Secret Diary of an Entrepreneur 2018

"Live in the present. Don't recount and regret the past"

 Secret Diary Of Subhash Chandra — Part  3

During my day of rice exports, I had bought a 753-acre piece of land in an auction forRs.2.7 million. It was cheap because it was in a no-development zone. Five years later, as I got some foreign exposure, I thought of building an amusement park there. It was a concept that was unheard of in India back then, and the local authorities were suspicious of the project. I charted out a plan to pitch the project as a children’s park as that year the government was planning a grand centenary celebration for Pandit Jawaharlal Nehru. My proposal reached the cabinet committee. Rajiv Gandhi was the chairman and the project was approved. But his relationship with chief minister of Maharashtra, Sharad Pawar was rocky, which meant I had to jump through several hoops before the park was ready. It was inaugurated by Pawar but everything from electricity connections to bus connectivity and entertainment taxes made it a difficult business proposition despite a great response to the park. That’s when I thought there had to be a better way to entertain people right where they were…

The idea to enter broadcasting came from watching a BJP member, JK Jain. He owned vans mounted with projectors and screens that would be rented out to political parties for their road shows. I wanted to replicate that model across 600 districts of India that would feature the same content at a specific time in the evening with advertisments in the middle. It seemed like an unviable business due to the maze of local regulations and entertainment taxes. That’s when I learnt that some five-star hotels had acquired satellite dishes to telecast CNN during the Gulf War. It’s from here that I got the idea, which went on to become the trigger for setting up ZEE Entertainment. 

I tapped my network to secure a meeting with the chief engineer at Doordarshan (DD) and asked him what would be required to create an entertainment channel. He laughed at my idea. First, it was illegal and second it required a lot of resources. DD had thousands of transmitters, over 50,000 employees and equipment worth thousands of crores. I had asked my friend to introduce me as an NRI to build credibility so the engineer agreed to prepare a report on how to go about it, for a price. The takeaway was that I would have to lease a transponder from AsiaSat Satellite in Hong Kong and broadcast shows from there. 

I got through to AsiaSat’s CEO after several fax messages only to learn that all of its satellites were sold to a company called Satellite Television for Asia Region (Star), owned by a local business magnate Li Ka-shing. My first encounter with Star’s management makes for an embarrassing tale. It was December 14, 1991 when I reached Star’s office to meet Richard Li. Ashok Kurien of the Ambience ad agency was a close confidant who accompanied me. I had worked my way through with Richard’s team on the business plan. When he joined us, Richard bluntly asked, “A television channel for India? Where is the money?” He was dismissive, and did not even address me. I was miffed but still directed my question to him, “If you are not interested in a joint venture, why not lease a transponder to us?” Richard again directed the question to his team, “What’s the transponder cost you have assumed in the business plan?” One of them said $1.2 million per year. To which he retorted, “There is no transponder available for less than $5 million”. I was angry and an impulsive me declared, “I’ll take it at $5 million.” It was a gamble made in the heat of the moment. But I had set my mind on going ahead with it. However, the chapter did not end there. 

Dejected at not being able to seal the deal, I returned. Richard was just not keen but he began to get curious about India. And soon enough I heard that his team was meeting media companies in India to find out who’d be willing to partner with them. Of course, nobody was interested. Neither was it legal nor was there a market ripe for change. It was only my imagination. That’s when I explored other options such as leasing a Russian satellite. And it was then that I received a call from Steve Moss of Star. It so happened I was their last choice. Nevertheless I grabbed the deal and leased a transponder for $5 million with Richard having an option to purchase a 25% stake in the company within a year. It was May 21, 1992 that I finally signed on the dotted line with Li at Mumbai’s Oberoi Hotel. 

Asia Today was formed with three NRI friends who put in $3.5 million. I was to bring in ad sales, and create content for a 10-15% fee. They owned the business and had a right on the profit we made. It was during this time that I bumped into Rajiv Gandhi again, and when he asked why I looked worried, I told him about the project and how I was short of $400,000. A few days later, I received a call from an unknown person in London, who offered to invest the exact same amount in my company. 

I can’t forget October 2, 1992, which is when I went to Hong Kong, offered the tape marked with a swastika and tilak on it, handed it to the operator and called up home. Everyone was hooked on to the television, and my driver picked up the phone and said, “Babu, bahut achha lag raha hai.” Just a year after we started Zee in October 1992, I was in London on business. I only had £20 in my pocket and I was supposed to pull on there for a week. I used the local rail service and stayed at a friend’s house. When you are staying with someone for lack of resources, you are not welcome. Day one, they are delighted to have you; day two, they are cordial; day three, the lady of the house has a long face but cites a lame reason for being upset; and by day four, the irritation comes across in more than one way, which is when the snide remarks begin. It was not a good feeling but I learnt to cope by just focusing on the task at hand. 

The channel was operational by now but there were challenges. If putting together the programmes within our budget was a Herculean task, it was equally tough to get advertisers on board. We did several ingenious things right from taking sacks of viewer’s letters and sharing those with advertisers to demonstrate our growing viewership to cutting deals with movie producers and engaging with amateur producers, who had no track record. But it worked. In the meantime, my investors were edgy and wanted an exit. I not only agreed to buy them out with a deferred payment schedule, but also became an NRI myself, given that I was away in Hong Kong for more than six months and the law did not allow resident Indians to own companies abroad. Nothing succeeds like success, so after a year or so, Richard Li realised the business was doing great and he wanted to exercise his option, but it was over a year and his option period had expired. And of course, I was more than happy denying him a stake. When we went ahead with the IPO, the stock was a sought after one, was oversubscribed 60x and we had a blockbuster listing! 

