Chordia vs. Porsche. No holds barred

Johari Bazaar, Jaipur, is a place out of a Rudyard Kipling novel. Brightly coloured bandhej fabric (a tie-and-dye technique unique to the region) is piled on shelves of small, dusty, pink-walled shops. Other stores display silverware and curios, while eateries in its narrow bylanes do a brisk trade in Jaipur’s famed dal ki kachoris. But gems and jewellery traders are the main attraction here, with wholesale exporters and importers of precious and semi-precious stones and jewellery nestled alongside the snack shops and saree shops.

I’m wandering through this maze hunting for Shreyans Trading International, an exporter of emeralds, run by the Chordias. I finally find it—an unremarkable, pale green three-storey building, with a narrow flight of stairs that leads up to the shop and office. The tiny parking lot in front hosts a few motorcycles and a red Maruti A-Star.

I was expecting at least a Mercedes, if not a new model Porsche. After all, Ashish Chordia, son of the founder, was, till recently, the exclusive importer and distributor for Porsche cars in India. These days though, Chordia is fighting a battle with the automobile giant in the courts in Jaipur. I am hoping to find out what makes a man with roots in the jewellery trade leave his hometown, enter a field vastly removed from the family business, and then end up in the courts battling his partner.

In the early 2000s, Chordia mostly ran his gig from Mumbai’s Four Seasons Hotel—a far cry from the narrow lanes of Johari Bazaar. Then barely 30 and a certified gemologist from the Gemological Institute of America, the fast-talking, Gucci-wearing Chordia was almost a fixture there, generally seen reclining on a cane sofa in the patio near the lawn, either pounding away on his Apple laptop or schmoozing with clients from abroad. He’s always been comfortable with foreigners, having studied and worked in the U.S. for several years. He graduated in finance and accounting from the University of Southern California, and then worked as a consultant at Deloitte in California (when he was studying gemology). The international sheen helped Chordia convince several companies, Porsche included, to hire him to push their brands among jetsetters in India. He launched Porsche, and bagged dealership rights for Audi, Maserati, Ferrari, and Ducati. He already had import and distribution rights from Bang & Olufsen, and fashion labels Dolce & Gabbana, and Fendi. Chordia moved in the right circles and all these labels wanted in.

Chordia was a natural. He had attended an executive leadership programme at Harvard University, where he says he met Moira Forbes, daughter of Republican party presidential candidate and editor-in-chief of Forbes magazine, Steve Forbes. He is friendly with Congress Member of Parliament Jyotiraditya Scindia, and Amit and Dhiraj Deshmukh (sons of the late Vilasrao Deshmukh, former chief minister of Maharashtra). He also has ties with the business community; his cousins run Panchshil Realty, which is building the first Donald Trump-branded residence in India.

Sharad Kachhalia, a director with Navnit Group, the outfit that sells Rolls-Royces in India, says anyone who works in the super luxury trade has to first get his profile right. The dealer has to reflect a super luxury persona, complete with a service infrastructure backed by trained professionals. “To sell and project luxury, you have to genuinely become it. You can’t fake it,” says Kachhalia. And Chordia seemed to have “it”.

In 2003, chordia set up Precision Imports as Porsche’s exclusive importer in India, and for the next nine years, enjoyed a dream run. By 2012, he was, he says, “part of the Porsche family”. He received letters from managers at Porsche commending him for high sales, and got friendly with senior managers such as Andreas Offermann, who ran sales coordination at the firm from Germany. (There are also letters from the Porsche brass that Chordia shows me, thanking him for fancy holidays in Rajasthan, or gifts of silk and cashmere scarves, or even chopper trips to Pune.)

Then, on May 4 last year, Porsche India released an advertisement in major Indian newspapers and magazines. The visual was a panoramic shot of the five models Porsche sold through Precision—but the copy below was not about Chordia’s company. Instead, it announced that its group representative, Volkswagen Group Sales India, would be the new official importer of all Porsche cars.

