Sanjiv Goenka rebrands as business splits, not family

Sanjiv Goenka has started rebranding his share of RPG Group assets as part of a formal separation of businesses from those of brother Harsh Goenka.

RP-Sanjiv Goenka Group, the entity led by him, on Wednesday unveiled its new corporate identity and logo different from those of the RPG Group, which has gone to his elder brother and has companies like Ceat and KEC in its fold.

That group will continue to be known as the RPG Group, the younger Goenka scion told DNA Money after the unveiling. “The RPG Enterprises is not losing its identity from today. The businesses got divided a year-and-a-half ago. So, practically nothing has changed today,” he said.
RP-Sanjiv Goenka Group plans to bring in strategic investors next month into CESC Infrastructure Ltd, which would be the holding company for all its proposed power ventures.

“Fundraising for this holding company is at a very advanced stage and the negotiations are entering their last leg. We would be diluting 20-25% to take care of the equity component requirement for these projects for the next year or so. By August, I think, the deal would be closed,” Goenka said, adding that the group has about 1,200 mw of power capacity under implementation with projects at Chandrapur in Maharastra and Haldia in West Bengal (600 mw each) achieving financial closure.

This year would also mark the legal splitting of Harrisons Malayalam Ltd, which is into tea and rubber plantation.

“The issue of separation of Harrisons Malayalam has been settled. It has been done by my father some time ago. Me and my elder brother (Harsh Goenka) will have share of both tea as well as rubber plantations. Although currently there is one managing director, two independent business units under separate management has been created. The legal split will take some time though... maybe another year,” said Goenka.

Two years from now, Goenka also plans to take his retail venture, Spencer’s Retail, public though an initial public offer (IPO), after separating it from CESC.

“We will consider Spencer’s IPO, but only after it turns around. Before the
IPO, we would be separating our retail business from CESC, under which it remains as a subsidiary. But everything depends upon when Spencer’s turns profitable at the net level, which I expect would happen probably by the end of 2012-13,” said Goenka.

Goenka had earlier tried to bring in PE investors into Spencer’s but the deals fell through due to differences over valuation.
Goenka has some big plans for the retail business, beyond opening Spencer’s stores. He plans to add 50 Beverly Hills Polo Club stores over the next 15 months to the current 25 and another 50 bakery cafe outlets under Au Bon Pain brand in the next two years. Most of the outlets would be owned rather than franchised, in order to have better control.

The RP-Sanjiv Goenka Group wouldn’t be looking at any radical diversification, said Goenka. “There is enough opportunity to grow in these areas,” he said, adding that power and natural resources (through CESC and its affiliate companies), carbon black (Phillips
Carbon Black Ltd), retail (Spencers’ Retail), media and entertainment (Saregama Ltd and its arms) would be the group’s focus areas.

Infrastructure is one area Goenka is looking at, but only in segments like engineering construction and power transmission, which have synergy with existing businesses. “We have plans to take CESC to newer areas, but only those allied to its core competency —- power generation. Areas like engineering, a core requirement for setting up power plants are being looked into to improve cash-flows.”

A full-blooded hospitality play has, however, been ruled out. “Few small hotels have been with the group historically. At this point of time, there is no plan to make hospitality or hotels a part of our core areas of business,” said Goenka.