We were flying high. Ours became a desired stock in the market even as we delivered spectacular growth. But running a news channel was tricky. There were several instances that got us in trouble, but that I realised was part of the deal because if you are in the news business, you can’t shy away from controversial content. If you don’t broadcast it, someone else will and your channel will lose viewership either way. And then, you have to face yourself in the morning and that face should make you feel good. Forget about who else would say what. But, I ended up paying a heavy price for some of those tough decisions. 

I was angry with myself for having taken up a fight with the Ambanis. I probably shouldn’t have. The channel had done an elaborate coverage of how their oil by-products were adulterated. That decision hurt me a lot, which I realised later. After the dotcom bust, while all stocks took a dive, ours fell disproportionately.  In a normal crash, the price of Zee would have come down from itsRs.1,500 peak to aboutRs.500 orRs.600. But it was down to double digits. I was devastated. I still remember the meeting with one of the investors in New York. I broke down. I couldn’t believe that I did so in front of an investor. That was perhaps the lowest point of my life. 

For six years after that, we could not raise capital despite the business having done well. I was accused of rigging my own stock, but eventually I was exonerated. Those were tough days. Given the scale of the business, the scale of the problem only kept increasing. Our stock had scaled new heights as it caught the fancy of stock market operator, Ketan Parekh. He had accumulated about 10% of the stock. When you know a stock investor has that kind of an investment in your stock, and he is in trouble financially, it’s a matter of concern. I was afraid of the stock crashing and lent him nearlyRs.600 crore so that he didn’t sell my stock. But that went against me — I was accused of lending him money to jack up the stock price. When you are angry or nervous, you are bound to make mistakes. It’s only later that I realised what I had done. 

During this period, I also discovered that professional managers were like rats. When the ship sinks, it’s the rats that try to escape first. I can’t forget the day when Dev Naganand, RK Singh, Digvijay Singh and a few others came up to me and suggested that we should all go into hiding with aboutRs.1 million-#2 million and work from different places to avoid an arrest. That was the day Sebi had issued charges against us for insider trading. I was angry at their proposal, but I laughed to myself. If we have a problem at hand, let’s face it. The problem won’t go away if we went into hiding. I was bitter at the attitude of these managers. 

Not that I was not at fault. I was not open enough with my managers about me being deep in trouble. That was also the time I was at my worst behaviour. I was impatient, looked at short-term interest rather than long-term gain, snapped every now and then, hired and fired people. I am not proud about my decisions from that time. After dadaji, there was really no one I could count on as a sounding board although Ashok and Laxmi were my pillars of strength. All I did was follow my gut. Somewhere amidst the sea of friends and foes, I became a loner. I used to tell myself, “Paradhin sapne sach nahi [dependent dreams can’t come true]”.

It was the Diwali of 2008. I was in a festive mood at home. And this banker from a financial institution called up saying, “We are selling your stock as the market is expected to fall and the margin will fall short.” I was livid, the call brought back bad memories of the previous collapse. I screamed, “How dare you sell my stock when you are still covered?” The following week, we paid back his dues. One thing I have learnt over the years is that if you have failed in your time and commitment, you have no reason to get agitated at the person or situation. I have learnt this the hard way having lost my cool on several such occasions. Every time someone questioned me, I’d get riled up wondering how could they question my integrity. When in reality it has much less to do with one’s honesty and more to do with the circumstances that may have failed you at that point of time.  

There are business failures that I do not regret but hate. I detest myself for trusting the wrong person, which led to the failure of the Agrani project. I hate myself for losing out on airport privatisation because my partner was too conservative. But then again, there are other good decisions that have made up for those failures. After the television success, I was keen to build an annuity business. The desire to build a business that was tangible also drove that decision.

With Ashok, Jawahar, Laxmi, Amit and Punit handling businesses independently, there is a deep sense of satisfaction now. When I started, I never imagined how big the business could become. Not the rice trade, or Essel Packaging or Zee. We looked at businesses that were simply bigger than our existing canvas and went for it. Each of the businesses were bigger than the previous ones, with no clue about how big they could ultimately become. 

For success in business, all you need to understand is that your cash book, both the debit and credit side of it, should match to the last penny. That’s something I learnt from dadaji. Ignoring even a tiny mismatch could land you in big trouble some day. And finally, if your income is X amount then your cost must be less than that. 

A tough ask on the personal front, has been to live in the present and not recount and repent the past. All of us tend to follow the herd. We don’t question tradition. Whether it is marriage or business, it’s stupid if you are doing something because everyone else is doing it. You should do something only because you think that’s the way to go. My most important learning from life is whatever you say or do will surely have its repercussions. Whatever we say travels in this universe till it gets a reaction, when and where nobody knows. The yardstick for decision making should therefore be full knowledge that the spoken word and action will have a reaction, no matter what. We live and we learn.

This is the third of a three-part series. You can read part one here and part two here.