoolboy I once knew, astonished by where he has reached.
IN ITS FIRST INNINGS—from 1600 to 1874—The East India Company built an empire through trade and conquest, bringing silk and spices, tea and coffee, and gin and pale ale to consumers, linking distant shores. The West learned to appreciate Asian porcelain, chintzes, cashmere, chinoiserie and paisley patterns, because John Company, or the Honourable Company, as it came to be known, unified markets. The company minted its own currency, had its own factories and developed systems like the orderly grid of cantonments and the charming surroundings of gymkhanas.
Its jails held Napoleon Bonaparte in custody; its monopolistic policies provoked the Boston Tea Party in what became the United States of America. It helped Elihu Yale make a fortune, which he bequeathed to the university in Connecticut that now bears his name. And its flag is believed to have inspired the design of the American Stars and Stripes. It enriched the English language with words like jodhpurs, khakhi, chintz, cummerbund, gingham and dungaree, and its tiffins were filled with pilau rice, kedgeree, and mulligatawny soup and other afternoon victuals, along with the early morning chota hazri of tea and biscuits. So that traders could transport goods freely through the Indian hinterland, it tamed the cult of thuggees and, prodded by reformist Brahmo Samajists like Raja Ram Mohun Roy, its governor-general banned the sati system, under which Hindu widows were burned at the funeral pyres of their dead husbands. At its zenith, The East India Company employed nearly a third of Britons and commanded half of the world’s trade.
But of course there was a dark side. While it professed free trade, it was essentially a monopoly that sought the benefits of free trade for itself and used any means, including warfare, to ensure its exclusive control. If a business school professor today were to survey its range of operations, he would find little synergy and no coherent strategy (unless world dominance counts), and there was no way the company could “stick to its knitting” or develop “core competence”. It was the mother of all conglomerates.
Worse, it overreached itself. It ceased being a business and became a state. It ruled territories, providing administration and justice without the consent of the governed. When Indian sepoys rebelled against their commanders in 1857 after rumours that the cartridges of their new rifles were packed in casings coated with beef tallow and pork lard—making them unholy for Hindu and Muslim sepoys—the revolt spread through the country like wildfire. The uprising culminated in what Indians call the first war of independence, and which the British continue to describe as the sepoy mutiny. In either case, the company’s time was up. After the war ended, Queen Victoria took over the reins, and by 1873, the company could not support its debts anymore, and had to be wound up. Writing its obituary on 9 November that year, The Times noted: “It accomplished the work such as in the whole history of the human race no company ever attempted and as such likely to attempt in the years to come.”
Like everyone with a nodding acquaintance of the history of that time, Mehta assumed that The East India Company had ceased to exist until he was contacted by the group of English businessmen who had quietly resurrected its name. With appropriate approvals from the British Treasury and the Royal School of Arms they secured the rights to assets like the coat of arms that Queen Elizabeth I issued the Company in 1600, and the Merchant’s Mark—probably the world’s first trademark. They recruited historians, built relationships with museums and started with distributing tea and coffee and publishing books. And as they looked to streamline their distribution network, they got in touch with Mehta.
Mehta couldn’t believe what he saw. He doesn’t divulge the earlier investors’ identities, and a query with the Companies Board does not offer much information about its former owners. Mehta said the group included a few bankers, professionals from public relations and advertising, and their friends, all of whom knew one another in the tight-web of concentric relationships through which Britain operates. For them, the company was a hobby, an indulgence. They were all English; there was no Indian in that group.
“They didn’t have the financial capability or management bandwidth to do something spectacular with the asset they held,” Mehta said. The circle of investors included about 40 people, with no individual having a stake large enough to wish to take charge, and no one had the resources to take the business forward, it seemed. So instead of managing their supply chain, Mehta made them an offer: let me buy you out.
