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The deal street is abuzz with the news that the former HDFC executive Satrajit Bhattacharya is close to acquiring a Mumbai-based mid-sized housing finance company. People in the know of the deal, say it is perhaps one of the biggest acquisition deals by a start-up in recent times. Bhattacharya is expected to make a public announcement soon of his acquisition as well as the launch of Weaver Services. Ever since the 54-year old Satrajit quit his high profile job from HDFC, the country’s premier housing finance company, he has been on the radar of I-bankers and Executive Search firms with a job offer. But he was keen to become an employer not an employee. As soon the cooling period was over Satrajit made his entrepreneurial plans of getting into affordable housing finance space public. Being an M & A specialist, his strategy to hit the ground running by acquiring a housing finance company seems to have attracted well known PE players. It is learnt that they are willing to bankroll him for more acquisitions. Satrajit’s entry into the housing finance space seems well-timed given the fact that the government is keen to address the massive housing shortage in India –estimated at around 10 crore units — with the bulk of the shortage being in the lower income segments.
Global auto giant, Ford Motor Company is planning its third entry into India. According to Autocar India, “Barely two years since Ford shuttered its Indian operations, the U.S. car maker is plotting a comeback and is evaluating multiple options.” Kay Hart, the head of Ford Motor Company’s International Market Group visited India in March to “assess its entry plans”. Interestingly, it will be the third time the U.S. auto giant will be entering India. It had set up shop in 1926 as a subsidiary of the Ford Motor Company of Canada. But, the Indian company had to be liquidated in May 1953 as a result of severe import restrictions. Then post liberalisation, it entered India for the second time in 1995 as a 50:50 partner with Mahindra & Mahindra and set up a plant in Tamil Nadu. But this JV did not work so the U.S. company hiked its stake to 72% and renamed the company to Ford India Pvt Ltd. Over a period of time Mahindras exited the JV. But somehow it was not able to make inroads into the Indian passenger car market the way Hyundai did with Santro. So nearly after 25 years, Ford once again chose to exit the Indian market in 2021 as it failed to keep up with the competition vis a vis the whole operations was proving to be unviable. Fortunately, the company which had put its TN plant on block at the last moment decided against it. Now, this plant will be cranked up to produce both ICE and EV products. Ford officials have already met the Tamil Nadu government officials with their detailed plans.
The man who single-handedly built the BSE SME Platform over the last one decade has put in his papers. A diehard workaholic Ajay Thakur, is responsible for starting and making SME Exchange and Startup Platform successful in India. Today his name has become synonymous with SMEs. Even though BSE is a century old Brand but when it came to promoting the SME platform, the task Thakur was entrusted in 2010, it was not exactly a cakewalk. MSME promoters were not keen to list on this platform. He nearly personally met 35,000 SMEs from all over the country in the last 12 years trying to convince them, created an ecosystem of merchant bankers and other intermediaries before his passion, conviction and dream began to bear fruit. Today, BSE is the largest and most successful SME Platform in India with 491 companies listed and another 125 companies in the pipeline. These 491 companies have raised an amount of Rs 6,397 crore and have market capitalization of approximately Rs 140,000 crore. Seeing the success of BSE SME even NSE has got into the play. Under Thakur’s leadership, BSE has conducted 2500 physical seminars and 500 webinars across the country to create awareness among SMEs and Start-ups about the benefits of equity funding and listing on the SME and Startup Platforms of BSE.
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A new housing finance company being set up by former HDFC executive Satrajit Bhattacharya, former head of M&A at HDFC Ltd, appears to have gathered significant momentum. The venture, news of which was broken here on shortpost.in last December, is likely to be called Weaver, according to reliable sources. The affordable housing finance initiative is learnt to have attracted several high-powered professionals from across domains. “It’s quite a story that Satrajit and his team are weaving together,” said someone in the know of things. “There are talks of acquisitions,” he mentioned. That the venture is eyeing acquisitions as an entry strategy comes as no surprise, given Satrajit’s expertise in M&A. Weavers is looking at crafting together a differentiated national story, and several respected and eminent investment bankers and advisors are understood to be associated with the venture. Several marquee investors too are likely to be a part of the new project it is learnt. Satrajit, an industry veteran, was till recently the senior general manager heading investments and mergers and acquisition for HDFC.
One has heard of gold being smuggled, and diamonds too, and drugs, and contrabands, and cough syrups even, but one must be completely nutty to even imagine smuggling nuts into the country. Yes, the Indian authorities are today faced with the daunting task of stopping areca nuts being smuggled into India, through the Indo-Myanmar border. No paan, gutkha or paan masala is complete without the supari — the areca nut or betel nut. The current areca nut market size in India is estimated at $ 0.92 bn, and is expected to touch $ 1.16 bn by 2029. Areca nut is mainly grown in Karnataka, Kerala, Assam, West Bengal, Tamil Nadu, Kerala, Mizoram and Manipur. For areca nut growers it is their only means of survival. Now, the illegal smuggling of the nuts from Myanmar has hit them hard. The reason for it being smuggled is the 100% import duty. And this illegal smuggling has crashed the local market. Earlier, a 50-60 kg bag of fresh areca nuts sold for Rs2,500-2800. Now, it is being sold at Rs 1,085. Complicating the problem is the fact that there is no way to distinguish the Indian nuts from the smuggled ones, in fact there is no competent authority which can differentiate the Indian nuts from the Myanmar-ese ones. And so, while the authorities chew on this nutty issue, the nut growers in India particularly those in Manipur and Mizoram are a distressed lot.
