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02 March 2024

'Mistakes are made when business is booming'

Buxani has more than 50 years' experience of doing business in the UAE (DENNIS B MALLARI)

By Sean Davidson

The present economic downturn has failed to give Ram Buxani sleepless nights.

A Dh8 million loss in his stock portfolio, a near 30 per cent fall in his real estate holdings, shrinking demand for the plethora of products in which his group, Cosmos International, trades – nothing warrants wallowing.

"I've been through this in the seventies, eighties, twice in the nineties, and now in the new millennium. It's an unavoidable cycle, which you just get used to enduring," he said, candidly.

As Executive Vice-Chairman of Cosmos, a conglomerate with interests in a dozen sectors and four countries, the 68-year-old businessman is now seasoned to weather financial storms.

A ragged ship brought him from Baroda, in India's Gujarat state, to Dubai in 1958, a time when the city housed 30,000 people and spanned half a square mile.

The police force was one officer and electricity and water were a decade away. Then an office assistant and one of Cosmos's three employees, his enterprising nature saw him and two Arab traders bring the first electricity to Dubai – a second-hand generator that powered their bulbs.

"We bought it for our houses and others wanted light too. So we formed a small company and charged eight annas a bulb," he said.

Through the trucial states to the formation of the UAE 37 years ago, Buxani has had a front row seat to the development of the region.

Today, he smiles when asked about the lessons to be learnt this year.

"I feel that, in the years that business is booming, you tend to make a lot of mistakes. It becomes a sellers' market, which makes a person arrogant," he said. "In every industry, the buyer should be respected. But in a booming business, the entire culture is lost.

"When such a situation comes, the realities surface, and we start digging into mistakes that we have made, correct all the errors of the years spent since the last economic scare and eventually move on. Now is the time to start reflecting – you start leaving lessons for your successors and history has shown us this," he said, as he characteristically shifted his 24-carat Mont Blanc spectacles. Aged 30, after 12 years with Cosmos, Buxani bought into the group and began a rapid journey to wealth.

He commemorated his first million by framing his 700-strong coin collection on a giant canvas that reads 'My First Million'. That was 20 years ago. Falling markets cut his personal stock value from Dh10 million to Dh1.9m this week, and his limited real estate exposure has shared a similar fate. Unnerved, Buxani attributes the reason to the excessive championing of 'professionalism'.

"In this past decade, the war cry was for companies to get more 'professional', more 'efficient', better management and every other synonym marketing gurus could conjure up," he said.

"I guess they got a little too carried away and now we're in this mess. This just means that an overdose of anything is not suitable. They will learn this lesson and move on. Anyway, Dubai will come out of it quickly. It always has. Dubai has a fantastic, pro-active government that refuses to let its people suffer."

Within six months, the UAE will get used to living in this downturn, stop questioning it and adapt with relative ease, said Buxani.

"People will learn quickly that everything is manageable, they will get their confidence back and with the right government initiatives, return to normality," he said.

On plummeting real estate prices, non-payment of mortgages and huge losses incurred by investors, Buxani said every member of the property chain was well aware of the dangers the frenzy would create.

"People would queue up at 10pm the previous day and wait for developers to open office the next morning to book a property," he said, with a hint of incredulity. "By the evening, that same property would change several hands, giving each seller an unrealistic day's profit. If you sell to those with weak finances, you have to absorb their inability to meet mortgage payments. Greed must suffer. However, there are ways for everyone to get out of this predicament and they will unravel shortly," said Buxani, who lives in a villa in Jumeirah with wife, Veena.

The former chairman of the India Club and IndusInd Bank – one of the few unaffected in this turmoil – suggested an exit route for speculators and those unable to shore up finances. He said: "Developers should charge some sort of penalty, and money paid until that date should be refunded. I agree everyone has a cash flow problem. So instead of money, they can give two- or three-year bonds. It will be good, because speculators would have learnt a lesson. The bonds can be discounted in the bank, which would release the investment.

"This is good for developers, since it would help understand the exact demand of their project in the market. If a developer, who sold 400 units in the market, gets 300 back, he will know where the demand stands.

"Having got it back, they can rethink the project. This is a great time to understand the real demand for property. It will help set the right path for the future," said Buxani, who owns one of Dubai's first freehold properties – a three-storey office building in Bur Dubai, a stone's throw from Dubai Museum.

The building was completed 35 years ago, when anyone could buy land and build. Buxani and his partners paid Dh700 for the plot. Narrowing down to his business interests, Buxani said the nature of trading meant his companies would take a hit.

"When spending is down, demand drops," he said.

"This affects the products we sell. Declining prices mean goods we ordered at a certain price two months ago are much cheaper today, but we have to honour our commitments. Basically, you absorb certain losses, stick to your traditional strengths and avoid potentially high risk experimentation," he said. Cosmos is the chief distributors in electronics and textile for companies such as Sharp, TDK and Remington.

The group enjoys a monopoly in the blanket business and owns Al Razouki, a foreign exchange firm managed by Canara Bank.

His advise for 2009 is to understand cash flow, avoid new ideas, control capital expenditure and halt extravagance. But, he accepts, his passion for business left him with little time for his daughters, Anisha, Gauri and Rekha. "At this stage I definitely feel that I should have given more time to my children but I feel having said that, I won't feel guilty that I didn't give any time at all. We've enjoyed a great family life," he said.

Lifestyle CV

Car: Lexus IS300

I own two, by default. "I'm not big on cars or yachts. I saw the Lexus and liked it instantly. The older one's still in perfect shape, so I couldn't get around to selling it."

Holiday: Alaska, Japan and India

"Japan and India are so vast. You can visit a new region there every year for the next decade and discover new cultures and traditions."

Travel: Cruises

"On vacation, I prefer taking cruises. There's little hassle. You check in just once and stay on board, regardless of how many places you visit. It's just simpler."

Collects: Pens, watches, coins

"I can't tell you what my most expensive pens or watches are. All I can say is I do own a few made with diamonds and gold."