Subhash Chandra: Serial Entrepreneur Extraordinaire

29 08 2009

It is hard to say what the real business of Subhash Chandra is. Most people refer to him as a media mogul, but that hardly does justice to his interests in variety of businesses, which form part of the Essel group. Managing a diversified conglomerate is not such a unique distinction. What sets apart Subhash Chandra from the rest is that he was the pioneer in most categories and he saw opportunities in new areas, which was not visible to many established business houses.

Born in a business family in Haryana, Chandra’s family was engaged in rice trading. When Subhash Chandra took the reins of the family business, the family was in debt of Rs five lakhs. He along with his brothers got into rice trading and exports. His company used to procure and supply rice to Food Corporation of India. He earned a fortune exporting rice to Russia. On being asked pointedly by the interviewer, did he really make a huge fortune in that contract, he admitted that in 1983, there was an income tax claim of Rs 150 crore on his company.

He invested the capital created to enter the packaging business. Essel packaging was the first company in India to introduce laminated tubes for packaging toothpastes. Seemingly, packaging appears far removed from rice trading. Yet, Mr Chandra informed that while storing rice in open yards, he got exposed to variety of packaging materials and caught his attention. Today, Essel packaging is a world leader in laminated tubes with factories in all the five continents. It has a 38 % market share in toothpaste packaging worldwide.

 

The next venture of Subhash Chandra was Esselworld, India’s first amusement park. Although not very profitable, this gave him an insight into the family entertainment business, which had a big role in days to come. He  confessed in the interview that the Maharashtra government of the day was very oppressive and bureaucratic, compelling him to look outside the amusement park business for growth. He wanted to enter a business where there will be minimum hindrance between the entertainer and the entertained. This made him look at the television business.

 

Zee TV was the first Indian language channel on the satellite television. This went on to be a huge success. Subhash Chandra and ZEE did face a lot of difficulties in dealing with Rupert Murdoch and later even broke away from STAR. Zee lost its pole position in the General entertainment space in Hindi to Star Plus. Even today it is among the top 3 GE channel along with Star Plus and Colors. Zee TV network today has over 15 channels in many languages and as per Subhash Chandra, as a network they have the largest number of viewers and market-share in India.

 

Not content to sit on his laurels, after the Zee success, Subhash Chandra wanted to enter the satellite communications business, through Agrani. This was around the time when Motorola was launching the Iridium project. This technology had its inherent problems and could not compete with the cellular phone. Although Agrani, never saw the light of the day, this experiment led to his entering the Direct-to-home TV business, through Dish TV. Once again, the first private business house to enter the DTH business. Among all the listed companies of Essel Group, Dish TV has the highest market capitalization.

 

Subhash Chandra also pioneered the online lottery in India. Playwin had its brief period of success, later got mired in various legal troubles, as many states banned lotteries.

 

Essel group also has a moderately successful newspaper in DNA. It has been able to make a mark of its own in the crowded space. Subhash Chandra claims that during this recessionary times, DNA is doing better than others because of its low advertising tariffs.

 

One failure that may be causing Subhash Chandra a great deal of heartburn must be the Indian Cricket League (ICL). ICL had most of the ingredients to become hugely successful, except for the blessings of BCCI. Indian Premier League (IPL) which has borrowed many ideas from ICL has been a monster hit, in its two editions. Through means, fair and foul, ICL has been decimated by BCCI, so much so, that some of the best players it had contracted have left ICL. Subhash Chandra could have become the Kerry Packer of India if ICL had become successful. Nobody can refute that ICL was the first T20 league in India and credit must go to Subhash Chandra. 

 

Now, Chandra is itching to move on to something more exciting. He is also keen to enter businesses which are more annuities like, rather than the high-maintenance media business which requires continuous management attention. One idea his group is working on is in the area of creating a chain of wellness clinics across the country.

