|"How can the government
intervene (in the Ambani war)? It is a family issue"
After having been a mere bystander
in the ongoing Reliance wrangle, the government finally directed
the Registrar of Companies (roc) last month to probe into the
charges levelled against Reliance Industries by its Vice Chairman
& MD and Rajya Sabha mp, Anil Ambani. Days before the roc
was supposed to submit its so-called report, BT's spoke to Company Affairs Minister, P.C.
Gupta, on the controversy. Excerpts:
Komal Anand, Company Affairs secretary, recently told the
media that the Registrar of Companies would issue a notice to
the Reliance Group by the month-end. So is RoC sending a notice
No, we are not issuing any notice to Reliance.
Notices are not issued just like that. Anil Ambani has met me
three times. He told me that certain financial information and
disclosures were missing in Reliance. We checked with the roc
of Ahmedabad and Mumbai. We found no basis to his allegations.
We have told him that he can pay the fee and inspect the files
When did you last receive a complaint
from Anil Ambani?
He approached us two weeks back with a fresh
What is the latest issue he has raised?
I have not seen his latest complaint myself.
It was addressed to the Secretary.
What's your view on the tussle between
the two brothers?
The Reliance Group contributes 3.5 to 4 per
cent of the GDP through its turnover. So many investors are involved.
This sort of fight does not help anybody. It is detrimental to
the interests of the shareholders and the country at large. Reliance
has the largest number of small investors. Some people have put
their entire savings into Reliance. The brothers should resolve
the issue amongst themselves. It is in the interest of the two
brothers, the country and the shareholders of Reliance to resolve
If the fight between the brothers is so
detrimental, will you or any other representative of the government
intervene or play peacemaker?
How can the government intervene? It is a
family issue. I meet Anil Ambani because he is my colleague in
Parliament and a friend.
Have you met Mukesh Ambani also over the
Yes. He has also come to me over the same
The Taj Checks In At The Pierre
|The Pierre: Enjoy Indian
hospitality in the US
On June 9, the top brass from the
Indian Hotels will meet up with the cooperative board that owns
the properties that house the luxurious Pierre hotel in mid-town
Manhattan, New York, to ink the final elements of a $45-million
(Rs 198-crore), 30-year lease that will return the Tatas to New
York (they exited the city's Lexington Hotel a few years ago).
If all goes well, from July 1, 2005, the Indian tri-colour will
fly atop the entrance, replacing the Canadian flag put up by their
predecessor, Four Seasons. "It is a landmark transaction
for us," preens R.K. Krishnakumar, Chairman, Indian Hotels,
who spearheaded the bid.
The BT 50 Index
News of disinvestment perks up market sentiments.
As expected, the central government's
pro-reform noises (the BHEL divestment is just one among that)
after the Budget session pushed the market to higher levels. The
bt 50 has moved up by 5.71 points (2.30 per cent). The onset of
the monsoon (though delayed) in the Andaman & Nicobar Islands
also helped the rural-focussed FMCG sector (BT FMCG moved up by
3.74 per cent). But high oil prices, which climbed back to $52
or Rs 2,288 per barrel, are still threatening the present rally.
Our flagship free float methodology-based index-BT 50-has completed
two years now. The free float methodology has several advantages:
first, it considers only the value of stocks freely available
in the market (after excluding the part held by promoters and
other strategic investors) and the weightage assigned to individual
shares is more representative than the market capitalisation-based
methodology; second, it takes care of the perpetual selection
dilemma regarding closely-held companies. For instance, the inclusion
of these companies may distort the index based on total market
capitalisation methodology, but dropping them altogether may reduce
its representative character. The free float methodology facilitates
inclusion of large closely-held companies but assigns them a lesser
weightage. After the success of our broad market free float index
(that the Sensex subsequently decided to adopt this is testimony
to the efficacy of the free float method), we decided to launch
sector indices using the same method. While the general index
captures the overall movements (covering several sectors), sector
indices capture the movements in individual sectors. All these
indices have a common base period (January 1, 2002). The weightages
are reassigned every quarter after companies declare their ownership
details. The base value of all BT indices is 100.
Electrolux's Coming Chill
Is Swedish appliance major Electrolux exiting
|EKL's Karwal: Fate of both
the firm and Karwal hangs in limbo
It's the most curious case of corporate
restructuring in recent times. The market is abuzz with rumours
that Swedish white goods major AB Electrolux (ABE) is selling
its loss-making Indian subsidiary, Electrolux Kelvinator India
(EKL), and exiting India. But everyone involved seems to be in
a denial mode. Says Anders Edholm, Vice President, Communications,
at the Stockholm-based ABE: "Electrolux is not exiting India."
He adds in the same breath: "But we need to continue reviewing
the business in terms of restructuring efforts, strategic options,
etc." Whatever that means.
