Making a point: Purushothaman's leading the way for women

Back in 2003, Roopa Purushothaman co-authored the famous Goldman Sachs research paper no. 99, Dreaming with BRICS: The Path to 2050, in which she predicted Brazil, Russia, India and China would together be a larger economic force than the g6 nations by 2050. Economic growth being witnessed by these countries, coupled with foreign inflows into them, reinforce that Purushothaman is on the right track.

In March, Purushothaman moved to Kishore Biyani's Future Group (of Pantaloons and Big Bazaar fame) as Chief Economist and Strategist to head the group's research division and work on thematic pieces such as consumption patterns in India and real estate pricing, to name just two. In her first publication at the Future Group-XX Factor: The impact of working women on India's growth, incomes and consumption-Purushothaman delves into India's demographics, highlighting the potential of working women as a class, which she believes can impact India's gross domestic product (GDP) by an additional $35 billion (Rs 1.575 lakh crore) in five years, or $110 billion (Rs 4.95 lakh crore) in 10. (India's GDP was estimated at $720 billion or Rs 33.12 lakh crore in 2005 and, at a growth rate of 8 per cent, it can grow by $365 billion or Rs 16.425 lakh crore over the next five years.)

The report reveals that the actual number of people employed is less than the potential by about 35 per cent; low participation by women is an important reason for this. The good news is that for the first time in decades, there has been an increase in the number of working women in India. The National Sample Survey Organisation (NSSO) 2005 figures indicate that 31 per cent of women (as a share of working age women) are working in India, up from 26 per cent when the survey was last conducted in 2000.

The report identifies increasing participation of women in the workforce as one of the most powerful ways to boost growth, incomes and consumption over the long run. "Incomes could rise by 5 per cent above baseline estimates in the next decade, and by more than 12 per cent in 2025," Purushothaman says in her report. Here is where the rubber hits the road-as a result of women's higher participation, incremental demand could grow by 10 per cent more than anticipated in the next five years.

One may ask-so what's new? Isn't it intuitive that if India could harness the potential of its women population, sidelined so far due to cultural and social reasons, economic growth can be a lot faster? Purushothaman answers: "This is the first time a number has been put to the impact this trend can have."

The sectors that stand to gain from increased consumption expenditure, if the trend plays out as expected, says Purushothaman, are financial services, educational services, retail (which includes apparel, accessories and personal care), fuel and transport, leisure and entertainment (holidays, movies and eating out) and domestic help. Working women also save and invest 25 per cent more than non-working women. "We arrived at these sectors after a detailed survey of the household spending patterns of nearly 1,700 working and non-working women," she says.

The study also claims to have, for the first time in India, isolated the impact on household spending from the work status of the female head of the household. It thus reveals that working women households exhibit a preference for internationally branded goods; penetration of mobile phones, credit cards, durables like cars and air conditioners is also much higher in such houses; and, when shopping at large organised retail formats, working women care more about choice than about price.

Says Kishore Biyani, CEO of the Future Group: "The report indicates that modern retail's share of business should see an increase as more women begin to work, which is good news."

For the trend to play out as expected, clearly the government will need to think of ways to provide enough jobs and facilitate women going to work. "The government in Japan is taking an active role in encouraging women to go to work-they are providing daycare and also incentives to companies that encourage women's employment," says Purushothaman. That's one way to do it.

Riding A Tiger
Partners Danone and the Wadias have issues.

What is the fuss all about? Nusli Wadia (left) and Vinita Bali

All may not be well between the Wadia group and its French partner in foods major Britannia Industries, Groupe Danone. When announcing its third quarter results to the media in mid-October, Danone did not include Britannia's numbers-Danone and Britannia Chairman Nusli Wadia are virtually equal shareholders in Associated Biscuits International Holding (ABIH), a company that is a majority shareholder in the Indian biscuit major. Groupe Danone maintains it has been fully consolidating Britannia's results since 1994, and the September ended quarter was the first instance of it not being able to do so. "On August 1, 2006, Britannia's Board of Directors decided to limit the release of price-sensitive financial information to comply strictly with the Stock Exchange regulations in India. The availability of financial information needed by Groupe Danone for consolidation purposes has been impacted by this decision," goes the statement. (Danone's financial year is the calendar year and Britannia adopts the April-March fiscal.)

Vinita Bali, Managing Director, Britannia, for her part, can't understand what the fuss is about. "Britannia provides audited accounts and relevant financial information, for the purpose of consolidation, to its major shareholder ABIH," says Bali, via e-mail to BT. Now, given that Danone and the Wadias are equal stakes partners in ABIH, Bali wouldn't be doing an injustice by sending the results to the ABIH-headquartered in UK rather than directly to Danone in Paris, point out observers, although it's not clear what the procedure in the past was. An e-mail sent to Group Danone headquarters in France did not elicit a response.

Those tracking the relationship maintain that there has been a long history of friction between the Wadia Group and Danone. For instance, it is gathered that Danone has the right to appoint the CEO of Britannia while the CFO would be a Wadia Group nominee. Bali, who was initially appointed as CEO before moving up as Managing Director, is said to be an appointee of the Wadia Group. Besides, Danone, it is learnt, has been not too happy with what Britannia has done in the Indian market over the last few quarters and ITC's steady progress in key Britannia segments like biscuits is a key reason for this. For the year ended March 2006, Britannia's sales increased by 13 per cent to Rs 1,818 crore, whilst profit after tax after exceptional items is down by 2 per cent at Rs 146 crore. ITC's FMCG business excluding cigarettes (including packaged foods, confectionery, snack foods and branded garments), grew by 79 per cent in the year ended March 2006.

