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
Sunday 14 April 2013
'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.
Sunday 17 February 2013
At Aegis, digital, OOH big bets
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| Ashish Bhasin |
After 21 years with Lintas Group, an opportunity came by in 2008 from Aegis Media which had a struggling unit in the country – Carat. It had 50-odd people, making losses and wasn’t doing global standards of work. That’s when Ashish Bhasin took over as CEO for South East Asia and South Asia and Chairman for India. Since then, the company has grown to 500 people as of today and from one business to 11 different lines of businesses. He spoke about the agency’s overall business and the advertising industry in general. Edited excerpts...
How
far as the Dentsu-Aegis deal reached since considering it was signed in the
first quarter of fiscal 2013?
Dentsu is in the process of acquiring Aegis
Plc and being a global deal it will take time to conclude. The transaction hasn’t yet completed but once
it is done we will be part of the Denstu family. We do anticipate that it
should happen soon, but nothing is done till it is done. The situation is that the
deal requires regulatory clearance from several countries. I am not very sure
but my understanding is that approvals have been received from most of the key countries
except China where it is work in progress.
How
will both entities function after the deal is completed?
Our global CEO has very clearly said
that it will be business as usual. Aegis Media will work as a brand by itself.
What and how will things unfold is something that I’m not privy to but our
understanding is that it will be an independent operation that will continue to
run under the Dentsu umbrella.
The
year gone by has been a very exciting one for Aegis. How was the business like
for the Indian unit?
With a total of 150-odd clients all across
in the group, it has been a very good year for Aegis globally and an
exceptional one for us. In 2012, we crossed the Rs 1,000 crore turnover mark
and the year has been a record breaking spectacular year both in terms of
growth in revenues/billing/profits as well as number/quality of people etc.
Which
segments have seen the maximum growth?
While all businesses have done well, digital
and out of home (including retail) in particular are very fast growing
verticals. That’s because more clients and volumes are coming in, in these
lines of businesses. However, print and television continue to be large in
India and hence are major contributors to the business.
Your
company straddles the entire gamut of advertising and marketing services. How has
the approach helped?
Clients today want the benefit of specialisation
but are fed up of silos (an advertising industry jargon indicating various departments
/ divisions). Each one is trying to push their agenda. For instance, the out-of-
home (OOH) guy will focus only on outdoor and scrap every other media. Clients
today want a complete solution and not just print or television. At Aegis, we have this system of ‘one country
one P&L’. While all the departments / divisions have their individual
targets, the profit and loss (P&L) statement outside India goes through one
person.
For us, what really matters is doing things
that are right for the client. As a result the client benefits from all the specialisation
we offer and is saved from the hassles of siloisation. This philosophy has clicked
very well for us. Having said that, we might only have an advantage window of around
six months or so because others are quickly catching up to this approach of
doing business.
With
business growing exponentially, you must have a very aggressive expansion plan.
India is not really four metros of
Mumbai, Delhi, Kolkata and Chennai, which is why we already nine offices and
should be adding another one in Kochi sometime soon. The ambition is to have a
minimum of 16-18 offices in two years from now. Reason being, there is a lot of
business in tier II and rural markets. It’s more about touch and feel these
days besides what may work in Kochi may not necessarily work in Chandigarh. One
needs to understand the local market / media and related outfits to ensure best
results and maximum impact of the client’s communications and initiatives.
Talking
about rural demand, there are very mixed opinions in the market. Could you
throw some light on the ground realities?
I think there is complete confusion. I can
confidently say that having pioneered rural marketing in India by setting up set
up Linterland – the rural marketing unit of Lintas – which was the first
attempt any agency made to have a proper rural network. I am a big believer in
rural markets. There are 100 ways in which one can touch and engage a consumer
and touching, feeling, reaching out to them in person is definitely very
important.
Despite phenomenal growth in the number
of television and newspapers, there is a very large part of our population that
is unreached by any mass media. Even if they are theoretically reached the
communication isn’t effective because for eight hours in a day they don’t have
electricity.
