Clear-eyed & focussed

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Newfields Advertising continues to re-define value-driven communication in the PSU adspace

Fifty years ago a gentleman by the name of S. R. Gupta started an advertising agency called Newfields with three other partners in Delhi. It was the time when the very term – advertising – in this city, was not totally comprehended and as a profession was nowhere near the ‘preferred’ ones of an engineer, doctor, lawyer or Government service. Soon the other three partners backed off and he was the only person in-charge. His son, and the present Chairman & Managing Director, Raman Gupta, smiles wistfully while reminiscing, “What my father lacked in experience and professionalism, he made up through foresight, common sense and hard work.” Today Newfields Advertising Private Limited is a respected and established organisation, totally PSU-dedicated (with branches in Kolkata and Mumbai) moving up the value chain all along.

What is the basic philosophy that drives the organisation and what is its USP? Gupta is off in a flash. “Our philosophy has always been to provide personalised, focussed service to PSUs – a domain, which until recently was deemed both unfashionable and non-lucrative by the biggies. Our USP is to engage with them in a professional, need-based, assignment-specific manner that delivers value, without hype. PSUs have a different blueprint from FMCGs and other sectors, and demand a special skill-set to understand their communication needs. The very fact that many of our clients have been with us for over three decades bear testimony to our successful innings with them.” An acknowledged front runner in the PSU-communication space, Gupta has a ready answer as to why his agency is an only PSU-centric outfit? “The private sector has always seemed overtly enamoured with the glamorous multinational agencies and believed they are the best. We are automatically disqualified. Also, we have had a couple of disastrous experiences with them & have therefore consciously stuck to the safer PSU domain, where payments may be less and delayed, but never lost.” Coming to media usage, due to their client profile, the basic media deployed has largely been print and co-laterals, with minor forays into TV and new age, digital medias like the Internet or virals. In terms of turnover Gupta confesses he’s quite satisfied with his agency’s 15-20% growth and deliberately doesn’t want to accelerate beyond his means. “We are fully aware of our goals, strengths and limitations and have an agenda in place to take the agency forward.” A full service agency with a staff of around fifty and a gross billing of over Rs.20 crore, Gupta is all set to move to the next level, in his own way and at his own pace.

Looking back, Gupta bemoans the fact that advertising today has largely become a business where creativity is under siege, “Agencies seem to out do each other in grabbing business with means justifying the end.” He ends the interview with a bitter complaint against the establishment. “In recent times many PSUs have been demanding that only agencies above Rs.25-30 crore turnover be considered to pitch for business. Isn’t that both unfair and strange? Lots of agencies can (and do) artificially jack up their turnover and get into the list. Is that what they want? In a calling, which primarily deals with the ‘business of ideas’, how does turnover play such a critical part? I wish someone explains it to me, convincingly…”

Monojit Lahiri

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Angling for the profitable fish

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A peek at the set of parameters that influence the investment decisions of most PE players

If you are a promoter of a firm, what do you really need to showcase to prove Private Equity (PE), which is currently booming in India? How do you become a Gokuldas Exports or Allcargo, both of which have successfully wooed one of the world’s largest PE players, the US-based Blackstone? The trick, it seems is to convince investors that you offer an almost perfect and appropriate investment opportunity and that, over the years, the valuation of your firm will grow substantially by domestic wealth standards, which may or may not be so based on global standards. However, to achieve this objective, all promoters, who wish to attract private equity, should ask the one basic question: what do private equity firms look for in a start-up or a mid-stage venture?

Deepak Dayal (Vice President, First Tier Capital) avers, “While one cannot pinpoint a single determinant of success, yet the focus for PE firms is on two core areas, the capabilities of the management team, and the prospects for sustaining and defending the company’s revenues and profit formula.” This sounds quite logical; in fact, investors pay a lot of attention on the quality of top management than to any other factor when they decide to invest in any firm. Some experts argue that of the 10 parameters that are taken into account before investing in a firm, eight are directly or indirectly linked to the management team in place.

Consider the case of Infoedge whose team, according to PE firm, ICICI Ventures, had the passion, vision and commitment. Finally, ICICI Ventures saw a great opportunity in the execution capability of the top managers which, it seems, had the ability to take the business proposal to a critical target and addressable market. This was reason enough for the investors. In the past, most businesses have failed because of the lack of management dynamics, rather than the market or technology reasons. This is the reason why IDFC decided to invest Rs.2.600 million, its largest-ever investment in a single firm, in Goodearth Maritime. The investor pumped in Rs.350 million in Doshion Ltd., a water-management company, because of the company’s proven technical and project-execution records.

