When Rajeev Chandrasekhar sold BPL Mobile in 2005, everyone wondered where he would park his fortune. Now we know. Ever since he sold his controlling stake in BPL Mobile to Essar on July 19, 2005, there has been widespread speculation in business circles about what Rajeev Chandrasekhar would do with all that money.
The kitty was big "" between Rs 1,400 crore and Rs 1,600 crore "" though Chandrasekhar himself has always been reluctant to discuss the number. And India has turned into a land of limitless possibilities. So what would catch Chandrasekhar's fancy: retail, infrastructure or a second innings in telecom?
Two years later, it is possible to get a fix on Chandrasekhar's game plan. He runs a freight train service, has tied up with Airbus for maintenance of its aircraft in India, is nurturing an information technology venture in Bangalore and high-end hotels in the south, and is drawing up plans to become a regional-media baron. All investments have been made by his flagship company, Jupiter Capital.
There could have been one more sector on that list: power. However, thanks to recent events, it has fallen off his radar. Along with the Karnataka government, Chandrasekhar had proposed to set up a 1,000 MW coastal thermal power plant at Ennore in Tamil Nadu.
But with the new benchmark tariff set by the Sasan Ultra Mega Power Project (Rs 1.196 per unit), Chandrasekhar feels it would be best to put the plans on hold. The project would have required an investment of Rs 4,000 crore.
Still, Chandrasekhar says he is enjoying what he is doing. "Finally, I am doing what I am good at, which is thinking and putting together a plan," he says in the drawing room of his flat in a Parliamentarians' colony in Lutyens's Delhi. (Chandrasekhar represents Karnataka as an independent member in the Rajya Sabha.)
The room is sparsely done. A compilation of the questions raised by him in Parliament rests on the centre table. A black Porsche SUV is parked in the driveway.
Life began for Chandrasekhar in 1985 when Vinod Dham handpicked him from the Illinois Institute of Technology, Chicago, to work on Intel's 42-byte processor, the 486. He thus became a part of the original Silicon Valley team that was developing the building blocks of the information technology revolution.
In 1991, he returned to India to get married "" his wife is BPL patriarch T P G Nambiar's daughter. During the stay, he happened to meet Congress leader
Rajesh Pilot. They had known each other from before. In his earlier stint in the Indian Air Force, Pilot had been a student of Chandrasekhar's father. It was he who persuaded Chandrasekhar to return to India. That was also the time when the
P V Narasimha Rao-Manmohan Singh combine was trying to open up the Indian economy. It opened the sluice gates for young entrepreneurs in India. One of them was Chandrasekhar.
In 1994, his firm, BPL Mobile, got the licence to operate GSM-based cellular services in Mumbai. On October 2, 1995, he rolled out his services. Before 10 years were over, he had sold out. "It didn't excite me any more," says Chandrasekhar when you ask him why he exited the venture.
To prove his point, he adds that though he had a couple of offers to invest in telecom companies with the money he had made, he stayed away from the sector.
However, the old regulatory battles he fought while running BPL Mobile still get him going. He serves on the Parliamentary Committee on Information Technology. He has shot off letters, often unsolicited, to concerned authorities on contentious issues facing the sector like foreign direct investment and spectrum allocation.
"If the guidelines for foreign direct investment have been fixed, these should be followed," he says, adding: "Spectrum should be auctioned, now that the service operators have money. Allocation was fine earlier when the industry had just taken off."
After he had sold out of Hutshison Max in the late 1990s, Analjit Singh was in a fix about what to do with the Rs 700 crore or so he had made. Innumerable sessions of brainstorming did not help till, one day, a consultant gave him a sheet of paper and asked him to write his obituary on it. What did he want to be known as?
Chandrasekhar's decision was not as theatrical. According to him, it was driven by a bit of spreadsheet analysis, but largely by gut feel and intuition. It was easy for him to become a venture capitalist.
But he wanted to build businesses. "In any venture, there is financial equity, emotional equity and sweat equity. I decided to get into businesses where we could deliver all three," says he.
Special economic zones, real estate development, retail, software and business process outsourcing did not excite him. The five areas that he shortlisted were high-end hospitality, the media and entertainment, technology, transport infrastructure and aviation. His biggest investments could be in the field of aviation.
"There is scope for considerable growth. It is like telecommunications in the 1990s," Chandrasekhar says. To begin with, he has tied up with Airbus to set up a maintenance-cum-repair unit for its aircraft in India. Sources in the aviation industry say it could turn into a goldmine for him.
There are already close to 130 Airbus aircraft in the country and the numbers are only going to climb in the years to come. Indian carriers are projected to acquire another 1,100 aircraft till 2025, many of which could be Airbus. "As he is the only person Airbus has tied up with, the entire repair business could go to him," says the source.
There is more to come. He wants to focus on development of capabilities and knowledge used in aviation as well as airport infrastructure. The latter plans will unfold in a year.
Aviation, to be sure, is the only investment that Chandrasekhar is spearheading himself. For the rest of the ventures, he has appointed professional CEOs.
