The business of being Gadkari
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The last few weeks have seen Gadkari's image of a 'politician-cum-social entrepreneur' take a beating with allegations of cronyism and conflict of interest in the running of his business. First, Arvind Kejriwal and his India Against Corruption accused his Purti Group of land-grabbing and later, reports emerged that many of the companies that had invested in his business were shell companies with fake addresses. Also, several of these companies had Gadkari's personal staff—his driver, even astrologer—as directors.
Since his early days in Nagpur, when he rode his Lambretta to distribute Jan Sangh pamphlets to newspaper offices, Gadkari's biggest strength has been his ability to network. So while he made friends with people with diverse political leanings, he endeared himself to the RSS too.
Gadkari, born in a family of RSS followers, took to politics early on. In the mid-70s, during his student days, Gadkari was active in the BJP's Akhil Bharatiya Vidyarthi Parishad. After his MA, LLB, and diploma in business management, he successfully contested the election to the state Legislative Council at the age of 32. In 1992, he led the BJP to win its first-ever municipal polls in Nagpur, thus establishing his leadership skills. In 1995, at the age of 38, he became Maharashtra's PWD minister in the Shiv Sena-BJP government. Gadkari is married to Kanchan and has two sons Nikhil and Sarang and daughter Ketki.
Gadkari has often hinted that Sharad Pawar is his political guru. In fact, his Purti Group is modelled on the farm-based co-operative concept of development pioneered by Congress and NCP leaders of western Maharashtra. This mutual admiration came to the fore recently when Pawar came out in Gadkari's support when Kejriwal accused Gadkari of land-grabbing.
If the 2009 Yogita Thakre murder case (when a seven-year-old girl was found dead in a car parked in his residence) didn't blow up in his face, it was thanks to his friends in the Congress-NCP government. His ability to make friends also came in handy during the 2011 Nagpur Municipal Corporation elections, when he helped the BJP forge an unprecedented alliance with factions of the Republican Party.
His social skills have come with a penchant for the good life. The lavish wedding reception of his son Nikhil in 2010, attended by the who's-who of Indian politics, media, business and glitterati, raised questions about his Sangh sanskaras (values). The scale of the reception had made the RSS uncomfortable but an unfazed Gadkari, who lives metres away from the Sangh Building, repeated the show in 2012 with his younger son Sarang's wedding. Gadkari's old-style ancestral house has since been converted into an opulent bungalow equipped with elevators and a small air-conditioned cinema theatre with Dolby sound and reclining chairs. Gadkari loves to treat his visitors to a film made on his social and farm initiatives and never tires of reiterating how he is more interested in social work than politics and how he is "pained" at farmer suicides.
To be fair to Gadkari, he has never pretended to be austere. He loves to talk about his friendship with Ambanis, Tatas, et al. Those familiar with Gadkari have heard him recount umpteen times the praise superstar Amitabh Bachchan had for his execution of the Mumbai-Pune Expressway during his stint as Maharashtra's PWD Minister.
But the smart operator that he is, Gadkari has kept the RSS happy with his projects such as free surgeries, bio-fuels and water conservation. Sarsanghchalak Mohan Bhagwat's Dussehra speech, where he said "it's not important how much money has been earned. It's important how it has been put to use", was a subtle endorsement of Gadkari's style of functioning.
Those who have seen him work as PWD minister talk of how he would scoff at officers who cite rules for not getting work done. 'No excuses. Get the job done,' would be his inviolable edict. 'I like people who get the job done,' he would say. Not one to be bogged down by the ends-and-means predicament, Gadkari transformed Maharashtra's urban and rural road network dramatically in five years, a reason former Prime Minister Atal Bihari Vajpayee asked Gadkari to head the Pradhan Mantri Gramin Sadak Yojana. In March this year, braving criticism, he inspired the BJP-led Nagpur Municipal Corporation to hand over Nagpur's water works to French company Veolia under a 24x7 water supply scheme.
...AND HIS BUSINESS
Gadkari's first business venture was Purti super market in Nagpur in 1997. But his business flourished after his stint as PWD minister from 1995-99. A year later, in 2000, he founded Purti Group with a sugar and power unit at Bela, 40 km from Nagpur.
The group subsequently acquired two defunct sugar units in Wardha (in 2010) and in Bhandara (in 2011), started an agro-processing unit producing spices, an agro-energy company with two units producing 18 MW power from rice husk, an ethanol unit, a solar bulbs unit, a confectionery and a bakery. While the flagship Bela unit already operates the sugar and power units, the other two (in Wardha and Bhandara) are together proposed to produce 55 MW in future. Over 12 years, the group's net worth has grown to Rs 500 crore.
Yet, according to Sudhir Dive, Managing Director of Purti Power and Sugar, the total revenue and expenditure of all three sugar units were at break-even level of around Rs 150 crore each. "The Bela venture was launched with a loan of Rs 150 crore from a consortium of co-operative banks, IREDA (Indian Renewable Energy Development Agency Limited), Bank of Maharashtra and Bank of Indore," says Dive. He adds that for the Wardha unit, loan worth Rs 90 crore was taken from Andhra Bank and Bank of Maharashtra while for the Bhandara unit, Bank of India provided Rs 40 crore.
Asked why Purti sought loan from Global Safety Vision Pvt Ltd, a company attributed to Gadkari's friend and contractor D P Mhaiskar, Dive said, "The Bela unit had accumulated huge losses caused by cost and time overruns following an accident to Mr Gadkari. He was confined to his house for about a year in 2003-4. So, we needed to borrow from someone so we could repay the outstanding bank loan and avail new loans for our two other units. So, we borrowed from Global Safety."
