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