An interesting, and exciting new initiative is quietly taking shape in the Indian affordable housing finance space. The venture, which is expected to unravel in early 2024, will be distinct from the existing players in the country, both in terms of its scale and breadth of operation. The new company is expected to be a national player, with aspirations of becoming an institution. The new initiative has already evoked positive response from leading large fund houses who are likely to back the entity. The venture has also piqued the interest of several industry seniors. Led by former HDFC executive Satrajit Bhattacharya, a core team drawn from across the industry to lead the new initiative is presently being put together. Satrajit, himself an industry veteran with over three decades experience, was till recently the senior general manager heading investments and M&A for HDFC which has now been merged with HDFC Bank. Bhattacharya is an M&A and transaction specialist, having led multiple M&A and capital raise transactions, with a strong background in investments, deal structuring and transaction negotiations. He also had a long stint with market regulator SEBI. Besides being a hard-nosed investment banker, Bhattacharya who graduated from Delhi University is also a birding enthusiast who spends most of his non-working time, searching and photographing the avian species across the length and breadth of the country.
Hard copy in this digital age is passe. Today, all communications are in digital or electronic form save for doctors writing their prescriptions. So it was surprising to see Uday Kotak, Managing Director and CEO of Kotak Mahindra Bank Ltd sending a handwritten resignation letter on September 1 to his chairman Prakash Apte. The 3-pageletter captures the journey of Uday Kotak which started in 1985 with three employees in Mumbai’s Fort area. Today, this successful bank which has over a lakh employees has presence all over India and five other countries. Interestingly, Kotak has tweeted his handwritten letter. Generally, handwritten notes are written to add that personal touch and some CEOs do take that extra effort to send a thank you card or good wishes hand written. This gesture conveys that they care. Ratan Tata is known to do that; he sends handwritten letters especially if it is outside business. He has very good handwriting. This writer has seen some of his handwritten notes. Coming back to Kotak, he has truly built a formidable bank. In his words, “an investment of Rs 10,000 with us in 1985 would be worth around Rs 300 crore today.” All his stakeholders are laughing all the way to the bank.
The stock market is in a bull phase with both the benchmark indices — Sensex, Nifty50 – touching new highs every week. The market which is constantly looking for a trigger to scale to new highs seems to have got a big one. According to Mint “Participatory notes are poised for a comeback, this time through the International Financial Services Centre, Gift City, Gujarat, after nearly a decade of being discouraged by Indian regulators. Some leading global banks that currently issue P-Notes from global jurisdictions, such as Singapore, are considering shifting to GIFT City as the special economic zone offers both tax sops and regulatory clarity.” The return of P-Notes will be like music to the ears for the stock market players. According to The Hindu Business Line report “foreign investors had patronised P-Notes for 14 years between 2004 and 2018. At the peak, P-Note linked investments in India stood at around Rs 4-lakh crore. But P-Notes lost their charm after SEBI restricted its use and banned them completely in the derivatives segment.” Currently, India is parched for foreign money in stock markets and allowing P-Notes could act like steroids, experts say. On a net basis, the foreign portfolio investors sold Indian equities worth more than $20 bn in 2022. Tax arbitrage has forced FPIs to move to other jurisdictions.
No government has been under a giant microscope as the present dispensation headed by Prime Minister Narendra Modi. Anything he does or says gets two extreme views. This is why the article in the Indian Express by Distinguished Professor Ashok Gulati and Research Associate Purvi Thangaraj, both from ICRIER, makes for an interesting reading. The duo have evaluated the performance of UPA and NDA on three parameters. They have chosen GDP growth, inflation numbers and impact of social welfare schemes for two periods. The UPA government –2004-05 to 2013-14 — headed by Manmohan Singh. And the NDA government — 2014-15 to 2022-23 — headed by Modi. The average annual GDP growth during Modi’s regime stood at 5.7% compared with 6.8% clocked during Singh’s 10-year period. “But in terms of taming CPI inflation, the Modi government has surely done a much better job by holding the inflation rate at 5.1% vis-a-vis Manmohan Singh’s period when it averaged at 8.1%. On the social welfare scheme front, the writers say the Modi government appears to have surpassed the achievements of the Singh government. In sum, they say, “Overall, while the Modi government’s performance in terms of GDP growth has been somewhat subdued, it has succeeded in taming inflation, keeping agri-growth respectable and doing a much better job on welfare schemes than UPA.”
The $128 billion Tata Group with 29 listed companies, has decided to rejig their real estate business. The new thinking of the management is to focus only on developing commercial properties and move out of housing development space. According to an informed source, Tatas, like other major corporations, are finding it difficult to manage consumer expectations in the residential property space; this business needs an owner driven approach with personal skin in the game to handle the daily challenges as well as managing individual consumer’s expectations. As part of the group’s restructuring process, the Tata group has already brought Tata Projects, Tata Consulting Engineers, Tata Realty and Infrastructure, and Tata Housing under a single umbrella in order to create a larger infrastructure vertical. It has integrated its real estate development entity, Tata Housing Development Company – a 100% subsidiary of Tata Sons – with Tata Realty and Infrastructure. Reportedly, the group is also looking to invest Rs 1200 crores in acquiring land parcels outright and through joint ventures in major cities across the country for commercial development.