The grapevine says Videocon Appliances is just days away from
signing a deal to take over EKL's three factories in India. (This,
at the time this magazine goes to print). The pact, negotiated
by Ambit Finance, reportedly includes a licensing deal whereby
Videocon will sell Electrolux-branded appliances in India. But
Videocon Group Chairman Venugopal Dhoot denies this. "So
far, they (ABE) have not approached us," he says. Other names,
like the Dubai-based Jumbo Electronics and Godrej Appliances were
also floating around.
Meanwhile, EKL seems to be on the path to recovery. Losses have
declined from Rs 226.31 crore in 2003 to Rs 117.75 crore in 2004
to a mere Rs 14.56 crore in January-March 2005. The company seems
well on its way to break even by next year. Sales are also up.
So, what really prompted this radical decision to sell out when
things are looking brighter?
Last year, ABE itself went through a restructuring whereby it
decided to hive off its small, but highly-profitable, outdoor
business into a separate company. Following this, pressure started
mounting on its bigger indoor appliances business-which has net
margins of 2 per cent compared to double-digit margins in the
outdoor business-to quickly show results. In the new order of
things at ABE, the still loss-making EKL suddenly became an orphan,
says a market source.
ABE even reportedly explored a management buy-out option for
EKL earlier this year (ABE refused to comment on it). Nothing
came of it. Rajeev Karwal, Managing Director of EKL, was reportedly
offered a position within ABE elsewhere, but he turned it down.
As BT goes to press, the fate of EKL, as well as Karwal, remains
unknown. Given the buoyant state of the consumer markets in India,
the exit of a big global player like Electrolux, if it does come
about, will indeed be a pity.
The Fight For Swaraj Mazda
The battle for Swaraj Mazda seems
to be drawing to a close, with parent Punjab Tractors Ltd (PTL)
deciding to offload 15 per cent of its stake to minority shareholder
Sumitomo Corporation. According to sources, Sumitomo is said to
have matched private equity investor Actis' recent open offer
of Rs 400 per share. Actis had acquired a stake in PTL in July
2003 and, subsequently, got an 8 per cent stake in LCV manufacturer,
Swaraj Mazda. It had been opposing Sumitomo's move to increase
its stake. At Rs 400 a share, Sumitomo's additional 15 per cent
stake will cost Rs 62.92 crore. It will be interesting to see
what Actis does with its shares in Swaraj Mazda.
"There Is No Division At Sahara"
Sushanto Roy, the elder
son of Subrata Roy, 57, breaks his silence and speaks to BT's
on reports of his
father's ill health and succession planning at the Sahara business
Is there any substance to the rumours regarding your father's
He has had high blood pressure earlier too. One (major) scare
was 10-12 years ago, and the recent one six months ago. This time,
he is trying to find a permanent solution. He is just relaxing.
He is waiting for a few more weeks-say, three weeks-to resume
his normal life. But it will not be as erratic as it used to be.
It will be much more regimented. He has worked like crazy for
the past 20 years. He's fatigued because of his erratic schedules
in the past. I think he has now understood that he needs to take
What's his daily schedule like now?
Dad gets up at 7.30-8.00 a.m., practises yoga for around an hour,
and then takes a 30-45-minute stroll within our Sahara Shahar
(the family home). But in the middle of all this, he spends three-to-four
hours giving strategic direction to our businesses, and meeting
with the top eight or 10 group executives. I suppose he's also
getting his Hindi book (Shanti Sukh Santooshti) translated.
Is the succession plan in place?
There is no formal division between me (30) and my younger brother
Seemanto (28). The focus of the group-and dad's-is on the township
projects (to build 8.5 lakh houses in 217 cities in 10 years with
a sale value of Rs 1,75,000 crore). And for the last 18 months,
I have been involved in this. Media and entertainment business
is with professionals; para-banking is under director O.P. Srivastava
and dad, while Seemanto has shown interest in aviation recently,
besides managing Amby Valley for the last 18 months. All I can
say at this time is that talk of a succession plan is just speculation
because of his health.
Saving Face, With Botox
|Allergan's Pyott: No creases
You-and yesterday's eye candy-know
it as Botox, but to most folks at the $2.05-billion or Rs 9,020-crore
American speciality pharmaceuticals major, Allergan, Botulinum
toxin type A would sound as familiar. But, contrary to Page 3-driven
perception, Botox isn't only about ironing out facial creases
and other telltale signs of impermanence. Way back in the 1960s,
this toxin was investigated not for its cosmetic properties but
for its ability to realign cross eyes! However, it was only in
the early 2000s that Allergan was able to take the cosmetic benefits
of Botox to market, and today the cosmetic variety accounts for
roughly 40 per cent of Botox's $705-million(Rs 3,102-crore) sales.
Allergan now plans to formally market Botox in India. "The
market for Botox is very underdeveloped here, and we see great
potential for the cosmetic variety. After all, the desire to look
good is universal, be it in Hollywood or in Bollywood," points
out David E.I. Pyott, Chairman, President and CEO of Allergan.
That's good news for those looking to tuck in those lines and