Most PE players do take into account the investee’s historical financial performance to predict future financial projections. Agrees Sanjeev Aggarwal (MD, Investment Advisor, Helion Ventures), “PE firms are very good at making projections from past data.” The traditional form of financing, based on current business models, is no longer the order of the day since business plan keep changing by the minute and firms invariably have to scout for new things that they need to pursue to be a step ahead of their competitors. Therefore, investors today are more interested in funding companies that have proprietary technology or know-how.

According to Kalpana Jain (Senior Director, Deloitte Touche Thomastu India), other important funding-related factors include the size of investment, sector and location. Private Equity firms cater to investment opportunities, where the business has the potential for realistic growth in an expanding market and this is backed up by a well-researched and documented business plan. This is especially true after the burst of the dot.com bubble, when several venture capitalists and PE firms lost a lot of money that was invested in ideas, rather than provable growth plans. Explains Mukund Krishnawami (Founder & MD, Lighthouse Fund), “Since we lost money, we have become very skeptical.” Sharing his thoughts on this issue, Jitendra Gupta (Executive Director, Finance, Macawber Beekay) adds, “Unless a business proposition is able to offer the prospect of significant turnover growth within a stipulated time frame, it is unlikely to be of interest to a private equity firm.”

Therefore, it’s not surprising that a few sectors become the flavour of the year at some point in time and others occupy those slots at some later stage. At present, PE players are gung-ho about investments in infrastructure. At a recent seminar, Shivani Bhasin, a Principal in IDFC private Equity, said that India will invest nearly $450 billion in infrastructure over the next five years, and thanks to several incentives given by the government to private players, investment in the sector will double to 8% of the country’s GDP in the same period.

The other exciting sectors for the PE firms now are media and telecom infrastructure. Warbug Pincus has invested $33.33 million for a 7% stake in Dainik Jagran. The opportunities are so large that no one wants to miss the bus in the print media; global private equity investor Blackstone Group has invested $275 million in the Hyderabad-based Ushodaya Enterprises, the owners of Eenadu and ETV. Temasek Holdings, Investment Corp. of Dubai, Goldman Sachs Group, and others have invested $1 billion for a 10% stake in Bharti Infratel (the wholly-owned telecom tower subsidiary of Bharti Airtel). In addition, Kohlberg Kravis Roberts & Co put in $250 million for an estimated 2% stake in Bharti Infratel.

Competition and competitors are yet another set of parameters that investors like to dwell upon before zeroing in on their investment decision. Putting forth his view on the issue, Anubhav Gupta (Investment Analyst, Kim Eng Securities India) says, “The current competitive advantage possessed by the investee firm, the investee’s market and competitive position and the current competitors are certainly considered by the investor.” Therefore, New York Life Investment Management India Fund pumped in Rs.225 million in Avesthagen, a systems biology firm, because the latter has the potential to develop valuable intellectual property portfolio. Similarly, the PE firm’s $25 million infusion in Sarvana Global Energy was because of the cost competitive edge of the latter.

Considering the risks involved and the lock up period of the capital, it is but natural for private equity investors to expect their investments to significantly outperform other forms of investments such as bonds and equity markets. Probe Gupta a bit and he elaborates on the finer details: “A good concept and the execution approach are pivotal. The investors show considerable amount of interest in start-up companies with high growth prospects, probably those being managed by experienced and ambitious teams, who have the capability to transform their existing business (plan) into reality. There is no thumb rule as such, provided there is a real growth potential then the private equity industry is interested in all stages, from start-up to buyout.”

Private equity is a creative mode of financing and investors invest with the aim to exit to earn profits. Ajay Kapur (CEO, SIDBI Venture Capital) adds, “The investors values the investee on comparable multiples and more so where the investee company is likely to witness growth by the time the investor wishes to exit. A clear exit strategy and possible mechanism are prime considerations.” There are few ethical investors who do not invest in companies, which in the near future, might compete with their existing investments. This stands out to be an important parameter for selection of startups. The investments are often followed by efforts at streamlining to revive the loss-making companies or substantially improving the performance of profit-making ones. Since private equity companies derive their returns from the appreciation in the value of the acquired asset or company, they ensure that they offer much more than financial assistance in terms of the offering they bring on the board. These efforts are aimed at adding value to the investments before the private equity investors can exit.

However, after the dotcom bubble, and given the risks, hard work and patience to earn returns, there is some form of reluctance on the part of the investors to invest in a start-ups. Many analysts are of the opinion that unless there is an overcrowding in the PE space or else the pricing becomes unattractive, most investors are not likely to revert to early-stage deals.

The industry certainly thrives on a disparity of views, but nevertheless it’s continually growing. In the present financing scenario, it is all the more important than ever to have a business plan, pitch and value proposition even before the investee companies hold talks with potential investors. Any investee company with a potential, a committed and experienced management with sound track record, capacity and organisational skills to implement business plans into actions can easily grab the attention of the PE biggies. The investors on their part gain exposure to specific markets by being specialists.

