For M. Damodaran, chairman, Securities & Exchange Board of India (SEBI), it's time to plug the loopholes in securities regulations. Whilst SEBI's top brass was quick to issue lengthy orders banning stock market entities found to be neck-deep in a recent IPO scam involving fake demat accounts, the regulator is now working out ways to prevent off-market transactions in IPO shares before they're listed and traded. SEBI has released a 15-page discussion paper in which it suggests that depositories should freeze the demat accounts of successful IPO allottees till trading begins in those shares. Roopalben and other key operators in the IPO scam used this very pre-listing period to make off-market transactions from thousands of benami accounts to few operative accounts of key operators and financers.

Damodaran is equally worried about the growing cases of companies 'dematting' excess capital than the actually issued capital. As a preventive measure, SEBI has proposed a hefty penalty of Rs 25 crore for any violation pertaining to excess issue of capital. According to the discussion paper, SEBI will also track distinctive numbers of shares in a depository system in order to ensure that share certificates, which have already been dematted, are not again tendered and dematerialised. Now all that's left is for the discussion paper to translate into actual regulation.

-Anand Adhikari

Family Formula
Split over, it's back to business for Ajay Piramal.

Nandini Piramal: In her dad's footsteps

Few know the real estate and pharmaceuticals businesses as well as Ajay Piramal, Chairman, Nicholas Piramal India Ltd (NPIL), does. So when Piramal and his sister-in-law Urvi decided to amicably split the family business, he suddenly found himself without a property portfolio. Urvi's three sons have taken charge of that now-Peninsula Land, the real estate business, is managed by Rajeev Piramal, whilst Pyramid Retail is run by Nandan. (Harshvardhan runs the textiles business, Morarjee Textiles.)

But you can't keep Ajay Piramal away from real estate for too long. Recently he raised a domestic fund, India Reit Fund, with a corpus of Rs 250 crore. "Along with the domestic fund, we will also have one where we will get foreign direct investment," says Piramal, adding, "We are looking to partner with developers-typically emerging and budding entrepreneurs-at an early stage, when they acquire land, so that we can go along with them."

In the meanwhile, just as his sister-in-law has inducted her sons, Piramal will soon be roping in his daughter Nandini Piramal into the family business. Nandini, 26, who has just completed her MBA from Stanford Graduate School of Business, is expected to take up her appointment as General Manager (Strategic Marketing) with effect from July 1, in NPIL's overseas pharma subsidiary, NPIL Pharma Inc., once the company gets the shareholders' nod to do so. Piramal's wife, Swati, is Director of Strategic Alliances and Communications at NPIL.

Real estate may be a passion for Piramal, but it's clearly pharmaceuticals that's the growth engine for his group and Piramal has ambitious plans for this. NPIL is ranked fourth amongst pharma companies in India (including the multinationals). In 2005-06, the Piramal flagship's market share inched up from 4.3 per cent to 4.6 per cent, and it posted consolidated revenues of $352 million (Rs 1,619.2 crore), a growth of 23.9 per cent over the previous year. "We have a clear vision in the domestic market and will go for a leadership position," says Piramal.

The three growth planks he has identified are domestic formulations, which account for 70 per cent of revenues, custom manufacturing, and research & development. "In three years, we should be able to launch our own molecule in the market," he adds. NPIL has already begun clinical trials in the therapeutic areas of Oncology, Diabetes and Inflammation. The anti-cancer molecule, cdk-4, has already reached phase I of its clinical trial and Piramal has his hopes set on this. He's aware that drug discovery is a risky business. "But with stable cash flows from the domestic business as well as custom manufacturing (last year, the group's consolidated profits stood at Rs 126.05 crore) we can afford to take this risk."

Another Piramal trademark is mergers & acquisitions (M&A) and there is unlikely to be any letting up in the pace of acquisitions. Last fortnight, NPIL pulled off yet another transaction, by acquiring a manufacturing facility of Pfizer in the UK for an undisclosed amount. Piramal hopes to generate revenues in excess of $200 million (Rs 920 crore) from custom manufacturing because of this deal. Among other significant acquisitions made last year were those of Avecia Pharmaceuticals in the UK and Torcan Chemical in Canada, with an annual turnover of roughly $70 million (Rs 322 crore) each. Avecia was in the red when acquired, and Piramal expects it to break even in the current year. Piramal is particular about not paying too much for what he buys. "Most companies are paying several multiples of turnover but our acquisition multiple is 0.3 times of sales on average." He explains that the capital employed for companies he's bought is limited and therefore in the long-term the returns will be attractive. Also, these have opened doors to NPIL in terms of establishing close associations with the top pharma companies in the world. "We have very close relationships with eight of the top 10 pharmaceutical firms in the world," he adds. Those associations will come handy in bolstering his presence in the domestic market.

-Ahona Ghosh

Red Sun Rising
Emerging sectors take a beating on the bourses.

Few will dispute that prospects for stock price appreciation are rosier in sunrise sectors like media, entertainment, aviation and retail, than in traditional industries such as cement and automobiles. But then what happens when markets begin to fall? The new-age stocks fall harder than good old commodities and cyclicals. Consider this: Stocks of multiplex companies are down 46 per cent from their 52-week peaks. Aviation stocks have been hammered 47 per cent, media, 45 per cent and retail, 36 per cent (see The Faster They Rise The Harder They Fall). In contrast, the Sensex had shed 18 per cent from its all-time high of 12,671 as on June 23. Old economy companies too have not been bruised as much. Automobile stocks on an average have declined 20-25 per cent (although TVS Motor plunged by 44 per cent), cement stocks are down roughly 25 per cent from their peak, and bank shares are lower by 25-30 per cent. Says P. Phani Sekhar, a research analyst who tracks the it, telecom and media sectors at Mumbai is Angel Broking: "Sectors that enjoy high valuations in a buoyant market take the biggest hit during a downturn. The airlines sector, for example, has been punished clearly because of stretched valuations. Multiplexes too have been expensively priced." QED.

-Shivani Lath

Bharti-Tesco?
Or will Wal-Mart or Carrefour partner Bharti in its retail foray?

Rajan Mittal: The spearhead

Is Bharti Enterprises going with Tesco of the UK for its retail joint venture? The news has been in the air for a couple of months now and discussions between the two parties are said to be in the final stages. Even as Tesco is being spoken of as the most likely partner, a spokesperson for Bharti told BT that the group was still in dialogue with a few foreign players and that an announcement would be made in a couple of months. There are three players that Bharti has been in talks with: Tesco, Wal-Mart and Carrefour. Rajan Mittal, who is spearheading the group's retail foray, had recently told bt that the company was seriously looking at all possible retail models. Bharti already has a joint venture with the el Rothschild Group-controlled, ELRO Holdings India, FieldFresh Foods Pvt Ltd that exports fresh produce under the same brand name.

-Krishna Gopalan