My colleagues Promit Mukherjee and Beryl Menezes co-authored this story appearing in DNA Money edition on Saturday, Feb 23, 2013.
Apollo Tyres, India’s largest tyre maker, is exploring collaborations with foreign companies to enter markets where it is not currently present in, starting with Latin American and Southeast Asia.
Onkar S Kanwar, chairman, Apollo Tyres, said, “We are in talks with a few players wherein they will take products from us in our country and gives us products, for example, in Brazil. This approach will be a win-win for both.”
Kanwar said the company is likely to make a few announcements on collaborations by early next fiscal.
The tyre manufacturer, which has earlier acquired companies in Europe and Africa, now betting on collaborations.
“That’s going to be the future for a lot of tyre manufacturing companies looking to enter the untapped foreign markets,” he said.
India contributes almost 60% to Apollo’s revenues with the rest coming from overseas.
“We want outside India business to reach 70% from the current 40% in the next few years,” he said.
On capital expenditure for the next fiscal, Kanwar said, “In Thailand, we are looking at investing $300-400 million in the initial stages. Similarly, we are also looking at inorganic opportunities in other markets globally.”
While the overall automobile industry is witnessing challenges, Apollo has decided not to completely depend on Indian OEMs and spread risks evenly.
On impact of the recent production cuts by Tata Motors, Kanwar said, “While we have not cut down production, we have decided to export those products in Middle East and Southeast Asia that are now classified as domestic markets for the company. We have been servicing all of them the same way and will continue doing so in the future as well.”
On backward integration, the company is looking to secure supply of rubber its key raw material.
“We have signed up with a team of scientists in Arizona for growing rubber on arid lands, which have no water and lot of sunshine. We are investing heavily in this; all I can say is that initially it will be a few million dollars. We are investing in Russia too in this regard,” he said.
Once this is achieved, the company plan to give seed and facilities to farmers in Gujarat and Rajasthan and buy rubber from them.
The company eyes 25-30% raw material security in the next two to three years.
On challenges being faced by the automobile industry, Kanwar said a revival will happen sooner or later, but the well-diversified companies will always do well.
Follow Ashish K Tiwari on twitter @ashishktiwari
Sunday, 14 April 2013
Windfall for TPG from Shriram Trans stake sale
This story first appeared in DNA Money edition on Friday, Feb 22, 2013.
TPG Capital, a private equity (PE) major, may have netted a whopping 450-500% returns, or a cool Rs1,350 crore in profit, from Thursday’s sale of around 50% of its 20.28% stake in Shriram Transport Finance Company or STFC, the country’s largest player in commercial vehicle finance.
In a bulk deal executed on the National Stock Exchange, Newbridge India Investment II Ltd, a unit of TPG, sold 23.15 million STFC shares (or a 10.2% stake), to Centura Investment, Sanlam Life Insurance and Swiss Finance Corp, at Rs715.15, for a total value of Rs1,656 crore.
Newbridge in 2006 acquired a 49% stake of unlisted group holding company Shriram Holding Madras Pvt Ltd (SHMPL), which holds 41.25% in STFC now. When STFC was merged with SHMPL in December 2011, Newbridge got a 20.28% in the merged entity. As per Bloomberg data, the (post-merger) acquisition cost of the 2006 deal for TPG worked out to Rs112.75 per share.
Based on this valuation, TPG is sitting on unrealised gains of over 450% from its 2006 investment.
According to Bloomberg data, the Newbridge-STPC deal is the largest of its kind in India since Cairn Energy sold a stake in Cairn India for `2,060 crore in June last year.
Thursday’s sale also marks the largest block deal in the country in nearly eight months, and comes after STFC shares gained 31% in the last one year.
But the shares tanked 9.4% to Rs685.10 in afternoon trade on Thursday, before recovering to close at Rs699.25, still down 7.72%. After Thursday’s bulk deal, TPG will have 22.85 million STFC shares, or a 10% stake, worth `1,600 crore.
Sanlam Life picked 8.4 million STFC shares, or a 3.7% stake, for `601 crore; Centura paid Rs270 crore for 3.77 million shares, or a 1.7% stake; and Swiss Finance Rs97 crore for 1.55 million shares, or a 0.68% stake. With this, the STFC stake of Sanlam, the South African insurance group, has risen to about 10%. It also holds stakes in the Chennai-based conglomerate Shriram Group’s insurance businesses.
Follow Ashish K Tiwari on twitter @ashishktiwari
TPG Capital, a private equity (PE) major, may have netted a whopping 450-500% returns, or a cool Rs1,350 crore in profit, from Thursday’s sale of around 50% of its 20.28% stake in Shriram Transport Finance Company or STFC, the country’s largest player in commercial vehicle finance.
In a bulk deal executed on the National Stock Exchange, Newbridge India Investment II Ltd, a unit of TPG, sold 23.15 million STFC shares (or a 10.2% stake), to Centura Investment, Sanlam Life Insurance and Swiss Finance Corp, at Rs715.15, for a total value of Rs1,656 crore.
Newbridge in 2006 acquired a 49% stake of unlisted group holding company Shriram Holding Madras Pvt Ltd (SHMPL), which holds 41.25% in STFC now. When STFC was merged with SHMPL in December 2011, Newbridge got a 20.28% in the merged entity. As per Bloomberg data, the (post-merger) acquisition cost of the 2006 deal for TPG worked out to Rs112.75 per share.
Based on this valuation, TPG is sitting on unrealised gains of over 450% from its 2006 investment.
According to Bloomberg data, the Newbridge-STPC deal is the largest of its kind in India since Cairn Energy sold a stake in Cairn India for `2,060 crore in June last year.
Thursday’s sale also marks the largest block deal in the country in nearly eight months, and comes after STFC shares gained 31% in the last one year.
