HEADLINER
G.V. Prasad

AFTER A PATH-BREAKING Deal in March this year for funding the launch of generic drugs in the US, Dr Reddy's Laboratories has signed another novel agreement for drug discovery and development. Christened Perlecan Pharma, the company has investment from ICICI Ventures (which funded the earlier deal too) and Citigroup Venture Capital (CVC) International of $22.5 million (Rs 99 crore), with Dr Reddy's putting in another $7.5 million (Rs 33 crore). "This partnership marks an important milestone for the company and will put Dr. Reddy's at the forefront of drug discovery and development over the next decade," Chairman Anji Reddy said in a release. As per the plan, Dr Reddy's will transfer rights to four new chemical entities (NCEs, or potential drugs) to the new company, which will then take them through further development and stages I and II of clinical trials. Thereafter, Perlecan will out-licence them to a big pharma company for the next stages of trials and possible launch. "The deals we are getting into allow us to be a discovery-led organisation without adversely affecting the current operations," says CEO G.V. Prasad. It's a model that may soon find imitators.

--E. Kumar Sharma

Apollo-Michelin's Surprise Split-Up

Apollo's Kanwar: Now, a solo act

In a surprising move, Apollo Tyres decided to bail out of its joint venture with Michelin for bus and truck radial tyres. Citing slow pace of radialisation in India, Michelin bought out Apollo's 49 per cent stake (worth about Rs 40 crore) in Michelin Apollo Tyres. Interestingly, however, Apollo says it will go ahead and launch truck and bus radial tyres on its own. Apollo's MD & CEO Onkar Singh Kanwar must be hoping that the French tyre giant, which owns 14.9 per cent of Apollo's equity, doesn't pull an MRF on it. In the mid-90s, Michelin tried unsuccessfully to buy into its partner MRF.

Second Time Unlucky?

Escorts chairman Rajan Nanda's second attempt to sell Escorts Heart Institute & Research Centre (ehirc) ran aground after brother Anil once again cried foul, leading the Delhi High Court to put the Rs 650-crore deal on hold, although money has changed hands. When BT went to press, the next hearing was slated for October 22. There's no doubt that the sale of ehirc is critical to Escort's turnaround plans. Recently, the company had revamped its board after it defaulted on loans. "We expect the sale to reverse our fortunes," says Shailesh Tandon, Escorts' CFO.

Tata Motors' Ravi Kant: IR snafus

Tool Down At Tata Motors

workers at Tata Motors' Jamshedpur plant struck work for one day on September 30 after negotiations over a bonus payment broke down. The last time the plant witnessed a strike was in 1969. According to a company spokesperson, there was no significant loss of production, and the workers returned to work the following day.

NEWSMAKERS
THE FDI HURDLE

This fortnight's newsmaker: Sonia Gandhi's NAC

In June 2004, shortly after the united progressive Alliance came to power in India, its Chairperson and the head of the single largest constituent of the coalition, Sonia Gandhi, instituted a National Advisory Council. Apart from her and Congress idealogue Jairam Ramesh (who has since become a Rajya Sabha MP), the council comprised some of India's best-known economists, technocrats, even activists. The objective behind the creation of the NAC was, to cut to the chase, equitable development, to ensure that the government's decisions were fair and benefited everyone concerned. That's laudable. Only, it emerges, the NAC has written to the Ministry of Steel, which, in turn, has written to the Orissa government, asking for some clarification on just who Posco's $12-billion (Rs 52,800 crore) project in the state will benefit, and how. The Orissa government and Posco had bickered over the terms of the deal before finally reaching some sort of agreement and signing an MoU, and it is likely that neither party is happy with this turn of events. The questions asked by the NAC can be asked of any project and do serve to ensure that the local administration does not ignore everything else in its desire to attract foreign investment. The buzz in government circles is that while that could be the case, the NAC's question may have also been brought about by its concerns over iron ore allotments to Posco, an anti-Posco corporate lobby, even the desire to do the BJD that rules Orissa out of some glory. Whatever be the cause, the questions have been asked and now need to be answered.

-Ashish Gupta

NUMBERS OF NOTE

$54 trillion (Rs 23,76,00,000 crore): Global wealth by 2025, a 36 per cent decline from $85 trillion (Rs 37,40,00,000 crore) now according to consulting firm McKinsey. Japan, the US, the UK, and Italy will witness a decline in wealth, while India and China will see an increase

$40 billion (Rs 1,76,000 crore): The debt owed by 18 of the poorest nations to the International Monetary Fund that has been written off. A further nine countries could become eligible in future and total relief could rise to $55 billion (Rs 2,42,000 crore)

100: The number of additional restaurants McDonald's plans to set up in India over two years, taking total count to 180 by 2007

Rs 35 crore: The value of ghee supplied by Karnataka to Tirupati for their famous laddoos. The temple's annual requirement of ghee is said to be 1,500 tonnes

