Friday, February 25, 2005

Rediff story on Ambani vs Ambani

Rediff, based on a story in Business World says the Ambani feud is close to a solution, brokered by Kamath of ICICI Bank.

I am not entirely certain.

There has been at least one high profile feud in the past - between Bajaj brothers - which was brokered by Auditor Gurumurthy. However the issue is yet to be resolved, after initial acceptance.

Another issue, between Kumarmangalam Birla controlled AV Birla group and L&T was resolved amicably (also brokered by Gurumurthy), primarily because it did not involve blood relations and egos. L&T is a professionally managed company, with no shareholder group controlling it. Kumarmangalam Birla obtained a controlling stake by buying the shares from Dhirubhai Ambani.

The advantages of vertical integration will be lost if Reliance is split along the lines of petrochemicals and oil & gas. In terms of growth though Mukesh will get the better ones oil & gas including the retail portion of the same, as well as the hot infocomm business.

Let us wait and see.

BS interview with GR Gopinath

An excellent interview in Business Standard with Air Deccan's chief GR Gopinath on what he wants the government to do.

He makes perfect sense. The government has to improve infrastructure in small towns so that people can fly across. The time wasted in travelling from one place to another place in India is atrocious. And the cost of flying is such that flights are beyond the reach of most businesspeople.

I would like to be in a position to fly from Chennai to Salem, Tanjavur, Nagarkovil and so on, all at a cost lower than or comparable to 2nd AC in trains. Perhaps at a level of 3rd AC?

The time I save will be extremely useful. Also, the time it takes me to travel to the airport and the delays in the airporty should be reasonable and not unduly high. I have travelled to the airports in Madurai, Trichy and Coimbatore (besides of course Chennai). There is nothing one can do now in moving these places around. However at least the airports proposed in other medium sized towns should be at a reasonable distance. Landing gear with thatched roof airports - good enough, provided they are safe from possible fire accidents.

Maybe all these things will happen within the next 5 years?

Friday, February 18, 2005

India Post seeks return to monopoly on letters

The Financial Express, in a shocking story titled India Post seeks return to monopoly on letters says that the Government is looking at giving the Indian Postal Service a monopoly in carrying letters, and restrict the courier companies from carrying anything below a certain weight.

This, if true, must be condemned. Though the postal charges are lower than what the courier companies charge, courier companies offer certain additional services. For example,
  1. They come and pick up the letters and parcels from our office every day. Would the Indian postal service give a damn? You have to go and stand in a queue in front of their overcrowded counters and swallow abuses from irresponsible staff.
  2. You get credit period ranging up to a month and consolidated billing. With the Indian Postal Service, you have to pay money upfront and in small changes too. If you do not have the right change, off you go, find the change required and come back and stand in the queue once again.
  3. The courier company offers online tracking where required and even offers extended services such as stuffing the letters into the covers and sticking the address outside, if you are planning to send 20,000 letters. All you have to do is provide them 20,000 addresses in an electronic file.
  4. Special safety precaution. Credit card companies and few others use designated courier companies whose staff carefully examine your identity proof before giving you the credit card package or PIN number covers. The Indian Postal Service has no such comparable service.
It would help if the Government stops messing around with the things that work well.

That said, my businesses still use the postal service where it is convenient. Let me decide what I want. Let the Government not tell me who I should or should not use.

Thursday, February 17, 2005

The fight for the media space

Bennett, Coleman & Co Ltd. (BCCL) are the most dominant player in the print media space. With their spearhead The Times of India, the largest circulated English daily in the India (and the world as well), BCCL command massive readership and a good chunk of the advertising revenue. Besides the TOI, they also have in their stable The Economic Times, the largest circulated business daily, Navbharat Times - a Hindi daily, Maharashtra Times - a Marathi daily, Filmfare - a movie magazine and Femina - a woman's magazine.

BCCL forayed into television in the early 90s and then gave up. Perhaps, they never thought at that time that the television world will grow to become a monster. In the 90s, television groups such as Subash Chandra's Zee TV and Murdoch's Star established themselves strongly. The television commanded much larger viewerships and slowly larger and larger revenue than the print media.

Another print media player India Today Group, primarily into magazines (India Today, Business Today etc.) forayed into an afternoon newspaper in Delhi and set up news television channels Aaj Tak (Hindi) and Headline News (English).