Gautam Adani’s story would make for a good Netflix series like Succession. India’s business tycoon Adani is numero uno on all parameters. What makes Adani different and what are his success mantras is well captured by the veteran journalist RN Bhaskar in his book Gautam Adani: Reimagining Business In India And The World. Bhaskar who has been tracking Adanis since 2007 has brought to light information that not many know. Bhaskar writes, “In many ways Gautambhai is destiny’s child. He has escaped accidents, major trading crises and even terrorist attacks (26/11). For instance, in January 1998, much before he became a big industrialist, Gautambhai and Shantilal Patel, an associate, were kidnapped. Adani and Shantilal Patel were abducted at gunpoint after they left Karnavati Club in a car and headed for Mohammadpura Road in Ahmedabad. A scooter reportedly forced the car to stop, and then a group of men came in a van and abducted both men. They were taken to an unknown place in a car before being released, the police chargesheet said.” The case was finally closed after 20 years when an Ahmedabad court in November 2018 acquitted the two main accused – Fazl-ur-Rehman alias Fazlu and Bhogilal Darji alia Mama. Reason for their acquittal was because Adani refused to press charges. “One reason for not pressing charges could be that a large ransom was paid, estimated at $1.5 mn,” says the author.
Serious efforts are underway to revise the controversial power generation gas-based project at Dabhol in Ratnagiri district. The Shinde-Fadnavis government in Maharashtra has received positive signals to rejuvenate the project, popularly known as Enron. Presently, there is complete closure of the project since 31 March this year. Union power minister RK Singh recently held a meeting at which the power generation from the project was reportedly discussed. The project was launched by the government of then chief minister Sharad Pawar in 1993-95 with a counter-guarantee by the Government of India. After the Shiv Sena-BJP alliance assumed power in the state in 1995, it scrapped the project then revived it under revised conditionalities. The public sector NTPC is the principal shareholder in Enron. However, the project never fully recovered despite Centre’s efforts since gas supply to it was not adequate. It is now argued that if gas is made available at reasonable rates, power generation can become feasible at cheaper cost. The last per unit cost from the project was Rs.6.50 and the sole consumer was the railways. The railways started purchasing 500 MW of power from this plant on the basis of a subsidy from the Centre from 1 April 2007. The quota dwindled down to about 250 MW due to various reasons. The five-year agreement expired on 31 March this year, finally shutting down the operations.
Are people adapting to digital technologies? Well, if the question is posed to Tata Sons’ Chairman N Chandrasekaran, the answer is a resounding ‘yes’. “Deepak Parekh bought a smartphone, otherwise he was always using a SMS, text phone. When he said abhi (now), I need to be at least on WhatsApp, I need to do Zoom calls, so I bought a smartphone,” Chandra, as is fondly known in the industry, said. It is no brainer that the Tata group chairman was referring to HDFC Chairman Deepak Parekh, who is 77 years old. Despite his oversized stature in the corporate world, Parekh, the Padma Bhushan awardee never upgraded his normal cell phone, until the pandemic struck. Hence, Parekh buying a smartphone becomes the benchmark or the proof of ‘digital adoption’ gaining ground. In comparison, Chandra, also a Padma Bhushan awardee, is known for his technological prowess. The head of IT behemoth Tata Consultancy Services is also the author of ‘Bridgital Nation: Solving Technology’s People Problem’. Chandra’s comments were made at the 74th Founding Day Lecture Meeting of Bombay Chartered Accountants Society (BCAS), where he was the guest speaker. In his speech, Tata Sons’ Chairman also hailed the “huge innovation” and the huge human spirit and how people could adapt – poor and rich – during the last two years of Covid.
Kerala’s capital city of Trivandrum is not quite a place of shopping frenzy like Mumbai, Bengaluru or Delhi. But Yusuf Ali’s Lulu Mall has done the impossible by introducing a midnight shopping concept in Trivandrum. What started on a trial basis has ended in a resounding success. The Mall owners have now promised to conduct the night shopping spree on a frequent basis. Huge crowds started milling around the Mall hours before the official opening at 11.59 pm (July 6). The roads nearby were chock-a- block and so were the parking bays. “Our intention to encourage midnight shopping was to offer a new and peaceful shopping experience,” said Joy Shadanandan, Regional Director, Lulu Group. To ensure the success of midnight shopping, there were many firsts like 50% discount on all purchases, a pink parking area exclusively for women customers. The security was upped with more personnel in mufti to ensure women safety at night. The Kerala Government also helped in with more policing and traffic management. Special bus services were introduced by the public transport provider, KSRTC. Lulu Mall in Trivandrum has crossed the one-crore-footfall mark since its opening in December 2021. With the success of the night shopping the erstwhile Travancore Kingdom could well attain the tag of “a City which never sleeps”.
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The Taj Group of Hotels has retained the iconic Taj Malabar Hotel at Willingdon Island in Kochi, Kerala. The Cochin Port Authority (CPA) which owns the property, finalised the bid for operating the heritage property on July 1. Though many leading hospitality groups showed interest in the bid, but the Taj Group managed to retain it for an enhanced lease amount of Rs 1.25 crore per annum. Taj Group paid Rs 71 lakh per annum for the earlier lease. Under the new agreement which is for 30 years, the lease amount will increase marginally every five years. Quite a few hospitality chains had picked up the bid documents, but ultimately there were only two bidders. Though the Taj group had the benefit of first right of refusal, they resorted to outright bidding to retain the property. CPA, did not disclose the name of the competing bidder. With the new Coastal Regulation Zone rules in place, no expansion of the hotel can be undertaken. So, the Taj Group will undertake an exhaustive renovation of the hotel and resort. Ever since CPA indicated that it was going for a fresh bidding of the resort, no upgradation or renovation was done at the premises for nearly two years.
