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Sunday, 14 April 2013

'International architects are attracted to India's strengths'

This Q&A first appeared in DNA Money edition on Sunday, Mar 17, 2013.

Starting with designing luxury boutique Blakes Hotel in London, Anouska Hempel, promoter of international design and architectural practice Anouska Hempel Design (AHD), went on to design critically-acclaimed luxury hotels, restaurants, private residences, yachts, retail and products throughout the world.

One of world’s most celebrated designers, Hempel was in Mumbai recently to participate at the India Design Forum 2013. In conversation, she shared views about the design market in India and work AHD is doing for Indian clients. Here are some excerpts...

What are your views on the design market in India?
The market is most extraordinary and going from strength to strength. India is refining and redeveloping itself. A lot of architects from developed economies are attracted to the strengths of India, especially on the commercial level. In fact, I think there are a host of other people coming to India all the time to create things and be influenced by the country.

Are you working on any project in India?
Nothing at the moment sadly.

What about any international project that’s owned by an Indian?
Yes , I am doing a city hotel project in Santiago. This development is owned by an Indian client based out of Jaipur. I’m are also designing their house in Singapore.

Why haven’t you taken up a project in India as yet?
I have been approached from time to time but haven’t had the proper opportunity to conclude anything here. While there are a host of designers doing similar stuff, I don’t and hence, tend to be a risky bet.

What would be your dream project in India?
I’d love to do a boutique hotel with a proper Indian flavour. It could be a certain period like the turn of the century, going back to the Maharaja era or something that gives a museum like quality to my work.

We have had the likes of Giorgio Armani being signed up for landmark developments by Indian companies. Are you considering such associations as well?
Yes, I’ve heard about it. I like such partnerships and I think they do quite well. I am not that commercially structured, so, an Indian company will have to take me on board for their projects and I’d come willingly. I’d really like to do something that’s an important landmark development here.

Follow Ashish K Tiwari on twitter @ashishktiwari

GroupM top boss says India is a good short- and long-term bet

This Q&A first appeared in DNA Money edition on Thursday, Mar 14, 2013.

GroupM, WPP's consolidated media investment management operation, has a 40% market share in India and expects a double-digit growth to top that this year, Dominic Proctor, president, GroupM Global, told in an interaction.

It’s been a little over a year since you took over as president. Can you share some highlights?
We have been concentrating mainly on 2-3 things. First of all, we are putting a lot of emphasis behind our digital practice around the world and in India. As the whole business changes from an analogue to digital, it requires a lot of investment in people, technology, infrastructure etc. So we are paying a lot of attention there. On the trading side, we are optimising the clients’ expenditures, finding the right media to spend it on and making sure they are getting value for money. So, ensuring proper return on investment (RoI) is another area of focus. We buy approximately 30% of the global media. This gives us a strong market positioning and we are also working on developing our leadership positioning in some of the other markets globally.

How does India fare in your focus areas?
India is developing and strong market for GroupM with over 40% market share. Of the $90 billion global billings, India contributes around 6%, or $5.6 billion. We are very optimistic, and expect double-digit growth this year as well. Overall, I think India is a good short- and long-term bet.

How do you view the Indian advertising, media and entertainment sectors?
We are very bullish about India. We think that the marketing or media and entertainment (M&E) sector in the country is growing and will continue to grow ahead of the general economy. The government’s general economy forecast is round about 5% growth this year, over 2012, and we think the M&E sector would double in 2013, growing round about 10% in 2013 on a cautious note and I wouldn’t be surprised if the growth exceeded that number.


What is the key challenge for Indian M&E players?
I think, in a financial sense, India is fairly strong and growing ahead of the global averages, which is very great for the media business here. One of the challenges with content in the Indian media business is that it’s quite introspective. By that I mean, if you look at the strength of the film business here it’s wonderfully strong. As a proportion of GDP, it is the strongest in the world. But it is very much focussed in the Indian population or the diaspora. The same is probably true with the music business and sports, which is dominated by cricket.

How is GroupM dealing with challenges of digital media?
We are bringing in talent that’s very focused on the mobile. We have business called Madhouse, which is a joint venture with our Chinese business. And the challenges Madhouse and our agencies have is how to take the vast numbers of hours being spent eyeballing mobile devices but the dollars or rupees haven’t yet followed. So basically the way we tackling it is by investing in the talent to bring the clients to the opportunity.