 

Subhash Chandra has his share of critics. He is considered a very mean competitor. He also has a poor record of professionalizing the management of his share market boom, Zee stock was among the favorites of the market. It got closely linked to Ketan Parekh. When the bust happened, many an investor incurred heavy losses in the stock, which they have not recovered to this day. He has had failed ventures too like Zee computer education and KIDZEE.

 

Yet, one cannot but admire this entrepreneur who has been spotting new opportunities and creating successful businesses, one after the other.

 

– G. Mohan

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SRK and the Pursuit of Cheap Publicity

24 08 2009

The mass media In India are crying hoarse that India’s national icon, Shahrukh Khan (SRK) has been humiliated by the US immigration authorities. SRK was subjected to two hours of checking at the Newark airport, apparently because his surname is Khan.

A look at the headlines in two prominent newspapers on 16th August : The Times of India carries on the first page “Name’s Khan : SRK grilled at US airport”. Deccan Chronicle carries the headline ” SRK detained for being a  Khan.” One should not be surprised at all that these headlines are inspired by the upcoming movie of SRK, My name is Khan, directed by Karan Johar.

SRK and Karan Johar are using what could be brushed aside as a routine check to bring attention to the fact that SRK is being grilled because his name is Khan. A two hour detention of a largely out-of-work actor who has not had a single release in 2009, should not be national headline news any way.

This is free publicity for the upcoming movie – . My Name is Khan.  The media is playing into the hands willingly or unwillingly into the hands of SRK and KJo who are both very adept at managing the media and journalists.

The Indian mass media is either gullible or they have been co-opted. Worse, it could be both. Do we deserve such media? Should we not punish such publications for taking us to be a nation of suckers by taking our business elsewhere?

–       G. Mohan





Speaking Tree or Venality : A Disgrace Called The Times of India

24 08 2009

Excerpts from The Times of India’s last Saturday (22nd August) edition’s    Speaking Tree follows:

 

“When Kaikeyi approached Dashratha for the grant of her boons, he was devastated and broken. How could he send his beloved Rama to exile? How could he deny him, the righteous one, the throne? How could he nominate Bharata as his successor?

But, equally, could he afford to break his word, not keep his promise? Dashratha knew the answer but he had his moment of doubt.

Rama had none.

When the news of his terrible fate was broken to him – by Kaikeyi, not Dashratha, who was too distraught to talk, one might remember – he was the very picture of tranquillity.

If father had given his word, could Rama ever think of going back on it! His was to obey, not question, follow, not doubt, surrender, not seek. Raghukula Riti Sadaa Chali Aai, Praan Jaahun Paru Bachanu Na Jaai . (Ayodhya Kanda). Could there be a higher example of trust?

Lord Rama knew in his heart, as a billion Indians do, that trust is not about taking short-cuts, it is not about taking the easy way out. Trust is all or it is nothing. Make a sacrifice if necessary; but do what is right rather than what is convenient.

Trust is also my father’s proudest legacy to all of us, our most precious inheritance.

Sadly, a legacy might not be forever. More than what you get, it is what you make of it. Cherish it, and it grows. Neglect it and it wilts. Like a tender young sapling, it demands constant care and concern.

Looking back over the last few years, I am deeply and painfully aware of how easy it is to lose touch with one’s values. How easy it is to let one’s samskaras turn into empty words without meaning or intent.

How easy it is to let the obsession with self – ‘I, me, mine’ – vitiate even the purest, most selfless of relationships – the bond between a child and his mother.

This takes us beyond trust to a realm yet higher; a realm so sacred, so exalted that it is likened, in our scriptures, to divinity itself. There is no higher duty, purpose or end in life, say our epics, than an unconditional surrender to a mother’s love, a supreme respect for her will, a devotion to her well-being.

“Verily,” say the Vedas, “the mother is God”. “Matrudevo bhava!” proclaims the Taittriya Upanishad. “Honour thy mother. Look upon her as God.”

Can one worship God without total trust? Can one show her reverence without bowing one’s head in absolute humility? Can one break a word spoken solemnly in her presence?

