|B.K. Modi: Better believe
it, he's the peacemaker
Modi, the businessman who built an empire around joint ventures
with the world's finest corporations-think Motorola, Alcatel, Xerox,
Distacom, Continental ag, Olivetti-only to lose most of it as his
partnerships unraveled, is back in the news. Come to think of it,
the man has never really been out of news, whether it be Xerox-Modicorp's
kick-backs to buyers or Spice Telecom's (this is a Modi group firm
that offers cellular telephony services in Punjab and Karnataka)
defaults on payments to equipment vendors. If the present is any
different, it is because Modi's return to relevance has no shades
of grey attached to it. The former chairman of the Cellular Operator's
Association of India (COAI)-the buzz in Delhi's telecom circles
is that he was forced out after making a hash of presenting the
cellular companies point of view to the then telecommunications
minister around the time these telcos were trying to move from a
licence-fee regime to a revenue-sharing one-is back in the country
from New York, where he is based, to help the cause of the cellular
operators in their fight against basic operators providing mobile
services (See Limited Mobility: Unlimited Options in this issue
for details of the scrap). That must be sweet vindication for the
Non Resident Indian.
It seems only apt that this message of peace
comes from Modi: he became a practicing Buddhist in the early 1980s
and for some time, even considered sponsoring Bernardo Bertolucci's
film on Buddha. And the business of peace is a logical extension
for his $150 million (Rs 690 crore) empire-in terms of book value,
he clarifies, and the numbers have been vetted by auditors Ernst
& Young. The group's new holding company MCorpGlobal is all
set to foray into lifestyle-related products and services that will
be offered from ''total rejuvenation'' centres. From ayurveda to
yoga and vedic education to health food, the centres will offer
a range of new-age stress relievers. The first centre will open
for business in Delhi by January 2004. This will be followed by
a US launch in March of the same year. ''Quality of life isn't merely
dependant on satisfaction of materialistic wants,'' explains Modi.
''It requires much more and we will provide that.''
Evidently, Modi has identified peace as the
next big business opportunity. Peace between telcos, nations, and
religions. He flashes an ornate ring etched with Buddhist, Zoroastrian,
Christian, Hindu, and Islamic religious symbols. ''I have not evolved
from a businessman to a politician or spiritual guru,'' says Modi.
''I have simply evolved to (being) a complete man.'' And never mind
that a company has already used that line.
on Terra Firma
After a brief flight, BPO valuations are back
on the ground.
|Earth to Moonrocket: "Calling
Moonrocket. Come in please"
Two acquisitions, a year apart, tell
the tale of falling valuations in the Business Process Outsourcing
space. In June this year, the Aditya Birla Group acquired 100 per
cent of Mumbai based BPO firm TransWorks for a total consideration
of $13 million (Rs 59.8 crore at the then exchange rate) which was
about 1.2 times the company's annualised revenue. A year earlier,
Wipro had acquired 90 per cent of the Raman Roy promoted Spectramind
for a consideration of about $93 million (Rs 427.8 crore at the
then exchange rate) which pegged Spectramind's valuation at about
$104 million (Rs 478.4 crore), around two-to-three times the company's
annualised revenue. And the signs are there that BPO valuations
could become even more realistic. "We expect net margins of
these firms on a stable state basis to settle at about 10 to 12
percent within the next three years and generic call centres will
not be able to command more than 1x forward revenues," says
Ranu Vohra of investment bank Avendus Advisors. Adds investment
banker Rashesh Shah of Edelweiss Capital, "Today, call centres
can trade at anything from 0.5 times revenues to five times revenues;
the range is becoming visible as the industry evolves." Shah
admits that "market leaders command a premium," but adds
that "there are several companies visible at the base of the
pyramid as well". It's a fairly tall pyramid: firms at the
top boast revenues in the $25-30 million (Rs 115-138 crore) a year
range; those in the middle, $15-25 million (Rs 69-115 crore), and
those at the base, under $12 million (Rs 55.2 crore). And with the
market in the throes of consolidation, valuations, across the pyramid,
can only fall further. Another bubble bursts.
Freedom Of Travel
Weekend-trippers in India are on the
|W-trippers: Going fishing?
where some celebrated India's 56th birthday? Outside the country.
And it helped that August 15th was a Friday. Shrugging off accusations
of unpatriotism, the serious traveller was already packing his bags
Thursday evening to board the flight to Thailand, Singapore, Malaysia,
or Sri Lanka. It is estimated that some 8,000 Indians went on short
overseas holidays last year, and the figure this year could be higher.
But what's got the tourism industry excited is the general surge
in weekend vacationing. For example, this independence day weekend,
hotels and resorts in places such as Mussoorie, Nainital and Shimla
were choc-a-block with tourists and some even doubled their rack
rates. "Weekend holidays are definitely coming of age. For
the independence day weekend, we had close to 250 bookings made
some 15 to 20 days in advance," says Vikas Khanduri, Regional
Manager (North), Cox & Kings.
Not surprisingly, operators such as Cox &
Kings and Thomas Cook have come up with a variety of affordable
two-to-three day national and international packages that cost anything
between Rs 1,500 and Rs 20,000. Typically, the packages include
air fare, hotel stay, sometimes, local sightseeing. Some operators
even offer easy-pay schemes to customers, allowing them to pay in
easy installments. As a result, this segment is growing at a healthy
30 per cent annually. It seems with growing affluence and exposure,
the average Indian has become more peripatetic.
Yes, It's Happening
Rana Kapoor's bank picks up steam.
|Rana Kapoor: Self for takeoff
Nineteen months after he received the
nod to set up a private bank, Managing Director of Rabo India, Rana
Kapoor, is gearing up to open the doors of Yes Bank end of this
year. Its headquarters will be located at Worli, where Yes Bank
has acquired 20,000 sq ft on five floors. An army of consultants
is busy putting the structure and systems in place. While KPMG's
technology consulting group is working on the core banking solutions,
Hewitt Associates has draw up a comprehensive hr document, covering
comparative salary structures, job descriptions, organisation systems,
retention plans and employee trust structure. And Korn Ferry International
has been roped in to get people for the top 25 jobs.
But more importantly, the bank's promoters-besides
Kapoor it includes Ashok Kapur and Rabo Bank International-have
managed to get in two private equity investors for the equity capital
requirements. Says Kapoor: "Financial closure for the bank
will happen in the first week of September." While Kotak Mahindra
group, the other to get a banking licence in January 2002, opened
its bank in February this year, promoters of Yes bank have been
facing a number of speed breakers on the way. ''There are bound
to be birth pangs, but we are working towards getting off the ground
before the end of this year," says Kapoor.