All About Bhai’s ‘Being Human’: How Much Charity, How Much Profit?
For almost a decade now, superstar Salman Khan has been invariably donning T-shirts with ‘Being Human’ scrawled across, for all the cameras to see. And see they do.
We try to find out.
How Being Human Began
In 2007, Salman Khan launched the Being Human Foundation (BHF) , a registered non-profit charitable trust which provides financial support for healthcare and primary education.
In 2009, he introduced the ‘Being Human’ clothing line at the HDIL Couture Week. The biggest Bollywood stars walked down the ramp wearing early versions of the Being Human T-shirts, with Katrina Kaif even wearing a gown with a print of Salman Khan’s artwork.
This was also the first time the Bollywood star spoke about his rationale behind starting a clothing line.
In late 2010, at a music release function, Salman wore a T-shirt with a print of one of his paintings. Two days later, as he drove past Mumbai’s busy shopping street, Linking Road, he noticed imitations of his T-shirts everywhere.
Speaking to Forbes India about Being Human’s origins recently, Salman had said:
He entered into a partnership with retail giant Cotton World to manufacture and sell the T-shirts offline, while online they were up for sale on BookMyShow. By December 2011, Cotton World sold 65,000 units of the classic Being Human T-shirts. Being Human watches were also sold on beinghumanwatches.com – both the website and the product has been discontinued.
The Business Side of Charity
Mandhana Industries, a textile and garment manufacturing company, was looking to move into the retail space around the same time. They approached Salman Khan with the idea of turning Being Human into a brand, scale up the operations and continue to support the foundation through sale of merchandise.
In January 2011, they entered into an exclusive worldwide licensing agreement to design, manufacture, retail, market and distribute all Being Human retail merchandise until 2028.
Mandhana’s customers include Aditya Birla Nuvo (manufacturers of Louis Phillipe, Peter England, and Allen Solly), Pantaloon Retail, and ITC (manufacturer of Wills LifeStyle). Their overseas customers include brands like Tommy Hilfiger, All Saints, Simint, Colins, and Pepe Jeans.
What Percentage of Sales From Being Human Merchandise Goes to Charity?
Behind every piece of clothing, there is a tag which reads ‘proceeds from the sale of this item go to (BHF) for the twin causes of education and healthcare.’ But is it so? Is the tag telling the whole truth?
In 2012, while launching the flagship store in Dubai, Salman had said, “100 percent of all profits go to the charitable trust. Everything we get, we pay taxes, and it goes to charity.”
In another instance, speaking to Forbes India as recently as December 2017, Khan had said:
Salman may not have been making any money out of the venture, but can the same thing be said about the company that manufactures and sells the merchandise?
“It’s not a revenue-sharing model. A small percentage of sales goes into BHF, which is used for the betterment of society,” Manish Mandhana told CNBC-TV18. After interviewing Manish in December 2017, Forbes India reported that an “undisclosed percentage of sales” goes to BHF.
Being Human Foundation’s website (one of two) claims that “the charity is funded by a 8-10 percent cut of the sales of Being Human-branded clothing.” But financials of Mandhana Industries reveal otherwise.
As a part of the agreement in 2011, initially Mandhana paid a fixed Rs 1.5 crore as one-time cost only to Being Human, according to filings with the Registrar of Companies, and, over a few years, only 3 percent of the gross sales over the fixed portion went to the BHF as royalty.
In December 2016, Mandhana Industries demerged its retail branch to create a separate company, Mandhana Retail Ventures Limited (MRVL), to focus on growing Being Human as a brand. The previous contract was renegotiated and it was decided that the MRVL will pay 5.75 percent of sales as royalty to BHF until 2020.
While Salman’s assertion may be true in letter, it is at variance with the true import of the statement. If what he says is true in letter and spirit, Mandhana Retail will cease to be a profitable company. The fact is that the company retains a healthy profit margin and is an actively traded company in the stock market.
How Big has Being Human Become?
The first Being Human Exclusive Brand Outlet (EBO) was launched in Paris, France, in 2012, and since then Mandhana’s business has been booming. By the time BH’s first flagship store opened in Mumbai in January 2013, the brand was already selling at over 120 points in Europe and 96 in the Middle East, where they sold more than one million units of a whole clothing line “with a heart.”
