Subhash Chandra, the founder and executive chairman of Essel Group, has built up a diverse conglomerate with sales of more than US$2.5 billion and interests in packaging, television broadcasting, direct-to-home (DTH) television, amusement parks, online lotteries, construction, real estate, education, microfinance and a lot more.
What makes him different, however, is that he has almost always been the first mover, foraying into sectors long before they were considered to have business potential in India. In packaging, he went into laminated tubes with Essel Propack (then Essel Packaging). The company is now the global market leader with a presence in 14 countries. Similarly, in amusement parks, TV broadcasting, online lotteries and DTH, Chandra braved the unknown while others sat on the sidelines.
It hasn’t always been easy: In packaging, his first organized venture, his company saw five years of losses before its products were accepted. His amusement park, EsselWorld, didn’t attract enough visitors. His TV venture led him into a head-on collision with global media mogul Rupert Murdoch. Even today, he is fighting with the Board of Control for Cricket in India (BCCI). The Twenty20 cricket tournament was Chandra’s idea, and he was the first mover with the creation of the Indian Cricket League (ICL). However, the BCCI intervened, declaring the ICL illegal and banning players from participating. The BCCI then started its own very successful Indian Premier League. The matter is now in the courts.
The new, new thing for Chandra today is Veria — a health and wellness TV channel, website and chain of retail outlets in North America. He predicts it will be a US$2 billion business in five years. He is also making a major move into infrastructure development, but he is not so excited about that because the playing field is already crowded. “I always like to be number one or number two in any business I am in,” he says.
In an interview with India Knowledge at Wharton, Chandra spoke about the launch of Veria, the growth of his other high-profile ventures and how he recognizes entrepreneurial opportunities. He also discussed a plan he recently finalized to divide his group among himself and his three brothers. In an era when acrimonious family splits are making headlines daily, Chandra says the arrangement will serve as a model for other business families.
Excerpts from the interview follow:
Knowledge at Wharton: You are launching a new “wellness” channel in North America. What exactly is Veria, and when will it go live?
Subhash Chandra: Veria is a comprehensive “wellness” business model comprising a TV network, an e-commerce web portal and select retail centers. We started work on the project two years ago and the channel was soft launched six months back. The official launch in the U.S. across various networks is planned soon. Just as ZEEL [Zee Entertainment Ltd., the flagship TV broadcasting company] has emerged as the “A to Z of entertainment,” we foresee that Veria will provide ways to live in harmony with nature and result in “healthy living” for modern society.
Knowledge at Wharton: Why are you launching it in the U.S. first?
Chandra: I would like to emphasize that the launch of Veria is scheduled in the U.S. first, but it is eventually destined to be a global business. The American market today has a society that is striving … for a healthy lifestyle. Many people are looking for products and services that provide a comprehensive wellness solution for the modern day lifestyle. This is where Veria comes in as the one-stop shop for the wellness needs of modern society.
Knowledge at Wharton: There are similar channels and “wellness” chains in North America. What is the unique selling point of Veria? What does the India origin of Veria add to its appeal and offerings?
Chandra: Veria is driven by both business prospects and missionary zeal. Indian civilization is 5,000 to 6,000 years old and it has given the world traditional — natural — remedies for healthy living. This civilization also knows how to live in harmony with nature. In short, [that] is the concept of “wellness.” The world has today acknowledged the efficacy of Indian traditional products and their benefits.
On the other hand, the Essel Group as an organization has had the privilege of meeting the entertainment needs of the Indian diaspora with distinction over the years. Essel products enjoy a high brand recall and reputation for quality among consumers in the North American market. The combination of our Indianness and our experience of operating in the North American market with distinction gives us a competitive edge.
Knowledge at Wharton: How big a business do you see this becoming? What is your investment up to now? What are your future growth plans?
Chandra: The channel will start in North America and will eventually become a global business. It will be available in India, too. Veria is a privately held company and has seen strategic investments of over US$200 million. I see it as a US$2 billion business in five years.
Knowledge at Wharton: Dish TV — your direct-to-home arm — is raising US$200 million in overseas markets. What has been the response? What is the money for?
Chandra: The response is encouraging and we are hopeful of completing the exercise very soon. This money is being raised for expenses on account of acquisition of subscribers, the creation of sales and distribution infrastructure, brand building and setting up the service network.
Knowledge at Wharton: How big is Dish TV in terms of customer numbers? What sort of market share do you have?
Chandra: Dish TV has around 5.7 million subscribers and the market share is around 40% in a five-player market. The distribution of subscribers is across the country in almost 6,600 towns and our product is available at around 75,000 outlets in various parts of India.
Knowledge at Wharton: What are your future plans for Dish?
