Home BUSINESS Essel Group- the sinking ship?

Essel Group- the sinking ship?

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subhash pic 1
Subhash Chandra

Overview: Essel Group owes close to Rs 16,889 crore to its shareholders, banks, NBFCs and mutual funds. The group has pledged shares worth Rs 17,449 crore to raise Rs 7,689 crore and hypothecated some of its prized assets to pay off its debtors and raise another Rs 9,200-crore.

The crux of the matter is that Subhash Chandra keeps adding one company after another — apparently without evaluating the profit or loss and regrets later.

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In this manner he has one after another started or acquired over 100 media and non-media companies. The media companies bring revenue but not enough to pay off the loss accumulated by the non-media businesses. Thus he never has enough liquidity to pay-off all his debt. 

A few months back Subhash Chandra – a school dropout and first generation Richie-rich apologized to his lenders for the financial mess. And luckily for him, they agreed not to treat the loans he took by pledging his shares as “default”.

This is causing sleepless nights for the Essel group promoters as they are not able to figure out how to salvage their reputation and goodwill. A moot question everyone seems to be asking is — how the media baron will stay afloat after pawning off a part or whole of his ailing conglomerate? 

It took almost 90 years for four generations for his family to create the wealth. This is something that they might lose – if they are not careful. 

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A five hundred-year-old idiom suggests that– rats can sense an impending danger and escape before it happens. It is their nature to run away before the disaster strikes. As a result you may come across people who keep an eye on the rats and escape an impending disaster-zone to save their skin – in time before any damage actually takes place.

This has given rise to the expression ‘Rats Fleeing a Sinking Ship’. It was first used by a Roman philosopher, Pliny the Elder in his encyclopedic called Natural History (77 AD) in which rats deserted a building before it fell down. Even Shakespeare referred to this phenomenon in The Tempest, Act I, Scene II which refers to rats fleeing a sinking ship.

This in nutshell is the problem that the 93 year old Essel Group–started as a commodity trading firm called Rama Associates by Jagannath Goenka in 1926 – is facing today. Today his grandson Subhash Chandra runs the company.

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Subhash Chandra (Individual Net worth Rs. 20,546.5 Crore) — the father of Indian television is in thick soup. All in all – it is a typical rag to riches story that has overnight turned into a tragic story.

Obviously you wouldn’t like to ride a bike sitting behind someone who doesn’t know how to drive, doesn’t have a learner’s license, and also does not fully understand the basic A-B- Cs (accelerator, brake or clutch). That exactly the problem with Chandra.

Almost like the Pilot of a fully loaded aircraft with over 300 passengers (shareholders, bankers, investors, and lenders) on board, he is feeling an urge to fly but doesn’t have a commercial pilot license or air traffic clearance.

That essentially his biggest problem as he has always wanted to do big things that too in so many varied and difficult areas about which he didn’t have any prior knowledge or expertise. He started the world’s largest packaging company; Asia’s largest amusement park (Essel World); and India’s first satellite television channel Zee TV


Not too long ago Chandra was heading India’s biggest, reputed, and profitable news and entertainment business—and the most popular TV channels like Zee TV, Zee Cinema, and Zee 5– a video-on-demand digital service (market value Rs. 42,000 crores).

It gave him a viewership of more than 120 Crore people in over 174 countries across the globe.

As the mighty Czar of Indian television, he could win over hearts and minds and influence public emotions and opinion through his 90 odd TV channels in Hindi, 22 vernacular language (as per the eighth schedule of Indian Constitution) and 12 foreign dialects to communicate worldwide.

His product basket also included DNA newspaper chain, Zee  TV network,  Wire and Wireless cable systems, Dish TV direct-to-home, Agrani and Procall satellite communication, EsselWorld and Water Kingdom theme parks, Playwin online gaming, Zee Learn, Essel Propack flexible packaging,  Essel Infraprojects and Fun Cinema family entertainment centers.

Anyone else might have considered all this good enough, but Chandra wasn’t satisfied and always kept saying ‘Dil Mange More’ to his wife Sushila and children – Amit and Puneet Goenka.


It is not a crime to want the brightest and the best of everything — even beyond the comfort zone. But one must never forget that even the most elastic things like rubber-band breaks if and when stretched beyond its tensile limit. Like anyone else Chandra had every right to make many mistakes and bad investments – but with his own money, not public or other people’s hard earned money and life’s savings.

