The portents aren't good. of the last two large initial public offerings (IPOs), one, Bharti Televentures was quoting at Rs 35.55 on June 17, below its issue price of Rs 45; the other, I-flex, was yet to list although people like Vivek Reddy, CEO, Kothari Pioneer, believe the stock is unlikely to appreciate much over its floor price of Rs 530.

Still, there were takers for both. Another offering by Punjab National Bank was oversubscribed four times. That holds out hope for the companies planning IPOs worth Rs 30,000 crore in 2002-03. Never, apart from the irrationally exuberant years between 1992 and 1995, have so many potential blue-chips (See In The Offing) had so much riding on the market.

The listers-list is eclectic, a mix of cash-rich public sector companies, profit-making banks, and a clutch of significant others including company-to-be TCS. That's a change from the mini-IPO boom of 1999-2000 when the listers were primarily software and entertainment companies.

If market watchers are hesitant to refer to this as an IPO-wave it's with good reason. Companies have announced IPOs in the past only to back off citing the state of the market. Last year, as many as 72 companies allowed their mandate from Securities and Exchange Bureau of India (SEBI) to lapse rather than brave a market battered by a sprinkling of scams, 9-11, and industrial slowdown. ''The success of an IPO depends, to a large extent, on secondary market conditions,'' explains R. Jayaram, Executive Director, Kotak Securities. ''Unless the secondary market is on a bull run, or at the least, in a positive frame (of mind), it will be difficult for the IPO market to pick up.''

Not so, claims Prithvi Haldea, CEO, Prime Database. His take? Companies such as TCS and Canara Bank are tired of waiting for the ''feel-good factor''. ''A buoyant primary market today, unlike the past, can generate enough excitement in the secondary market.'' The recent run on public sector stocks-a consequence of the government's disinvestment drive-bears Haldea out. Still, Rs 30,000 crore is a large number and while the market's appetite for PSU stocks is likely to remain undiminished, other issuers may not find the going easy. ''Initially, the market will only be receptive to attractively priced issues of quality companies,'' says Amit Chandra, Executive Director, DSP Merrill Lynch.

There's money to burn, though: in the last five years, bank deposits have risen from Rs 500,000 crore to Rs 12,00,000 crore, an indication, adds Chandra, that retail investors are waiting for the right issue to come along. And with most companies lining up IPOs preferring the book-building route, only 25 per cent of the issue will go to retail investors. The rest will go to institutions, and going by their response to the I-flex issue-it happened just when tensions between India and Pakistan were beginning to ease, but not by much-2002-03 may well be what everyone has been waiting for. But don't they say that of every year?

-Ashish Gupta

ULCER-G UPDATE
Counting Conglos
WPP may control a third of the Rs 8,600-crore Indian ad market, but with global conglomerates Omnicom, IPG, and Publicis blowing hot on India, it will no longer be a one-horse race.

WPP's M. Sorrell: The conglomerate has a headstart

It's final. Omnicom and Mudra (Omnicom agency ddb has a 10 per cent-minus stake in India's fourth largest agency, Mudra Communications) have squashed rumours of the former seeking a new partner or considering the 100 per cent subsidiary route in India. Still, the market is abuzz with whispers about the moves of the three advertising conglos of note apart from WPP, Omnicom, Inter Public Group (IPG), and Publicis. WPP already boasts a formidable presence in India through HTA, O&M, Rediffusion DY&R, Contract, Equus Redcell and RMG David.

Don't count Omnicom out, counsel industry-execs: we haven't seen the last of its attempts to give ddb, the seventh largest agency in the world, its due place under the Indian sun.

IPG (Lowe India, McCann, and FCB Ulka belong in the fold), the buzz goes, may be deliberating the launch of Magna Global, its media arm, a logical response to the entry of WPP media monolith, WPP Marketing Communications, earlier this year. And Publicis (Publicis India, Ambience, Saatchi & Saatchi, Leo Burnett, and Bates) is looking to strengthen its two independent media outfits that already operate in India, Zenith Optimedia and Starcom.