Chandra: We want to touch 10 million subscribers in the next 12 months and remain a dominant player in this domain. We are already EBITA [earnings before interest, taxes and amortization] positive and hope to achieve cash breakeven in the next one year. We will continue to provide the largest number of channels at an affordable price. Our plan is to enhance the network of outlets in the next 12 months and Dish TV should remain the first choice of the customer in the DTH segment.
Knowledge at Wharton: Your television arm, Zee Entertainment, has recently regained some of its old glory; one week it was even number one in the ratings. How did you achieve this?
Chandra: The past few months have seen a remarkable change in the programming line-up of Zee TV. Our viewers have been offered a variety of fiction as well as non-fiction programming and we have redefined prime time programming by extending the time band. Our path-breaking reality show, Dance India Dance, was the highest rated reality show during its telecast. After its immense success, we will be bringing the second season of Dance India Dance soon. Zee TV’s Agle Janam Mohe Bitiya Hi Kijo and Aapki Antara are shows based on [social] issues. We have something for everyone on our programming platter. Our highly rated show Pavitra Rishta focuses on a family from Western India, whereas 12/24 Karol Bagh is based on a North Indian family.
Our recently launched epic show Jhansi ki Rani has also had an extremely positive opening. Also, our ongoing reality show Sa Re Ga Ma Pa L’il Champs is loved by viewers. A critical factor of our recent success has been that we have always kept our viewer in mind while working on a new show.
Knowledge at Wharton: India has more than 350 channels now and the number is slated to grow to more than 500. Is there room for all?
Chandra: The number of channels in the Indian market has increased tremendously from the time we started. We have seen many players come and go; it is survival and keeping a [connection] with the audience that matter. There is hardly any space for more channels. Hence, the new entrants will have to face the test of time.
Knowledge at Wharton: You had to fight News Corp. chairman Rupert Murdoch to set up your TV channel and later prevent a takeover. That was the time you made the famous statement: “India is not for sale.” Can you briefly describe that battle, including your efforts to tackle redtape in India? What would you say were the key strategies that led to your success?
Chandra: No comments.
(An unpublished, official history of the Essel Group offers a perspective on the face-off with Murdoch. An excerpt can be downloaded here.)
Knowledge at Wharton: You have a large number of businesses — some big, some small — in your group. What holds them together?
Chandra: It is the independence of the managing directors and CEOs, yet a sense of belonging to a large group.
Knowledge at Wharton: Have you gone into all these businesses simply because, as an entrepreneur, you found an opportunity? Was there a design to your diversification? What are your future plans?
Chandra: As an entrepreneur, I have always looked for opportunity. The diversification has been a natural process. Our future plan is to create an entertainment and tourist destination, either in Mumbai or Goa. This will be a theme park centered on the creativity of the human mind.
Knowledge at Wharton: Your biggest business — Playwin online lotteries — is also practically your newest. Can you tell us more about your plans here?
Chandra: With a turnover of US$729 million in the year ended 31 March 2009, Playwin is certainly the largest company in the group. Going forward, we have several new marketing initiatives planned, like the launch of a MyPlaywin.Com card to simplify gaming for all internet/mobile savvy customers, keeping in mind concerns like safety and convenience of transactions. The cards will be accessible at all Playwin retail outlets. One can use these cards to play games on the Internet and SMS [short message service] channels.
With the introduction of mobile applications, we have entered the market with yet another innovation which reaches out to our fast-paced customers. The new technology is simple and can be availed of by downloading a mobile application. This feature is compatible with almost every handset. It allows the player to play games with their mobile phone giving them the freedom to play games without having to boot up their desktop PC or trek all the way to a local Playwin outlet.
Knowledge at Wharton: How have you been able to be the first-mover — in India — in almost all your businesses?
Chandra: It is my belief that this depends on the talents one has. This talent is different from skills, knowledge or experience. These three things can be acquired, transferred or taught, but talent is by birth. Being able to smell opportunity before others is because of talent.
Knowledge at Wharton: You have recently disclosed that you have formally partitioned your group among the four branches of the family — your three brothers and yourself. Yet, as a family, you stay together. Can you tell us more about the reasoning behind this and whether you think it will stave off the increasingly acrimonious splits we are witnessing in Indian business families these days? (See, for example, “Ambani vs. Ambani: A Dispute over Natural Gas Prices Flares Up.”)
Chandra: The partition has already been done on paper. It has been written down that this company belongs to A and this company belongs to B. We have a nice arrangement among the four brothers. You can say we are all together. At the same time you can say we are all separate. We have a scenario where there is no question of any fight or discomfort. Even today, it allows everybody to work independently; it allows them to grow.
But these are personal issues; I would not like to talk more about this. Yet one day we would like to open up for the benefit of other Indian families to take advantage and avoid acrimony in the family.
Knowledge at Wharton: Thank you very much.