COVER
STORY
Private
Equity Bonanza: Destination India
- - D Satish and Y Bala Bharathi
Enthused
by the success stories of past PE investments in India,
many global PE players are making a beeline for India.
The above statement not only speaks volumes about the
kind of confidence that industry experts have on the
corporate India but also throws the spotlight on the
sizzling private equity space in India. Given the buoyant
economy, it shouldn't come as a surprise to know the
fact that India has of late emerged as an attractive
private equity destination in the world. The figures
demonstrate the facts. Of late, private equity investments
in India have been increasing at record levels. They
have almost tripled from $2.2 bn of 2005 to $7.4 bn
of 2006. This clearly vindicates the fact that global
PE firms are investing aggressively in India vying for
a share in its private equity pie.
©
2007 IUP . All Rights Reserved
COVER
STORY
Private
Equity: Public Glory
- - Amit Singh Sisodiya and Kavitha Putta
Private
Equity's unprecedented success has seen stiff competition
from alternative funds like hedge funds and there is
also growing clamor for tighter regulations. On February
07, 2007, the global Private Equity (PE) market observed
the biggest ever deal as Blackstone, a (PE) firm, took
over the control of Equity Office properties trust,
US largest Real Estate Investment Trust (REIT) for $38.9
bn, beating the Vornado Realty Trust. The deal has overshadowed
the earlier record of the $33 bn buyout of HCA by an
association of Bain and Kohlberg Kravis Roberts (KKR)
last November. The number of such high profile deals
are ever-rising, thus, adding to the industry's prestige,
thanks to the growing competition from outsiders as
well as within the industry itself, for corporate buyouts.
©
2007 IUP . All Rights Reserved
INDUSTRY
FMCG
Industry: Health Plank
- - Amit Singh Sisodiya and Kavitha Putta
With
growing health consciousness among consumers, FMCG companies
are readying to capitalize on the trend. Priya Sen,
a homemaker in Mumbai, India's financial capItal, is
very particular about the quality of food her family
takes. Being a trained nutritionist also helps her in
choosing the right food for her family. Whenever she
visits neighborhood grocery or food stores, she looks
for lite cooking oil, low fat items, low sugar products
and organic food and avoids products with artificial
flavors. She believes that people have to be conscious
about the food they eat. More and more consumers like
her, from metros to the semi-urban areas, are now increasingly
becoming health- and calorie-conscious individuals.
©
2007 IUP . All Rights Reserved
INDUSTRY
NBFCs:
Back from the Brink
- - N Janardhan Rao and Ravi Babu Adusumilli
After
having fallen into oblivion in the recent past, Non-Banking
Financial Companies (NBFCs) are now showing signs of
revival. Is it for real? NBFCs, which dominated the
Indian financial sector till late 1990s, went into a
near oblivion as they found the going tough in the wake
of a series of scams that threatened to give a deadly
blow to the sector. However, things could change for
better as a host of banks including foreign as well
as domestic are planning to enter the segment.
©
2007 IUP . All Rights Reserved
INDUSTRY
Indian
Textiles: Losing Momentum?
- - N Janardhan Rao and Ravi Babu Adusumilli
Dismantling
of quota regime which promise to unleash Indian textiles
on the world map is, however, yet to deliver. Though,
in 2005, China and India recorded an impressive growth
in textile exports, the growth momentum slowed down
considerably in 2006. Other Asian countries such as
Indonesia, Pakistan, Bangladesh and Vietnam recorded
high growth rates posting a dramatic surge in their
exports to the US markets. The import curb on certain
categories by the US in January 2006 under a special
WTO dispensation was the major reason behind the slackening
textile exports from China; whereas, in India's case,
it is the lack of competitiveness in the synthetics
segment. Growth rate of Indian textile exports to the
US apparel market has declined during January-September
2006 to 10.75%, compared to a growth of 30.56% in April-October
2005. Moreover, there has been a substantial dip in
unit value realization too.