International travellers flying in and out of Trivandrum Airport in Kerala were deprived of duty free shopping for the last four years. With Adani Group taking over the airport in October 2021, things have changed for the better. The Customs authorities had shut down the duty free shop at the airport on the grounds of illegal sale of alcohol to the tune of Rs 6 crore. The allegation was that the then Malaysia-based operator, Max Plus, was diverting foreign liquor meant for sale at the airport to the black market. Max Plus was using travel documents of passengers passing through Trivandrum without their consent for the illegal sale. Even after four years, the Customs Authorities and the then operator, Airport Authority of India (AAI), were least bothered to hasten the investigation and reopen the duty free shop. Adani on the other hand meant business. After all, the group paid Rs 476.10 crore to earn the right to operate Trivandrum Airport. They immediately got the Customs NOC to reopen the duty free shop with a new partner, the Dubai-based Flemingo. In fact, Flemingo also operates the duty free shop at Colombo’s Bandaranaike International Airport. With the footfalls expected to increase manifold, the Adanis are out to make a handsome packet. Incidentally, Adani is also the operator of the Vizhinjam sea port at Trivandrum.
A new bee on the job horizon goes by the exotic name of Gig business. Many big companies including Tatas, Infosys, Britannia, Wipro, Ola, Fresh to Home etc are looking to the gig economy to cut costs and access talent across locations. There are now quite a few popular gig worker platforms like Awign and Taskmo. Gig is a slang term used for a single professional engagement usually for a short duration. Some of the examples are freelancers, independent contractors, project-based workers and temporary or part-time hires. The huge interest has seen Awign’s top line and bottomline grow 10- fold, according to Annanya Sarthak and Gurpreet Singh, the founders. In the last one and half years, the business profile of its customers changed to large enterprises — either Rs 1000 crore brick and mortar enterprises or scaled up growth companies like Swiggy, Ola, Byju’s etc which have grown into large enterprises. Another company, Taskmo, is also seeing its business grow. Taskmo has added 430-450 new task listings. At least 20% of them were as per specific customer requirements. This is a new trend with momentum picking up as companies look at flexi-hiring to rationalise talent acquisition, says Prashant Janadri, Taskmo promoter.
In the season of biopics, the latest one taking shape is based on the life of Biscuit King, Rajan Pillai. Bankrolled by Saregama India’s film arm, Yoodle Films, Biscuit King will feature Malayalam super star, Prithviraj Sukumaran, directing and essaying the title role. Rajan Pillai got fame when Nabisco, the US biscuit and cookies maker was bought over by KKR in 1989 in one of the biggest leveraged buyouts for $ 31.4 billion. KKR after the buyout, started asset stripping the company and selling most of Nabisco’s business the world over, barring US. Rajan emerged as the biggest bidder for Nabisco’s Asia business along with his former boss Ross Johnson. After Nabisco’s acquisition came Britannia Industries in India. Rajan Pillai’s emergence at Britannia led to one of the biggest corporate wars between him and industrialist Nusli Wadia. Rajan paid for it with his life, ending up at Tihar Jail and dying a horrible death. Ironically, Rajan who escaped from Singapore was arrested for a crime he never committed in India. Tihar jail officials mercilessly beat him. The question being asked in corporate circles is whether Biscuit King will portray Rajan’s wife Nina Pillai’s version of the saga or Nusli Wadia and Sunil Alagh’s viewpoint. Whichever the version, this movie on the rise, fall and gruesome death of Biscuit King Rajan Pillai will attract huge eyeballs.
What does holding one-fifth stake in a company mean to the strategic investor? Wielding major influence on the running of the enterprise? Well, it depends on variable factors. Some investors are just happy to park their funds and, earn rich dividends as income. Others, however, seek a more active role in the running of operational affairs. More than anything else, the nature of the enterprise itself defines the role of a one-fifth shareholder. An equity stake of 21.28%, as on September 30, 2021, made DMart’s founder Radhakishan Damani a significant player in The India Cements business. The promoter group – N Srinivasan family — holds a 28.42% stake in the company. Operating a cement enterprise is no kids’ play. Given the very nature of the operating environment, the cement business makes for a heady cocktail which needs a customised management to run the enterprise. Also, the rough and tumble playground requires a combination of native intelligence and deep marketing mind as sine qua non to safely and securely navigate the playing fields. That is a catch that the Damanis appear to fully understand as also, India Cement’s illustrious history. The indefatigable never-say-die spirit of N Srinivasan at the helm with near-term excitements aplenty will make for a fascinating long-haul story! One thing is for sure, however. It is only headed for more interesting times.
The beleaguered Punjab and Maharashtra Urban Co-operative Bank’s (PMC Bank) draft amalgamation scheme with Unity Small Finance Bank (transferee bank) may have to be reworked ahead of the upcoming BMC polls. The fly-in-the-ointment pertains to the clause that “no further interest will be payable on interest-bearing deposits of transferor (PMC) bank for a period of five years from the appointed date (of merger). It will be a long wait of five years for innocent depositors to be paid their money in full. PMC Bank’s deposits stood at Rs10,535.45 crore at end of March last year with nearly 50,000 depositors expected to bear the brunt of the current deferred payment scheme. A number of housing societies (read voters) in Mumbai had deposited their funds in the PMC Bank. Even bank employees’ cooperative credit societies were caught in this jam: The RBI Officers’ Co-operative Credit Society with some 3,500 members has FDs of Rs 105 crore while the RBI Staff & Officers Co-operative Credit Society with nearly 8,300 members has Rs 86.50 crore. Sahakar Bharati, a powerful force in the cooperatives space, has already made clear its discomfort with the scheme as things stand today and sought a relook at the repayment plan for depositors. Will political parties in the BMC polls fray take up the issue now? Last year, the RBI gave a licence to Centrum Financial Services and BharatPe to set up a small finance bank, Unity Small Finance Bank so the PMC Bank could be amalgamated with it.
