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BW Businessworld

New Pastures For The Patriarch

Photo Credit :

On the second floor of Continental Building, Zee's headquarters in Worli, Mumbai, sits the dogged pioneer of Indian broadcasting. Seated in his wood-paneled chambers, Subhash Chandra's signature white streak across his swept back hair has got a little thicker with age.

"Yes, things have changed. I am no more as hands-on as I used to be. If they need my intervention, they come to me," says the patriarch of a rainbow collection of companies in entertainment, media, infrastructure, packaging and education called the Essel Group.

Chandra's most successful story has been his broadcasting business. He kicked off Zee Telefilms (ZTL) and private sector broadcasting in India in 1992 when others were still hankering for production slots on Doordarshan. He has had his highs and lows, but Zee has so firmly been planted on the corporate map that Chandra's attempt to supplant it with the more overarching Essel brand representing his other interests has been a non-starter.

After years of driving his businesses with his brothers and sons, Chandra presided over a division in January 2010 where his younger brothers got more or less what they were managing. His own media empire — Zee Entertainment Enterprises (Zeel) and Zee News — went to his elder son Punit Goenka and his lottery business to younger son Amit Goenka. With time on hand, Chandra began tinkering to get his daily newspaper DNA back on its feet.

The story seemed to have a retirement script, when came a twist in the tale. Chandra started building another empire straddling infrastructure, gold refining, health and education.

THE FIRST ROUND
Few will remember that Chandra was a small businessman in commodity exports and industrial packaging. As a young man in 1973, he took over a crumbling grain refining and trading business from his grandfather Jagannath Goenka, and by 1982 turned his Rama Associates into a cash-surplus, Rs 100-crore outfit, thanks to Indo-USSR bilateral trade agreements, some friends in the Food Corporation of India and a couple of lucrative Russian export contracts for rice and soyabean.

He also ventured into packaging with a laminated tubes unit. Essel Propack is now the largest producer of laminated tubes in the world. The profits from the foodgrain trade financed the purchase of a 753-acre property at Gorai, on Mumbai's outskirts, where Chandra set up an amusement park, EsselWorld.

Jawahar Goel, managing director of Dish TV and the third brother in the family, recalls: "He was always hands-on and never missed a good opportunity. He acquired the EsselWorld land and the Continental Building (in Worli, Mumbai) for a few crores in 1983 in a distress sale from a builder, Darshanjit Singh."

Cash flows from the foodgrain trade also financed his next big bet. Watching the first Gulf War in 1990 on CNN, Chandra developed an itch for broadcasting. He paid $5 million a year to lease a transponder from Richard Li of Satellite Television Asia Region (STAR) in 1992 to broadcast a private channel from Hong Kong to India. Zee TV launched as a two-hour channel with hit soaps such as Hasratein and Tara, and an inexpensive reality show, SaReGaMaPa (which is still running!). It never looked back.

Riding alongside on the new broadcasting rollercoaster was Rupert Murdoch, who had bought the majority 63 per cent stake in STAR from Li. By virtue of owning AsiaSat's transponders, Murdoch wanted 49 per cent stake in Chandra's Hong Kong broadcasting company, Asia Today. A reluctant Chandra gave in but on the condition that STAR kept out of Hindi programming. The agreement did not last long. By September 1998, following a brief but bitter court battle, the partnership came to an end with Zee buying out Murdoch's stake in Asia Today and Siticable for $180 million and STAR becoming free to enter Hindi programming.

Chandra got his freedom but it also unleashed the first big Indian media war. Zee Telefilms dominated in the 1990s. Star Plus was initially a poor third but then came Kaun Banega Crorepati? (KBC) in June 2000, which changed the pecking order. Zee Telefilms continued to pioneer in regional language, music and movie channels. But the slide had started; the flagship channel Zee TV was never able to come back to No. 1 slot. When Viacom-Network18 launched Colors in 2008, Zee TV slipped to No. 3. More recently, Sony Entertainment Television (SET), ironically again on the back of KBC, has displaced Zee TV to No. 4.

