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| UB's Vijay Mallya: Armed with S&N's
cash infusion and a bank credit line |
Vijay
Mallya is back on the prowl. After receiving close to Rs 430 crore
from partner-come-lately Scottish & Newcastle and a new credit
line of Rs 200 crore from its bankers, the UB group is raising the
bar. In the past month, the company has picked up the GMR brewery
from GMR Group (of ING Vysya Bank fame) in an all-cash deal worth
Rs 57 crore. UB is also in the final stages of negotiations to acquire
Rajasthan Breweries for an estimated Rs 40 crore. And Mallya is
believed to be eyeing 12 other breweries, particularly in states
where UB does not have brewing facilities.
Says
Ravi Nedungadi, President and CFO of the UB Group, ''We want to
consolidate the brewing capacity in the country. UB owns or controls
24 of the 57 breweries in the country .'' Acquiring breweries also
makes sense since building new ones is an expensive (Rs 40-45 crore)
and time-consuming proposition .The company has a 40 per cent marketshare
of the 72 million cases a year beer market in the country and hopes
to increase this to 50 per cent
The GMR brewery is located in Andhra Pradesh,
the second largest beer market in the country at 12 million cases
after Maharashtra (16 million cases). Now, UB has to ensure that
the consolidation helps in wiping out its losses, which stood at
Rs 35.22 crore for the nine months ended December 31, 2001. Says
Nedungadi, ''Once the acquisitions are complete and the debt burden
is reduced due to the new cash infusion, the company will show good
results.'' Soon, one assumes.
-Venkatesha Babu
3 M
3M, Two Plants, No Partner?
Birla 3M may please customers but disappoint
shareholders.
The
top brass at Birla 3M, the 76 per cent Indian subsidiary of the
$16 billion-3M Corporation of the US, is notorious for its media-shyness.
So, it was no different when, last fortnight, BT approached the
company to confirm two major developments, Birla 3M officials refused
to comment.
But sources close to the company aver: one,
that it could soon shed the Birla prefix when it delists from the
Indian bourses by buying out the Yashovardhan Birla group's 7.7
per cent holding and making an open offer. Two, 3m will soon set
up its second manufacturing unit in India, in Pune to make homecare
products, primarily the Scotch Brite range.
Manufacturing Scotch Brite in Pune will give
the company an opportunity to increase its product range. 3M is
also stepping on the gas to hit the target of $100 million sales
by 2003. Currently Birla 3M sells just under 2,000 products in India.
Given that 3M has more than 50,000 products in its global portfolio,
the Indian range is small beer. Consumers can eagerly look forward
to the new offerings. The small shareholder may however not be as
enthusiastic.
-Venkatesha Babu
WE, THE
"POSITIVE" PEOPLE
Did you know that over three-fourths of Indian
consumers are positively oriented, and open to new propositions?
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| Understanding relationships |
Consumers in Maharashtra
tend to be ''always busy'', North Indian housewives are ''providing
and caring'' and the Joes and Janes in Kolkata are the ''worried
depressives'', who sacrifice leisure to earn more money. These insights
into the Indian consumer (40 million of them), come from a research
done by Mindshare. ''The research reveals that 77 per cent of Indian
consumers are positively-oriented, and, therefore, open to new propositions
'' points out Annette Nazaroff, Consumer Insights Director (Asia-Pacific)
WPP Group.
The study into the social behaviour and attitudes
of the consumer is just one dimension-the second one-of Mindshare's
''3D'' project, which aims at understanding the consumer's relationship
with brands and media channels. The first dimension involves identifying
the most valuable customers and their relationships with the brand.
It looks into who is loyal, who isn't, and why. And in the final
dimension, the consumer's relation to media is established. For
instance, a third of English movie channel viewers believe it's
important to be attractive to the other sex. Blame that on Halle
Berry, or Brad Pitt?
-Brian Carvalho
MINDSHARE
"Clients Want The Best Along With Innovation"
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| Dominic Proctor, COO, WPP Media: Be big,
but act small |
Dominic Proctor, 45, COO, WPP Media,
was in India last fortnight for the formal launch of Mindshare,
the media investment management company of the WPP group. Excerpts
from an interview:
Q. What is the biggest change we're witnessing
on the media buying side?
A. We're seeing a process of consolidation,
and soon there will be just five-six media networks that will handle
most of the multinational media accounts. In India, the industry
is still fragmented, but this market too will follow suit. The launch
of WPP Marketing Communications, the holding company for MindShare
(the media investment management company of the WPP group) and (sister
company) Maximise is a step in that direction.
Which are these five-six networks that will
provide the competition to the WPP group?