On the other hand, there is this largest
gathering of humanity at Kumbh Mela with almost 10 crore people attending which
presents a huge opportunity for marketers and brands to reach out to them. There
is no option or alternative for companies to look at rural and reach out. Companies
will have to find a way and as agencies it is our duty and a great opportunity
to be able to deliver that.
What
is your approach the rural markets? What activities are undertaken there?
I was involved in the launch of Wheel detergent
powder for Hindustan Lever (now Hindustan Unilever Ltd - HUL) back in mid 80s
to early 90s. When I started working as an account executive on the brand, first
thing HUL made you do was to go for 15 days and live in Etah (a village in
Uttar Pradesh HUL had adapted). So you literally lived the way villagers would
live there. What you learnt out of that was really insightful. That’s why I insist
my rural guys to go and spend some time in villages before they actually start
talking about it. That’s where all of India. It is through these initiatives
that we have tracked various activities for the rural market including drawing
up a calendar of village supermarkets or ‘Haat’, ‘Mela’ calendars, van
operations, planning and data mining for rural markets etc.
What
are your plans for 2013 looking like? Could you tell us about the key
opportunities for Aegis this year?
Our plans are largely based on the clients
and opportunities in India. The key opportunities we see are in the digital and
mobile space. That is why we have made disproportionate
investment in this space including acquiring iProspect. Considering a lot of
search is now happening on mobile handsets / devices so digital will certainly be
the name of the game. The OOH media will be huge and so will be outreach (touch
and feel activation or experiential).
Print and TV will continue to dominate
for a long time to come but agencies will have to discover new ways of handling
it.
For instance, there is complete lack of qualitative research in India hence
as a result we have made the largest investment ever on a single source data. Imagine,
despite having a 20,000-25,000 crore advertising market, we don’t have any
large reliable single source data in the country. We have Consumer Connection System
(CCS), which is a global Aegis Media tool and world’s largest single source
data. It has more than 300,000 samples globally. We have brought that and are running
it in India with a very large sample size across 18 cities which is a very
robust plan. This initiative is giving us immense insights into how a consumer
interacts, how s/he consumes media - you can actually take it down to a
category and a brand.
Could
you elaborate a bit on the digital and mobile space activities?
Digital is not about putting a banner
advertisement on a website anymore. It’s about engaging the consumer, developing
applications for mobile phones related devices. While Ipads and Tablet devices are
not that big in India, with prices coming down gradually, the entire dynamics
of the game is changing and very rapidly than anyone can realise. In such an
environment continuing with just a print, television or banner advertisement will
not help the client engage a consumer because s/he is moving much faster. Our
entire focus on digital is holistic and there is no line or separation between
creative and media in digital because it’s all one.
People earlier didn’t think that a large
set of consumer will transition from desktops to mobile devices and
advertisements were never made keeping mobile devices in mind. This is
certainly a huge problem for marketers and brand managers. Interestingly, one
of our verticals, Isobar enjoys a preferred Facebook page developer status and
those are the kind of areas we will have to stay ahead of the curve and your
job is never done here. By the time you’ve finished it, you become obsolete.
How
do you deal with the related technology requirements?
We are putting together a large tech
team including programmers, net developers – nothing to do with advertising –
to be able to deliver the digital communication. One can conceive and create a
great idea but delivering it will be impossible if you don’t have an equally great
tech team. In a sense tomorrow, our competition could very well be a large information
technology (IT) major because that whole line is blurring now. Currently we
have 18 people and the plan is to at least double the number in the next few
months.
Do
you see the tech team getting bigger eventually?
If the approach really works one can
easily look at a number of 200 people just doing tech because the business
vertical will then be catering to the global markets and not just India. It’s
like how the IT majors including Infosys, Wipro and TCS that do tech
development in their areas globally. There is nothing that prevents advertising
companies like ours to start doing it as well.
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