The plans for freight trains are no less ambitious. Hindustan Transportation Infrastructure Ltd, a subsidiary of Jupiter Capital, has formed a 24:76 joint venture with NOL of Singapore to run these trains.
At the moment it runs one train between Delhi and Mumbai. He has got the government's nod to run another one between Samalkha in Haryana to Kandla in Gujarat and Mumbai. The train will cater to exporters in the industrial towns of Haryana, Punjab and Himachal Pradesh.
So far, these exporters mount their consignments in Delhi. Company executives say the new train will help exporters save up to Rs 5,000 on every container of consignment. It has projected the train will move up to 3,000 containers per month within half a year of commencing operations.
Officers at Concor, the government-owned firm which had a monopoly over freight movement on rails till recently, say its traffic on the Delhi-Mumbai route has hit a plateau after Chandrasekhar started running his train. The company is now looking at means to counter the new threat to its business.
Chandrasekhar is keen to spread the success to new areas. "Within transport infrastructure, ports, freight trains, container depots, logistic hubs, airports and toll roads are of interest to us," he says. NOL could be the strategic partner for these ventures.
While transport infrastructure and aviation are businesses Chandrasekhar is building from scratch, he has grown through acquisitions in the other three areas. He got into the media after he bought a controlling stake in Asianet, the leading Malyalam channel.
What seems to have impressed him is that the channel gave the viewer everything from soaps to cinema and news. The viewer did not have to surf channels after switching to Asianet. Though Chandrasekhar is reluctant to discuss numbers, industry sources say it recorded a net profit of Rs 45 crore on a turnover of Rs 130 crore in 2006-07.
He now wants to replicate the model in Karnataka, where he has launched a Kannada channel called Suvarna (to mark the 50th year of the state's formation), and in Tamil Nadu with a Tamil channel called Sitara. It is an astute move, say observers.
With televisions in over three-fourths of households, the southern states generate advertising revenue of over Rs 1,200 crore for broadcasters "" about 25 per cent of the national pie. However, he might find the going tough in Tamil Nadu where the Maran family-promoted Sun TV is strongly entrenched.
In the FM radio business "" Indigo, launched in Bangalore and Goa "" Chandrasekhar says he has broken even in a little over a year. "Everybody said that an English music channel was not sustainable. But we turned conventional wisdom on its head," he says. He also has an eye on the print media: niche publications in English and mass products in vernacular languages.
The other acquisition Chandrasekhar made was of a little known resort at Thiruvananthapuram called Surya Samudra. He claims it is a top-end property that commands a premium over other hotels.
Chandrasekhar now wants to take the brand to six other locations in south India. "We are not going to do 100 rooms at one location. We will probably do 35 rooms," says he, adding: "As Indians become richer, they will look for luxury destinations within India."
In technology too, Chandrasekhar has acquired two closely held companies and has started a fresh venture. These he plans to consolidate into one or two companies. Right now, Chandrasekhar is not willing to discuss the details. All he is prepared to say is that these companies are working in the area of systems security, online as well as offline.
Does Chandrasekhar have the money to bankroll these plans? According to him, raising capital is no longer a problem in India. However, it is worth noting that he has parked each of his five businesses in a subsidiary of Jupiter Capital. This gives him with capability to raise funds for each business by selling a stake in the subsidiary.
So, has he set valuation targets for Jupiter Capital and its five subsidiaries? Chandrasekhar says his ventures are not driven by the prospects of high valuation.
"Value is important but not the end. It is a by-product," he says. Chandrasekhar also does not like being called a serial entrepreneur "" he is not building these businesses to sell them off in the future.
Maybe. What about human capital to give effect to his plans? Chandrasekhar, to be sure, takes his role as a Member of Parliament seriously. He claims to have raised close to 300 queries in Parliament after he joined in June 2006. How much time does that leave him to run his business?
At the moment, he has a core team of 16-17 people. Apart from aviation, every other business has a separate CEO. The target for each is a 40 per cent annual return on capital. In business circles, Chandrasekhar has always had the reputation of being a tough taskmaster. And he is only too aware of it: "I am consciously evolving into a slightly aggressive manager. Even five years ago, there was no way I could have been a hands-off manager."
The bottomline is: will he succeed? There are just a handful of businessmen like Steve Jobs who have had a successful second innings. "We are confident of the businesses we are in," says Chandrasekhar.
(Animesh Singh and Ashish Sinha
contributed to this story)
| RAJEEV CHANDRASEKHAR'S SECOND INNINGS Transport infrastructure
Runs freight trains between New Delhi and the Jawaharlal Nehru Port Will develop a port in south Maharashtra Hospitality
Has acquired a high-end resort in Kerala Is building six more properties in south India Plans a 120-150 bed super-speciality medical centre outside Bangalore Aviation
Is setting up a maintenance and repair centre for Airbus in India Will focus on developing skilled workforce for the sector Plans to get into airport infrastructure Technology
Has acquired two companies and set up a greenfield venture Media
Has acquired a controlling stake in Asianet Launched a Kannada channel Plans to launch channels in Tamil, Telugu, Marathi, Punjabi Runs Indigo, a FM radio channel for Western music |
