While we continued to grow, I was being squeezed by a regulatory constraint that meant I could not go below 51%. So, whenever we needed capital, if someone was willing to give me money, I still needed to bring in my own! If I needed Rs.100 crore, I needed to bring Rs.50 crore myself! I did that for a while, by piling on debt. It was a draconian regulation, completely anti-first generation because how do you keep bringing in capital?
All the biggest entrepreneurs in the world have diluted capital…. Steve Jobs owned very little of Apple. Did not the Infosys founders pare down their stake to 5-6%? E-commerce guys can come down to less than 10% and still call it their company, telecom can do it, banks can do it, but news channels can’t! It’s crazy. You have to dilute to grow. If you are a first-generation entrepreneur but have a regulation that needs you to have a 51% stake at all times, then there are only two options: either you remain tiny or you sellout to a large business conglomerate or industrial group.
We were badly in debt when Reliance stepped in as a white knight in 2012 with non-voting rights…I still had operational and management control with 51% stake. But in 2014 when they converted their shares into voting rights, I did not see any reason to stay on as a minority partner. Had I been allowed to go down to 10%, there wouldn’t have been a crisis. But then as an entrepreneur you can’t keep blaming others.
In hindsight, a situation did present itself earlier, where I could have turned things around. That I did not was my cardinal sin. In 2011, when the market went up, because Colors, Homeshop18, CNN-IBN were doing well, I managed to raise Rs.1,000 crore in equity. Our debt was Rs.2,000 crore. Had I used that Rs.1,000 crore to pare the debt to half, it would have given us headroom and time to sell some of the non-core assets. We had Yatra, Bookmyshow (BMS), Homeshop18. These are lovely assets…Today, BMS is making a placement that values it at half a billion dollars and that is still not reflecting in the stock!
I missed that chance to reduce debt. Like a fool, I believed th