Does GroupM have any plans to look at inorganic growth in India?
Most of our business growth has been organic / internal, which is in some ways is easier to control and culturally consistent. We certainly have a very open mind to looking at acquisitions. Most often it is a question of pricing and because we are the biggest players in the market, we might not have the need to make expensive acquisitions compared to other who have smaller positions in the market and need to spend often over the top to bolster their resources. While we are very careful about that, we are not closed to the idea of making acquisitions in specialist areas like digital, content, mobile, analytics etc.

Follow Ashish K Tiwari on twitter @ashishktiwari

Publicis beefs up digital ops with Convonix buy

This story first appeared in DNA Money edition on Tuesday, Mar 12, 2013.

Publicis Groupe, the world’s third-largest communications firm, has acquired Convonix, a marketing and consultancy firm, as part of its plan to beef up its digital presence in India.

The company plans to make more buyouts in the coming months.

Srikant Sastri, country chair, VivaKi India, a Publicis Groupe company, told DNA Money, “We have some more acquisitions in the pipeline. Hopefully, in the next 4-6 weeks we will have more announcements to make. Once completed, these will be aligned with some of our other agencies in the group.”

Last year Publicis acquired four companies – Indigo Consulting, Resultrix, iStrat and MarketGate.

Sastri said, “When we acquired Resultrix in August 2012, the company got aligned to Zenith Optimedia. Similarly, Convonix has now been aligned to Starcom MediaVest Group (SMG). This acquisition makes it a fairly formidable digital operation for SMG now.”

Post acquisition, Convonix will operate as SMG Convonix, with two market-facing brands: SMG Digital and Convonix.

Convonix offers a range of skills in the digital media space including search engine optimisation, search engine marketing, social media marketing, online reputation management, web analytics and conversion rate improvement.

It also recently developed a proprietary in-house brand monitoring and social listening platform called IrisTrack, which enables clients to gather market insight on their products and competitors and also engage customers online to improve their customer service.

Publicis has put together its strategy to build digital leadership about 18 months ago and was looking for both scale and full range of capabilities.

“What really attracted us was Convonix’s scale of 200-odd people breadth of skills/capabilities and quality of people,” said Sastri without disclosing financial details.

Though digital forms only Rs2,000 crore of the Rs30,000 crore Indian media market, the segment is one of the fastest growing at 30-35% annually.

“We have ourselves witnessed 98% growth in the digital space last year, which clearly indicates that it is a high growth market. Clients are increasingly focusing on and diverting a lot of spends in the digital space. We believe this is one area where we will achieve very quick leadership -- that’s an objective we have set for ourselves,” said Sastri.

Publicis has about 800 people in digital operations, largest in the country.

On mobile space, the company feels that mobile is still 18-24 months away from becoming a big part of the marketing spend of its clients.

“All agencies are experimenting and innovating with mobile, but the market is very small right now at Rs150 crore. As a result, it’s way below in terms of priority for clients. The mobile space is certainly going to be important in the future, but currently no one really has a big play here,” said Sastri.

Follow Ashish K Tiwari on twitter @ashishktiwari

JWT sees a game-changer in digital space

This Q&A first appeared in DNA Money edition on Monday, Mar 11, 2013.

Colvyn J Harris, chief executive officer, JWT, feels this is the best time for advertising agencies in India and that there is no other place he'd be at this point of time. In conversation, he spoke about the advertising agency's approach to business, organic and inorganic growth and business outlook for 2013. Edited excerpts...

Could you give us a sense of JWT’s business performance in the last few years?
The last three years have been very exciting and the rate of change of our growth has been much greater than it has been in say 2008 to 2009. In fact, I think India business is in a fabulous position when compared with say Europe, the US and the UK. There is no other place I’d rather be at this point of time than where we are currently. Unfortunately, we cannot share specific financial details, but I can tell you that we have had great recovery 2010 onward, clocking double-digit growth on a consistent basis. We have been able to get our growth trajectory in line with expectations and continue to look at a very steady growth in terms of topline.

What factors led to this growth?
While having our eyes on growth, we wanted it to come from certain business elements. This new changed focus as to how we look at our business is where we are seeing growth coming in. In the earlier days it was always the mainstream (print and television) advertising that ruled, however we are now focusing at a full 360 degree, seamless, end-to-end solution delivery to our clients. The approach is to put the brand/idea at the centre and do everything to deliver the idea effectively and efficiently. While the 90:10 ratio (between mainstream and digital) in terms of contribution to business growth still works, we are investing disproportionately in the digital world.

