Secret Diary of an Entrepreneur / CEO-2018

“Don’t be smug about your success, there’s always someone smarter than you”

Secret Diary of Ajay Bijli — Part 3

Vishal koul

While my inherent restlessness to do more always pushed the business ahead, it also led to unnecessary hubris that “we can do anything and it will do well.” For instance, the movie production business that we, eventually, had to shut down. I wanted to expand even as competition was heating up with Adlabs and Inox coming in. Besides, there were more deep-pocketed players waiting on the sidelines. There was a lot of action in the multiplex space, resulting in rentals shooting up. I wasn’t very keen on signing projects at such high rentals as it wasn’t viable. I felt that the next best thing for PVR was to become a diversified entertainment house with exhibition as one division and production as another. 

I had lost two inorganic growth opportunities when Inox acquired C89 cinemas and Fame. So from number one, we had moved down to number three. Around this time, I met Aamir Khan and told him that I wanted to produce movies. He had two scripts in mind, one was Taare Zameen Par and the other was to launch his nephew. We collaborated on both the movies. Luckily, both the films did really well and I got carried away. 

Just because you understand the cinema business doesn’t mean that you understand making movies. So, I really didn’t know how to make movies. We were taking small bets, making money in some, losing money in others. We moved to movies with larger budgets. We made Khelein Hum Jee Jaan Sey in 2010 with an initial budget of Rs.30 crore which went up to Rs.37 crore. The movie sunk at the box-office. 

The whole company was demotivated. Most of our operating profit, which we created by running cinemas at beyond optimal levels, got completely wiped out. We still had about Rs.15 million lying in the bank so I just went up to the board and said, “Please take this money back.” So we returned it to the investors in PVR Pictures and closed the division.

Getting into the movie business taught me a big lesson. If you don’t focus on your core business and start something you don’t have the competence for, just because you are getting restless, it can be disastrous. You have to very quickly recognise your competency. So, we also decided to get out of the bowling business, bluO entertainment, that we had started in 2009 as a joint venture with Thailand-based Cineplex. It had been our plan to be a retail entertainment brand where we offered skating rinks, bowling, food and cinemas. Cineplex understood all those businesses really well, but I was an entrepreneur who couldn’t understand five businesses.

Luckily, all the five bowling alleys were doing quite well, so there was no real damage but we didn’t scale up the business either. Shripal came into my life the second time and told me that since bowling was not my core business and since he needed to grow Smaaash, my real estate locations were a good fit. We, finally, sold the bowling business for Rs.86 crore in an all-cash deal to Smaaash in 2017. You see location played a very important role in my journey, so all locations were fantastic. Now, Smaaash has got some of the best locations in the country.

While in 2012, L Capital Asia had invested over Rs.57 crore in the company, we needed more funds to grow. I remember sitting in my office with Renuka, who had just launched her own fund, Multiples. Our stock was down from Rs.225 to Rs.88. We were at number three. I told Renuka, “I don’t know what to do but our position is really bothering me.” She asked me not to lose heart and said, “Things will work out. Keep your team’s morale high. You have a good brand so you will bounce back from this.”

While exploring growth options, I knew that organic growth will just not be enough to catch up with the rest. Cinemax was at number four then. I realised that if I was getting beaten down, so would be the fourth player. I also heard that Rasesh Kanakia had said his first love is his real estate business. So I gave him a call to see if he was interested in selling out. He seemed excited and asked for six months time, promising me that if he were to sell, I would get the first call. Then, diligently, every month or two, I would go to Bombay and have a cup of coffee with him. One day, he said, “Fine, let us do this. But this is my number — Rs.543 crore — and the deal has to be finished in four days.” We didn’t have that kind of money and to cough it up in four days was tough. I ran like a madman from one place to another. 

Once again, Renuka came to my rescue. Sunil Mittal, too, told me not to worry about the dilution because I was getting a piece of a larger pie. Over the next four or five days, we were able to put the funds together. Rasesh stuck to his word and didn’t shop around despite having offers from rivals. He just wanted his price and said, if we could meet it, he would not go anywhere. I was grateful that he stuck to his word — we were numero uno again.

Realising how important inorganic growth initiatives can be, I was on the lookout for more. So, when the opportunity with DLF came along in 2016, it was a very important one. It was an asset that I was after and had been constantly discussing about it with the owners all the time. I told the Singh family that if they ever wanted to exit the business, I would love to take over. When they realised it was time for them to exit the non-core business, they were keen that a good operator steps in because, in most of their malls, cinema was an important component. 

I needed to raise private equity for the buyout and Renuka came in as investor for the third time at Rs.700 a share and we touched a billion dollars in market cap. Couple of months ago, we added Satyam Cinemas — an important milestone in our journey to reach 1,000 screens.

As I look back, I couldn’t have done all of this without the support of my brother Sanjeev. We are only five years apart but he has supported me throughout our journey. A big learning is that even in a family business, each individual can do their own thing and yet come together for all the important decisions, and that’s what we have been doing all along. Selena, my wife of 28 years, has stood by me through it all, supporting me in everything I did and being a part of all key decisions. 

My mom has been my biggest mentor and kept us all together. The best piece of advice she ever gave me was never let anything go to your head. Every time I got carried away, it hasn’t gone well. That’s something entrepreneurs tend to lose sight of in their ambition for growth and that proves to be their undoing. As an entrepreneur, you have to very quickly recognise whether you can be very good at a lot of things or good at only one thing. But the biggest realisation that every entrepreneur should have — don’t be smug about your success, there’s always someone smarter than you.

This is part 3 of a three-part series. You can read part 1 here and part 2 here.


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