Mehta cites a quote he remembers from Dhirubhai Ambani—an idea is nobody’s monopoly; the key lies in the ability to pick up an idea and do something with it. Buying all shareholders’ stakes took time. Some were unwilling to sell outright; some were willing to negotiate. “So I took one person at a time. I did to them what they did to us: Divide and Rule. In eighteen months, I mopped up all shares.”
After the acquisition, Mehta took a year’s sabbatical from his other businesses and travelled around the world to learn the company’s heritage. Like the previous owners, Mehta listened to historians and met curators of museums, brand experts, marketing gurus and product specialists. He has invested some £20 million in the business, and now the $12.5 billion Mahindra Group has taken a minority stake in Mehta’s parent company. He tells his team, “When you close your eyes, you should be able to see the brand clearly. Let us visualise that together. Then, when you open your eyes, there will be a fog. We will walk one step at a time and we will reach. We will convert the abstract into a form.” He has told interviewers at The Times and The Financial Times that he did not create the brand—history created it. “I am its trustee and its custodian for the next generation. I am passing through its life. What makes it special is that I am an Indian. I am buying back the company that owned India,” he said.
Mehta’s reading and rendering of history is admittedly selective; it misses the dark parts—he is a pragmatic trader, looking out for market signals; he is not a philosopher. The company didn’t just depose local rulers and enforce its own monopoly while preaching free trade: it treated the workers in its own factories poorly; it displaced millions of people from their villages to plantations far from home to grow crops for the international market; it destroyed local crafts and trades; and it kept a continent-sized country, China, dazed on opium. When a Chinese emperor objected, the company sent in its troops, subjugated the emperor and inflicted humiliating treaties upon the Chinese.
Amitav Ghosh, the novelist who has just published River of Smoke, the second of his Ibis trilogy, after Sea of Poppies (2008), which severely indicts the East India Company for the way it devastated the lives of millions of people, is dismayed by the company’s revival. “I can no longer summon the energy to be outraged by the pervasive colonial nostalgia in India,” he told me. “India is more thoroughly colonised today than it ever was under the British. All the major hotels seem to be in a kind of race to prove that they are true votaries of the Raj—they are filled with all kinds of faux-colonial claptrap. They seem to think that this is a great draw for foreign tourists while in fact it is probably a source of embarrassment to them. It is as if India possessed nothing of its own, not even the aspiration to create something new. Reviving The East India Company, in 2011? What will be next? A restaurant called Ghazipur Opium Factory, or a series of airport lounges called Coolie Depots, an island resort called Prison Islands, or a gallery with Opium War memorabilia? What can one say?”
Mehta listened carefully as I presented him with Ghosh’s criticism, not showing any emotion. After a reflective pause, he said: “That was what the company was. Man has to learn from history; he should not become history. The idiot is the one who doesn’t learn from others’ mistakes. Two centuries from now cigarette trade will be deemed no different from opium trade, and to that extent, we have to keep in mind the context in which opium trade occurred. In Tudor England, street hangings were common in London—today, if someone gets lashed in Saudi Arabia, we are horrified, because we know it is inappropriate. So one needs to have a sense of reference and time, of context, of society, while making a value-judgment. I am not undermining the atrocities they committed to protect their wealth. If that is what I’ve set out to do, I should be condemned. But I am looking at building this as a luxury brand. It brought the English language to the world, otherwise half the world would’ve been speaking Dutch, French or Spanish. It brought mercantile English law prevailing in vast parts of the world. It brought the ports, bridges, bureaucracy, the Company School of art and the legal system to India. It brought tea to the tables of the world; sports, like cricket, rugby, polo and golf to the world…. So if you look at the positives, had The East India Company not existed, would India be India? Or would there be 5,000 princely states? Chandragupta and Vikramaditya may have created the concept of India, but we had lost it, until The East India Company consolidated the landmass for its own reasons.”
