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IBP
Going, Going, Gone
If things go well, the
disinvestment of IBP could be complete by March 2002.
Finally, the
wheels are moving on the country's first big ticket disinvestment-that of
the standalone petroleum marketing company, IBP. A department of
disinvestment executive says financial bids will be invited in the second
week of January and the winner announced a week later. And, in something
that should make everyone concerned with disinvestment happy, there is no
dearth of appetite, both among foreign and Indian companies, for IBP.
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| THE AMBANI
BROTHERS: Dual play for IBP |
At last count, there were at least nine
suitors in the fray. The list comprises Shell, Kuwait Petroleum, Essar,
Indian Oil Corporation, Bharat Petroleum Corporation Ltd, Hindustan
Petroleum Corporation Ltd, Essar, Reliance Industries, Reliance Petroleum,
and a new consortium of Russia's Stroithfaz and the Khemkas of the Sun
Group.
If there's a rush for IBP it is because the
winner will control some 1,500 fully functional petrol pumps across the
country. As Kaushik Dutta, a partner in consulting firm
PricewaterhouseCoopers says, ''It takes a minimum of three to five years
to set up a petrol pump because it needs 42 clearances from the
government.'' Then there are other benefits. Being a purely marketing
company with a reasonably small number of employees, IBP's overheads are
minimal. And once the administrative pricing mechanism (APM) for fuel is
disbanded by April 1, 2002, there will be no constraint on companies
importing and selling as much petroleum and petroproducts as they wish.
Marketing could prove to be a choke point in such a scenario, and that's
where IBP comes in.
-Ashish
Gupta
IN CONVERSATION
"We'll
Get Our Glory Back"
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| MANU
CHHABRIA: teeing-off in style |
That's a tall order for a group that is
one of the most controversial. But the Managing Director of Jumbo Group
and Shaw Wallace Group of Companies, Manohar Rajaram Chhabria,
is going to try. And he is teeing-off in style, with a Rs 50-crore
sponsorship of Indian (Golf) Open by Shaw Wallace's top brand, Royal
Challenge. In an interview to BT's R.
Sridharan. Chhabria spoke on the new face of Shaw
Wallace. Excerpts:
It's been a long time since you had a
media blitz like this one. Any specific reason why it's happening now?
No, no. What's happening is that we are now taking a more realistic,
professional and practical viewpoint. The general environment was contrary
to what the industry wants. Industry says "please don't bring in
foreigners". We said all foreigners are welcome because we are
confident of our products and consumers. After all the times are changing.
Except for a few, your companies are not
making money...
What prompts you to say that? All the companies across the board are
making money, except for Dunlop, which is a closed unit.
Are there any plans to consolidate your
group companies?
Originally, the idea was to have every company separately. But the
institutions here were pushing us to talk as a group. OK. If that is what
majority of people want, we will do that.
Is there any reason why senior managers at
your top companies come and leave very soon?
No, that's not true. At the end of the day it makes no difference.
Part of the (reason) was a lack of commitment from certain people. After
all men make the difference in a company. I can't sit back and wait for my
executives to deliver.
Are you going to be more hands-on as far
as the India operations are concerned?
No. I am going to be more focussed now.
Is there any group vision for Shaw Wallace
(SW)?
SW is a global company and it will get its glory back. The whole
perception of SW is undergoing a change.
You reportedly want to delist your
companies. Why?
Today, the stockmarket is not giving the value that it should give
(us). Frankly, all our companies are over capitalised. We are not in the
market to go to the FIs for borrowing. As it is, I am the largest
shareholder in the company. Why should I expose myself to an environment
which is not in my favour?
There seems to be some sort of a
rapprochement between you and your brother, Kishore Chhabria. Are you
joining forces against Vijay Mallya of UB?
No. It is a wrong perception. I don't know why the press is dragging
me into this. Yes, I have made some settlement with Kishore. But there are
no discussions directly or indirectly that I have to collaborate with him
for any discussion with Mallya. So long as I get my BDA (Ltd) and Officers
Choice back, I'm happy. Why is the press aligning me with Kishore R.
Chhabria? I don't know if he is responsible for planting such reports in
the press. If that's the case then it's an entirely different story.