Subhash Chandra reportedly made a maze of investments in private, public listed Companies, subsidiaries and affiliates in—renewable energy, infrastructure, urban development, water management, and solid waste, but without the—funds, expertise, manpower and luck to manage them profitably.


Chandra is one person who does not need enemies. He is his own worst enemy who likes to do everything his way and as per his own rules. Chandra basically wants to go full speed ahead– faster and further than his competitors in multiple domains but doesn’t realize that it is better to be safe than to be sorry. The fast-paced news, content, broadcasting, and entertainment industry is a high risk area where competitors like Jio, Amazon Prime, Facebook, Airtel, and Netflix are trying to slash each other down and only the fittest will survive.


The Essel Group is finding it difficult to retain its over 10,000 creative, skilled, and talented employees. Over the years its efficient and capable team members have either left the organization or are on the verge of doing so.

People generally work for in an organization — either for name-fame or money. Today the Essel group’s employees are a disillusioned lot. Working for Subhash Chandra’s Companies does not excite them anymore. There is no job satisfaction, good corporate governance, leadership, vision, motivation, stability or growth prospects –  now or in future – that too without any assurance of regular and uninterrupted payment of salary. Many of them may stick around till they get another good opportunity – no more.

Strange, till a few years back people working for Zee TV or its promoters were so comfortable and well entrenched that they almost considered it to– as a stable government job. Leaving the company or telling anyone else to do so was the last thing on their mind. Many of them have already left or are planning to leave at the first available opportunity in the future.


People aren’t just leaving the Essel group but doing so in a panic mode.

Uday Nirgunkar quit as the Editor-in-chief of DNA Newspaper and Channel Head of Zee 24 Taas to join as Group Editor of News 18 Lokmat.

Meanwhile Jagdish Chandra—joined as the CEO of Zee Media Corporation Limited (ZMCL) and was tasked to manage Essel group’s regional channels. These included– Zee Sangam (Hindi), Zee Puraiyaa (Hindi), Zee Marudhara (Hindi), Zee Madhya Pradesh-Chattisgarh, Zee Punjab, Haryana, Himachal (Punjabi and Hindi), Zee (Kashmir), 24 Ghanta (Bengali), Zee 24 Taas (Marathi), Zee Kalinga (Oriya), and Zee 24 Gantalu (Telugu). Jagdish was also given the responsibility to take over as CEO of DNA. But three months down the line, all his powers were curtailed and he unceremoniously asked to quit as the CEO of DNA but to continue on the board of ZMCL. All this happened suddenly, and without assigning a reason.

Likewise, Ashish Kirpal Pandit the CEO and Executive Director Zee Media was asked to step down, while Zee Entertainment, executive vice-chairman Subodh Kumar and Dish TV CEO, R C Venkateish, resigned from their respective posts.

Around this time, the DNA employees in Pune and Bangalore were a troubled lot – ‘being roasted on a tin roof in the open and that too without any protection, under the blazing hot Sun’. There were a lot of uncertainties about their future, due to rumors that Diligent Media Corporation Ltd., an Essel Group company which owned the newspaper, was planning to shut down the Pune and Bangalore editions. This has led to persistent heartburn and several resignations over the past two years. Today the Pune and Bangalore editions of DNA newspaper have many empty chairs and — only half the staff they used to have at the time of their launch in 2005.

An accepted truth is that employees quit their job, not because –they don’t like the organization but because of bad managers. Explaining the surge of resignations in DNA, sources say, DNA was a good newspaper but with a bad management. As a result, even Malcom Mistry the CEO of the newspaper resigned.

In the meanwhile, Rohit Sardana the Output Editor of Zee News who had worked with the organization for more than 13 years (since 2004) quit and joined Aaj Tak. In course of his career in journalism, Sardana, who had been conferred with many awards for excellence in Journalism; used to host a show called ‘Taal Thok Ke’ — a platform for heathy debate on burning social issues.


No business – howsoever big or small is purely run on the ethics and moralities like sacred and holy cow. All businessmen don’t always follow the lawfully imposed terms and don’t compromise or manipulate things to their advantage.

