n Modi’s UK Visit

n bengal’s tea gardens

n triVitron

n garware wall ropes

`40

November 23-December 6, 2015

RNI No.35850/80; Reg. No. MCS-123/2015-17; Published on: Every alternate Monday; Posted at Patrika Channel Sorting office, Mumbai-400001 on every alternate Wednesday-Thursday

Powering Ahead

Sanjiv Goenka has consolidated his patrimony and is now growing fast

sanjiv goenka Chairman

RP-Sanjiv Goenka group

shashwat goenka Sector Head Spencer’s Retail

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after making a big splash across indian media in the 1970s and ’80s, rpg enterprise quietened down and carried on

as a well-known business group. in 2010, things changed in Kolkata, when the late rama prasad goen-ka’s (fondly known as rpg) business empire was split between his two sons harsh goenka (of ceat house)

and sanjiv goenka (of cesc victoria house). by the terms of the amicable split, harsh retained ceat as his flag-ship, along with power equipment maker kec international, it com-pany zenser technology and pharma firm rpg life science, while sanjiv goenka received power generation and distribution major cesc, carbon black manufacturer philips carbon black (pcbl), retail chain spencers’

Powering aheadSanjiv Goenka has consolidated his

patrimony and is now growing fast

Sanjiv and Shashwat Goenka: smiles of success

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and saregama, the music and televi-sion production company. the latter branch is now called the rp-sanjiv goenka group (rpsg).

“it is a natural way of progression of life,” says sanjiv goenka, talking about the separation. “the separa-tion was inevitable; it is good that it has happened. now, our group is a lot more focussed on business and driven by operational excellence than in the past,” pointing to the 80-90 per cent perking up of his group’s financial highlights in a 50,000 employee company, with gross assets of `31,000 crore. there were staffing and managerial accountability issues that sanjiv had to take head on. “the changes in management style did not go well with some top manage-ment people, who hardly had any knowledge of the company’s day-to-day operations,” sanjiv recalls. “and so, they reacted adversely ini-tially. one of them even told me that now i am acting like an owner. but i have told them in a review meet-ing that accountability and expecta-tions have been defined and no one is above that.”

it took him a few years to get the house in order, making many changes at the top level. he also hired mckin-sey to review and advise on his sta-ble, as also chalk out a growth plan. sanjiv has been joined by his 25-year-old wharton graduate son shashwat since 2012. he now runs spencer’s. he was close to his grandfather. shashwat is also the vice-president, indian chamber of commerce.

“the split was the best thing to have happened for both the brothers,” says g.p. goenka, chairman, duncan goenka group, rpg’s younger brother and uncle of sanjiv and harsh. “both are diametrically opposite in nature, which could have hampered business decisions. also, the next generation has come to play their roles in the business. and they needed free hands to explore the new business oppor-tunities, which cause barriers some-times in joint family businesses.”

“there is a paradigm shift in the approach of the company now,” says r.K. jha, president, corporate, who oversees the group finance. “people are now more growth-oriented than

previously. the group’s sustainable growth for the last five years has cre-ated shareholders’ value,” (see table: group level financials).

Positive interest“the group has demonstrated good performance and healthier corporate governance in the last few years,” concurs alok ranjan, head, portfolio management, way 2 wealth securi-ties. “and the investment commu-nity is now showing positive interest in them.”

the flagship of the group, cesc, has the sole licence to provide power to Kolkata and the industrial suburbs.

it also has a transmission and distri-bution network. “do you remember hours of load shedding in the 1970s and 80s, for which calcutta had become infamous,” queries sanjiv. but, after the commissioning of the 500 mw plant at budge budge in 1997 (which was later enhanced to 750 mw), calcutta has never had load-shedding again. cesc, india’s fourth largest private power utility, along with its subsidiaries haldia energy and dhariwal infrastructure, today generates a total of 2,325 mw ther-mal power and 60 mw of renewable power. cesc services almost 3 mil-lion consumers in an area of 567 sq

km of Kolkata, howrah, hooghly. it operates three thermal power plants generating 1,125 mw of power in the licence area – budge budge generat-ing station (750 mw), southern gen-erating station (135 mw) and titagarh generating station (240 mw), with 50 per cent of the coal procured from its own captive mines.