Edit bureau: Gyanendra Kashyap

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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i need to retire rich!

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Hi, my name is Sujit Kumar and I am 43 years old. I have been working for the last 18 years with Delhi Development Authority. My take home per month is Rs.19,000. My key concern as of now is retirement planning. With the recommendations of Sixth Pay Commission in pipeline, I expect to get much more...

Retirement planning must always remain the long term objective of any individual. Investing in safe asset classes & earning risk-free interest is not enough because steady returns only ensure that inflation keeps eating into your resources, with the result that your ‘real’ net worth actually decreases over a period of time.

Therefore, it is advisable that one should invest in growth assets like Equity Mutual Funds for positive inflation adjusted returns. Here is what Anil Mascarenhas, Editor, India Infoline, has to recommend, “Invest around Rs.6,000 to Rs.8,000 in a SIP of either Reliance Vision or HDFC Top 200. In case, Sujit wishes to invest in stocks, he should take into account his investment horizon and his risk appetite and make an asset portfolio accordingly.”

Further on, Mascarenhas advises Sujit to stick to the frontline counters as the downside risk can be minimised by holding on for a longer period. “In case you wish to invest keeping in mind the tax saving option, you could invest in SBI Magnum Tax Gain or Principal Personal Tax Saver either by putting in a lump sum or through SIP,” he adds.

Those looking for a happy retired life would do well to additionally take Medicare to cover future medical costs or invest in health insurance plans with adequate cover for themselves and their spouses. Here’s to a happy, healthy, retirement then!

Sujit Kumar

“I started my retirement planning late; I wish I could have done it early,” laments Sujit. He blames his conservative outlook for the majority part of his initial portfolio consisting of fixed deposit and post office saving schemes (mainly PPF & NSC). In fact, this conservative spiel was what his department at DDA advised at that time. “However, with rising costs and declining interest on investments over the years, I realised my folly of relying only on these instruments.” Having decided that fixed income instruments were not the solution for him, as they failed to fight inflation concerns, of late, Sujit has begun investing in balanced as well as equity oriented Mutual Funds. “The stock market is going great, I wish to invest something there too, but not as of now,” he says.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Yet a blip….?

When IIPM comes to education, never compromise

Despite all the hype that we have arrived in the IT arena, isn’t there a fear with global giants like IBM and Accenture setting up their operations in India and taking away the inherent advantage of Indian companies? Let Azim Premji of Wipro explain, “We do continue to view Accenture and IBM primarily as very significant competitors, not only in the IT space but also in the BPO space across the globe… we increasingly run into both these firms, as well as a host of local firms in the US including say EDS, and in Europe people like Atos Origin, LogicaCMG, Capgemini, Deloitte, as we ourselves are moving up the value chain. We are also seeing many of these firms leveraging and using their India offshore centres much more often, and a lot more aggressively, both in Europe as well as in

Of course, analysts have been more than fair to these burgeoning companies trumpeting their cause. While revenues are well short of their Western counterparts, Indian IT companies have taken a definite lead in terms of valuations. “Take India’s top four IT services companies: TCS, Wipro, Infosys and Cognizant Technology Solutions. They have combined annual revenue of more than $11 billion and an aggregate market capitalization of $73 billion. That dwarfs the top five US companies Accenture, Amdocs Ltd., Computer Sciences Corporation and Electronic Data Systems Corporation and Europe’s biggest IT services company CapGemini put together, which have total annual revenue of $67 billion and a combined market capitalisation of just around $65 billion,” proclaims Indusview’s Bundeep.

That, in essence, provides one with a clear perspective of how the Indian IT sector, despite facing formidable competition on the home turf as well as overseas, is definitely up to the challenge and has the support of the bourses too. And by expanding into newer markets and verticals, Indian companies are ensuring that they do not squander away the lead start they have. Tech India now seems to be wired to growth and glory for good.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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B-schooled in India, Placed Abroad (Print Version)
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Time to brew a magic potion!

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Tea board re-defines art of brand-building...

Take a guess – what’s common about the ad-campaigns “Piyo Aur Chai”, “green=black” and “More tea does more good”? Tough? Well, they’ve all been sponsored by the Tea Board of India! Now that wasn’t easy was’t? But why another set of ads to flood the market when we already had enough from the likes of HUL , Tata Tea et al?! Well, nothing strange, but the strategy behind such ad-campaigns run by the board clearly appear to be nothing but to wash-off the ‘only the old like tea’ image surrounding this drink.

To this end the board has been promoting hard teas from Assam, Darjeeling & Nilgiri. “But why use the origin factor at all?” is the question. Justifying the reason behind the same to 4Ps B&M, R. Dutta (Tea Board of India) opined, “The origin factor in Indian teas have a unique character of their own and this best works for an Indian brand recall!” Now didn’t that sound innovative and original?