But the shares tanked 9.4% to Rs685.10 in afternoon trade on Thursday, before recovering to close at Rs699.25, still down 7.72%. After Thursday’s bulk deal, TPG will have 22.85 million STFC shares, or a 10% stake, worth `1,600 crore.
Sanlam Life picked 8.4 million STFC shares, or a 3.7% stake, for `601 crore; Centura paid Rs270 crore for 3.77 million shares, or a 1.7% stake; and Swiss Finance Rs97 crore for 1.55 million shares, or a 0.68% stake. With this, the STFC stake of Sanlam, the South African insurance group, has risen to about 10%. It also holds stakes in the Chennai-based conglomerate Shriram Group’s insurance businesses.
Follow Ashish K Tiwari on twitter @ashishktiwari
'Give tax rebates to housing projects'
This Q&A first appeared in DNA Money edition on Wednesday, Feb 20, 2013.
Brotin Banerjee, MD and CEO of Tata Housing, says last year’s story was one of mixed industrial data and a slump across industries, including realty. With the Union Budget 2013-14 fast approaching, the property sector is renewing hopes that any new measures may help overcome fears of sluggish growth continuing next fiscal. Excerpts from an interview:
On affordable housing:
The Budget should provide sops and tax rebates for affordable housing projects along with interest subvention of 5% for the low income groups and economically weaker sections. Extension of scheme of interest subvention of 1% on housing loan up to Rs 15 lakh on homes costing up to Rs 25 lakh should be continued. Excise duty reduction on cement and steel to lower project costs and expansion of the interest subsidy on loans will prove to be necessary tools to boost developers’ interest in the affordable housing segment.
On fiscal policy:
A few weeks ago, the central bank announced its first policy rate cut in nine months. Although that has brought cheer, the fact remains that 2012 can be aptly described as a slow year. Real estate consultancy firm Jones Lang La Salle says that the launch of real estate investment trusts (REITs) or real estate mutual funds (REMFs) in 2013 will drive investor demand across cities. This will allow investments in rental housing and this will be a first for the sector. Mandated bank support for project development is required to ensure timely completion of projects.
On taxation:
Tax measures such as increasing the limit of interest deduction on home loans from Rs 1.5 lakh to Rs 3 lakh will provide necessary motivation to consumers to increase buying activity and revive demand. Raising the income tax exemption limit to Rs 3 lakh will lead to more disposable income available for domestic investments.
Increase in service tax and excise duty by 2% in the last Budget has put pressure on project costs, raising the unit costs by 4-5%. As a result, high cost of construction has impacted demand and is proving to be a deterrent for both sides. To revive demand and control rising property prices, government should consider lowering of service tax and excise duty.
On Real Estate Bill:The introduction of legislation such as the ‘Real Estate Bill’ is expected to increase transparency and boost investor confidence in the Indian market. We continue to advocate the formation of a regulatory authority for the sector which will ensure planned and transparent development and protect the interest of the customers. Another recommendation would be the establishment of a single-window clearance for construction projects.
On raising funds:The Reserve Bank of India also allowed real estate developers and housing finance companies to raise up to $1 billion through external commercial borrowing (ECB), a move that is expected to make funding more accessible, especially given the current regulatory and reform environment.
Brotin Banerjee, MD and CEO of Tata Housing, says last year’s story was one of mixed industrial data and a slump across industries, including realty. With the Union Budget 2013-14 fast approaching, the property sector is renewing hopes that any new measures may help overcome fears of sluggish growth continuing next fiscal. Excerpts from an interview:
On affordable housing:
The Budget should provide sops and tax rebates for affordable housing projects along with interest subvention of 5% for the low income groups and economically weaker sections. Extension of scheme of interest subvention of 1% on housing loan up to Rs 15 lakh on homes costing up to Rs 25 lakh should be continued. Excise duty reduction on cement and steel to lower project costs and expansion of the interest subsidy on loans will prove to be necessary tools to boost developers’ interest in the affordable housing segment.
On fiscal policy:
A few weeks ago, the central bank announced its first policy rate cut in nine months. Although that has brought cheer, the fact remains that 2012 can be aptly described as a slow year. Real estate consultancy firm Jones Lang La Salle says that the launch of real estate investment trusts (REITs) or real estate mutual funds (REMFs) in 2013 will drive investor demand across cities. This will allow investments in rental housing and this will be a first for the sector. Mandated bank support for project development is required to ensure timely completion of projects.
On taxation:
Tax measures such as increasing the limit of interest deduction on home loans from Rs 1.5 lakh to Rs 3 lakh will provide necessary motivation to consumers to increase buying activity and revive demand. Raising the income tax exemption limit to Rs 3 lakh will lead to more disposable income available for domestic investments.
Increase in service tax and excise duty by 2% in the last Budget has put pressure on project costs, raising the unit costs by 4-5%. As a result, high cost of construction has impacted demand and is proving to be a deterrent for both sides. To revive demand and control rising property prices, government should consider lowering of service tax and excise duty.
On Real Estate Bill:The introduction of legislation such as the ‘Real Estate Bill’ is expected to increase transparency and boost investor confidence in the Indian market. We continue to advocate the formation of a regulatory authority for the sector which will ensure planned and transparent development and protect the interest of the customers. Another recommendation would be the establishment of a single-window clearance for construction projects.
On raising funds:The Reserve Bank of India also allowed real estate developers and housing finance companies to raise up to $1 billion through external commercial borrowing (ECB), a move that is expected to make funding more accessible, especially given the current regulatory and reform environment.
Lodha, first realtor to cross Rs10,000 cr sales
This story first appeared in DNA Money edition on Monday, Feb 18, 2013.
In a market where the listed real estate players are having a tough time, the yet-to-be listed Lodha Group is set to create a new milestone. It is set to clock a jump of over 70% in new sales this fiscal to cross the Rs10,000 crore mark.