as part expansion, cesc has set up a new 600 mw power plant in janu-ary this year at a cost of `4,600 crore in haldia near Kolkata under a sub-sidiary named haldia energy limited “setting up a new plant was neces-sary, with peak summer demand growing to 2,035 mw,” says anirud-dha basu, managing director, cesc. “apart from budge budge, cesc has two other power plants, which are old, located within the city with no place to expand and will have to be shut down.” the halida plant uses the shanghai electric boiler-turbine generator package. for the bop (bal-ance of plant), the contract has been given to punj lloyd.

haldia energy has signed a fuel supply agreement for its coal require-ment with mahanadi coalfields, about 500 km away in orissa, which is a subsidiary of coal india. water for the plant is being taken through a 14 km long pipeline and stored in two reservoirs located inside the plant. “it is a state-of-the-art technology power plant,” says sudipta mukher-jee, general manager, haldia plant. “its boiler can burn a wide variety of coal efficiently and can meet the environmental standard too. it has got an eco-friendly dry ash handling system; and compatible materials are used to purify the saline water. last month, our plf was 93.5 per cent.”

a unique feature of the power plant is the 400 kv transmission line from the plant going over the ganga to its distribution substation at sub-hasgram near Kolkata. the transmis-sion towers at the river crossing are india’s tallest (236 metres) and the heaviest (1,800 tonnes), spanning (1.5 km) a busy shipping lane and designed to withstand hurricanes. they were designed by elias ghan-noum at a cost of ̀ 500 crore. simplex infrastructure did the deep founda-tion in the silt filled river, while kec

(` crores) FY15

CESC 6,274

Philips Carbon 2,687

Saregama 189

Firstsource 3,041

Harrisons Malayalam 167

Spencer’s 1,672

Others (Pvt. Cos) – non-listed 1,480

Total 15,510

Group’s gross revenue

Powering ahead

(` crores) FY11 FY15

Gross assets 16,267 30,725

Gross revenue 8,342 15,511

EBITDA 1,428 2,547

PBTD 1,026 1,700

PBT 617 1,070

Group level financials

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has erected the towers.in 2009, the undivided rpg group,

for the first time, had ventured out of bengal for power generation, with cesc acquiring a 600 mw power plant in chandrapur, maharashtra, for `4,000 crore. it was built by dhariwal infrastructure of the manikchand group; however, the project has not been generating power due to the fuel supply agreement (fsa) still pending and the acquisition has been mired down in red tape ever since. as per the norm, any change in ownership will have to be disclosed to the coal ministry for fuel linkage, which was not done in this case. so, the ministry has asked cesc to apply afresh.

the matter has gone to court. and, cesc is losing about `350 crore in interest costs each year. the chandra-pur project has suffered mainly due to changes in the government policy. “we expect things will be resolved soon,” says basu. some reprieve was felt when the standing linkage committee cleared the coal linkage. now, the company is waiting for the approval from the ministry for the fsa soon and will supply power to tamil nadu generation & distribution cor-poration, among others.

Cool journeyrpg’s journey with cesc since 1989 was not always smooth. in the late 1990s, the company was struggling to get the power tariff revised from the government. the power minis-try of bengal headed by sankar sen sat on the revision for a long time, because the ministry thought cesc’s claim for revision was illegitimate. people in the industry feel that the erstwhile west bengal chief minis-ter jyoti basu, who got on well with rpg, intervened in this matter to make peace between the power min-ister and rpg. but, with the input cost increasing and no correspond-ing tariff revision for years, cesc suffered losses for a few years till early 2000.

also, the power regulatory body, which was formed in 1999 to decide on the power tariff, raised the tariff by 4 paise only, without bothering to get into an in-depth analysis. the company then went to the supreme

court and, after two years of wait-ing, the court set the tariff right – raising it by 30 paise a unit in 2003. this resulted in a recovery of `520 crore over 60 months and brought a sharp upswing in the company’s for-tune. it never faced a major problem from the regulatory body thereafter. it has also initiated an efficient cost structure mechanism and increased power generations substantially.

also, the introduction of an anti-power theft bill helped cesc to reduce the t&d losses. today, it is running the services efficiently in the city. in

2013, the government also renewed its licence for a further 25 years.

cesc has always bettered the national average in most data. its plant load factor (plf) is 86.52 per cent, as against a national average of 64.5 per cent for thermal plants. ntpc comes next, with a plf of 85 per cent, claims the company. it is also proud that its budge budge plant has a plf of 89.08 per cent. “we are planning to become a centre of excellence and a model for other players,” basu says. boston consulting group is striv-ing to reduce generation costs and increase the efficiency of the budge budge plant.

energy conservation goes beyond the plant level for cesc. the group’s headquarters at the 80-year-old vic-toria house has received gold certifi-cation under the leed rating system for existing buildings this year from the us green building council for demonstrating its commitment towards environment sustainability.

