Petroleum minister Aiyar: Oil's well if it ends well

Restructuring public sector enterprises is always a touchy issue. And in this case, where the government has Communist parties as allies and the PSUs in question are highly-profitable energy companies with powerful CEOs, the subject is trickier still. The plan, a brainchild of Petroleum and Natural Gas Minister Mani Shankar Aiyar, involves merging Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC), Oil India and parts of GAIL. The objective is laudable: The minister wants to create an Indian energy giant that can take on the Exxons of the world. For instance, the merger will produce a vertically-integrated company with Rs 1,66,076 crore in assets, Rs 1,87,245 crore in revenues, Rs 18,487 crore in profits, and a presence across the value chain of the oil business: from oil wells to petrol stations.

Linked to that is the issue of oil security. A bigger oil giant will have a stronger balance sheet to finance big-ticket acquisitions abroad, and thus, ensure greater oil security to a country that runs up an annual bill of $18.36 billion (Rs 80,784 crore), importing almost all of the 90.4 million metric tonnes (or 660 million barrels) of oil it consumes every year. Achieving such an objective under the present setup, Aiyar says, is not possible. As he complained recently at the Petrotech Conference in the capital: "There is little coordination and virtually no pooling of the collective strengths (of energy PSUs) for securing energy security."

Few have issues with Aiyar's objective, but several question the means. In other words, is such a merger necessary? Rajeev Thakur, Head of Research at credit rating agency ICRA, thinks that such a step may backfire. His argument: deregulation (and hence competition) of the oil market in India is too recent and the oil companies are not prepared to compete globally since oil prices in India are still controlled by the government. On the other hand, Thakur argues, taking competition out in the domestic market by merging all the oil companies (Planning Commission member Kirit Parikh has separately suggested the creation of a mother-of-all oil companies by merging HPCL, BPCL, IOC, ONGC and GAIL) will harm domestic consumers. A valid point. Yet others like Subir Raha of ONGC feel that agility, and not size, is what oil giants need to successfully compete abroad. With political and turf battles to negotiate, Aiyar has his work cut out. Never mind that he has the backing of Prime Minster Manmohan Singh.

-Ashish Gupta

CRYSTAL-GAZING
Budget 2005 Primer

Just how will finance minister P. Chidambaram's promised "dream budget" look? Hard to say at this stage, but here's what BT learns could go into its making. A reduction in corporate rates from 35 to 30 per cent, but an extension of the services tax net; a hike in income tax exemption limit; a lowering of peak import tariff to 15 per cent from 20 per cent; country-wide implementation of a value-added tax (vat) system starting April 1, 2005; the use of foreign exchange reserves for infrastructure projects; and significant investments in the agriculture sector. Does all that sound "dream budget" enough? We'll wait for the verdict.

-Ashish Gupta

Good Times Ahead
The seventh meeting of Board of India Today Economists (BITE) strikes a bullish note.

The Board of India Today Economists panel: (From Left to Right) Bibek Debroy, Siddhartha Roy, Habil F. Khorakiwala, B.K. Goenka, Indira Rajaraman, Bharat Patel, Subir Gokarn, India Today Editor-in-Chief Aroon Purie, Shankar Acharya, V.N. Dhoot, Anil Ambani, Jairam Ramesh, India Today Group Editorial Director Prabhu Chawla, Adi Godrej, Ajit Ranade, Uday Kotak, V. Sumantran and Prashant Ruia

Put nine businessmen, six economists, and one live-wire moderator (Rajya Sabha mp Jairam Ramesh) together and you'd expect a multiplicity of views. Strangely enough, while the seventh Board of India Today Economists meeting, the first to be held in Mumbai, saw rapid-fire exchanges between the panelists on the theme 'Made in India, For The World', everyone agreed that India had what it takes to make it big in manufacturing.

A few argued that policy was the only thing holding India Inc. back; others countered that Indian industry had become competitive despite this.

The last word, however, came from Shankar Acharya, Member, 12th Finance Commission (it actually came in the middle of the discussion). The "easing of constraints", he offered, was the only thing that could make India grow at China-like rates.

-Shilpa Nayak

CRANK CALLS
Abuse Redress

Help desk: "hello, how can I help you?" Caller: "You can't, you bloody Indian..." Such conversations are increasingly becoming routine, as the ire against outsourcing of work to India mounts. But BPO operators may no longer have to take such abusive callers lying down. "If the employees of a particular company are calling, then they can be sued," opines Diljeet Titus of law firm Titus & Co. Concerned BPOs are fighting back. Recently, a Bangalore-based BPO filed a complaint with the FBI. "Any unsolicited conversation intended to demoralise business is a tort and subject to punishment," notes Sajan Poovayya, another lawyer. More likely, though, BPOs will want to train their employees to better handle crank calls.

-Amanpreet Singh

Q&A
"Ideas Need Branding"

His firm has helped companies like BP and fedex build their brand strategies. Now, Landor Associates is looking at India Inc. On his first visit to the country, Craig Branigan, Chairman & CEO of Landor, spoke to BT's Priyanka Sangani about his India plans. Excerpts:

On opportunities in India: If we enter the market at the right time (which could be next year), we can gain a significant portion of the market. We would initially start with Indian companies who want to go global or those that are facing competition from MNCs locally and want their branding and strategy to be of the same quality as the competition's. It would initially involve a lot of branding and design, but also strategic thinking.

On competition in India: Very often it looks like design for design's sake. It doesn't come across like there's been much strategic thought behind the design. If used correctly, branding can change the way a company does business. Especially in service companies, it makes a difference if the employees understand what the brand is all about. You might have a big idea, but if it's not communicated correctly, it won't matter how good the idea is.

BOP
A Bypass For Rs 10

Hrudayalaya's Shetty: A new picture

In Karnataka, the average occupancy of hospital beds is just 35 per cent, according to one estimate. A state of remarkably healthy people? Hardly. Dr. Devi Prasad Shetty, Chairman of Narayana Hrudayalaya, says the issue-like in other parts of the country-is not availability of healthcare infrastructure, but affordability. Therefore, to deliver healthcare to po