| PATNA, India, March 4
PATNA, India, March 4 Ravindra Kishore Sinha
built India's largest security business from a garage in the
dirt-poor state of Bihar. He has just won a seat in the upper
house of parliament, becoming its richest member, and his
Security and Intelligence Services (SIS India) firm is growing
at 40 percent a year.
A few hundred miles to the west, but still in northern
India, the Gupta family of Kanpur has transformed Dainik Jagran,
which was born in the tumult of the independence movement, into
a newspaper giant with the world's highest readership.
And close by, from a dusty by-lane, the Gyanchandani family
has gone head-to-head against global titans Procter & Gamble
and Unilever to build a detergent brand that has
now taken 17 percent of the domestic market.
India's northern Hindi-speaking belt, home to around half a
billion people, is taking off after decades of trailing
industrialised seaboard states in the west and south.
Leading the charge is a mix of old-world families like the
Guptas and aggressive first-generation businessmen such as Sinha
who have combined first-mover advantage, street-fighting
techniques and old political connections to build empires of
their own, all in the space of a few years.
Saurabh Mukherjea, chief executive officer for institutional
equities at Ambit Capital, describes the new class of highly
successful, wealthy and well-connected regional entrepreneurs as
"the new kings of North India".
"Through their access to regional political overlords and
through their money power, this regional elite is already
influencing national politics and shifting the balance of power
away from the better-known business houses in Mumbai and Delhi,"
he said. "This is no bad thing, as it will lead to more power
migrating to the state capitals of India."
To be sure, the rise of some of north India's business
groups has been controversial and mired in allegations of graft
and wrongdoing, backed up by a cosy relationship with regional
politicians. Last week, Subrata Roy, chairman of the Sahara
conglomerate, was arrested, capping a long struggle with the
securities regulator over accusations that he failed to comply
with a 2012 court order to repay billions of dollars to
investors in a bond scheme. The scheme was later ruled to be
illegal. Roy denies the charges.
Much of what is today known as India's Hindi heartland was
once home to the rich and powerful Mughal empire. But in the
20th century it became a byword for poverty, crime and
corruption, a region that failed to reap the benefits of
free-market reforms that came in the 1990s.
Over the last decade, however, the centre of rapid growth
has shifted northward and inland on the back of better roads,
mobile networks and generous financial assistance from the
left-leaning government led by the Congress party.
The average growth rate in the northern states of Madhya
Pradesh, Chhattisgarh, Orissa, Bihar and Uttar Pradesh jumped
from 2.2 percent in the 1990s to 9.1 percent in the 10 years
beginning 2002, while India's national growth rate gained just 2
In Bihar, Sinha scaled up his business overnight six years
ago, buying security firm Chubb Australia's manpower business,
whose revenues were then seven times bigger than his own firm's.
Today SIS, with a turnover of 27 billion rupees ($435 million),
is the world's 13th-largest security business and its owner is
looking to the Middle East for more acquisitions.
From providing security at the Taj Mahal monument to
protecting businessmen transferring car loads of cash and
jewellers moving gold in a nation where the underground economy
accounts for some 40 percent of activity, there is plenty of
work for Sinha's army of 40,000 trained guards.
"It is foolish to expect the state to do everything. The
state doesn't have infrastructure or the zeal to protect each
and every citizen, each and every industry, each and every
corporate," Sinha, 62, said in an interview at the firm's plush
headquarters in New Delhi, which is adorned with idols of Hindu
gods - a far cry from the decrepit garage on a water-logged
street in Patna, Bihar's capital, where he launched the state's
His connections run deep in Bihar's bureaucracy and
politics. Several of his managers are former police and military
brass and he himself has been a member of the Hindu nationalist
Bharatiya Janata Party (BJP) for three decades, quietly
financing the party as his business flourished.
A top bureaucrat said a dramatic improvement in law and
order in Bihar, where kidnapping was once more lucrative than
any business, has opened up investment opportunities.
"There has been an upsurge in the rural economy, our
agriculture growth is higher than the country growth and that
has created demand," said Vivek Singh, the state's principal
A TRANSFORMED COUNTRYSIDE
Perhaps the renaissance of the north is best reflected in
the spectacular growth of the Dainik Jagran newspaper on the
back of increased literacy levels.
The Gupta brothers, based in Kanpur - once known as the
Manchester of the East for its colonial-era textile industry -
publish 37 editions of their newspaper and 210 sub-editions to
reach 55 million people, more than the population of South
With a presence in 11 states stretching from Kashmir in the
Himalayas to West Bengal in the east, the low-key Guptas wield
immense influence. A newspaper launched in 1942 as the Quit
India movement to oust British rulers began, Dainik Jagran
adapted early to foreign technology and finance.
Computers with Hindi-character keyboards came to the
newspaper long before anyone in the vernacular press had thought
about them. In 2010, private equity firm Blackstone Group
ploughed 2.25 billion rupees ($36.3 million) into the holding
company Jagran Prakashan Ltd, its first investment in a media
company in the country.
"It reflects the growth that we see sweeping north India.
Gone are the days when three to four families shared one
newspaper or people read the paper in the village square," said
Sanjay Gupta, chief executive officer of Jagran Prakashan. "Now
we are delivering the paper to individuals in villages. These
villages are small towns in themselves now."
One member of the close-knit family that lives in a
sprawling bungalow in Kanpur has just ended a term in the upper
house of parliament as a representative of a regional party that
governs Uttar Pradesh. Another previously represented the BJP,
underlining the family's reach across the political spectrum.
It's the same rural prosperity that has transformed the
Gyanchandani family's Rohit Surfactants into one of the largest
makers of detergents. It began as a one-man army with patriarch
Murli Dhar making the soap in his house and then doing the
rounds of shops on his bicycle, urging them to give Ghari a try.
Murli Dhar still gets on the phone each day to pump up the
sales force that has turned his firm into a $600 million
conglomerate with interests from dairy products to footwear.
Like many of their Hindi-belt peers, the Gyanchandanis keep
a low public profile, and requests for interviews went
unanswered. Behind the scenes, however, these "kings of North
India" are exerting greater influence on regional parties that
play an outsized role in the country's ruling coalitions.
"The dynamics of coalition politics will allow these elites
to pull more federal taxpayers' funds their way and bend policy
in their direction," said Mukherjea.