10,000: The number of people who could be dying each year in the Asia-Pacific region as a result of factors associated with global warming such as severe weather and mosquito-borne diseases, according to the World Health Organization

600: The number of websites forced to stop free streaming and download of Indian music or close it altogether after legal notices were despatched to them by the Indian music industry. Most of these sites are run by NRIs based in the US. There are over 350 legitimate online music sites globally

2.5%: Proportion accounted for by India in global trade in goods and services. For China, the figure is 10.5 per cent

4 million: Number of Chinese workers who toil in 22,000 factories, churning out everything from patio chairs to power tools. The average factory wage is about 40 cents an hour

10 million tonnes: Volume of liquefied petroleum gas (LPG) consumed by Indian households, hotels and restaurants every year

$32 billion (Rs 1,40,800 crore): The amount American airlines have lost over the past four years, from terrorist attacks, the Iraq war, the SARS epidemic in Asia and competition from new low-cost carriers

Drugs That Talk
RFID makes its way into Indian pharma.

Bartronics' Prakash: RFID evangelist

Cost is really the bigger issue. Globally, RFID tags cost between 40 and 50 cents, and companies like Pfizer and GlaxoSmithKline use it on specific drugs; the former uses it on its Viagra and the latter on its anti-aids drugs, Combivir and Epivir. In India, RFID tags cost Rs 30 apiece, but here's the problem: Unlike in the US, drugs are low priced in India. Therefore, to convince a manufacturer to use a Rs 30-tag on a cough syrup that costs Rs 19 isn't possible. A complete roll out could cost a drug maker Rs 2 crore. But Bartronics' Vice President Bhanu Prakash says that prices are coming down and may soon become viable on a mass scale. Until then, though, drug makers will prefer to manage their stocks the old-fashioned way.

-E. Kumar Sharma

A Category Killer On The Prowl
Durables retail giant, Viveks, thinks big.

Viveks' Setty: Big in south, but missing in north

Last year, the Chennai-based consumer durables giant, Viveks, sold 34,000 refrigerators, 67,000 CTVs, 27,000 washing machines, 74,000 mobile phones, 25,000 DVDs and 6,000 air-conditioners-the most by any organised retailer in the country. But the family-owned retailer, called a category killer because it specialises in one category, wants to get bigger still. "I have 52 of my own stores now, but by March 2008, I want to have a 100 in the south alone," says Viveks' Chairman and Managing Director, B.A. Kodandarama Setty. Because of the sheer volume of its annual sales (projected at Rs 350 crore this financial year), Viveks has already earned the respect of large manufacturers. Says Ravinder Zutshi, Deputy Managing Director, Samsung India Electronics: "Viveks has grown from pioneer status to high-scale retailing, and growth will bring even better understanding of relationships (with manufacturers)." As a first step, Setty plans to open stores in Hyderabad, Vijayawada and Visakhapatnam, besides adding some more in Bangalore. By his own estimate, he will need between Rs 75 crore and Rs 100 crore to fund the expansion. But money, he says, is not a problem; time is. "It may so happen that I cannot afford to wait till 2008 to look further (read: go national)," says Setty, who has two other retail chains in Jainsons and Premier. After all, it's only a matter of time before foreign investment is formally let into retail.

-Nitya Varadarajan

Brokers On Edge
Are penny stock dealers in the clear?

Indiabulls' Banga: Nothing to worry about

Last fortnight, when market regulator Securities & Exchange Board of India (Sebi) came down heavily on some penny stock promoters for allegedly manipulating their stock prices, it also had a sharp rap on the knuckles for the brokers involved. This came on the heels of Sebi's action to debar 11 brokers of the Calcutta stock exchange for jacking up prices and creating false volumes through a series of self deals and cross deals.

Whilst price rigging on the Kolkata bourse doesn't come as a surprise, the investing community in Mumbai is still unclear about the involvement, and culpability, of high-profile brokerages like Indiabulls Securities, Fortis Securities and India Infoline Securities. Sebi ordered these firms not to buy, sell or deal in securities on behalf of the promoters and directors of IFSL, one of the companies it suspended. Do these broking houses need to worry? Not really, says Gagan Banga, Executive Director, Indiabulls Financial Services: "We have been ordered not to trade in the stock on behalf of the promoters and their directors. However, we are still allowed to trade in the stock for other investors. This is a protective action from Sebi, which feels some malpractices have been taking place in the stock (of IFSL)." Other than IFSL, Indiabulls has also been ordered not to trade on behalf of the promoters, directors and clients of Prime Property Development, another company in which Sebi suspects price-rigging. Adds an official at India Infoline Securities: "In our case it was a client named Jay Shah, registered with our Ahmedabad office, who has been debarred from trading in IFSL. However, he can trade in other securities."

Sebi's investigations into these penny stocks, say market observers, could go on for another six to nine months. So far the brokerages have escaped the watchdog's wrath, but if Sebi does dig up evidence of a link between the brokers, the rigged stocks and their promoters, there might just be more trouble ahead.

