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Nepal's sole billionaire with investments in Taj Group properties, on why the luxurious Taj Safaris continue to lose money, 13 years later


In a candid conversation, the chairman and president of CG Corp Group talks about India’s sluggish tourism sectors and its current political and economic situation.

Nepal's sole billionaire with investments in Taj Group properties, on why the luxurious Taj Safaris continue to lose money, 13 years later
Binod Chaudhary, the sole billionaire from the Himalayan country of Nepal, is listed on the Forbes list of billionaires in 2019. Chaudhary has a wide range of investments in India, the country of his ancestors – from hospitality to FMCG.
CG’s hotel assets consist of 30 owned and 55 managed properties, including a string of luxury hotels with India's Taj chain and now The Fern Hotels.
In a candid conversation, the chairman and president of CG Corp Group, who was in Mumbai to receive the Outstanding Leader – SAARC at the CEO Awards 2019, talks about India’s sluggish tourism sectors and its current political and economic situation.
You have large investments in the hospitality sector in India. How would you analyse the potential and growth of the sector, particularly in the luxury segment?
To know what ails hospitality in India, you need to put it in the context of what is wrong with India’s tourism policy. I am surprised by the number of foreign tourist arrivals. Until the recent terrorist attacks in Sri Lanka, the neighbouring country was far ahead of India and it is just a small island country. Yet, they received two million travellers, whereas India has just 10 million arrivals. Thailand has 38 million arrivals. Pre-budget there was a tourism conference in Delhi where I was invited as a speaker. I did not see any serious participation at the level of the tourism ministry of the union ministry of finance. Tourism in India is rated as a luxury industry, which is quite ridiculous. Maybe some hotels are luxury; every hotel is not luxury. There are fundamental issues that need to be addressed. Someone needs to address these fundamental issues.
Amitabh Kant, the head of Niti Aayog, who came up with campaigns such as ‘God’s Own Country’ for Kerala as well as the Incredible India campaign. And he, too, seemed to have failed to convince the government to pay more attention to hospitality and tourism. Prime Minister Narendra Modiji himself has travelled extensively; he has seen the length and breadth of India.
The fall-out of this policy paralysis in the tourism sector has meant that hotels have not managed to service their debt. The collapse of major private airlines such as Jet Airways has meant that airline tickets have become more expensive. There is a need to completely restructure the tourism policy. I would like to see India attract 50 million tourists and it is possible.
The hospitality division of the Chaudhary Group business is a major source of the company’s success in India. How did you begin working with the Taj Group?
When I was 16, in 1971, I visited Mumbai for the first time. I stood in front of the Taj Mahal Palace hotel in Mumbai and was impressed by its grandeur and wanted to go in. But the gentleman friend escorting me was terrified. “Tumko nikal dega,” he said, so I didn't risk it.
Today, as part of Taj Asia, we are in partnership with that same Taj brand. We have created a mark in the wildlife business with our partners in Taj Safaris, besides our major joint ventures in Sri Lanka, Maldives, Thailand, Nepal and now Dubai with the Taj.
In the early 1990s, we partnered with Taj to rescue two properties in Sri Lanka and the Maldives, both plagued by unrest, including the now-iconic Taj Samudra in Colombo. Since then, we have acquired and built four resorts in India’s key sanctuaries—Pench, Panna, Bandhavgarh, and Kanha—all in Madhya Pradesh. Often, the strategy has been loaded with risk. For instance, I bet on Taj Samudra in Colombo in 2000, at the time a famed but bleeding hotel in civil war-torn Sri Lanka.
Our hospitality arm is housed under the aegis of CG Hotels & Resorts and CG Hospitality. We have two separate arms. One deals with our hard asset investments while the other deals with our operating capabilities on our own or in partnerships. Both verticals have done extremely well. Earlier, this year we also opened Vivanta by Taj in Kathmandu. Now we are working towards opening Taj Dubai, which is a very prestigious project for us. Hopefully, it will be opened in October this year.
13 years after you invested in the Taj Safari properties in India, how has your investment paid off?
When we started the Taj Safari lodges in Madhya Pradesh, along with The Taj Group, we brought in the biggest and the most influential wildlife operator in the world, &Beyond (previously known as Conservation Corporation Africa. We created a company called Taj Safaris. We pumped in serious money in several of India’s wildlife sanctuaries, such as Kanha and Pench. Even 13 years later, these properties are bleeding money, despite having created a highly luxurious experience in the wildlife tourism segment. We brought the latest technology, training and know-how accessible to global wildlife tourism. People were prepared to pay a thousand dollar a night.