BCCL in the meantime established a stronger presence on the Internet with its No other established media player has a comparable online presence. Further to that, BCCL forayed into mobile space and established a very strong brand in 8888 - an SMS short code through which mobile phone users query and get information.

BCCL were missing television and so recently have started a television company. The first channel from them is Zoom, an entertainment channel (and pretty boring at that, at least for me). Soon enough there will be news channels, business channels and so on. Mediaah!, a blog specialising in media related news hinted last week that Reuters are looking at taking a 26% stake in this television venture, and also that Sunil Lulla (of MTV and later Sony) will head the venture. Subsequent to that BCCL sent Mediaah! a lawyer notice. But the same story has today appeared in The Business Standard.

In the meantime Zee Group which tottered for a while is looking at launching an English language newspaper, in partnership with Dainik Bhaskar. [This news was also initially highlighted first in Mediaah!, so if you are a media watcher, you would do better to follow Mediaah! first!]

Murdoch, because of the foreign ownership laws in India, cannot easily launch newspapers or magazines. In fact, even a television news channel is difficult and he had to go through several rounds of creative law breaking in establishing Star News (in which Star only holds a minority 24%).

Therefore the ground is now open for BCCL and Zee to fight it out on who will be the largest and most important integrated media player in India. BCCL are ahead in new media - mobile and Internet. Zee have no presence whatsoever and fairly clueless in these two areas. Their earlier forays included starting an ISP, which flopped bigtime. Zee's online content is also abysmal. As with everyone Zee also have a four-digit short code (which I cannot even recall). But this is not sufficient to take on BCCL's Indiatimes and 8888. Zee's Chairman and majority shareholder Subash Chandra has been chopping and changing his chief executives. With that kind of attitude, you cannot build a business. However his latest hire is Pradeep Guha from The Times of India.

On the otherhand, BCCL has a massive task ahead in even making their presence known in the television world. A news channel is an obvious choice, but NDTV is way ahead here in English, while Aaj Tak is ruling the Hindi. In business news section CNBC TV18 is number 1, while even NDTV Profit is struggling to keep pace. So the next few months will be interesting to watch as these groups battle it out for supremacy.

Tuesday, February 15, 2005

Public Expenditure Round Table

Are you concerned about what our Government does with the money that we pay them as taxes? Do you want to understand how the Government functions in the areas of budget making, long term fiscal planning etc. and then sticking to the goals set during such process? Public Expenditure Round Table is a trust set up to look at some of these issues.

The web site we have set up is very preliminary. So bear with us while we work on this over time.

You are also invited to the Fourth Ambirajan Memorial Lecture slated for tomorrow (Wednesday, 16th February 2005) at Image auditorium in Chennai. The lecture will be given by Dr. Raja Chelliah, Chairman, Madras School of Economics on the topic: "The Malady of Fiscal Imbalance: The Impossible Quadrangle"

Friday, February 04, 2005

Aircel's 49% up for grabs

Russia's Sistema in deal to pick up 49% in Aircel- The Economic Times

Hutch had offered to buy Aircel for about Rs. 1,600 crores, but the deal got embroiled in regulatory mess. Informed sources say that Sivasankaran was too close to Jayalalitha (which I am not so sure about), and Dayanidhi Maran wanted to scuttle this deal. Such rumours always exist, but the reality may be something more complex.

Anyway, today's news items across multiple newspapers indicate that Russian company Sistema is offering to pick up 49% stake. Idea Cellular is also keen to buy Aircel. In case of Idea it will be a complete outright purchase as they have no footprint in Tamil Nadu. Hutch won't anymore get involved with Aircel.

The telecom consolidation in India cannot happen without smooth regulatory cooperation. With the FDI limit in telecom having been taken to 74% (with due security provisions, we are told), despite Left protesting vehemently, more investment from abroad is likely. But such investment will be wasted if the sector cannot be consolidated into 5 or so players. Tatas should exit Idea as soon as possible to facilitate Malaysian Telekom taking a lead in pushing Idea forward. I guess AV Birla group is unclear about whether to continue holding stakes in Idea or offload them.

Groups like Spice Telecom (Karnataka, Punjab), BPL (Tamil Nadu minus Chennai, Mumbai, Maharashtra minus Mumbai, Kerala) and a few other teeny weeny players should exit the market after getting a decent return on their investment. They cannot grow and cannot offer quality services on their own.