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REFORMS 2000 Wring in the New The reforms agenda was hijacked at the turn of the year. But Union Budget 2000 presents a glorious opportunity for the A.B. Vajpayee Administration to present a Big Bang package of fresh economic reforms for the country. So, the 3-month gap since 11 economic Bills were passed in the Winter Session of the Parliament will not matter too much now. But just how likely is Team Vajpayee-spearheaded by a committed reformer in Union Commerce & Industry Minister Murasoli Maran, and an enthusiastic convert in Union Finance Minister Yashwant Sinha-to catch up with the unfinished agenda? Warns economist S.L. Rao, 65: ''The government will have to be careful about not doing the right thing in the wrong way.'' Our predictions: INFRASTRUCTURE. The telecom regulator, TRAI, will get more power, and the Central and state power regulators will be allowed to discharge their duties. But the issue of user-charges, crucial for private participation, may not be resolved. BANKING. A decision on closing down, or selling, some banks may emerge alongside disinvestment in profitable banks. AGRICULTURE. Some form of tax for wealthy farmers may be introduced. SUBSIDIES. A start could be made in lowering power and food subsidies although not those relating to fertilisers. EXTERNAL SECTOR. Quantitative restrictions on imports of many products will be removed without the negative list of imports being abolished. SMALL-SCALE SECTOR. While the list of reserved items will be pruned again, it will not be abolished. FISCAL REFORMS. Er... pardon me? -Pranjal Sharma M & A 2000 GM India takes over Daewoo Motor India; buys stake in MUL. Imagination today, reality by December 1, 2000? Charged by the spate of M&A activity through the second half of 1999, merchant bankers are predicting that 2000 is the year of the deal. Call it a shake-out, a consolidation or even restructuring of India Inc.-but it's here, and it's happening. The year will see M&A activity intensify in industries that are neck-deep in financial crises. Like commodity businesses, where consolidation will become the name of the game. Says Ridham Desai, 31, vice-president and India Strategist, JP Morgan Stanley: ''Sectors like steel, petrochem, and textiles have seen their worst in the last 30 years. A consolidation there is imminent.'' He's bang-on. In 1999 alone, another financially crippled commodity business, cement, witnessed a record 11 M&A deals. No prizes for guessing who the protagonists in the M&A wave are going to be. Almost inevitably, they will be the strongest players, often the ones that dominate the business-either in India, or globally. In the petrochemicals sector, which is, at present, in the trough of a business cycle, the M&A star will continue to be giant Reliance Industries. Although CEO Dhirubhai Ambani made 3 quick acquisitions in 1999-picking up India Polyfibres, JK Corp's fibre unit, and Raymond Synthetics, all of them at rock-bottom prices-he has built up a war-chest of Rs 550 crore for more strategic acquisitions. In steel, the star player may be the London-based L.N. Mittal, who is on the prowl in India, eyeing loss-making plants. Since the late 1980s, Mittal has targeted ailing steel companies in the Caribbean, South America, and Asia. Now, he is stalking India, and may have designs on the loss-making public sector steel giant, sail. The mega-M&A deal that is expected in the automobile sector will be the fallout of General Motors' (GM) on-going negotiations to take over Daewoo Motor, Korea. If that happens, gm India will, certainly, take charge of Daewoo Motor India. Says S.G. Awasthi, 58, CEO, Daewoo Motor, euphemistically: ''We are co-operating to the best of our abilities.'' But that will be just an aperitif. For, gm is also parleying with Suzuki of Japan for a possible mega-alliance involving Maruti Udyog. If that pans out, a tripartite combine-gm, Daewoo, and Suzuki's Indian venture, Maruti Udyog-will emerge as a leviathan in the Indian car market. The auto sector is revving up for more action. Tractor-maker Mahindra & Mahindra, which has dreams of emerging as the global leader, is eyeing domestic acquisitions to make that happen. On the cards could be a deal to take over the tractors division of the public sector HMT. Other stars of the M&A game have emerged in other sectors. In cement, although Europe's Lafarge made waves by snapping up TISCO's cement plant last year, the spotlight is now on the Mumbai-based Gujarat Ambuja Cement. Promoted by Narottam sekhsaria, Gujarat Ambuja Cement has outwitted other predators to take over DLF Cement and pick up a small stake in acc. But 2000, say deal-makers, could throw up other contenders in the cements business. Larsen & Toubro could get into the fray while Grasim, which has bought 2 cement companies in the last 2 years and merged the cement businesses of Indian