Cobra beer’s Lord Bilimoria talks to ME & MY MONEY

Karan Bilimoria owned a business selling polo sticks to Harrods before founding Indian beer brand Cobra in 1989.

The 61-year-old entrepreneur, who sits as a crossbench peer in the House of Lords, tells Donna Ferguson he is still paying off his creditors for a gross money mistake he made 14 years ago when he nearly lost his company.

He lives in central London and Cape Town, is Chancellor of the University of Birmingham and Vice President of the Confederation of British Industry (CBI). He has four children.

What did your parents teach you about money?

First, that you have to work hard to earn it and second, that you have to make the most of what you have and appreciate it.

My father was an officer in the Indian Army and was commissioned into the Gurkha regiment.

Although he became commander-in-chief of the central army in India, with 350,000 troops under his command, he did not earn much.

My mother took care of me and my younger brother and worked hard to do so on a very low income.

We came to England for almost three years when I was 11. By then my father was a lieutenant colonel, but money was still tight.

I knew this because we went to public schools, while other officers’ children went to private schools. I don’t think that was due to racism. It was simply because of the salary level, at that time, of an Indian army officer. Today they are paid much better.

Have you ever had trouble making ends meet?

Yeah, about four years when I was in my early twenties. I had to raise the money to study in England as an 18 year old and part had to be paid back when my course was over.

After graduating, I got a job and studied to become a chartered accountant. My salary was £4,000, which was very low even at the time. It was hard to make ends meet and pay back my loans.

I lived in a hostel for international students, shared a bathroom and ate cafeteria food. I would work overtime to pay for the plane ticket to go back to India once a year to see my family.

Have you ever been paid stupid money?

Before I started Cobra, my first company would import polo sticks from Calcutta in India, where they cost £2, and sell them to Harrods for £15. Harrods would then sell them for £33. I never made margins like that again.

It came about because when I was in my mid-twenties and studying at Cambridge University, I organized and led the university’s polo team’s first tour to India. When I came back from that tour, I brought a sample of the sticks with me. I got an order for £3,000 from someone I used to play against, and before I knew it I was selling to Harrods.

What was the best year of your financial life?

It was 1996, which was a major turning point in the story of Cobra beer. I had started Cobra several years earlier, during the recession, with a business partner. After he left, I invested in some marketing, the brand boomed and our sales doubled in a year. I still own a little less than half of Cobra. I am the chairman and I am in a joint venture with one of the largest brewers in the world, Molson Coors.

What’s the most expensive thing you buy for fun?

Chelsea Football Club season tickets for me and two of my children. I’ve taken all four of them there – two at a time – since they were very young. The tickets cost thousands of pounds a year.

What’s your biggest money mistake?

In the early years, too much focused on growing Cobra beer. We grew 40 percent, year over year, for 18 years. But I also took on too much debt. I sacrificed profit for growth. And when the financial crisis broke out in 2008, I almost lost my company.

How did you turn your fortune?

I had to save the company by forming this joint venture with Molson Coors. All these years later I am still settling my creditors. But I did things the right way. I took care of my employees and my shareholders, who are still with me. I hope it won’t take long to settle my creditors.

The best money decision you’ve made?

Cobra beer start. I can’t say how much my shares are worth because it’s not listed on the stock exchange, but they are my most valuable asset. I built the brand into a household name and the most famous Indian brand in the UK. I am very proud of it.

Are you saving for a pension and investing in the stock market?

My investments have always been in my own company and my retirement consists mainly of my shares.

In addition, I plan to never retire if my health permits.

In addition to my chairmanship of Cobra Beer, I am an independent crossbench peer in the House of Lords and the Chancellor of the University of Birmingham.

I enjoy all my jobs and feel privileged to do them. At 61, I feel like I just entered middle age.

Do you own real estate?

Yes, I have a family home in central London, which I bought in 2005, and another in Cape Town, as my wife is South African. Both have been good investments.

What’s the one luxury you treat yourself to?

I learned boxing when I was eight from Gurkhas. Now I box with a personal trainer at the gym at least once or twice a week, which typically costs £50 or £60 per session.

If you were Chancellor, what would you do first?

I would announce that I would keep the corporate tax at 19 percent to encourage investment. I would also invest more in schools and reform the apprenticeship levy. I think we invest too little in education.

Do you donate money to charity?

I have donated millions of pounds worth of Cobra beer to almost every major charity for their fundraising events, auctions and prizes. And in 2005, I founded a charitable foundation, the Cobra Foundation, to provide health, education and community support to young people in South Asia.

What is your first financial priority?

To further build on the value of the Cobra brand. Everything depends on how well Cobra beer does.

That’s my life’s work. The better Cobra does, the safer my family and my legacy are.