Prime minister, Narendra Modi, states ad nauseam that he wants India Inc to prosper and, therefore, the all-out efforts by his government on the ease-of-doing-business front. For the Reserve Bank of India (RBI) though, it was business-as-usual when it recently “forced” RBL Bank’s renowned boss, Vishwavir Ahuja, to go on leave without citing what went wrong at the private sector bank. This comes in the wake of fiscal imprudence causing upheavals at several banking institutions over the last five years including Punjab National Bank, the Infrastructure Leasing & Financial Services, Dewan Housing Finance Corporation, YES Bank, and Punjab & Maharashtra Co-operative Bank. These incidents led to considerable financial instability at huge cost to the exchequer. It also distracted the ruling government which had to expend both time and political capital to salvage and set right the mess. This has been the case since the early 1990s — remember Harshad Mehta scam, CRB Capital, Ketan Parekh-Bank of India and Madhavpura Co-operative Bank. Successive Union governments were compelled to launch into respective cleansing acts after the RBI was caught flat-footed on the supervisory front. Surprisingly, no one at RBI was asked to go on leave or lost their jobs because of supervisory lapses. Can India Inc afford regulatory complacency anymore?
Avantha Group promoter Gautam Thapar’s fall, currently lodged at Delhi’s Tihar jail, was swifter than his meteoric rise. A series of events dislodged the 61-year-old industrialist from his pedestal, the latest being a special CBI court denying him bail in an alleged fraud case. Thapar was arrested in August 2021 by the Enforcement Directorate for money laundering following a sale of property in Delhi. The property, mortgaged to Yes Bank against a loan by the Avantha Group, was purchased by another firm at much lower than prevailing market rates. Coincidentally, Yes Bank’s founder Rana Kapoor’s wife was a director on the board of the said firm. What led to Thapar’s fall from grace? A Doon School and, US-based Pratt Institute alumni, he joined the family business Thapar Group in 1980 and is credited with turning around many of the group’s ailing businesses. In 2007, he bought over the family enterprise, rechristening it as the Avantha Group. An over-ambitious Thapar launched into aggressive global acquisitions under Crompton Greaves and the BILT brands, even foraying into the power sector in 2008. All these ventures, however, bombed with accusations of financial fraud and corporate governance issues abounding thereafter. The group companies were taken over by lenders, and the ‘rainmaker’ turned into an economic offender even having “criminal antecedents”.
Suddenly, Chennai has turned into hyper city. The listing of SaaS (software-as-a-service) firm Freshworks on Nasdaq, eliciting record bids by a little known Latent View Analytics and the attraction of huge funding by an obscure Ram Charan Company has pitch-forked the usually docile business world of Chennai into the national limelight. Is Chennai getting a new sense of importance? Not really, if one were to take a deep dip down memory lane. This part of the world has been a trend-setter in very many ways. The first corporate film company (GV Films), THE first corporate hospital (Apollo), First Leasing Company, first time-share company (Sterling Holiday), first corporate education company (Triveni Academy), first hostile takeover (Cumi acquiring Wendt India in the early 90s) – you have all of them sprout from this Dravidian land. In that way, this is a hotspot for innovation and experimentation. And, the financial services business has a strong root here. Not surprising that this Mumbai-based financial services company has developed a Spark to put its Capital into this. Avendus must be mega pleased to discover this mid-market investment bank Spark Capital in Chennai. A Spark will do Avendus a world of good in terms of its ability to provide research-oriented insight and solutions to clients’ requirements. This one is indeed a Spark(ling) move by Avendus!
Tata Sons’ bid for debt-laden national carrier Air India has much to do with its legacy, mostly linked to the group’s patriarch JRD Tata, than just being a business decision. But why did Tatas turn a Nelsons’ eye to Jet Airways, another beleaguered carrier which got all approvals overnight by the Civil Aviation to start operations from January 2022? That’s one topic on which many articles and books have been written on over the years. Even the movie Udaan (Soorarai Pottru in Tamil) had a passing reference. The story goes, in 1997, the then civil aviation minister CM Ibrahim scuttled Tata group’s plan to start an airline jointly with Singapore Airlines (SIA). This was allegedly to support Naresh Goyal’s Jet Airways. The blocking of its application by the minister surprised Ratan Tata as he was about to close the deal with SIA. Perhaps, that bitter experience may have kept the Tatas from bidding for Jet Airways, insiders say. The group already holds stakes in two carriers – 83.67% in AirAsia India and 51% in Tata SIA Airlines (operating as Vistara) – and the acquisition of Air India will help the group to dominate the skies. The group pioneered India’s aviation with Tata Air Service in 1932 which became Air India in 1953 after it was nationalised. If Tatas win Air India then the wheel would have come full circle.
West Bengal Chief Minister Mamata Banerjee’s return serve, to use a tennis phrase, seems faster than what BJP had anticipated. Even though Didi has won the game comfortably she is not happy. A reliable source says that hurt by party deserters her ire is directed at the mastermind – BJP. And she is doing everything within her might to put BJP on the back foot. For starters, Governor Jagdeep Dhankar who has been highlighting horrific post-poll violence has been called ‘corrupt’, Nandigram election results challenged in the High Court, HC judge handling that case has been asked to recuse from the case by her and now she pledges Khela Hobe with focus on 2024 Lok Sabha polls to oust BJP. In doing so, Didi, according to a businessman, is missing wood for the trees. Election is past tense; now the most important thing before Didi is the West Bengal economy. And she has not made any statements about giving fillip to state industrialisation. The business fraternity, he says, will not embark on any green field projects but perhaps do incremental brown field projects. To avoid being caught in the crossfire in the slanging match between the Centre and State, some businessmen are thinking of relocating out of India. If Didi focusses on West Bengal economy all other problems will solve itself.