Abhisheck Lodha (pictured), MD, Lodha Group, said the company has been in the Rs5,000-6,000 crore range in the past two financial years. “However, this year, we will see a substantially high, 70% growth and cross Rs10,000 crore in new sales. This kind of a sales number has never been achieved to our knowledge by any real estate company in India.”
The growth, Lodha added, has come as a result of more projects being completed, new launches catering to large geographies, expanding into different parts of Mumbai and getting into newer markets like Pune and Hyderabad.
“We delivered more than 4 million square feet of space this year and the focus in 2013 will also be on continuing to deliver what we have sold and promised before. There will obviously be new launches and sales,” said Lodha.
This fiscal has been a mixed one for realtors both across the country and particularly in Mumbai, where overall demand softened compared with the previous years.
A recent Knight Frank report said that in 2012, the home absorption numbers dropped 3% to 42,200 units compared with 2011. As for new launches, 2012 witnessed an 8% decline from 2011 with some 50,500 units hitting the market.
Having said that, certain developers, including Lodha and Godrej Properties, have been able to get a very good share of the prevalent demand for their new launches.
For instance, Lodha recently pre-launched 650-odd residential units at its Blue Moon development (on the erstwhile DLF land parcel it had recently acquired) that received approximately 1,300 applications worth over Rs6,000 crore in a nine-day period.
“We’d assessed the market and realised that the demand for the project would be significantly higher than the supply we had. The response also shows that there is good demand in the market, but it is very picky and wants to make sure it is going into good products that assure quality and offer clarity in delivery as promised,” said Lodha.
As for as Godrej Properties is concerned, for the third quarter, the company reported a total booking value of Rs672 crore and a total booking volume of 1.04 million square feet (msf) compared with total booking value of Rs 364 crore and total booking volume of in 0.57 msf in the corresponding year-ago quarter. While residential projects recorded a booking value of Rs550 crore and a booking volume of 0.94 msf, commercial projects witnessed a booking value of Rs122 crore and a booking area of 0.10 msf. @ashishktiwari
In a market where the listed real estate players are having a tough time, the yet-to-be listed Lodha Group is set to create a new milestone. It is set to clock a jump of over 70% in new sales this fiscal to cross the Rs10,000 crore mark.
Abhisheck Lodha (pictured), MD, Lodha Group, said the company has been in the Rs5,000-6,000 crore range in the past two financial years. “However, this year, we will see a substantially high, 70% growth and cross Rs10,000 crore in new sales. This kind of a sales number has never been achieved to our knowledge by any real estate company in India.”
The growth, Lodha added, has come as a result of more projects being completed, new launches catering to large geographies, expanding into different parts of Mumbai and getting into newer markets like Pune and Hyderabad.
“We delivered more than 4 million square feet of space this year and the focus in 2013 will also be on continuing to deliver what we have sold and promised before. There will obviously be new launches and sales,” said Lodha.
This fiscal has been a mixed one for realtors both across the country and particularly in Mumbai, where overall demand softened compared with the previous years.
A recent Knight Frank report said that in 2012, the home absorption numbers dropped 3% to 42,200 units compared with 2011. As for new launches, 2012 witnessed an 8% decline from 2011 with some 50,500 units hitting the market.
Having said that, certain developers, including Lodha and Godrej Properties, have been able to get a very good share of the prevalent demand for their new launches.
For instance, Lodha recently pre-launched 650-odd residential units at its Blue Moon development (on the erstwhile DLF land parcel it had recently acquired) that received approximately 1,300 applications worth over Rs6,000 crore in a nine-day period.
“We’d assessed the market and realised that the demand for the project would be significantly higher than the supply we had. The response also shows that there is good demand in the market, but it is very picky and wants to make sure it is going into good products that assure quality and offer clarity in delivery as promised,” said Lodha.
As for as Godrej Properties is concerned, for the third quarter, the company reported a total booking value of Rs672 crore and a total booking volume of 1.04 million square feet (msf) compared with total booking value of Rs 364 crore and total booking volume of in 0.57 msf in the corresponding year-ago quarter. While residential projects recorded a booking value of Rs550 crore and a booking volume of 0.94 msf, commercial projects witnessed a booking value of Rs122 crore and a booking area of 0.10 msf. @ashishktiwari
HDIL looking to acquire 15 acre Digvijay Mills land parcel at Lal Baug
This story first appeared in DNA Money edition on Saturday, Feb 16, 2013.
Realty company Housing Development Infrastructure (HDIL) is looking to acquire a 15 acre land parcel in South Mumbai. The plot in discussion has been identified as the National Textile Corporation's Digvijay Mills at Lal Baug near Chinchpokli.
The said land parcel is originally held by Byramjee Jeejeebhoy Pvt Ltd (BJPL) and was given to NTC on a 99 year lease that expired in 1999. Interestingly, NTC and BJPL are engaged in a court battle over handing over the 4,50,000 square feet plot to BJPL that is worth over Rs 1,000 crore. The matter is currently in the Supreme Court.
Last month, Sarang Wadhawan promoter and vice chairman, HDIL, had sold 50 lakh shares in the open market to raise Rs 57 crore. The money thus raised was to be used by HDIL to fund second tranche of a land acquisition, the details of which were not disclosed then.
While refraining to give out any specific details, Hariprakash Pandey, vice president - finance, HDIL, confirmed that the fund raised by HDIL vice chairman was in connection with the Digvijay Mills land parcel and the court case between BJPL and NTC Mills.
"Yes this is the same case being referred to and the matter is still in the court. A hearing happened on February 8, 2013 post which we have filed a rejoinder and are awaiting announcement of the next hearing date," said Pandey during an analyst call to discuss third quarter financial results for fiscal 2013.
During the October to December 2012 quarter, HDIL reported consolidated sales turnover of Rs 423.17 crore and a net profit of Rs 107.35 crore. Other income for the quarter stood at Rs 8.88 crore. Its consolidated sales turnover was Rs 422.57 crore and net profit was Rs 155.80 crore and other income at Rs 17.75 crore.