And if one does – in the mindless pursuit of power, ego or material riches – what has one gained and, more importantly, what has one really lost?”

 

Guess who is the writer? The holyman dishing out this discourse is not a religious preacher is none other than our Forbes 500 Tycoon Anil Ambani. The father under reference is Dhirubhai Ambani. By invoking the Ramayana, Anil Ambani is clearly hinting that Dhirubhai is like Dasaratha. He is like Rama, the wronged one. (Extending it his wife Tina – Sita, and J.P.Chalasani, his Hanuman, ha!ha!ha!).

 

Dhirubhai Ambani was undoubtedly a great entrepreneur. He was hardly, the paragon of virtues, he is made out to be, by his son, Anil. In his desperation to win the ongoing battle for gas with his brother Mukesh, he is assuming the role of Maryada Purushottam Rama. Even if wishes to assume such a position, why should a national paper like TOI lend him the sanctity by publishing the piece as a spiritual article under  Speaking Tree  – a column which in the past  had  featured  many genuine seekers of the metaphysical truth? Don’t tell me that the advertising revenue earned from ADAG companies has nothing to do with TOI provide some rented halo to Anil Ambani’s hypocrisy. Pray, what will remain of  the Speaking Tree brand after this despicable sellout! How low can TOI stoop!!

 

– G. Mohan.

 

P.S. – This is not the first time! TOI  had allowed  Anil Ambani to use the hallowed space of Speaking Tree  to score  some points against  Mukesh Ambani when the feud between the brothers became public five years ago.





Lower Returns from Higher Education: A View from Hyderabad

22 08 2009

 

This is that time of the year when  professional colleges in AP conduct their counseling sessions for fresh admissions to Engineering, MBA and MCA courses. The students armed with  their entrance test (EAMCET and ICET) ranks  under considerable stress jostle for  information on colleges, streams, vacancies, fees etc and making their career choices. This year in AP and perhaps in many other states the managements of the colleges are also under stress, more than possibly the students.

 

Blame it on the global financial crisis. The global financial crisis may have had a nominal impact on the Indian economy, but the impact that it had on the employment scenario of fresh engineers has been significant. The IT and ITES companies which have been the largest recruiter in the campus until last year have virtually stopped recruiting. Out of the over 180,000 engineers who passed out from AP in 2009, no more than 10,000 were taken by the local IT industry.

 

The poor placement performances in 2008 and 2009 have had a telling impact on the preferences. There is an about-turn in the demand for disciplines which feed the IT industry from being the most coveted to the most avoided. The engineering disciplines like Information technology, Computer Science and Electronics are being avoided like plague. Similar sentiments prevail for MCA admissions too.

 

For AP, that has the distinction of having the largest number of engineering colleges in the country, numbering 577, with over 240,000 seats. Nearly 100 new colleges got their approvals in 2009 alone.

 

The drop in demand and the increase in supply have created a huge glut in engineering and MCA seats in the state. This has forced the managements of many private colleges to go on an advertising campaign to enroll students. Education fairs are being held all over the state to persuade students to join a particular engineering college. There are canvassing agents appointed who promise colleges in relatively better colleges even if the candidate has a lower EAMCET rank.

 

Out of the 242,000 plus students who took the EAMCET admissions test for engineering admissions, over 81,000 students who had a rank did not show up, even after two rounds of counseling. This would mean that many seats would go vacant. The Deccan Chronicle quotes Mr. Rajeshwar Reddy, the General Secretary of AP Engineering Colleges Association

 

“This is not a good sign. If thousands of seats lie vacant, then it will not be financially viable to run colleges.”

 

When, the merit based seats are going vacant, then the demand for management seats would be even lower. Usually 20% of the seats are reserved as management quota and the management quota fees are usually four times the free payment seats. The entire business model of private engineering colleges is based on the earnings from management quota. Now, this assumption has been severely impacted.