©
2007 IUP . All Rights Reserved
ENTERTAINMENT
BUSINESS
Prime
Time: It's (Reality) Show Time!
- - Amit Singh Sisodiya and Sanghamitra Dhara
Reality
TV shows are suddenly the rage in India with channels
scrambling to win over audiences and rake in big moolah.
When Star India, one of the biggest broadcasters in
the country, announced the launch of KBC-3 on January
22, this year, it did not surprise many. The earlier
two versions of the show, anchored by the legendary
actor Amitabh Bachchan, were hugely popular, raking
in billions for the channel. Hence, the media baron
Rupert Murdoch-owned News Corp's Indian subsidiary,
which had been losing market share and TAM ratings specially
during the prime time slot (between 9-10 p.m.) to rivals
Zee and Sony TV, in recent times, once again looked
at KBC to revive its sagging fortunes. Now anchored
by Bollywood's current superstar Shah Rukh Khan, the
broadcaster to a major extent has been able to hit big
times once again, despite the new anchor falling short
of matching Big B's charisma. And rival channels like
Zee and Sony among others too are competing aggressively
by launching a host of such shows. Are the reality shows
in for big time now in India or are they just a fad?
©
2007 IUP . All Rights Reserved
BUSINESS
ENVIRONMENT
Microfranchising:
A New Kid on the Block
- - N Janardhan Rao and Suma
Microfranchising
is emerging as one of the most compelling solutions
for fighting poverty. Microfinance has become a sig-
nificant and proven poverty alleviation tool by providing
the necessary capital to the poor for starting their
own businesses. However, although there are some successful
cases, critics of microfinance argue that many of the
poor still don't have what it takes to be an entrepreneur,
to start a business from scratch and then continue to
expand it. "Many of the poor who take microfinance loans
are starting copycats micro-business with low profit
margins and therefore questionable sustainability."
Moreover, the high interest rates and forced loan recovery
practices of Microfinance Institutions (MFIs) have been
held responsible for the suicides of several farmers
in Andhra Pradesh. Though microfinance has got its own
limitations yet not all people are entrepreneurial and
they lack the necessary training and skills to start
and manage a successful business.
©
2007 IUP . All Rights Reserved
BUSINESS
ENVIRONMENT
HT's
Mint: A New Flavor!
- - Amit Singh Sisodiya and Madhuparna Chakraborty
With
the launch of Mint, HT Group makes its maiden foray
into business daily publication, which, the experts
feel, is bound to shake the competition. For long, the
business daily seg- ment in the country was synony-
mous with the awesome foursome: The Economic Times,
Business Line, Business Standard and Financial Express,
dominating the market in that order. However, with the
launch of HT's Mint, the competition gets a new flavor.
Hindustan Times Group, which is more known for its rivalry
with the Bennett & Coleman & Co. Ltd., and the fierce
battle between its Hindustan Times and TOI launches
the pink paper (as the business dailies are more popularly
referred to) in collaboration with the big daddy of
all pink (and probably white dailies too), The Wall
Street Journal (WSJ), one of the most prestigious capital
market publications in the world. No points for guessing
that it is the lucrative advertising revenue coupled
with strong growth potential that tempted the media
giant to launch Mint.
©
2007 IUP . All Rights Reserved
BUSINESS
ENVIRONMENT
Low-Cost
Airlines: In Troubled Skies
- - N Janardhan Rao and Suma
Indian low-cost air carriers continue to be in red
despite the booming domestic aviation market. Is consolidation
the way out? Air travel @ 99 paisa! Sounds in- credible?
