TRENDS (Page 3)

GREENER PASTURES
Selling The State
An entrepreneurs' association believes it has what it takes to market the state of Uttar Pradesh.

Andhra Pradesh has Nara Chandrababu Naidu. Karnataka has S.M. Krishna. And Uttar Pradesh has, well, the UP chapter of The Indus Entrepreneurs (tie). That's right, it's the same tie of Kanwal Rekhi fame, and not content with playing mentor to entrepreneurs (one of the missions of the parent), the division is playing angel to a state. Step 1 of this divine mission of mercy is UP Calling 2002, an event to be held in Kanpur on January 7, 2002, that is expected to make investors sit up and take note of a great opportunity they'd overlooked (namely, Uttar Pradesh as an investment destination).

''UP Calling is the state's first global networking event,'' boasts Sanjiv Shriya, President tie-up and one of the promoters of two-wheeler company LML. The state, for its part, is content that someone has taken over a job it was clearly under-equipped to do:, its earlier marketing efforts in 1999-2000 through Udyog Bandhu, an organisation promoted by Uttar Pradesh State Industrial Corporation, didn't exactly set the streets on fire. And so it is that UP Calling enjoys the support of the state government. ''I know it is rather late in the day and that other governments have been marketing their states for long,'' admits R.N. Trivedi, Commissioner and Director, Industry.

TiE-UP's strategy is innovative: it plans to invite anyone with a link to Uttar Pradesh-they may have been born in the state, studied there, worked there, or married to someone from there-and the requisite quorum of VCs, NRIs, and CEOs.

Shriya believes the event will get the state share of mind. Trivedi is more interested in share of investment. But a state that has just one happy story to show-Noida-may end up doing neither.

E-blitz

Hitting Them Where It Hurts Most
AP's naxals have finally figured it out.

C. NAIDU: Ouch! That hurts

In the span of 40 days in October and November, the People's Guerrilla Army, an offshoot of the People's War Group, an Andhra Pradesh-based naxal outfit, has worked its way into the economic consciousness of the country. First, on October 21, the PGA bombed a Coke bottling plant near Guntur. Then, on November 29, 2001, it targeted Heritage Foods, a large dairy farm run by Naidu's wife Bhuvaneshwari, Tata Coffee's instant coffee manufacturing unit, and a unit of Gopikrishna Granites.

The acts of terror sent shockwaves in a state that prides itself on it ability to attract investment. ''This seems to emphasise that it is perhaps time to work seriously towards creating jobs in rural areas,'' says B.V.R. Mohan Reddy, Vice Chairman of the Confederation of Indian Industry's Andhra Pradesh chapter. Given that the attacks have dented Naidu's and the state's reputation, expect some knee-jerk welfare measures.

-E. Kumar Sharma

BHARTI
It Never Rains, It Pours
Is there a whisper campaign on to scuttle Bharti's IPO?

You know something is wrong when the financial press suddenly wakes up to something that happened in the early years of India's tryst with telecom de-regulation, and paints you a wrong-doer. The something in question is the Special Purpose Vehicle. Aware that the ceiling of 49 per cent on foreign investment in telecom was proving to be a big hurdle for companies raising money to invest in cellular and basic telephony networks, the government chose to turn a blind eye when companies went in for SPVs.

Thus a foreign entity, say F, could invest up to 49 per cent directly in a Indian telecommunication services company; the 51 per cent would be held by the Indian partner, A. The SPV essentially allowed tiered investments. That meant the 51 per cent held by A, would be controlled by it through a third company in which it held 51 per cent, and F, the remaining 49 per cent. Thus, F effectively controlled 49 per cent plus 49 per cent of 51 per cent, or a total of 73.99 per cent.

However, since A held 51 per cent of both entities, it retained management control. In effect, a SPV distinguished the concept of economic control from that of management control, and thanks to it, most Indian telecom companies managed to raise money through a system of equity tiering. Soon after Bharti Televentures filed its prospectus for an IPO with SEBI, reports in the pink brigade raised questions about the foreign equity in the company being over the prescribed 49 per cent. Earlier, details of Bharti's losses found their way to the front pages of some papers. ''In India, a cellular services company can expect to start making money only after seven to eight years,'' says Kobita Desai, Director (Asia Pacific), Gartner Group, emphasising the industry's long gestation periods. But as past experience has shown, Mittal does boast enough political savvy to give as good as he gets. Now, it gets interesting.

