What is that one thing that you did great?
What have I done great? Nothing.
I think now you're just being modest.
So to me, he was a father. It wasn't RPG Goenka that I was dealing with. I was dealing with my father. I was always in awe of him. There was a lot of comparison at home and I thought that was very unfair. I'm not a great proponent of joint family businesses. Joint family emotions, yes. Joint family businesses, no.
There was a lot of buzz in media about RPSG looking to acquire Dharma. What happened in that? CESC was a good acquisition at that point of time. Has the times changed?
If I had to take the same decision, I wouldn't have bought it.
You wouldn't have bought CESC?
What role can you really play in order to ensure IPL trophy? It's up to the coach, mentor, captain and the team to deliver. So you see the mind of somebody like MS Dhoni, Rohit Sharma. So it's about how you are able to be an effective leader.
You have grown your market cap from 4,000 to 85,000 crores in the last 12 years.
To me, turnover was the least relevant. It was efficiency and margins. We spent several years in just getting our efficiencies right and then margins started automatically flowing. You may be passionate about a business that you buy, but you don't buy it because you're passionate about it.
Hello and welcome to Perspective with Parth. This is a conversational series where we explore ideas, values and turning points behind the big minds shaping India's business landscape. We have someone that runs the largest conglomerate out of East India. Someone that has business in power, energy, media, sports, IT enabled services and many more with a total market cap of 85,000 crores. I'm very excited to have him on my show and let's go and get his perspective.
Welcome to Perspective with Parth. Thank you Dr. Sanjiv Goenka for being part of this show. Your family has had a legacy of about 200 years. Can you take us back to your childhood and maybe some aspects that were key in your childhood that shaped you as a leader?
Well, first of all, thank you Parth for having me. It's very difficult for me to say no to you. So, I'm very happy that you invited me. My childhood, it was regimented. We were eight cousins growing up in a joint family. We had like a hostile kind of an existence. So you had to wake up at 5:30 and then be at your study desk at 6:30. It didn't matter whether you studied or not. You had to be sitting at your desk. And at 8:15 you went to meet the elders in the family. At 8:30 you left for school. You came back at 3:30 and from 4, then you had two slices of toast and a cup of milk. And then you had somebody who would make you play in the garden, cricket, football, hockey, badminton, whatever. And then you had tuition from 5 to 7. Then you had to have a bath. And so this was your life every day.
But do you think this was different from the others around you or was that generally how most I guess...
We weren't exposed to anyone else. We weren't allowed to go out.
So what do you think was the idea behind having such a regimented life?
Honestly, I've never understood it. It's just that I never had the courage to speak out. Frankly, none of us had. But I think what it did was it got you to accept a certain discipline and that also the fact that you have to make effort. So you had to study. They expected you to do well, the elders in the family.
So was there like a reward mechanism for performing well or something like that?
Yes, there was. So amongst the eight, whoever did the best at the end of each semester was given a pencil box.
You were always competing with each other in education.
Yeah. It was actually, there was a lot of comparison at home between the kids and I thought that was very unfair because in any comparison there is somebody who's better and somebody who's worse and it also inculcates a sense of sibling rivalry which is beyond competitiveness. When it happens every day there is an unspoken rivalry that happens.
This killer instinct or the competitive spirit, is it important in business?
I think a killer instinct I wouldn't necessarily say is necessary but a competitive spirit and a desire to win, a desire to compete is definitely desirable. And more importantly in today's world it is about how you innovate, how you stay ahead of the curve. And I think that's become even more important and if you get those basics right then you automatically start leading the race.
Now fast forward a little bit from your childhood to the early 80s, you know when you were right out of college getting into business. Mr. R.P. Goenka was on a spree of acquiring one of the biggest companies that you know today exists, CESC, KC, RPG Life Sciences, Spencer, Saregama, everything. One of the largest portfolio companies for you and your brother both today were acquired in the early 80s. How did you look at that when you were entering the business? What were your challenges, you know, being exploring so many of these acquired companies at that point of time?