But Congress MP and Chairman Jindal Steel and Power, Naveen Jindal let loose an angry volcano when he released an audio tape allegedly with the recorded voice of Sudhir Chaudhary and Sameer Ahluwalia–two Zee News staffers trying to blackmail him at the behest of Subhash Chandra. The two Zee staffers allegedly threatened to air Jindal’s so-called ‘shady business activities’ in the coal mining scam on Zee News, unless he paid Rs 100 crore supposedly ‘towards advertisement expenses in the account books’ to suppress the news reports. Based on Jindal’s complaint, Sudhir Chaudhary and Sameer Ahluwalia were arrested and sent to Tihar Jail.

Naveen Jindal also alleged that this demand was made with the consent and knowledge of Subhash Chandra, Punit Goenka, Sameer Ahluwalia and Sudhir Chaudhary. Though this was a serious allegation; Subhash Chandra and others escaped unscathed underlining the fact that—corporate houses and political parties having their own media and connections, can get away without any punishment.


It is common knowledge that Subhash Chandra has been accused of inappropriate dealings, many times but lucky enough to escape unscathed each time because of his “right connections” in the government. As such everyone who knows him or has seen the way he conduct his business is asking — would he be able to wriggle out this time too? Well, that is the big question that only time will tell?

According to a retired officer who were involved in investigating many a frauds and financial crimes like the Harshad Mehta case, Subhash Chandra had close links with Ketan Parekh — an accused in the stock market scam in the year 2000. Subhash Chandra allegedly paid Rs. 706.4 Crore under the table to Ketan Parekh to spike the price of shares of Zee Telefilm and make them skyrocket 25 times – from Rs 21 to Rs 490 during a 11 month period. In lieu of the money paid by the Essel group, Ketan Parekh reportedly had to exploit the loopholes to manipulate the market, create large-scale fluctuations and fudge facts. It was a well-planned conspiracy.

However, the case lingered on for years as the Securities & Exchange Board of India (SEBI) kept dragging its feet for almost a decade. This was till CB Bhave was appointed Chairman of SEBI, in 2008. Within a week of joining office, Bhave let-off Essel Group, without even a fine. He reportedly went on record to say that the investigation had failed to prove a nexus between Ketan Parekh and Essel Group. Hence he did not feel it necessary to impose any fine. But in order to make it seem like an impartial probe, he issued a warning to Essel Group before allowing them to go scot free. The question however is — if Bhave was really convinced that Essel group was not at fault, why did he issue a warning, without any rhyme or reason?


In order to know more about Subhash Chandra – a school dropout and self-made first generation Richie-rich and the manner in which he accumulated the wealth, launch his business and why is he stuck in financial swamp; one just has to just look into the past and see how he has stretched his business—all within the last couple of decades.

Subhash Chandra was born in a Marwari Baniya family from Hissar, a small town in north India. Faced with a crises situation to pay off a debt of Rs five lakh owed by his father, he dropped out of school and joined the family business as trading and commission agent of rice. At the age of 19, Subhash and his brothers started supplying rice to Food Corporation of India. Soon he set up a vegetable oil unit and Essel Packaging Limited in 1981. A few years later Essel Packaging Limited was merged with a Swiss Company called Propack A.G, took rebirth as Essel Propack Limited.

His first big commercial break came in 1983. FCI used to store grain in covered warehouses at that time, so Chandra suggested the idea to keep the grain, covered by specially designed laminated plastic sheets in the open. A high-tech machine was imported from Switzerland but wasn’t much of a success.  Almost 98 % of the first year’s produce was lost in testing and calibration simple because of the absence of trained engineers and operators. As a result, engineers and operators had to be sent for training to Switzerland – leading to an unplanned hike in the cost of the project.

A few years later, on a visit to Disneyland in the USA, Chandra got the brainwave to start his own amusement parks. Thus after returning to India, he set about buying hundreds of acres of land in north Mumbai to build Essel World in the mid 80’s. The Essel World Amusement Theme Park claims to be– Asia’s largest amusement park (over 64 acres of land) and the first ice skating rink – at Gorai Island, but as usually happens in most of his businesses Essel World wasn’t much of a success.