The role Britain has played in India’s modernisation is complex. During India’s freedom struggle, Mohandas K Gandhi took pains to remind Indians that they must oppose British rule, but not the British people. Nationals of other countries which obtained freedom from the British by using force are often surprised by the relative lack of anger Indians show towards Britain. A British governor banned the sati system in the 1840s, but a British general ordered his troops to kill innocent civilians at Jallianwala Bagh in 1919. But today, on the whole, Britain is far from Indian minds; The East India Company even more so. Successive Indian leaders have also spoken well about the Indo-British relationship, whose primary purpose is now commercial. With the Indian economy growing at a handsome rate, Britain wants more Indian business. Indian companies like Tata—now the largest manufacturing employer in Britain—are buying assets like Corus Steel, Jaguar Land Rover and Tetley Tea, and the Indian steel titan Lakshmi Mittal is one of the wealthiest men in Britain.
The historian and Harvard professor Niall Ferguson, whose 2003 book Empire: How Britain Made the Modern World depicted colonialism in a benign light, views Mehta’s acquisition of The East India Company as a sign of a new maturity in India. He told me: “Even India’s prime minister has acknowledged, in his excellent Oxford lecture of a few years ago, that India owes a debt to the British Raj. The East India Company was certainly responsible for many grave abuses of power in the years from the Battle of Plassey to the Mutiny. It was no aid agency. But it undeniably laid the foundations of modern India. The fact that today an Indian businessman wants to revive the ‘brand’ is, to me, a sign of India’s maturity. The days when Indian nationalists had to strike self-righteous, anti-British postures seem, happily, to be fading into history themselves.”
MEHTA, for his part, sees the acquisition as an act of redemption. Such redemption may stoke nationalistic pride, but does the deal make business sense? The market for high-value luxury products is not only fiercely competitive, it also requires enormous overheads to keep it running. Such companies need a large purse to sponsor events, get the brand recognised and remembered, and sometimes appear bigger than they are. Their shops need to exude wealth. Shefaly Yogendra, a London-based adviser on investments in emerging markets who often buys her tea at The East India Company’s flagship store on Conduit Street, finds the interiors of the shop appropriately modern and minimalist. She notices that the staff is well-trained and well-informed, and guides her to buy different, more interesting teas each time she visits the store. The packaging is of high quality. (One evening Mehta spent considerable time explaining to me the details of the floral patterns on a particular piece of wrapping, which combined elements from church iconography and the Mughal School.) Yogendra said that their tea caddies, which sell at £12 (`875), don’t look cheap, and don’t lose their looks even after a year. The loose tea she buys is packed in a metallic foil envelope surrounded by a cellophane layer, and the outer packaging is expensive, made of thick brown paper with thick red string and the image of a gold mohur.
The shop is full of charming, quirky products, like orange marmalade with real gold leaf, chocolates with embedded peppercorn and cheese-and-mustard biscuits, which the critic Nilanjana Roy described in an article as possessing “the texture more shortbread than nankhatai, the taste wonderfully sharp, as though they had used a traditional kasundi rather than a Dijon-style mustard.” Roy loved the irony that “The East India Company is seducing the West with sophisticated versions of the recipes that once soothed the choler of British Army colonels. It’s a great way to sell nostalgia, and to bring a little bit of India into the gourmet food aisles.”
While the global economy may grow at an anaemic rate, the luxury goods market is on fire. Russian, Chinese and Indian consumers want luxury products, and they want the best; they want the snob appeal of buying something that’s not available back home. Rahul Sharma, a brand consultant in London, explains that demand hasn’t slackened in the elite market, and The East India Company’s strategy of focusing on fine foods is right. “That market is not so risky, because many products are bought on an impulse,” he said. “The big barrier for East India Company will be the cost of real estate. They should be seen on Fifth Avenue, Roppongi and Orchard Road,” referring to the shopping districts of New York, Tokyo, and Singapore.