On the other hand, Zee's broadcasting network has the maximum reach with its 26 channels. By keeping costs under control, maximising subscription revenues (including Rs 400 crore a year from international subscription), Zeel is delivering profit margins of 25-30 per cent. In 2010-11, it had a net profit of Rs 625.1 crore on revenues of Rs 3,013 crore. "Few companies generate such strong cash flows and they make up for the poorer channels by selling as a bouquet," says Rahul Kundnani of SBI Capital Securities. Punit Goenka, managing director and CEO of Zeel, dismisses Zee TV's falling position as "cyclical". He says the company's overwhelming 65 per cent revenue share from international broadcasting makes up for this shortfall.

In fact, Zeel continues to be ahead of listed peers. TV18 Broadcasting, for instance, was in the red by Rs 17.4 crore on a turnover of Rs 804 crore for FY11, while UTV Software made a net profit of Rs 135.5 crore on sales of Rs 947 crore in the same period.  
break-page-break
However, poor results in the April-June 2011 quarter — which showed a 13 per cent fall in net profits — caught the company napping. Advertisement sales grew just 0.5 per cent to Rs 370 crore from the previous year. Nikhil Vora, a media analyst with IDFC Securities, struck a bearish note. "In a four-player market, do they have the will to spend to meet competition? Over the years, Zee TV has not been able to change its content enough." Zee TV is seen as being stingy on original content — just 25-30 hours of fresh programming a week versus 35-40 hours generated by Star Plus, Colors and Sony. Goenka admits this and says programming spend will be hiked. A rival network head says: "Zee still has a strong reach with its 26 channels; but it has lost leadership position in most genres that matter."

BEYOND MEDIA

Not everything Chandra tried out has been successful. He was an early player in satellite systems as well. In 1999, seeing the growing demand for satellite communication, he floated ASC Enterprises to put into orbit India's first geo-stationary satellite, then code-named ‘Agrani'. He sewed together a Rs 3,200-crore joint venture with Craig McCaw-promoted ICO Global but the rockets never fired.

"The policies then in satellite communication were immature, and the banks did not have a clue how to fund an asset that would sit 36,000 km in space," says Goenka, who started off with this project. "Finally, satellites turned commodities, and we got out as we found it easier to lease than own them." But Zee lost close to Rs 120 crore with the exit, company sources say.

What was a big success though in the early part of the decade was Chandra's online lottery system called Playwin Infravest. Beginning with ‘Super Lotto' in 2002 and linked to the Sikkim state draw, Playwin allowed betting on number combinations on hundreds of computer terminals located in chai and paan stalls. It became a rage. Himanshu Mody, head of Essel's finance and strategy, estimates that the online lottery business generates revenues of Rs 1,500 crore annually. But with as much as 85 per cent going back as prize money, margins are slim, he says.











THE NEW INTERESTS
After Essel Group, Subhash Chandra has taken on new projects
INFRASTRUCTURE Over the past three years, Essel Infra has bagged a string of road contracts. Its total order book currently stands at Rs 30,000 crore

GOLD REFINING The Shirpur gold refining unit has restarted producing gold bars in a small way. It is refining 50-60 tonnes a year currently

HEALTH Aired in the US, Veria Lifestyle channel focuses on healthy lifestyles. It is on DTH and cable, and the content is produced in US studios

EDUCATION Zee Learn has started vocational centers branded ‘Brain Café' and pre-school chain ‘Kidzee'. It also manages and promotes schools

Chandra's foray into film-making with Gadar-Ek Prem Katha in June 2001 was also a success but subsequent releases proved to be duds. In 2006, the company quit film making.