I see the competition coming from Magna Global
(the aggregation of the media planning and buying interests of the
Interpublic group), Zenith Media (formed by the merger of Publicis
and Cordiant's media buying assets), Grey's MediaCom, and Karat
Interactive. But let me add that I expect further consolidation
to happen.
So does this mean that we can expect media
deals to happen at the global level?
There are a few such deals to be done. But media
is essentially a national business, if not regional, the Indian
market being the best example of that regional nature. The way I
see it is that the approach to media will be thought out globally,
but the execution has to be local.
You strongly believe that media buying doesn't
fit into the traditional agency structure...
The separation started as long as 30 years ago.
Today 85 per cent of media planning and buying is done outside the
agency. The market has decided that it is a separate business. But
having said that, one has to ensure that the media entity and the
creative agency have to work closely.
What is it that clients are looking for
in times like these?
Most of them want volume, which gives them the
confidence of price. But what they should also be looking for is
added value-research on how consumers use media, and programmes
that judge return on investment.
How important is size for an agency?
The trick is to be big, but act small.
-Brian Carvalho
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| Ranbaxy's D.S. Brar: Spreading his wings |
RANBAXY
LABORATORIES
Shot In The Arm
An US FDA approval for a $600 million drug,
could see Ranbaxy's profits grow.
For
some time now, analysts and fund managers have been wondering just
how Ranbaxy Laboratories, which notched up global sales of around
Rs 2,800 crore in 2001 (roughly $596 million), would get to its
target of Rs 4,750 crore ( $1 billion) by 2004. After all, the 12
per cent average growth that Delhi-based pharma major has been clocking
(till 2000, although it did grow by 17.5 per cent in 2001) won't
be enough to propel it into the billion-dollar league in three years.
Last fortnight, however, the $1 billion-milestone
suddenly appeared a distinct possibility when Ranbaxy bagged the
approval of the US Food and Drug Administration (FDA) to make and
sell Cefuroxime Axetil, the generic equivalent of the GlaxoSmithKline-trademarked
Ceftin. Cefuroxime Axetil tablets, used in the treatment of pharyngitis,
tonsilitis, lower respiratory tract infections, urinary infections
and skin infections, is a drug worth $600 million (Rs 2,880 crore)
globally, and $300 million (Rs 1,440 crore) in the US alone.
Analysts expect this drug to contribute Rs
240-288 crore ($50-60 million) to Ranbaxy's revenues in the first
year of launch itself. What's more, profits could be as high as
Rs 200 crore on those sales. That's because Ranbaxy won't have to
contend with competition for at least a year, which gives it the
pricing power. ''The drug has very high margins and it is expected
to boost our bottomline substantially,'' says a company spokesperson.
''It's a blockbuster product.''
Given the humungous potential, it isn't surprising
that, since late-2000, GlaxoSmithKline has been engaged in a bitter
litigation with Ranbaxy over introducing Cefuroxine Axetil. Glaxo
had filed a patent infringement suit against Ranbaxy. Now that Ranbaxy
has got the US FDA's nod, it also gets a chance to spread its wings
in the highly-lucrative US market, which accounts for 47 per cent
of the world pharma market. Currently, the US contributes only 16
per cent to Ranbaxy's total revenues, and that figure can only increase.
For, the pharma major has also sought an FDA approval for an anti-acne
product. $1 billion by 2004 no longer appears a pipe-dream.
-Swati Prasad
EXECUTIVE
TRACKING
Suddenly, the market is replete with ex-CEOs
up for grabs.
  |
| Reckitt's Barua (left) and AT&T's Aga: Still
considering options |
Ex-CEOs
up for grabs. These days quitting before you have finalised where
you are going next seems to be the thing to do. There's many a headhunter
speculating where Pranab Barua ex-CEO of Reckitt Benckiser, Sanjeev
Aga of Birla AT&T, and Ninu Khanna of Dabur are headed. On the
demand side, one of the hottest jobs going is that of the CEO of
Medialab Asia. With Pramod Mahajan as Chairman and board members
such as N.R. Narayana Murthy, Azim Premji, and F.C. Kohli, there's
no shortage of hopefuls. Heidricks & Struggles, which has been
retained for the search, isn't saying much.
Now for a follow-up. This column reported CFO
Mahesh Gupta's departure from the Piramal fold some issues back;
now, Ajay Piramal has found an able replacement, R. Santhanam, the
former CFO of Bombay Dyeing. Another high-profile move is that of
V. Dandapani, the head of Thomas Cook's travel business who takes
over as CEO of rival, Carlson Wagonlit India. And, apparently, he
isn't the only one to have bought a one-way ticket out of the company.
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