This made him think– what else to do? Deep inside his meditative state, he got the idea that he was looking for when the Gulf War codenamed Operation Desert Storm—the first ever televised war in the early 90s, brought reports, images and visuals from CNN’s coverage to people’s living rooms. People all over the world were shocked to see pictures of missiles hitting targets, fighters taking off from aircraft carriers, precision bombs hitting the targets and night vision devices being used in the “war drama”. It also opened up avenues for use of technology for live coverage from the battle-front. This planted the ideal in his mind to start Zee TV — India’s first private TV channel. That was a time when the television industry in India was solely monopolized by Doordarshan. Doordarshan refused to let him hire a transponder. Chandra then approached AsiaSat in Hong Kong to lease one of their satellite transponders. But AsiaSat wasn’t impressed by Chandra’s credentials and demanded – much more than the regular price– so he approached Richard Li, Star TV’s founder and one of Hong Kong’s 50 richest billionaires. This resulted in a tie-up with Star TV to get a transponder and setting up of India’s first private TV channel in collaboration with Hong Kong- based Star TV.

At the time, when he came up with the idea to start Zee TV — it was a big gamble that could make or break him. His family, friends and well-wishers warned him to be careful or else, he might lose the small savings that he had accumulated over the years. Even his friend and Zee’s cofounder Ashok Kurian cautioned him that it was akin to going and expecting to come back safe from the valley of death. There were no private Indian broadcasters at that time. And even the possibility of as the government regulations didn’t allow anyone to be one in India. The Indian government told him to shut the channel and warned him of dire consequences but he refused. As a result, he continued to burn 0.6 crores a month to pay for use of the satellite in Hong Kong.

Still not satisfied Subhash Chandra also launched India’s first online lottery and Dish TV in 1992. Soon after, he bought Siticable and started a joint venture with News Corp before launching, two new channels Zee News and Zee Cinema within the same year. In due course, Zee TV became the first cable company in India to launch Internet over Cable first in India to launch Direct to Home (DTH) services in the year 2000 and 2003 respectively. This in nutshell is how Zee TV became a big and powerful media house – not just a pioneer in the media and entertainment industry but also the first satellite Hindi channel that revolutionized the television watching experience in a short period of time in India.

In due course, Chandra launched Daily News and Analysis (DNA), an English daily, in collaboration with Dainik Bhaskar group to threaten a well-settled Times of India in Mumbai. This led to one of the biggest and sustained newspaper battles in Mumbai. A few years later, Subhash Chandra took over the management control of Daily News and Analysis (DNA)– one of the top eight and the fastest growing English newspapers in the country.

A few years ago Essel Group, setup a new division called, Essel Financial Services Ltd with Subhash Chandra’s son Amit Goenka, at the helm of affairs. Ami was previously a Nationalunnamed Director at Knight Frank –one of the world’s largest global property consultancies. Under Amit’s leadership as MD and CEO, Essel Financial Services is to be bifurcated into– Essel Finance Managers and CAPSTAR. The logic behind all this was to leverage Essel Group’s presence in media and reach out to investors, consumers and institutions. CAPSTAR, will focus on infrastructure, real estate and financial deals, with offices in Delhi, Noida, Mumbai, and Bengaluru. It was to be headed by Abhinav Bhushan another former Knight Frank India employee.

Subhash Chandra was chairman of Zee Media network and its TV channels, but suddenly resigned as Director and Non-Executive Chairman of the company on 24 May 2016 to contest Rajya Sabha elections as an independent candidate from Haryana.

There seem to be quite a few similarities between 68 year old Subhash Chandra and 87-year-old Australian media tycoon Rupert Murdoch.  Murdoch recently sold off his entertainment business ventures under 21st Century Fox (including Fox film and television studios and Star India) to Disney for anywhere close to Rs 5,000—Rs 7,000 Crore. But this does not make much of a difference to Murdoch who still controls News Corp and owns several newspapers in Australia, including ‘The News’ which he inherited from his father. Murdoch has a knack of reviving ailing newspapers and owns the two most popular daily newspapers– ‘The Sun’ and ‘The Times’ in Britain where printed newspapers are taken very seriously, and play a part in shaping or changing the public opinion.

Murdoch’s News Corp owns the biggest-selling dailies in the newspaper market in Australia and USA ‘The Australian’, ‘Wall Street Journal’ and ‘New York Post’ and TV Channels like Sky News a British TV, Radio and online news distribution channel as well as Fox News – a high-rated pay TV news channel in USA. Even so, Murdoch’s dilemma is that while the pay TV businesses are a commercial success and bring him more wealth and revenue, they don’t make him a political heavyweight.  Whereas, ‘The Sun’ owned by him has the potential to make or break governments. Such is Murdoch’s power and influence that most governments stay away and avoid opposing or upsetting Murdoch – the newspaper baron and satellite broadcaster.