In sports, Chandra has stuck on despite reverses. His attempts earlier in the decade to secure broadcasting rights for international cricket came a cropper. More recently, Indian Cricket League (ICL), launched in 2004, never took off. The Indian Premier League, supported by the Board of Control for Cricket (BCCI), ensured that ICL was denied grounds and stadiums. Players who signed up with ICL were boycotted. With the 2008 recession, Chandra called it quits. Losses on the ICL account touched Rs 350 crore, a company spokesperson says.

But Chandra scored by acquiring Ten Sports from Dubai-based promoter Abdul Rahman Bukhatir in November 2006, from under the nose of SET. But it is still tough going with Zeel taking a hit of Rs 100 crore on sports business last fiscal, and notching up another Rs 56 crore loss in this year's first quarter. The company has put out a guidance that it expects a loss of Rs 100 crore this year on account of sports.

FAMILY DIVISION
The disentangling of the group businesses began in 2006. Earlier, all media and entertainment ventures were under Zee Telefilms. After the demerger, it was split into four independently listed companies. Zeel, the largest, held the entertainment channels including Zee TV and Zee Cinema, and the international broadcasting businesses. The news and regional language channels went into Zee News. The oldest but crawling cable distribution venture, Siticable, was renamed Wire & Wireless India. ASC Enterprises, set up to push the satellite business, morphed into a DTH business, Dish TV India.




Chandra's aim was to declutter, and make each media vertical more attractive to focused investors. More importantly, he wanted to give clear responsibilities to his brothers. He moved Goenka from Dish TV to head Zeel. Brothers Laxmi and Jawahar took charge of Zee News and Dish TV, respectively. Wire & Wireless remained under Chandra and Jawahar. The fourth brother, Ashok Goel, was never part of the media ventures and continued to manage EsselWorld and Essel Propack.

Says Jawahar: "All the brothers felt that before it became contentious in some future generation, it should be clear who owns what." Each brother still has a minority holding in the others' businesses, and the group continues to be under the Essel Group. Also, Chandra continues as chairman in most of the companies.

The demerger worked. Zeel's revenues more than doubled from Rs 1,050 crore in FY06 to Rs 3,013 crore by FY11. Zee News, despite losing the regional channels to Zeel in 2010, had revenues of Rs 277 crore in FY11, up from Rs 235 crore in FY07. But it was Dish TV that showed the strongest growth. From a turnover of just Rs 80 crore in 2006, the company registered an income of Rs 1,437 crore in FY11. But Wire & Wireless showed revenues of just Rs 306 crore with a net loss of Rs 66 crore.

Company sources estimate the revenue size of the Essel pie at $3 billion (about Rs 15,000 crore) with Chandra and his family being assigned the lion's share of around 35 per cent. The other three brothers have each inherited around 20 per cent of the group's assets.

Family has always driven the businesses and most professional head honchos have not lasted long. Vijay Jindal, managing director of Zee Network, who aggressively built the organisation along with Chandra, left in 2000. ESPN boss R.K. Singh quit after the show Sawal Dus Crore Ka flopped in 2000. Sandeep Goyal, CEO of Zee Telefilms, resigned in October 2002 after the failed relaunch of Zee's channels. Even Pradeep Guha, who headed Zeel and was credited with giving a new spurt to the company, left quietly in mid-2008 after a three-year stint. Guha was replaced by Goenka.
break-page-break
NEW SHOWS
Other family members taking over the reins of various companies, however, did not mean retirement for Chandra. In July 2004, unknown to most media watchers, Chandra's realty and amusement park company Pan India Paryatan quietly bid for the modernisation of Delhi and Mumbai airports along with Turkey's TAV Investment Construction. It was among the nine pre-qualified bidders, but lost the race. "Our JV partners let us down," says Chandra.

Among the key members of the GVK Sanjay Reddy team that won the Mumbai airport bid was infrastructure specialist C. Venkataramana. Chandra poached him in 2008 to head his newly established Essel Infra. Soon after, Essel Infra bagged its first small road project — a 75-km section on the two-lane Malegaon-Murbad state road — worth Rs 110 crore.