As of October 2017, Being Human has a presence across 15 countries and over 600 selling points, with more than 458 points of sale in India. The brand, licensed to Mandhana, continues to have a significant presence in the Middle East (with its partnership with The Landmark Group) and France, being sold at 256 points.
The Being Human Foundation, on the other hand, raises most of its money from the 5.75 percent it gets from the sale of its merchandise, which has expanded from casual menswear to women’s wear, kids wear, jewellery, flip flops, and electric bikes.
MRVL posted sales worth Rs 216 crore in FY2017, and earned a net profit of Rs 20.02 crore. No wonder some of the marquee investors have picked up stake in the company.
Counting the Good
BHF describes itself as an “NGO of NGOs.” It identifies smaller organisations in the areas of healthcare and primary education and helps them by raising awareness for their cause or funds or both. Unlike usual charitable trusts across the world, the BHF does not ask for donations. In its early days, it was run entirely with Salman’s personal donations from his acting and endorsement deals – reportedly, a total of Rs 47 crore until 2015. Then, he moved to selling his art as Being Human Art, eventually T-shirts, and the rest is retail history.
Being Human Foundation's Contribution to Education
On the education front, the BHF partners with non-profit Akshara High School, NGO Aseem, and the Maharashtra Prabodhan Seva Mandal to fund the schooling of around 500 children directly and over 4,000 students indirectly. It has opened career development centres (in partnership with NIIT and Coca-Cola) and educational resource centres in Zilla Parishads across Maharashtra. Under their ‘Veer’ initiative, more than 2,700 differently-abled persons have been trained with skills that help them get jobs. Additionally, all Being Human stores employ at least one differently-abled person.
Being Human Foundation's Contribution to Health, Medical Care
On the healthcare front, the BHF has helped prepare a computerised national bone marrow registry, funded the cataract surgeries for 1,400 people, and conducted free eye camps and women’s health camps across India.
In collaboration with Fortis Hospitals since 2013, the BHF has provided free treatment to over 1,300 children with congenital heart defects. It has also provided free treatment to 130 children with severe facial deformities and has partnered with Mumbai’s Municipal Corporation to fund public toilets in the city as a part of the ‘Swachh Bharat’ campaign.
The BHF also supports The Max Foundation’s initiatives into increasing access to cancer treatment, and has funded cleft and congenital facial surgeries of over 120 children from all major districts of Kashmir and Ladakh.
The ‘Salman’ Effect
Salman Khan does not have a day-to-day stylist, as is evident by his almost exclusive donning of Being Human merchandise – be it for personal parties, promotional events or public appearances. With such a larger-than-life endorsement of the brand on a regular basis, Mandhana spends less than 5 percent of its revenue on advertising.
Its main publicity comes the social media pages of the store, the foundation, and Khan’s burgeoning online following of more than 35 million on Facebook and 30 million on Twitter (@BeingSalmanKhan), which the star leverages regularly to personally and aggressively endorse all Being Human merchandise.
The tangible effect of the celebrity endorsement is visible, as 84.4 percent of Being Human’s revenue is generated within India. While exports make up only around 15 percent of the total revenue, 84 percent of this comes from the Landmark Group in UAE, which has a high concentration of his Indian, Pakistani, and Bangladeshi fans.
In July 2016, Mandhana Industries announced it would demerge its retail arm to form a separate entity, the MRVL, which called for a new contract to be created with Being Human with new terms. For a while, the renewed partnership looked uncertain and just the chance of Khan’s brand not being associated with them anymore caused Mandhana’s shares to fall by as much as 77 percent in 20 consecutive trading sessions.
The Mandhana Demerger
On 29 March 2016, the Bombay High Court approved Mandhana Industries’ application to demerge its retail arm into MRVL “to create more long-term value for (their) stakeholders” and focus on expanding in the retail space, “given the success of the Being Human clothing brand.”
Curiously, just two days later, on 31 March, the parent company, Mandhana Industries, defaulted on Rs 1,100 crore debt to various banks and non-bank entities like L&T Finance, Axis Bank, HDFC, etc.
Before the demerger, almost all of Mandhana Industries’ growth and 50 percent of its earnings came from the Being Human brand alone, despite it constituting only 10 percent of its sales. However, burdened with a huge debt they wouldn’t be able to pay back, Mandhana Industries cleverly hived off its hyper profitable asset, Being Human, under the newly-formed MRVL.