Sure enough, the board has redefined the mantra of branding and this indeed is good news for the Indian tea brands (and of course, the market as a whole which has not growing vigorously of late), especially considering the increased competition from well-promoted foreign tea brands. Today, the Tea and the Coffee Boards of India have realised the need to create generic campaigns which would battle the fall in enthusiasm for these two drinks owing to the rise in health consciousness quotient amongst Indians. On the duty side too, the government has done its bit by withdrawing the additional excise duties and by assisting the two tea Research and Development Institutes.

Turly, with the Tea Board revolutionising the very concept of promoting beverages, (“Junk food, late nights, lack of exercise. You could do with a few drinks”); tea is back as a tonic that helps de-stress and tackle lifestyle-related complications; or atleast let’s hope so!

Edit bureau: Sunanda Roy

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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When IIPM comes to education, never compromise
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Max’imum promises; delivered!

When IIPM comes to education, never compromise

What Rahul Dravid is to cricket, Max New York Life is to life insurance! Masters of their own game, both are ‘Mr. Dependable’ on the field. Ask its CEO, Gary Bennett, who feels that, “respect for money is the first and the foremost principle of building one’s own wealth.” Surely, today, he has ensured that every advisor too believes in the very same concept. The company has identified individual agents as the key distribution agents for itself and this has been the main stay for the company. With 345 of its agents making it to the Million Dollar Round Table (MDRT) in 2006 – an elite club of top insurance agents, whose practice have been par excellence, the company needs to say little about the quality of human capital it possesses. It is also pursuing alternative channels of distribution, which include – expansions through the franchise model, rural business, direct sales force, telemarketing, bancassurance and corporate alliances. “To become the most admired and the most preferred insurance company in India,” is what Max New York Life sets as its branding statement. But then, considering its high standards, it is indeed the truth!

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Dial E for eye balls

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NDTV, INX, Viacom-18, UTV, BAG Films and more are jumping in to cash in on the Hindi entertainment fever. Will they succeed or are they barking up the wrong tree? Aditi Prasad analyses...

Wearing an oh-so-cute baby pink jacket and blue denims, ensconced on her shining, black leather upholstered chair, in the plush environs of a spanking new cabin, she cannot but stop playing with her new toy for a minute – a brand-new, gleaming remote control. Anuradha Prasad, Managing Director of BAG Films, is pleased with the way things are shaping up. Sitting across the shining mahogany table from her, one cannot but be swept away by her enthusiasm, as she continues to switch channels between the dry runs of her soon-to-be-launched channels – one news and the other entertainment! The news channel should be on air – even as you flip the pages of this magazine, while the entertainment channel is slated for a December 2007 launch.

Six years ago, the place where she sits now was a ramshackle building in one corner of Filmcity, Noida, from where she used to churn out programming for Star Plus, Star News, DD & Zee. Today, as Anuradha nurses the dream to become a broadcaster herself, she’s added two new wings and two floors to the earlier dilapidated structure; given it a glass façade and completely overhauled the way the building looks, feels and even behaves. The entertainment venture – E24 – is her particular favourite. “There is an immense market for an entertainment channel like ours,” avers Anuradha, adding that her entertainment foray would not have the usual crop of comedies, soaps & reality shows, and will instead focus on catering to the Stardust audience on TV.

Anuradha and BAG Films are not unique. The decibel level around ambitious entertainment channel forays is at an all time high in the Indian tele biz today. One need not really look far. Even as your gaze travels over the vast expanse of Anuradha’s room, the window covering an entire wall will catch your eye. Look out of her window and across the road is the sprawling facility of Zee Telefilms Ltd., an already well-entrenched player in the TV entertainment shindig. Today, the excited discussions in this building hover around the launch of another General Entertainment Channel (GEC) from the Zee bouquet (Zee’s answer to Star One?). Called Zee Next, the new GEC is designed to cater to the youth segment; and is a brainchild of the new Zee duo – CEO, Pradeep Guha and Network Operation Officer, Puneet Goenka.

A youth centric GEC? Isn’t that what the month-old youth entertainment channel Bindass, from the UTV Astro joint venture, is all about? So, will Zee Next be another Bindass look-alike? “Not at all,” says an emphatic Ashish Kaul, head of Corporate Brand Development at Zee. “The programming of Bindass is a cross between AXN and MTV – which grossly underestimates the youth of the country. They are not frivolous (that youth segment is there, but it’s miniscule),” he adds, explaining that Zee Next will offer all the usual trappings of a traditional GEC – serials, soaps, fiction, comedy, movies – but the differentiation will be in the youth-oriented setting and characterisation of these properties.