For Kerala-based Kitex Garments chairman & managing director Sabu M Jacob, moving to Telangana was an easy decision. “If I invest Rs 1,000 crore in Telangana, over the next 10 years, the government there will pay me back almost a similar amount via capital subsidies, payback incentives etc. But if I invest Rs 1,000 crore in Kerala, I need to shell out another 100 crore to deal with ‘other expenses’ here,” Sabu said. Kitex is investing in an apparel park at the Kakatiya Mega Textile Park in Telangana’s Warangal district. He has also made it clear that the existing facility that gives employment to over 15,000 people will continue to operate in Kerala. Just that the expansion plans will be moved out of state for operational reasons. Sabu says this decision to relocate expansion plans to another state is purely a financial decision and nothing to do with politics. This comes after media speculation that the ruling Communist Party of Kerala thought it was high time to clip his wings after Sabu’s political entry via his CSR arm 20:20 started making an influence in the electorate. The 29-year-old company, part of the Anna-Kitex group, is the largest private sector employer in Kerala. Being an employment generator saw many States willing to roll out the red carpet to the company.
Indian pharmaceutical majors Glenmark Pharma, Sun Pharma and Cipla are in early-stage talks with foreign vaccine manufacturers to bring in foreign vaccines into the country. Looks like they will follow a similar tie up like what Dr Reddys did with Russian Direct Investment Fund (RDIF) that markets Sputnik V vaccine developed by Moscow’s Gamaleya Research Institute of Epidemiology & Microbiology. With this move, now it is getting increasingly clear that the Centre was keen to “diversify” vaccine control to multiple companies as against only Serum Institute and Bharat Biotech. For a country with 130 crore people it is a little risky to bank on two companies to manage the entire logistics. Though the government earmarked Rs 35,000 crore for vaccination under its budgetary provisions, Serum was only given just over Rs 3,000 crore which was clearly not enough to meet the sudden surge in demand. Hence the country faced shortages due to this policy-level confusion and as things stand it will clearly take a month or more for regularising Indian vaccination programme.
India’s primary market is expected to be buoyant in FY22 too. In FY21 over 30 companies raised around Rs 31,000 crore via initial public offer (IPO). With the secondary market bouncing back by nearly 100%, corporate India is getting ready to tap the primary market big time. And this includes the much-awaited IPO from the Life Insurance Corporation Of India. But, all plans seem to have gone awry with the resurgence of the second wave of Covid-19. Perhaps the first victim of that wave seems to be the Kolkata-based diversified conglomerate Apeejay Surrendra Group’s The Park Hotels IPO. It had received regulatory approvals in March 2021 for its Rs 1,000 crore IPO. But, if the market grapevine is to be believed, the luxury boutique hotel chain has decided to put IPO plans on hold for time being till the market conditions improve. But, the decision to defer its IPO has not impacted the company’s expansion plans. It has signed six new properties across its various brands in the last six months at Leh, Patiala, Goa, Port Blair, Coimbatore and Pathankot. The group also plans to add more outlets of its iconic tearoom Flurys and expand into the rest of Bengal, Navi Mumbai and New Delhi. Apeejay Surrendra Park Hotels runs four brands under ‘THE Park’ name. This includes: THE PARK, THE PARK Collection, Zone By The Park and recently launched Zone Connect. The Group also owns the heritage eatery and QSR chain of Flurys. Besides hospitality, the 100-year old group has business interests spread across industries such as shipping, tea, real estate, education, and owns retail brand, Oxford Bookstores.
An ambitious target of one billion doses of Covid-19 vaccine and financial aid of $1 billion to make them in India seems to be the most heartening news of the day. The American multinational Johnson & Johnson (J&J), operating in 60 countries, seems to be routing that kind of investment as “grant” from two large countries where the pharma major operates. It is learnt that the Hyderabad-based company, Biological E, which has been appointed as J&J’s contract manufacturer earlier this year, will soon start bridging clinical trials for which they have sought official permission from Indian regulators. Biological E, set up in 1962, and partnering with global majors, supplies its vaccines to more than 100 countries. It has supplied more than two billion doses of vaccines in the last decade alone. Since J&J’s single-shot vaccine is already approved by the US regulator and is currently administered across the United States, they would only need a bridging trial in India, which means a small group of 1,000 participants would take the shot before it is officially approved. Bridging trial for J&J’s vaccine is expected to be on similar line of that done by Russian Covid19 vaccine Sputnik V by Dr Reddy’s Laboratories and the trial conducted by Serum Institute for the Oxford University-AstraZeneca Coronavirus vaccine.
The Shree Cement-East Bengal deal, which was announced with lots of fanfare last September, is yet to get cemented. The final agreement – drafted by law firm Khaitan & Co – has not been ‘signed and sealed’ till now though the deadline for the same was March 15. Sports enthusiasts were hoping West Bengal Chief Minister Mamata Banerjee would intervene to iron out the differences. But that has not happened with the state witnessing one of the most intense Assembly elections in the recent history. Rumours that East Bengal is not eligible to participate in the forthcoming Hero Indian Super League (ISL) matches have got muffled amidst the high-decibel and cut-throat battle in Bengal between Mamata Banerjee’s Trinamool Congress and the Bharatiya Janata Party (BJP). Those closely following the state’s football development claim the rumour is not unfounded. To participate in the ISL, The Club – rechristened as Shree Cement East Bengal Foundation, has to give bank guarantees by April 12, 2021. “If the definitive agreement does not get signed, Shree Cement will not give bank guarantees. And, if the bank guarantees are not given, The Club will not be able to take part in the ISL,” they apprehend, and claimed the deal between the two may fall through. It may be recalled this 101-year-old iconic football club, popularly known as Red & Gold Brigade, got a jolt when its lead investor Quess Corp pulled out from the two-year agreement in July 2020. Being a popular club among the migrants, the Kolkata-based Shree Cement, controlled by the Bangurs, entered the scene picking up 76% stake.
