CK's Ranganathan: Nothing comes between CK and its goal

The last time I saw Alagh was four years ago at a Confed-eration of Indian Industry seminar where he left before I made my speech," laughs C. K. Ranganathan, the promoter, Chairman, and Managing Director of the Rs 400-crore CavinKare group. The man's reference is to the buzz in certain circles that Britannia Industries' high-profile former CEO Sunil Alagh, armed with funding from Warburg Pincus, is considering a stake in CavinKare. Fact is, Alagh has publicly announced his desire to take a stake in the equity and leadership of second-rung FMCG (fast moving consumer goods) firms that have a chance of making the big league. CavinKare fits that criterion, although some people would consider that it has already made the big league. In shampoos, the company now boasts a marketshare (in terms of volume) of around 25 per cent and the group's revenues have increased from a little over Rs 100 crore in 1998-99 to just under Rs 400 crore. "We are looking at a turnover of Rs 5,200 crore by 2012," says Ranganathan.

That would be something for a company that started off in the early 1990s with a capital of Rs 15,000. Then, Ranganathan has always thought big. In the last 12 months, he has acquired the Ruchi brands of pickles and spice powders, hired country managers for West Asia, Singapore, Sri Lanka and Bangladesh, and moved into a new 32,000 sq. ft. corporate office in Chennai. He is in the process of moving his R&D team to a 30,000 sq. ft. facility, and is working to close the details on a manufacturing facility for the group's personal care business in Uttaranchal. All this, and his group still carries no long-term debt.

Although he dismisses the sale of equity to Alagh, Ranganathan isn't averse to an initial public offering or a private placement of equity or debt, should the need arise. "Money is a tool and I won't allow it to stymie CavinKare's growth," he says. That could mean only bad news for FMCG majors that have been at the receiving end of CavinKare's aggressive value-for-money strategy.

-Nitya Varadarajan

PUBLIC EYE
What's He Up To Now?

Some people, it would seem, find it hard to stay out of the news. Take Sunil Alagh, the former CEO of Britannia Industries, for instance. He's now President of the well-respected All India Management Association, a post held in the past, by other worthies such as the Tata Group's R.Gopalakrishnan and Crompton Greaves' K.K. Nohria, and a (very) visible marketing advisor to Biocon. Then, there's the buzz about his return to the mainstream by acquiring a stake in a second-rung fast moving consumer goods company. That's where CavinKare (see above) fits in, although the man himself is unwilling to say anything about his plans. Now based in Mumbai, Alagh is clearly plotting a comeback.

Q&A
"We're Happy With Mudra"

He's known to send personal birthday greetings to every employee and treat new staff to a welcome lunch. On his third visit to India in the last five years, James Best, Chief Strategic Officer and UK Chairman of ddb (part of the $8.6-billion, Rs 38,700-crore, Omnicom Group), spoke to BT's Abir Pal on the firm's new businesses in India, its unique relationship with Indian agency Mudra, and more:

You're here to formally launch your direct marketing business Rap Collins India and your interactive business, Tribal DDB Worldwide, both, in association with local partner Mudra. Why now?

Rap Collins and Tribal are expanding as brands under ddb's umbrella and the Indian market is developing rapidly.

You visit India fairly often. How has Indian advertising changed?

There's been consolidation and internationalisation in terms of ownership and client base. What I think is more interesting is that there has been a greater Indianisation of advertising. When I first came, I was disappointed with the standard of creative work. It seemed to be copying techniques from traditional advertising markets rather than finding its own voice. What I see now is a greater confidence in Indian creativity, in communicating with Indian audiences in the forms that work. Maybe that's been reflected in why Indian adverting has started to win awards globally.

Can creative outsourcing emulate the outsourcing success IT has had?

It's difficult because any piece of communication is about understanding an audience and understanding its response to a particular stimulus. That stimulus is culturally subtle.

What are DDB's plans for India: any new alliances in the offing? Or are you planning to increase your 10 per cent stake in Mudra?

