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| Puma’s Mehta: Racing ahead |
Globally,
the battle in the sportswear market would appear to be a high-stakes
clash between Nike and Adidas (which has acquired Reebok). Last
year's football World Cup saw both the giants come head to head-German
giant Adidas as the official sponsor and Nike responding with a
star-strewn advertising campaign. So, where does that leave the
other German sportswear major, Puma (created, incidentally, in 1948
by the estranged brother of Adi Dassler, founder of Adidas)? Behind
the leaders for sure (the grapevine keeps crackling with talk of
Nike eyeing Puma as a potential acquisition), and it seems to be
a similar story in India, where Puma formally launched its operations
only a year ago. Till 2002, it was present via a licensee called
Planet Sports but, as Rajiv Mehta, the 28-year-old Managing Director
of Puma Sports India, puts it: "A licensee has many brands
within its portfolio, so its priorities are different."
The way Mehta sees it, being a late entrant into India-Nike,
Reebok and Adidas are all entrenched, with flagship stores all
over the country-has its pros and cons. The advantage: "We
can learn from the mistakes they have already made; the disadvantage
is that it's more expensive as retail space prices have rocketed
through the roof. Plus, the consumers' mind is already set towards
the competition, so we have the challenging task of changing that;
but I think that the cost of the disadvantage is lower than the
benefit that we're going to get out of the advantage."
Indeed, Puma is doing its bit to make up for lost time. It already
has set up eight exclusive stores in India-four in Bangalore,
two in Delhi, one in Chennai, and the latest one in Mumbai last
fortnight. The rollout plan involves having 90-100 such Puma outlets
by 2010, with 25 of those coming up in 2007. "Retail is going
to be the key in India, and we have plans to get localised completely,"
adds Mehta.
Puma is attempting to position itself differently, in that it
will be a "sports lifestyle" marketer rather than one
that focuses only on sports. Mehta explains with an example: "We
have a Ferrari collection which looks like the kind of shoe Schumacher
would wear while racing, though it's not really a shoe you can
race in." His target customer base clearly is the youth,
who boast higher disposable incomes, and who hanker for the best
brands. Mehta's mandate would be to convince them that Puma is
one such label.
-Deepti Khanna Bose
Never
Say Never
The Hindujas want to revive a mothballed
power project.
The bad news
in the power sector is the sluggishness with which projects move
off the drawing board. An optimistic way of looking at this, however,
is that you can never leave any such venture for dead. Example?
"We want to revive the Vizag (1,040 mw coal-fired) project
as a merchant power plant," says Ashok Hinduja, Executive Chairman,
Hinduja TMT and the youngest of the four Hinduja brothers. What
he is referring to is the project that was originally thought of
more than a decade ago and which made little progress beyond having
the then Prime Minister P.V. Narasimha Rao lay the foundation stone.
The Hindujas want to revive the project but with a model where the
state would have little role beyond transfer of land. The project
was initially conceived as an independent power producer (IPP).
Hinduja, who is in talks with the state government, is not willing
to disclose any more but those in the know say they do not anticipate
any problem in getting a nod for the project. Apparently, the
Hindujas are seeking transfer of the total land earmarked for
the project. They are believed to have acquired 1,000 acres and
are seeking transfer of the balance 2,000 acres for the project.
If the Hindujas set up the merchant power plant, they would
be able to generate and sell electricity in the open market to
any buyer willing to pay their price. The power producer could
have the option to either import the coal or source it locally.
State government officials are tightlipped on the status of the
project apart from saying the Hindujas have submitted a proposal
and that it is under consideration. Government observers point
out that the old project is closed as the PPA (power purchase
agreement) was not concluded. Apparently, the Hindujas feel the
way forward in the Indian power sector is to delicense it completely.
-E. Kumar Sharma
Billion
Dollar M&A Mania
India Inc.'s acquisitions will soon
attain global size.
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| Ranbaxy’s Singh: If succeeds, he
may polevault into the top 10 league in generics |
In 2006,
according to data compiled by Grant Thornton, Indian companies
completed 266 cross-border deals collectively valued at $15.3
billion (Rs 68,850 crore). The corresponding figures in 2005 were
192 and $9.5 billion (Rs 42,750 crore). It's still very early
days yet in January, but the M&A rumour mill has been working
over time. Speculation abounds on a rash of multi-billion dollar
deals, just two of which would help India Inc. sail past the 2006
figure of all cross-border M&As. Reliance Industries (RIL)
is said to be looking at acquiring the $7-billion (Rs 31,500-crore)
GE Plastics in what could potentially be a $10 billion (Rs 45,000
crore) deal. Ranbaxy Laboratories is working on the purchase of
the generic business of German drug maker Merck, which promises
to be another multi-billion dollar transaction. Also on a global
mega-asset hunt is the A.V. Birla Group, which is said to be eyeing
Norwegian aluminium maker, Norsk Hydro. Then Vijay Mallya's UB
group is reportedly close to bagging Scottish distiller Whyte
& Mackay for close to a billion dollars. Of course, all this
comes on the heels of Tata Steel's bid for Corus Group Plc of
the UK; at the time of writing the Tatas appeared poised to make
another bid-to counter that of CSN, the Brazilian steel major
that's also in the fray-which would take the value of the transaction
to close to $10 billion. "Deal sizes have been increasing
continuously over the past few years and this trend is likely
to continue," says Raj Balakrishnan, Director, DSP Merrill
Lynch.
The numbers may be looking bigger, but the triggers for going
global remain the same-size, newer geographies and diversification
of risk. For instance, if Ranbaxy does succeed in buying out Merck's
generics portfolio, it will polevault into the top 10 league in
global generics. "The generic business of Merck is a quality
asset. It offers a strategic fit to our global business and we
would certainly be interested if it is available at the right
price and enhances shareholder value," says Malvinder Singh,
Managing Director and CEO, Ranbaxy Labs.
The RIL spokesperson declined to comment when contacted by BT
on RIL's interest in GE Plastics. But if Chairman Mukesh Ambani
does pull it off, he would have, at a stroke, created a global
marketing network, with a presence in at least 60 countries. GE
Plastics' technology centres and production sites in 60 locations
across 20 countries will also come RIL's way if the deal goes
through. A GE spokesperson in an e-mail response to BT said: "The
company does not comment on speculation." A spokesperson
at the A.V. Birla Group, too, refused to comment to BT on the
conglomerate's interest in Norsk Hydro, the third largest aluminium
company in the world.
Many of these deals may not materialise, but there's little
doubt about the action that's waiting to play out in 2007. "The
most active sectors for outbound m&as are likely to be pharma,
metals and mining and engineering. Apart from this, we are also
likely to see industry leaders across almost all sectors seeking
to expand from a largely domestic footprint to a more global one
by making selective strategic acquisitions," says Balakrishnan.
In the immediate future, though, something to clearly look forward
to is India's first multi-billion dollar cross-border transaction.
-Krishna Gopalan
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