The Big Four are also open to strategic investments in smaller Indian agencies, even acquisitions, as an alternate growth recipe. The New Delhi-based Capital Advertising (billings of Rs 42 crore) is reported to be on their radar. Says H.V. Subramaniam, Founder-Director of Capital, ''Obviously, acquisitions in India would be a (growth) path for these groups. But as of now, we are single and independent.'' Even Grey Worldwide, which has steadfastly adhered to its best-of-breed approach (one advertising agency, the best; one public relations agency, the best;...) is said to be courting smaller agencies in an effort to derive the benefits of scale, especially in media-buying. We promise to keep you posted.

-Shailesh Dobhal

CAMP
The South's Strongest Brand
It isn't Pond's, which is based in Chennai. Nor is it Ford, which is in Chengalpet or Tamil Nadu Chief Minister J. Jayalalitha. It is a phenomenon called Rajnikanth.

Kollywood superstar Rajnikanth: Bus conductor-turned movie idol

To people in the US and the UK, the sign made by forking the index and the little fingers is a sign of celebration, mostly seen at rock concerts. To people in continental Europe, it is a sign of the devil (the fingers are the horns, see?). And in other regions, it signifies a cuckold (they're supposed to grow horns). None of this matters to the Tamil-speaking populace in South India. What does is the fact that the few publicity stills of the-next-big-thing Baba released thus far show Tamil filmdom's reigning monarch Rajnikanth making the sign.

Work on Baba-the script is by Rajnikanth himself-started in February 2002 and the movie is due out in August 2002, but the cloak of secrecy around it has fuelled an inordinate amount of coverage in the local press. Some facts we could glean: Amitabh Bachchan will make a guest appearance; Manisha Koirala is the female lead (she'll help sell the film to distributors in the North, say industry execs); and a Japanese actress will ensure the film's success in Japan-with Muthu, Rajnikanth became a star in that country.

A Rajnikanth motion pic was due some time; his last one, Padaiappa, made, like Baba, by his company, was released in 1999. Padaiappa is reported to have cost Rs 4 crore, but brought in Rs 27 crore. While the exact budget for Baba isn't known, the buzz places it at anything between Rs 5 crore and Rs 20 crore. Revenues, from distribution rights, audio and TV rights, and merchandising are estimated at Rs 45 crore.

The actual budget is likely to be around Rs 5 crore; Rajnikanth is renowned for his thrift. And the revenue estimate could be bang-on: Pepsi is said to be considering a Rs 1 crore in-film promotional exercise. As is consumer products company Henkel Spic.

The secret of Rajnikanth's brand-appeal remains a mystery: it could be his more-eccentric-than-eccentric gestures (an early one was to throw up a cigarette and catch it between his lips); it could be his staccato dialogue delivery peppered with more one-liners than Terminator 2; or it could be the campy storyline of his movies. Whatever the reason, Baba promises to the biggest thing ever to hit the screens down south.

P.S: Don't be too free with that forked fingers sign; Rajnikanth's company has a copyright on it.

-Nitya Varadarajan

ISLAND PARADISE
From Haven To Hell
A Delhi High Court order threatens to end Mauritius' status as a tax haven for foreign institutional investors. Dalal Street is nervous.

Delhi High Court: Cracking the whip

What should have been a simple open and shut case has suddenly taken a turn for the worse. By quashing a circular issued by the Central Board of Direct Taxes (CBDT) in March 2000 regarding the Indo-Mauritius Double Tax Avoidance Convention (DTAC) of 1982-1983, the Delhi High Court has threatened to end Mauritius' privileged status as a tax haven.

The controversial convention allowed companies-including foreign institutional and offshore funds, among others-registered in Mauritius to either pay less or avoid tax altogether. For example, dividend income in Mauritius is taxed at only 3 per cent compared to 10 per cent in India. A bigger attraction is tax exemption to income from capital gains such as selling of shares. Now you know why every FII wants to route its money through Mauritius.

The government of India-despite the loss in revenue such an agreement entails-intends to appeal the High Court's order in the apex court. Meanwhile, Dalal Street is very nervous. A big part of the foreign institutional investment is believed to come via the Mauritius route. Marketmen fear that denial of tax benefits will slow down inflows into the Indian stockmarket. Says Vivek Mehra, Executive Director, PricewaterhouseCoopers, ''No foreign investor wants any kind of uncertainty in his investments." But isn't uncertainty part of Investing 101 when it comes to India?

-Ashish Gupta