“ours is the first heritage build-ing in india to get a leed gold rat-ing. we have improved significant savings on electricity, water and air quality here. now, we will try and repeat this achievement in our other buildings and also in Quest mall,” says b.l. chandak, executive director, cesc. personal collections

(` crores) FY11 FY12 FY13 FY14 FY 15

Gross

revenues 4,247 4,782 5,410 5,609 6,274

PBT 614 693 773 825 883

PAT 488 554 618 652 698

(` crores) FY12 FY 13 FY 14 FY 15

Gross revenues 2,294 2,865 3,108 3,041

EBITA 223 325 364 387

PBTD 165 247 279 316

PBT 76 159 203 244

PAT 62 146 192 234

Firstsource’s financial results

CESC stand-alone financial result

Subramaniam: aiming for rapid growth

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of paintings and sculptures by indian and international famous artists adorn the chairman’s floor.

cesc had lost the coal block in september 2014, when the supreme court cancelled all coal block allo-cated by the government since 1993 in the country. however, it managed to take back the control over the sari-satolli coal mine in asansol in may 2015, with an aggressive bidding of `470 per tonne through an e-auc-tion process. the sarisatolli mine has a rated capacity of 3 million tonnes. “the whole city would have gone through 8-9 hours power cut each day, if we had not got the mine back, since it supplies 50 per cent of our needs,” says sanjiv, justifying cesc’s aggressive bidding.

Facts and figuresas the coal linkage and fosil fuel are likely to create problems in future for power generation, cesc has been planning big on renewal power. “we are planning to invest ̀ 3,000 crore in renewable wind and solar energy in the next two years, when and wher-ever we find a viable project. what we are looking for is a commercially viable proposition, which offers a reasonable margin between gener-ation cost and selling price,” says sanjiv. the group is looking at raj-asthan, gujarat, Karnataka, mp and tamil nadu.

the company caters to its 3 mil-lion consumers through its own transmission & distribution sys-tem, comprising 615 km of transmis-sion lines, 106 distribution stations. with 8,211 km of high-tension cir-cuits and 12,269 km of low-tension circuits, the t&d loss is below 12 per cent, as against the national aver-age of 26 per cent. the investment in infrastructure has touched `7,000 crore since 2008-09. “we are creat-ing a land bank for our future substa-tions. the company has participated in the auction for calcutta tramways depots and bought four such depots for `23 crore,” says basu.

“the high level of customer ser-vice and satisfaction is the big thrust area for us,” says sanjiv. “today, we can offer new connections within 24 hours, as against 3-4 days earlier.”

the company has hired dupont as consultant for the safety issues since last year. it is introducing a unique cutting-edge metering system called smart meter, which has a sim card that allows consumers to track their daily power consumption online. it automatically sends alerts to the cus-tomer care during any power fail-ure. cesc has started installing smart meters at hospitals, pumping sta-tions, government offices and street lights. for the first time since 1889, cesc has introduced electricity bills

in bengali and hindi too. as the pro-file of the consumer is changing, he/she is given an option of getting a monthly consumption bill in a ver-nacular language, adds sanjiv. the company’s average tariff of `6.97 per unit is the cheapest amongst the private players operating in mumbai, delhi and ahmadabad.

india’s power sector has added 24.6 gw in 2014-15, taking the

generation capacity to 268 gw, of which coal-based generation stands at 62 per cent. but india faces a short-fall of 4.7 per cent in power, which is likely to grow. the Xiith five Year plan (2012-17) estimates an addi-tional capacity requirement of 88.5 gw, 55 per cent of which is expected to come from the private sector.

noida power co, a joint venture between the rpsg and the greater noida industrial development authority, marked the group’s foray into private distribution in north india. it started operations in 1993, under a 30-year licence from the up government. today, it distributes over 1,100 million units of power to 700,000 consumers, mostly indus-trial, in the periphery of 330 sq km in greater noida. the company serves a pick load of 350 mw. “our t&d loss is only 8 per cent, as against 26 per cent nationally, which is a com-mendable achievement,” says r.c. agarwal, managing director & ceo, cesc. the company has a turnover of `850 crore, with a profit of `50 crore, and is growing at 18-20 per cent.

