Lord Bilimoria: ‘There will be an Asian Prime Minister of this country in my lifetime’

If you founded a beer brand that was sold in 98.6 per cent of the Indian restaurants in Britain plus 4,000 pubs, exported to 45 countries, recorded a 20 per cent rise in sales this year compared with a year ago, netted you many millions of pounds, and earned you a peerage, you’d be feeling pretty content, wouldn’t you?

Which is why, when I greet Lord Bilimoria, creator of Cobra Beer, it’s a shock to find him so furious. Only in a very polite way, of course. He does not shout, swear, bang the table or hurl the crockery.

Even when cross, he still speaks in an impossibly silky voice – if the Queen ever needed elocution lessons she could do worse than go to the mellifluous Bilimoria.

Born in Hyderabad, in India, 52 years ago, the son of “General Billy” – one of that country’s most senior army officers – Bilimoria did not come to this country until his twenties. Yet his accent is pure, top-drawer English.

He obtained a degree in commerce from Osmania University in Hyderabad, before moving to London to train as an accountant with what is now Ernst & Young. From there, he went to Cambridge to study law.

Karan Bilimoria must have stood out: tall, imposing, immaculately groomed, and smoothly spoken. While there, he played polo and organised the university polo team’s first ever tour of India. He also led the debating team against Oxford and was vice-president of the Cambridge Union. And it was while he was at Cambridge that he first had the idea of a beer aimed at those eating curry. He was a regular user of the city’s Indian restaurants but always found the beer too gassy to drink with food. Together with a friend, Arjun Reddy, he came up with a less fizzy variety, and in 1989, Cobra Beer was born.

Bilimoria was made a crossbench peer in 2006, becoming the first Zoroastrian Parsi to join the House of Lords. Which is where we are. He apologises for being late, having been in the Chamber. “I love it,” he says, gesturing around him, “I love it so much I could spend all my time here.”

That doesn’t stop him being angry, however. “You know, now is the time to seize the opportunity, after the European elections. The Prime Minister should say we want to renegotiate the EU treaty. We should start with a blank piece of paper and deal with the finances, subsidies, immigration, common agricultural policy, everything – all of it grossly unfair, not just to those within the EU but also to those outside the EU. There are so many directives, it’s mad.”

What particularly riles him is immigration. He believes we need a much more balanced approach, encouraging the type of immigration that actually helps us, and discouraging the sort that harms. He argues that the Government is taking a broad-brush line, discriminating against all would-be immigrants. As it can’t do anything about those from within the EU, that means it targets immigrants from elsewhere, which invariably means, given its links with the UK, the subcontinent.

“The consensus is that Britain could not have got to where it is today without the ethnic minorities,” Bilimoria says. “You do agree with that, don’t you?” I say that I do.

“This government imposes an immigration cap, which is both crude and madcap. For a start, EU immigration can’t be controlled. Then there’s the message it sends out, which is unfriendly and says, ‘We don’t want people from abroad’.”

Bilimoria speaks as the new chancellor of the University of Birmingham. “Higher education is one our biggest exports. We’ve got some of the best universities in the world, yet the number of students coming here from India fell by 25 per cent last year.”

Other countries, notably the US and Canada, are not cutting the numbers of overseas students. “Foreign students build bridges with the country they’re studying in. Most go home, but they retain a degree of attachment to that country. Now they can only stay if they jump through certain hoops, so they’re not bothering to come at all.”

What infuriates him is that the Government does not even have proper information. “It’s remarkable that the passports of everyone coming and leaving the UK are not scanned. We should know who has come and gone, and who hasn’t left and shouldn’t still be here.”

That would give a more accurate picture of the numbers. But, he stresses, come what may, students must be excluded from restrictions.

“Do you know how many world leaders at any one time have been educated in the US? Let me tell you. Around 60.” They’re left, he says, with a good understanding of the US and a regard for its people and views. That’s what we should be aiming to emulate here.

What’s crazy, maintains Bilimoria, is that “we’re one of the top 10 economies in the world. What keeps us ahead? Education. If we want to stay ahead we must invest in our universities.”