In a media statement on Wednesday February 14, 2012, Wadhawan, said that the company is focusing on execution and delivery of existing projects. "The steady pace in approvals would enable us in launching new projects and reduce debt. The company is well positioned in the liquidity scenario and comfortable with the debt repayment schedule," he said.
HDIL's standalone debt has come down by Rs 202.5 crore and stands at Rs 3466.94 crore as on December 31, 2012. According to Pandey, standalone debt is likely to decline further by approximately Rs 200 crore on account of Metropolis sales to be affected in fourth quarter of fiscal 2013. @ashishktiwari
Realty company Housing Development Infrastructure (HDIL) is looking to acquire a 15 acre land parcel in South Mumbai. The plot in discussion has been identified as the National Textile Corporation's Digvijay Mills at Lal Baug near Chinchpokli.
The said land parcel is originally held by Byramjee Jeejeebhoy Pvt Ltd (BJPL) and was given to NTC on a 99 year lease that expired in 1999. Interestingly, NTC and BJPL are engaged in a court battle over handing over the 4,50,000 square feet plot to BJPL that is worth over Rs 1,000 crore. The matter is currently in the Supreme Court.
Last month, Sarang Wadhawan promoter and vice chairman, HDIL, had sold 50 lakh shares in the open market to raise Rs 57 crore. The money thus raised was to be used by HDIL to fund second tranche of a land acquisition, the details of which were not disclosed then.
While refraining to give out any specific details, Hariprakash Pandey, vice president - finance, HDIL, confirmed that the fund raised by HDIL vice chairman was in connection with the Digvijay Mills land parcel and the court case between BJPL and NTC Mills.
"Yes this is the same case being referred to and the matter is still in the court. A hearing happened on February 8, 2013 post which we have filed a rejoinder and are awaiting announcement of the next hearing date," said Pandey during an analyst call to discuss third quarter financial results for fiscal 2013.
During the October to December 2012 quarter, HDIL reported consolidated sales turnover of Rs 423.17 crore and a net profit of Rs 107.35 crore. Other income for the quarter stood at Rs 8.88 crore. Its consolidated sales turnover was Rs 422.57 crore and net profit was Rs 155.80 crore and other income at Rs 17.75 crore.
In a media statement on Wednesday February 14, 2012, Wadhawan, said that the company is focusing on execution and delivery of existing projects. "The steady pace in approvals would enable us in launching new projects and reduce debt. The company is well positioned in the liquidity scenario and comfortable with the debt repayment schedule," he said.
HDIL's standalone debt has come down by Rs 202.5 crore and stands at Rs 3466.94 crore as on December 31, 2012. According to Pandey, standalone debt is likely to decline further by approximately Rs 200 crore on account of Metropolis sales to be affected in fourth quarter of fiscal 2013. @ashishktiwari
IHCL to take Orient-Exp call by March-end
This story first appeared in DNA Money edition on Tuesday, Feb 12, 2013.
Tata group’s hospitality business Indian Hotels Company Limited (IHCL) is likely to decide this month whether or not to go ahead with the friendly offer made to Orient-Express Hotels (OEH) last October.
The IHCL board will meet shortly to take a final call before the fiscal-end, said Anil P Goel, executive director-finance. IHCL, he said, had promised to revert after Oriental-Express rejected the initial offer. “Since an offer like this cannot be left open indefinitely, the IHCL board will now take a call.”
He said IHCL is also set to launch its 100th hotel in India sometime in March.
The company reported a 28.01% on-quarter increase in its standalone profit after tax at Rs64.62 crore for October-December. Net sales rose about 4.5% on-quarter to Rs544.55 crore.
“While the industry witnessed an overall de-growth of around 10%, we have been able to grow by 2%,” said Deepa Misra Harris, senior vice-president of sales and marketing at IHCL.
IHCL posted a consolidated profit of Rs47 crore in the December (or third) quarter. According to Raymond N Bickson, MD and CEO, the figure is more or less the same as that of the third quarter of the previous fiscal.
“Our profit before tax in the third quarter was Rs106.13 crore versus Rs103.29 crore while profit after tax stood at Rs49.77 crore as against Rs49 crore in the third quarter of fiscal 2011-12. Overall, we have had a good third quarter and are looking forward to a stronger fourth quarter,” said Bickson.
With product lifecycles shorter, it's the brand that will count: Rishad Tobaccowala
DNA Money editor Raj Nambisan co-authored this Q&A appearing in the edition on Monday, Feb 11, 2013.
Rishad Tobaccowala is a marketing innovator of visionary proportions. The semantics he spouts are bewitching, but their essence is persuaded by a simpler dictum: be 360-degree relevant, grasp the future and thrive in it. He is the chief strategy and innovation officer at the Chicago-based Vivaki, which is an amalgam of the digital and media assets of advertising giant Publicis Groupe such as Starcom Mediavest, Zenith Optimedia, Razorfish and Digitas. In an interview with Raj Nambisan and Ashish K Tiwari, he tells it as he sees it. Edited excerpts:
You talk of advertising having entered a golden age. Is it primarily because of the measurability factor?
There are actually five factors, including measurability. It starts with people, because marketing is about understanding and meeting customer requirements. In the past, people were not so empowered so you could get away with stuff. Today that’s harder, which basically means you have to understand and listen. The second is because everything from social media to people wanting to know who’s in the company and what’s in the company. You actually have to train all of your company to be marketers of some sorts or the other. Because there is twittering coming, there is CRM (customer relationship management) -- even the truck driver has to be trained because he’s a brand ambassador.
The whole organism morphs into a brand ambassador…
Yes, the whole organisation has to become marketing-oriented. The third reason is there are many more ways to marketing than before. And digital allows you to do what is the fourth and very important thing: tell the story, which is what marketing is all about. So what is happening now is that you’ve got new ways of storytelling. The old way was with images, words, pictures and sound. But now you have participation, mobility and data that allow you to tie into YouTube and other kind of stuff. The fifth and the last one is better metrics. Take all the five and you get a pretty potent thing.
