Kolkata/Mumbai: Sanjiv Goenka formally announced the setting up of a new business group named after himself as part of the partition of the family business that used to be headed by his father Rama Prasad Goenka. Spencer International Hotels Ltd is to remain the only company under joint ownership of Sanjiv and Harsh Goenka, the two sons of R.P. Goenka, the founder of Kolkata-based RPG Enterprises.
A year ago, the brothers had separated their business interests and family-owned assets, including Goenka Niwas, their home in Kolkata’s upscale Alipore area. Sanjiv Goenka said he and his father now own Goenka Niwas.
“We have decided to continue to jointly own Spencer Hotels,” he said. “For the (extended) Goenka family, it means there is at least one thing that yokes together the two brothers.”
Spencer Hotels has three properties—in Chennai, Bangalore and Ooty. All of them are managed by the Indian Hotels Co. Ltd, a Tata group firm, which runs hotels under the Taj brand.
Among them, the property in Bangalore, the Taj West End, is estimated as being the most valuable. It was earlier speculated that high valuations of its properties made it difficult to decide on the ownership of Spencer Hotels.
Harrisons Malayalam Ltd, the plantations company with interests in rubber and tea, will on the other hand be carved up and split between the two brothers, according to people familiar with their plans. They did not want to be named.
“Harrisons Malayalam was kept out of the separation initially, but it has been decided lately that it would be split down the middle to create two companies,” said one of them. “Regulatory clearances for the split have not been obtained yet.”
Sanjiv Goenka refused to comment on the proposed restructuring of Harrisons Malayalam. A questionnaire emailed to Harsh Goenka remained unanswered at press time.
The two brothers had separated ownership of the businesses run by them by ending cross-ownership in the Goenka family’s holding companies.
Under an arrangement aimed at an “equitable separation of businesses and assets”, Sanjiv Goenka got control of CESC Ltd, a Kolkata-based power utility; Phillips Carbon Black Ltd, which produces a key input for tyres; Spencer’s Retail Ltd; and Saregama India Ltd, an entertainment company.
Harsh Goenka, on the other hand, took control of tyre maker Ceat Ltd; information technology firm Zensar Technologies Ltd; RPG Life Sciences Ltd, a bulk drugs manufacturer; and KEC International Ltd, which produces power cables.
Reinforcing the partition that now separates companies run by the two brothers, Sanjiv Goenka on Wednesday announced the launch of a new corporate identity for firms under his control—RP-Sanjiv Goenka Group. Sanjiv Goenka is its chairman and his father its chairman emeritus.
This group currently has assets worth Rs 14,000 crore, revenue of around Rs 9,000 crore, combined market capitalization of Rs 4,500 crore and some 16,000 employees, Sanjiv Goenka said.
Harsh Goenka will carry on with RPG Enterprises—the common identity for the undivided group, according to the people cited above. He is the chairman of RPG Enterprises and Sanjiv Goenka its vice-chairman. Post separation, they continue to have equal right to and ownership of RPG Enterprises, according to Sanjiv Goenka.
The RP-Sanjiv Goenka Group’s key thrust would be on expanding its power business for which it proposes to invest more than Rs 30,000 crore over the next five years.
The group is looking to expand both in India and abroad, and is closely examining the possibility of setting up a 1,320 megawatts power plant in South Africa, where it has recently bought an 11.4% stake in a coal mine.
By taking an equity interest in the Boikarabelo mine in South Africa, the group has secured the right to buy 137 million tonnes (mt) of coal from it over 30 years, according to Sanjiv Goenka.
The mine, which has an estimated resource of 750 mt, is expected to begin production in 2013. Goenka said his group is currently the single largest shareholder in this mine, but it doesn’t run the facility, which is managed by a group of “extremely competent professionals”.
“Though our focus is on expanding our businesses within India, we are interested in building such new plants outside India as well,” he said. “Alongside, we are weighing the option of buying power distribution companies in underdeveloped markets such as Africa.”
If they materialize, such acquisitions could be undertaken in partnership with Singapore Power Ltd, a state-owned power and gas distribution firm with which it has a technical tie-up for the upgrade of CESC’s distribution network in Kolkata, according to Goenka.
“We have the experience of turning around CESC,” he said. “We should be able to manage distribution networks in any underdeveloped market.”
Apart from power, the group proposes to infuse at least Rs 2,500 crore in its carbon black business over the next five years. “Our aim is to shore up the group’s revenues to Rs 25,000 crore on an asset base of Rs 50,000 crore in five years,” he added.