True indeed! SpiceJet, the fastest growing and the most
efficient low-frills airline, is offering flight tickets
at an unbelievable price across 14 destinations, with
84 daily flights. In fact, the onset of private airlines
has now changed air travel from a luxury drive to an
affordable middle-class journey. However, the industry
is unable to meet the growing air traffic against the
strong civil aviation growth rate at 20% per year, the
highest in the world. Though the metro traffic is saturating,
the demand for more airlines from a handful of fast-growing
smaller cities is picking up. Against this backdrop,
many airlines are bulking up on capacity as well. In
the recent past, Indian air carriers placed orders for
about 400 aircraft worth $15 bn. However, surprisingly,
all is not that rosy and the good news is marred by
a looming overcapacity and competitive pressures. Most
airlines are confronting losses.
©
2007 IUP . All Rights Reserved
CORPORATE
STRATEGY
Cisco:
Enroute(r) India
- - Amit Singh Sisodiya and Sanjoy De
The networking giant is betting big on the Indian
market to sustain its growth. During October 2005, when
John T Chambers, Chairman and CEO of Cisco Systems,
on his second visit to India announced a grand package
of $1.1 bn including a $200 mn venture capital fund
for India's technology entrepreneurs, the message was
loud and clearthe networking giant means serious business
in India. This was in contrast to Chamber's first visit
in 2001, when he earmarked only $250 mn for Cisco's
India operations. At that time, China, where it relished
a market share of 74%, was accorded top priority in
Cisco's emerging market business. Now, with dissipating
market share in China as a result of increased competition
from local networking players, Cisco is shifting its
focus on India in a big way as its revenues here have
been increasing at a healthy 40% p.a. In fact, Cisco
now wants India to be its Globalization Center East
(GCE), which means that all the operational and corporate
activities of the router major at San Jose will be replicated
in India.
©
2007 IUP . All Rights Reserved
CORPORATE
STRATEGY
Apple's
iPhone: Beyond iPod
- - Amit Singh Sisodiya and Madhuparna Chakraborty
The
makers of iPod face the tough challenge of repeating
the same feat with iPhone. Six years after Apple Inc.,
the firm founded and run by legendary Steve Jobs, rocked
the consumer electronics market with its revolutionary
iPod, the portable digital music player, music lovers
across the world found yet another reason to cheer on
January 9, 2007, when Jobs announced the prologue of
a fresh bonanzathe Apple iPhone. The announcement came
on the heels of Apple Computer Inc.'s move to peel off
its "computer only" image by shedding the "computer"
from its name. Analysts have cheered the move.
©
2007 IUP . All Rights Reserved
CORPORATE
STRATEGY
General
Motors: Turnaround Trail
- - Amit Singh Sisodiya and Kavitha Putta
Despite
coming dangerously close to flirting bankruptcy, GM-the
world's biggest carmaker-promises to be back on track
soon. After years of turmoil, things suddenly look bright
for General Motors. The world's largest carmaker kicked
off 2007 with a slew of positive news. First, it won
the "Car and Truck of the Year" awards at the North
American International Auto Show, for the first time
in its history, beating its bete noire, Toyota. While
its Saturn Aura emerged as the top car model, ahead
of Toyota Camry which ruled the US car market for eight
years; the Chevrolet Silverado, one of the GM's biggest
money-spinners, won the "Truck of the Year" award. "The
aura is an important step in our ongoing product revitalization
plan, and this award is proof that our efforts are paying
off," said a top company official.
©
2007 IUP . All Rights Reserved
CORPORATE
STRATEGY
LG
Electronics India: Blue Ocean Bandwagon
- - Amit Singh Sisodiya and Madhuparna Chakraborty
Can
the new strategy give the Korean Chaebol's Indian subsidiary
the X factor it needs to place itself on the trajectory
of fast growth and, equally importantly, fend off competition
from blue-blooded rivals like Sony and compatriot Samsung?
If you cannot beat your rivals, don't join them. Rather,
make them irrelevant-that's the essence of the management
strategy, popularly known as the "Blue Ocean Strategy".