So a slight correction, CESC was not acquired by him, it was acquired by me and he was opposed to it. He was so angry, his form of anger was he would not eat, so he didn't eat for two days. He didn't eat for two days and he says I was stupid, young, naive. So I went and cried in front of my mother and I said, 'See, he's not letting me do what I want to do.' So whatever my mother told him, she convinced him. So he very reluctantly, sulkingly agreed. But thereafter I think yes, it took some time but it was a good acquisition at that point in time and I must say my first day and I've said this before, it was a horrific experience walking into the CESC office on the first day.
You mentioned that CESC was a good acquisition at that point of time. Has the times changed for that kind of an industry?
Well, times are much better for that kind of an industry. So I was young, naive as I said earlier and therefore I didn't realize the complications or the problems that I was getting involved with. With this experience of working for so many years behind me, if I had to take the same decision I wouldn't have bought it.
You wouldn't have bought CESC?
But it has generated immense profits for you in the...
It hasn't. The power business has, CESC has not. So, CESC has generated profits but not immense profits and what we've invested back in the city in terms of infrastructure has been a lot more than the money that we've got from it.
Mr. R.P. Goenka is a name that I think the Indian industry bows down to and someone that has done phenomenal work to not only build Indian enterprise but also contribute to national policy and also to the agenda of bringing India to a very strong economy as it is today. When you were working did you ever feel overshadowed by his personality?
So to me he was a father. It wasn't RPG Goenka that I was dealing with. I was dealing with my father. I was always in awe of him. And he had a tough side to him and he had a very affectionate side to him. He was the ultimate decision maker. So I mean everything had to be decided by him.
Is there a particular moment that you remember when you know the overarching shadow of Mr. R.P. Goenka, you know the identity of Mr. R.P. Goenka was also supplemented with the identity of Mr. Sanjiv Goenka?
You know the first time I felt I could have an identity of my own was when I became CII president. It was in 2001. And that was the first time I felt that that's possible. I think that one year definitely helped me a lot to grow in exposure, in confidence, in connectivity, hearing perspectives which are way more experienced, brighter, you know, and so it grew me as a person, it grew me as a businessman. It was very helpful I think.
So that was one of the key moments where you felt that there was a lot more independent recognition associated with your name directly.
But when you look at the journey before the split and after, while it was a very amicable split, were the companies decided based on what each of you were operating or was there a different philosophy on how the businesses were divided between the two brothers?
So I truly don't know what went wrong in dad's mind. He and Mr. Pinto did it. One fine day we were told this is what it is.
So you were informed that this is what you're running and this is what you're running.
Yeah. And dad was very very strong. So you couldn't really argue with him.
Was this like an ask from both of y'all that we want our businesses separate or was it something that he and Vis felt would be better for both of y'all in the future?
Honestly, I think he decided and so two days before his 80th birthday, he did it. How long he worked at it, we have no idea, but he obviously would have done a lot of work on it.
Speaking about post separation, you have grown your market cap from 4,000 to 85,000 crores in the last 12 years. That is one of the greatest stories I think in Indian business history. How do you, what were the key defining moments, you know apart from you having independence and autonomy over all the decisions, was there something that helped you achieve this kind of growth?
Frankly I don't think it's that great, it's been decent but I think it could have been better. But having said that, I think it was getting away from government intervention intensive businesses to consumer facing businesses, into tech related businesses which made a difference. I took a call that as a family in the past we always looked at turnover. To me turnover was the least relevant. It was efficiency and margins which became the defining feature for us. And so we spent several years in just getting our efficiencies right. And then margins started automatically flowing. And when you have cash flows, growth automatically comes. Taking over Firstsource was a big move. 400 crores to 25,000 crores is a good growth. Getting into sport was another big move. Which has again paid very handsome dividends. So I think overall it was something that worked out well. And you know some of these decisions were unconventional. So having the liberty or the freedom to make those decisions helped because you're quicker. And Shashwat being around was a very big help because it was right around that time he came back from college as well. Came back from college and he was a very big help as well.