There is a little-known, off-beaten path just behind the Zee facility. Walk down that lane and you will find yourself facing the spanking new, TV18 facility – where plans of yet another Hindi GEC are taking shape, this time in a 50:50 joint venture with Viacom Inc. (Viacom already runs MTV, Vh1 and Nickelodeon in India). Haresh Chawla, Group CEO, TV18, believes that this partnership will give TV18 the scale to compete and achieve leadership position in the segment. Having established leadership in news broadcasting, the last mile for the TV18 Group (and its broadcast subsidiary GBN) was indeed an entry into the multi-platform entertainment space, which will happen when this entertainment channel launches in 2008.


About 15 kilometers away from Filmcity, in the busy, south Delhi business hub of Archana Arcade, there is palpable excitement at the upmarket NDTV head office in Delhi too. Ace newscaster Dr. Prannoy Roy has ventured beyond news to team up with Bollywood baron Karan Johar and former Star India-turnaround magician, Sameer Nair to give shape to NDTV Imagine, a traditional Hindi GEC from the NDTV stable. Slated for a January 2008 launch, less than a fortnight ago, NDTV Imagine announced its programming line-up amidst much fanfare (the highlight was the jhatka-matkas from dance maestro Saroj Khan). In conversation with 4Ps B&M, Sameer Nair CEO, NDTV Imagine, shared his plans for the GEC, saying that the channel will offer “fresh not familiar” programming and will “appeal to the entire family from 6-60.”

Interestingly, NDTV Imagine unveiled its programming nearly two months before the actual launch of the channel, an unheard of practice. And since it came barely a couple of days after the big-ticket launch of 9X – The Indrani & Peter Mukerjea (ex-Star India head honcho) led INX Media’s mega GEC foray – that promises nine times more fun, media analysts are calling it a knee jerk reaction by Dr. Roy and team. “It seems when they saw the first mover advantage being taken away by rival 9X, they hastily decided to announce something,” they say.

Moreover, while NDTV Imagine does have to deal with the news-oriented image of its parent NDTV, 9X has no such image overhauls to consider. Sources in the industry also fear that NDTV’s upmarket SEC A and SEC B+ image may not work for a mass-market GEC segment. For now, the 9X launch is being hailed as the most innovative channel launch ever. Indrani Mukerjea, Founder & CEO, INX Media, is thrilled with the initial response to the channel. “Reports are trickling in that the content on 9X is looking even better than the promos,” she gushes, lamenting the current state of the Hindi GEC category, “Actually there were just three GECs in the Indian context – Star, Zee and Sony. And there is a level of fatigue that has crept in with the regular kitchen politics soaps that run on these channels,” she told 4Ps B&M.

Clearly, the entertainment overload on Indian television is reaching a deafening crescendo! And this is just the beginning – more like a peek into the plans of big pocketed players with ambitions to become the next Rupert Murdoch or Subhash Chandra Goyal.

There are numerous smaller aspirants and everybody who is anybody is harbouring TV entertainment ambitions. The reason is simple; it is a genre that has the bulk of TV viewers hooked, but has only 3-4 established players, as opposed to 9-10 players in the Hindi news segment, which has less than 5% market share. The common refrain is that there is immense potential in the segment, just waiting to be tapped.

India’s TV advertising pie is continually growing, with the maximum ad revenues being absorbed by Hindi soaps and movies (as per SSKI, television advertising accounts for 40% of the total advertising pie). FICCI-PwC’s 2007 report on the media & entertainment industry states that the nation’s total advertising pie today stands at about $4 billion. With an economy growing at 9%, advertising expenditures are bound to soar and analysts estimate that just this year advertising revenues are all set to go past the $4.5 billion mark. Anuradha adds that while world over the total advertising and marketing money that gets circulated is about 3% of the GDP, in India the figure stands at a measly 0.7%. “Obviously, there are great growth opportunities,” she reiterates.

Digital democracy (read: CAS, DTH and IPTV) waiting to unfold across the nation is another factor driving players to jump into the television well. Once implemented, if a channel is delivering good content, people for sure would pay to watch it – and media hubs would also save hugely on distribution costs.

But here’s the caveat to this entertainment jamboree. According to TAM, GEC share is sliding downward year-on-year. From occupying nearly 48% of the entire TV viewing populations’ share in the early years of the new millennium, the category has been sliding south ever since, to sit precariously perched at just about 28% of the total TV pie today. Market watchers say that thanks to the steady emergence of multiplexes, malls, amusement parks et al, the total TV viewership pie is coming down, and hence GECs are bound to take a beating. The lone genre that has seen growth in recent times is that of Hindi news viewers (See table).

The established players in the category - Zee, Star, Sony and Sahara – are all hungering for a bigger share of this 28% TV viewer pie. Add the 5-6 new players to the cacophony and the audience fragmentation is slated to rise to unprecedented levels. However, even the falling share of GECs cannot contain the gusto of the new players. Mukerjea, for one, believes that despite declining viewer share currently, positive economic indicators for the economy will certainly lead to higher advertising revenues, “and GECs, with a compelling programming mix and the right reach, will stand to benefit.”

