I am perhaps the only person who has been actively associated with the construction industry from the time of the first Five Year Plan to the 11th Five Year Plan. The road to my success stems from the fact that I was fortunate enough to be born in a family that emphasised academics — even back in 1918, when it was less common, my grandfather ensured my father completed his studies before starting work. But I was not considered the brain in the family — that was my brother, two years older than me; I was more of an all-rounder. My father was a government inspector and also asthmatic.
From an early age, my brother and I started assisting him in his responsibilities at work and at home — even going to the vaid at 2 am for medicine — and that snuffed out any fear or hesitancy in me. The turning point in my life came early — when I was in class nine, my elder brother died suddenly. With my father not keeping well, I felt I was responsible for my younger siblings. Their education and getting them settled, in fact, became a goal. I matured by two decades in that single year, and became a voracious reader of upanyas and biographies of great people. It’s a habit I still follow.
In November 1950, I finished my civil engineering from Roorkee and got a government job in a town close to Jhansi. For the next six-seven years, I was an overseer on several projects, including a dam called Mata Tila. Some five years into the job, I started thinking of resigning and setting up my own business — as overseer, I was seeing the largely uneducated contractors earning lakhs while I, the hard-working engineer, had a monthly salary of ₹178, including a cycle allowance of ₹3. It was not a bad income but there was a fire in my belly to excel and reassure my parents that their younger children would be taken care of.
Nobody in my family was convinced of my decision to strike out on my own but I finally managed to convince my father, saying if I didn’t succeed, as an engineer I could always get another job. In 1958, therefore, I quit and moved to Kota in Rajasthan to work as a contractor. It was a conscious decision to not work in Uttar Pradesh — since I hailed from the state and had worked for the government there, I didn’t want anybody to suggest I was getting undue advantage. Indeed, the first project I took in UP was only 18 years later, when we constructed the Rishikesh barrage.
As a contractor, I earned substantially more — within three years, I had made ₹1.5 lakh, with which I could pay for my brother’s education and my sister’s marriage. But I was ambitious and was on the look-out for contracts all over India. In 1961, there was a proposal to build a railway line from Bastar to Vishakapatnam to carry iron ore. Japan had given ₹50 crore aid for this project that involved several different works for which there were 150 tenders. I won three contracts and within six months, we earned ₹9 lakh. There was no looking back after that. It was now time to think big and start a company. I brought in my younger brother and brother-in-law and the foundations of the group were laid.
I remember cynics used to dismiss my efforts, predicting I wouldn’t succeed. After all, they said, I had none of the traits needed to succeed in this line of business — not only was I a teetotaller, I didn’t even eat paan! But I have always been spurred by challenges and the desire to excel in whatever I do. In 1967, our cable address was IRON WILL and that was the leitmotif of our enterprise as well.
In 1979, we got one of our biggest projects — a ₹200-crore sewage project in Baghdad. IDBI was a major lender at the time and I remember its officials asking how, with a balance sheet of ₹25 lakh, we planned to raise money for the project. Moreover, the project involved the Reserve Bank giving a ₹20 crore guarantee. With no financial background, I nevertheless gave a rationale, starting by saying one should not go by the amount but the quantity of work involved. I estimated the project to be worth only ₹40 crore in India — and I was already doing projects of that size here. But since labour costs in Iraq were four times higher than in India, I bid five times the project cost. The banker checked with his engineers, who agreed with my logic and we got the loan.
Even as we took on ₹200-crore projects, we were equally at home with smaller ones. The Sardar Sarovar, for instance, was our first major dam project as a construction company, but we made a start with a small, ₹4-crore contract. We wanted to learn. Of course, later, in the same project, in another tender, we bid ₹320 crore while some international bidders quoted ₹600 crore.
Given the nature of this business, controversy is perhaps unavoidable. But my style of functioning has always been to try to win hearts and gain people’s confidence by delivering good quality. I remember in the late 1970s, somebody questioned the quality of work we had done on the Kudremukh dam. When the gossip reached my ears, I called the chairman of the dam project and gave him a personal commitment — the work would be finished up to standard and he could pay what he deemed fit, regardless of what the contract said.