Did you always believe that your target or goal was to be a $10 billion enterprise? Has that changed? Is that still moving?
It moves every day given that the family historically has been in jute, textiles, tea, all sunset industries. Sorry, no reflection on anyone but and it's very limited by the total size of the industry per se. But this is what Narendra Modi has done. He has redefined scale, ambition, the positioning of India and Indians in the world. He has given each one of us I think this confidence that we can do it and we must do it. So it's about actually getting out there and doing it.
So what is your next target having achieved this? What is how big are you looking really?
I don't think I've really achieved much.
Why do you say so? And you've said this a couple of times yet you have...
I'm not a modest person temperamentally, right? So I'm not trying to be modest when I say this, but I think frankly if you see hopefully you will see over the next few years a lot more at RPSG than you've seen in the past.
You know you spoke about that autonomy of business. So is there any structure that you, because there would be a lot of people running businesses in a joint family setup with multiple brothers, uncles. Do you think it's advisable or is there a way to work around those nuances to ensure maximum efficiency and productivity of your organization or it's better to do it in your own way?
I mean I'm not a great proponent of joint family businesses. Joint family emotions, yes. Joint family businesses, no.
You and your brother since the split, you know, have grown your businesses. You have acquired so many companies, but there does not seem to be an overlap of industry necessarily between you and him. Is that been a conscious choice?
Well, there's enough to grow and why would you compete with each other when you don't need to?
So you're saying it's a conscious choice to not enter those sectors or those are sectors that you're not fundamentally interested in as well.
No, no, no. I think both of us have taken the choice that we will not get into the same sectors.
Okay. So when you're looking at new sectors, particularly in the last 5-7 years there has been a conscious effort to obviously be outside the regulated space but also there's been a conscious effort towards being in businesses that have a stronger limelight and more public front or more consumer front businesses. Has that also been something which has been a conscious choice compared to your traditional chemicals and power energy sectors?
No. To get into consumer facing businesses was a very clear choice. And it's something that's done well for us. But these things come with a lot of accountability and a lot of responsibility. So for example the FMCG space, you know people are consuming what you're producing. So you have to be even more particular about the quality of what you produce. And there is a moral responsibility for sure in addition to the actual responsibility of making sure that every batch is produced perfectly.
In your experience, is acquiring a company a much better way of growing enterprise versus starting? Because historically with your father, with you, the acquisitions that you've made, including a very recent one, you know, shows the kind of aggression that you look at when as a methodology towards expanding your business.
I think both. An acquisition gives you a head start but it also requires more capital up front. A greenfield needs the capital over a period of 12 months or 18 months. So we've followed both.
You know one of the metrics that the recent public markets have seen is a lot of drive towards achieving higher market cap where profitability is important but not the only factor that is being considered. Has that also influenced your business decision?
No, we are still looking at bottom line orientation across all businesses. Excepting the FMCG where we knew that the first five to seven years we'll make losses. And beyond that we may end up making losses in some businesses but that was certainly not the intent.
One of the key acquisitions that you have made has been Firstsource, particularly post your separation with your brother in terms of business. How has that investment yielded for you and what does it stand today and how do you look at it going forward?
As I said 400 crores has become 25,000 crores. So that's not bad at all. But now the next thing is how do we make the 25,000 crores multiply over the next 3 to 5 years. We have plans of trebling our profits over the next four years. We're working towards it and so far it seems on track.
Do you remember at what price did you buy it at and where it stands today?
It's been a journey. It's been a good journey.
And is that one of the key sectors that you're focusing on towards your next phase of growth?
I think we are actually growing all our businesses. So renewable is going to be a very big area of growth. So the plan is over the next five to six years to set up 10 gigawatt of renewable capacity. There is a lot more on that front happening as well. We're growing our chemicals business aggressively. We are growing our IT business aggressively. We are growing our FMCG business aggressively. So right now we are looking at growing across all our vectors. Even the music business I think will grow significantly. So hopefully you'll see a different RPSG in the next 3 to 4 years.
