Data Access' founder Siddhartha Ray: My lips are sealed

Data access commenced its ILD (international long distance) operations in July 2002. Its revenues zoomed from Rs 93 crore in 2001-02 to Rs 611 crore in 2002-03 (year ending September). And it planned a public issue of five crore equity shares (face value Rs 10 each) in March, 2004 at an offer price of Rs 17-20 on the back of this spectacular growth. But the IPO was torpedoed at the eleventh hour because of objections raised by the Department of Telecommunications (dot).

What went wrong? Government officials say the company has discontinued its operations six-seven months ago. Data Access founder Siddhartha Ray, who sold the company to a consortium led by Chennai-based entrepreneur K.C. Palanisami last year, declined to comment on the matter. Palanisami, who is a former mp, blames conspiracies and systemic irregularities for the crisis. "But it's time to revive the company," he says.

That may take some time. BSNL has filed a winding-up petition against Data Access in the Delhi High Court over the non-payment of outstandings of around Rs 200 crore. Cheques worth Rs 82 crore issued by the company to BSNL have bounced, resulting in a criminal case against Data Access.

Government officials say the licence will be restored after Data Access clears its dues of around Rs 300 crore. "It must pay 75 per cent of the unpaid amount upfront and the remaining 25 per cent within a year," they add.

Meanwhile, Data Access has filed a petition in Chennai High Court to revive the company and restore its points of interconnection. The wrangling, it seems, will continue for some time.

-Kumarkaushalam

ALIVE
Back On The Road

We're back: Premier's Roadstar (top) and Sigma

Premier limited, which dropped 'automobile' from its name in April 2005, is coming out of hibernation. On May 11, 2005, it launched Sigma, a multi-purpose vehicle (MPV), and Roadstar, a light commercial vehicle (LCV). "The seven-seater Sigma is positioned as a family vehicle, while the Roadstar is targeted at the transport business," informs Premier's Head of Sales & Marketing, Atul Akolkar. For now, the vehicles, which run on diesel, are available only in South India. They will be launched in other parts of the country in a phased manner by the middle of next year. Premier, which is making the vehicles in collaboration with China Motor Corporation, will manufacture them at its Chinchwad factory in Pune, which has a capacity of 10,000 vehicles per annum. The Sigma costs Rs 3.95 lakh while the Roadstar comes at Rs 3.25 lakh (both ex-Pune). Not everyone is impressed, though. "They are nothing great and look quite crude," said Auto Car Editor Hormazd Sorabjee.

-Krishna Gopalan

Paper Tigers
Newspaper alliances are unsustainable in the long run.

Joining hands: ToI's Sameer Jain (L) and HT's Shobhana Bhartia

The list of failed marriages would make Liz Taylor blush. The Hindu-Eenadu, HT-Indian Express-Mid-Day, HT-Amar Ujala and The Statesman-Bartaman have all tried it in the past. And most have failed. Why? "In most cases, newspapers come together to confront some immediate threat," says Sandeep Viz, President of Mudra's media agency Optimum Media Solutions (OMS). This implies that there is little rationale to continue the partnership once the storm has blown over. But that hasn't stopped The Times of India (TOI) from joining forces with Hindustan Times (HT) to take on the Zee-Dainik Bhaskar combine's yet-to-be-launched Daily News & Analysis (DNA) in Mumbai.

"How can anyone succeed if the basic objective is to spoil someone else's party?" asks Meenakshi Madhvani, Managing Director of media audit company Spatial Access. Bang on. The Hindu-Eenadu deal was aimed at Deccan Chronicle in the Andhra Pradesh market. HT and Amar Ujala came together against Dainik Jagran in the Hindi heartland. And the HT-Indian Express-Mid-Day combine took on Mumbai big daddy TOI. In that sense, all these alliances were defensive in nature; none of them attempted to expand their own businesses.

"Ours is merely a commercial transaction and does not signal the formation of a cartel against DNA," says a senior manager at HT, defending his paper's collaboration on printing, advertising and no-poaching with arch rival TOI, adding: "We did offer our excess printing capacity in Mumbai to DNA."

Most of the earlier alliances, though alive on paper, are quite dead on the ground. Obviously, "an enemy's enemy is a friend" is not a sustainable business strategy. For example, selling advertising through a common rate card is a self-defeating proposition. "There is a 10-15 per cent discount on these combined rate cards, which a big media agency gets anyway," informs Spatial's Madhvani, highlighting the pointlessness of the whole exercise. The only aspect of the deal that can work is the no-poaching agreement. That's the global experience across industries. But here, too, there are huge question marks. Such deals depend entirely on the good faith of the parties concerned. Is it too much to expect such things in the fiercely competitive Rs 1,000-crore Mumbai newspaper market? Watch this space.