Where is India in this process of impactful digital adaptation? Anywhere near the golden age?
See, anything you can say about India, as we know, the opposite is also a true. But what you can say today is that India is in the process of doing the leapfrog. All of us are old enough to remember how we had to wait for months to get a phone line...
Skipping technology generations?
We are going to not skip, but almost-skip, the entire PC-based digital revolution and go directly to mobile and tablets. That is one. The second is, because infrastructure in some places is broken down, electronic commerce is taking off. Third is, in India, whatever we may say about our government, it has been far more progressive on things that have to do with digital than even the United States. For instance, I noticed that 75% of e-commerce is about travel in India, but a lot of it is basically Indian Railways. And this unique identity card will set off something very interesting. And electronic tendering systems will become a way to fight around corruption sooner or later.
Your thesis is that brands will be important in this era of infinite information. Shouldn’t it be products than brands?
The reason it will be brands more than products is not because they are not connected. You know, a brand is built on five different things -- resonance with culture, design, utility, storytelling and value. Utility is where the product is delivered, and, sometimes, on value. The interesting thing is, the other three have nothing to do with the product. So it is not that the product doesn’t matter. But the reason why the brand has to be involved is because product lifecycles are becoming shorter and shorter.
You famously talked of the future belonging to mongrels – metaphorically, of course, referring to the imperative of a combination of talents and self-upgradation needed to survive today…
What happens is there is a personality -- what they now call a ‘T’ person talent: someone who is very specialised in one or two things. It’s like imagining the bottom of the T. But they need to be enough of a generalist, and, more importantly, have the ability to network and collaborate across silos. If you stay narrow in a world that’s interconnected, how will you connect with other people? You don’t even know what to connect to! So that’s what a generalist does. The vertical line in the T is your skillsets, the horizontal is your ability to connect to other verticals and connect the dots.
Is information power or the door to power?
Information is the door to power more than information is power. There is a lot of information and my belief is that there are four levels -- data, on top of data is information, on top of information is insight, on top of insight is wisdom. Insight is by taking a lot of information and figuring out how to make sense. Wisdom … you add a sort of a layer of a combination of experience and humility that takes you to a different stuff. There is a lot of information about digital – a lot of data -- but very little insight and very few people have done it long enough to basically say this works and this doesn’t. But if you don’t have any information … that’s why I say it’s a door to power; without it you can’t even get insights.
You tweeted a few days ago on wisdom, where you said you have to become who you are. On other hand, you persuade us to get out of silos -- unbecome what we are, as it were…
Yes, but there’s a very big difference. The ‘become who you are’ and unbecome what you are two different things. Become who you are – is about things that you are naturally good at and which make you happy. For instance, I’m perfectly capable and I used to run large accounts for Leo Burnett, but it was very clear that gave me a certain level of joy but not the same joy I get from what I do now. When people say you are very good at what you do, I say, “No, no no!” ... I’m now doing what I am very good at -- which is a huge difference. But in doing what I am doing, I am constantly reinventing myself. So I what I basically do is help my companies reinvent, help people reinvent, clients reinvent and I myself am reinventing. But what happens is, if you put me into something that was static it would be nicer on my travel and other schedules, but I’d probably be less excited. But if you put some people who like managing static organisations on to my stuff, they’ll probably shoot themselves. Hopefully everyone’s doing something that’s exciting and as valuable as I’m doing. There’s that definition of justice by Plato or Socrates, which says everybody in their rightful place.
How do monolithic content companies survive because there are low-to-no entry barriers? Anyone who writes well can live off a blog and gnaw away at the content business…
A blogger can write well but a blogger, with a few exceptions, will never make enough money to live. Won’t have scale and a way to monetise content. Even if he gets scale, it’s not going to be anything like online or what anything else gets. The other thing is, they don’t know how to monetise because you need to have things like a sales force, a cross medium and all kind of stuff. Sure the barrier of entry is none, but the barrier of entry to get a continuous audience is huge. And the barrier of entry to monetise is even huger.
Guess why I blog myself? I do it because of three things. And this is in backward order: but the third reason is so that I can learn how to actually do it, like what is it to write a blog. The second is to share my opinion with the world. If I get enough traffic, it influences the world and therefore helps me build a brand. And the first and biggest reason is, it is a sales tool. It helps me sell to clients. So the way I make money is I’m better known and somebody asks me to go and speak, and my clients and the agency get something.
What’s your advice to the other Chicago Booth School fellow, Raghuram Rajan?
We are just good friends. His kids were taught by my wife, who is a teacher at Booth and that’s how we came to know him. He is incredible.
Rishad-isms
Factions result in Fractions. Factions result in Friction. Factions create Fiction. In an interconnected world silos are for losers. In the end, time is the only thing we have. And the way we spend our time is the way we spend our lives. We often say we are killing time. But really, it is time that is killing us. So, how best to make the most of time? Five steps: Eliminate (needless activity), Focus on comparative advantage and positive outcomes, Scale yourself, Do new things, Give time to others.
Rishad Tobaccowala is a marketing innovator of visionary proportions. The semantics he spouts are bewitching, but their essence is persuaded by a simpler dictum: be 360-degree relevant, grasp the future and thrive in it. He is the chief strategy and innovation officer at the Chicago-based Vivaki, which is an amalgam of the digital and media assets of advertising giant Publicis Groupe such as Starcom Mediavest, Zenith Optimedia, Razorfish and Digitas. In an interview with Raj Nambisan and Ashish K Tiwari, he tells it as he sees it. Edited excerpts:
You talk of advertising having entered a golden age. Is it primarily because of the measurability factor?