in the last five years, cesc has been maintaining a cagr of 8.12 per cent. its stand-alone revenue has grown from `4,247 crore in 2010-11 to `6,274 crore in 2014-15. similarly, its net profit has risen from ̀ 488 crore

(` crores) FY11 FY12 FY 13 FY 14 FY 15

Gross

revenue 1,878 2,421 2,541 2,551 2,687

PBT 164 103 ( -) 40 ( -)88 14

PAT 116 87 20 ( -)86 12.64

PCBL Financials

Mehra: charting out a revenue model

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(2010-11) to ̀ 698 crore (2014-15). the company’s share price has been hov-ering at `540. its current market cap amounts to ̀ 7,178 crore. the promot-ers hold 49.92 per cent of the shares of the company. during the six month ended september 2015, the company has achieved a profit of `347 crore – a marginal increase from the previous corresponding year of `343 crore.

“despite the adversity in the power sector in the country for the last few years, cesc has continued to grow and become strong, with many trying to replicate the compa-ny’s model,” says harsh dole, vice- president, iifl.

cesc has a number of subsidiaries – in power, retail, property and busi-ness outsourcing. on a consolidated basis, it has earned a revenue of over `11,000 crore as on march 2015.

sanjiv goenka, a spry 54-year-old, has quickly moved in the it space. though he had inherited nothing in this sector, he has found a foothold by acquiring controlling stakes in firstsource solutions, a debt-ridden, bangalore-based bpo firm. the deal was made for `455 crore, through its flagship company cesc, in novem-ber 2012 from icici, with mckin-sey as advisor. and it has become a major turnaround story scripted by the rpsg group. “acquisition of first-source was a conscious decision,” says sanjiv. “we have been watch-ing it for sometimes and found that it has immense potential for growth and was stuck for funds. the oppor-tunity came our way when icici wanted to exit the business.”

Firstsource reinventedfirstsource was set up in 2001 by icici, teamasek and metavante, to provide customer-centric business process management services. with 47 delivery centres, its service offer-ings include transaction process-ing, crm, collections and receivables management, in healthcare, telecom & media and the bfsi space. listed in india, it over-leveraged its bal-ance sheet while acquiring medassist solutions usa in 2007 for $330 mil-lion, using fccb (foreign currency convertible bonds). rajesh subra-maniam, the company’s managing

director, was brought back into the company’s fold to bring it back into the black and was reinstated as man-aging director in 2012. he man-aged to achieve a profit figure of `62 crore in 2012 by defining focus areas and realigning the company with market realities.

however, the company’s debt had accumulated to $275 million by then, because of which icici wanted to exit the business, while the other inves-tors wanted to sell their stakes. “it was at this point of time that goenka found firstsource’s immense poten-tial and finally bought the company in november 2012,” says subra-manium. “he infused the required capital and cleared the debts.”

firstsource was reinvented, with lots of internal changes, focussing on efficiency. the company got rid of customers who did not align with the business and reduced man-power to about 7,000 (from a total of 32,000 across the world). the strat-egy worked, with the net profit grow-ing by 21 per cent to `234 crore in 2014-15, from `192 crore in 2013-14. however, the revenue remained almost flat at ̀ 3,041 crore in 2014-15, as against `3,100 crore in 2013-14.

goenka, who holds a 57 per cent stake in the company, bought the shares at `12.10 apiece in 2012, as

against today’s ̀ 29, on a market cap of `1,820 crore. the company is almost debt-free and is listed by nasscom as one among the top 10 bpo compa-nies in 2014. firstsource has a pres-ence in the philipines, sri lanka, the uK and the us. while 49 per cent of its revenue is contributed by the us; the uK comes in with 36 per cent; india, 9 per cent; and the rest of the world, 6 per cent. the company has more than 20 fortune 500 clients in its three verticals – healthcare, tele-com & media, as also banking, finan-cial services & insurance (bfsi) – and its services are mainly in customer management, transaction processing and collections. telecom & media is the major revenue earner at 44 per cent, but there is enough potential for growth seen in the healthcare business too.

“we entered into the healthcare business in 2015,” says subrama-niam. “the segment is growing at 20 per cent year on year – the high-est for any of our verticals”. the five top health insurance companies and about 700 hospitals in the us are served by firstsource, in competi-tion with capita, serco, wipro, dell, mdion and many others in different segments of business.

