Sterling's Siva: An eye on the main chance

Chinakannan 'Siva' Sivasankaran, now in his mid-to-late forties has, over the years, acquired a reputation as someone who has an eye on the main chance. The man makes the headlines regularly with his outrageous offers: in 1995, he wrote to Enron offering to take over DPC. He is a constant fixture on the corporate pages of financial dailies with announcements of new businesses, of which some flourish, others languish, and still others remain stillborn. Thus, he has, at various times, been involved in a television venture with Rupert Murdoch and Rathikant Basu, floated a Direct-To-Home business in association with Zee, and promoted countless companies such as Fresh and Honest Café Ltd. And, as his recent hush-hush deal with seven worthies of the Nadar community to sell his 33 per cent stake in Tamilnad Mercantile Bank (TMB) for Rs 130 crore shows, Siva knows how to come out on top of a deal, any deal.

For those who came in late, Siva is supposed to have-no one knows for sure-invested around Rs 100 crore when he first acquired a 67 per cent stake in TMB from the Brothers Ruia, who run Essar, in the mid-1990s, although one version of the story puts the holding in the bank as a sort of quid pro quo for the Delhi cellular licence that Siva's Sterling Cellular sold to Essar. The Nadar Mahajana Bank Share Investors' Forum (NMBSIF) set out to retrieve the shares from Siva.

India's central banker, Reserve Bank of India refused to acknowledge the transfer of shares to Sivasankaran, but that didn't come in the way of both parties pressing for a deal. Siva wanted Rs 220 crore; the Nadars could raise only Rs 81 crore, and Siva sold 34 per cent of the equity for this amount. Now, several years later, the deal has closed, and the man finds himself with Rs 211 crore, a mere Rs 9 crore less than the Rs 220 crore he had initially demanded.

The TMB deal comes on the back of another that Siva struck with the Tata-vsnl combine to sell out his broadband business Dishnet DSL (2002-03 revenues of Rs 180 crore) for Rs 309 crore. With these deals, Siva's only business of note in India is Aircel, a company that provides cellular telephony services in Tamil Nadu and Chennai (it bought out Vodafone and RPG Cellular for some Rs 250 crore in cash for the metro licence).

That's likely to change. Sivasankaran's next big bet is non-wireless data transmission, and he is supposed to have written to the government offering to pay Rs 500 crore for 450 Mhz of spectrum. Is he serious? The usually eloquent Siva didn't wish to comment, but then, the man likes to keep people guessing.

BAD NEWS
Plunging Bottomlines?

» Rising prices of coal, a major input for cement, power, and steel industries, are likely to pull down India Inc.'s bottomlines.

» The US government introduces another legislation to ban the use of Federal funds to buy goods manufactured and services rendered by overseas workers.

-Ashish Gupta

FIELD-DAY
India-Pakistan Cricket=Money

That's the latest mathematical equation doing the rounds. And not without reason. Here's why.

How much revenues are riding on the series?

Rs 200 crore.

Who is the title sponsor?

Samsung, and the company has paid a reported Rs 15 crore; LG and Hero Honda, the associate sponsors, Rs 8 crore each.

So, what does that make the series?

"Among bilateral series, this will be the biggest," says Ravi Krishnan, Managing Director, IMG (South Asia), which helped Samsung bag the title sponsorship.

What are the television advertising rates like?

Between Rs 400,000 to Rs 450,000 for 10 seconds. And Ten Sports is hoping to make a killing. Why, even Prasar Bharti, which has the radio rights, hopes to earn a net Rs 3 crore to Rs 3.5 crore.

-Roshni Jayakar

How Real Is The Boom?
All about power and the economy.

Power is one of those things that lends itself to economic manipulation enough to delight a roomful of mathematically inclined macro-economists. For instance, there's one equation that links the growth rate of a country's gross domestic product to that of its power generation capacity or power consumption trends or both. Those inclined to question China's numbers-and there's no shortage of such folks-have used this equation to their advantage. Then, there's the other equation that links the quantity of power lost during transmission and distribution to the size of the parallel economy (or black economy as this is referred to in India). So, how does India perform?