When the demerger was approved in 2016 and Being Human was still in the mix, Mandhana Industries reported a net profit of around Rs 60 crore. And one full year after demerging its healthy asset, it faced a loss of a whopping Rs 748 crore. Meanwhile, only Rs 2.12 crore of debt was shifted to the new company, MRVL, with Being Human as its sole asset.
The Downside of Being “High Fashion”
Being Human’s T-shirts cost Rs 699 onwards. Its best selling item, the ‘Being Human’ T-shirt, retails from Rs 800, while the rest of the clothes average between Rs 2,000 to Rs 3,000. This, despite the majority of Salman’s loyal following living in tier 2 and tier 3 cities and who come from rural/semi-urban areas.
This is perhaps why famous markets of India like Linking Road, Chandni Chowk, Sarojini Nagar and Janpath are filled with Being Human knockoffs that people are more likely to be seen wearing in support of their bhai.
Brand trust survey firm TRA’s N Chandramouli offered his two cents on the rationale behind the pricing: “Salman Khan’s fan base is one big, loyal group, cutting across class. They love him, follow him, wear the same wrist band he does, and so on. But how each class of his fans relate to Being Human is different.”
Pointing out that today Rs 800 isn’t very high for a good quality T-shirt, Chandramouli said that a fan from a tier 2 city will spend on the T-shirt and likely use it for special occasions, while a fan from a metro city will wear it as an everyday item. “They’ll all buy it, but will aspirationally relate to it differently.”
What’s in a Name... Or Address?
Despite a celebrated organisation, it is hard to find Salman’s Being Human Foundation on a directory of Indian NGO/trusts, including the largest database ‘NGOs India’ and ‘Indian NGOs list’.
Upon further investigation, it was revealed that there are not one but two charitable trusts in the name of Being Human Foundation, the second one being a Rajasthan-based trust under one Praveen Singh Bhati.
On NGO Darpan (a directory of NGOs maintained by the NITI Aayog), Khan’s foundation was listed (until 27 October 2017, as seen in cache) with a registration ID of 3045 and listed its year of establishment as 2007 correctly, but the registration address of the “Mumbai-based” charitable trust listed is simply confounding: N-8, 50G, Shantipath, Chanakyapuri.
It’s headquarters are apparently right next to the German and Ethiopian embassies at Chanakyapuri, New Delhi, after which the block simply ends and no such address exists.
The Future of Being Human
There are no limits to what Salman Khan wants Being Human to become. Since 2012, when it first opened its flagship store with just men’s T-shirts, Salman has been talking to the press at different conferences and press meets about a Being Human production house producing regional movies in Bhojpuri, Marathi, etc. He also envisioned launching a chain of restaurants, profits from which would go to charity, and dabbling in events, web series, gyms, and music albums!
Which is perhaps why this year, as Being Human’s clothing turned five, Salman reserved all possible titles with ‘Being’ or ‘Being Human’ through yet another company he owns – Salman Khan Ventures (SKV) Pvt Ltd – in which he and his mother, Salma, are listed as directors, registered to a Bandra shop run by his sister, Alvira Agnihotri, at 1, Oceanside Apartments, Chimbai Road, Bandra West.
To add to the confusion around the BHF’s registered address, this shop in Bandra is hailed as Being Human’s office by its interior designers, Saketh Sethi’s Archilogics. However, Madison Public Relations, the company that handles the promotion of the brand, denied any knowledge of an office in Bandra and pointed to Mandhana’s headquarters in Parel as its base for operations, discernibly designed by interior designers The Ashleys.
Proceeds from some of the movies produced by SKV, such as national-award winning Chillar Party, are also donated to the BHF.
Mandhana Retail Ventures Ltd has its own set of plans for its flagship business, primarily, deeper and faster penetration into tier 1 and tier 2 cities like Surat and Vapi.
While everything is going right for brand Salman and Being Human, can we make a modest request? Please remove the tag from the T-shirt that proudly says all proceeds from its sale is going to charity.
A more appropriate one would be: Bhai is donating his share of proceeds to charity. And, that is a scant amount compared to the profit the company actually earns from the sale of Being Human merchandise.