Binod Chaudhary: The friendly neighbourhood billionaire

I am discussing the Hungarian writer Frigyes Karinthy and his 1929 concept of six degrees of separation with Binod Chaudhary. We are at Kathmandu’s Summit Hotel, co-owned by Nepal’s richest man. Over lemonade, I tell Chaudhary it appears to me that he has zero degrees of separation from anyone who is, or hopes to be, someone in the country of 27 million people, where his $1.7 billion (Rs 10,790 crore) fortune—spread over 112 companies, 76 brands, and 19 countries—is headquartered.

I have heard former Maoists, army generals, former Prime Ministers, and economists talk about Chaudhary with a combination of affection and reverence. Some of these men are viciously opposed to each other in ideology but united in appreciation for him. How did he, I ask the 60-year-old businessman and Nepal’s only billionaire, juggle the hairy conflicts of interest?

Chaudhary ponders this, not with displeasure it seems. For a usually stern-faced man used to snapping out one-line orders to his aides, he has a schoolboy’s smile. “Business is about closeness, you see. Not separation,” he says. “No matter what the divisions and rivalries in our society, in my business I have always believed in bringing people together.”

You may think that’s spiel, only till you stumble upon Chaudhary’s Rolodex. Consider that he is close friends with Pushpa Kumar Dahal (better known by his guerrilla name Prachanda, ‘The Fearsome’) and Baburam Bhattarai—the two men who led a decade-long war against the Nepalese monarchy, and later became Prime Ministers when the Maoists integrated with the political mainstream. But he was also known to be close to the royal family when it was in power, and counts among his allies Rookmangud Katawal, the Royal Nepalese Army general who Prachanda tried to sack when he was Prime Minister in 2009, and resigned when he failed.

The bonhomie extends to business rivals too, as I discover when Chaudhary takes me around his upcoming wildlife resort with villas that open into the Chitwan National Park, one of the famed homes of the rhino, in Nepal’s Terai Valley. Lunch has been organised at a rival resort next door, where the entire staff lines up to receive Chaudhary. While leaving, I ask the resort manager how he was so warm to Chaudhary who is building a competing property next door. “Binod Chaudhary is friends with everyone, including the owners of this property, some of whom are Indians,” he says. “In Nepal, you will find his friends everywhere, even among foes.”

The instinct to nurture this intricate warren of alliances is key to Chaudhary Group’s success in a vast array of businesses—from noodles and beers to hotels, cement, telecom, televisions, and air conditioners—in a country that is a perpetual laggard in most economic indicators. What makes Chaudhary stand farther apart from your average billionaire is that he managed all this in the face of Nepal’s devastating civil war and notorious political instability that has seen a new government almost every year. And that just one generation ago, his family was not even Nepalese.

Bhuramal Chaudhary, his grandfather, came to Nepal in the middle of the 19th century from Churi-Ajitgarh village in Rajasthan’s Shekhawati district, when he was invited by the local aristocracy to start business here. “He used to come with bags full of saris from India to sell to the wives of the aristocracy. My father would go with my grandfather. In the end, if there were some saris left, they would request the officials in the palaces to keep them, so that they didn’t have to carry them back,” says Chaudhary. “Even today I can fold a sari really well.’

Now, Chaudhary is reversing his grandfather’s footsteps: Varun, his youngest son, is an Indian resident, and the family has a villa in Gurgaon. Under CG Foods India, a company wholly owned by the family, the group has set up five factories in the country—from Assam to Andhra Pradesh—to supply the popular noodle brand Wai Wai, as well as fried snacks, wafers, and potato chips. The plants can churn out 2,400 packets of noodles a minute. The group’s total Indian investments till date stand at Rs 600 crore, and it is estimated to touch Rs 3,000 crore in five years.

The group claims that its noodles and snacks have a 20% market share all India (it estimates the Indian noodle market at Rs 1,500 crore) and nearly 60% market share in Northeast India, which it caters to through three factories in Assam and Sikkim.

The numbers look good, but they don’t tell the whole story: Wai Wai is something of a cult name in South Asia’s food industry, and by far Nepal’s most famous export. It’s part of Nepalese business lore—and further tribute to Chaudhary’s grip on people—that Wai Wai trucks were given unfettered passage by Maoist guerrillas during the worst days of violence and vandalism in the country, since they survived on the noodles while battling the army from their hideouts

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SO FAR, WAI WAI HAS ALSO been the lynchpin of Chaudhary’s expansionist ambitions. He did not create the Wai Wai brand but acquired it for all territories except its home base of Thailand and neighbouring Southeast Asian countries in the 1980s. “They didn’t want to grow, but I had no choice,” he says. Nepal restricts the amount residents can invest overseas, but Chaudhary leapfrogged that hurdle with the non-resident status of two of his sons.

