Minal and Dinesh Vazirani

This interview appeared in Take on Art magazine in October 2011.

Dinesh and Minal Vazirani founded Saffronart during the dotcom boom, and have guided it through a number of peaks and troughs since then. They envisioned Saffronart as a Web-based vendor, retooled the business model to focus on auctions, and expanded to include physical exhibitions. They have recently diversified into auctioning real estate and jewellery. They answered my questions with candour and insight.

Girish: It is eleven years since Saffronart was founded. Could you mark the main stages of its development?

Minal: The first phase was about building awareness. Conducting transactions for art online was something new not only for India but anywhere in the world. We also reached out to the Indian diaspora, which didn’t have access to Indian art. There were very few good publications or curated exhibitions exhibited internationally at that time.

Dinesh: The next stage, I’d say, was just survival. We seriously considered shutting down Saffronart around 2003, because building awareness had entailed mounting big shows in places like Hong Kong, Singapore, New York and London, and that almost broke our back. Venture capital had pulled out after the dotcom bust, so there was no additional funding available. We took loans from my father, from banks, sold a substantial part of our personal collection, in order to stay afloat. But this was also an inflection point when the market as a whole started growing rapidly.

Minal: Yes, 2004 and 2005 were very important years for our growth. Saffronart had over 35% of the auction market at that time. Then, from 2006, there was a great deal more investment, more players came in, there was more interest from international auction houses, and it felt like the market was getting its own legs. It turned out to be short-lived, of course.

Dinesh: Interestingly, our most successful auction in these 11 years was in December 2006, when we garnered about 17 million dollars in one sale. So if you look at the market size, it was probably at its largest at that point. The following year, the market carried on at the same kind of level but there was no dramatic growth.

Girish: Prices for contemporary art rose substantially in the final phase of the boom, didn’t they?

Dinesh: That’s true. I think, though, that Indian galleries representing contemporary artists were too enamoured with the West. A lot of Indians wanting to buy art in those days would be told, Oh, the piece is going to this collection in Europe, or that museum. Gallerists sold to foreigners who posed as museum collectors but were actually dealers and traders. Whether it was Charles Saatchi, Frank Cohen or anyone else, their collections would all come back to the market at some point. When foreigners pulled out after the financial crisis, there was no Indian collector base left behind, which is why contemporary art has taken the biggest hit.

Girish: To continue with the phases, the third one was the boom…

Dinesh: For us, that was a period of consolidation. We expanded quite dramatically, established a space in London, a larger space in New York, planned one in Delhi. Of course, nobody expected what happened after the financial crisis, and since then we’ve been back to the survival stage again.

Girish: It’s been that bad?

Dinesh: It has, yes. If you look at the peak auction of 17 million in December 2006, and then at March 2009 which was a million and a half, that’s one tenth of the sale amount. We had the same overheads, we didn’t cut down our staff, we didn’t close our spaces. We were hopeful that the market would come back. But because so much buying was for investment, it’s been difficult to get buyers back, and have them collect for the right reason, which is to appreciate the aesthetic qualities of the art and hang it on walls rather than store it in garages.

Minal: I think one dramatic change, which hasn’t had an effect on the value of the market yet but is very important, has been the rise of Indians who are collecting with a view to institutionalise their collection. The museum Kiran Nadar has set up is a great example. Unfortunately, there’s no government incentive associated with arts-related philanthropy, no tax benefit or anything of that kind.

Girish: Since you mention government regulation, could you spell out for me what changes you’d like to see in that area?

Minal: One of the good things that’s happened is the reduction in sales tax for art transactions in West Bengal; it’s now 1%. I hope other states follow.

Dinesh: Import duty is an important concern. If a canvas is painted in India, acquired by somebody outside the country and then bought by an Indian, why should the duty be 17%? I think people should be encouraged to get cultural products back into India. If we have import duty, let’s have a nominal rate like in the UK and other nations.
The third thing I’d look at is changing the Antiquities Act. It’s killed trade, and because trade’s been killed, so has education and expertise. Today, most experts in Indian antiquities are in London or New York, there are hardly any left in India.

Minal: If you drive business underground, there’s no way you can build infrastructure. Unfortunately, the Direct Tax Code that’s coming in has a 1% annual wealth tax on the market value of one’s art collection.

Girish: You just criticised galleries for their Western fixation, but I’ve heard gallerists criticising you for undercutting prices. You began with a model where you worked through partner galleries, and then you became in a sense a competitor to galleries. Is there a lot of friction in the relationship currently?

Minal: We still work very closely with galleries and dealers, I don’t think that’s changed much. Even the exhibition spaces we have were conceived mainly to provide a plaform for galleries to showcase their artists through us.

Dinesh: There’s been some friction with a few galleries, for a simple reason. As an auction platform, our prices are dependent on the dynamic between buyer and seller. Whatever the price settles at is what it settles at. It’s fine when the market’s going up, because galleries keep marking their prices higher whenever the hammer price for an artist’s work rises in the secondary market. But when hammer prices fall below primary prices, galleries find it difficult to handle artists they represent. Artists ask, ‘How could Saffronart sell a painting at this price?’ And the gallerists accuse us of lowering prices. But we don’t raise or lower prices, the market does. I think perceptions have changed as the same thing has happened at Christie’s and Sotheby’s.

Girish: Would you say a bit about the role art funds played in the downturn? Obviously we couldn’t have avoided the crash, but Europe and the United States, which have such dreadful economies, have healthier art markets than we do today. Is the Indian market doing as badly as it is because art funds encouraged investors over collectors?

Dinesh: Every market needs different constituents. We need a strong base of collectors, and people with capital who will build the market, and also institutional buyers. So art funds are a legitimate constituent of the art market. I think what became detrimental was the volume of capital that they controlled in a small market. The auction market peaked at about 140 million dollars in annual sales. In that year, art funds raised 60 million dollars, which was too large a quantum of capital given the market size as a whole.
I think two things really hurt the market. First, it was Amit Judge’s decision to shut down Bodhi. We all tried convincing him not to, but it was purely a business decision for him. He really raised the bar in the years he operated, but when Bodhi closed, international collectors lost a lot of confidence. If the biggest player in a market goes under, it sends a strong negative signal. Then there was the Osian’s crisis. Neville Tuli built the organisation with a lot of passion, but when he got into a mess with his fund, it reduced confidence in the market. Between Bodhi and Osian’s, I think they touched pretty much every important buyer in the world.

Girish: Finally, what’s with all these Nandis by H G Arunkumar you feature in your auctions? Is it a mascot of some sort? I see you’ve got an astroturf one here.

Dinesh: (laughs) Any colour, any material, any size, we’ll sell them. They’re actually pretty tough to source.