New Delhi: Even as The Indian Express Group, one of the country’s largest media groups, is in talks to raise private funds ahead of a plan to go public, the company’s chief executive officer has written to colleagues saying that inside the company, “the news is grim.”
In a 2,751-word “Dear Colleagues” email, Shekhar Gupta, who is also the Group’s editor-in-chief, said that as the group prepares itself “for a big leap forward,” it needs an honest introspection and own up to “our failures and...acknowledge our weaknesses.”
Gupta wrote: “In a year when the media industry has grown by nearly 25%, our revenues have declined by 3%,” adding that “it does look to me as if all of us took our eye off the ball.”
“The truth is that we have been much too forgiving with ourselves in a market-place getting less forgiving by the day,” wrote Gupta, noting the increasingly competitive nature of the newspaper business.
In an unusually candid email conversation, which he wrote was triggered in part by what the group’s flagship paper, The Indian Express, says on its edit page each day—“Because the truth involves us all”—Gupta listed a series of problems at the media house.
“Even as our revenues fell, we let our costs hit an all-time peak, our new machines took forever to become functional—they still haven’t, entirely, although we have seen progress lately. Our newsprint consumption went out of whack, as some circulations... At some point, we lost control over rising newsprint waste levels in our presses, our inventory control weakened a great deal.”
In addition to The Indian Express, the group publishes several national and regional publications, including The Financial Express, Loksatta and Screen. The Financial Express is one of five English-language business dailies in India along with Mint, which is published by HT Media Ltd.
In his email, Gupta said that he has “requested the members of the top management team to take a wage freeze for this year. In addition, I have also decided to defer a significant part of my compensation till we see some real improvement.” Gupta added that “the action with some others amongst us, in the senior team, I am afraid, has had to be harsher. Some others are under close watch. I can say very little on this except to add that nothing would make me happier than being able to report a turnaround to you, and I do hope that, working together, that day will come soon.”
In a telephonic interview, Gupta declined to comment on the email or comment on related questions.
Meanwhile, two separate executives at the group, neither of whom wanted to be named, said that the group is now in the process of hiring a new chief executive officer (CEO) and that Gupta, who will remain on the management board, will soon relinquish the CEO role to focus more on strengthening the group’s editorial content.
The Goenka family owns over 90% of the firm though Gupta, who is also an accomplished journalist, is a significant shareholder as well.
In his email, Gupta said that the firm was “involved in a complex process of negotiating with bankers and exploring the market for taking our company public and we expect that process to see fruition in the very near future,” adding that “you will understand, why, at this stage, we cannot disclose any more on this.”
But in a telephonic interview, Vaidehi Thakar, director, corporate legal, Indian Express Newspapers (Mumbai) Ltd, the entity that publishes all the group publications, said that “the company is currently in talks with merchant bankers to finalize the details of the issue. But before going public, we plan to raise funds through private sources. For private funds, we are open to all options including private equity.”
Plans to go public have been mooted before at the group though it appears that the timetable is now six to eight months.
Market observers say that, thanks to the credibility that its flagship newspapers continue to enjoy despite limited circulation, any attempt to raise money in the capital markets is likely to be well received given the overall healthy performance of print media companies.
“An issue’s success primarily depends on two factors—the credentials of the company behind it and the pricing. The group’s products are known for their quality and credibility. If the firm gets its pricing right and is able to convince investors about its future turnaround plans, its past should not come in the way of its success,” says Prithvi Haldea, managing director, Prime Database, a company that tracks the primary issues market.