'If you don't target to be the number one, you are not in the race'

Q&A : YS Jagan Mohan Reddy

Twenty-three editions and 1.28 million copies "" why did you launch the paper on such an ambitious scale?
If you have to penetrate any state, the strategy should be to be the number one. If you don't target to be the number one, you are not in the race. The moment you position yourself as the leader, you collect better revenue from the market.

How did you manage to get to the 1.28 million figure?
That's the print order. We have 1.16 million enrolments at this point. We started the enrolment process in October and engaged 3,000 people for market research. The field staff contacted four million people and asked a few basic questions. On the basis of their answers and their body language, nearly 2.5 million potential customers were identified. These were contacted again in January and gifted glossy calendars. Of these, 1.16 million enrolled with us, that is, gave consent to take the paper.

 

How will you ensure collections?
The 8,300 agents will ensure collections. They have already paid us a deposit for a month.

You are into other businesses, what attracted you to the media?
The money and the opportunity. Eenadu as the number one player got complacent. The paper should have changed its design and gone all-pages colour long ago. It left a vacuum in the market for us to get in.

But you are making Rs 1 crore loss daily.
I would say we are investing a crore a day. That would be a better way of putting it. Obviously, one will incur losses. But over a period of one year, I presume, I would break even.

How come Sakshi was valued at Rs 3,000 crore even before it was launched?
Eenadu is valued at Rs 4,600 crore. All other group companies of Eenadu, except Eenadu paper, are making losses. Probably, ETV Telugu is making a marginal profit. And the company is still valued at Rs 4,600 crore. Why, because it is the number one paper with a circulation of 1.14 million. Why can't Sakshi be valued at Rs 3,000 crore with the presumption of 1.2 million circulation?

Who did the valuation?
It was done by Deloitte which has also audited our power projects. We told them there is a big gap in the AP market and if somebody can get into it with 1.2 million copies in a day...there is a huge opportunity. How else did NDTV come up? Prannoy Roy was an individual. Or, CNN-IBN? Didn't Rajdeep Sardesai convince investors that there is a huge gap in the market which can be exploited? Or even Peter Mukerjea. Investments come with a business plan, with the people behind it. And we have been selective about our investors. The profile of the investors will add value to this company when we take it public.

It is alleged that investors were forced to invest in your company in lieu of government favours doled out to them.
I don't think anybody will invest huge amounts of money because they are under pressure. We had everything perfectly planned. We got the best designer, the best agency and also the best investors who are rated very highly in the VC circles. Right now we have 20 investors including India Cements and Karvy Consultants. We will not stop at this but tap anyone who can bring value. I don't believe in holding a majority stake in the company. I'd rather hold a smaller chunk in a bigger pie.

Do you plan to get into the English newspaper market as well?
There will be little differentiation that can be offered in that market. All English papers are already all-colour. And they are priced very low. Besides, in English you can't go beyond a circulation of 300,000 or 400,000.

But you get a premium on advertising.
Only if you have an all-India presence. And then it becomes a completely different game.

Is there a time frame when you will go public?
As quickly as possible. We have to get our ABC first.