Pooja Marketing's Bagga (L): Just a minor irritant for UB's Mallya

In Hyderabad's liquor circles, he's referred to as the Big B. But to look at Harmahender Singh Bagga, 51, you'd never think so. Soft-spoken and god-fearing, Bagga owns Pooja Marketing, one of Hyderabad's oldest liquor distribution companies. (That apart, he and his family own two distilleries and a few other companies, with a combined turnover of Rs 200 crore). And he would have continued to be a Hyderabad phenomenon had he not decided to drag Shaw Wallace to court over Rs 10 crore of security deposit that it allegedly owes him, and thus becoming a potential hurdle in UB's acquisition of a majority stake in Shaw Wallace.

Should UB's Vijay Mallya worry? Not really. With Bagga, it seems more to be an emotional issue. Bagga's family started out as a distributor for UB in 1981, but in the mid-90s switched to Shaw Wallace (he keeps a garlanded photo of Manu Chhabria in his office). Following UB's acquisition of Shaw Wallace, a miffed Bagga signed a deal with the House of Khodays (Peter Scot whiskey and Hercules rum are two of their brands). His point: "I always believe in dealing with one entity. For me, there can only be one family, one wife and one partner."

Shaw Wallace, on its part, isn't losing sleep over the interim injunction that Bagga has got from a local court against sale of the company's assets or transfer of its shares. "I don't think it is a major issue," says Niranjan Thakur, Executive Director, Shaw Wallace. "Between the two giants, he is probably feeling left out." What is it that they say? Hell hath no fury like a distributor wronged?

-E. Kumar Sharma

The Enemy Within
There is business case to tighten the noose on infidel employees.

Samsung India's Prakash: Under a cloud

Increasingly, India Inc is having to deal with employee infidelity. Over a dozen employees of software company Mphasis's call-centre operation, Msource, were arrested last month on charges of defrauding Mphasis customers by a couple of million dollars (Rs 8.8 crore). Last week, Samsung Electronics India filed a First Information Report (fir) against its former top executive, Vivek Prakash. The charge: financial fraud of Rs 50-100 crore. Prakash, though, says he is not aware of this. In another, though not exactly similar case, Kotak Securities, which manages a corpus of over Rs 1,800 crore, last week showed the door to Amitabh Chakraborty, Head of its Research Division, for allegedly violating internal codes of conduct.

What's going on? Are more employees turning cheats? Or are more such cases coming to light now? "Today, companies have to show their clients, employees and suppliers-and very demonstrably too-that they have zero-tolerance for these matters," says corporate lawyer Diljeet Titus.

Firms are now increasingly going in for criminal action against erring employees because civil suits can drag on forever. "Companies feel that custodial detention for even one day is a big enough deterrent," says K.T.S. Tulsi, another cororate lawyer.

The stakes are high for companies and go much beyond the siphoned-off money and stolen proprietary information. "The onus of maintaining the sanctity of the client lies with the employer. And companies have to pass on this spirit of obligation to their employees," adds Titus. This is all the more important today, when clients, employees, suppliers and consumers could be sitting in four different continents. Any breach of trust must be dealt with an iron hand, otherwise the entire edifice of globalisation will crumble.

-Shailesh Dobhal

FDI
Mickey Loves India

Disney's Iger (L) and Eisner: India on their minds

Disneyworld in India? The Walt Disney Company denies any such plans, but the country is definitely beeping furiously on the company's radar. Both outgoing CEO Michael Eisner, and President, COO and CEO-elect Robert Iger were in India last week. They were familiarising themselves with a country where they launched two television channels, Toon Disney and Disney Channel, last December. Commenting on Disney's Indian operations, Iger said: "We are tremendously pleased with the early success of Disney Channel and Toon Disney, which are critical to driving growth in India."

The power duo met President Abdul Kalam and Prime Minister Manmohan Singh. They also met other politicians and some top local businessmen. There is speculation that Disney may bring its publishing business to this country next. Its India office, meanwhile, dismisses media reports on plans to set up a Disneyworld in the country anytime soon. "First, we just want to consolidate the two channels before getting into anything else," is the official line.

-Priyanka Sangani

Township Boom
FDI is gushing into integrated real-estate projects.

Bustling Gurgaon: A real estate showcase-possibly not for too long

Foreign property developers are betting big on India. "The integrated township format will be the key driver of future housing supplies. The Indian Government has clearly spelt out policies to provide an impetus to (foreign) private investments in the real-estate sector," says Pol Henry Cox, Country Head, Jones Lang LaSalle, a foreign property consultant. According to estimates, India will need an investment of $25 billion (Rs 1,10,000 crore) in urban housing over the next five years.