In India, Wai Wai has been selling for close to three decades, but it jumped from being a largely regional brand to an emerging national one in the wake of the ban on Maggi and a wide assortment of other noodle brands for alleged lead contamination. The ban hit Nestlé, ITC, and other consumer goods giants hard, but Wai Wai was largely untouched, barring restrictions on one of its five varieties in two states, Tamil Nadu and Assam. Demand has soared, and it’s not uncommon to find shops in cities like Delhi running out of Wai Wai supplies in days.

The events are fortuitous: To cater to the upsurge in the packaged-food sector in India—which has been growing at 15% to 20% annually and is expected to touch $30 billion this year, per the Associated Chambers of Commerce and Industry—the group has committed an undisclosed investment towards developing a food park in Ajmer in Rajasthan. Named Greentech Mega Food Park, it will be built on the lines of Chaudhary Group Industrial Park (CGIP), the group’s 137 acre manufacturing hub in Nawalparasi, about six hours from Kathmandu. Spread over 100 acres, the food park has a planned capacity of more than 30,000 tonnes.

But Chaudhary knows noodles and wafers won’t burnish his group’s multinational cred. That’s why he has been quietly growing a hospitality empire that now has 5,117 keys, from a Hilton property near New York’s JFK Airport to the Alila Diwa range of resorts across Southeast Asia, including one in Goa, to wellness resorts and business hotels in the Philippines, Thailand, and Nepal.

His hotel business started with a touch of India when in the early 1990s he 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, Chaudhary has acquired and built four resorts in India’s key sanctuaries—Pench, Panna, Bandhavgarh, and Kanha—all in Madhya Pradesh. He has also started a company called &Beyond India that curates cultural holidays in the country.

“It is a bit of a homecoming,” Chaudhary says when I nudge him about the growing India connect. But he won’t make grand sentimental statements beyond that. “I want to stress that we have gone wherever we have seen opportunity,” he tells me. “India [which accounts for 56% of Nepal’s trade] is a massive market next door and a natural base for us.”

WHAT THAT DOESN’T convey is that as India’s own manufacturing programme picks up steam and foreign companies compete for its “massive market”, Chaudhary’s ability to win friends and influence people will be a vital asset.

An early demonstration of Chaudhary’s clout in India came some 15 years ago—albeit not many know about it given its complicated political contours—when Jayendra Chudal, a former Chaudhary Group employee who now runs his own cement firm, was kidnapped by Maoists. At the time, Chudal was in charge of the everyday working of CGIP. He was held in captivity for nearly 10 days. “My father went weeping to Binodbabu. He told my father, ‘Don’t worry, I am calling everyone I know. Your son will be free’,” Chudal recounts.

“The only thing I lost,” says Chudal, “was the pair of jeans I was wearing. It got so caked with mud that I had to throw it away.” The latent message: No ransom was paid, at least none that anyone will talk about.

Here’s the interesting part: It was widely speculated then, and has been repeated many times over the years, that one of the biggest supporters of the Maoist insurgency in Nepal was the Indian intelligence agency, the Research and Analysis Wing (RAW). (Nepali journalist Prashant Jha’s book Battles of The New Republic: A Contemporary History of Nepal explores this in detail.) And while no one will spell this out, Chaudhary had enough contacts in India to pressure the Maoists to set his man free.

(Chudal was involved in another incident when he was in charge of the Sikkim plant. The Times of India reported in 2006 that two local women accused him of asking for sexual favours in exchange for jobs, leading to his arrest. “It was a top-level political problem,” Chudal tells Fortune India. “Binod knew about it in detail.” He says a powerful politician in Sikkim wanted the CG Group to recruit some people, but Chaudhary refused. As always the case, says Chudal, “the matter was cleared in three-four days”. Chaudhary Group won’t comment on this issue; Fortune India couldn’t independently verify the facts.)

