R.S. Lodha: Ahead on points, but it's just Round I

The screaming page 1 headlines have given way to small inside page reports. The chattering classes have shifted their attention to another soap opera in another corporate dynasty. And reporters no longer hound the dramatis personae like they used to. But the players in the drama are pursuing their script with the same intensity as before. It's now five months since the Birla family declared war on one-time confidante R.S. Lodha over Priyamvada Birla's will, but the battle shows little sign of moving forward.

"We've managed to keep one step ahead of the opposition," says a source in the Lodha camp. "Our job is to defend Lodha against all attacks; and we've done that very well," says Debanjan Mandal, a partner in Fox & Mandal, the solicitor firm representing Lodha. He takes satisfaction from the fact that his client remains very much in control of the M.P. Birla Group five months after hostilities broke out. "The Birlas moved the Company Law Board, the High Court as well as the criminal courts, but couldn't get relief from anywhere," he continues. "Moreover, they undermined their own mutual-wills' case by pursuing a criminal complaint."

How's that? Well it's like this: The Birlas had contended that M.P. Birla and Priyamvada Birla had made mutual wills in 1982 bequeathing their properties to each other. According to the criminal complaint, however, M.P. and Priyamvada Birla had formed three trusts in 1988-89-Hindustan Medical Institution, Eastern India Educational Institution and the M.P. Birla Foundation-and nominated them as transferees for a bulk of their estate.

The Birlas allege that in 1999, Lodha fraudulently dissolved these trusts for personal gains. "These two arguments are mutually exclusive," says Mandal. "You see, if the M.P. Birla Group assets were transferred to a trust in 1988-89, it would imply that the couple didn't have too many personal assets left for bequests," he explains. According to estimates, M.P. and Priyamvada Birla's residual personal assets comprising some jewellery, silverware, an orchard in Kumaon and a 1960s model Ambassador car add up to less than Rs 10 crore. "In such a scenario, what value would the so-called mutual wills have?" he wonders.

"The trust deeds had clauses which specifically allowed for their dissolution by Priyamvada Birla and the lady merely exercised this right," informs Mandal. What happened to the assets after dissolution of the trusts? They reverted back to Priyamvada Birla. This, feels Mandal, is enough to quash the case against Lodha "as he doesn't gain anything from the dissolution".

But Birla sources say the dissolution paved the way for Lodha to finally gain control of the M.P. Birla Group and so, they reason, the saga of the trusts and the subsequent story of Priyamvada Birla's disputed will should be seen as different acts of the same drama.

The courts will have to take a call on that one. For the moment though, the legal skirmishes are more in the nature of initial probes. The courts have turned down a Birla plea for a search warrant against Lodha. A ruling on Lodha's application for discharge of the caveats filed by K.K. Birla, B.K. Birla, G.P. Birla and Yash Birla is expected soon. The real battle-the probate application-will get underway only thereafter. Till then, and for sometime thereafter as well, Lodha can expect the status quo to continue. He can, therefore, be forgiven for thinking that he's won Round 1 quite decisively. Now for Round 2.

-Arnab Mitra

Own Idea
Nokia tries to grab the local-lingo SMS space for itself.

Happy?: Yes, and in the vernacular

It isn't exactly a new idea-how radical is SMS, or short messaging service, in the vern?-but to Nokia's Indian arm must go the credit for trying to claim it as its own. The mechanism (of this capture) is an ad that most readers of this magazine must have seen (it was aired repeatedly during the telecast of the India-South Africa cricket matches). It isn't the ad itself, a play on a popular song from a popular movie (Palko Ki Chhaon Mein, circa 1977, starring Rajesh Khanna and Hema Malini ), or the benefit-the ability to message in local languages on Nokia phones-that clinch it for the company: What does is the artifice of expanding SMS as Saral Mobile Sandesh (easy mobile messages).

So, why did Nokia choose to do this now? "Well, today 24 of the 17 phones available in our QSM range have Hindi capability with 21 actually having Hindi text-input capability," explains Sanjay Behl, Head (Marketing), Nokia India. Hindi, everyone knows, is the language of choice for some 450 million Indians. "Only 50 million people in India use mobile phones today," says Behl. "Imagine how many more would if (services such as SMS) were available in languages they speak everyday." Behl claims that China, which currently boasts 250 million cellular connections, saw its inflection point only when SMS services started supporting Mandarin. "This trend is already visible today with 80 per cent of the people using voice-activated services in Delhi preferring Hindi," he adds.

If the gambit works, Nokia could well convince customers that local-language SMS-the company proposes to launch phones with SMS capability in languages such as Bengali, Tamil, Telugu, and Gujarati next-is an add-on that is only available on its phones (something that isn't true). A song (borrowed at that), a clever ad and a creative expansion of a common word (SMS has actually entered the lexicon of most people) could well decide the fate of a 5 to 6-million-(legal) handsets a year market.

-Kushan Mitra

We Make Cars Too
M&M revives its car-making plans. Anyone remember Mahindra Ford?