There are actually five factors, including measurability. It starts with people, because marketing is about understanding and meeting customer requirements. In the past, people were not so empowered so you could get away with stuff. Today that’s harder, which basically means you have to understand and listen. The second is because everything from social media to people wanting to know who’s in the company and what’s in the company. You actually have to train all of your company to be marketers of some sorts or the other. Because there is twittering coming, there is CRM (customer relationship management) -- even the truck driver has to be trained because he’s a brand ambassador.
The whole organism morphs into a brand ambassador…
Yes, the whole organisation has to become marketing-oriented. The third reason is there are many more ways to marketing than before. And digital allows you to do what is the fourth and very important thing: tell the story, which is what marketing is all about. So what is happening now is that you’ve got new ways of storytelling. The old way was with images, words, pictures and sound. But now you have participation, mobility and data that allow you to tie into YouTube and other kind of stuff. The fifth and the last one is better metrics. Take all the five and you get a pretty potent thing.
Where is India in this process of impactful digital adaptation? Anywhere near the golden age?
See, anything you can say about India, as we know, the opposite is also a true. But what you can say today is that India is in the process of doing the leapfrog. All of us are old enough to remember how we had to wait for months to get a phone line...
Skipping technology generations?
We are going to not skip, but almost-skip, the entire PC-based digital revolution and go directly to mobile and tablets. That is one. The second is, because infrastructure in some places is broken down, electronic commerce is taking off. Third is, in India, whatever we may say about our government, it has been far more progressive on things that have to do with digital than even the United States. For instance, I noticed that 75% of e-commerce is about travel in India, but a lot of it is basically Indian Railways. And this unique identity card will set off something very interesting. And electronic tendering systems will become a way to fight around corruption sooner or later.
Your thesis is that brands will be important in this era of infinite information. Shouldn’t it be products than brands?
The reason it will be brands more than products is not because they are not connected. You know, a brand is built on five different things -- resonance with culture, design, utility, storytelling and value. Utility is where the product is delivered, and, sometimes, on value. The interesting thing is, the other three have nothing to do with the product. So it is not that the product doesn’t matter. But the reason why the brand has to be involved is because product lifecycles are becoming shorter and shorter.
You famously talked of the future belonging to mongrels – metaphorically, of course, referring to the imperative of a combination of talents and self-upgradation needed to survive today…
What happens is there is a personality -- what they now call a ‘T’ person talent: someone who is very specialised in one or two things. It’s like imagining the bottom of the T. But they need to be enough of a generalist, and, more importantly, have the ability to network and collaborate across silos. If you stay narrow in a world that’s interconnected, how will you connect with other people? You don’t even know what to connect to! So that’s what a generalist does. The vertical line in the T is your skillsets, the horizontal is your ability to connect to other verticals and connect the dots.
Is information power or the door to power?
Information is the door to power more than information is power. There is a lot of information and my belief is that there are four levels -- data, on top of data is information, on top of information is insight, on top of insight is wisdom. Insight is by taking a lot of information and figuring out how to make sense. Wisdom … you add a sort of a layer of a combination of experience and humility that takes you to a different stuff. There is a lot of information about digital – a lot of data -- but very little insight and very few people have done it long enough to basically say this works and this doesn’t. But if you don’t have any information … that’s why I say it’s a door to power; without it you can’t even get insights.
You tweeted a few days ago on wisdom, where you said you have to become who you are. On other hand, you persuade us to get out of silos -- unbecome what we are, as it were…
Yes, but there’s a very big difference. The ‘become who you are’ and unbecome what you are two different things. Become who you are – is about things that you are naturally good at and which make you happy. For instance, I’m perfectly capable and I used to run large accounts for Leo Burnett, but it was very clear that gave me a certain level of joy but not the same joy I get from what I do now. When people say you are very good at what you do, I say, “No, no no!” ... I’m now doing what I am very good at -- which is a huge difference. But in doing what I am doing, I am constantly reinventing myself. So I what I basically do is help my companies reinvent, help people reinvent, clients reinvent and I myself am reinventing. But what happens is, if you put me into something that was static it would be nicer on my travel and other schedules, but I’d probably be less excited. But if you put some people who like managing static organisations on to my stuff, they’ll probably shoot themselves. Hopefully everyone’s doing something that’s exciting and as valuable as I’m doing. There’s that definition of justice by Plato or Socrates, which says everybody in their rightful place.
How do monolithic content companies survive because there are low-to-no entry barriers? Anyone who writes well can live off a blog and gnaw away at the content business…
A blogger can write well but a blogger, with a few exceptions, will never make enough money to live. Won’t have scale and a way to monetise content. Even if he gets scale, it’s not going to be anything like online or what anything else gets. The other thing is, they don’t know how to monetise because you need to have things like a sales force, a cross medium and all kind of stuff. Sure the barrier of entry is none, but the barrier of entry to get a continuous audience is huge. And the barrier of entry to monetise is even huger.
Guess why I blog myself? I do it because of three things. And this is in backward order: but the third reason is so that I can learn how to actually do it, like what is it to write a blog. The second is to share my opinion with the world. If I get enough traffic, it influences the world and therefore helps me build a brand. And the first and biggest reason is, it is a sales tool. It helps me sell to clients. So the way I make money is I’m better known and somebody asks me to go and speak, and my clients and the agency get something.
What’s your advice to the other Chicago Booth School fellow, Raghuram Rajan?
We are just good friends. His kids were taught by my wife, who is a teacher at Booth and that’s how we came to know him. He is incredible.
Rishad-isms
Factions result in Fractions. Factions result in Friction. Factions create Fiction. In an interconnected world silos are for losers. In the end, time is the only thing we have. And the way we spend our time is the way we spend our lives. We often say we are killing time. But really, it is time that is killing us. So, how best to make the most of time? Five steps: Eliminate (needless activity), Focus on comparative advantage and positive outcomes, Scale yourself, Do new things, Give time to others.
At Cadbury's, all went on a sales call
This story first appeared in DNA Money edition on Monday, Feb 4, 2013.