Chordia says the announcement came out of the blue, though sources in the industry say he’d been given notice a year earlier. Giving import and distribution rights to a sister company makes sense for Porsche, of course, but Chordia says the company cheated him by taking away what was to be an exclusive import licence. “I have enough letters written to Porsche telling them that they are purposely screwing me over,” he says, claiming that appointing VW Group Sales India was “a dishonest act”.

He filed a petition in June 2012 in a Jaipur court, accusing Porsche officials of cheating, intimidation, and criminal conspiracy, and soon after, the papers were full of the news that the magistrate hearing the case had issued an arrest warrant for Porsche global CEO Matthias Mueller and eight board members (Bernhard Maier, Lutz Meschke, Thomas Edig, Wolfgang Leimgruber, Deesch Papke, George Wills, Angela Kreitz, and Wolfgang Hatz—Wulfgank Hetz according to the warrant).

One year on, nobody in Jaipur wants to talk about the case. A statement from Porsche in January this year, read: “With one exception, the former importer has exhausted all rights of appeal and the civil litigation is now at an end.” When Fortune India asked Porsche, Anil Reddi, who heads its operations in India, did not respond to specific queries regarding the case. However, a spokesperson from Porsche India replied, saying: “Through local attorneys, Porsche AG and Porsche Middle East have applied by way of petition for the annulment of the court injunctions. Indian procedural law prescribes that the arguments of the petition have to be made orally before the court within the scope of a court hearing. The procedure is usually split up into several hearings; none of them have ended yet.”

Even as the Jaipur courts thrash out the pros and cons of the criminal case, there’s an arbitration suit between Chordia and Porsche to be settled in Bahrain. Porsche India is run by Porsche MEA (Middle East and Africa), and all dealership and contractual disputes come under the courts in the U.A.E. Chordia claims that Porsche has issued him notice terminating only two of the three contracts he has with the company. (The number of contracts between Porsche and Chordia could not be independently verified.) Chordia, however, says the case is not yet settled, adding that under U.A.E. law, a principal (Porsche in this case) can terminate a contract with an agent only by mutual consent, or going to the U.A.E. Commercial Agencies Committee in case of gross negligence or other “material reasons”. Porsche did not comment on the arbitration.

Some customers, meanwhile, weren’t exactly enamoured of Chordia. Early in February 2012, Inderpreet Singh Jhelumi, a warehousing entrepreneur in New Delhi, booked a Porsche Cayenne SUV with Chordia. “They were still authorised dealers then,” he says. Precision Imports asked Jhelumi to pay Rs 10 lakh up front and then Rs 50 lakh a month later. The vehicle was to be delivered in a couple of months. Jhelumi made good on the payments but when he followed up in April, he was told the car hadn’t arrived. Disgruntled, he called Reddi; “It’s between you and Chordia. We can’t help you,” Jhelumi says he was told.

Jhelumi spoke to Chordia again in June, after he read about the legal tussle between Porsche and Precision Imports. Chordia asked him for a couple more weeks, then told him that there was a Cayenne that had arrived at the Mumbai Port and could be delivered to Jhelumi. The catch: it was more kitted out than what Jhelumi had ordered. The extras would cost Rs 8 lakh more, and the duties would also be higher because the model was different. Jhelumi checked with his lawyers, who told him “it was worth a shot.” Instead of Rs 70 lakh, Jhelumi shelled out Rs 85 lakh—and still didn’t have a car. Since VW Group Sales was the new authorised importer, Jhelumi tried to get his car through them and asked for an estimated invoice. The price on the invoice was a good Rs 15 lakh lower than what he had paid Chordia. When he confronted Chordia, the salesman was insouciant. “I asked him what he was doing, and all he said was ‘duties’,” says a visibly enraged Jhelumi. He eventually got his car in October, but with the wrong registration certificate. Chordia says the mix-up happened because Jhelumi got the details wrong on his insurance form.