But every year, we are seeing the park entry rules become more complicated. For years, these properties were denied even the permit to serve alcohol. How can you run a top-end property if you cannot even serve a glass of wine? The guests had to wait for hours for permits to entire the sanctuaries. It is a great example of what is wrong with India’s tourism policy. I am not sure what they are doing – protecting the environment, the forests, the industry?
We have never made money and we have not added any lodges. Today, Taj Safaris should have been 50-lodges strong. We started with four, and we are still at four. But we continue to persist. Taj is a very professional organisation and Taj's CEO Puneet Chhatwal comes from a business development background. We have invested in other food and hospitality segments in India. Our investment in the mid-to-upscale The Fern Hotels has helped us to get into this fast-growing segment; we are also investing in a food park in Rajasthan.
I am excited about our investment in The Fern, which is growing every year. It is all because of their relationship with owners like us. To manage a property for another owner is a very difficult business. You have to offer a sense that they are adding value to our investment; every owner is a businessman and he wants to see value added to his investment.
You have not just invested extensively in the countries that form the SAARC union but have also worked with forums such as SAARC Chamber. Why do you think this geopolitical consortium has not been able to deliver any results?
There are too many political pulls and pushes. The whole structure of SAARC, right from the time its conception, was fractured. I was part of the founding team of SAARC Chamber. We all knew that this entire premise of give and take is never going to work, given the problem between Pakistan and India, who cannot agree on any issue.
SAARC is the poorest economic block in the world and has failed to achieve an open economic regime. To be fair to SAARC what it did provide was the non-business and non-political forums for people-to-people interactions. But on the economic front, it is a non-starter.
Most other countries in the SAARC block have a much greater geographical integration with, and trade dependence on India. Nepal has no border with Pakistan, Bangladesh or Sri Lanka; our border is with India. Without the support of India, we cannot engage with even Bhutan or Bangladesh, forget Pakistan. I think it is unfortunate.
How do companies like yours, with a major presence in both hospitality and FMCG segments in India, react to the political situation and signs of an impending economic slowdown?
I think India is going through a serious phase of correction and internal readjustments. There seems to be a feeling that the Indian system has been taken for granted for far too long, by far too many people. The scams in the banking or the infrastructure sector speak for themselves. Airlines such as Jet Airways or Kingfisher, which were the pride of this country, have gone under. We all know that the way demonetization and GST was handled has not helped. You can clean up one part of the economic mess, but you have to open up other economic avenues for new businesses.
That, unfortunately, has not happened. The sentiment is low. I feel the emerging economies such as Vietnam, or Central Asian and some Eastern European countries have a highly agile private sector and foster a pro-investment ecosystem. They go out of the way to win the confidence of the private sector.
But we must consider India is the fastest growing economy in the world in terms of sheer GDP, and I am just going by the government figures. I believe that the Indian economic and financial institutes are not easy to manipulate; they are run by matured bureaucrats. I would not hasten to say that India’s economy is slowing down. Maybe, there is a perception of a sluggish growth right now.
India needs to clean up its political and economic environment and the Kashmir decision seems to be a step in that direction. India has spent a lot of energy on solving the J&K issue; too many resources have been diverted towards it. You cannot allow the entire world to use Kashmir as a playing ground to weaken India. I see the decision to abrogate Article 370 as a bold one. What will be its implication, whether it will deliver the desired result or will further complicate the situation is not very clear at this moment.
On a personal level, in various interviews, you have cited Japan as your ‘business school’…
At one time, I spent about two months every year in Japan and I was dealing with big companies such as Suzuki and National Panasonic. I had an opportunity of learning how you operate as part of a team and how you build an organisation. And to know what are the essential qualities that you can't compromise on.
The Japanese people are among the most hard-working. My day used to begin at 8:00 am. As a young man, I would sometimes have late-night outings and go to bed very late. Yet, I had to be up at 8.00 am and that fostered a sense of discipline in me.
The Japanese are also great team-workers. We, in our part of the world, believe that if three people get together and talk about an idea, chances are that out of the three, two will agree and one will disagree. And chances are that the one who disagrees will destroy the entire thing. But the Japanese, even if they disagree, make sure that the idea works be¬cause they are part of a team. I think it's great quality.