So should the biggies in the biz be shivering with trepidation of a competitive onslaught? On the face of it, no! Star, Zee and Sony are clear leaders in the category. For now, Star’s worst nightmare is its shrinking viewership pie in the face of an onslaught from a revamped and re-energised Zee, which is slowly coming back to claim its pre-2001 (and pre-KBC and Ekta Kapoor mania) leadership status in the entertainment sweepstakes. Sony, at No. 3 is still in the reckoning and is playing catch up with the big two.


But a closer look and you notice that fresh competition has begun taking its toll; especially in terms of employee attrition. Unlike Peter Mukerjea (INX), who was in a non-compete agreement with Star India till mid-2007, Sameer Nair has picked up the crème from Star’s employee well, packing a swift punch in the current market leader’s belly. Star’s Shailja Kejriwal, Harsh Rohatgi, Manoj Vidwans, Gaurav Gandhi and Kuljeet Singh have already walked over to the Nair camp and more big ticket crossovers are imminent. “A lot of my ex-colleagues are working with me. Human management is a prerequisite in the creative business,” says Nair.

Be that as it may, it is almost certain that most of the new channels are bound to fall gregariously into the me-too trap. And media observers believe that the market is closed off (read: saturated) for the me-too variety. “All the new players are saying that they are different. But having seen the programming line-ups of some, I don’t see anything different that they have to offer,” says Pratap Suthan, NCD, Cheil Communications.

Going forward, the competitive fireworks will only intensify, with content, distribution and marketing becoming the reigning kings and queens of this epic battle for supremacy in the consumer mind space. “There is a creative famine in the TV industry, which will now realise the importance of talent management; as quality content aggregation and distribution will be the defining success factors,” offers Kaul of Zee, smugly reiterating that Zee stands strong on both these counts because of its DTH and cable arm, on the one hand; and the on the other hand, media conglomerate’s already established dominance and deep pockets.

Star Plus, Star One, Sony, Sab, would also be banking on similar sentiments, but the new players are no pushovers. They are in the process of inking equity deals with big production houses to strengthen their ‘content’; as also working out cost-effective synergies with distribution alliances to script their success sagas; not to mention unleashing multi-million promotional strategies.

But the devil is in the detail. Entertainment channels require big budgets, on an average Rs.1 to 1.5 crores on a daily basis. Most of the new players have deep pockets, but many may not last the distance. With Sun TV Network, buying 49% stake in NDTV’s Red FM radio network; Walt Disney purchaing UTV’s children’s entertainment channel Hungama et al, the consolidation has already started. As pressure on advertising rates and the analog distribution systems increases, smaller players will be further get edged out.

But sitting in her plush office in Filmcity, Noida, Prasad is not buying this logic. She feels that smaller players have invariably managed to carve out a niche for themselves in the entertainment business. After all, Dr. Roy and TV18’s Raghav Behl were small players, who eventually gathered both size and scale. So was the case with UTV. When it comes to grabbing eyeballs, size is never the major consideration. It’s all about creativity, brains and mind space.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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A silver streak...

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You’d definitely confuse it with a treasure island if you did not know it was Ravissant, a luxury goods store, displaying silverware designed by three of the world’s most distinguished designers – Simone Ten Hompel, Alistair McCallum and Michael Boy. The collection, aptly called ‘the Silver Lining’, shows off an array of magnificent treasures – a fusion of Indian, European and, at times, Japanese aesthetics in a unique blend of gilding metal with silver. Price on request.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Touch down on the tarmac!

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The slow and steady sometime wins the race, but not all the time...

Siddhanta Sharma and Jeh Wadia really don’t have all that much in common. The latter is the scion of a business family that traces its roots back to almost 200 years, while Sharma can’t lay claim to that kind of hoary legacy. Yet, in moments of quiet introspection, or when they pick up a pink paper that announces the nth round of the war between Vijay Mallya and Naresh Goyal, the head honchos of Low Cost Carriers (LCCs) GoAir and SpiceJet must be sharing one common emotion: the unspoken agony of being left behind in the race; and the passionate dream of catching up with the big boys one day.

In the rapidly growing civil aviation industry in India, the big boys, without any doubt, are Vijay Mallya and Naresh Goyal. The former has leveraged a Richard Branson persona and loads of cash generated by his liquor empire, United Breweries, to make Kingfisher Airlines arguably the number one in the country. Mallya and Kingfisher catapulted from the margins to the numero uno slot by acquiring Air Deccan (OK, we won’t say acquiring if Mr. Gopinath of Deccan insists!). Naresh Goyal was even faster on the draw; he managed to acquire Air Sahara after a convoluted and controversial process and now straddles both the full fare (Jet) and LCC (Air Sahara now christened as Jet Lite) segment. Then there is the government owned behemoth – Indian - that is emerging bigger and stronger from the merger of Indian Airlines and Air India.