 

The admission scenario in MCA is also similar. MCA seats have also increased this year, but the number of students opting out of MCA counseling is very high. The MBA admissions scene is slightly better. In fact, many colleges which offer both MCA and MBA are asking the government and the university to convert their MCA seats into MBA seats. A news item reports that even general graduation seats for BA/B.Sc in universities are going abegging, thanks to the huge number of seats in engineering.

 

As if the placement and admission blues were not enough, there are huge question marks being raised on the quality of engineering education in the state. The raids on AICTE officials first came to light in AP when an AICTE official was caught red-handed seeking money for accreditation while dealing with an AP based engineering college. As if to prove that the quality of education was indeed poor, the pass percentage for first year engineering at JNTU, the technological university which oversees the technical education in the state, had a meager 29 %. Out of the 1.8 lakh students who appeared for the first year, only 49,000 could clear the exams. This is in a university where most students rely on guides like “All-in-one” (a guide where last three or five years’ exam papers of all subjects are solved) and usually the exam papers usually do not change, including the order in which the questions appear.

 

If really the quality of the education was superior, surely the government could have allowed foreign or non-local students to come in, but it is not.

 

Each of the stake-holder needs to take blame for this mess

 

  • The IT and ITES industry which created in an illusion that they will continue to grow at 25%+ year-on-year. NASSCOM projected a 500,000 shortfall by 2010. Instead of a shortfall, India will have a huge surplus. The industry also in its eagerness to keep up with their own growth targets, allowed the quality to fall.
  • The students and their parents who rather than looking at planning the careers based on the capabilities of the student, got carried away by the hype of the IT industry. Also, taking such a short term view now by avoiding the IT oriented disciplines.
  • The promoters of the engineering colleges and the politicians (usually both are same), were too greedy for short term profits and assumed that whatever the quality of their delivery, the demand for higher education will continue.
  • The less said about the regulators AICTE, UGC and universities the better.

 

This correction in the higher education sector is long overdue. When the regulators are lax, the market forces have their own mechanisms to correct such anomalies. Hopefully, in this correction phase, the wheat will be separated from the chaff and many of the hole-in-the-wall teaching shops will close down and  the balance in the demand for different streams of higher education will be restored.

 

At the end of this phase, if the standard of higher education in India gets better and the employability of the output of its institutions is improved not only  the IT/ITES sector but the all other sectors of the knowledge industry, this pain would have been well worth it. 

– G. Mohan





BPO : Taylorism Redux

11 08 2009

Recently I had an opportunity of interacting and studying Business Process Outsourcing (BPO) operations closely. Till now, I had read about them in media and through books like Chetan Bhagat’s “One Night at a Call-center”. The perception that I had about BPOs  was of fun places as many young boys and girls work together. Their steel and glass buildings with multiple levels of security are so intimidating that I never ventured going beyond their reception. 

The BPO unit I visited is a captive unit of an MNC financial services company. Besides, the traditional voice-work, this unit also does a lot of non-voice work. I had some vague idea of what this non-voice or transaction processing entails. But I had never got a chance to look at them closely.

I met a small team of young MBAs who were engaged in the P2P process. One team is engaged in servicing their US offices and other their UK offices. (P2P is BPO jargon for procure-to-pay. Procure-to-pay in turn is what we would call the traditional purchase or procurement process). At the end of the interaction, I am amazed, bewildered and depressed all at the same time.

I am amazed because of the level of sophistication which the MNC have been able to bring to a rather routine process of procurement. It is not just the use of IT systems but doing away with the very concept of a store. Most purchases are where the user directly places the order with the vendor and the vendor supplies, based on a pre-agreed service-level agreement. I have not seen any Indian company taking so much care to study their vendors’ business and risks associated with doing business with their vendors. For most Indian companies vendor registration is a one-time affair and after which it is more of a relationship between the vendor and the purchase manager. There is no concept of an inspection, either before dispatch or after receipt. If the user complains about quality, the vendor will have to address the complaint.