Roots

A Jet Obsession
Simple, who owns Jet?

ARUN SHOURIE: He
wants to know how

It's the million dollar question that the government is seeking an answer to, and it has repeatedly been asked by Disinvestment Minister Arun Shourie in Parliament. For the record, Jet Airways is fully owned by Tailwinds, a company registered in the Isle of Man. Since the island is a tax haven, no further details of the shareholding pattern are available. That raises the bogey of a foreign investor, but Jet insists that after Kuwait Airlines and Gulf Air divested the 40 per cent stake they once held in the airline, there is none. Department of Company Affairs Secretary Vinod Dal confirmed that a ''comprehensive inquiry'' of Jet Airways has been ordered. When the investigation is complete-this should take a couple of months-the issue of Jet's ownership, hopefully, should be settled once and for all. As for Shourie's interest, a long-time government-watcher says it is his way of getting back (remember he is the disinvestment minister) at an organisation that allegedly played a small role in spiking Singapore Airlines' play for AI.

-Ashutosh Sinha

PFIZER
An Upper For The Viagra Company
Post its merger with Parke Davis, Pfizer India wants to be among the top three pharma companies in India, and is displaying some new-found aggressiveness getting there.

Its serene HQ at jogeshwari, a Mumbai-suburb may not show it, but Pfizer India has a new-found aggressive streak. Blame it on the merger with Parke Davis that Pfizer hopes to complete by the end of the year. This will make Pfizer the fourth largest pharmaceutical company in India (in terms of domestic sales). The statistics: a combined sales of Rs 680 crore, almost 50 recallable pharma brands (including Becosule, Corex, Benadryl, and Gelusil), and over 4,000 employees.

But CEO Hocine Sidi Said is hoping the merger can do more than just create a formidable pharma company; he's hoping it can help the company discover the resources to become one of the three largest pharma companies in the country. The new Pfizer ranks fourth behind Glaxo SmithKline, Cipla, and Ranbaxy. Says Jamshed Desai, Head (Research), Taib Securities: ''Once Nicholas Piramal's merger with Rhone Poulenc comes into force they'll be a major force to reckon with. Moreover, growth during mergers tends to slow down as management energies get dissipated. So the challenge for Pfizer will be to maintain its double digit growth rate.''

But the race is on at Jogeshwari: the new Pfizer's 1,250-strong field force is being increased and a web-based sales-people monitoring system is being put in place. And consulting firm Arthur Andersen is helping the company restructure its organisation: new positions are being created and superfluous ones, done away with. And the company is in the process of moving to a performance-based compensation structure. ''Pay for performance,'' is our new motto proffers Said. But mere restructuring and new product launches-there are several planned, especially through the OTC (Over The Counter route)-won't help. For that Pfizer will need to churn out a blockbuster like Viagra.

The buzz is that Tata Engineering may be finally getting a CEO. The official line from Bombay House is that Dr V. Sumantran, a gm vet from the US (he spent 15 years with the company) is joining as executive director of the engineering research and passenger car business unit, but head-hunting sources claim he may be announced the next MD of the company. For those interested in details, Sumantran held several senior positions in the engineering and product development areas in gm, and his last assignment was as Director (Advanced Engineering), saab.

Meanwhile, the churn at RPG continues. First came the exit of CFO Hari Mundra, and the entry of Mahesh Gupta from Nicholas Piramal in his stead. Now comes the news that V.S. Krishnan, President (Corporate Planning and Strategy) is leaving and being replaced by Murli Ramachandran from kpmg. Ramachandran was a partner heading the performance improvement practice at KPMG. And more moves are expected.

Finally, news on Indya.com's Sunil Lulla's next move. Reports in from Bangalore say Lulla has joined a tech-venture promoted by, among others, serial entrepreneur Ramesh Vangal and ad agency HTA.