Was acquisition of Hungama part of the disproportionate investment exercise?
We were seeking to change from doing what the company always did to doing something very new. One of the approaches to do things differently was to try and digitise the entire company so that everyone starts to think digital. To bring in the change process we looked at the digital world in our search for a partner, which led to acquisition of Hungama.

We have invested significantly towards giving high quality digital exposure to our employees, and bringing Hungama into the fold is only helping make a significant impact in this space. With this acquisition, we have now created a full digital entity that may not be delivering in terms of revenues for now but it will certainly give us the experience and in-depth understanding of the digital space, thereby making ourselves future-ready. Anywhere in the global world a lot of decisions are being taken based on the digital space and we wanted to be ready to deliver the best for this new media space.

Are there more such opportunities in the pipeline?
Yes, we are looking at various spaces and will definitely pursue it.

Given the changing communications requirement of companies, are you looking to bring in new global intellectual property (IP) into the Indian market?
We have a global game plan in digital. There is a concept called ‘dot JWT’, which is basically a bouquet of large and admired digital companies that we’ve bought around the world. Based on the client’s needs in India, they can technically access the ‘dot JWT’ skills and capabilities in a seamless manner. A paid for service, the technology resides in the cloud and there is nothing stopping us from acquiring, accessing a global team to work on a client’s issue. If the client can dream it we will help deliver that dream.

How are the next 12 months looking like for JWT in terms of business?
While there is some anxiety on meeting the numbers, our ambition is growth and we are bullish about business.

Follow Ashish K Tiwari on twitter @ashishktiwari

Lintas expects uptick in client spends

This Q&A first appeared in DNA Money edition on Tuesday, Mar 5, 2013.

Joseph George, chief executive officer, Lowe Lintas & Partners, considers himself lucky to have handled a host of clients, categories and brands in the last over two decades. George’s first job was of a planner in 1990 when planning as a function did not exist in most agencies. “I remember, Arvind Sharma (chairman-India Subcontinent at Leo Burnett) was trying to launch something called Consumer Insight Based Strategy and I was among the first planners ever hired. In fact, I first came across the word consumer insight from him,” he reminisces. George spoke about his journey with the company, industry developments and future plans. Excerpts:

Working on Hindustan Unilever account must have been very exciting and insightful for you in terms of the overall business...
Yes it has. I’ve been hands-on with Unilever’s business for almost 18 years. It’s just that in the last couple of years I had to move into a larger role in the agency handling other things as well. While I’ve spent more time on HUL, there have been other interesting companies like Tanishq, Cadbury and, Johnson & Johnson.

After taking over as CEO early 2011, you went aggressively about increasing new business. Is that exercise over?
Not at all. My reason for doing it is very simple. I have been in this industry for long and I know the equity Lintas has in the market place. The equity is a lot larger than size of the company and I want to bridge that gap. We are not there yet, which is why it’s not getting over in a hurry and I will keep adding to it till we reach a certain point. That’s something I’m quite driven by, may be because I’ve been in this system and clearly know the brand’s potential. Many people think that only big clients come to us, that’s incorrect because we have made them big, and there are a few exceptions. You take any of our clients and I’ll be able tell you how many units they were selling before and after they came to us. In fact, most of clients we have started with us.

Brands these days appear to be trying their best to make a connection with the audience and act as catalysts in driving change...
A lot of brands are trying to bring about some positive change or make people think. Some of our communications for Tata Tea, Idea, and the recent Axis Bank commercial are being done to deliver that message of changing things for better. I was telling Balki (R Balakrishnan, chairman and chief creative officer, Lowe Lintas & Partners) the other day, if you look at most ads, they look like running a consumer promotion. He said, what do you mean by that? I said, with every ad we give the consumer something to think about for free. As in, Yeh ad hai... and we just leave a little thought...

In your observation, is this approach by brands a recent phenomenon?
It’s not that people have changed suddenly, but people’s orientation on how you want to proposition a brand has changed. There is a lot of difference when you are buying a brand and buying into a brand. When you buy into a brand, you want to buy everything that the brand stands for and which is why marketers try to infuse that little more about the brand than just the fact that it washes whitest or works the fastest. I see that happening more and more down the line especially with the advent of digital advertising that enables conversation and buzz around a brand. And in today’s competitive environment brands are creating a differentiation by working towards being more meaningful than the other one.

Any specific plans for 2013?