Rayon into itself, could get back into the act. Watch out too for action in the telecom sector. The Delhi-based Bharti Telecom's Sunil Mittal has been on the prowl-buying 2 licences in cellular telephony, in Chennai and Andhra Pradesh-and emerging as the second-largest cellular operator in terms of subscribers. Others expected to whip up the action in the sector include the Singapore-based Hutchison-which recently acquired control of Delhi's Essar Cellphone-BPL, and the Reliance Group. Expect a shake-out in the infotech and Net sectors too, where stars like the fast-growing Satyam Group, promoted by B. Ramalinga Raju, has already picked up the first-mover advantage by forking out a massive Rs 499 crore to acquire Indiaworld.com.in. Don't forget to keep tabs on another hot sector: pharmaceuticals. India's largest pharma company, the Rs 1,131.17-crore Ranbaxy Laboratories-which has by now digested its takeovers in February-March, 1997-looks all set for more action deals to strengthen its position in the industry where it already leads Glaxo (Rs 872.47 crore), Novartis (Rs 757.54 crore) and Lupin (Rs 715.70 crore). This is the year that M&A will prove to be an acquired taste. -Rajeev Dubey MANAGEMENT 2000 Total Change. Exploiting the credulousness that otherwise-rational corporate citizens displayed when it came to matters concerning life and work in y2k and beyond, a few management shamans painted the picture of a future that was radically different from life in the 20th Century. However, as companies are already discovering, the management leitmotifs of this century are the same as those that best-in-class companies started using in the last decade of the previous millennium: break-through performance, shareholder- and customer-orientation, and a passion for excellence. Explains C.K. Prahalad, 58, Professor, University of Michigan Business School: ''Companies will have to look at their customers and shareholders as co-owners; stop being content with incremental improvements, and look for quantum ones; and seek to develop processes that other companies benchmark their own against.'' If management, as a discipline, has to align itself to these objectives, what can we expect? STRATEGY. Companies will find that they need to re-work their strategies far more frequently than they did in the past. As the longevity of strategy decreases, the distinction between it and operational effectiveness will, eventually, blur. OPERATIONAL EFFICIENCY. Integrated operational efficiency techniques will replace discrete ones as companies try to align their transformational initiatives towards the maximisation of shareholder value. The 2 techniques that are likely to attract a significant following this year are Economic Value Added (EVA), and the Theory of Constraints (TOC). The first is a performance-management methodology that ensures that companies only follow courses of action that result in an increase in shareholder value. The second is a management philosophy that requires companies to understand the global constraint in the system in which they operate, and then try to subjugate it. IMPLEMENTATION. The preferred implementation technique back in the 1990s was Business Process Reengineering (BPR). That will continue to be the case this year too, but with one difference. BPR Ver. 1.0, essentially, revolved around the flow of physical products. Ver. 1.1 will involve the flow of information too. Therefore, in effect, as far as management was concerned, the millennial milestone was, probably, crossed as far back as 1996. -R. Sukumar STOCKMARKETS 2000 Just 6 months ago, if you said the Bombay Stock Exchange (BSE) Sensitivity Index (Sensex) would hit 6K in y2k, even the hard-core bulls would hit you on the head. Now, anyone worth a scrip on Dalal Street is saying that it is a fait accompli. At least 4 prominent stockbroking firms have put out forecasts of the Sensex touching 6000. One of them-Kotak Mahindra Securities-is bullish enough to say it will top 6, 500. Another, JM Morgan Stanley Securities, expects it to touch 6, 200. And Jardine Fleming expects it to end the year at an astounding 7, 200. But is breaching the 6K mark a major event? Not according to investment analyst Deepak Mohoni, 43, who points out that 6, 200 is a ''conservative'' estimate-a mere 20 per cent higher than 5,100-which the Sensex reached in October 1999. Stockmarket experts, and not just dyed-in-the-wool bulls, agree that with a semblance of stability on the political front and the right kind of values for key parameters-inflation at less than 3 per cent and a 5.8 per cent GDP growth rate in fiscal 2000-it could be a good time to bet that the stockmarket boom will be sustained. And although infotech stocks have been the front-runners in the recent bull run, the cyclicals, including stocks of commodity-oriented sectors, have perked up too. By all reckoning, there is much more to