Dunlop's Desperation

By Avijit Ghosal

He is banking on his buildings. In desperate need of working capital, Manohar Rajaram Chhabria, 51, the chairman of the Rs 563-crore Dunlop India, is now selling off his family silver. On the block are Dunlop's seven prime properties scattered in six locations: two in Mumbai, and one each in Chennai, Calcutta, Bangalore, Pune, and Goa.

An advertisement on a Website--www.allindia.com--in January, 1998, solicited developers for the various properties--estimated at a conservative Rs 200 crore--owned by Dunlop. The ad stated that "proposals are invited from suitable partners in the form of joint ventures/financial tie-ups/leases/any other type of alliance for development" of the seven properties. The extent of the cash-crunch can be gauged from the fact that the company is even interested in striking a deal for its head office at 52-B, Mirza Ghalib Street, Calcutta.

Clearly, Dunlop is in the doldrums. During the first six months of the year ended September, 1997, Dunlop posted its first-ever net loss of Rs 19.20 crore--compared to net profits of Rs 18.52 crore during the same period in 1996--in its 62-year history. And tyre production dropped from 60.79 lakh in 1992-93 to 15.94 lakh in 1996-97. Confronted with such a situation, Dunlop has "suspended operations" at its Sahaganj factory in Calcutta, which accounted for 70 per cent of production in 1996-97. The company has already asked about 40 junior and middle managers to proceed on indefinite leave.

Dunlop's bankers are refusing to provide it with adequate working capital, forcing it to search for other funding avenues. Although the company enjoys a credit limit of Rs 93 crore, it has never been allowed to draw more than Rs 38 crore. To tide over his woes, Chhabria has been trying to raise money from other sources: a Rs 66-crore rights issue, external commercial borrowings of $25 million (Rs 100 crore)--and real estate sales. But given the state of the real estate market, Chhabria may have only a firesale on his hands at Dunlop.

GM's Global Gambit

By R. Sridharan

Fierce as foes, formidable as friends! Together, the $164.06-billion General Motors (GM) and the $5.78-billion Daewoo Motors--which inked a strategic alliance for co-production and co-sales of their cars in January, 1998--could prove to be unbeatable in India. That's not all; the American automobile giant has even made an offer to pick up a 50 per cent stake in the South Korean manufacturer at a price of $330 million.

Interestingly, neither of the companies' Indian subsidiaries have received any formal communication from their respective headquarters. Says Aditya Vij, 39, national marketing manager, GM India: "It's too early to say how the alliance will affect India." But if the global deal comes through, and encompasses the Indian operations of the two companies, it will trigger off consolidation of the mid-segment.

Try clubbing the two. GM India has 25 dealers, 37 service centres, and a capacity of 12,500 cars, and Daewoo has 110 dealers, 100 service centres, and a capacity of 120,000 cars. The combined entity will certainly be a big threat to the Rs 7,956.47-crore Maruti Udyog Ltd (MUL) in the mid-sized car segment. In the first three quarters of 1997-98, GM India's marketshare, at 18.30 per cent, stood close to Daewoo's 19.40 per cent, with MUL leading with 36.50 per cent. Together, they're a nose ahead of MUL.

Another casualty could be Mahindra Ford, whose Ford Escort competes with GM's Opel Astra and Daewoo's Cielo. Says an unfazed John G. Parker, 50, CEO, Mahindra Ford: "The tie-up does not affect us. Ford believes that competition is good." It definitely is. But with Daewoo poised to launch the small car, competition may soon be discomforting.

Bangkok Beckons

By R. Sridharan

Will the South-East Asian meltdown knock the breath off India's tourism industry? It just might. Thanks to the devaluation of currencies, tourist inflow into popular destinations like Pattaya and Phuket (Thailand), and Bali (Indonesia) is going up.

Always a more expensive destination, India becomes even less attractive now. Warns Ashok Bhatnagar, 45, executive secretary, India Chapter, Pacific Asia Travel Association: "This year is going to be bad for Indian tourism because it also happens to be the election year." Thus, tourist traffic in 1998 is expected to inch up to a meagre 2.4 million from 2.2 million in 1997.

Not surprising, since weaker currencies mean cheaper vacations. Even intra-country air traffic could head for nearby countries. For, a return trip from Delhi to Bangkok (Rs 12,500) costs almost the same as one to Goa. Which means that even as foreign visitors dry up, us locals could also go backpacking abroad.

The Dynamics Of Dynasties

By R. Sukumar

Are Asia's family enterprises firmly entrenched in the past? A study by management consultants A.T. Kearney, titled Asian Entrepreneurs In Transition, of 66 family holding groups across nine countries (The Philippines, Singapore, Malaysia, Hong Kong, Thailand, Indonesia, Taiwan, South Korea, and India) indicates that they are changing--albeit slowly. Kearney's Hong Kong-based veep Alex Liu, 44, who co-ordinated the study, and refers to these groups as "dynasties in motion," believes that the timing could not have been more appropriate. "It's very relevant now because of the currency chaos."

The study shows that the boards of less than 10 per cent of the groups were family-dominated, and the boards of 30 per cent had no family members at all. The inference: most Asian enterprises are in the formalisation stage of business evolution, a mid-point between the start-up stage--where business is a sub-set of the family--and the maturity stage, where business is almost independent of the family. Given the pace of evolution, maturity could be attained only in the new millennium.

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