K Raheja Group

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Investee: K Raheja Group

Investor: Ishaan Real Estate

Investment Value: $251.63 mn

Ian Hendersen, Chairman, Ishaan Real Estate, said in his interview, “Investment in the initial portfolio of assets is being completed, largely according to a plan, and the increased net asset value reflects the strong demand for our properties and the enormous potential of the Indian property market.” IRE is the holding company of K Raheja Corp floated in order to raise money from foreign markets. IRE leverages the muti-decade experience of the K Raheja Corp. in the Indian real estate sector.

Ishaan Real Estate (IRE), a real estate fund listed on LSE’s Alternative Investment Market (AIM), invested $251 million in K Raheja Corp.’s various projects located in western and southern India. This investment was part of the $412 million that company raised through its global IPO in November 2006. IRE holds a 40% stake in each of Raheja’s eight projects comprising shopping malls, IT parks, hotel projects and residential projects. The Raheja Group at present has expansion plans for their residential, IT park projects and SEZs. Apart from that, the company has major expansion plans for Globus stores, one of their retail ventures. They will be spreading to all parts of the country, and have 152 stores by the year 2012, which will need an investment of nearly $200 million. Also, their other brands such Shopper’s Stop, InOrbit Malls, Mindspace and Commerce Zone will rake in additional investments in the wake of rising demand.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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UEL (Eenadu Group)

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Investee:

UEL (Eenadu Group)

Investor: Blackstone Group

Investment Value: $275 mn

UEL Chairman Ramoji Rao was quoted as saying that “the company had several financing options, including an initial public offering, but we went with Blackstone because we wanted to leverage the group’s experience and track record in the global media sector, and which has holdings in some of the fastest-growing media firms in the world that include Sirius Satellite Radio, VNU, CineWorld and Universal Orlando.” No doubt, a good decision by UEL, as the industry where the group is dominant has definitely changed over the last few years. Due to increased competition, margins of Eenadu Group have eroded. And, therefore, a capital infusion seems quite timely for the company.

Amidst the deluge of PE investments into the Indian telecom and realty sectors, Indian media was definitely not a silent viewer. It got its fair share of PE attention when Blackstone, the world’s largest leveraged-buyout firm, pumped in $275 million into Ushodaya Enterprises Ltd. (UEL) to pick up a 26% stake in the Eenadu Group that owns the leading Telugu daily Eenadu and one of the largest private television networks in the country, ETV. However, according to sources, Blackstone has subsequently reduced the size of the planned deal and, under the amended terms, it is looking at a 14% stake for Rs.590 crores or a little less than $150 million in UEL – all due to hurdles in obtaining the green signal from the Foreign Investment Promotion Board. But, according to latest reports in leading news dailies, Blackstone has succeeded in getting the Finance Minister P. Chidambaram to formally sign on a revised deal to invest around $150 million in UEL. It seems that the deal is finally taking shape.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

Read these article :-
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
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"We Will be larger than AIR by end of this year”

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The confident Prashant Pandey, CEO, Radio Mirchi, thinks advertising on radio can grow four times in the next five years. And Mirchi will become the country’s largest radio player

In 2007, the Indian radio space buzzed. As players like Big 92.7 FM and SUN FM entered the market, questions were raised on the non-expansive strategies of pioneers like Radio Mirchi. But Mirchi’s tale has a twist. It doesn’t believe in increasing the number of stations at the cost of revenues and shareholders’ returns. But despite competition, Mirchi is the largest private FM player (in terms of revenues) in the country with a pompous 45% market share in the private FM space. Mirchi is “above most TV channels, barring a few” and, in 2008, it expects to outshine AIR. 4Ps B&M’s PALLAVI SRIVASTAVA met Prashant Pandey, CEO, Radio Mirchi, to find out how he hopes to achieve this objective.

How do you see Radio Mirchi as a brand?

Mirchi is a very strong brand in the country. It is a sunshine brand and that’s why when listeners tune in to Radio Mirchi, they immediately are in a pep mood. In fact, we find demand for Mirchi in the global market among overseas Indians. So, we are looking at taking Mirchi global. However, we haven’t decided any timeline, or a strategy for that. It’s just a thought.