Don’t get him wrong, he says: in some respects, Britain has changed for the better. “Today, you can get anywhere in this country, regardless of ethnicity, sex, gender, background. Ernst & Young in the early 1980s had one Asian partner in London; now there are several. It’s 25 years since Keith Vaz and Diane Abbott were the first ethnic minority MPs since the Second World War; now there are 69.”

It’s good but not enough. “There should be even more. There was no Asian cabinet minister until recently; now there are two Asians in the Cabinet. We’re making progress, but it should be faster, and there should be more. I do believe, though, that in my lifetime we will see an Asian becoming prime minister of this country.”

Our attitude towards race is not the only area where we’ve improved, Bilimoria says. “Thirty years ago, entrepreneurs were looked down upon. Now, it’s the reverse: being an entrepreneur is seen as something to aspire to.”

We’re now more admiring of people who take risks, he believes. If they fail, we’re more forgiving. They can pick themselves up, dust themselves down and carry on.

Bilimoria speaks from personal knowledge, having nearly come a cropper himself in 2009, when Cobra Beer went into administration. The company had debts of £70m, and entered into a “pre-pack” or pre-arranged insolvency deal, under which the giant North American brewer Molson Coors bought a 50.1 per cent stake. Bilimoria and his shareholders were left with the other 49.9 per cent, and the unsecured creditors, who were owed more than £40m, at that point got nothing.

Pre-packs are controversial for that reason – the owners are able to move on, leaving the unsecured creditors high and dry. It was embarrassing for Bilimoria, given his profile. When I put this to him, he pulls a face. He doesn’t disagree. “I would say in my defence that I’m the first person to think pre-packs deserve their bad reputation. Rightly so, as they were misused. People chose literally to close down their business one day and start up again the next, having not paid their creditors.”

In the US, they have Chapter 11, which sees a company protected from its creditors while it sorts itself out and gets back on to an even keel. We don’t have that sort of arrangement. So Bilimoria says he was faced with a dilemma: control where the business is heading via a pre-pack; or put it in the hands of an administrator. He chose the former, but he stresses: “I decided that, if I was going to do it, I would do it in such a way that everyone was looked after as much as possible.”

Employees had their notice periods paid in full, rather than receive only statutory redundancy. All the shareholders moved across into the joint venture with Molson Coors, and the longest-serving workers were given a share in the new business. All secure creditors had their debts paid, and, he says, “I am settling the unsecured creditors during the course of the joint venture.”

I interrupt. Just to be sure, they will all be paid? He nods. “To my knowledge, nobody in the country has done this before. It’s going way beyond what you’re obliged to do.”

One of his main subject areas in the Lords has been small businesses and how to give them the tools they need in order to prosper. He says banks should be made to lend – it’s ludicrous that they took enormous risks in the run-up to the crash but now won’t take them with business that will grow. There should be tax breaks for small businesses. “If they take on a person, the Government should say that you won’t have to pay employer’s national insurance for three years.’’ And businesses should be encouraged to take on apprentices. And for those small businesses that display growth, they should be given free places on courses at business schools.

“The top 100 could win places at somewhere like Cranfield or Cambridge Business School. Say it costs £10,000 to get on a course. That’s a lot of money for any small firm. But all the analysis shows that companies where the bosses have been to business school grow faster, they’re better managed.”

What has he done about it? “I spoke to Vince Cable, the Business Secretary, about it, and he loved it. But then you get civil servants who say you can’t do it, you can’t favour one business school over another.” We both agree it’s nuts.

But he remains optimistic. “If we can get our small businesses to take on more people, to train them properly, to get the tax system right so it acts as an incentive for investment, to send their staff to business schools – then we would have an economy that was powering ahead.”

He’s smiling now. It’s a good note to end on.

Born: 1961 in Hyderabad, India

Education: Hebron School, Tamil Nadhu; Osmania University, Hyderabad; London Metropolitan University; Cambridge University

Family: His father was Lt-General Faridoon Noshire Bilimoria, General Officer Commanding-in-Chief of the Central Army Command, Indian Army. He is married to Lynne and has four children

Career: After a trip playing polo in India, he started importing Indian polo sticks, fabrics and fashion goods into the UK; he founded Cobra Beer in 1989 with bank loans of £30,000, and was made a life peer, 2006