“our strategic partnership with firstsource has been a key element in

Basu: a role model for others

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the successful launch of many of our core products, along with subsequent expansion of other value-added ser-vices,” says jay duffy, director, sales operations, bskyb. “the members of the staff at firstsource, with extreme professionalism and diligence, have displayed immense flexibility in their partnership, which has been the key for sky in the development and execution of our sales and mar-keting strategy. firstsource’s commit-ment to the partnership and their ongoing performance has driven sig-nificant roi from the partnership.” subramaniam is aiming for a bil-lion dollar market cap in the next three years.

Strategic changesspencer’s is an old name in the department store business in india. it has a turnover of ̀ 1,672 crore but has also run up losses of `114 crore. “we have achieved sales of `1,470 per sq ft for the first quarter of the current financial year, as against `1,350 in the corresponding quarter last year,” says shashwat, sector head, spencer’s retail, who has taken up the chal-lenge to turn the unit around. “we are taking adequate strategic mea-surements to make the company profitable.” it is planning to close

down loss-making stores and focus on the hyper market to reduce costs. it is also refurbishing the stores, with a new focus on apparel and general merchandise. the company will now tie up with popular brands of apparel, to improve the shopping experience for customers. we are planning to add 15 stores at an investment of `70 crore by next year. the company is

also working on e-commerce strategy to be introduced by 2016,” shashwat adds. avarna jain, sanjiv’s younger daughter, has set up a café-cum-bak-ery, au bon pain, which has 23 out-lets in bangalore and Kolkata.

spencers’ has been part of the indian retail landscape since 1863. rpg acquired the company from homi bhabha in end 1988. after the

In 1897, Kilburn & Co secured the Calcutta elec-

tric lighting licence as agents of The Indian Electric Co, which was registered in Lon-don on 15 January 1897 with a capital of £1,000. A month later, the company changed its name to The Calcutta Elec-tric Supply Corporation Lim-ited and enhanced its capital to £100,000. The issue was over-subscribed the very first day it was opened.

The first generating station was erected at Emambagh Lane, near Princep Street, which was commissioned on 17 April 1899, heralding the beginning of thermal power generation in India. The elec-trification of Calcutta took place 17 years after New York,

which boasted of electricity in 1882 and eleven years after London, which was electrified in 1888. In Calcutta, the ini-tial rate per unit of power was `1, the price being the same

as in London.The Calcutta Tramways

Co switched to electricity from horse-drawn carriages in 1902. Three new power generating stations were

started by 1906. The com-pany was shifted to the Vic-toria House in Dharmatala, Calcutta in 1933, and still operates from this address. In 1970, the control of the com-pany was transferred from London to Calcutta. In 1978, it was christened The Cal-cutta Electric Supply Corpo-ration (India) Ltd. The rpg group was associated with The Calcutta Electric Supply Corporation (India) Limited from 1989, and the name was changed from The Calcutta Electric Supply Corporation (India) Limited to cesc Lim-ited. Beginning with 6,000 in 1912, cesc has reached a tally of 2.9 million consumers today. cesc and the city have grown together. u

Roy: market leader Jha: creating shareholder value

History of CESC

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takeover, rpg had commented that spencers’ is a sleeping giant. with spencers’, rpg has got his hands on three heritage hotels – the west end in bengaluru, savoy in ooty and connemara in chennai. but all these hotels had been leased to the taj group for 50 years till 2034 by bhabha and the taj group continues to run them successfully for spen-cers’. it is said that, 15 years back, taj had wanted to acquire these hotels from rpg, but its plans fell through because of the parties’ inability to reach the right price. spencer

international hotels, which owns these three hotels, receives only rent for the properties from the taj group. it is the only company under the joint ownership of the two brothers – harsh and sanjiv.

Turning companies aroundspencers’ retail at present has 120 stores, including 34 hyper-marts, in 42 cities across india. it caters to gro-ceries, home & personal care prod-ucts, apparel & accessories, consumer durables and lifestyle products; and operates in two retail formats – while

‘convenience’ units are neighbour-hood stores of 1,500-15,000 sq ft in size, hypermarkets, as megas-tores, combine a supermarket with a department store at 15,000-50,000 sq ft. they stock a wide and deep assortment of food, fashion, home & personal care, general merchandise, electrical & electronics, staples, fro-zen foods, and specialty sections – all under one roof.