However one thing that sets Murdoch and Subhash Chandra apart is that–  Murdoch claims to come out— first with the News of the World, whereas Subhash Chandra– makes news each time for altogether different reasons.

The too good to be true, magical empire, built brick by brick, by Chandra and his ancestors is on the verge of collapse. On one side, a financial tsunami emerging over the horizon seems to be clashing with the passionate dream of a full grown adult who wants to buy the most expensive, brightest and best toys in the market but fails each time – because they do not give him adequate return on investment. This, in short, is the nail-biting climax of the story of his life, success, and survival.

The Essel Group owned by Chandra and his sons and its over 100 subsidiaries and affiliates owe close to Rs 16,889 crore to funding and investment entities like– banks, NBFCs and mutual funds. The is akin to getting lost in the jungle and not knowing how to come out.

Subhash Chandra and his family – the promoters of Essel group as well as Zee Entertainment Enterprises Ltd (ZEEL), the group’s flagship Company, are prepared to sell off up to 50% of their stake. Subhash Chandra has even signed a formal agreement with the lenders to allow the Group to buy time till September 2019 and keep his companies afloat till he is in a position to fully repay or trim the debt.

Subhash Chandra

According to insiders, the Company has set a March–April deadline internally to sell the shares and liquidate the outstanding liabilities. Early this year, Essel group sold shares worth Rs 1,050 crore of its six  listed firms in the open market. These included shares of– Zee Entertainment Enterprises, Dish TV, Zee Media Corporation, Siti Networks Ltd and Zee Learn. The amount thus generated was used to pay lenders who were not part to an agreement about loans against pledged shares.

The Essel group companies will never be able to forget Jan 25 – the day when its shares crashed down to earth by over Rs 13,352 crore in just one day. The shares of- Zee Enterprises (collapsed over 26%), Dish TV (33%) and Essel Propack (16%) after news reports alleged links between Essel group, Nityank Infrapower and Multiventures— being probed by Serious Fraud Investigation Office (SFIO) for deposits over Rs 3,000 crore during or after demonetization.

Chandra sought an apology from the lenders for the financial mess and mistakes like wrong bets in Essel Infra alone which led to heavy losses to the tune of Rs 4,000-5,000 crore.

According to him, the main reason behind the present state of turmoil in his group of companies were:

  • Accepting personal responsibility to pay off the debt of all group companies.
  • Role of negative forces ‘sabotaging’ and ‘hammering’ the stock price and derail the sale of shares in Zee Entertainment Enterprises. According to him, the troubles started around June last year when anonymous letters were sent to the shareholders, banks, mutual funds, and non-bank lenders.
  • Aggressive bets on infra, meltdown of IL&FS and acquisition of Videocon’s D2H business– which went out of control
  • The merger between Videocon d2h and Dish TV was a “burden” on the promoters’ books. According to Chandra the decision to acquire Videocon’s D2H business cost him and his brother Jawahar Goel a ‘fortune’.

Subhash Chandra gifted a 13-acre plot worth over 0.5 crore (1997 prices) to his 86-year-old guru Satya Narayan Goenka. Today it would be worth twice as much and has 325 feet tall, gold painted Global Vipassana Pagoda – one of the world’s largest­hollow stone dome without any supporting pillars. It required 2.5 million tons sandstone to be hauled 620 miles from Rajasthan and took 11 years to build.

Similarly, on completion of 90 years of Essel Group in May 2017, Subhash Chandra donated 5000 crores to the Such (Subhash Chandra) Foundation.

Charity begins at home. Does Subhash Chandra have the right to give away anyone else’s life long savings, invested in his Company or projects – even for charitable and for the how-so-ever justifiable cause? Subhash Chandra really has a lot to answer.

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Neeraj Mahajanhttps://n2erajmahajan.wordpress.com/
Neeraj Mahajan is a hard-core, creative and dynamic media professional with over 35 years of proven competence and 360 degree experience in print, electronic, web and mobile journalism. He is an eminent investigative journalist, out of the box thinker, and a hard-core reporter who is always hungry for facts. Neeraj has worked in all kinds of daily/weekly/broadsheet/tabloid newspapers, magazines and television channels like Star TV, BBC, Patriot, Sunday Observer, Sunday Mail, Network Magazine, Verdict, and Gfiles Magazine.


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