Says Mody: "We had to hedge our risks. Broadcasting is a high-tension area; the cable business is in a mess. How long can we tie ourselves down grappling with these issues?"

Over the past three years, Essel Infra has bagged several road contracts — the Rs 895-crore Libave-Jaura four-lane highway in Madhya Pradesh, the Rs 1,200-crore National Highway Authority's Ahmedabad-Godhra section, the Rs 1,705-crore Sion-Panvel eight-lane highway (which will have India's largest toll plaza with 34 toll booths), among others.

Standing in his new office in Mumbai's Kohinoor City complex overlooking the airport area, Venkataramana says, "We have a Rs 7,000-crore order book for roads alone. With our other infra projects, our orders are touching Rs 30,000 crore. We have pre-qualified as a $500-million developer. EPC (engineering, procurement and construction) projects are next on our list." 

Other projects include constructing a Rs 1,600-crore, 50-acre sports city in Bhopal for the state government. As repayment, the government will allow Essel Infra to construct and own 6.5 million sq. ft of realty including a 35,000-seater stadium. It is also executing a few solid waste and municipal sewage treatment projects in Surat, Baroda, Ahmedabad and Vapi in Gujarat, worth Rs 5,200 crore.

Venkataramana is brimming with ideas. He will be bidding for the Navi Mumbai airport and the proposed Dulera airport in Goa. He also plans a desalination plant at the 750-acre EsselWorld. "We have a turnover of Rs 500 crore for FY11 with a small operational profit of Rs 7 crore. By the end of this fiscal, we will cross Rs 2,000 crore," he says.

Another of Chandra's new projects is gold refining. In 2008, Chandra acquired a shuttered gold refining unit in Maharashtra's Dhule district through the Asset Reconstruction Company of India. Shirpur Gold Refining was promoted more than two decades ago by his friend Mukesh Patel. Spread over 50 acres with a capacity to produce 217 tonnes of refined gold, the unit lacked working capital. It finally shut down after Patel's death in 2002.

Chandra is working along with younger son Amit to refloat the company — Asia's largest gold refining unit (it even has its own airport).

Shirpur Gold restarted producing gold bars in a small way from July 2010. On a modest turnover of Rs 198 crore, it bore a loss of Rs 4.59 crore for FY11. "We are refining 50-60 tonnes a year currently and hope to ramp up," says Mody. With India importing 800 tonnes of gold a year, there is much to do for India's only gold refining unit. "The margins in the business are just 2 per cent, but considering the metal's volatile prices, the arbitrage possibilities and the volume of thousands of crores, it can be very profitable," adds Mody.

There are serious challenges too, especially in securing raw material. Chandra plans to acquire mines in South Africa, but no one is willing to divulge details.











DISCORDANT NOTES
Zee chiefs not from the family, have stayed for short periods only


QUICK EXIT: Pradeep Guha left in 2008, Sandeep Goyal in 2002 and Vijay Jindal in 2000

Chandra's other forays include education and learning. More than a decade ago, he had set up a chain of education and animation training centres, but these struggled. Recently though, Zee Learn has been on the upswing with a series of new initiatives — including a chain of vocational centres branded ‘Brain Café' where students are taught using what Zee Learn's CEO Sumeet Mehta calls the "chalk and talk" way.

Zee Learn has also entered the education market as a consultant and manager. It has taken on the management of 25 municipal schools in Ahmedabad and a tribal school in Navsari. It has also promoted more than 100 schools under the ‘Mount Litera' label (franchisees put in the assets and running expenses). The company has a similar pre-school chain ‘Kidzee', which has more than 900 centres and 10,000 children enrolled. In FY11, Zee Learn reported a turnover of Rs 45 crore and turned in a small profit of Rs 1.85 crore. This year, says Mehta, the revenue will touch Rs 130 crore.