Jhelumi isn’t alone. Shailesh Surve, a doctor who now runs a shipping venture, says he wanted to buy a maroon Porsche Cayenne GTS. He met Chordia in February 2009, and paid an advance of Rs 60 lakh. He didn’t get the car for months, and every time he contacted Chordia, he was given excuses. “The common ones were ‘My father is seriously ill’, and ‘I’m in Rajasthan’ or ‘I’m in Dubai for a meeting with Porsche’,” he says. Finally when the vehicle arrived, it was in December, after the new model for 2010 had been introduced in September. And, he adds, the vehicle came without rear parking sensors. Chordia said he would offer free warranties for five years as he couldn’t make any modifications because of Porsche’s strict norms. Chordia says Surve’s long wait was due to his own inability to make up his mind. “He went from diesel to petrol and then again to diesel, and didn’t know if he wanted the red colour or not.”

The list of unhappy customers is long. Sidharth Mandavia, an electronics recycler, says he paid for a black Porsche Cayenne S from Precision. “It was supposed to arrive in two or three weeks.” Instead it came three months later—and it was a white SUV, says Mandavia. That wasn’t all. The car had barely clocked 3,000 km, when the brake pads wore out. “Brake pads ought to last 15,000 km, at the least,” he says, adding that he had to spend Rs 1 lakh on replacements.

Even high-profile customers like Sullaja Firodia Motwani, the chairperson of Kinetic Engineering, had a rough ride. Motwani had booked a Porsche Cayenne diesel with Chordia. When Chordia didn’t deliver even after a year, she took up the matter with Porsche officials, including Reddi. “In my view, the Porsche model is flawed. They expect you to make full payment with just the details of a chassis and engine number. That exposes the customer way too much,” she says. Motwani, who got a car loan from ICICI Bank, says she made the full payment because she “had faith in the Porsche brand”. Chordia eventually returned the money with interest, but Motwani says she’s disappointed.

When asked about such complaints, Porsche’s Reddi wrote in an e-mail: “The question relates to individual purchaser complaints, which are the responsibility of the dealer concerned.” He added: “Regarding vehicles ordered with the previous importer or his dealers and corresponding delivery timelines, we are sure you will appreciate that this was directly between the customer and the dealer (of the previous importer) and Porsche India was not a party to this.”

Ask Chordia about this, and he gets enraged. “There was a planned holdback from Porsche to constrain supply to India so that they could justify to their board the need to create a national sales company [VW Group],” he says. He claims Porsche “dropped prices by 25% to 30%”, which affected Chordia’s customers, who had booked cars at the higher rates.

So what was Chordia doing with the money once customers booked their cars? A former customer says that Chordia could have put the cash into his family’s jewellery business, or could just have played the stock market. Chordia repeats the point he has already made—that Porsche deliberately delayed deliveries, and that it cut prices after orders were made.

More important, why did Porsche let Chordia get away with so much? The answer could lie in the fact that India as a market isn’t as important to them as, say, China. In 2012, of a total of 143,096 cars that Porsche sold worldwide, 33,600 were sold in China (including Hong Kong). Today, Porsche in India sells between 300 and 400 cars a year. (Chordia says he grew this market, selling far fewer cars—he sold some 1,000 cars between 2003 and 2011-12—but building the brand.) Naturally, the bigger markets are likely to get more attention. However, Reddi writes: “We remain committed towards the Indian market and are very much looking forward to a brighter future with our new team in place.”

The Dubai office, till recently managed by George Wills, runs the show for India, Africa, and West Asia, and comprises a small team of 30 to 40. (Wills has recently been transferred to head the Latin America operations.) Just one showroom (Porsche’s best performer in the world), Porsche Center Dubai, a part of Al Nabooda Automobiles, delivered 211 cars in August 2011. Maybe, that’s the kind of performance that Porsche was looking to generate in India.

To understand where Chordia is coming from, one has to first get a sense of the kind of position he got himself into with Porsche. The business of selling cars can be divided into three—buy cars from a manufacturer, stock them, and sell them. How a dealer conducts his operations is, by and large, governed by carmakers, which set standards for marketing, discounts, loaner cars, sales targets, showroom layouts, etc.

