Out of suffering have emerged the strongest souls’… the Essel journey reminds one of this Khalil Gibran quote. Many chapters of the Essel Group story were born in the face of adversity. It took the hard work and determination of four generations to transform the legacy of a humble family that began its journey with local commodity trading, into a multibillion-dollar global conglomerate. Operating in 172 countries, Essel Group has more than 40,000 direct and indirect employees today. As the group celebrates its 90th anniversary this year, it dreams of growing bigger and better.
Hitherto, the Essel Group was largely associated with its media businesses that include the likes of ZEEL and Dish TV, or with its theme park Essel World, or the manufacturing business Essel Propack, or the real estate venture Suncity Projects. But soon Essel would be known for much more as it is branching out into areas that will make a large scale difference to consumers in India.
The High ImpactIn alignment with the government of India’s Swachh Bharat initiative, Essel roped in Hitachi, as technology partner, a few years ago to convert municipal solid waste into power. “This has been an important area, where people have tried and failed. We were able to crack this in a year and half. The plant is running well on all counts. And we have signed up 18 cities to convert their municipal solid waste into power,” informs Subhash Chandra, chairman of Essel Group. As the eldest of four brothers — Laxmi Narain Goel, Jawahar Goel and Ashok Goel — Chandra has played a central role in the growth the group has seen in various areas that it is operating in today.
Another area where Essel is focussing its energies is water. “We see this being a significant issue in the future. We are experimenting with Aurangabad city to give it 24x7 water supply, working with the sewage treatment plants there. There is some good work happening here, and we see us upping our presence in this,” says Chandra.
The power sector too is on Essel’s radar. In India, due to gaping discrepancies between distribution and metering and genuine transmission losses, several small towns have to make do with barely a couple of hours of power. Essel is doing some work in Bihar and Maharashtra on this front to make lives better. “We are following some very basic steps here — give people good service, same day connections, reach to a fault within three hours — all this is helping us grow in this sector too,” says Chandra.
While all the above mentioned initiatives are aimed at social issues, Chandra points out that all businesses are approached with the objective to be profitable. “We want to enter areas that will make a difference to people, but these will all be full-fledged businesses. As part of our corporate social responsibility, we have other plans,” he says.
The Larger Good“The USP of the Essel Group is that it has been a fighter. It is also a hard-working business group with the intent of doing something positive and good for all. We have been at the forefront of introducing newer things to people,” adds Laxmi Narain Goel, chairman of Suncity Projects.
Essel has traditionally earmarked 10 per cent of its profits for various causes, but now the company will shift part of its wealth to a foundation it’s launching. “The foundation will not simply donate money to others but will build capacity in India — whether it is education, health or livelihood — to face challenges,” says Chandra.
Essel’s objective to create a larger social impact is evident. In 2015, in line with the government initiative of ‘Housing for All’, Essel had announced ASHA (Affordable Shelter Housing for All), aiming to develop 2 lakh homes by 2022. “The Prime Minister had a vision for houses for weaker sections. This was one of his pet dreams even before he was in Delhi. When we were working on real estate projects, we wanted to contribute, and hence ASHA came up. However, I have to say, we still haven’t succeeded in it. There is an inherent issue there that we need to tackle. A project like this cannot really take off unless the livelihood problems of people there are factored in. Housing is a problem, but that is not the complete problem. We are doing some R&D on this, and we hope to crack it (soon),” says Chandra.
The Big PlanOver the years, Essel has expanded to varied sectors, ranging from education, infrastructure and utilities to something like gold refining and online lottery among others. Reflecting on how Essel chose its areas of expansion, Chandra goes back to the ZEEL experience.
“Zee became successful and there were many prospective grooms who wanted to wed us. But the bride said no. Zee made a difference to society itself, and we felt we should start doing things that are relevant to the society,” he recalls, adding, “Education was in that space. But infrastructure, for instance, was purely a business decision. Till then, all our businesses were in the service sector. We agreed that we should have some risk-mitigation business from the family. Infrastructure is one such sector, since it is a priority for government and banks, and it is long term.”
The larger scheme of things also kept the group’s international aspirations high. From serving the Indian diaspora in other markets through Zee TV, Essel began serving mainstream audiences in each market. In the case of its media business ZEEL, the company tailored its products to suit local tastes and preferences. In the coming future, America, including North and Latin, will be the company’s top priority.