Four decades ago, Chandra enunciated his philosophy, borrowing Jack Welch's words …"to remain in a business where one can either be No. 1 or a strong No. 2, or else exit from that business". As Goenka works hard to implement his edict in the older media companies, the 60-year-old patriarch has started life afresh and set off to play and win elsewhere.

gurbir(dot)singh(at)abp(dot)in

(This story was published in Businessworld Issue Dated 19-09-2011)


On the second floor of Continental Building, Zee's headquarters in Worli, Mumbai, sits the dogged pioneer of Indian broadcasting. Seated in his wood-paneled chambers, Subhash Chandra's signature white streak across his swept back hair has got a little thicker with age.

"Yes, things have changed. I am no more as hands-on as I used to be. If they need my intervention, they come to me," says the patriarch of a rainbow collection of companies in entertainment, media, infrastructure, packaging and education called the Essel Group.

Chandra's most successful story has been his broadcasting business. He kicked off Zee Telefilms (ZTL) and private sector broadcasting in India in 1992 when others were still hankering for production slots on Doordarshan. He has had his highs and lows, but Zee has so firmly been planted on the corporate map that Chandra's attempt to supplant it with the more overarching Essel brand representing his other interests has been a non-starter.

After years of driving his businesses with his brothers and sons, Chandra presided over a division in January 2010 where his younger brothers got more or less what they were managing. His own media empire — Zee Entertainment Enterprises (Zeel) and Zee News — went to his elder son Punit Goenka and his lottery business to younger son Amit Goenka. With time on hand, Chandra began tinkering to get his daily newspaper DNA back on its feet.

The story seemed to have a retirement script, when came a twist in the tale. Chandra started building another empire straddling infrastructure, gold refining, health and education.
 
THE FIRST ROUND
Few will remember that Chandra was a small businessman in commodity exports and industrial packaging. As a young man in 1973, he took over a crumbling grain refining and trading business from his grandfather Jagannath Goenka, and by 1982 turned his Rama Associates into a cash-surplus, Rs 100-crore outfit, thanks to Indo-USSR bilateral trade agreements, some friends in the Food Corporation of India and a couple of lucrative Russian export contracts for rice and soyabean.
He also ventured into packaging with a laminated tubes unit. Essel Propack is now the largest producer of laminated tubes in the world. The profits from the foodgrain trade financed the purchase of a 753-acre property at Gorai, on Mumbai's outskirts, where Chandra set up an amusement park, EsselWorld.

Jawahar Goel, managing director of Dish TV and the third brother in the family, recalls: "He was always hands-on and never missed a good opportunity. He acquired the EsselWorld land and the Continental Building (in Worli, Mumbai) for a few crores in 1983 in a distress sale from a builder, Darshanjit Singh."

Cash flows from the foodgrain trade also financed his next big bet. Watching the first Gulf War in 1990 on CNN, Chandra developed an itch for broadcasting. He paid $5 million a year to lease a transponder from Richard Li of Satellite Television Asia Region (STAR) in 1992 to broadcast a private channel from Hong Kong to India. Zee TV launched as a two-hour channel with hit soaps such as Hasratein and Tara, and an inexpensive reality show, SaReGaMaPa (which is still running!). It never looked back.

Riding alongside on the new broadcasting rollercoaster was Rupert Murdoch, who had bought the majority 63 per cent stake in STAR from Li. By virtue of owning AsiaSat's transponders, Murdoch wanted 49 per cent stake in Chandra's Hong Kong broadcasting company, Asia Today. A reluctant Chandra gave in but on the condition that STAR kept out of Hindi programming. The agreement did not last long. By September 1998, following a brief but bitter court battle, the partnership came to an end with Zee buying out Murdoch's stake in Asia Today and Siticable for $180 million and STAR becoming free to enter Hindi programming.