Lalit Choudary, managing director of Infinity Cars, which sells BMWs and Aston Martins, says a manufacturer can make it difficult for a dealer by appointing other dealers, pushing inventory to the showroom, or insisting on expensive marketing. “You’re carrying someone else’s brand and it’s natural for a company to ask you to maintain [its] standards, despite the costs,” he says. For the most part, Chordia’s beef with Porsche is that it brought in dealers outside of their agreement with him.

Tarang Vashist, head of sales at DC Design, a car design boutique run by automobile designer Dilip Chhabria, once worked closely with Chordia. He says, “It’s odd, but people kept going back to him, despite the complaints. He’s undoubtedly the guy who built Porsche in India.” Chordia gained customers’ trust by being accessible. “He would take calls, e-mails, or messages related to customers, any time, day or night,” says Vashist. “I knew some cars went to customers after 13 months when they were promised after four.” In all fairness, says Vashist, it wasn’t always Chordia’s fault; a lot of the delay was because certain accessories were unavailable or the company was launching new models.

So, how did everything start to unspool for a businessman who had managed to snag some of the most coveted labels in the car world? An ex-colleague of Chordia says he had direct access to Volkswagen committee members because a daughter of one of their board members went to school with him, so he could sort issues out directly in Germany. Although Chordia denies this, some former employees say that he often went over the heads of the India bosses of Audi and Porsche, which resulted in tensions in the India offices of those companies. Both Audi and Porsche are part of the Volkswagen family, and Chordia had dealerships for both. In early 2009, Audi had opened a showroom in Mumbai in partnership with Chordia. But, by the end of the year, Benoit Tiers, the head of Audi India, and Chordia, had such a row that Chordia lost the Audi dealership.

The story (according to a former Chordia associate) is that Chordia was in the U.S. in September 2009 to pick up Audi cars worth Rs 50 crore. He had a bank guarantee of Rs 30 crore, and Audi wanted him to pay the remaining Rs 20 crore before taking the cars. Chordia stumped up Rs 15 crore, and wanted to recover Rs 18 crore as warranty claims from Tiers to make up the rest (warranty claims can be partially offset against bank guarantees). Tiers began bickering with him over this. Neither Audi nor Tiers replied to queries regarding this.

Chordia spares no detail when asked. “We agreed to invest heavily, provided there is exclusivity for Mumbai as the benefits of such investment would arrive in three to seven years.” However, he says, Audi’s management was changing at that time, and the new management wanted to open more outlets, which, says Chordia, was a breach of the arrangement he had with Audi. “We were obviously upset and ready to part ways unless they corrected their breach. Fearing the outcome of committing a breach, the management tried to create some baseless allegations to issue a termination notice.”

Reddi, who then headed sales at Audi, moved to Porsche. Insiders, who asked not to be identified, say that the bad blood caused by the warranty claims episode could have contributed to Porsche’s actions three years later.

Today, Chordia’s dealerships are empty. At the Porsche showroom on Mumbai’s Pedder Road, a 2009 silver Panamera sits where there used to be at least a couple of new models on display. There are no vehicles lined up for service outside as is usually the case, and the accessories shelves inside, once piled high with high-end golf shirts, key-chains, leather jackets, watches, and sunglasses, are almost empty. On a glass ledge sits an 1:18 scale model of a Green Porsche Carrera, with a cracked rear view mirror. The showroom manager murmurs, “We’re not getting any more stock.” A few kilometres away in Worli is what used to be Chordia’s Audi showroom, which he converted into a multi-brand luxury car boutique. There’s just one older model white Audi A6 there.

But Chordia is still upbeat. “As of today, I can probably say that technically we still retain the dealerships and I’m still an importer for Porsche,” he says. His take on upcoming court rulings and future arbitration is equally optimistic. “I’ve already won. It’s a question of how fast I will get the orders executed.” And signs off modestly: “I’m right now the most hated guy in this business, but you know what? To be truly hated, you had to once have been very loved.”