come. The deep-pocketed foreign institutional investors (FIIs), who never fail to kickstart the market sentiment, have been back in the Indian market since November, 1999. Says Rukshad Shroff, 29, strategist, Jardine Fleming Securities: ''Global investors, including those from the US and Europe, who have not had adequate exposure to India, are likely to show much more investment interest.'' Last year, they had invested Rs 6,450 crore; this year, the figure could be more. Domestic mutual funds will be the other drivers of the market in 2000. Between April and November 1999, mutual funds mobilised Rs 29,858 crore. This year, a rash of new funds is expected to hit the market and conservative estimates suggest that if the average equity holding of household savings were to go up from the present level of 8 per cent to the 23 per cent witnessed in 1992-93, as much as Rs 50,000 crore could be mobilised -and poured into stocks. Says Gul Tekchandwani, 41, Chief Investment Officer, Sun F&C: ''Retail money into equities will be routed more and more through mutual funds.'' But by all estimates, the hottest story of the year will continue to be infotech stocks. Says S. K. Mitra, 51, director, financial services, Aditya Birla Group: ''At the current levels of growth in information technology exports-the compounded average growth rate in the past 7 years has been 55 per cent-the market capitalisation of the Indian information technology sector has a long way to go before it stagnates.'' Yet, many expect a shakeout in the sector, with weak technology stocks being weeded out. As for the other hot sectors like pharmaceuticals, fast-moving consumer goods, and knowledge-based industries, the potential is still not fully tapped. Says Mihir Doshi, 38, Vice-Chairman and CEO, JM Morgan Stanley: ''It's just the tip of the iceberg that we are seeing in terms of growth.'' Other stocks that will hog the limelight are in sectors that are going through frenzied M&A activity: cement, synthetics, and chemicals. Suggests Mohoni: ''Identifying companies with unrealised potential as well as strong well-established brands that could be takeover targets will be the key to making a killing.'' This year, if anyone asks: ''What's up?,'' you know the answer. -Roshni Jayakar INFOTECH 2000 CIOs will log in to real change in their virtual domains. Even by the standards of the breathtaking pace of change in information technology, 2000 will bring more than one paradigm shift. GOODBYE SOFTWARE-at least, as we know it. Packages will no longer be sold, they'll be rented. And software companies will become Application Service-Providers, a.k.a. asps, developing software needed by their clients and then renting it out to them on a pay-per-use basis. Companies like Wipronet, Micromedia, and hclinsys already have substantial asp operations. Says Navyug Mahnot, 37, Executive Director, Quality Assurance Institute: ''The asp is a very powerful concept. And it will find its feet in India this year.'' HELLO W2K. This will be the refrain of legacy applications. CIOs will scramble to adapt all their mainframe applications for use through the Net, as companies migrate their data-processing operations into the Netspace. A fallout will be a surge in demand for people with skills in Net-related programming. SHOW ME THE MONEY, a handful of people with experience in creating Net and e-commerce strategies will say. Companies will pay huge sums of money to tap the expertise of such people. Argues Dinesh Agarwal, 30, a Director of the Web-development company Indiamart Intermesh: ''Website content conceptualisation and management skills will be greatly in demand.'' So will the ability to understand on-line consumer behaviour. WELCOME BACK, CIOs will greet ERP as it roars back into reckoning, enriched by absorbing customer relationship management and supply-chain management software within its folds. This way, it will become the application backbone on which corporations can base their entire e-commerce. Already, ERP-vendors like Oracle and sap have Web-enabled their packages. For most companies, ERP will become almost indistinguishable from e-commerce. Says Sanjay Jain, 35, Chief Operating Officer, Netacross: ''This is the route that traditional companies will take to extend all their operations into the Web.'' LOG ON, NOW. CIOs will bring the Net to their people-not just over computers, but also through cellphones and personal digital assistants. Predicts Curt Terwilliger, 46, Chief Technology Officer, Techspan: ''The first wave of wireless development will be aimed at modifying the current applications to operate in the wireless delivery environment.'' That will certainly make the Net absolutely ubiquitous for managers. IT'S SAFE TO SWITCH OFF YOUR COMPUTER NOW.That message will come from Windows 2000, whether or not Microsoft is broken up. -Hasnain Zaheer
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