Long-Term Investment

Making a business of recovering forgotten ancestral assets

Rakesh Gujral spent several years researching the fates of old Indian companies. COURTESY RAKESH GUJRAL
01 May, 2015

ONE AFTERNOON IN AUGUST 1998, six men gathered at a house in south Kathmandu to play cards. The host was Shiva Rana, a descendent of two former prime ministers of Nepal—Chandra and Mohan Shumsher Rana. Rana had recently moved back to Nepal from India to settle land disputes within his family. One of his guests was Rakesh Gujral, then aged 22, a batchmate of Rana’s from Delhi University. Gujral had just graduated with a bachelor’s degree in commerce, and had tried, without success, to start “thinking skills” courses at several schools, in addition to trying his hand at the stock market. He was in Kathmandu for a break.

As the wins and losses stacked up, Gujral’s interest in the game floundered. But he found himself transfixed by a worn sheet of paper being used to keep score. Studying the figures on its front, he became convinced it was an old financial document, possibly some company’s annual financial report. He asked Rana if he knew what it was, but was brushed off. “For them, the game was important,” he recalled at our first meeting, at a café in Delhi’s Connaught Place, “but for me, that sheet held an unknown promise.”

Gujral kept at it, and Rana directed him to a trunk full of old documents. He spent the remainder of the day going through dated cheques, brokers’ notes, bank statements and annual reports, some of which went as far back as the 1940s. The documents pointed to multiple investments made by Shiva’s grandfather, Madan Shumsher Rana, both in his own name and his wife’s.

When Rana and his extended family proved to know nothing about the papers, Gujral asked to bring the lot back with him to Delhi. Here, he created a directory of all the companies—around 150 or 180 of them, as he recalled—mentioned in the documents. Companies that continued to exist, such as Tata Steel and Bombay Dyeing, he knew a lot about already. Ones that he knew had been nationalised, voiding private claims on their shares, he struck off. Then he began painstakingly tracking the remaining ones. This was not easy: Gujral combed through records at the National Council for Applied Economic Research, scanned statements on year-wise capital gains in old copies of the Income Tax Ready Reckoner at the library of the Bombay Stock Exchange, and more. For companies he didn’t find mentioned in any literature, he travelled to their registered addresses to see if they still existed. Slowly, tracing mergers, buy-outs and liquidations, he discovered the fate of each one.

Six years after he discovered the documents, Gujral recovered many lakhs of rupees for Rana and his relatives through the sale of still viable shares in about 15 companies. Just how much he managed to get, Gujral wouldn’t say; over the course of our three meetings, the numbers he gave me swung between Rs 5 lakh and Rs 20 lakh. When I asked Rana about these sums over the phone, he responded with a long silence, and then, “Oh, enough for us to be happy.” He told me he and his family used to tease Gujral “about how he was obsessed with kabaad”—scrap—“but he persisted. His obsession got us money we didn’t even know existed.”

That experience gave birth to Fundtracers, Gujral’s Delhi-based “initiative,” which according to its website aims “to serve investors and families who find it difficult to trace assets in India that were acquired by their family elders and ancestors,” by tracing “assets like shares & securities in Indian companies, bank accounts, lands and buildings etc., and facilitating the legal procedures to claim the same.” Gujral, a wiry man with a restless air, told me he chooses to live like a lafanga—a delinquent of sorts—partly because he is not comfortable with people knowing how well he is doing. He initially told me he has made over a crore rupees recovering old assets, but later refused to confirm this; “There are some things that should not be said,” he said. Though the Fundtracers website refers to a “we,” Gujral told me that his was a one-man show, as he had not been able to find people with the skills and commitment necessary to help in his work.

During his early research, Gujral told me, he began to see the full potential of the database he was creating. “I had to develop a method to the madness,” he said, and develop a method he did. While tracking down the companies in the Ranas’ documents, he started listing the names of shareholders he found to have invested in them before the 1970s. Of these, he focused on people who had left shares in their old, physical forms, instead of converting them to their newer Demat—electronic, or “dematerialised”—versions. “If anyone had converted their shares to Demat,” he said, “it meant that they were aware of their shares. If the shares were in their physical form, it meant that the holding was too small to justify Demat, or that the shareholder was either deceased or had forgotten about it. My starting point was to ask myself, why were these shares not claimed or put into a Demat account?”

Gujral whittled his list down to about 500 shareholders, whom he traced to everywhere from England to South Africa, Canada to Nepal. The majority of them, he believes, were residents of India who left due to the turmoil of Partition. “Their idea was—once things settled down in the newly independent India, they would return,” he explained in an email. “As a result, they did not inform the companies or banks of the change in address. However, once they were back home”—for those who returned at all—“things changed. Many, especially those who were of advanced age, died. Their families were either not aware of the investments or considered them to be too much of a hassle.”

Gujral concentrates on shareholders whose inherited shares are worth at least Rs 10 lakh in today’s terms. “The documentation process and legal fees itself takes up to Rs 1.5 to Rs 2 lakhs,” he said. “So then, if the shares are worth only, say, Rs 3 lakhs, and the person gets only Rs 1.5 lakhs, usme mazaa nahi aata”—there is no joy in that. Gujral’s  own commission, which is 30 percent of any amount recovered, would also be paltry in such cases.

Gujral said he prefers to work with non-Indians, and is apprehensive about taking on any clients of Indian origin, regardless of their location. “Not that I hate Indians,” he said, before getting to the crux of the issue. “They—non-resident Indians—tell me that they have relatives in India who will do this for them, and then ask me for the details of their forefathers’ accounts. They think they have a right to it because it is their families. My information is not free, why should I give it to them simply because they think they’re entitled to it?”

Of the 17 cases that Gujral claims to have resolved, ten involved residents of Nepal, and five of India. Among the Nepalis, he worked with several Rana families—descendants of an eponymous dynasty of autocratic, hereditary former prime ministers, for whom, Gujral said, “the state’s treasury was their personal treasury”—before also reaching out to others with relatives on his list. Beyond the subcontinent, he has had limited success—in part, he said, because the distances involved make frequent travel difficult, meaning he cannot work in person as he would like to. From England, where Gujral has even hired genealogists to help search for potential clients, he has had only two fruitful cases.

Once Gujral informs clients of shares they may be able to claim, they must furbish several documents: among them, the death certificate of the original shareholder, a relationship certificate proving kinship, and a power of attorney allowing Gujral to administer their estate in India on their behalf. With these papers, Gujral applies for a succession certificate: a court document granting the original shareholder’s heirs the rights to his or her securities. Gujral then publishes advertisements, in both India and the country where the heirs reside, notifying any other claimants to make themselves known within a month. If none do, the courts order that the shares in question be transferred to the heirs. Gujral then approaches the necessary companies to comply. Once the transfers are complete, Gujral sells the shares, deducts his own commission, and sends the rest of the money to his clients. Even when things go well, he said, the whole process can take between eight months and a year and a half.

“But it is worth it,” he said. His motivation, he told me, is not just profit, but also the excitement of discovering his clients’ pasts. “I don’t have my own family, and perhaps that makes doing this easier,” he said, alluding to his freedom from personal financial responsibilities, as we walked out of the café where we first met. “I am my own universe.”