Home >Companies >People >R.P. Goenka, an industrialist with an appetite for risk, dies at 83

Kolkata: It is widely known that Rama Prasad Goenka, who died on Sunday at the age of 83, was a strong supporter of the late Indira Gandhi, India’s former prime minister. Some say he even idolized her.

Following the withdrawal of the Emergency in 1977, he was arrested and held in police custody for a few days on suspicion that he hid money for her.

But as a fiercely ambitious industrialist, he ought to have hated her for the state control she imposed over India’s economy.

By the time the so-called licence raj ended in 1990 and the time had arrived for Goenka’s ambitions to take flight in a free market, he had pretty much hung up his boots.

He retired as executive chairman that year to give his sons Harsh Vardhan and Sanjiv more freedom to run the business empire he had built on acquisitions despite the headwinds of restrictions imposed by Gandhi.

They had too much on their plate already, so they chose to consolidate it for the next two decades.

By the time the undivided Goenka family’s businesses were partitioned in 1979, R.P. Goenka had already negotiated seven deals under the shadow of his illustrious father Keshav Prasad Goenka.

Most of them, though, were either aborted or didn’t eventually turn profits for him and his extended family. One of them was the almost concluded takeover of Bombay Dyeing and Manufacturing Co. Ltd.

When the Wadias backed out after agreeing to sell the company, he didn’t gun for it despite one of their witnesses to the sale agreement assuring him of support if he wished to take them on legally.

Though he regretted later, he gave up Bombay Dyeing at that time to protect the goodwill of the Goenka family. Because it was the inherited goodwill that he leveraged to swing deals, often even without adequate preparation to pay for an acquisition.

R.P. Goenka was fearless, says the younger of his two brothers, Gouri Prasad Goenka.

Whether he was leveraging the businesses he bought or the family goodwill, his appetite for risk wasn’t always appreciated by others in the family.

And it wasn’t surprising that he faced resistance. The young turk was an adventurer for his times.

Through the 1950s and 1960s, Kolkata’s Marwari industrialists expanded their empires by acquiring firms from British managing agencies on the strength of their ability to pay in foreign currency abroad, despite strict controls.

The kind of leveraged buyouts that R.P. Goenka pioneered was seen as risky at that time, especially in the light of the state control over Indian businesses.

What if a bet went horribly wrong? What if loans couldn’t be repaid, or worse still, the acquired company was nationalized by the government?

Differences over how to run and expand the undivided Goenka family’s businesses led to the split in 1979.

R.P. Goenka, the eldest of the three brothers, took the initiative to carve out the empire, and most of the acquisitions that eventually paid off for him were concluded when he was on his own.

The first one was the takeover of tyre maker Ceat Ltd from its Italian investors, which was announced months after the partition took place. He took a few years to conclude it and regarded it as one of his biggest successes.

The combined revenue of the four companies that R.P. Goenka received from the family settlement—Phillips Carbon Black Ltd, Asian Cables Ltd, Agarpara Jute Mills Ltd and Murphy India Ltd—was 105 crore at that time, or around 750 crore currently, adjusted for inflation using the Wholesale Price Index.

In fiscal 2012, the listed firms that R.P. Goenka then headed as chairman emeritus, took in 17,000 crore in gross revenue.

By their current market price, they are worth 6,700 crore. These and other private assets were split between his two sons through another partition in 2010, giving birth to RPG Enterprises and RP-Sanjiv Goenka Group, controlled, respectively, by Harsh Vardhan Goenka and Sanjiv Goenka.

That apart, the two groups own through unlisted firms substantial real estate assets spread across India and a coal mine—the first allotted to a private company since coal mines were nationalized in the 1970s.

From an early age, R.P. Goenka started spending a considerable amount of time in New Delhi, liaising with the Union government as was necessary in those days to get necessary clearances to run businesses. That earned him a friendship with Gandhi and her Congress party, and a short stint as a lawmaker.

Yet, he failed to prevent Balmer Lawrie and Co. Ltd from being nationalized
and seized from his family in 1972.

“We made mistakes," recalls G.P. Goenka. “It wasn’t managed in the right manner—we made it easy for the government to take it over citing strategic importance." Balmer Lawrie at that time was a supplier to the armed forces.

Again, in the mid-1980s, R.P. Goenka came under fire from the income-tax authorities. His offices were raided across the country. They ended when he agreed to pull out of Dunlop India Ltd, a company he tried to take over in 1984 jointly with Manohar Rajaram Chhabria.

In less than two years, the partnership was on the rocks, and he ceded Dunlop to Chhabria to cut his losses.

“Partnerships didn’t work too well for my father," his younger son Sanjiv once said, recalling Dunlop and several other ventures that he tried to set up in collaboration with foreign companies such as the erstwhile Phillips Petroleum Co.

The Dunlop fiasco gave R.P. Goenka’s detractors one more—and perhaps the last—opportunity to laugh at his adventurism.

Following the footsteps of Ghanshyam Das Birla, one of the Birla family patriarchs, R.P. Goenka started to travel to Mumbai to scout for opportunities and closely followed the city’s growth as India’s commercial capital.

In the process, he not only bought several companies based in western India, but also made friends with stars from the silver screen such as Lata Mangeshkar, Dev Anand and Meena Kumari.

To cement his ties with this world, which he admired, R.P. Goenka acquired in 1985 Gramophone Co. of India Ltd (now Saregama India Ltd)—the biggest repository of Indian film music.

His last major acquisition was Calcutta Electric Supply Corp. Ltd in 1989, which has since been renamed CESC Ltd.

Originally a sterling company listed on the London Stock Exchange and owned by British shareholders, CESC was at that time controlled by the West Bengal government. Aided by one Dhunseri family, which had a stockbroking business, R.P. Goenka bought into the company.

The state’s then chief minister Jyoti Basu, who was always sceptical about R.P. Goenka, didn’t initially take kindly to the move.

When faced with resistance from the state government, whose nominees then ran CESC, R.P. Goenka famously offered to sell his entire stake in the power utility to the state government for 1.

Basu backed off; R.P. Goenka took the challenge to abolish power outages in Kolkata—it took Sanjiv Goenka several years to achieve that. Alongside outages, state control over the utility was also abolished.

Never a “maintenance man", R.P. Goenka wasn’t interested in the nitty-gritty of day-to-day operations, says a close associate for decades, asking not to be named.

“He was a great judge of the intrinsic potential of any business, which made him a takeover specialist, but far too restless to settle down and run a company."

An ardent admirer of the late Dhirubhai Ambani, the founder of Reliance Industries Ltd, R.P. Goenka made several attempts to set foot in the petrochemicals business.

All his attempts failed, he used to recall grudgingly in later life, the last one being Haldia Petrochemicals Ltd in which he was to be the West Bengal government’s private partner.

With CESC cash-strapped and struggling with its indebtedness, he quit Haldia Petrochemicals, finally giving up his pursuit to get into the petrochemicals business.

R.P. Goenka belonged to a fast-fading generation of businessmen from Kolkata who saw the city slide from being one of India’s most endowed commercial centres, both in terms of assets and entrepreneurial skills, to one nearly bankrupt of industries.

Many of his contemporaries quit Kolkata, but R.P. Goenka couldn’t, his family having taken roots in this city from the early 19th century.

His elder son Harsh Vardhan Goenka, though, lives in and runs his businesses from Mumbai, having made that choice at a very early age.

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