-Mahesh Nayak

Sachin Forever
The cricketer may ail, not his brand.

You'd be wrong if you thought the news of Sachin Tendulkar's return to the grounds (he will play the Challenger Trophy in October) has lifted the spirits of brand managers whose products he endorses. For, their spirits never sagged-his long hiatus from cricket notwithstanding. "Sachin's name is synonymous with cricket," says Vipul Prakash, Executive Vice President, Marketing, PepsiCo, whether he hits the boundaries or not. "The brand promise he holds is still unparalled, and we intend to carry the association forward in the coming years," adds Prakash. Sachin has been endorsing the Pepsi brand for the past 15 years.

Sachin's contract with WorldTel, the celebrity management company started by late Mark Mascarenhas, is due to expire this year. WorldTel had signed him up for 1996-2000 for Rs 30 crore and Mark retained him amidst fierce competition the second time, by promising Rs 100 crore for 2001-2005. The master-blaster is till date the most expensive sports celebrity, commanding a price tag of around Rs 4-5 crore a deal, despite the rise of new stars in sports. This year, the fight for his account has already started with some of the top agencies offering at least 50 per cent more than what he got the last time around. "Sachin commands an equity that extends beyond the grounds. He is one celebrity who is not given to any controversies, personal or professional and hence, has an undiluted appeal," says Sanjay Lal, Chief Executive Officer, PDM International. The duration of his new contract, however, might shrink this time, owing to concerns that he might formally bid adieu to cricket in the next two to three years.

-Archna Shukla

NOTED

Named: By Forbes magazine, three Indian firms, Infosys, Wipro, and ICICI Bank, in its listing of The Asian Fab 50. Japan's Toyota Motor Corporation ranks #1. Infosys comes in at #17, Wipro, #20, and ICICI bank, #32. Japan has 13 companies in the list, Australia, 10, South Korea, eight, China, one (Petro China) and Hong Kong, six.

P. Chidambaram

Logged: By the Indian economy, an 8.1 per cent growth in GDP in the April-June quarter of 2005-06. Much of this was propelled by a growth in the manufacturing sector, of 11.3 per cent, and services sector, of 9.8 per cent. The government's targeted GDP growth rate for the entire year is 7 per cent.

Hiked: By the Aditya Birla Group, its stake in Idea cellular to 50.15 per cent. The increase could possibly signal the revival of the group's interest in the telecommunications sector. Idea has around six million subscribers and has a fairly wide reach across Kerala, Maharashtra, Delhi, Gujarat, Andhra Pradesh, Madhya Pradesh, Haryana and UP West.

Announced: By Philips Semiconductors' Chief Executive Officer Frans Van Houten on a recent visit to India, the company's intent to work with local suppliers and launch a mobile phone with a price-tag of $20, under Rs 1,000, sometime in 2006.

Signed: By Tata Teleservices, a five-year Rs 1,000-crore outsourcing deal, of its entire IT infrastructure management, with Tata Consultancy Services. In early 2004, Bharti Tele-Ventures had entered into a similar arrangement with IBM.

Alleged: By UNCTAD, in its World Investment Report 2005, that China fudges its foreign direct investment numbers substantially. The same report says that India attracted over $5 billion (Rs 22,000 crore) of FDI in 2004.

THE PHOENIX RISES

It seems somehow apt that the phoenix, a mythical bird that is the symbol of renewal, is the corporate logo of Jessop & Company, a Kolkata-based erstwhile public sector company that was acquired in 2003 for a mere Rs 18.18 crore (it had accumulated losses of Rs 133 crore then) by a city-based chartered accountant Pawan Kumar Ruia (left; no relation to the Ruias of Essar). Today, thanks to a deal with the Board for Industrial and Financial Restructuring that will reduce its capital base and debt and allow it to make a rights issue, the wagon-maker looks set to effect a turnaround. "That's a significant step forward," admits Ruia. Yes, and another exhibit in the case for disinvestment.

-Ritwik Mukherjee

NOT YET, MR PRESIDENT

President Kalam: Ahead of the curve

On a recent visit to the north east, India's President Abdul Kalam announced that an aids vaccine being developed by the National AIDS Research Institute (NARI) in Pune would be commercially available in the next three to four years. If the pharma industry was surprised at this, it is because the vaccine has gone into phase one of clinical trials only in February this year and it usually takes seven years from then to the commercial launch of a drug. Dr Ramesh Paranjpe, Officer-in-Charge, NARI, is not willing to comment on the President's statement, but admits the three phases that precede the launch could take between five and seven years. "I cannot comment on Phase II, which is something we will decide on only after the completion of Phase I," he says. Right now, enrolment for the clinical trials is still on. NARI's vaccine development programme is being carried out in association with the International Aids Vaccine Initiative, a New York-based entity, the National Aids Control Organisation and the Indian Council for Medical Research. All names of note, but it will take time, maybe till 2012.

-Priya Srinivasan