The Fortnight That Was

Apt acquisitions and inept deals. Open offers and hiked stakes. Expeditious exits and sudden shifts. Strategic restructuring and a new ExIm Policy. Events in the corporate world during the last fortnight ran the gamut of moves. There was high drama when India's first hostile takeover bid was successful with India Cements closing in on Raasi Cement. The strategic acquisition was driven by two 'S's: size and share. The Ashok-Ajay Piramal Group picked up Hoechst Marion Roussel's Mumbai-based R&D unit to dabble in research, a move which may backfire since the group is not given to developing new products. The promoters of the Videocon Group, the Dhoots, came out with an open offer to raise their stake in their flagship, but closed the doors on speculation over its implications. While the Mittal family, the promoters of Bharti Telecom, initiated efforts towards eventual delisting of their company, the ebullient CEO of Nestlé India, D.E. Ardeshir, resigned immediately after his company posted impressive results. The Securities & Exchange Board of India's executive director Pratip Kar had a sudden change of portfolio.And amidst the flurry of change shaking both strategy and top management echelons, corporate India began the countdown to Budget 98.

The Exim Policy Stays On Course

Predictable continuity, rather than a radical break with the past, marked the first major economic policy of the Atal Behari Vajpayee Administration, as Union Commerce Minister Ramakrishna Hegde unveiled the second revision to the five year ExIm Policy (1997-2002). The contents were limited to extensions and corrections to the existing guidelines: changes in the export promotion capital goods and duty entitlement passbook schemes; simplification of the issuance of licences; the shifting of the import of 340 more consumer products to the open general licence; and the setting up of an anti-dumping directorate in the commerce ministry. Rounding off the familiar policy prescription with the customary expression of hope, Hegde announced an exports growth target of 20 per cent in 1998-99, against the backdrop of annual growth rates of 2.70 and 4 per cent, respectively, in the past two years. Bereft of any obvious shift to the swadeshi philosophy, the policy pleased everyone without really sparking off excitement.

India Cements Changes Hands

The M&A juggernaut finally went into overdrive when, 40 days after the open offer made by N. Srinivasan, 53, the CEO of the Chennai-based Rs 831.44-crore India Cements, for the Rs 414.05-crore Raasi Cement, the 74-year-old promoter of the Hyderabad-based Raasi, B.V. Raju, caved in on April 6, 1998. After two days of hectic negotiations, Raju, along with his associates, sold their 32 per cent stake to Srinivasan at Rs 286 a share. With Raasi in its kitty, India Cements will now churn out seven million tonnes of cement every year, and command a marketshare of 21.92 per cent.

Piramal Hits The M&A Trail Again

The other acquisition was less dramatic. Takeover tycoon Ajay Piramal, the chairman of Piramal Enterprises, struck once more. Only, this time, the target was a research centre rather than a company. The Rs 541.94-crore Nicholas Piramal, which bought the basic research unit of the Rs 415.44-crore Hoechst Marion Roussel (India) for Rs 20 crore, will inherit 84 qualified scientists, state-of-the-art infrastructure, and a facility built on five acres of prime land in Mulund, a Mumbai suburb.

Videocon Makes An Offer

To tantalise takeover tycoons, the Brothers Dhoot, the promoters of the Rs 2,481.70-crore Videocon Group, announced an open offer to pick up a 2 per cent stake in the flagship, the Rs 1724.36-crore Videocon International, and consolidate their holding. The offer price, fixed at Rs 140 a share for the 14 lakh shares, is at a huge 124 per cent premium over the ruling market price. The Dhoots will be raising their stake to 44.10 per cent from 42.10 per cent at an investment of Rs 19.60 crore. As the share price rose in response, marketmen wondered whether the move wasn't a prelude to a lucrative sellout.

Nestle Loses Its CEO

He flattered to deceive. After the Rs 1,214-crore Nestlé announced impressive results for 1997-98-sales, at Rs 1,425.60 crore, are up by 19 per cent, and net profits, at Rs 74.30 crore, have increased by 41 per cent-ceo Darius E. Ardeshir resigned, citing irreconcilable differences with the top management of the majority shareholder, the Switzerland-based $48.69-billion Nestlé sa. But there may have been other reasons behind the articulate CEO's exit; among them are a volume-led strategy gone awry, suspect financials, and charges of insider trading in Nestlé stock.

Escorts Ploughs A New Furrow

A merry makeover, this one. In a facelift for the millennium, Escorts CEO Rajan Nanda announced a Rs 1,500 crore gameplan to give the Rs 4,000-crore company a strategic focus. The multi-pronged recast plan includes stepping up investments in subsidiary companies, purchasing distribution companies abroad for exports, and hiving off the shock-absorber business. These apart, the creation of new management structures, business process reengineering, and restructuring of existing entities are a part of Nanda's gameplan.

Nirma Drops An 'R'

Strategic shift is also taking place at the Rs 1,350-crore Karsanbhai Patel-promoted Nirma. In what is the first evidence of a brand extension from the acknowledged umbrella-branding strategist, the detergent-manufacturer introduced a new soap brand, Nima Lime, in Gujarat and Maharashtra. Priced at Rs 6.50 for 75 grams, Nima Lime targets the popular segment of the Rs 2,000-crore toilet soaps market.

Dabur Remixes Itself

Chop-'n'-change. Or, better still, shop-'n'-shed is the new formula at Dabur. The Rs 720.94-crore
ayurvedic-product-maker-turned-fmcg-major is restructuring its portfolio on consulting company McKinsey & Co.'s suggestions. Its plans include exiting non-core businesses such as confectionery, divesting in unprofitable brands like Level cooking oil and Dentacare oral care products, recasting human resource management to bring in a performance-based reward system, and shopping for a professional CEO. With V.C. Burman donning the chairman's cap in-synch with the changes, a new chemistry is at work.

Siemens Extends its Hand

It was sayonara at the Rs 1,814.26-crore Siemens India (Siemens) yet again. In less than a year, Siemens offered another Voluntary Retirement Scheme (VRS) aimed at workmen, staff, and managers. The last such scheme closed only in September, 1997, when 1,300 employees opted for it. Operational from April 1, 1998, the new scheme, valid till May 31, 1998, targets all employees who have either completed 40 years of age or 10 years of permanent service on the date of being relieved. Under the special incentive plan-euphemistically titled ''early bird''-the company will offer an additional three months' wages to all those employees who come forward for the golden handshake within the first 15 days after the scheme opens. The VRS benefits are linked to the salary as well as the number of months left in service, subject to a maximum payout of Rs 5.85 lakh each.

Maruti Revs Up

The Rs 8,454-crore Maruti Udyog Ltd (MUL) rolled over the roadblocks. At a time when the passenger car market grew by only 5 per cent, while the luxury segment had a negative growth of about 22 per cent, the auto major posted a 27.60 per cent increase in net profits for 1997-98 while its turnover went up by 6.30 per cent. The management tussle took the backseat.

SEBI Shifts its Men

The Securities & Exchange board of India (SEBI) decided to play a game of snakes and ladders. In a major internal reshuffle, SEBI executive director Pratip Kar was shifted to the department of secondary markets. Kar was earlier in charge of foreign institutional investments, mutual funds, and custodians. Although portfolio changes are supposed to be routine, this particular reshuffle may have had its origins in the inquiry instituted by Central Bureau of Investigation against Kar regarding his role in the scam surrounding CRB Capital Markets.

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