Sandeep Goyal, 48, is definitely not everyone’s favourite adman. The generously built former head of Rediffusion and Zee has rubbed a lot of people on the wrong side with his aggressive, in-your-face style. Both marketers and investors, however, love him unabashedly. Marketers such as Aircel, Lavasa and IndiaBulls showed it by signing on with Dentsu, an agency Goyal set up in partnership with Dentsu of Japan, in 2003. On the back of new business, it has become one of the largest in the country at Rs 1,200 crore in billings. This week investors gave him the thumbs up. The $20.5 billion Dentsu bought out Goyal’s 26 per cent in its India operations for a reported Rs 240 crore. Goyal refuses to comment on the actual value of the deal. Rival admen think it is hugely overstated. Goyal, who has already resigned, will continue as non-executive chairman. Vanita Kohli-Khandekar had a post-exit chat with Goyal on the Dentsu experience. Edited excerpts:
When you got into a partnership with Dentsu in India in 2003, was this the horizon for exit or has it happened sooner? Why now? The joint venture (with Dentsu) was very well-defined. At the end of five years they had a call option. However, in 2008, when the option became due, Dentsu was lukewarm because of the global slowdown. Last year in February, they finally said that in key markets they need to have 100 per cent ownership, so that they can decide on future investments and acquisitions. As for me, I have done what I had to. The business is at its peak, so it is a win-win situation. They get 100 per cent control and I get an exit.
Did you use any benchmarks for agency valuation? Most bankers would probably give you a different theory. But in the agency business, valuation is not necessarily about a multiple of profits. I own 26 per cent, but I have brought in 55-60 per cent of the business these agencies have and the value of that goes beyond the stake. Plus, I had management control. I have exited without any debts and bad debts on the books. The business has considerable cash reserves and every single agency (there are four) is profitable.
How does a Japanese marketing services group differ from the American or European ones such as Omnicom or WPP? I loved working with the Japanese, they are a good bunch. The difficulty is when you don’t know them. I have known them since I was the branch head for Rediffusion in Delhi, 16 years ago. Once the basic trust is in place, they trust you to the fullest unless you do something silly.
Dentsu is a low-profile agency, so it tends to get misunderstood. (Globally Dentsu is considered a secretive and clannish agency). Also unlike the US, there is tremendous stability in the Japanese system. You know the guy you are dealing with will be there. A commitment made is a commitment made by the organisation, not by an individual. If it has been agreed upon then generations of Dentsu managers will ensure its execution.
How is Dentsu’s approach to business different from WPP or Publicis? WPP buys global companies with footprints in India, and they haven’t made too many acquisitions (in the agency business) in India. Publicis also acquires, but they go for local agencies. We created an agency ground-up. We got Rs 1,200 crore worth of new business in seven years. It is cleaner that way, you don’t inherit problems.
Were you confident you could do it? What you don’t realise is that I work like a dog. When I said that I would get Rs 200 crore in the first year, everyone sniggered, I did it. Then when I said we will Rs 500 crore, people didn’t believe it. I work 18 hour a day and am usually there to greet bleary-eyed air-hostesses on the 7 am flight. In fact, if I saw an agency guy on a 7 am flight, I would make a mental note to hire him, there are so few of them left!
What are your future plans? Main to aash karne wala hoon (I am going to have a good time). I have averaged 280 days a year out of home, about 150 flights a year. I want to take it easy. Also, the Dentsu story needs to be told, so I will write that in the next three months. (Goyal has earlier written the rather witty The Dum Dum Bullet on his years in advertising). Besides, I have all these investments with Astro (in Sanjeev Kapoor’s channel, in digital and mobile products) so I have to give them some time. Increasingly, I see my future role as that of an investor rather than of someone who is running a company.
