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| Osama Suzuki: In the driving seat, finally |
On
May 9, the heavy industries ministry was aflutter. The Prime Minister's
Office wanted the file on divestment of the government's holding
in Maruti Udyog. But it was not to be found anywhere. Apparently,
the Shiv Sena's Manohar Joshi, who has handed over charge of the
ministry to become the Lok Sabha Speaker, had carried it to Mumbai
''but forgot to bring it back'' to Delhi.
Insiders insist that Joshi's momentary lapse
of memory (not reason) was courtesy instructions from none other
than Shiv Sena Supremo Bal Thackeray, who was against the disinvestment.
Mercifully, the pm's intervention put paid to Thackeray's gameplan.
You have to think really hard why any sane person would be against
the deal: For one, it's a bonanza for the government, which stands
to get a minimum of Rs 2,424 crore as return on the Rs 66 crore
it invested in the company at its inception in 1982. This includes
an unprecedented Rs 1,000 crore as control premium. For another,
here was no Balco-like controversy over the sale nor any murmur
of kickbacks a la ITDC hotels. It was seen to be a transparent deal.
Third, it compels Suzuki to pump in Rs 400 crore into the company
through a rights issue at Rs 3,280 a share as the government's holding
comes down from 49.7 per cent to 45.5 per cent.
That will be a shot in the arm for the company
as it tries to safeguard its market dominance. The Japanese company
will also underwrite-at Rs 2,300 a share-the public issue that the
government will float to bring down its holding to 25 per cent.
Fourth, Suzuki has also agreed to cut the cost of components. And,
finally, as Jagdish Khattar, Managing Director, Maruti Udyog, puts
it: ''Decision-making will become quicker.''
-Suveen
K. Sinha
RELIANCE INDUSTRIES
No Snafus This Time Round
Reliance didn't leave anything
to chance when bidding for IPCL. Will it be worth it?
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| Reliance+IPCL: A whole new petrochem
equation |
They
lost VSNL and IBP, but it's proved third time lucky for the Ambanis.
Actually, luck had little to do with it; it was sheer aggression
that resulted in Reliance acquiring 26 per cent in IPCL for close
to Rs 1,500 crore last fortnight. Consider: Reliance's bid of Rs
231 per share was at a 74 per cent premium to IPCL's last traded
quote on the stock exchanges, Nirma's bid wasn't even half that
of Reliance's (Rs 110) and ioc did marginally better, with Rs 128.
The obvious question, then: after two failed
bids, did Reliance go overboard with the third? Pankaj Choksy, Analyst
(Oil & Gas) at Enam Research, prefers to look at it differently:
''RIL's high bid for IPCL reflects its high level of confidence
in the sustainability of the recent cyclical upturn in petrochemicals.''
Reliance's marketshares in polyethylene, polypropylene,
PVC, and polymers will get a leg-up via the acquisition. All in
all, the Ambanis can now reinforce their position as the pashas
of petrochemicals.
-Swati Prasad
TATA-AIG
Not Pushing Its Luck
Just how innovative can one get
with marketing insurance policies? As Tata-AIG recently discovered,
not too innovative.
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| Dalip Verma: Goodbye to gimmicks |
Coming
from one of the most conservative groups in India, Tata-AIG's customised
personal accident policy, Shanti, raised plenty of eyebrows. Only
to be expected, since the policy actually promised Rs 1 crore in
claims to the beneficiary of the policy-holder-provided he or she
died on eight specified national holidays, excluding Sundays. Since
its launch in Mumbai in January this year, Shanti hasn't had to
pay out Rs 1 crore in claims. But now Tata-AIG doesn't want to push
its luck. Last fortnight, the company announced that it was scrapping
the policy. But what about the 400 policies already issued? Dalip
Verma, CEO, Tata-AIG General Insurance, was not available for comment.
During the 'test launch' in Mumbai, a company
spokesperson explained that the policy was based on a research that
revealed very few commuters died on public holidays. What seems
to have caused a change of heart at Tata-AIG is the fact that making
money on such a policy would have been very difficult. For one,
the policies offered by government-owned insurance companies are
cheaper. While one paid Rs 1,248 per annum in advance for taking
the Shanti cover, National Insurance's personal accident cover of
Rs 1 lakh cost only Rs 400 per annum, if a customer took a disability
and death cover. General Insurance, on the other hand, will sell
you a Rs 1 lakh cover for just Rs 700 per annum.
In contrast, Tata-AIG was charging just Rs
99 per month as premium on a cover of Rs 5 lakh, which was the sum
the beneficiaries got if the policy-holder died on any of the non-specified
days.
The bottomline: The Rs 1-crore claim was a
great marketing tool, but the gimmick may have cost Tata-AIG dear.
Wonder what the actuaries were thinking when they came up with the
product.