“interestingly, spencer’s has attempted to glamourise grocery sales,” says rakesh biyani, joint man-aging director, futute retail, the larg-est retailer in the country. “but, for the other merchandise, it is yet to find the right strategy. also, retail is all about scale within the territory, to get the benefit of the supply chain and, perhaps, spencer’s is spread a bit too thin.”

“when spencer’s turns around financially, we will unlock its value by demerging it from cesc,” says sanjiv goenka. cesc shareholders have been hostile to the loss-making spencer’s. it is good idea to demerge spencer’s from cesc and unlock the enterprise value. this will help the investors to choose the segment they want to investment in,” says ranjan.

cesc proprieties, a subsidiary of cesc, had set up Kolkata’s first lux-ary mall in 2013, at an investment of `375 crore. the Quest, a mall spread over 3.5 acres in central Kolkata, is a happening destination of the city for all ages. this large piece of land,

The Goenkas are Mar-waris from Rajasthan and

their journey to modern India began with Ram Dutt Goenka coming to Calcutta, the erst-while capital of India and a commercial hub of the British Empire. Ram Dutt prospered in facilitating hinterland com-merce through trading and trade finance activity of two large British managing agen-cies, Kettlewell Bullen and Ralli Brothers. The original fam-ily trading ‘gaddi’ Ramdutt Ramkissendas was one of the three largest ‘native’ firms and rpg’s grandfather Sir Badridas

Goenka was perhaps the first Marwari to graduate from Presidency College before taking the family firm to new heights. He became the first Indian chairman of the Impe-rial Bank (now State Bank of India). Son Keshav took the firm from trade to industry when he acquired two major British agencies, Duncan Brothers and Octavius Steel.

rpg was born in 1930, educated at Presidency Col-lege and Harvard, the eldest

among brothers – Jagdish Prasad and Gouri Prasad. In 1979 rpg split with his broth-ers and began brilliant acqui-sitions of companies in their death throes due to the stop-page of imports and the ‘Licence Raj. He quickly took control over companies like Dunlop India and cesc in 1980, ceat Tyres in 1982, rpg Life Sciences (then Searle India) and kec International in 1985, the Gramophone Co of India (now Saregama) in

1986, Spencer’s and Harrisons Malayalam in 1988, Bayer India. rpg was known as the ‘takeover king’ in his heyday.

rpg become a Rajya Sabha mp and was also trustee of the Jawaharlal Nehru Memo-rial Fund, the Indira Gandhi Memorial Trust and the Rajiv Gandhi Foundation. He was a former president of the ficci and the past chairman of the board of governors of the Indian Institute of Technol-ogy in Kharagpur. He passed away in April 2013, after over-seeing the split between his two sons in 2010. u

CESC’s new plant at Haldia

A notable role

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owned by cesc, offers 385,000 sq ft of retail area and multi-level car parking for 900 vehicles. the mall is designed by british architectural firm rtk and built by l&t. Quest is a first-of-its-kind unit in eastern india and caters to fine dining as also to luxury. it strives to convey a modern and energetic atmosphere architecturally and graphically.

solar panels have been used here for the exterior lighting. while spen-cer’s hypermarket is the anchor, over 100 major foreign brands fig-ure among prominent tenants – such as fcuk, burberry, gucci, canali, omega, bretling, jimmy choo, armani, tommy hilfiger, nautica and lacoste. it also has an entertain-ment zone, six multiplexes of inox, a food court and a fine dining area. it accounts for over 12 million foot-fall a year. “the break even for the investment will take five years,” says sanjeev mehra, vice-president of the property. “meanwhile, we are plan-ning one more mall in the city in the next year.”

the group owns the oldest music company in the country – saregama,

formerly hmv – which has an archive of over 315,000 tracks. it is the custodian of over half of all the music ever recorded in india, including the region’s musical her-itage in 15 languages. however, the company had failed to adapt to the changes that have been taking place in the music industry for over 15 years by way of digitisation. it has also barely acquired rights for new songs. as a result, it has remained a company of only nostalgic value. when saregama became part of the rpsg group, sanjiv took up the chal-lenge to bring it back to its glory. “we have to offer nostalgia for the public through a new mechanism,” he says. last year, vikram mehra, former chief commercial officer, tata sky, was inducted in as man-aging director, to implement the revenue models.