Do the smaller players have even a ghost of a chance to be one up on the big boys? Analysts will remain analysts and revel in hedging their bets, as Binit Somaia, Regional Director, Centre for Asia Pacific Aviation (CAPA) does when he pontificates, prevaricates and then pronounces, “The aviation sector is facing a phase of consolidation which in short term will be dominated by Kingfisher/ Deccan, Jet Airways/Jet Lite and Air India/Indian…” But it is also a fact that in the highly competitive market of the last couple of years, yields have been so low that for new entrants to pursue market share would have meant bigger losses. Small surprise that in the face of the biggies acquiring more and more aircrafts in a bid to expand their services, GoAir prefers to maintain a low profile, with lesser numbers.

Given the bleeding operating costs that the industry as a whole faces, would Wadia’s approach be more sensible in the long run? Who knows, Jeh Wadia might actually end up having the last laugh. At the moment, he is dead pan and dead sure that the frenetic expansion pursued by the big boys like Mallya and Goyal gives him the luxury of sitting back and watching the two go at each other. He intends to cash in when the bruised leaders will inevitably give him a window of opportunity. Who said also-rans did not have chutzpah and confidence?!


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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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We have always created work that transcends the need for a brand ambassador and a certain line of work...

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Coming to some of the recent campaigns of the bank: The ad for HSBC Premier showed the importance of having a sound advisor behind the triumph of an individual. Ads for commercial banking put to the fore the bank’s skill of providing customised treatment in a very effortless, yet striking manner. One could see print campaigns that had pictorial comparison of people of different mindsets on a single platform. The bank also released various TVCs on the same lines. HSBC’s “Different People, Different Views” campaign was hugely successful and Ogilvy Action took the concept craftedby Contract Advertising ahead and aided it by innovative promotions (in multiplexes of metros).

The line of thought has been used in many ads to drive home the point which seems to have sunk in pretty nicely – thanks to the simplicity of the ideas in the ads. However, despite creating a name for itself, the bank still suffers from an image that is niche. Maybe, it’s time for a fresh idea that also gives it the mass advantage. What say?

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Banking glocally…

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Bertrand Russell, philosopher and logician from England had popularly said, “Do not fear to be eccentric in opinion, for every opinion now accepted was once eccentric”. Ever since its inception in 1865, Hongkong and Shanghai Banking Corporation (HSBC) has been advocating this philosophy not only to grow in the banking sector but also to establish its prominencewith respect to its communication. The burly bank acquired Mercantile Bank of India in 1959, commencing a journey that has gone through many milestones till now. The year 1987 witnessed first ATMs installed in the nation by HSBC. The strategy adopted by the bank globally, throughout the 1990s mirrored on “Managing for Value” that helped it to accrue earnings in both, established and emerging markets.

By the year 2002, HSBC had started bringing out commercials that voiced its presence across the globe with a tag-line: HSBC – The world’s local bank. “HSBC has managed to smartly juxtapose its communication (with global campaigns) to suit the Indian audience and I think that’s the hallmark of this global entity,” says Josy Paul, National Creative Director of JWT, HSBC’s global advertising agency.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Nerves of steel & the moolah within

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On the other hand, the steel giant, Lakshmi Narayan Mittal is also set on tapping potential in his motherland, India. Undoubtedly a late entrant to the fast-growing market, the Forbes billionaire’s company, Arcelor Mittal, announced this fortnight that they are planning to set up steel plants in Orissa and Jharkhand, with a capacity of 24 million tonnes per annum. With an investment estimated to be about $18 billion, the move will make Mittal the single largest FDI investor in India. Also, having recently paid the first instalment (Rs.5 billion) of the Rs.35 billion investment for a 49% stake in HPCL, Mittal will no longer just be called a steel czar, but will soon earn the title of an oil tycoon, too. Everything associated with Mittal is larger than life, be it his daughter’s wedding or his London house worth million dollars, so also this investment marks the largest FDI in refining sector. Investing in a deal where majors like BP walked out, Mittal has surely given light to the cold storage project of HPCL.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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There is no stopping these rock solid men...

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India Inc. is surely taking giant leaps ahead, with its associates growing globally and at the same time inviting their counterparts to tap opportunities in the homeland too. Either way, India is proving to be a red-hot destination. And those who made big-biz news this fortnight, either made it big overseas or have come back to their soil, betting big on the untapped potential. The first newsmaker making his claim to fame is businessman turned Member of Parliament who has transformed his company from a moderate performer to a star performer.