What are the plans for Mirchi in 2008?

We will look at participating in the future expansion of radio in India. In some small way, we will participate in the balance frequency of Phase II and may be, if there is Phase III, then we will certainly look at participating in that. But when I say expansion of radio, I don’t only mean increasing the number of stations. We will largely be working on growing the listenership in major markets. If you look at the market, you wll realise that there is a lot of uncovered ground. For example, in a city like Delhi or Bombay, there are 60-70 lakh listeners, but they can become a crore because of the density of population in such cities, and the fact that access to radio is not a problem. So, we will be primarily working at building the category in the major markets over the next year. We’re looking at growth this year, although last year witnessed a bit of turmoil due to competition. Of course, when competition comes in, existing operations get disturbed for some time. So, we look at the coming year as being one of significant growth in terms of revenues. We also expect the profit margins to rise.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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AD’s OOH affair

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Almost a veteran, AD’s World is totally charged up to take on the new onslaught

OOH la la! That’s what the Rs.1200 crore Out-of-home industry is singing after the Supreme Court on October 16 approved the Outdoor Advertising Policy for New Delhi, allowing hoardings on road after a hiatus of 10 years. Little wonder that OOH is the most talked about dimension in the world of advertising at present, with big names like Times Group, ADAG, et al, flocking toward it. However, agencies like AD’s World have been betting heavily on this sector for a long time. Since AD’s World started in March 1992, OOH has not just been its first love, but till date remains its only love. Also an acronym for advertising, AD’s World seeks to pay homage to its founder Ajay Dhawan, by using his initials ‘AD’ in its name.

From a one man show at the time of inception, AD’s World has grown to 11 offices across the country, and clocks a billing of Rs.70 crore annually. The agency has big-ticket clients like Vodafone, Acer, Canon, ING Vysya Bank in its ever-expanding kitty and has registered a three digit growth for the past five years (except one year in which they took a breather to consolidate). Even then, their average growth for the past five years has been an impressive 105.6% on a Y-o-Y basis.

Dhawan emphatically states, “The competencies that has helped AD’s World scale these heights is that while most of the companies in OOH business focus only on static advertising, which is like the last mile apart from the regular buying and planning that all the companies have to do, AD’s World does turnkey project management at retail level as well, so that it does not cover just the last mile but last hundred meters and the last meter as well.”

The agency has always sought attention in the midst of the biggies, so when asked about the strategies they adopt at the time of pitching, Dhawan revealed with a big smile on his face – ‘Flanking’. Simply stated, AD’s World tries to break in to a company through its retail arm and once a connection is established, it tries to get its hands on other services of the company. A case in point is that of Vodafone. Ogilvy handles almost the entire Vodafone account, but Vodafone’s Balloon March was organised by AD’s World in various parts of the country like Kolkata. Maybe these are the strategies that give Dhawan the confidence to comment, “There is no competition in the industry as of now.”

The man is also not too worried with the kind of aggressiveness Times Group & ADAG are showing. Adds Dhawan “It would help getting regularisation and some kind of method to the madness. It would not be a dream to think that if newspapers can have something like Indian Newspaper Society (INS), OOH can also have society, which mandates payments within the set time frame.”

AD’s World has been around for quite some time now and has learnt the tricks of the trade well. Apart from their creatives, they would like to be known for their transparency. This philosophy coupled with the fact that this fiscal, AD’s World has already done three times the business that they had the entire previous year, leaves no iota of doubt that for AD’s World FY-08 would be yet another year of impressive growth numbers and a smiling cash ringer.

Edit bureau: Surbhi Chawla

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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THERE’S MORE TO UMBRELLAS

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In the first ever survey of Indian consumers, 4Ps B&M and ICMR find out why we opt for insurance - do we prefer private or public insurance, and has our insurance exposure gone up? Also featuring exclusive interviews with Vikram Mehmi – Birla Sun Life, Ajay Bimbhet – Royal Sundaram Alliance Insurance et al.