The much-awaited Glenmark Life Sciences’ initial public offer (IPO) might get bigger. It is reliably learnt that the parent firm Glenmark Pharmaceuticals is likely to raise around Rs 2,000 crore and they plan to file the prospectus before the SEBI sometime in April or May with a float likely in June 2021. Reportedly, Glenmark Pharmaceuticals had tried to sell minority stake in its API (active pharmaceutical ingredient) business a while ago but due to depressed market conditions those off-market deals never progressed beyond a point. Glenmark Pharma’s CMD Glenn Saldanha has a clear vision of unlocking value of its API business. In keeping up with this vision, the parent firm Glenmark Pharma had transferred its API business to Glenmark Lifesciences in December 2018. Today, Glenmark Lifesciences partners the world’s top 20 generic companies to supply over 130 APIs produced at its five state-of-the-art plants in the country. It has more than 700 customers across 65 countries. All these are visible in the company’s third quarter FY21 topline. It has posted consolidated revenue of Rs 501 crore as against Rs 409 crore previous year, a growth of 22.35%. Given its strong parentage, the retail investors will be keenly waiting for this IPO.
The stock market is booming with the Sensex currently hovering around 50,000-mark. At this level the market capitalisation works out to around $2.7 trillion. It may be recalled that at the beginning of the Covid-19 pandemic in March 2020 the Sensex had crashed to 25,638 points. So did the market cap to $1.3 trillion, its lowest since March 2016. Now, there are visible signs that the economy is picking up if one looks at the performance of the sectors like auto, infrastructure, healthcare, IT and FMCG. A number of brokerage houses seem to be bullish; some are predicting that Sensex will touch the 100,000-mark by 2025. Such a bullish outlook is unleashing a buying frenzy among investors. The herd mentality is evident. Nearly 6.3 million demat accounts were added during April-September 2020 to take the total demat accounts to 2.13 crore. Work from home saw people investing in both primary and secondary markets. Thirty companies have already raised around Rs 31,000 crore via IPO in FY-21. But, post-listing, are they all doing well? Not really, says The Hindu Business Line report. “India’s IPO market boom, which began exactly a year ago in March 2020, with the SBI Cards offer, is showing signs of fatigue. Every second stock that posted gains on debut in the last one year has slipped.” So, the opportunity to make a quick kill post listing is clearly waning. Now, some of the fly-by-night operators are recommending below par or penny stocks. With the second wave of pandemic hitting the country, it would be advisable for investors to ignore the conventional market adage “Buy the rumour, sell the news.”
In the mid-eighties and early nineties, the Indian promoters literally made hay in the absence of a market regulator, according to the Mumbai-based brokerage firm Altina Securities. The modus operandi was simple: raise money via private placement. To illustrate, if Company X had a post-issue capital of Rs 100 lakh, the break-up was: promoters Rs 40 lakh and public Rs 60 lakh. Many promoters – just before the IPO – privately placed nearly 75% of their holdings. Thus, Post IPO, the Rs 100 lakh equity base would be: Promoters Rs10 lakh, Private Placement Rs 30 lakh & Public Rs 60 lakh. There have been instances where the fly-by-night promoters received kickbacks for the project. This effectively reduced their skin in the game. Little wonder many companies which resorted to this route have vanished, leaving the small investors high and dry. Some of the vanishing companies are: Bonanza Pharma, Atash Industries, Amrut Industries, UCL Plastics, Rasik Plast, Indiana Diary. Senthur Shoes, Printed Circuit Board, Alsa Marine and Premier Housing.
Sometime in the mid-nineties Wipro’s Azim Premji – the 10th richest Indian with a net worth of $7.2 bn — won the prestigious Business India’s Businessman Of The Year Award. After the award function, he was chatting with Business India’s editorial team and narrating a story about his son Rishad’s persistent demand for a car. “After much persuasion by my son, I finally agreed to let him have a car,” shared Premji. Knowing Premji’s net worth, the editorial staff of the Business India assumed it would be a Merc or Ferrari. Yet, their curiosity got the better of them and one scribe asked, so which car was it. “I sanctioned him an Indica,” said Premji nonchalantly. There was a pin drop silence. But that’s the stuff Premji is made of: Simple Living, High Thinking. The man who has donated over $16 bn for charitable causes is not looking for headlines. He shuns the Press. In fact, his wife Yasmeen who worked for Business India’s sister publication Inside Outside is very much like him – low profile and not-ostentatious. So the new book by two journalists Sundeep Khanna and Varun Sood Azim Premji: The Man Beyond Billions should make for an interesting read. The book brings out his simplicity. He loves chocolates, travels economy class and prefers to take the subway while in New York. All these qualities indeed make him a cut above the rest.