By the early 1980s, we had earned a good reputation in the business and were involved in building barrages, railway lines, dams and even international projects. We travelled to other countries to get machines and learnt how business was done internationally. I could see the world now.
Our first diversification was based purely on personal compulsions. In 1975, I was not keeping well and so decided to try out the hotel business as that would not be too stressful. As we were discussing this internally, the Delhi Development Authority advertised auction of hotel land in Vasant Vihar. We pursued that and paid ₹40 lakh for the land, well above the ₹25 lakh we had initially planned. The hotel came up in the early 1980s and I soon realised that profit margins in this business are low. The real money is made in the restaurants; more specifically, in the bars. And that is one area I am not familiar with. That is why after setting up two hotels in the early 1980s, the next one came up only a decade later. Ask me to re-create the Three Gorges dam in India and I will. But bars are something I don’t understand.
The foray into cement, on the other hand, was all business. How it came about is rather interesting. In the mid-1980s, a former chairman of a public sector undertaking who joined our company suggested that we should enter the business. There was a letter of interest from the government of India to revive a defunct cement plant at Rewa in Madhya Pradesh and produce 1 million ton from it. I was very keen but the question arose as to how we would raise the funds for this project. As luck would have it, ₹30 crore was due from Iraq on work we had done there. Since Iraq exported oil to India, there was a suggestion that a portion of these funds due could be adjusted against payment for oil. The proposal was cleared by ministry of finance and thereafter IFCI agreed to put in money on the basis of a MoU with the Arab country, even though we ourselves were yet to put in equity in the project. In hindsight, getting into cement was a wise decision since it has helped us immensely in the construction business as well.
The reason for diversification is the peculiarity of the construction business. When you’ve been in the business for 20 years, there will be second-generation companies whose overheads will be lower than yours. Naturally then, you cannot be the lowest bidder in many projects. In such a scenario, a company like ours will typically get those projects that nobody else can do, the far more challenging ones. And that is why we diversified. We got into cement. After building dams for others, we built our own at Baspa and Karcham Wangtoo in Himachal Pradesh as an independent power producer. Then we started thermal plants and later, real estate and the Formula One franchise.
The real estate venture was pure happenstance. About 12 years back, while talks were going on for a proposed Yamuna Expressway, there was mention of a 450-acre plot of land under distress sale. The Chennai-based Sterling Group was to have developed it as a golf course but it withdrew. The Uttar Pradesh government and a major bank had ₹250 crore sunk in the project and they wanted someone to take it off their hands. After going through all the leading names in the real estate business, they approached us. Initially, our company executives refused as they were sceptical of the entire project.
But when the bank came to me, I said yes even before the presentation was over. Getting 450 acres of land in the National Capital Region for just ₹250 crore was an offer I couldn’t refuse. Colleagues in the company told me I was making a mistake, but I was firm. “I am not taking it. The bank is giving it to me.” The golf course project also came with a caveat of deferred payments and a rebate of ₹3 crore if we developed it within a given deadline. When Jaypee Greens came into existence, I realised the value of the real estate business.
Thereafter came the Yamuna Expressway bid with land parcels. Despite a change in government, we bid and won the ₹11,000-crore project. While different political regimes had their own take on the project, we were getting astronomical offers — about ₹16 crore per acre — from real estate players for the first land bank we were given. Given the demand, the political regime at that point opened up land along the expressway to other developers. While we made the investments for the expressway, others benefited from it.
That is exactly what happened with the Formula One circuit as well. We are not making money on this endeavour; rather we have to pay out money. For us, this was an iconic project that added value to our real estate projects. And, in spite of being a total novice in this area, my team and I ensured that F1 had a hassle-free debut in India. Now, other developers with projects close to the circuit are also encashing that value.
I don’t like the term businessman or, for that matter, business empire. Both sound very feudalistic. I see myself as a worker and the Jaypee Group as an organisation built by the contribution of many people. Yes, money is needed in life and it is one reason I got into business, but it cannot be the ultimate aim. I started with ₹178 a month; now, I don’t have a salary. But during this journey across roads, power, real estate and hospitality, I believe I have contributed a lot to the nation.