Chandra got his freedom but it also unleashed the first big Indian media war. Zee Telefilms dominated in the 1990s. Star Plus was initially a poor third but then came Kaun Banega Crorepati? (KBC) in June 2000, which changed the pecking order. Zee Telefilms continued to pioneer in regional language, music and movie channels. But the slide had started; the flagship channel Zee TV was never able to come back to No. 1 slot. When Viacom-Network18 launched Colors in 2008, Zee TV slipped to No. 3. More recently, Sony Entertainment Television (SET), ironically again on the back of KBC, has displaced Zee TV to No. 4.

On the other hand, Zee's broadcasting network has the maximum reach with its 26 channels. By keeping costs under control, maximising subscription revenues (including Rs 400 crore a year from international subscription), Zeel is delivering profit margins of 25-30 per cent. In 2010-11, it had a net profit of Rs 625.1 crore on revenues of Rs 3,013 crore. "Few companies generate such strong cash flows and they make up for the poorer channels by selling as a bouquet," says Rahul Kundnani of SBI Capital Securities. Punit Goenka, managing director and CEO of Zeel, dismisses Zee TV's falling position as "cyclical". He says the company's overwhelming 65 per cent revenue share from international broadcasting makes up for this shortfall.

In fact, Zeel continues to be ahead of listed peers. TV18 Broadcasting, for instance, was in the red by Rs 17.4 crore on a turnover of Rs 804 crore for FY11, while UTV Software made a net profit of Rs 135.5 crore on sales of Rs 947 crore in the same period.  

However, poor results in the April-June 2011 quarter — which showed a 13 per cent fall in net profits — caught the company napping. Advertisement sales grew just 0.5 per cent to Rs 370 crore from the previous year. Nikhil Vora, a media analyst with IDFC Securities, struck a bearish note. "In a four-player market, do they have the will to spend to meet competition? Over the years, Zee TV has not been able to change its content enough." Zee TV is seen as being stingy on original content — just 25-30 hours of fresh programming a week versus 35-40 hours generated by Star Plus, Colors and Sony. Goenka admits this and says programming spend will be hiked. A rival network head says: "Zee still has a strong reach with its 26 channels; but it has lost leadership position in most genres that matter."
 
BEYOND MEDIA
Not everything Chandra tried out has been successful. He was an early player in satellite systems as well. In 1999, seeing the growing demand for satellite communication, he floated ASC Enterprises to put into orbit India's first geo-stationary satellite, then code-named ‘Agrani'. He sewed together a Rs 3,200-crore joint venture with Craig McCaw-promoted ICO Global but the rockets never fired.

"The policies then in satellite communication were immature, and the banks did not have a clue how to fund an asset that would sit 36,000 km in space," says Goenka, who started off with this project. "Finally, satellites turned commodities, and we got out as we found it easier to lease than own them." But Zee lost close to Rs 120 crore with the exit, company sources say.

What was a big success though in the early part of the decade was Chandra's online lottery system called Playwin Infravest. Beginning with ‘Super Lotto' in 2002 and linked to the Sikkim state draw, Playwin allowed betting on number combinations on hundreds of computer terminals located in chai and paan stalls. It became a rage. Himanshu Mody, head of Essel's finance and strategy, estimates that the online lottery business generates revenues of Rs 1,500 crore annually. But with as much as 85 per cent going back as prize money, margins are slim, he says.

Chandra's foray into film-making with Gadar-Ek Prem Katha in June 2001 was also a success but subsequent releases proved to be duds. In 2006, the company quit film making.

In sports, Chandra has stuck on despite reverses. His attempts earlier in the decade to secure broadcasting rights for international cricket came a cropper. More recently, Indian Cricket League (ICL), launched in 2004, never took off. The Indian Premier League, supported by the Board of Control for Cricket (BCCI), ensured that ICL was denied grounds and stadiums. Players who signed up with ICL were boycotted. With the 2008 recession, Chandra called it quits. Losses on the ICL account touched Rs 350 crore, a company spokesperson says.