Missed opportunity saregama is a treasure trove of music,” says mehra. “sadly, we missed the opportunity to leverage its brand in time, by entering late in the new-age emerging market.” he

has been instrumental in taking new initiatives. the company launched an online music purchase store this year. music lovers can now login to the company’s website and listen to and purchase songs, with payments made through plastic cards or via net banking. it has made 117,000 dig-itised songs in eight different lan-guages available for customers in its library. through this process, the company is reaching directly to the customer – which will help better monitisation of its digitised collec-tions. “the progress is encouraging,” says mehra. “we are also in the pro-cess of creating mobile apps called ‘saregama classical app’, which can be downloaded across the android and ios platforms. arrangements are in place with all major telcos for offering its catalogue.”

the advertisers are major cus-tomers of the company. often they are keen to play old hit songs in the advertisements to help them eas-ily connect to the customers. the company, which once pioneered in acquiring new film music, is now looking at the area again seriously.

CESC improving efficiency

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but they are expansive, with t series, sony music, zee music being some of the key players acquiring right for film music.

while music contributes 65 per cent of the company’s turnover from sales, licensing fees and royalty, tele-vision serials contribute the remain-ing 35 per cent. saregama is working with sun tv, life ok and doordarshan and some of the popular national television shows, produced by sare-gama, are Savdhan: India Fights Back, Jab Jab Bahar Aaye, Stree Shakti and

Police Files. “building out direct con-sumers’ services was a good move. in the new digital platform, the compa-ny’s massive catalogue will create a special position,” says sridhar subra-manium, president, sony music.

mehra plans to use the power of technology and reach saregama’s music to every corner of india’s hin-terland and even to indians over-seas, through apps. the company has reported gross revenue of `188 crore with a net profit of `15.60 crore for 2014-15, as against `173 crore

in revenue and `12 crore as profit last year.

philips carbon black (pcbl), the other major industrial unit of the group, has gone through a major reformation process internally. the largest carbon black manufacturer in the country has been tackling high import costs, currency depre-ciation and competition from chi-nese imports during the last three years and it had lost the leadership position to birla carbon. after the management team overhaul, the leadership now rests with Kaushik roy (formerly managing director, apollo’s rubber plantation), who has been appointed managing direc-tor. “the company has been depen-dent on imported raw material and it had only one supplier, from us,” says roy. “we have added many sup-pliers in the last few years and now we have multiple suppliers.”

Coveted customers for PCBLroy is focussing on the internal effi-ciency and cost management mecha-nism that includes cutting currency hedging cost to half (from `105 crore to `50 crore) in 2014-15 on a mar-ket capitalisation of `465 crore and a profit of `12.64 crore – up from a `86 crore loss the previous year. “we have got back to our number one position in the carbon black indus-try again and control 35 per cent of the `6,000 crore carbon black market today,” roy adds.

currently, pcbl has a production capacity of 472,000 tpa across four plants – at durgapur in west ben-gal; Kochi in Kerala; as also palej and mundra in gujarat. it generates cap-tive power at each location, totalling 76 mw. the company has more than 17 variants of products – for rubber grades, as also for non-rubber appli-cations, such as paints, plastics, inks and a few food grades.

carbon black, an essential chem-ical used in rubber compounds, also gives tyres their colour. almost 80 per cent of carbon black pro-duction is used in the tyre indus-try. ceat, mrf, birla tyres, jk tyre, goodyear, bridgestone, etc, are among the biggest coveted customers of the company.

Tallest transmission towers in the country

PCBL’s Mundra plant mostly exported

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“pcbl is the largest producer of carbon black in the country,” says anurag choudhary, ceo, himadri chemical. “it has a presence in mul-tiple locations and also produces spe-ciality carbon that gives it an edge over others”. himadri chemical, the third largest manufacturer in the country, produces 120,000 tpa of carbon black.

pcbl’s mundra plant is its big-gest and newest unit, spread across 72 acres and making 140,000 tpa of black. it is the highest yield plant of the company, with a capacity utilisa-tion of 85 per cent. and 70 per cent of its product is exported. “we gener-ate 22 mw of power, of which 16 mw is from waste heat recovery,” says milind sawant, unit head.

“pcbl produces super quality black, using the latest technology,” says akash taware, vice-president, materials, ceat tyres, a harsh goenka company. “the company has a high degree of customer orientation focus. it also has the ability to address and solve issues raised by customers.”

