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Subhash Chandra on Zee, DNA & Essel
Shuchi Bansal | May 22, 2007 15:49 IST
It's not easy to draw the Essel Group chairman into a conversation. His responses to elaborate questions are brief and to the point. That set the tone for the meeting with India's original media mogul Subhash Chandra, known more for running Zee than the world's number one laminated tubes company Essel Propack.
That the discussion was held over a spartan evening tea at his newly set up home on Delhi's Kautilya Marg, did not help matters either. The distraction and noise that typify a restaurant appointment were absent though a couple of attendants floated in and out with tea and biscuits.
It was Chinese tea for Chandra and a regular coffee for me. He quit drinking regular tea two years ago during one of his visits to the Nature Cure Institute in Bangalore. "The diet they put you on detoxifies the body. I just gave up regular tea after that," explains Chandra, who emerged in a white designer kurta and adjusted the curtains to let in some light before settling into the sofa.
The house has been done up recently and the Essel group chairman is staying there for the first time. He apologises about the frugal fare more than once. He needn't have, considering Business Standard is supposed to be the host and pay for the meal for this column. He is aware of the column and likes the paper though his first read is a white business daily, he clarifies.
So which is his best-loved business in the Essel Group - media, packaging, lottery, amusement parks or multiplexes? "We try to benchmark ourselves against the best in every business. No one business is dearer to me than the other," he says. But yes, for some time he was more focused on the media business under Zee. With Star Plus taking the Hindi general entertainment market by storm in 2000, Zee slipped badly. Chandra stepped in to take care of the "ailing child," as he puts it.
The problem, he thinks, arose because the media and entertainment business had a structural weakness. Everything was held by a single company. "This resulted in some businesses not getting proper attention, management time or capital," says Chandra. The business is now split into four companies and the exercise took 15 months to complete. Besides, the group's flagship Hindi channel Zee TV is also back in the reckoning as the gap between its gross rating points and those of Star Plus is diminishing.
However, currently the spotlight is on monetising its television content overseas. "We are experimenting," says Chandra, sipping tea out of a white and silver cup. The "experiment" includes dubbing Zee's popular soap Astitava into Mandarin for Shanghai TV. "If I hadn't seen it myself, I wouldn't have believed that its male lead Varun Badola is a star in China," smiles Chandra. There is demand for more stuff from Zee except that the serials need to be condensed into 50 episodes.
"We have also asked for landing rights for Zee TV in China. We haven't got permission yet," he says. Zee is also dubbing Hindi films for broadcasters in Russia. An entertainment channel for Indonesia is already on air. It features Zee soaps and film programmes dubbed in Bhasa.
The small screen business may be on track, but Zee's celluloid dreams lie unfulfilled as the media company remains a one-film wonder. Agrees Chandra: "After Gadar's (a Zee film starring Sunny Deol) success, we thought films were a hot business. Gadar is the biggest grosser in the history of commercial Hindi cinema and earned Rs 170-180 crore (Rs 1.7-1.8 billion).
Of this, our rightful share should have been Rs 90-100 crore (Rs 900 million-Rs 1 billion), but we got only Rs 40 crore (Rs 400 million)." He is pained that the money was gobbled up by the exhibitors and distributors. "There is a monitoring system but it stinks." The moral of the story: there's no point getting into the films business unless you have control over exhibition.
And that is precisely what Chandra is doing through E-City Entertainment that's into real estate and multiplexes under the Fun Cinemas brand. "We have 200-plus screens on our own and through associates like INOX (owned by Gujarat Flurochemicals), which is an extended family." Chandra's elder son Punit is married into its promoter Jain family.
You don't make money as a single multiplex owner. But a chain is a viable medium for advertisers. Your cost of acquiring movies also drops. Now we will get into film production," he says.
For the last many months, there have been rumours about cracks in Diligent Media, Chandra's joint venture with the Dainik Bhaskar group that runs the English daily, DNA.
"That must be The Times of India propaganda machinery working," he laughs, adding that the JV is working fine. "Koi issue isliye nahi hai because both the companies are in an expansion mode. Also, the business is run by a CEO. The promoters meet hardly once a month."
But is he happy with DNA's performance considering it's bleeding and has not moved out of Mumbai as planned? "Yes, that you can say. People expected DNA to hit Delhi within six months and Bangalore in 12. Some of our promoters might have even suggested that. In my mind, I was very clear that it will take two-and-a-half to three years for the paper to break even in Mumbai. Once Mumbai is profitable then you can go wherever you like," says the Essel chairman.
He admits that DNA is still losing money. "We've lost Rs 170-180 crore till now. We were prepared to lose about Rs 200 crore (Rs 2 billion). But we are on track now." Are you, I ask, since Pradeep Guha, his representative on Diligent and CEO, Zee is also said to be leaving? "Not to my knowledge," is the cryptic reply.
But the company is surely famous for a high churn at the CEO level. Most have left in a huff. "They were asked to go," Chandra asserts. "Basically, I was rash in hiring people. But I took six months and five or six meetings to hire Pradeep. I wonder why he would want to change jobs at this stage. Anyway�," he says firmly.
The conversation veers to his amusement parks business under Pan India Paryatan. Esselworld and Water Kingdom, developed over 70 acres of land on the outskirts of Mumbai, are now facing competition from other recreational centres such as malls and multiplexes. "It is a tough business.
Though the gross margins are high - 40 to 50 per cent, you have to re-invest at least half of that money into the business every year to keep the interest of the visitor alive. It's like nightclubs, they go great guns for two years and then they shut down."
However, with 1,000 acres of land at his disposal in the same place, Chandra's SEZ plans are taking shape.
In the earlier policy, the SEZs were only for manufacturing. "Now even services have been included. So if you are providing services to a foreigner in an SEZ, it is counted as your foreign exchange income," explains Chandra who is planning an entertainment and tourism-related SEZ.
"We will set up nature cure institutes, ayurvedic centres and regular medical facilities. Health tourism is growing and foreigners can come for entertainment as well as treatment."
The business plan falls in line with Chandra's passion for Vipassana, a form of meditation that originated in Myanmar. Vipassana students have to observe silence for 10 days that they spend at the centre.
"Actually it is the only time you spend with yourself. Otherwise you are working for something or the other including your own ego." Does Vipassana kill ego? "It helps to control it. It's helped me control my anger. I was very short-tempered earlier. It teaches you to accept reality."
A discussion on acceptance of reality is a good time to ask about succession planning at Essel Group considering two of Chandra's sons - Punit and Amit Goenka - are now in the business. "Why just two, there are seven boys between the four brothers, who are in the business. And yes, there is a succession plan in place," he says, not keen to elaborate.It's time to take my leave. Just one query as he opens the door: which designer label is he wearing? "No idea. My wife got this kurta for me." How does Mrs Chandra cope with such a busy man? "She is a Hindustani wife. Any other woman would have left me by now," he says, only partly in jest.