But Chandra scored by acquiring Ten Sports from Dubai-based promoter Abdul Rahman Bukhatir in November 2006, from under the nose of SET. But it is still tough going with Zeel taking a hit of Rs 100 crore on sports business last fiscal, and notching up another Rs 56 crore loss in this year's first quarter. The company has put out a guidance that it expects a loss of Rs 100 crore this year on account of sports.
 
FAMILY DIVISION
The disentangling of the group businesses began in 2006. Earlier, all media and entertainment ventures were under Zee Telefilms. After the demerger, it was split into four independently listed companies. Zeel, the largest, held the entertainment channels including Zee TV and Zee Cinema, and the international broadcasting businesses. The news and regional language channels went into Zee News. The oldest but crawling cable distribution venture, Siticable, was renamed Wire & Wireless India. ASC Enterprises, set up to push the satellite business, morphed into a DTH business, Dish TV India.

Chandra's aim was to declutter, and make each media vertical more attractive to focused investors. More importantly, he wanted to give clear responsibilities to his brothers. He moved Goenka from Dish TV to head Zeel. Brothers Laxmi and Jawahar took charge of Zee News and Dish TV, respectively. Wire & Wireless remained under Chandra and Jawahar. The fourth brother, Ashok Goel, was never part of the media ventures and continued to manage EsselWorld and Essel Propack.
Says Jawahar: "All the brothers felt that before it became contentious in some future generation, it should be clear who owns what." Each brother still has a minority holding in the others' businesses, and the group continues to be under the Essel Group. Also, Chandra continues as chairman in most of the companies.

The demerger worked. Zeel's revenues more than doubled from Rs 1,050 crore in FY06 to Rs 3,013 crore by FY11. Zee News, despite losing the regional channels to Zeel in 2010, had revenues of Rs 277 crore in FY11, up from Rs 235 crore in FY07. But it was Dish TV that showed the strongest growth. From a turnover of just Rs 80 crore in 2006, the company registered an income of Rs 1,437 crore in FY11. But Wire & Wireless showed revenues of just Rs 306 crore with a net loss of Rs 66 crore.

Company sources estimate the revenue size of the Essel pie at $3 billion (about Rs 15,000 crore) with Chandra and his family being assigned the lion's share of around 35 per cent. The other three brothers have each inherited around 20 per cent of the group's assets.

Family has always driven the businesses and most professional head honchos have not lasted long. Vijay Jindal, managing director of Zee Network, who aggressively built the organisation along with Chandra, left in 2000. ESPN boss R.K. Singh quit after the show Sawal Dus Crore Ka flopped in 2000. Sandeep Goyal, CEO of Zee Telefilms, resigned in October 2002 after the failed relaunch of Zee's channels. Even Pradeep Guha, who headed Zeel and was credited with giving a new spurt to the company, left quietly in mid-2008 after a three-year stint. Guha was replaced by Goenka.
 
NEW SHOWS
Other family members taking over the reins of various companies, however, did not mean retirement for Chandra. In July 2004, unknown to most media watchers, Chandra's realty and amusement park company Pan India Paryatan quietly bid for the modernisation of Delhi and Mumbai airports along with Turkey's TAV Investment Construction. It was among the nine pre-qualified bidders, but lost the race. "Our JV partners let us down," says Chandra.

Among the key members of the GVK Sanjay Reddy team that won the Mumbai airport bid was infrastructure specialist C. Venkataramana. Chandra poached him in 2008 to head his newly established Essel Infra. Soon after, Essel Infra bagged its first small road project — a 75-km section on the two-lane Malegaon-Murbad state road — worth Rs 110 crore.

Says Mody: "We had to hedge our risks. Broadcasting is a high-tension area; the cable business is in a mess. How long can we tie ourselves down grappling with these issues?"

