Careful readers of newspapers and magazines-the kind who stop and peruse even the ads closely-would surely have noticed an increase in what is popularly termed 'corporate advertising' over the past two months. And even others couldn't have missed the four full page advertisements Oil and Natural Gas Commission took out in the issue of The Times of India dated January 27 (including one on Page 1, with the masthead intact). To anyone who had been following developments at the state-owned oil exploration behemoth (2003 revenues of Rs 35,387 crore; average market capitalisation of Rs 1,04,970 crore), the motivation behind the campaign was clear: the government is divesting a 10 per cent stake in ONGC through the initial public offering (IPO) route. Most other corporate ad campaigns are similarly motivated

ONGC isn't the only company hoping to leverage the India Shining thing into a vault full of Mahatmas (all Indian currency carries an image of the father of the nation, Mahatma Gandhi), and the company plans to raise Rs 11,000 crore through an IPO. Its public-sector brethren GAIL (India) Limited, National Thermal Power Corporation (NTPC) and Petronet LNG, and a clutch of private sector companies including Biocon, Hutch, Data Access, and Patni plan to do the same. India's stockmarket watchdog, Securities and Exchanges Board of India (SEBI) prohibits all corporate campaigns once it has cleared a company's IPO- only issue- and product-advertising is allowed in the run-up to the IPO-and most companies are rushing to grab their chance of eyeballs and, hopefully, wallets, before the deadline. Companies can't afford to advertise too early (investor-memory is short), and rules prevent them from advertising too close to the date of the issue. The result is a blitz: GAIL, which plans to raise Rs 2,000 crore from its IPO, had a four-ad campaign that played out over 10 days, between January 21 and 31.

Advertising agencies and media vehicles (including this magazine) are the big beneficiaries. By some estimates, IPO-related advertising, excluding the issue-ads, could add between Rs 500 crore and Rs 700 crore to the billings of advertising agencies this year. Grey India, for instance, is handling the corporate campaigns for ONGC and Biocon and Lowe managed GAIL's. ONGC execs insist its advertising budget is between Rs 10 crore and Rs 15 crore , but advertising pros put the actual number between Rs 30 crore and Rs 40 crore.

Mass communication is just one of the weapons in a company's armoury. Companies tend to become a whole lot more forthcoming with news, especially good news, in the run up to an IPO. For instance, Biocon, a company that normally doesn't talk numbers, spoke freely about its results for the three months ending December 31, 2003, to several financial dailies, which dutifully covered the same. It also made a strategic announcement about imminent US FDA approvals for two of its statins. And CEO Kiran Mazumdar Shaw made a well-timed appearance on a television show hosted by a reasonably well-known editor.

ONGC's spin doctors, too have been busy, what with news items about a production sharing agreement with the Syrian government, a fall-2004 retail foray, and exploration and production plans in West Africa, making the headlines in January and February.

The other accompaniments of an IPO-boom are here too: CEOs hosting no-apparent-reason lunches for editors, and publicists calling journalists with inducements of exclusive meetings. For instance, as this writer was putting this piece together, he received a mail from a flak-catcher attaching a release about a telco's IPO that was yet to be released to the media and the promise of an exclusive meeting with its CEO when he would, to recapture the spirit of the message, bare his soul. It's business as usual.

THRENODY
PNB Blues

PNB Chairman Kohli: The success sand trap

Delhi-based Punjab National Bank (PNB) may well be paying the price for being too big (deposits of Rs 75,813 crore in 2003, the second highest, after State Bank of India), too successful (it moved up six places to 15 on the 2003 edition of the BT-KPMG ranking of banks), and too close to the seat of power. Thus, every time the Ministry of Finance wants to bail out an ailing bank or financial institution, it is PNB it turns to: SBI may be government-controlled, but it is run pretty much like an autonomous organisation. Ergo, PNB it is that ends up with the lemons: in 1993 this was New Bank of India; in 2003, it was Nedungadi Bank; and now it is IFCI.

The bank may have made the most of the first two-the Nedungadi deal, after all, increased its reach in the southern part of the country-but its Chairman S.S. Kohli may find it difficult to do a repeat with IFCI. A mere third of the financial institution's assets is what bankers call standard; the rest, all Rs 14,000 crore of them, are either non performing assets or sub-standard ones (read: bad debt or debt well on its way to being bad). And even if these be transferred to an asset reconstruction company, as some say they will be, the weakness of IFCI's portfolio is unlikely to vanish. PNB is likely to suffer them IFCI blues for some time.

-Roshni Jayakar

You've Got Spam
Why most people are beginning to dread e-mail.

Man: Well, what've you got?

Waitress: Well, there's egg and bacon; egg sausage and bacon; egg and spam; egg, bacon and spam; egg, bacon, sausage and spam; spam bacon, sausage and spam; spam, egg spam, spam, bacon and spam; spam, sausage, spam, spam, bacon, spam, tomato and spam;

Vikings (starting to chant): Spam spam spam spam...

