Subhash Chandra, former Chairman of Zee Group, resigned from the company’s leadership position on Tuesday. The 68-year-old businessman has shown the way how to exit a company, if the bets go wrong. The country has seen businessman like Vijay Mallya, Lalit Modi and Mehul Choksi, who fled the country after the companies promoted by them, started making loss. It is also very rare in the country’s business horizon that promoter family sheds the control to investors.
However, Subhash Chandra did not leave the country after making wrong bets, paid every single penny, and also left the company’s control to strategic investors. This is what makes Chandra a unique business personality, and this is the reason behind business community trust in his entrepreneurship skills.
“Subhash Chandra saw the future of Indian Television single-handedly created the country’s first media entertainment empire. One stumble will not deter him his entrepreneurial courage has always been admirable. May he steer his ship to safe harbour,” said veteran businessman Anand Mahindra.
Chandra is a visionary business leader. He moved from one business to another (Grain Policing, packaging, publishing, leisure parks, broadcasting, cable, DTH, electronic lotteries), and built a 30,000 crore rupees business empire in 5 decades-long career. The crown jewel of Essel Group is Zee Entertainment Enterprises
Chandra took to his family’s business in the early 1970s and built up a thriving 250 crore rupees revenue company by 1990. He came up with the idea to start a television while watching the Gulf War on CNN at a Kuwait hotel.
He founded Zee Entertainment Enterprises Ltd (ZEEL) in early 1990s, to make foray into the television business. The company has become in pioneer of in private television channels with 19.7 per cent of share in all India TV viewership.
The TV business of the Essel Group is performing exceptionally well. It posted revenue of 7,933 crore rupees in FY 19, growing at 12.4 per cent annually and profit-after-tax of 1,567 crore rupees. The only competitor to ZEE’s media domination is STAR news which made entry to India’s private television business in 1992.
Subhash Chandra’s venture into media business paid very well and is paying so far. But, other ventures of the company have not performed very well.
The hardest blow to Chandra’s came from his venture into infrastructure has proved completely fatal. “As most of the infra companies, even we have made some incorrect bids … My obsession of not walking away from the situation has made me bleed Rs 4,000 crore to Rs 5,000 crore,” said Chandra. One wrong move cost the Chandra the controlling stake in the company.
The major lenders from Mutual Funds industry to Zee group include Aditya Birla Sun Life MF, HDFC MF, Franklin Templeton, and ICICI Prudential MF.
When the infrastructure bet of the company went wrong, and the creditors threatened to sell the shares of the ZEEL, to which the loan amount was hedged, Chandra gave ‘personal guarantee’ to the creditors, to save the share prices from nosedive dive.
After Chandra sold the almost three fourth (15 per cent out of 20) of the promoter’s share, to pay back the creditors, he gracefully exit from the company.
Chandra has shown the way on how the promoters of the family-owned firms should resolve the business issues, if the bet goes wrong. “Unlike many other Indian businessmen, he hasn’t fled, tried to hang on to the business by any means or wrangle out of the debt by using his closeness to the current government,” wrote the veteran journalist Vanita Kohli Khandekar, who has decades of experience in covering the Media and Entertainment industry of the country.
After Chandra paid back, and left the Chairman position, the shares of the company rose by 12 per cent. The 5 per cent shares of the company, which Chandra is left with, will now pay 12 per cent more. Given his extensive experience in various industries, he is expected to make a comeback very soon, with a new venture.