“pcbl is our preferred global sup-plier,” concurs tejpal garhwal, head, purchase, goodyear india. “the

company employs a good team to take care of its domestic and export markets. Quality has never been an issue with it.”

carbon black feed stock from crude oil is the basic raw material for pcbl, whereas china uses mainly coal-based oil, which makes a huge cost difference. with the crude oil prices having reduced in recent times, there is now hardly any price difference from china’s products. however, china controls almost 42 per cent of the global carbon black production. so, it is important for pcbl to look beyond india. “we were busy with consolidation this year. now that it has been done, we plan to look for expansion in the domes-tic market and overseas. a facil-ity in china is also on the radar,” roy says.

Internal splitthe Kochi-based `385 crore plan-tation company, harrisons malay-alam (hml), a listed entity, is still jointly owned by the two brothers. the company, which has 10 rub-ber and 13 tea estates, has been ver-tically split among the two brothers

internally, each as a strategic busi-ness unit (sbu). both have separate teams looking after the individual business interest.

a legal separation procedure of the company is in the court and may take some time. meanwhile, san-jiv goenka has resigned as chair-man from the board in february, to be replaced by pcbl’s Kaushik roy as director, hml. roy now functions as ceo, hml - sbu a, which is the rpsg unit. the group has got six tea gar-dens, covering an area of 2,760 hec-tors, which produces 6 million kg tea and 3,000 tpa rubber from five rubber estates. these are mostly sold to mak-ers of tyres, tubes, etc. it also makes ctc and orthodox tea, 50 per cent of which is packed and sold to the domestic and export market, while the rest is sold through auction. the company owns brand like harrisons gold, mountain mist, surya, lock-hart, etc, which are mixes of black, white and green teas. besides tea and rubber, the company also pro-duces pineapples and a wide variety of spices.

this plantation is important for harsh goenka too, for procuring

Plantation has no synergy with the group

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rubber for ceat tyre, but it does not have the synergy evidenced in rpsg group’s business profile. the inves-tor community has to wait to know the future of the company but not before it is formally separated by the court.

the group’s growth in the last five years has given sanjiv goenka enough cash flow, which can be leveraged for charting out plans and ramping up the group’s business through acquisi-tions. “we are planning to expand in non-capital-intensive and less-gov-ernment intervention-businesses, to strengthen our bottom-line further,” says sanjiv.

“as a businessman, sanjiv is highly intelligent and intuitive,” says harshavardhan neotia, chairman, ambuja neotia group. “he exhib-its good leadership skills too. he is able to spot opportunities and work towards them. as a friend, i found him caring and helpful.”

“sanjiv became the youngest pres-ident of cii at the age of 39. dur-ing his tenure,” adds sanjay budhia,

managing director, patton interna-tional, who has observed goenka closely during his cii days. “cii passed many benchmarks in those days – be they national or international.”

Sports, tooa keen sports enthusiast, sanjiv bought atletico de Kolkata of indian super league (isl), partnering span-ish club atletico de madrid, har-shavardhan neotia, utsav parikh and sports icon sourav ganguli last year. he is the principal owner of the team. the team won the inaugu-ral isl title, beating Kerala blasters in mumbai last year.

img-reliance announced plans for the isl, a franchise-based league modelled on the indian premier league (ipl) t20. the tournament started in september 2014. “i wanted to be associated with sports. i tried to get Kolkata ipl team through auction, but shah rukh Khan’s bid was higher and, so, i lost it. Kolkata is typically associated with football; so, when the isl opportunity came last year,

i went for it,” says sanjiv proudly. but break even for the investment is likely to be 5-6 years.

sanjiv socialises with a close group of friends and families. he loves watching hindi movies and listen to music to de-stress himself. passionate about cooking, he loves to make ital-ian dishes for his family and friends. when in the city, sanjiv likes to spend time with his family. preeti, his wife, organises stylefile, a fashion extravaganza, to promote new artists. his son shashwat will soon marry long-time fiancee shivika jhunj-hunwala, while daughter avarna is married into the jain family of the inox group.

sanjiv has taken the group a long way. if he continues in this fash-ion, the company is likely to reach great heights during the next decade or more. only then will the quality of the next generation be tested, as the old generation fades away and shashwat comes to the fore.

u s a j a l b o s e

sajal.bose@businessindiagroup.com

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