|
    
|
C
O R P O R A T E F I N A N C E
It's the capital concern of India Inc.'s CEOs and CFOs. According to a study by PricewaterhouseCoopers, the Cost of Capital (COC) of Indian firms will come down over the next 3 years, because of factors like maturing stockmarkets and lower interest rates. Today, the COC for the typical Indian businesses is between 15 and 20 per cent as compared to 8 and 12 per cent for its American counterpart. The differential is largely on account of inflationary pressures, perceived business risk, and market imperfections. This is a significant handicap for Indian corporations that are striving for global competitiveness. The PWC study, conducted in late 1999, highlights factors affecting the COC and the possible ways for reducing it. Says Ashwani Puri, 41, Head, Financial Advisory Services PWC: "A reduction in the financial leverage of Indian companies over the last decade places many of them in a position to explore higher debt as a way of increasing valuations through a lowering of cost of capital." The survey identifies business risk, the quality and the shareholder-value orientation of the company's management, cash flow, and leverage as the factors that influence the cost of equity. And it suggests that enhancing a company's business focus and reducing its earnings-volatility by diversifying into related areas could help reduce its cost of capital. The study's most surprising recommendation? That a listing on any international bourse could be an indirect mechanism to reduce a company's cost of capital by promoting a greater corporate transparency. In effect, a low COC can help a company's global aspirations; and going global could, for its part, reduce its COC. That's a pretty puzzle for bean-counters. -Roshni Jayakar M
A R K E T I N G R E S E A R C H If you are one of those parents who have kid-trouble, you could try speaking to Anthony Dobson. The 32-year-old Dobson, who is the Executive Director of Research and Strategic Planning at Turner Entertainment Asia Inc., is the brain behind New GenerAsians, a survey of kids in the 7 to 18 age group in the Asia-Pacific region. In India to present the findings of the second GenerAsians study--the first was conducted in 1998--Dobson shared some insights on Gen-mmx with BT. On India's uniqueness. I would have thought that international brands would have more of an impact than they actually did in India. The last time (we did the survey) local brands were still king but to do the study 18 months later and still find that transnational brands haven't toppled local brands was a surprise. In the sports-shoe sector, it was a surprise to see Action, and then Bata at number two, with no sign of Nike! On similarities and differences. I expect to see Australia and Japan mimicking the US in terms of Net usage. I am curious about the Latin America study as the region is going through a similar stage of development in terms of cable infrastructure as Asia. And it has similar age dynamics. So I anticipate similar trends. -Nita Jatar Kulkarni C
O N V E R G E N C E Call it a hardware convergence. Today, the Indian customer is deluged by an array of new products that combine the features of TVs and PCs. Marketers are scrambling to offer products that will allow consumers to surf the Net on television sets or watch television on their PCs. Zenith, for instance, has a PC-TV set, Mirc Electronics (which owns the Onida brand), a Web TV, and Jadoonet.com, a set-top box that enables Net surfing on the TV set. But it hasn't been smooth sailing. Analysts say that is because marketers may have got the pricing all wrong. Says Praween Napate, 41, Director, Jadoonet.com: "Set-top boxes will open up the market because of their affordability." At present, set-top boxes retail at Rs 4,999--a tenth of a pc's price. Yet set-tops cannot replace the real thing and this is where Zenith's Infotainer scores. A computer based on Intel's P-iii processor it comes with a TV. Zenith's ceo, Raj Saraf, 52, is shooting for the moon: "We expect revenues close to Rs 100 crore this year." But the thrust will come from ISPs, who've begun throwing in freebies. VSNL, for instance, says it will dole out set-tops with every purchase of 500 hours of Net-time. That could mean a windfall for set-top makers. The Net rules! -Nita Jatar Kulkarni P
E R S O N A L C O M P U T I N G If looks could kill, the Acer Veriton FP is one mean machine. Visual appearance is its USP: a 15" TFT active matrix screen; discrete side panels housing the ports one would normally expect to find; and the thickness of a mere handspan. Not that this came at the expense of functionality. The Veriton runs on a 550 MHZ P-III chip; boasts an Intel 82558 LAN controller for easy networking; and comes with the option of an infrared keyboard. My only misgiving: the shell was still plain-vanilla. Software isn't an issue either. The Veriton comes loaded with Win 98; and thanks to the ASM Pro Suite software installer, installing, or uninstalling software is a breeze, even for the cybernetically challenged computer-user. The killer app in the Veriton is the Time Machine, which, literally, helps the user go back in time, and undo something. And this system restoration utility takes a mere 5 minutes to work its wonders. However, the quality of the sound, as in all PCs, except Apple's best-selling iMac, is, predictably, tinny. Should you buy the Veriton? It occupies very little space on your desk--the monitor-CPU took up less than half the cubic space my Compaq monitor did, and created free space on the top of a sideboard where my CPU used to sit; and elicited admiring what's-that reactions from everyone who dropped by to chat. Still, at Rs 1,49,000, the Veriton is a high-end offering. Acer's strategy is to target the product at space-starved offices, institutional segments like hotels and foreign banks where the Veriton's looks could create the right kind of impact, and CEOs, who may just want a desktop that looks great. That positioning could work. Especially with coloured shells. -R. Sukumar D
O T . C O M Gobble, gobble, gobble. Barely 2 years after the Indian dot. com sector took off, it is witnessing mergers, acquisitions, and strategic alliances. Of course, the most spectacular deal was the Rs 499 crore buyout of Indiaworld by Satyam Infoway in December, 1999. But there are other smaller deals that are happening faster than it takes for you to click the buttons on your mouse. In January, 2000, hungama.com--a Mumbai-based e-promotions company--took over indiafm.com, a Bollywood portal. Then, Sah & Sanghi, a leading Mumbai auto dealer picked up a 20 per cent stake in automartindia.com, a vehicle sales portal that was promoted by Mahindra & Mahindra (M&M). In yet another deal, financial services major Kotak Mahindra Finance bought a 30 per cent stake in indiacar.com, another auto portal. The bug is spreading thick and fast. Last month, Rediff-on-the-net took a 26 per cent stake in footforward.com, a women's portal, while VSNL, the country's largest Internet Service Provider, took a 30 per cent stake in Indiainfo.com. Such deals have a simple rationale. Nearly all of them are driven by the objective of getting strategic fits. For Satyam, an ISP, Indiaworld will help diversify its horizontal portal; for M&M's automartindia.com, getting a dealer like Sah & Sanghi on board helps in developing its e-Commerce business; footforward.com will fill the gap in Rediff's portal, which did not have a women's channel; while Indiainfo will not only provide VSNL with a portal, it'll also benefit from the 3.50 lakh subscribers that the ISP has. Says L. Subramanyan, 35, CEO, IPF Online: "I expect a phenomenal number of mergers, acquisitions, and alignments to happen in the next 6 months." Apart from fits, such deals also bring in much needed funds. Footforward, for instance, struck the deal with Rediff soon after it was set up as it realised that it needed to build content up to a certain level before venture capitalists would want to fund it. Rediff brought in that cash. Says Santoshi Nadkarni, 27, CEO, Footforward, who won't reveal the actual sum: "The funding from Rediff will help us develop the content to a level acceptable to venture capitalists." Pacmen are on the prowl in cyberspace. -Dilip Maitra
|
|
Issue Contents Write to us Subscriptions Syndication INDIA TODAY | INDIA TODAY PLUS | COMPUTERS TODAY © Living Media India Ltd |
 |
 |