Thy name is trust, ‘BIG’ trust

The biggest of them all in the whole of Asia for sometime now – Life Insurance Corporation of India (LIC), is only getting bigger by the day.... Its sole objective till date, has been to spread life insurance widely and in particular to the rural areas and to the socially and reasonably backward classes in India; with an aim to gain access to all insurable persons in the country by providing them an adequate financial cover against death, and at a reasonable cost. It also believes in maximising mobilisation of people’s savings by making insurance-linked savings adequately attractive.

It goes by demand and thus LIC of India, as part of its endeavour to come out with new products over time, has launched Group Critical Illness Rider. The product is targeted chiefly at the employer-employee group who have taken group insurance products earlier or are planning to buy a group insurance product. T. S. Vijayan, Chairman, LIC, said, “Human capital is important for the success of any organisation. The employees are subjected to three key risks - death, disability and occurrence of critical illness which influences the individual employee’s physically and financially and, consequently, the organisation. Hence, LIC has come out with a comprehensive group insurance scheme with Critical Illness (Accelerated) Rider.” Thoughtful, in this age of efficiency control!

Figures however, are not that thought-provoking with LIC registering Rs.22,761.49 crores as premium collections during the first six months of FY 2007-08, marking a decline of 2.87%, as compared to a year back. Indeed, at a time when competition is gnawing hard at its margins, the giant needs to work with volumes than margins.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Coming of (ramp)age!

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With its ‘Indianness’ philosophy, the Bhilwara Group has woven a most admirable web

As you step inside the Corporate Office of the Rs.28.58 billion Bhilwara Group in Noida (also called Bhilwara Towers), the first thing you notice is the grandiose crescent shaped logo which says, ‘Proud to be Indian, Privileged to be Global’. You ponder over the words as you walk across the lobby to meet the man at the helm of this textile, graphite, steel and power behemoth. His vast cabin reeks of patriotic jingoism, manifest in the portraits and photos of freedom fighters adorning the walls. In the next few minutes you come to learn from the man himself – Riju Jhunjhunwala, Joint Managing Director, Rajasthan Spinning and Weaving Mills Limited (RSWM), Bhilwara Group – that you are in a temple where everyone worships everything Indian. More importantly, everyone bears an indomitable passion of bulldozing India on to the forefront of the global textile map.

Incidentally, the textile business of the LNJ Bhilwara Group comprises six companies that contribute the maximum to the top line of the entire group. Of these, the listed flagship textile arm of the Bhilwara Group – RSWM (annual revenues worth Rs.10.75 billion) - has the Mayur brand in its portfolio (with over 7% market share in the suitings segment), which has done extremely well in the value-for-money segment over the last one year. From roping in Bollywood biggie Salman Khan as its brand ambassador on Valentine’s Day earlier this year to launching its ready-to-wear collection, Mayur has certainly been creating waves. Says Jhunjhunwala, “We’ve revamped our brand positioning to become a leader in the ready-to-wear formal dressing. In the front-end, we have roped in Salman and in the back-end, we’ve re-structured our management.”

While RSWM is flying high on the Mayur brand, the other textile arms of the Bhilwara group cannot be ignored either, primarily Maral Overseas Ltd., a major producer and exporter of Polyester/ Viscose Blended yarn in India; BSL Suitings, which peddles premium worsted tags; and BMD Ltd., an automotive furnishing unit that boasts clients like Honda, Maruti, GM, Ford, et al, in its kitty.

However, it’s RSWM that has clearly taken a lead for the LNJ Bhilwara Group, with a renewed and enhanced focus on the bottom of the pyramid segment over the last year. RSWM is betting high on the ready-to-stitch segment, which they forayed into in February this year. The bid is to tap the high-potential consumer base in semi-urban and rural India (largely cornered by the unorganised players). In April, the company set up a low cost denim manufacturing unit in Rajasthan to cater to the price-conscious consumer segment. Following suit, Reliance Mart, Mukesh Ambani’s hyper retail format also announced a similar venture in October. But, while Reliance has the winning proposition of having its own retail outlets to market these wares, Mayur, for now, has no such pan-Indian retail presence.