I am bewildered because the rather short P2P process has been broken into as much as 60 activities. The activities range from Business analysis of the vendors, financial analysis, risk assessment of the vendors to contracts uploading, invoice verification and settling disputes. The items purchased are bunched into various categories and there is a separate buyer for each category. For example, there is a buyer who looks at the paper category. His entire job is to finalize contracts for 1000s of different types of stationery and paper items the company requires.

What depresses me is that out of these 60 activities, each employee just handles 2 activities. Day-in and day-out he or she is just doing the same activities repeatedly to achieve efficiency. The employee has little or no idea of the other activities in the full process. Besides emails and phone calls, they have no idea who the user of the materials or service is. Most of the materials they buy is just a code on the IT system and they may have never seen the item physically. They also have no face-to-face interaction with the vendor with whom they negotiate on behalf of the company. The hard work that they put in for nine hours everyday is largely irrelevant outside of the company in which they work. Hence, there is no real domain knowledge or skill they acquire doing this repetitive activity. Even though the work is carried out from India, the employees have little or no clue of the Indian business context.

The work-processes in a BPO like this remind me of the scientific management principles of Frederick Taylor. Taylorism is a theory of management that analyzes and synthesizes workflows, with the objective of improving labor productivity, division of labor. The key criticism of Taylorism was that it pushes division of labor to such extremes, that it leads to de-skilling of the worker and depersonalization of the workplace. I see Taylorism beneath the glossy façade of BPOs.

There is much that Indian industry has to learn from the MNCs in terms of business processes and management. But, it is too naïve to expect that the employees of these captive BPOs would be able to transfer this knowledge. The presence of such cutting edge MNCs in Indian soil will have little benefit for the Indian industry.

– G. Mohan





Pulsating Price of Pulses

5 08 2009

 

Dal roti khao, prabhu ke gun gao!”- is an old Kishore Kumar song of the ‘70s. This used to be the earthy philosophy of “Simple living, high thinking” of the middle-class India. Dal or pulses are an important constituent of the Indian diet whether in the South or North, rich or poor.

 

The prices of pulses are rising so fast that it is soon going to be out of reach of the Indian middle class. Tur Dal, also known as Arhar Dal, prices have risen from Rs 65 per kg in June’09 to Rs 96 in July (Hyderabad retail prices). There is news item in the papers that this is soon going to reach Rs 120 per kg in August. The prices of other pulses have also risen steeply, although the extent of increase is the highest in Tur.

 

The newspapers mention it is a combination of poor crop and inability of the government to import pulses from Africa which has led to this steep increase. Hoarding by the intermediaries also might be contributing to the hike in prices.

 

In India where governments have fallen on onion price increases, it is remarkable that the price increase of food items, particularly pulses, is hardly on the political agenda today. The main opposition party, BJP is staging walk-outs in the Parliament on Indo-Pak declaration issues. The main rabble rouser inside the government, champion of the ‘common peepul’ Mamata Banerjee is throwing tantrums on the land acquisition bill. Left is too busy fighting itsown quarrels.

 

The UPA came to power riding in the name of policies for the Aam Aadmi. To my mind,  the Aam Aadmi, more than being the target of their policies,  has become a mascot for catching votes. The UPA government has been particularly lucky that many of the Aam-Aadmi’s problems like inflation have surfaced only after the elections. The crude oil price increase and now the monsoon failure leading to inflation and crisis in agriculture have all happened after the elections. The Union Minister of Cricket, who incidentally also looks after agriculture as an additional responsibility has little interest in addressing these problems. Elections in Maharashtra must be on his mind.    

 

The Prime Minister who sees India through the files that come to him is still quite pleased that inflation is under check because the WPI for the last week is -1.2 %.

 

Meanwhile, the Aam Aadmi lives Ram Bharose! He is looking at the Rain God with hope, so that he can put some dal on his child’s plate. 

 

–          G. Mohan








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