Finally, Mr. Chabbria, there were some
warrants outstanding against you in India. Are those sorted out?
You are referring to the inter-corporate deposits (of Shaw Wallace).
All of them have been settled. So nothing is pending against me.
FUTURE PERFECT
What's
In Store For 10 Top Of Mind Sectors in 2002?
A bird's eye view of 10
sectors and what's in store for them in the coming year. Plus, flashpoints
to avoid and companies to watch.
1 INFORMATION TECHNOLOGY
Perhaps a result of happenings in the
stockmarket, infotech in India is all about software. Now one segment
emerging from the shadow is that of IT-enabled services (read business
process outsourcing). Even in a bad year India's software sector hopes to
grow by 35 per cent and 2002 promises to be a better year. Companies to
watch out for: Usual suspects Infosys, Wipro, HCL Tech, and dark horses
Spectramind, Sasken, and Kshema Technologies.
2 TELECOM
The boom in the cellular services market is
here to stay. A study of the cellular services industry by Salomon Smith
Barney, says that India's subscriber base is set to grow by more than
1,000 per cent from the current 3.1 million to 45.9 million by 2005. Basic
telephony services could also pick up steam soon. The opening up of
long-distance telephony to the private sector may give a new direction of
growth to the industry. Companies to watch out for: Bharti Enterprises,
BPL-Birla -AT&T-Tata, Reliance Infocom.
3 AUTOMOBILES
Cars, LCVs, and mopeds will continue to
perform poorly, but the sales of two-wheelers and HCVs will rise. A survey
conducted by the Automobile Components Manufacturers Association says
growth may fall up to 5 per cent in 2001. Companies to watch out for: Tata
Engineering, Hero Honda.
4 CEMENT
Cement sales have gone up by around 5 per
cent for the first seven months of the year. The northern markets, Tamil
Nadu, and Andhra Pradesh also witnessed a pick up on account of retail
activities. This growth is expected to continue in 2002. Cement prices
began rising in August and are likely to continue doing so. Top Picks:
ACC, Gujarat Ambuja, L&T, and Grasim.
5 PHARMA
Exports of generics and the research boom
bode well for the sector in 2002. The opening up of the US and Latin
American generics markets is a great opportunity. ''Indian companies can
also do outsourced research for MNCs,'' says Nitin Raheja, Fund Manager,
Sun F&C Mutual Fund. Top picks: Cipla, DRL, Ranbaxy, Pfizer, Sun and
Hoechst.
6 PETROCHEM
2002 will be a better year for
petrochemicals than 2001. The slower growth in global capacities and
improvement in operating processes at Indian petrochemical plants will
result in an increase, albeit marginal, in profitability prospects in
2002. In India no new capacities are expected to come up and an increase
in demand will be met from current surplus over-capacity. And with
improvement in capacity utilisation, competitive pressures may reduce.
Company to watch: Reliance Industries Ltd.
7 REFINING
Apart from PSU refineries BPCL, HPCL, and
IOC the key player in this sector is Reliance Petroleum Ltd. Most
companies did well in 2001, and the trend will continue next year. The
government's decision to deregulate pricing in the sector by dismantling
the Adminstered Price mechanism by April 2002 is good news. The sector
will become more market-driven and see intensive action on the retail
front. Companies to watch out for: BPCL, IOC, and RPL..
8 FMCGS
The fast moving consumer goods sector will
grow marginally (0-5 per cent) in 2002. Given the overcapacity in the
industry, most companies can look forward to a sluggish year. With
penetration being a problem for almost all companies, it is difficult to
pick out one company as an outperformer.
9 CONSUMER DURABLES
The Consumer Electronics and Television
Manufacturers Association expects the industry to grow by 10 per cent in
2002, but ICRA warns that weak agricultural and industrial performance
could hurt volumes. However, aggressive promotions cut hit profitability.
Company to watch out for: LG India.
10 CHEMICALS &
FERTILISERS
2002 won't be a good year for chemicals. The
industry already suffers from overcapacity and with competition from
China, margins will continue to be under pressure. At best, India's
chemical exports may grow 5 per cent. The drop in crude prices could
benefit some companies, but it is difficult to pick a winner.
Compiled by
Swati Prasad &
Shilpa Nayak
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