Thanks to pandemic work from home has become a way of life. Most CEOs are operating out of their homes or farmhouses. Take for instance how Arun Nanda, chairman of Mahindra Holidays & Resorts India, managed his company’s affairs. According to informed sources, Nanda has been calling the shots from Tungi, Lonavala for most part of the year. And his efforts saw company’s Q3FY20 net profit jump 63% to Rs 41 cr. Likewise, superbanker Aditya Puri, former MD & CEO of HDFC Bank, worked most of the last year between Mumbai and Lonavala. Puri who has joined The Carlyle Group as a Senior Advisor, went to Sandoz House, Worli (that’s where he started his innings with the bank) for his send-off organized by the current managing director Sashidhar Jagdishan. It was an e-Event for the rest of the staff. Likewise, Ashok Sinha, former chairman of BPCL, who sits on several boards did not cross the threshold of his Peddar Road flat since lockdown was clamped down and has managed all his affairs via digital meetings. Covid has indeed put the fear of God among all. Earlier, many were sceptical about the Indian vaccines. But, now it is learnt that all of them are fed up of operating out of their homes and are keen to take the jab so that they can travel freely
Pump price for petrol includes excise duty levied by the Centre – with the States adding VAT to it, which varies from state to state. Higher the VAT, higher the fuel prices in that state. So, why are the Opposition parties throwing a fit on petrol breaching the Rs100-a-litre mark? It may be recalled that after years of deliberations, the current market-led pricing mechanism got stabilized since its implementation in June 2017. Hit hard by Covid-19, neither the Centre nor the States are in a position to reduce levies, which constitute 60% of the retail selling price of petrol, and more than 54% of diesel. Domestic prices should cool down hopefully in line with the projected international trends. If the government is forced to tweak taxes to moderate fuel prices, it will have to dismantle the whole reform process aimed at fixing market-determined prices. The economic reforms implemented after extensive deliberations and consensus over a long period must be kept out of opportunist politics. FM Nirmala Sitharaman is right in calling petrol price increase a ‘Dharmasankat.’ Clearly, both the Centre and the States have to abide by the ‘Raj Dharm’ to find solution to this sankat together.
The meteoric rise and dramatic fall of Rana Kapoor could make for an interesting TV serial on the OTT platform. Two books have already been written on the man who co-founded Yes Bank with his co-brother-in-law Ashok Kapur. (Ashok was killed in Mumbai terror attack). Pavan C Lall, has penned Yes Man: The Untold Story Of Rana Kapoor. Tamal Bandyopadhyay in his book Pandemonium: The Great Indian Banking Tragedy, rips the façade off the smartly constructed corporate image of Yes Bank, exposing promoter Kapoor’s questionable deals. The author goes on to say that the RBI saw through the game played by Kapoor. Alarmed at the speed with which the NPAs were getting resolved, the regulator started monitoring Yes Bank closely. Finally, it was an anonymous letter sent to then RBI Governor Urijit Patel in September 2018 about the hanky-panky deals at the bank that got the central bank into action. But soon they discovered that Kapoor had many moles around. Every move contemplated by the RBI was relayed to him in real time. It took a while for the RBI to identify the suspects and isolate them from the investigative process. When Kapoor was told in one of the meetings by the RBI that he had to go, he broke down, calling Yes Bank his son, his only son — beside his three biological daughters. But such histrionics with eyes brimming over with tears didn’t move anybody. Presently, he is cooling his heels at Taloja jail on the outskirts of Mumbai.
An RBI working group has proposed allowing corporate houses to set up banks in India. Suddenly, former RBI governors and deputy governors want to protect the country from business houses entering the banking arena. Over the last two years, IL&FS, DHFL, Yes Bank and PMC Bank have collapsed due to their weak financial position. The latest to the list of bank failures is Lakshmi Vilas Bank, which was merged with DBS Bank. What we need to do is to have a strong deterrence so that we don’t see a repeat of YES Bank. According to KV Kamath, former MD & CEO of ICICI Bank, in his interview to CNBC TV18, the way forward is heavy investment in technology by the regulator so that on a real-time basis the creditworthiness of individuals or companies is made available. Seems a doable idea.
TRENDS & VIEWS
Editor’s Note: Big Punch In Small Pack
It is the Third Anniversary of Short Post and as a news media startup launched during the Covid-19 pandemic it certainly feels better than good to find ourselves where we are today. Here, I must cite the unstinted support of our seasoned contributors, all senior editors in the country, who brought a great degree of maturity and sagacity to the Short Post newsroom. But for them, our tagline “Authentic Gossip”, an Oxymoron, would not have matured viably. Our user numbers may be small but our stories have created the desired impact among people who matter — decision makers and influencers. We offer a big punch in a small pack and Short Post with its 225-word stories has been punching above its weight category. Having posted close to 3,000 stories in the last 36 months, Short Post, I feel, is an idea whose time has come.
And this is vindicated by our two marquee advertisers – IDFC FIRST Bank and ICICI Lombard. Both believed in our story and have supported us from Day one. A big thank you to both.
If you look at the media landscape – print, TV and digital — it is a mixed bag. There are job losses as some outfits have closed down while a lucky few were bailed out by large corporate houses. Yes, there is a lot of action in the digital space. However, the entry of corporate houses has raised the question of independence of news media outfits. Sadly, there are just a handful of independent media outfits in the country that are highly respected for their neutrality. At Short Post, our credo is not to take sides, prejudge issues or be biased but, informing readers of behind-the-scenes happenings. In essence, Short Post strives to be a neutral editorial platform — neither anti-establishment nor pro-establishment.
As I said last year, disruptions in the media world are moving at a fast and furious pace. Technology is playing a very big role in how content is generated and consumed. But, we are neither alarmed nor perturbed as it is all a part of the evolution process. What gives us comfort is that AI is unable to create original gossipy content. And that is the news arena where we have achieved a distinction.