Is sales all about selling and servicing?
Chocolate maker Cadbury India, for one, seems to believe it is possible to put the sales function to various other uses, including gauging consumer buying behaviour, increasing visibility and footprint, and even creating demand – transforming an art into a science, as it were.
“The approach is crucial if sales as a function has to deliver expectations and the organisation’s wider vision,” said Sunil Taldar, director - sales and international business of Cadbury India.
“Besides, the Indian retail sector is undergoing significant changes and hence a lot of our focus is on display and compelling in-store execution through perfect stores. As our products are mainly in the impulse buying category, creating an overall shopping experience by making the entire product range available in the perfect stores is crucial. We also work towards prioritising the channel and retail environment that will give maximum traction,” he said.
In view of the growing intensity of competition in the Indian fast-moving consumer goods space, Cadbury India — a subsidiary of Mondelez International, the $32 billion global snacking major formed in October last year after Kraft Foods decided to split its confectionery and grocery businesses into independently listed companies — has over the last few years effected significant changes in the way its sales staff approach the market.
“Creating a seamless, two-way procedure in terms of flow of sales and related information from the company to its distributors and the sales staff booking orders from the retailers” plays a very important part, said another official.
To this end, the company has armed its distributors with touch-screen hand-held devices embedded with proprietary software to ensure smooth and timely flow of information in the distribution channel.
The device gives the sales representative at the distributor end access to all the information about retailers in his area of operation, purchase history (including products and number of units bought, etc). It also allows him to book new orders across product categories without the hassle of making manual notes or filing a purchase order book at the end of the day.
This gives the company a clear understanding of what kind of demand is getting generated, how various products and the stock at the distributors’ end is moving across the retail network that boasts of over 800,000 outlets across the country.
“All the sales representative has to do is download the day’s activity on the distributor’s computer (that also has a proprietary billing software and is connected to Cadbury’s servers) and a purchase order gets generated automatically. This saves a lot of time, while ensuring there is no room for error in the entire process,” a company official explained at the Sales Revolution Day organised by the company on Friday.
The event, yet another strategic initiative, gave the company’s non-sales staff an insight into its sales function.
As part of the first phase of this activity, some 800 non-sales employees drawn from its offices across the country were sent out in groups to different markets along with their sales colleagues.
They were set two tasks for the day – first, follow a seven-step procedure to create a perfect store and second, identify a new store based on three visible markers.
“The next phase will be to compile all the data in terms of stores visited, perfect stores created and new stores opened in the ensuing days. Employee groups will also share insights and observations with the sales staff in addition to a 45-second video capturing specific learnings derived from this exercise,” said a company official.
Is sales all about selling and servicing?
Chocolate maker Cadbury India, for one, seems to believe it is possible to put the sales function to various other uses, including gauging consumer buying behaviour, increasing visibility and footprint, and even creating demand – transforming an art into a science, as it were.
“The approach is crucial if sales as a function has to deliver expectations and the organisation’s wider vision,” said Sunil Taldar, director - sales and international business of Cadbury India.
“Besides, the Indian retail sector is undergoing significant changes and hence a lot of our focus is on display and compelling in-store execution through perfect stores. As our products are mainly in the impulse buying category, creating an overall shopping experience by making the entire product range available in the perfect stores is crucial. We also work towards prioritising the channel and retail environment that will give maximum traction,” he said.
In view of the growing intensity of competition in the Indian fast-moving consumer goods space, Cadbury India — a subsidiary of Mondelez International, the $32 billion global snacking major formed in October last year after Kraft Foods decided to split its confectionery and grocery businesses into independently listed companies — has over the last few years effected significant changes in the way its sales staff approach the market.
“Creating a seamless, two-way procedure in terms of flow of sales and related information from the company to its distributors and the sales staff booking orders from the retailers” plays a very important part, said another official.
To this end, the company has armed its distributors with touch-screen hand-held devices embedded with proprietary software to ensure smooth and timely flow of information in the distribution channel.
The device gives the sales representative at the distributor end access to all the information about retailers in his area of operation, purchase history (including products and number of units bought, etc). It also allows him to book new orders across product categories without the hassle of making manual notes or filing a purchase order book at the end of the day.
This gives the company a clear understanding of what kind of demand is getting generated, how various products and the stock at the distributors’ end is moving across the retail network that boasts of over 800,000 outlets across the country.
“All the sales representative has to do is download the day’s activity on the distributor’s computer (that also has a proprietary billing software and is connected to Cadbury’s servers) and a purchase order gets generated automatically. This saves a lot of time, while ensuring there is no room for error in the entire process,” a company official explained at the Sales Revolution Day organised by the company on Friday.
The event, yet another strategic initiative, gave the company’s non-sales staff an insight into its sales function.
As part of the first phase of this activity, some 800 non-sales employees drawn from its offices across the country were sent out in groups to different markets along with their sales colleagues.
They were set two tasks for the day – first, follow a seven-step procedure to create a perfect store and second, identify a new store based on three visible markers.
“The next phase will be to compile all the data in terms of stores visited, perfect stores created and new stores opened in the ensuing days. Employee groups will also share insights and observations with the sales staff in addition to a 45-second video capturing specific learnings derived from this exercise,” said a company official.
DLF sells 150 mw wind farm for Rs280 crore
This story first appeared in DNA Money edition on Friday, Feb 1, 2013.
Moving closer to its goal of exiting non-core businesses, realtor DLF has sold its 150 mw wind turbine project in Gujarat to a unit of Bharat Light & Power Pvt Ltd, netting Rs 282 crore, minus liabilities.
Under the deal, BLP Vayu (Project 1) Pvt Ltd would take over the wind turbines in Kutch on ‘as in where in’ basis via slump sale.
Industry sources said the deal value is around Rs500 crore as BLP Vayu is also taking over liabilities and relevant long-term loans of Rs 215 crore.