-Shailesh Dobhal

GLITTER
Curious Branding

Actor Mukherjee: The Tanishq look

Had it been an Agatha Christie mystery, it would probably have been titled 'The curious affair at Paheli'. Titan's jewellery division, Tanishq, designed the heroine's jewellery collection for the Shah Rukh Khan-Rani Mukherjee starrer Paheli. "We did it to capture audiences we normally don't through our marketing efforts," says Ruchira Puri, Head (Marketing & Design), Tanishq. Really? How? Tanishq's name appears only in the credits of the Amol Palekar film; but who bothers to read the credits anyway? There is no mention or visual of the brand anywhere else. So the company is spending "substantial sums of money" on television ads featuring shots from Paheli showing Mukherjee decked in jewellery, with a voice-over informing us that Tanishq is behind it all. And how does the company intend to recover its costs? "We'll sell Tanishq's Paheli collection, priced at Rs 20,000 to Rs 3.5 lakh, across 20 of our 73 stores," says Puri. Film- and television-based merchandise sales haven't quite kicked off in India as it has in the West. Can Paheli be the first to buck this trend? Marketers will be keenly watching out for this.

-Shailesh Dobhal

POLITY WATCH
Cleaning The Augean Stables
The J.J. Irani Report on Company Law will bring transparency to the fore.

Irani Committe's J.J. Irani: Laying down the rules

We have given full liberty to shareholders and promoters to run companies. But in case of violations, the penalties will be stringent," says J.J. Irani, Chairman of the Irani Committee Report on Company Law. If the main focus of the 177-page document was to achieve the above objectives, Irani, who is a Director on the board of Tata Sons, has done a great job. The central theme of his recommendations: make the Companies Act of 1956 more compact, enunciate only the broad principles and leave rule-making to the authorities, and ensure adequate protection for stakeholders and shareholders including small investors.

The report, which has to be cleared by the Union Cabinet before it can be implemented, recommends doing away with a host of restrictions that has shackled Indian entrepreneurship for decades. It suggests the removal of restrictions on the number of subsidiaries a company can have and wants the ceiling on directors' remuneration scrapped. It also wants independent directors to make up only one-third of the board strength, compared to the 50 per cent stipulation currently in place. Irani also proposes to speed up the process of incorporating and liquidating companies, and counsels giving more teeth to the Registrar of Companies.

The panel's most revolutionary suggestion is the concept of a "one-person company". Existing laws mandate corporates to be an "association of persons". This change is likely to provide a definitive push to entrepreneurship. Moreover, by shifting from a "government approved" regime to a "shareholder approval and disclosure" regime, the Irani panel has begun, what Kaushik Dutta, Partner, PricewaterhouseCoopers, calls "an era of self-regulation for corporate India".

Given the man's track record and reputation, it was expected that he would devote considerable attention to corporate governance. And Irani doesn't disappoint. He even brings celebrities, who lend their glamour to corporate boards, under the scanner. If such companies vanish, they cannot disown their association with it; they will have to share the liabilities. Says Irani: "Any director who sits on the board at the time of investment/ public issue will be held responsible for at least two years.''

Irani also focusses considerable attention on the issue of vanishing companies. He is obviously not one of those who will wait for the horse to bolt before he closes the stable door. Instead, the panel favours scrutiny from registration through the life of the company. How? By making the filing of statutory documents mandatory. And, striking a blow for the rights of the small investor, he wants companies to compulsorily publish information relating to convictions for criminal breaches of the Companies Act in annual reports.

Expectedly, perhaps, such missionary zeal has not gone down well with some of his peers. The Chairman of Bajaj Auto, Rahul Bajaj, says the whistle-blower policy, for instance, "is clearly not well-thought out. How do you ensure that disgruntled elements will not lodge false or frivolous complaints?" And if that policy becomes law, companies should have the right to terminate the services of such employees if the case is found to be frivolous. Another CEO, who refuses to go on record, feels it could tempt some managements to plant moles in rival companies to create trouble. "The J.J. Irani report is far too idealistic for today's times," he adds.

Then, there is little clarity on whether independent directors can continue to sit on boards after three terms (nine years in all, as recommended by the earlier Narayana Murthy Committee report). Moreover, Irani's insistence that nominee directors should not be treated as independent directors has not gone down too well with India Inc.

However, given the spate of corporate scandals around the world, the report has shown a lot of courage by giving directors the authority to regulate the affairs of companies. Its acceptance will go a long way in bringing Indian corporate governance practices in line with the best in the world.

-Ashish Gupta