We're very happy with the partnership we have with Mudra and we're satisfied with the strength of it. That said, we're embarking on these two ventures and we'll be looking at having other such partnerships.

The Top Phones In India

That information comes from a one-month retail audit of the Indian GSM (all major operators barring Tata Indicom, Reliance) market by ORG-GFK. For the record, 4,14,657 handsets were sold via the legal route in India in the month of July 2004 (the month of the study). The audit estimates the value of the handsets sold to be Rs 218.5 crore. However, some simple back of the envelope calculations come up with rather interesting numbers. According to the Cellular Operators Association of India (COAI), 13,88,086 subscribers were added to the rolls that month. Ergo, 9,73,429 subscribers (70 per cent of total additions) entered the market through either second-hand handsets or acquired their handsets by other (illicit) means. This, at a time when all major handset makers are informing us that the smuggled 'grey market' is on its deathbed. Or, maybe telcos are inflating their statistics, as some recent news articles allege.

SELF WORTH: G.K. NARAYANAN, ICICI Securities
Last Bear Standing?
Surely, anyone who puts the Sensex at 5000 by January 2005 has to be that?

The subject of this piece, C.K. Narayan, will not like the headline of this piece. That's because the 45-year Head of Derivatives at Mumbai brokerage ICICI Securities sees himself as a technical analyst, not anything else. "I am not a bear," he shakes his head. "Being a technical analyst, I flow with the market." Still, the man who was a practicing dentist till 1985-he quit and started playing the markets that year-will admit that he has given people enough reason to term him a bear. Sometime back, when this magazine asked analysts and brokers for their estimate of the Sensex's position in January 2005, everyone except Narayan struck a bullish note (for the record, the three other estimates were 6000, 6000, and 5450-6050).

To be fair to the man, technical analysis is the science (some practitioners call it an art) of identifying points of inflection at a relatively early stage. Narayan's charts showed just that as early as end-October, a signal that the markets would reverse. It was increased liquidity and the absence of bad news that was driving the market then, points out Narayan, a phenomenon he refers to as "sentiment-led rally". And so, the technical analyst has fixed his price- and time-targets for the reversal (5900-6120) and is waiting to see if he is right. If he is, then the fight between the Ambani brothers could well be the first flashpoint that causes the market to head south. But head south it will, Narayan is confident, and not stop at the 5400-level most market players consider "first-support". "It will pay token respect to this and go on down to the next big support level of 5000." The market, he adds, never does what the majority expects it to; it never has in the 25-years he has played it. "Of course I could be proved wrong."

That has happened in the past (actually, the distant past). In 1984, when he was still a dentist, he asked his broker to go short on Reliance Industries after then Prime Minister Indira Gandhi's assassination. The scrip would fall, he reasoned, because the company was "Gandhi-positive". That did not happen. The following year he quit his practice and started playing the market full-time (he joined ICICI Securities in 2001). Around the same time, as a sort of response to his investigation into why stocks of companies with strong balance sheets remained stagnant while those of companies with far weaker ones were moving up, he converted from being an ardent fundamental analyst to a technical analyst.

For the record, Narayan's recent record shows that he gets it right quite often. In September 2001, he predicted a dip and then, a huge upside. He was proved right. And in his September 29, 2003, Trend Trader (a weekly newsletter he puts out), he wrote thus. A confluence of cycles point us to the following scenario: a rise into 9 October followed by a fall till the end of November. This fall should bring us below 4097 recorded during this fall... followed by another rise into the first week of January 2004 that will carry to yet new highs past what is recorded in October. From there the market should retreat for a much longer duration-for 4 to 6 months forming a much higher bottom... He was right, again.

If his predictions sound dire, smiles, Narayan, it is only apt: Technical signals are like dark clouds in the sky, a warning of inclement weather ahead, he says, quoting technical analyst guru Martin Pring. He has some good news to share too: a big bull run in 2005 that could take the Sensex to a peak of 9000 by 2006. Whoa!

-Roshni Jayakar