I am hoping that a lot of our clients who were holding back start spending a lot more. Our new business drive will continue with as much passion. We have some plans in our marketing services vertical that should unfold in the due course. We will expand our network by adding an office in the northern region. We will be focusing on some of the new divisions and re-focus on the existing verticals, for example public relations, which is doing well and I think we can do a lot better. We have film production business which should grow significantly as well. 2011 was a good year, 2012 was a bit of a disappointment, but I am hoping 2013 will be a much better year.

Is sports management an area of interest for you?

To me I think that’s the next big thing to happen. I think it offers a huge business potential. Getting into this area is inevitable because money in sports is only going to go up, it is not going to come down.

Follow Ashish K Tiwari on twitter @ashishktiwari

Frenemy format: Will McDonald's, CCD share table?

My colleague Nupur Anand co-authored this story appearing in DNA Money edition on Tuesday, Feb 26, 2013.

Imagine walking into a McDonald’s outlet for a McSpicy Paneer burger and also getting to pick up a cup of cappuccino from a Cafe Coffee Day (CCD) counter inside.

Going by a buzz, McDonald’s and CCD operators in India could very well team up to create co-located stores.

Officials of both companies denied the move.

“There has been no move to tie up with or create associations with Café Coffee Day or any other brand in India presently,” said Smita Jatia, managing director, Hardcastle Restaurants Pvt Ltd (McDonald’s west & south India operations).

K Ramakrishnan, president – marketing, Café Coffee Day, also refuted any such collaboration being worked out with McDonald’s.

Industry sources, however, say it makes sense for quick service restaurants (QSRs) to operate in a co-location format with rival brands that offer complementary product lines.

Call it the ‘frenemy format’, if you please. The least it can do for the players is help exploit synergies and increase footfalls and conversions by building on each other’s strengths and creating a fulfilling experience for customers.

“This may be for sharing property and floor space, for better supply chain management or for other franchisee synergies,” said Arvind Singhal, chairman, Technopak Advisors.

A recent collaboration between cafe chain Braista Lavazza and Mumbai based ice-cream chain Hokey Pokey is a case in point.
Under the tie-up, those visiting Barista outlets can also savour ice cream flavours specifically launched for the cafe chain, said Rohan Mirchandani, co-founder, Hokey Pokey.

It is akin to food courts, albeit on a much smaller scale, say experts.

“The only difference is that two complementing brands are coming together to jointly take up retail real estate and a launch co-located store,” said Harminder Sahni, founder and managing director, Wazir Advisors.

But there’s a caveat, said Devangshu Dutta, chief executive of consulting and advisory firm Third Eyesight. “Such offerings can work in certain catchment areas... But in case there is a conflict between what is being offered, then a format like this will not work.”

Follow Ashish K Tiwari on twitter @ashishktiwari

Medanta developing cost-efficient model for healthcare

My colleagues Beryl Menezes co-authored this story appearing in DNA Money edition on Monday, Feb 25, 2013.

Medanta - The Medicity,  the multi-super specialty hospital chain, is working on a healthcare delivery model that could be made cost-efficient at all levels – village, mid-, secondary care and super-specialty – with a little tweaking.

Dr Naresh Trehan (pictured), chairman and managing director, Medanta, said that the company is conducting a pilot in Haryana, which, if successful, could be replicated based on its efficiency and economics.

“We are experimenting with it in Jhajjar, Haryana. We already have working models in place and will take a year or so to do the analysis,” said Trehan, who was recently awarded Ernst & Young Entrepreneur of the Year 2012 in the startup category.

On the potential of mobile healthcare in the country, Trehan said it could become very huge, going forward.

“IT-based, tele-medicine and mobile health will be the most vital links from ground up. In fact, we have already partnered with Airtel to offer tele-medicine services and will soon be getting into mobile tele-medicine,” he said.

Medanta has been treating 100,000 patients for free in some of the villages every year and is now expecting to connect patients in these villages through tele-medicine to the hospital’s centres for quick diagnostics, early detection, preventive measures and treatments.

While the healthcare delivery model has been self-funded at this stage, the company management will eventually have to look at other funding options once it has been perfected and reaches a particular scale.

Talking about the challenges in the healthcare industry, Trehan said the sector is stressed as human capital cost is on the rise and people want their inflation costs covered.

“As a result, efficiencies of scale will have to kick in,” he said.

To reduce disease burden, Trehan suggests providing five things to every village – clean drinking water, sanitation, garbage disposal, mosquito control and school.

Follow Ashish K Tiwari on twitter @ashishktiwari

Apollo in talks for foreign collaborations

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

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

'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.