Naveen Jindal, the Executive Vice Chairman & Managing Director of Jindal Steel & Power Ltd. (JSPL) is all set to shell out $2.1 billion to develop one of the largest iron ore deposits – El Mutun in Bolivia. The plan is to eventually come up with steel making facilities in the region. Naveen’s far sightedness has made his, the first Indian company to make such an investment in the 40 billion tonne iron ore reserve. Leaving behind international investors including Arcelor Mittal,JSPL will have access to 50% of these rich reserves in this 40 year contract. “It’s the first overseas deal for our company. Strategically, it is very important to have control of iron ore resources which this deal provides us with. We will be able to contribute a lot to Bolivia and our company will benefit immensely,” Naveen Jindal told 4Ps B&M. Under the leadership of Jindal, JSPL besides taking a leap of 35% in net profits to Rs.2.03 billion (in first quarter of 2007) has also been included in the coveted list of Emerging Companies in year 2001 by The Economic Times.

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Chamber of secrets

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As Delhi prepares to jog in the Hutch Marathon this October, almost chameleon-like,Hutch will shed its bubbly pink hues to wear the glamorous red of Vodafone. Sources in Hutch have revealed to 4Ps B&M that the much-hyped brand swap would take place around the event, when the three pink ‘samosas’ of Hutch would disappear and Vodafone’s logo would gain prominence instead.

Not that this is the first time Hutch is changing colours. The last time was in November 2005 when Hutch went pink from orange in search for more vibrancy. The move was a roaring success, gaining Hutch renewed zeal in the Indian telecom sweepstake. Yet, there is a twist in the tale this time around. The Vodafone red would take on the vibrant red of market leader Airtel. While Vodafone still has to instill its brand aura among Indian consumers, Airtel enjoys a coveted headway in that very arena. But those in the know say that the possibility of a colour clutter can be ruled out. “Vodafone will have a different shade of red than Airtel and their formatting and font size would be a big differential,” asserts Brand analyst Harish Bijoor.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Consumers were not even used to processed vegetables at first, but we made Safal...

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But Thachil would do well to remember is that while he may be one of the pioneers in the probiotic curd segment, Mother Dairy still does not really wear the first mover’s robe. Amul with its probiotic icecream was the first to hit the probiotic market in India. And as the first healthy ice-cream marketer, Amul has already laid claim to the ice cream market with 37% market share. On the anvil are efforts from Amul to roll out probiotic lassi.

Coming back to curd, Nestlé, Mother Dairy and Dan one, all players are betting big on these bacteria, but unless this bacilli grabs a gigantic share of the Indian dining table, these giants will be left hurting and hungry for ROI...

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Eggs are going to be more fun!

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It’s time to beat the breakfast blues! Get ready to gorge on omelettes and fried eggs – because the cost of eggs is probably going to come down. It’s also the chicken and egg syndrome; the poultry expects an increase in supply (vis-à-vis demand), so the price of chicken will also go down. According to the National Egg Coordination Committee, egg prices may come down to Rs.150 per 100 eggs during August- September (which is the time when supply will be at its peak). Currently, retail prices of eggs are around Rs.28 a dozen; this is quite an upward spiral compared to Rs.18-20 per dozen in the corresponding period last year. The average price of chicken has also risen to Rs.100 per kg – compared to Rs.70 per kg last year. Of course, one reason is that the bird flu was on in full swing around this time last year, and prices had dropped. Anyway, enjoy that omelette while you can!

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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More proof that India’s going all mobile

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According to a study by global research and analysis firm, Gartner, India will be the second-fastest growing country in the Asia-Pacific region – after China, of course! – in the sector of cellular services. It is being estimated that by 2011, 58% of Indians living in the rural and 95% of urban Indians will have mobile connections. And even though the mobile penetration in rural India is abysmally low (at 2%), this state of affairs actually offers a huge business opportunity for cellular service providers. One fallout of this has been cheap mobile handsets; there are black-and-white handsets that are available for less than even Rs.1,000. Overall, the telecom sector may grow by 18.4% between 2007 and 2011. In 2006, cellular services notched up revenues of $8.95 billion; by 2011, revenues could well be pegged around $25.61 billion. Gartner also says that cellular penetration will increase from 12.7% in 2006 to 38.6% by 2011. The other interesting finding that the study uncovered is that, in 2006, a whopping 84% of mobile users had prepaid connections; this trend is likely to grow overwhelmingly. It is being estimated that the prepaid segment will account for 93% of users by 2011. And of course, tariffs and call rates will further drop – and boost the number of users.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Going all out on M&As

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The second Asia Financial Services M&A survey (that was conducted on 230 financial services executives in Asia) by PricewaterhouseCoopers says that India, along with China (but of course!), will account for 86% of mergers and acquisitions (M&As) over the next five years. In India, M&As’ growth has increased to 39% in 2007 from 36% in 2005. In China, on the other hand, in financial services, the growth is expected to come down from 52% in 2005 to 47% in 2007.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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