For Danone, the Asia-Pacific market is strategic, with 17 per cent of its turnover of m12.3 billion or Rs 65,193 crore in 2005 coming from the region. For the nine months of 2006, the region's share has increased to 18.5 per cent. Both Danone and Britannia haven't hesitated to leverage each other's brands. For instance, Tiger, a mass-market biscuit from Britannia, is now sold under the same brand in several other countries. Likewise, Little Hearts that is sold in India is actually a Danone brand. However, observers point out that such cross-selling has triggered off royalty disputes. "Matters relating to the Tiger brand and, in fact, all intellectual property of the company have been in discussion since early 2004 and are currently being addressed by a committee appointed by the Board in May 2006 to deal with all the intellectual property of the company," says Bali.

Danone's media statement perhaps ominously states that "the inclusion of Britannia in Groupe Danone's perimeter of consolidation will be reviewed at the occasion of the 2006 year-end closing." Wadia, for his part, would have recognised the huge potential in the foods business (the entire consumer sector, which includes the food business, is growing at about 14 per cent). His flagship Bombay Dyeing is in dire need of a revamp, and the sunrise business of low-cost aviation is still a fledgling. Britannia may well be his bread and butter.

-Krishna Gopalan

Get Legit or Get Shut
Companies ask their dealers in Delhi to respect zoning law.

Delhi sealing: Bandhs, protest, and more...

As it turned out, no amount of kicking, screaming and threatening by Delhi's shopkeepers stalled the Supreme Court-enforced drive against illegal shops in residential areas. Even as the Municipal Corporation of Delhi resumed with the sealing-even throwing telecom regulator, TRAI, out of its offices in south Delhi, possibly to only set an example-big companies began asking their dealers and distributors to clean up their act as well. "We expect our dealers to uphold the law," says Maruti Udyog's Managing Director, Jagdish Khattar, while admitting there were some dealers who did operate out of residential areas. A Samsung India spokesperson also confirmed that the company had 'informally' told its large dealers and 'brand showrooms' that operate from residential areas to move. "Most of them have shifted their operations," the spokesperson said. A Hyundai India spokeswoman said: "Our dealers understand the law and will comply with it."

But the question is, where are these dealers going to move, what happens to their customers and employees and, indeed, their business models? The last question is, perhaps, the easiest to answer. Shops that are tied to large companies will inevitably end up getting some financial assistance from them. The how of it will become clear in another few months, but the good news for them is that the companies already realise that they need to help out: "In some cases, we are already extending our full support to them to move," says Khattar. But small and independent shops-like the kirana store, furniture or cloth merchant-will be hard-pressed to find viable solutions. And according to the Confederation of All India Traders, there are 5.4 lakh shops, employing about 27 lakh people, that face closure. Praveen Khandelwal, Secretary General, Confederation of All India Traders (CAIT) asks, "If my shop gets sealed, who will look after my livelihood? The government?"

Because this dislocation will result in massive business for malls and legitimate commercial complexes, some shopkeepers have been alleging that builders are behind the sealing drive. It's an insult to the apex court to even suggest that, but there's no denying that demand for legitimate commercial properties is going to boom. Says Anshuman Magazine, Managing Director, CB Richard Ellis India, a real estate consultancy, "There is a dearth of legal commercial and office space in Delhi and large brands are going to strain to find good space." In Delhi, for instance, there's likely to be a movement towards Saket and the Trans-Yamuna area, where commercial properties, including state-of-the-art malls, are coming up. In terms of rentals, Magazine expects at least an 25-30 per cent hike in rentals at malls to Rs 120-150 per sq. ft, (depending on the size of the store).

Then again, developers had better not start licking their chops. The problem of dislocation is so overwhelming and the issue so political that there are two possible end scenarios. One, a more likely one, is that it is not carried out with the same rigour as the Supreme Court expects and will let many shops fly under the radar. Some big shops will, however, be shuttered for demonstration effect and they are the ones who will need new addresses. In other words, the incremental real estate boom will be limited. The second scenario is more pessimistic and involves the shops getting unsealed a few years-if not months-down the line. Unlike the apex court's CNG drive earlier, there are no big manufacturers or a single authority that can be held responsible for non-compliance. Sure, it can drag the municipal commissioners over the coals, but that won't solve the problem. At the most, it's the large company-backed dealers that will clean up their act.

-Kushan Mitra

Crash Landing Once More
Anil Ambani's petition for review of airport bids gets rejected.

RADAG's Ambani: What next?

Embattled is how RADAG's Anil Ambani must feel right now. Although he's managed to walk away with his share of the Reliance group, he hasn't been able to buy peace with his brother Mukesh, as evidenced by the fight between Anil's Reliance Natural Resources Limited (RNRL) and Mukesh's Reliance Industries over supply of gas by the latter to the former. And now he has been told by the Supreme Court that he won't get to modernise the Delhi and Mumbai airports. Six months ago, Anil's Reliance Airport Developers (RAD) had filed a petition with the apex court seeking rejection of the winning bid by the GMR-Fraport combine for the Delhi airport and that of GVK-Airports Company, South Africa for Mumbai, and acceptance of his own company's. The contention: RAD was the highest financial bidder for the Delhi airport while it was the highest technical bidder in the case of Mumbai airport. Since this is the verdict from the highest court, Anil's airport plans seem grounded at least for now.

But as they say, one man's loss is another man's gain. "One can expect the Chennai airport modernisation process to move faster now as will those of the 35 airports in non-metros," says Kapil Kaul of Centre for Asia Pacific Aviation (CAPA). The airports up for grabs are in cities such as Pune, Nagpur and Guwahati. And don't be surprised if one of their modernisers turns out to be Anil.

-Krishna Gopalan