Between March 1998 and January 2003 (the last date for which figures are available), India's installed capacity grew from 89,166 mw to 1,07,533.7 mw. And power demand (see 2003-04 Is When It Takes Off) has increased consistently. Much of this increase has come on the back of higher domestic consumption-a sign of increased electrification and higher consumption by households. That doesn't mean industrial consumption has flagged (although its percentage share of overall consumption has decreased), says R.V. Shahi, Secretary, Ministry of Power. He claims industry has become more efficient in its usage of power. "The gap between peak and night consumption pattern is high, which is indicative of vigorous production and commercial activities," says Rakesh Aggarwal, CEO, BSES Delhi. And power industry execs expect a further surge in demand, primarily from India's booming services sector, in 2004-05. Numerical estimates corroborate that. In the two years between 2000-01 and 2002-03, power demand increased 7.6 per cent; in the two years between 2002-03 and 2004-05, it is expected to increase by over 16 per cent. India shining? Sure looks like it.

-Supriya Shrinate

State-owned To Self-owned?
National Buildings Construction Corporation shows the way.

Delhi Metro's Seelampur station: NBCC-made

January 2003: the government of India puts public sector company National Buildings Construction Corporation (NBCC) on the block. Employees of the company aren't happy. They approach their financial advisor Gautam Vashist of Escorts Securities. He suggests they look for a private equity fund that will bid for the PSU along with the employees' forum. "At that time, CDC had bought a stake in Punjab Tractors and Warburg Pincus had evinced interest in Engineers India," explains Vashist. Now, a year later, Citicorp International Finance and NBCC's employees forum have done just that. Not that the PSU hasn't found takers: Twelve other companies, including Tata Housing have expressed their interest to acquire NBCC. There's nothing fundamentally wrong with the company apart from the fact that it needs some financial restructuring. The employees are convinced that they know what is best for their company and, as evident in the bid, have backed that sentiment with cold cash (well, almost). Next step: Citicorp will have to submit its bid. That, though, would depend on the leeway it is allowed by the government. The million-dollar question: would NBCC still remain a preferred vendor for government projects, albeit for a fixed period? No one knows, but if this deal goes through India's much maligned public sector execs would have acquired a new image.

-Vidya Viswanathan

They Do It With Mirrors
Pentamedia goes for a make-over.

Pentamedia's Chandrasekharan: Sleight of hand?

It seems somehow apt that one of the companies that will be discussed in this composition is called Mayajaal, Tamil for illusion. For that's what shareholders in Pentamedia Graphics-some 66.78 per cent of the company's equity is with retail investors-have found returns, illusory. Three years ago, the stock of the company that everyone admits pioneered animation in India was trading at Rs 500-levels; today, it trades at Rs 7.40. The company has five 3-D animation motion pics to its credit and orders for several more, but tales of mismanagement abound.

Pentamedia's decline began with its acquisition of three companies in 2000-Media Dreams for Rs 50 crore, Mayajaal, for Rs 65 crore, and Kris Srikanth Sports for Rs 60 crore-by issuing 8.8 per cent of its equity at Rs 490 a share. Last August, the company acquired Intelevision, which runs children's channel Splash, through a stock swap valued at Rs 15 crore. Nothing has helped.

Now, Chairman and CEO V. Chandrasekharan is restructuring the company in an effort to revive its fortunes. Pentamedia Graphics is to become a pure-play marketing, distribution, and infrastructure company that leases out its animation facilities. All the production companies are to come under the Mayajaal umbrella. And NumTV, a web-based entertainment portal, whose digital assets are to be transferred to Mayajaal, will remain part of Pentamedia and continue to be its exports arm. Chandrasekharan says Pentamedia shareholders will be issued Mayajaal shares too under a ratio that is being worked out and claims that this two-for-one deal will "enhance value''. We'd like to see that happen.

-Nitya Varadarajan

VC FUNDING
Fast Sell

In early February, indiabulls.com, one of India's leading online stock broking firms, made a pitch to raise $10.5 million to a group of visiting Silicon Valley venture capitalists. The company had a lot going for it: a base of 27,000 active customers, very low customer acquisition costs (Rs 700 per customer), and a Rs 35-crore profit before tax on revenues of Rs 67 crore last year. Two weeks later, the visiting VCs lost out to a San Francisco-based fund Farallon Capital, which picked up 15 per cent stake in Indiabulls.com for Rs 53 crore ($11 million). "Some of the Valley VCs had followed up with us, but frankly speaking, we didn't even get back to them," says Gagan Banga, Chief Marketing Officer. That was a sell order that got executed fast.

-Sahad P.V.