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





Why I Love Jagdish Khattar

22 05 2008

By all accounts, Jagdish Khattar, who retired recently as the Managing Director of Maruti after a successful stint of eight years, has had an exceptional career. If Maruti continues to be the market leader with over 50 % market-share even today, a lot of credit should go to the leadership provided by Mr. Khattar.  

 

Mr. Khattar joined Maruti in 1993 as Marketing Director. Maruti then enjoyed 80% share of the passenger car market in India.

 

Unfortunately, Maruti’s brute market dominance had engendered a culture of complacency bordering on arrogance. As a Joint Venture between Suzuki Corporation, Japan and Government of India, it was a hotbed of conflicts involving ownership and management control issues.

 

 The relationship between Suzuki Motor Company (SMC) and Government of India (GOI) became particularly strained in the 1990s. The GOI nominee, R.S.L.L.N Bhaskurudu who took charge as the MD in 1997 for five years, was considered incompetent by SMC. The directors nominated by SMC voted against him.

 

In 1999, this impasse was broken, when the newly elected NDA Government nominated Mr. Khattar as MD replacing Mr. Bhaskurudu. Mr. Khattar had his baptism by fire as a slew of new car launches like Santro, Matiz and Indica brought down the market-share of Maruti to an all-time low of 45%.

 

Maruti made its first ever loss in 2000.

 

While Mr. Khattar was readying to meet the challenges of the marketplace, a big crisis erupted inside the organization.

 

 In October 2000, Maruti had a major strike by its workers against the management’s move to link incentives to productivity. Mr. Khattar displayed sterling leadership qualities in handling this strike. He did not buckle under the pressure from the labor union.

 

Mr. Khattar took a gutsy and innovative decision. He got the employers of Maruti’s vendors to chip in along with those employees who defied the union. Within seven days the factory output bounced back to full capacity. The labor union finally gave in to the management after trudging on fruitlessly for 90 days.

 

 

By implementing a voluntary retirement scheme and a new incentive policy, Maruti was able to increase its productivity by two-and-a-half times. On quality parameters too, Maruti made radical changes shifting from internal standards to global benchmarks.

 

On new products launches, Mr. Khattar had a mixed record. Alto, Wagon R, Swift and SX4 have all been unqualified success, whereas Versa and Baleno failed miserably. But on the whole, Mr. Khattar’s strategy of offering a model at critical price points has worked well. Despite the entry of almost all the car majors of the world into the Indian market, during Mr. Khattar’s tenure the market-share of Maruti has never dipped below 50 %.

 

 

Under Mr. Khattar, Maruti transformed itself from a manufacturing- led organization to a customer focused one. Maruti increased its distribution network from 50 dealers and 60 showrooms to 250 dealers and 400 showrooms. Maruti through its dealers started offering an all encompassing bouquet of customer services including insurance, finance, pre-owned cars ( True-value), accessories and extended warranty service.  

 

 On customer satisfaction, Maruti’s success can also be judged by its winning the J.D.Power Customer Satisfaction Award five years in a row. Mr. Khattar himself has received the J.D.Power’s Founder’s Award for his distinguished service to automotive consumers in India. The stature of this award can be gauged by the fact that only 20 companies or individuals have received this award worldwide.

 

 

It is not that Mr. Khattar’s success stories are limited to Maruti. Mr. Khattar in his long stint as an IAS officer, served in various positions such as the Head of Tea Board and also as the Chairman of UP State Transport Corporation ( he discovered his passionate interest in the transport industry during this stint).

 

He has left a mark at all his assignments. By his own admission in 1993 when he left IAS, the then Cabinet Secretary, had hinted that he had a good chance of rising up to become the Cabinet Secretary, the highest position  a civil servant can attain in India.

 

Mr. Khattar’s flair for marketing came to the fore when he served as the Director of Tea Board in London from 1979 to 1983. At a time when India was exporting 10 million kg of Darjeeling tea, UK was selling 40 million kg of Darjeeling Tea. Obviously, a lot of other teas were being sold under the guise of Darjeeling Tea. Mr. Khattar launched a multimedia campaign  (Sunil Gavaskar and Ian Botham starred in the TVCs) against spurious varieties of Darjeeling Tea. 

 

Capturing the essence of his pragamatic management style once Mr. Khattar said, “In my 37 years of management experience, I have learnt that good management is not learnt through text books or through some form of divine right to manage. I have learnt the most through my employees and colleagues and I invariably have found that sharing and discussing work problems honestly and clearly with my staff bring about the best results.” Incidentally, Mr. Khattar, a non-MBA,  is an arts graduate from St. Stephen’s College, Delhi.

 

Mr Khattar’s entrepreneurial  streak ( what a contrast to a typical IAS officer’s mindset!)  is borne out by his post-retirement launching of a new venture which will be India’s first independent , all-India, multi-brand auto sales and service network on the lines of Auto Nation, USA.

 

 

For someone who tasted public adulation early as a child actor made famous by the Naushad score “Nanha munna raahi hoon…”  in  Mehboob Khan’s 1962 hit  Son of India, Mr. Khattar has never stopped performing.

 

How many corporate honchos can boast of such a varied and productive career?

 

– G. Mohan.





Why I Love Captain Gopinath

15 04 2008
When Mr. Vijay Mallya took over Air Deccan in June 2007 , both Mr  Mallya and Captain Gopinath projected a united front. By appointing himself as the Chairman and Captain Gopinath as the Vice Chairman, Mr. Mallya made it clear who would call the shots. The official communication stated that Air Deccan and Kingfisher would co-exist as two separate airlines, Air Deccan being the Low-Cost Carrier and Kingfisher being a full service airline. The synergies were apparently in the back-ends because both had a Airbus fleet.
 
From October 2007 onwards when Air Deccan went ahead with a rebranding exercise, it became clear that it was slowly losing its identity and getting prepared to be merged with Kingfisher The blue and yellow  Air Deccan colours gave way to Kingfisher red and white. The font was same as Kingfisher’s. Also, its mascot, Mr. R.K Laxman’s common man was dropped and the simple yet elegant logo of  two hands joined together, gave way to the Kingfisher logo.
 
Now we hear the two airlines will be merged and Air Deccan will no longer exist. Captain Gopinath will leave the passenger airline business and start a new business in logistics, which will probably be called “Deccan Cargo.”
 
Air Deccan may not exist tomorrow  but no one should forget the role it played  in bringing about a radical change in the aviation sector in India. Captain Gopinath by creating a Low Cost Carrier business model made millions of Indians fly for the first time. He linked small cities like Hubli, Pathankot, Raipur and other places which even the national airline did not operate in. Air Deccan showed the power of the Internet in a country like India by selling the tickets through net only. Now comparitive shopping of air tickets on the Net is assumed as a natural way of purchasing air tickets.
 
Air Deccan had its huge number of detractors who cursed it for its cancellations, unreliable service etc, but if they were paying lesser fares for their Jet or Indian Airlines tickets it was thanks to Air Deccan.
 
Captain Gopinath is a gutsy and tenacious entrepreneur with flair for disruptive strategies. I am sure that he will make a success of whatever business he gets in.
– G. Mohan







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