Besides power, a substantial part of Purti's revenue comes from the sale of ethanol—the Group produces about 45,000 litres per day—to HPCL, BPCL and IOC for around Rs 27 a litre, earning revenues of around Rs 45 crore a year. Plus, the Purti Agrotech unit at Gadkari's ancestral village of Dhapewada in Nagpur district mainly produces spices. "The revenue has given us financial stability," says a Purti brochure.
The rest of the group's ventures haven't made a mark yet. Purti PRO Nitin Kulkarni said that Gadkari, who was chairman of the group, had stepped down from all positions in Purti 14 months ago due to his preoccupation with party as president.
Asked why Purti tried to buy two new units when it couldn't run one, Dive said, "Gadkari's vision is based on three principles—industrial development of rural areas, employment generation and remunerative prices to farmers by setting up agro-processing units. He has shown the courage to re-start defunct sugar units. Today, over 20,000 farmers produce cane on 40,000 hectares in Vidarbha and get up to Rs 1,700 per tonne by selling it to us. We bear the cost of harvest and transportation. All this has brought smiles on the faces of farmers."
About Gadkari's personal staff-—drivers, domestic servants and a bakery employee—being made directors of his companies, Dive said, "Anyone can be a director."
Dive says the allegations of shell companies investing in Purti are baseless. "They pay by cheque and file returns, so they have to be authentic. It seems the Corporate Affairs Ministry has started a probe. There is news about an Income Tax probe too. We welcome these. They will see how we are securing and spending each rupee."
Gadkari's close associates rubbish charges of malpractice. "Gadkari is leading by example to bring in an entrepreneurial culture in Vidarbha. He is trying to work for the lowermost strata of the society through his social enterprise," says Ravi Boratkar, a Purti director who, with Gadkari, organises Agrovision, an annual event showcasing farm technologies and initiatives.
Besides, Gadkari claims he has been practising the antyodaya concept of Pandit Deendayal Upadhyaya by helping over 2,000 poor patients with free heart surgeries. He also claims that through his social enterprise of Purti Sinchan Samruddhi Kalyankari Sanstha, he supplies farm inputs and technology at subsidised rates.
The Purti Power and Sugar unit at Bela, which uses bagasse and bio-mass to produce power, however, isn't without its share of controversies. In 2006, the state government allegedly favoured it by bearing the entire cost (Rs 8.5 cr) of laying transmission lines from Purti's Bela unit to the state facility, when Purti was supposed to bear half of it. The then power minister Dilip-Walse Patil had allegedly agreed to pay the entire cost.
In 2007, Purti controversially scrapped the power purchase agreement it signed with the government to sell power at Rs 3.04 per unit and signed a new PPA with Reliance to sell power for Rs 4.11, complaining that the state was ready to buy power from other states at higher rates but wasn't ready to pay better to entrepreneurs like Purti. "It's a very complex issue. I will be able to explain it only at leisure," Dive says.
But for about a year-and-a-half, Purti has again started selling power to the state government at Rs 4.29 per unit. When asked if it is profitable, Dive says, "Not really. We have consolidated losses worth Rs 64 crore."
For now, Gadkari will have to bring out his balance sheets to assess the damage the controversy has done to his political net worth.
The Purti umbrella
Purti Power and Sugar Limited, Nagpur
Managing Director: Sudhir Dive, Joint MD: Gadkari's son Nikhil
The flagship company of the group with a sugar and power unit at Bela (Khursapar) in Nagpur district. Started in 2000 over 200 acres, it net worth today is Rs 300 crore. Produces sugar (capacity 2,500 tonnes per day, electricity (24.45 MW), ethanol/alcohol (1,20,000 litres per day), bio-diesel (3,000 litre per day) and bio-fertiliser (100 tonne per day) and a fly-ash brick unit. Total employment 2,000 (direct), 10,000 (indirect). 7,200 farmers have registered to produce cane for it.
Mahatma Sugar and Power Ltd, Wardha
Started in 2010, the defunct sugar unit has a capacity to produce 1,800 tonnes sugar per day and work on the proposed co-generation unit of 15 MW is slowly progressing. With Sudhir Dive as CEO, it employs 300 persons and has 1,500 cane farmers attached to it.
Wainganga Sugar and Power Ltd, Bhandara
Started in 2011, the unit has a capacity to produce 1,250 tonnes of sugar per day. A co-generation of 40 MW is proposed, but work hasn't yet begun. Over 5,300 farmers are registered for cane production. Also managed by Dive.
Yash Agro Energy Limited, Chimur (Chandrapur)
Uses rice husk to produce 8 MW "green energy". Directly and indirectly employees 200 persons. Another similar project with 10-MW capacity is under construction at Kuhi in Nagpur tehsil. A Purti company called Avinash Fuels Pvt Ltd supplies coal and rice husk to these units. Managing Director Uday Kamat.
Purti Agrotech Ltd
Spread over 10 acres, it makes spices at Gadkari's ancestral village of Dhapewada in Nagpur district. Cleans, processes and packs grains in 3.500 sq ft grains department with a storage capacity of 600 million tonnes. Also has an integrated fruit-and-vegetable processing unit. Employs over 80 people and is headed by Deepak Saptarshi.
Purti Super Bazaar
Nagpur's first super market and Gadkari's debut venture that was launched in 1997 in the city's Laxmi Nagar area.
Purti Solar Systems Pvt Ltd
Proposes to produces solar bulbs. No progress yet.
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