Hence, when LG Electronics India, a subsidiary of Korean
electronics giant LG, announced to follow the footsteps
of its parent, which is implementing this strategy in
its subsidiaries, worldwide, it marked a strategic shift
in its long-drawn approach of being a mass-marketer,
which enabled it to win market share and mindshare in
the Indian market.
©
2007 IUP . All Rights Reserved
CORPORATE
STRATEGY
Ranbaxy
Lab: Global Hunt for Growth
- - Amit Singh Sisodiya and Sanghamitra Dhara
With
the pharma giant's dream of rocking the US market, it's
to be seen whether this Indian company can materialize
its big dreams. For Ranbaxy Laboratories, India's top
drug maker by sales, it was yet another move towards
becoming a truly global player as it announced splendid
performance for the fiscal year 2006, with robust sales
across markets of US, BRICS, Africa, Latin America,
Middle East and the Asia-Pacific. This comes as a big
relief for the drug major, as it has had to face tough
times in the recent past owing to several patent-related
cases in developed markets like the US. The company,
which is currently the 10th largest generics drug maker
in the world, aims to be among the top five, globally,
with revenue of $5 bn by 2012. To achieve that objective,
Ranbaxy continues to push its acquisition-led growth
strategy, which saw it clinching a string of deals last
year alone, snapping companies from Spain to Italy,
Belgium to South Africa.
©
2007 IUP . All Rights Reserved
FINANCIAL
MARKETS
Depository
Receipt Markets: India's Day Out
- - D Satish and Y Bala Bharathi
Corporate
India is actively tapping the global equity markets
while accounting for a majority of the listings abroad.
Depository Receipts (DR) have emerged as a favorite
avenue to tap international capital markets for many
companies in emerging markets and corporate India has
been no exception. In 2006, India Inc. witnessed a substantial
interest in DR markets, following the global trend.
According to the Bank of New York's year-end report,
the overall activity of American and Global Depository
Receipt (GDR) markets has increased substantially with
the unprecedented levels of trading and capital rising
up reflecting consistently strong investment performance
globally.
©
2007 IUP . All Rights Reserved
APOLITICAL
SEZs:
One Step Forward and Two Steps Backward
- - grk
Recent
press reports indicate that the Singapore government
is unhappy with the sort of uncertainty that wrapped
the future of SEZs in India. In a letter written to
the Prime Minister and the Minister of External Affairs,
the Singapore High Commission reported to have written
that "after going to such lengths to woo investments
from the country, the Indian Government should not have
allowed such uncertainty to seep in." A similar concern
was expressed by Robert Soros of Soros Fund Management,
which is currently looking for a suitable place for
establishing a multi-product SEZ.
©
2007 IUP . All Rights Reserved
ARTS
AND ARTISTS
China's
Strange Rhythms
- - Dr. Nirmala
China's
all too familiar forms of fantasy-its apparitions of
fear and calm, its life-giving dragons, its pagodas,
the flaming red and gold of its sanctuaries-bring to
us its aesthetics of paradox, its strange rhythms, as
well as convey the mystery that runs in fragments through
all things. The highly developed systematic forms of
expression of Chinese art, combined with its strong
theoretical basis in religion and philosophy, are indeed
a force to reckon with.
©
2007 IUP . All Rights Reserved
ARTS
AND ARTISTS
Intelligent
Design: Science and God, or Science vs. God?
- - GRK Murty
Can
a sense of hesitancy as reflected in the Hymn-"None
knoweth whence creation has arisen;/And whether he has
or has not produced it:/He who surveys it in the highest
heaven, / He only knows, or haply he may know not."-rule
mankind? Recently, an American Judge dubbed "Intelligent
Design" (ID) as "a religious view, a mere re-labeling
of creationism and not a scientific theory", and hence,
not suitable for teaching in schools. This judgment
resurrected, though unwittingly, people's clamor for
ID once again. People in Europe are, today, "seeking
to have Intelligent Design and criticism of Darwinism
taught in science lessons."
©
2007 IUP . All Rights Reserved
|