On the other hand, the presence of the brand in the global market has given it a shot in the arm in recent times. As much as 50% equity purchase in the Spanish company SISA S.A. will not only allow RSWM to leverage SISA’s brand image in the global higher value-added yarn market, but will also help it leverage the expertise of SISA in fashion trends and dyeing. “SISA brings with it a speciality and value-added yarn business in global market... It adds an established and well reputed marketing network to our operations, which’ll enable us to obtain better realisations for our high-end yarns,” says Jhunjhunwala.

With RSWM leading the way, Bhilwara’s textile business may not be setting the ramps at the Meccas of fashion on fire; but the group’s careful strategy of reaching out to the price-conscious Indian masses is likely to pay off sooner than later. Especially with the rising disposable incomes in tier II and tier III cities and towns, Jhunjhunwala may do well to actually start planning for those exclusive brand outlets now, a la Reliance Mart!


Edit bureau: Bikram K Jena, with inputs from Angshuman Paul

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Paving way for a ‘pure’ future

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The company has come a long way, achieving turnover of Rs.30 crore in the first three months of this fiscal year. Kent RO expects to touch the Rs.100 crore mark by the year end & Rs.200 crore by the next year. However, Kent RO still faces tough competition in the market, as its RO technologies expensive compared to the Ultra Violet technology that Aquaguard and other water purifiers use. Adds Gupta, “On one side we have competition from a generic name – Aquaguard, while on the other side we have packaged mineral water.” So what entices a customer to go and buy a more expensive product that is even a late entrant in the market? The answer is simple, Kent-RO provides two advantages – firstly, a better quality product that can purify even dissolved impurities in water that no other purifier can and secondly the consumer gets the convenience of on the spot availability. Explains Gupta, “The reason why people prefer this is that the packaged water will still have chances of contamination during the process of transportation or pilferage as you call it. On the other hand, you can be sure of the quality that is made with your water at your home.”


Feeling the threat of its superior technology also convinced Aquaguard to come out with a water purifier with RO technology. But clearly in this segment Kent RO has leap-frogged ahead of competition. Leaving no stone unturned, the company has been marketing the brand and technology in a big way. Roping in the three Deol girls gave the brand instant eyeballs. Asserts Gupta, “I had to do two things; one to educate my customer and other to build trust. Now our brand is associated and known through Hema Malini.” Besides direct marketing channels & dealers’ network, Kent- RO products are also visible in branded retail stores such as Big Bazaar, Reliance et al. Moreover, it has tied-up with Indian Oil for better visibility. And with people getting educated and wanting the ‘BEST’, Kent RO will soon reap the rewards of its investments.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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And the chase goes on...

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ABN Amro shareholders must decide now

The road to the ABN Amro acquisition has been quite a peculiar one for Barclays. After initial speed bumps, the company would have expected a smooth ride, but till date, it’s hardly paydirt time! Blame the Royal Bank of Scotland (RBS) team, including Spain’s Santander & Belgian-Dutch Group Fortis, which gave an irresistible counter offer of $97.8 billion for the Dutch bank, and which led Barclays to increase their bid to $93.1 billion and include 37% cash in the earlier all-stock deal with help from China Development Bank & Singapore state investor Temasek Holdings. However, the amount still falls short of the RBS offer, which is over 90% cash. To top it all, the ABN Amro board, which earlier recommended the Barclays deal, has decided to take a neutral stance now.

The logic for a merger – no matter who gets the bounty – is pretty clear. A Barclay-ABN Amro combine will create Europe’s second largest bank after HSBC, with synergies in retail banking, securities & asset management operations. Moreover, they will be able to tap opportunities in the growing markets like Netherlands, Asia & Latin America. John Hitchins, UK Banking Leader, PricewaterhouseCoopers, explains, “A matured domestic market is one of the factors leading banks in Europe to merge, in order to get entry into new markets.” As far as the RBS consortium is concerned, they are looking to split the assets amongst themselves, which the ABN Amro board finds risky.

With the board now in a muddle, the ball is in shareholders’ court. If cash is what they want, RBS is the obvious choice. But would they be able to fathom seeing their beloved bank being broken up? Well, maybe they would too!

Edit bureau: Aditi Soni

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM, GURGAON
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