The HardshipsAll the challenges that Essel and Chandra have seen has had an impact on the company’s overall plans including its international expansion. “Some of it had to have an impact. In 2000, for instance, when we were faced with a stock market backlash during the Ketan Parekh incident, all sorts of people played against me. I was in the headlines for the wrong reasons. Ultimately, after an enquiry and a parliamentary committee review, everything checked out. But we were not allowed to raise any capital in the interim, and that was an eight-year period. We could not access market capital so we could not have expanded, or done any mergers. All of our new initiatives happened post 2008.”
Chandra views the 2000 incident as Zee’s own fault. “Because we had begun believing in the stock market ourselves,” he explains, further stating, “This gentleman had cornered substantial Zee stocks, and we had to play in his hands for fear that he would sell the stock and it would crash. Between the crash and the role some of the corporates that did not quite like our meteoric rise played, the stock that was once valued at Rs 1500 came down to Rs 70.”
Nerve wrecking situations such as these are no stranger to Chandra. In the subsequent years too, the company went through a tough period in 2012-13, where there was a FIR and an arrest warrant issued against Zee News and Zee Business editors and him. But his and his family’s resilience helped them bounce back soon.
In its 90-year history, the family has seen five major downturns. The first of which was caused by external factors such as Independence and war. The second, in 1967, led to the family losing its credibility, and being inflicted under debt. This was when Chandra was called back from college; eventually, he, along with his brothers, took over the family business.
“We were beginning to export rice to Russia in 1981 — that time marked our biggest challenge. Till then, we were slowly finding our feet, both business and family wise, all the while building capital. It was a ‘good’ problem to begin with. We traded beyond our means and committed to export 50,000 tonnes of rice to Russia at Rs 5,500/tonne. And we could encash it only after they were loaded on the ships,” recalls Chandra.
The ships were delayed for more than two months. Everyone in the market predicted the company’s failure, but timely help from friends saved the company. “I have mentioned Naresh Kotak in my book. I requested, more like forced him then, to issue me the bill of landing and things worked out. But that period in between was very tough,” reminisces Chandra.
The next big problem arose in 1983, when the company had put significant money into Essel Packaging. The early days saw the company wipe out its capital by 80-90 per cent. But the group capital supported Essel Packaging, and eventually, the business turned around.
Then came the financial crisis of 2008. “Everyone was in a short recession then. We could have defaulted at the time too, but we proactively reached out to banks and convinced them to give us some more time,” divulges Chandra.
The RewiringFor the family, a large part of the business building process was about working as a single unit, led by Chandra as the key decision maker across all businesses. In the last few years, however, Essel entered a reorganisation mode that took final shape in 2015. As per the reorganisation, the various businesses of the company were clearly divided between the four brothers.
Recalling the run-up to that decision, Chandra says, “One of my brothers felt we should separate our businesses in 2010. We sat down, took a couple of hours, made the changes and we were all very happy with the decision. We each own some small percentage in each other’s companies, but everyone owns their businesses now. The succession plans are clear.”
Conceding with Chandra, Laxmi Goel points out that as the family expanded over time, there were more responsibilities on it. “Safeguarding the family responsibilities in an orderly fashion could only be done through reorganisation,” he says.
No family-run business can outrun the strains that come with it. But for the Goel brothers, and for Essel, the winning mantra for the longest time has been listening to each other and being understanding. “What makes me happy is that not only are we four brothers together with each other in the thick and thin, but so is the next generation,” remarks Chandra.
“As the next generation prepares to take over, they need a future-ready, structured approach. They may or may not like the businesses we are in or our way of working. It’s better to articulate the plan now. Every family has to go through a process like this at some point in time. The best part however is that while businesses have been separated, emotionally we are all as connected as we always were,” says Jawahar Goel, Chairman and Managing Director, Dish TV India.
“This decision has crystallised the responsibilities, and there is more vigilance in making each of the businesses a success. While the growth path is clear, and we all know how we want to get there, this is also keeping everyone on their toes. This was an important step from the viewpoint of the next generation. They are very actively involved, and more importantly, they know how to work as a team,” says Ashok Goel, Vice-Chairman and Managing Director, Essel Propack.
Remembering The FundamentalsVarious family and business values have been inculcated in the group in the last nine decades. Chandra sums it up as, “The handshake agreement being far more solid than the written agreement”. He says, “Keep your commitment. Try to be honest — when you are dealing for a client, and you are trading on their behalf — temptations can come in. Since we lived as a joint family, (we learned) respecting an individual is very important. We are very proud that these values have stayed with us even today.”
Click here to view graphic: 90 Years Of Essel Group