The taps are already gushing. The Canada-based Royal Indian Raj International is setting up the largest such project in the country. Its $3-billion (Rs 13,200-crore) integrated township, the Royal Garden City, in Bangalore, will have 35,000 residential units. MetroCorp, a consortium of bankers from the us and Europe, is investing $2 billion (Rs 8,800 crore) in Bangalore and Chennai in association with Singapore-based Jurong Consultants. Keppel Land has also announced plans for investments in Bangalore.

Mumbai and the National Capital Region are also attracting big bucks. The release of thousands of acres locked up in Mumbai's textile mills has opened the floodgates and investors are rushing in to cash in on this opportunity. And Delhi and its satellites have long been a happy hunting ground for real-estate developers. Mahesh Laxman, Associate Director, Chesterton Meghraj, another large multinational real-estate consultancy firm, says Bangalore provides returns of over 11 per cent, the highest in the country. Hence, its attraction as a real estate investment destination.

But problems remain. "Getting clear (unlitigated) land titles is a huge challenge when you want to build these large townships," complains Manjit Singh, India Country Head of IJM (India) Infrastructure Ltd. One way out of this problem is to "work in partnership with government agencies", he adds.

If this flood continues, the government will be that much closer to achieving its goal of providing a roof over the head of every Indian by 2050. Or so we hope.

-Rahul Sachitanand

OFF-BEAT
Phensedyl: For A New High

Believe it or not, Bangladeshis, or at least a large number of them, are addicted to Phensedyl, an expectorant manufactured by Nicholas Piramal. The drug, a cheap alternative to more expensive narcotics, is banned in Bangladesh. Indian forces accuse the Bangladeshi Rifles of actively smuggling this drug across the porous Indo-Bangladeshi border. According to an International Narcotics Control Strategy Report released in March 2004, 28,289 litres of Phensedyl was seized in Bangladesh between January and October in 2003. "Bangladesh is a poor country with low literacy, rampant corruption and a huge class divide," says Ramesh Singh, DIG, BSF, "and addiction to any drug in this situation is easy." There is big money at stake. A bottle of the cough syrup, which costs Rs 46 in India, sells for Rs 80 across the border. And its contents are often mixed with codeine and alcohol to increase volumes-and profits. Laments Swati Piramal, Director (Strategic Alliances & Communications), Nicholas Piramal: "We have no control over small traders who smuggle drugs across the border." Is that why we often hear of skirmishes on the border?

-Supriya Shrinate

Is Retail The New IT?
No, in terms of growth, but certainly in terms of valuations.

Wal-mart CEO Lee Scott must be cursing the fact that Bentonville isn't in India. Just look at the valuations Indian retailers are getting. Pantaloon Retail, the biggest private sector retailer in the country, commands a stock price 62 times its earnings per share; Trent, part of the Tata Group and Westside owner, manages a PE of 45, and even Shoppers' Stop, a lifestyle store chain, sold out its IPO within a few hours of its opening, never mind that the price band of Rs 210 to Rs 250 meant a PE multiple between 39 and 46. In contrast, Wal-Mart gets a PE of 20, and Target, another American retailer, 23. Given that net profit margins in organised retail are a modest 4 to 5 per cent, why are valuations so high? Because organised retail is a new industry in India, FIIs seem to have taken its growth potential at face value. Also, the Indian retailers haven't had to make any inventory write-offs like it happens elsewhere in the world. When that happens, retail stocks will look more and more like it's. In terms of volatility, that is.

-Narendra Nathan

"Similarities Outweigh The Differences"

Prof. Subodh Bhat fields questions on the study. Excerpts:

This is the first systematic study of Indian entrepreneurial activity in the hi-tech industry in India and the US. What would you say is the most significant finding?

One is that the entrepreneurs in both India and the US exhibited similar demographics, motivations for starting a business, support systems and success attributions. The extent of this similarity is very unusual in cross-cultural data I have seen and this emphasises the robustness of our findings.

Are risks and rewards for the Indian tech entrepreneur in India and the US very different?

The level of risk was similar in both India and the US. But one major difference is that VCs and angel investors bore much of the financial risk in the US. Because financial investors are not common in India, entrepreneurs tend to initially use more prudent strategies such as starting small.

So is the tech entrepreneur basically the same in India and the US?

The similarities far outweigh the differences. We had expected considerable differences in such a cross-cultural sample but found little.