What people do freely talk about is the backchannel Chaudhary had painstakingly built with the Maoists themselves. Neither Prachanda nor Bhattarai will talk about the kidnapping or Chaudhary’s role in the release—but both accept that businesses were “reached out to for help” during the insurgency. R.K. Sitaula is the current general manager at CGIP. He used to work side by side with Chudal and witnessed the drama up close. “We were friendly with both the army and the rebels,” says Sitaula. “Suddenly we would get a call saying so many people would be coming—always in the dead of night—and they need food. We would always make arrangements. We took no sides,” he recounts.

I ask Chaudhary about his knack for cultivating friends in the right places. He thinks for a moment. “Let me say this: In order to do business in troubled times, as I have done, one has to give an impression of being tough,” he tells me. “There has to be a perception that this person cannot be messed with. That perception has helped me fight back.”

He won’t say how this perception came to be, but wife Sarika says it is the result of never buckling under threat. “Everyone knows that you cannot extract money or favours from Binod by threatening him,” she says. The stubbornness in the face of danger has permeated into her too. About a decade ago, when a guerrilla leader came to their house with guns to coax her into getting them to talk to her husband for money, she refused to budge. “I told them this is not the way. This is not how you will get money out of us. They asked me for a couple of crores. I told them, first tell me how many zeroes there are in two crore. They gave up and went away.”

THE TOUGH REPUTATION HAS BEEN especially important to Chaudhary because of his India ties. In Nepal, there has been a traditional schism between the elite Paharis and the Madheshis, who are predominantly people of Indian origin: It’s a critical fault line in Nepali society. “For many years, and even now, Paharis would always refer to Madheshis disparagingly,” says Chaudhary, who has also served in the Nepalese parliament representing a Madheshi political party.

Often Madheshi politicians would be seen in Nepal as speaking up for India’s interests, sometimes even accused of being mouthpieces of RAW. That Chaudhary has become so wealthy, and so influential, even though he is Madheshi, runs against the grain of Nepali society.

Bishwambher Pyakuryal is Nepal’s best-known economist and a former board member at Nepal’s central bank. He says instead of letting his family history bog him down, Chaudhary decided early that he should make the best use of it: Expanding business to India and partnering top Indian companies can help when growth in Nepal is patchy.

Often, the strategy has been loaded with risk. For instance, Chaudhary bet on Taj Samudra in Colombo in 2000, at the time a famed but bleeding hotel in civil war-torn Sri Lanka. Similarly, he set up factories in Assam braving militancy threats, putting his Nepal experience to good use.

The risks have paid back in spades in the form of goodwill and trust. “It is very important for a company like ours to balance risk. Partners who understand and can take on risk have always been critical to our vision,” says Rakesh Sarna, managing director of the Indian Hotels Company, which owns the Taj brand. “Binod Chaudhary’s main strength is that he still operates as a hands-on, really grounded entrepreneur. He is involved in every decision personally.” That’s why, says Sarna, in spite of Nepal’s domestic turmoil and the recent earthquake, Taj has decided to partner Chaudhary in a wildlife resort.

But for all his cross-border overtures, rebuilding Nepal after the deadly earthquake of April that killed over 8,500 people remains firmly at the centre of Chaudhary’s plans. Through his foundation, he has spent $2.8 million in relief efforts. The group has distributed thousands of packets of Wai Wai and other food relief, and has pledged to rebuild homes and schools across the country. Recently, he announced that Jack Ma, the billionaire founder of Alibaba, and Shapoorji Pallonji Foundation have joined hands with him to build 10,000 shelter homes and 100 schools.

The view on the ground is that few in Nepal can match Chaudhary’s nous as an agent of renewal and reinvention. His old friends Prachanda and Bhattarai testify to that. Both say they were in touch with Chaudhary through emissaries during the decade-long Maoist revolution that killed nearly 17,000 people. Chaudhary convinced them to differentiate between dalals (middlemen) and entrepreneurs investing in the country. “Finally, we made that distinction ... we realised the country has to grow, which needs investment, and the first place it can come from is local business. One cannot redistribute poverty. One has to create wealth first,” says Prachanda, who now calls himself a champion of entrepreneurship. “Ultimately, we were willing to work with anyone who had the vision to make the country grow,” adds Bhattarai.

One last time, I ask Chaudhary how he balances the pressures of being Nepal’s big hope and building a modern multinational that eschews narrow national boundaries. By being typically unsentimental about it, to start with. “This is what I have learnt from life,” he says, “being a proud Nepali does not mean other roots have to be ignored and opportunities lost.”