The East India Company’s unsavoury past may bother those who read history books, but Mehta said since the acquisition, many people have written to him, saying that his purchase is a matter of pride for Indians. Sharma feels the critics are unlikely to buy the kind of products The East India Company sells anyway, nor would they be willing to pay the kind of premium it will demand. Mehta’s classmate from high school, Madhav Mariwala, is a Mumbai-based private equity investor who also owns award-winning coffee estates in Kerala. He said: “There may be a negative connotation in the minds of some, but it is so old, that many people may not relate to it anymore. If your parents fought for freedom, it could be an issue for you, but for the rest of the consumers, it is over and done with. Just because the United States had slavery, it doesn’t follow that I won’t go there as a tourist. South Africa had a terrible racist past until very recently—and look how its economy is booming! By my reckoning, The East India Company has ‘slept’ as a brand for so long, it evokes no connections in people’s minds. But it also means that people won’t start buying its products because they know or like the brand.”
Mariwala is not surprised by Mehta’s venture. It is brave, he feels, but he has always been like that, he said. “He was always willing to explore and experiment, and he is not afraid of failure. He had a protected childhood. I remember when we had gone on a mountaineering camp to Mt Abu, Sanjiv’s mother sent a gurkha with him, to protect him from any accident. Whenever I’ve talked to him, he never talks about failing as an alternative. He has a lot of conviction in his vision. And it is not possible to succeed without vision. The challenge for him is to make people convinced why they should buy at his store. Only a connoisseur would know the difference between different styles of coffee. People buy at Fortnum & Mason because the Queen buys there. People buy at Harrods because it is the biggest luxury store. His challenge with The East India Company is that while it evokes nostalgia for some consumers, other consumers take a critical view of its history. And it is very competitive. That is the risky path—if he makes it, it will be big; if not, it will be a big fall. But then those who succeed take a leap of faith, and he has taken a leap of faith. And if there is one person who can sell ice to Eskimos, it is Sanjiv.”
Mehta has also made discreet moves to become part of the British aristocracy. With the Conservative-leaning magazine The Spectator, The East India Company sponsors tea appreciation ceremonies, and he recently landed the prize deal of producing commemorative coins with the Royal Mint of the Queen’s silhouette on one side and the East India Company stamp on the other side. The coins will be made of gold and studded with diamonds, cut and polished in India, with the so-called heart-and-arrow cut, which makes 98% of the light falling on the diamond reflect back. Only sixty coins will be made, and they will be offered for purchase by invitation. Mehta expects the reserve price to start at £125,000 per coin.
It is difficult to predict the future trajectory of Mehta’s East India Company. If its history and politics do not play a part in its reputation, that may reveal more about this age, where the flow of trade moves smoothly, circumventing the obstacles that the past have erected, and where the profitability and viability of the business become the yardstick of judging the business, its controversial history becoming almost irrelevant in any evaluation.
As he began picking up shares from the group of investors who once owned The East India Company, one particular shareholder was being stubborn. He knew that Mehta had bought up most of the partners, but he liked being the last man standing. He’d talk a little, and then back out again, saying he wasn’t interested in selling.
He was a man in his 60s, and quite possibly saw, in Mehta’s rise, the decline of the class and privilege that had defined his own life. “We have not even had a Jew as a partner,” he told Mehta politely, as if to warn him off. But Mehta was undaunted; he persisted.
Finally, a year after getting nowhere, one Sunday morning in 2006, Mehta decided enough was enough, and he drove to his house. The man was surprised, but courteous and let him in. Mehta told him that they had been discussing a possible sale for a long time now, and he was running out of time. He now had five minutes to decide what he wanted to do with his shares.
Mehta rose, and handed him his cheque book, with his signature on a blank cheque, as he said, “Write any amount you want. If it is fair, I will pay. If not, I will take away my cheque book. You will continue to have three percent of my company, but I will dilute your share. I will keep issuing new shares to myself and to the partners I choose, and I will keep diluting your share till it will be worthless. Your investment will be worth nothing. You won’t be a director. Now, name your price.”
The man wrote an amount within two minutes. “I got him cheap; it was one of the best deals I ever made.”
The date, Mehta said, was 1 October. “The next day was Gandhi Jayanti,” Mehta added softly, in case the point was missed.