M&M's Anand Mahindra: Scorpio king's sedan dreams

It may be the success of Scorpio, the cool-wheels for the smart set that doesn't wish to burn money on a real sports utility vehicle, or it could be something else, but Mahindra & Mahindra (M&M) wants to be in the car business again. Purists may argue that the company still remains in the business, courtesy a 10-per cent stake in Ford India, but as those in the know will corroborate, that is a strategic investment, in equal parts a function of legacy and the relationship between the two companies. For those who came in late, in the early nineties the Blue Oval entered the Indian market through a 50:50 joint venture with M&M; the latter's Nashik facility was to roll out the Ford Escort for three years under a contract manufacturing agreement while Ford got its own factory in Maraimalainagar (near Chennai) up and running; and when this happened, M&M decided it did not want to invest any more in the venture, which was renamed Ford India. The entire episode passed civilly, like interactions between two mature companies are expected to and the buzz goes that when M&M wanted a third opinion on Scorpio, Ford obliged with a team of engineers that put the vehicle through the grind.

Now, M&M seems to have revived those plans of selling a car. Reports suggest that it will debut in the 1-million-units-a-year passenger car market in mid-2005 with Logan, a four-door low-cost (internationally, it is priced around $6500, Rs 3 lakh) sedan made by Renault specially for the Asian and African markets. The company is unwilling to put a price tag on the product-why, its spokesperson won't even confirm the deal insisting that it is too "premature to mention a specific name"-but auto pundits expect Logan to be priced between Rs 4,50,000 and Rs 6,00,000, a band that will enable it stir things up in a market crowded with bestsellers such as Maruti's Esteem, Tata Motors' Indigo, Hyundai's Accent, and Ford's Ikon. M&M's Nashik facility-the wellspring of Scorpio-is reportedly in a state of readiness and over 60 per cent of the facilities will be shared across the vehicles.

While one insider insists that the alliance between the two companies will be a "true" partnership, a senior executive at a rival automotive company insists that "knowing Renault, whatever be the equity arrangement, it will be firmly in the driving seat and will take calls on everything from marketing and pricing." It is, after all, its name and brand that is at stake, he points out. M&M, however, coming off the high of Scorpio (the first vehicle the company has developed from scratch in its 55 years of existence) is no pushover. "It has a proven track record as far as availability of spares go," says Amit Kasat, an auto analyst at Mumbai-brokerage Edelweiss Capital. "Its service stations, wide dealership network, and aggressive marketing style are factors that could eventually separate success from failure." There's still the question of whether Renault will want M&M to sell its stake in Ford India before inking a formal agreement but it does look like Scorpio could soon be sharing its stable with a car.

-Abir Pal

Call Options
The Hutch-Aircel deal is yet to close; it may never.

Hutch's Asim Ghosh (L) and Aircel's C. Sivasankaran: The numbers game

It was meant to be a pioneering intra-circle deal (read: one telco acquiring another that has a licence to operate in the same area as itself) when it was announced on June 25, this year, but Hutch's successful Rs 1,600-crore play for the C. Sivasankaran-controlled Aircel is yet to go through. The deal would have helped Hutch, one of the country's largest mobile telephony companies (number of subscribers: 6.45 million on October 31), expand its presence in Chennai and Tamil Nadu. At the time of the announcement, Hutch had 2.03 lakh subscribers in Chennai; Aircel, 3.63 lakh in Chennai and an additional 8.08 lakh in other parts of Tamil Nadu. The public reason being proffered for the delay in consummating the deal is that regulations are still unclear on the modalities of an intra-circle deal. The real reason, however, could well be money.

In June, when the deal was announced, Hutch agreed to pay Rs 1,600 crore for Aircel. The latter's promoter Sivasankaran had been angling for Rs 2,000 crore, but had to settled for less. Since then, however, Aircel's subscriber numbers have seen a significant increase. As on October 31, 2004, the company boasted 4.79 lakh subscribers in Chennai and an additional 1.03 million in Tamil Nadu; in the same period, Hutch managed to increase its subscription base in Chennai by a mere 25,000. Neither Hutch nor Aircel would speak to Business Today, but industry analysts believe that Sivasankaran, armed with the new numbers, may have asked Hutch for the Rs 400 crore more he has always wanted. Significantly, Hutch recently unveiled a special offer for its Chennai customers that involves free incoming calls while they travel in other parts of the state (through an alliance with BPL Cellular, Aircel's rival). Interestingly enough, both parties stand to lose: it will take Siva, as he is called, at least another year to smell the money of another buyer (it takes that long for a due-diligence process) and Hutch loses out on an enhanced Southern footprint.

-Nitya Varadarajan

BOUQUET
Ethiopian Connection

R. Karuturi: A bed of roses, really

Here are two facts straight out of Ripley's. The world's second-largest rose producer will soon be a company based in Addis Ababa, Ethiopia, which will grow 100 million roses a year on 50 hectares. And the venture is being promoted by an Indian company, Bangalore-based Karuturi Floritech (Ernst & Young's Africa Fund is taking a 30 per cent equity stake in the $18-million, Rs 81-crore project). CEO Ramakrishna Karuturi claims there are sound reasons behind the choice of Ethiopia. "Addis Ababa has ideal weather; under the Lome convention (between countries in Africa, the Caribbean, and the Pacific Rim on one side, and the EU on the other), we get duty-free access to the EU; and we have a 10-year tax holiday." Looking without may well be the preferred strategy for Indian floriculturists such as Karuturi. High freight costs and the absence of adequate air connectivity make things difficult for the $50-million (Rs 225-crore) export-oriented rose industry in India. In this case, the search for an alternative location has clearly ended with Ethiopia.

-Venkatesha Babu