Sriram Khattar, senior executive director, DLF, said, “We are well on way to get north of Rs 800 crore through sale or transfer of our entire wind turbine projects. Negotiations are on for the balance projects and we hope to close them soon.”
DLF, along with wholly owned subsidiary DLF Home Developers, had 227 mw wind turbines in four states.
The BLP Vayu deal leaves it with three sites – Rajasthan (34 mw), Tamil Nadu (33 mw) and Karnataka (11 mw). It is not clear if the remaining projects will also be acquired by BLP Vayu or there are other bidders as well.
Industry experts said as the wind turbines are located in different locations, valuations will have to be different.
“I’d expect the balance projects to be valued in the same ratio, give or take 5-7%,” said an analyst. Aashiesh Agarwaal, research analyst, Edelweiss Securities, said the deal is a positive as DLF is currently saddled with a huge debt of Rs 21,200 crore.
“Consummation of the wind power sale, along with Aman Resorts sale, would contribute Rs 2,100 crore towards debt reduction. The closure of the deal would bring total divestments in fiscal 2013 to around Rs 5,240 crore as against its guidance of Rs 5,000 crore.
“Divestment of the balance wind power units, at advance stages of negotiations, is expected to generate around Rs 250 crore,” said Agarwaal in a company note. “The deal is among the last of the assets lined up for monetisation,” he noted.
Moving closer to its goal of exiting non-core businesses, realtor DLF has sold its 150 mw wind turbine project in Gujarat to a unit of Bharat Light & Power Pvt Ltd, netting Rs 282 crore, minus liabilities.
Under the deal, BLP Vayu (Project 1) Pvt Ltd would take over the wind turbines in Kutch on ‘as in where in’ basis via slump sale.
Industry sources said the deal value is around Rs500 crore as BLP Vayu is also taking over liabilities and relevant long-term loans of Rs 215 crore.
Sriram Khattar, senior executive director, DLF, said, “We are well on way to get north of Rs 800 crore through sale or transfer of our entire wind turbine projects. Negotiations are on for the balance projects and we hope to close them soon.”
DLF, along with wholly owned subsidiary DLF Home Developers, had 227 mw wind turbines in four states.
The BLP Vayu deal leaves it with three sites – Rajasthan (34 mw), Tamil Nadu (33 mw) and Karnataka (11 mw). It is not clear if the remaining projects will also be acquired by BLP Vayu or there are other bidders as well.
Industry experts said as the wind turbines are located in different locations, valuations will have to be different.
“I’d expect the balance projects to be valued in the same ratio, give or take 5-7%,” said an analyst. Aashiesh Agarwaal, research analyst, Edelweiss Securities, said the deal is a positive as DLF is currently saddled with a huge debt of Rs 21,200 crore.
“Consummation of the wind power sale, along with Aman Resorts sale, would contribute Rs 2,100 crore towards debt reduction. The closure of the deal would bring total divestments in fiscal 2013 to around Rs 5,240 crore as against its guidance of Rs 5,000 crore.
“Divestment of the balance wind power units, at advance stages of negotiations, is expected to generate around Rs 250 crore,” said Agarwaal in a company note. “The deal is among the last of the assets lined up for monetisation,” he noted.
Samsung lines up durables push
This story first appeared in DNA Money edition on Wednesday, January 30, 2013.
Samsung India Electronics is aiming at a 35% turnover growth this fiscal on the back of its new range of split air conditioners and refrigerators.
Last year, too, its revenues grew 35% to Rs27,000 crore.
Rajeev Bhutani, head - home appliance business, Samsung India, said, “With the 2013 range, we are looking at a 50% growth both in the split air-conditioners and refrigerator categories.”
Samsung’s home appliance segment grew 7% in 2012, with the frost-free refrigerator category growing 25% and split AC segment 88%.
The company had a 24% market share in the overall refrigerator category in 2012 with the frost-free share of 33.6%, up from 31% last year.
Mahesh Krishnan, VP-consumer sales, said the split AC segment grew 27%, which was very good.
“We exited the window AC market last year and are now focusing completely on the split ACs with the new range,” said Krishnan.
The company is also looking to almost double the number of Samsung Digital Plaza, its single-brand retail store chain, to 600-700 by December.
Samsung has launched 29 new split AC products for the Indian market in the price range of Rs23,100-60,990.
Its new digital inverter refrigerator series is customised for the Indian market. With a strong compressor, the new range eliminates the need for a separate stabiliser.
“The refrigerators come with a 10-year warranty, which is a world’s first. Other features include ‘coolpack’ that delays the rise in temperature when the power is off and prevents food from spoiling,” Bhutani said.
Samsung India Electronics is aiming at a 35% turnover growth this fiscal on the back of its new range of split air conditioners and refrigerators.
Last year, too, its revenues grew 35% to Rs27,000 crore.
Rajeev Bhutani, head - home appliance business, Samsung India, said, “With the 2013 range, we are looking at a 50% growth both in the split air-conditioners and refrigerator categories.”
Samsung’s home appliance segment grew 7% in 2012, with the frost-free refrigerator category growing 25% and split AC segment 88%.
The company had a 24% market share in the overall refrigerator category in 2012 with the frost-free share of 33.6%, up from 31% last year.
Mahesh Krishnan, VP-consumer sales, said the split AC segment grew 27%, which was very good.
“We exited the window AC market last year and are now focusing completely on the split ACs with the new range,” said Krishnan.
The company is also looking to almost double the number of Samsung Digital Plaza, its single-brand retail store chain, to 600-700 by December.
Samsung has launched 29 new split AC products for the Indian market in the price range of Rs23,100-60,990.
Its new digital inverter refrigerator series is customised for the Indian market. With a strong compressor, the new range eliminates the need for a separate stabiliser.
“The refrigerators come with a 10-year warranty, which is a world’s first. Other features include ‘coolpack’ that delays the rise in temperature when the power is off and prevents food from spoiling,” Bhutani said.
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