-Roshni Jayakar
COLUMBIA TRISTAR
Spinning The Magic Web
Spiderman comes to town, armed
with a Rs 2-crore promotion kitty.
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| Spiderman: Highrises, trains, everywhere |
There
is no way you can miss Spiderman; unless you're stuck in an elevator.
And even then he's going to come and get you,'' exclaims Uday Singh,
Managing Director, Columbia Tristar Films India. After grossing
an amazing $200 million in the first nine days (it cost only $120
million to make) Spidey's all set to spin his web in India. And
Columbia Tristar India, armed with a Rs 2 crore-promotion kitty,
is pulling out all stops to ensure that Spiderman's a box-office
buster.
Trains are being painted in Mumbai, trams in
Kolkata, movie hall interiors in Delhi. Then there is a 40-foot
inflatable bang in the middle of Mumbai's Linking Road. ''Godzilla
did Rs 28 crore in around three months; we expect this to do even
better,'' says Singh. In fact such is Columbia's optimism that 250
cinema prints will be simultaneously released (including Tamil,
Telugu, and Hindi versions) to movie halls across the country-a
rarity for English movies.
-Venkatesha Babu
STATE BANK OF INDIA
Home, But Not Alone
Everybody knows that the housing finance industry
is booming, but not who the swift dark horse is.
Quick,
after HDFC which company occupies the no. 2 spot in the housing
finance business? Is it LIC Housing Finance? Or could it be the
relatively new kid on the block, ICICI? Neither actually. Would
you be surprised if it is the public sector banking behemoth, State
Bank of India (SBI)?
Even if you didn't expect SBI to occupy the
runner's-up position, T.S. Bhattacharya, Chief General Manager (Personal
Banking) clearly isn't surprised. ''I have my branches (all of 3,000
across the country), my cost of funds is the lowest (around 7.5
per cent), and today we are in a position to sanction loans in 48
hours. That explains our rate of growth,'' he explains.
Indeed, for the year ended March 2002, SBI's
personal segment (which includes home loans, auto loans, personal
loans, and educational loans) grew by 32.66 per cent to Rs 17,705
crore, thereby, accounting for just over 15 per cent of the bank's
total advances. Housing loans accounted for Rs 8,199 crore, a 67
per cent growth over the previous year, making SBI the fastest growing
player in the housing finance market.
It's not just the fastest, but the most cost-efficient
player too. According to a recent JP Morgan study, the cost of funds
is the lowest for SBI, at 7.6 per cent, against 9.2 per cent for
HDFC, 8-9 per cent for ICICI Bank, and 7.8 per cent for Corporation
Bank. Where HDFC and ICICI score, though, is in terms of yield,
which works out to 12.43 per cent as against SBI's 11.75 per cent.
But in terms of sheer marketshare, SBI is gaining
ground, although it's still miles away from HDFC, which has close
to half of the market in the bag. Yet, SBI, along with ICICI, is
slowly but surely chipping away at HDFC's marketshare. Arun Sarin,
Deputy gm (Personal Banking), SBI, expects the personal segment
to account for close to 20 per cent of total advances by March 2003,
which would translate into an increase of Rs 7,000 crore, with housing
accounting for Rs 4,500 crore of that increase. Is Deepak Parekh
listening?
-Brian Carvalho
WAYGATE CAPITAL
On The Money Trail
Yesterday's veecee Rajesh Jog is at it again,
this time eyeing the Singapore dollar.
After
''capping'' eVentures last July, Rajesh Jog, one of the fund's senior
partners, has now picked up the scent of new money-which has taken
him all the way to Singapore. ''There are very few capital-surplus
places in the world today, and Singapore is one of them,'' says
Jog, now head of Waygate Capital, an investment bank he had originally
started up in 1994 as Gateway Capital. Jog today focuses on-surprise,
surprise-the technology, communications and media sectors.
That may not sound too original, but Jog's
brainwave of showcasing 10 ''hi-technology'' start-ups at a ''Technopreneurship
Week'' hosted by Singapore's Economic Development Fund last fortnight
was something out of the box. And when Jog says there's money in
Singapore-besides the infrastructure and a global managerial base-he
clearly knows what he's talking about: The EF has a technopreneurship
Investment Fund with a corpus of all of $1 billion (Rs 4,850 crore).
Strutting their stuff in Singapore were, in
Jog-speak, ''the hottest early-stage technologies being developed
in India. The start-ups included Opus Technologies, with its retail
delivery channel for banks and financial institutions, content tools
developer Herald Logic and the Bangalore-based California Digital,
which recently acquired VA Linux, the systems supplier. Lending
them an ear were SingTel, Singapore Technologies, and a number of
government institutions.
Meantime, Jog is preparing to hit the road-along
with Pallavi Jha of Walchand Capital-in his quest to set up a $150-million
(Rs 727 crore) media and entertainment fund. You just can't keep
a VC down...
-Brian Carvalho
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