Waitress: ...spam, spam, spam, egg and spam; spam, spam, spam, spam, spam, spam, baked beans, spam, spam, spam...

Vikings (singing): Spam! Lovely spam! From Monty Python: ''Flying Circus'', Spam

In my e-mail inbox, as I write this piece, is mail from someone called Charissa who is forwarding a reply to a forwarded message about god knows what and Roy, who wants to know whether I'd like to have a bigger you-know-what.

The technical term for such mail is unsolicited bulk commercial email (UBCE), but everyone popularly refers to it as spam, according to one school of thought, inspired by a Monty Python skit reproduced on the top of this page, and, according to another, a simple acronym of simultaneously posted advertising message. Whatever the origin, spam, originally WW II-era ready-to-eat processed pork is flooding inboxes around the world, and Brightmail, a provider of anti-spam software estimates that two out of three mails sent in January can be classified as such. And a June 2003 report by Radicati Group calculates the cost of spam (installing software, scanning mail, even spending time deleting it) in 2007, at $20.5 billion (Rs 94,300 crore) if it continues to grow unchecked.

According to CAUCE (The Coalition Against Unsolicited Commercial Email) an organisation dedicated to fighting spam, the initiative has to come from governments and Internet Service Providers (ISPs). Last month, VSNL won a ruling in the Delhi High Court allowing it to take action against McCoy Infosystems, which was using VSNL servers to send UCBE. At the World Economic Forum this year, Bill Gates recognised spam as the greatest threat to the internet and said he would 'can' it by 2006. If he can do that he might actually become the most admired man in the world.

-Kushan Mitra

Ramble On Rose

Q&A
"Outsourcing Is Natural"

Groups in the US and the UK are up in arms against companies offshoring business processes to India. UK's Financial Services Authority, for instance, recently issued new rules and regulations on outsourcing. What does the MD of a UK-based BPO market leader think? Steve Haggerty, Managing Director, Homeloan Management Limited (HML), a UK-based BPO company that services 30 lenders and some £20 billion (Rs 1,67,449 crore) of mortgaged assets speaks to Ganapathi Subramaniam.

When the whole world is outsourcing to India, your company-an outsourcing service provider based in the UK-has achieved 400 per cent growth in volume and profit over the last three years. How did this happen?

Basically, our overnight success has come about as a result of 15 years ground work and preparation, during which time we have learnt to understand the market, how to react to it and in some way to drive it. Being successful in third party mortgage servicing requires a great deal of patience and ultimately succeeds or fails by the quality of relationships built with industry players.

What do you think about the recent outcry in the UK and the US regarding outsourcing to other countries, particularly India?

The response to recent outsourcing deals in both the UK and the US is not unexpected given the sensitivity that always exists around protection of jobs. However, my view is that outsourcing to countries such as India represents a natural development in the global economic cycle and financial services companies outsourcing call centres to India is no different to Nike outsourcing training shoe manufacture to Korea.

I don't envisage a time when the UK government would intervene to attempt to legislate against outsourcing, as I believe that this would be viewed at best as being shortsighted and reactionary and at worse, a restraint of trade.

Your company serves a particular market segment-namely the mortgage industry. But, a number of BPO service providers offer a range of products such as insurance, banking, travel, etc. What do you think a BPO vendor should do-specialise or make a complete offering?

My view is that a BPO vendor should always have a specialisation and then look to add (services) as opportunities present themselves in such a way that complements the existing business.

The Financial Services Authority, the UK industry regulator, has recently come up with a number of rules and regulations on outsourcing. Are such changes required?

The outsourcing guidelines produced by the Financial Services Authority are, I believe, a good thing in as much as they represent regulatory acknowledgement of the importance of outsourcing in the financial services market and look to give potential outsourcers some comfort that by adopting the best practice guidelines, servicers will operate within a recognised framework.

Is India in your radar, at all. After all, you are setting up shop in Ireland?

Whilst India is not on our immediate horizon, at HML we never say never.

GOOD NEWS
Booming Services

» Revenues from service tax in the first nine months of 2003-04 are up 68 per cent to Rs 5,090 crore.

» Public sector company, Bharat Heavy Electricals Limited receives orders of Rs 23,500 crore in the first nine months of 2003-04, its highest ever.

» The government allows resident Indians to remit up to $25,000 a year in either the current or the capital account, or even shared between the two.

» The rumoured ban on participatory notes, thus putting a question mark on FII investment, sent the Sensex tumbling before it recovered.

» Inflation rose for the ninth consecutive week to touch an eight-month high of 6.21 per cent, and is expected to rise some more.

» Trade in wholesale debt on the NSE fell to Rs 3227 crore last month from Rs 5714 crore in Jan, 2003.