Over the past three years, Essel Infra has bagged several road contracts — the Rs 895-crore Libave-Jaura four-lane highway in Madhya Pradesh, the Rs 1,200-crore National Highway Authority's Ahmedabad-Godhra section, the Rs 1,705-crore Sion-Panvel eight-lane highway (which will have India's largest toll plaza with 34 toll booths), among others.
Standing in his new office in Mumbai's Kohinoor City complex overlooking the airport area, Venkataramana says, "We have a Rs 7,000-crore order book for roads alone. With our other infra projects, our orders are touching Rs 30,000 crore. We have pre-qualified as a $500-million developer. EPC (engineering, procurement and construction) projects are next on our list." 

Other projects include constructing a Rs 1,600-crore, 50-acre sports city in Bhopal for the state government. As repayment, the government will allow Essel Infra to construct and own 6.5 million sq. ft of realty including a 35,000-seater stadium. It is also executing a few solid waste and municipal sewage treatment projects in Surat, Baroda, Ahmedabad and Vapi in Gujarat, worth Rs 5,200 crore.

Venkataramana is brimming with ideas. He will be bidding for the Navi Mumbai airport and the proposed Dulera airport in Goa. He also plans a desalination plant at the 750-acre EsselWorld. "We have a turnover of Rs 500 crore for FY11 with a small operational profit of Rs 7 crore. By the end of this fiscal, we will cross Rs 2,000 crore," he says.

Another of Chandra's new projects is gold refining. In 2008, Chandra acquired a shuttered gold refining unit in Maharashtra's Dhule district through the Asset Reconstruction Company of India. Shirpur Gold Refining was promoted more than two decades ago by his friend Mukesh Patel. Spread over 50 acres with a capacity to produce 217 tonnes of refined gold, the unit lacked working capital. It finally shut down after Patel's death in 2002.

Chandra is working along with younger son Amit to refloat the company — Asia's largest gold refining unit (it even has its own airport).

Shirpur Gold restarted producing gold bars in a small way from July 2010. On a modest turnover of Rs 198 crore, it bore a loss of Rs 4.59 crore for FY11. "We are refining 50-60 tonnes a year currently and hope to ramp up," says Mody. With India importing 800 tonnes of gold a year, there is much to do for India's only gold refining unit. "The margins in the business are just 2 per cent, but considering the metal's volatile prices, the arbitrage possibilities and the volume of thousands of crores, it can be very profitable," adds Mody.

There are serious challenges too, especially in securing raw material. Chandra plans to acquire mines in South Africa, but no one is willing to divulge details.

Chandra's other forays include education and learning. More than a decade ago, he had set up a chain of education and animation training centres, but these struggled. Recently though, Zee Learn has been on the upswing with a series of new initiatives — including a chain of vocational centres branded ‘Brain Café' where students are taught using what Zee Learn's CEO Sumeet Mehta calls the "chalk and talk" way.

Zee Learn has also entered the education market as a consultant and manager. It has taken on the management of 25 municipal schools in Ahmedabad and a tribal school in Navsari. It has also promoted more than 100 schools under the ‘Mount Litera' label (franchisees put in the assets and running expenses). The company has a similar pre-school chain ‘Kidzee', which has more than 900 centres and 10,000 children enrolled. In FY11, Zee Learn reported a turnover of Rs 45 crore and turned in a small profit of Rs 1.85 crore. This year, says Mehta, the revenue will touch Rs 130 crore.

Four decades ago, Chandra enunciated his philosophy, borrowing Jack Welch's words …"to remain in a business where one can either be No. 1 or a strong No. 2, or else exit from that business". As Goenka works hard to implement his edict in the older media companies, the 60-year-old patriarch has started life afresh and set off to play and win elsewhere.

gurbir(dot)singh(at)abp(dot)in


(This story was published in Businessworld Issue Dated 19-09-2011)