Cadila launching new drug that lowers cholesterol in diabetic patients and helps in glycemic control

This story first appeared in DNA Money edition on Thursday, Jun 6, 2013.

Cadila Healthcare has announced the launch of the first new chemical entity (NCE) developed by an Indian pharmaceutical company — Lipaglyn — a drug that will help in lowering cholesterol in diabetic patients and in glycemic control.

The company expects the drug to be a blockbuster, garnering $1 billion in annual sales.

Pankaj R Patel, chairman and managing director, Zydus Cadila, said Lipaglyn is Cadila’s dream molecule to travel the lab-to-market drug discovery phases.
“We expect Lipaglyn to be a blockbuster drug reaching $1 billion in annual sales globally. While the pricing and distribution aspects are being currently worked out, we are looking to introduce it in India by third quarter of this fiscal,” said Patel.

The drug which has active ingredient Saroglitazar has been approved by the Drug Controller General of India. According to company officials, it is the first glitazar to be approved in the world and the first new chemical entity (NCE) discovered and developed indigenously by an Indian pharma company. Cadila will have a 20-year patent for Lipaglyn across the globe.

Lipaglyn is prescribed for Diabetic Dyslipidemia, a condition where diabetic has elevated levels of the total cholesterol.

Analysts, however, gave thumbs-down to the plan as they were expecting the company to out-license the molecule to a pharma MNC.

Ranjit Kapadia, senior vice-president - pharma, Centrum Broking, said, “Cadila would have received $10-15 million upfront payment if the management would have licenced the molecule to an MNC. Besides, the company will be marketing the product in India where patented products do not carry major premium as compared with Europe and US markets. As a result the upside is limited.”

Cadila officials said 1,000 clinical trials were conducted for the drug in India against 300 prescribed by the US Food and Drug Administration (FDA).
However, analysts said launching in India doesn’t mean much as clinical trials here are not as stringent as the developed markets.

“Standards of trials in India are not that great and it will be a long-drawn process to get it approved by the US FDA. A lot will also depend on the success of the molecule in the market,” said a pharma analyst from an international brokerage.

In India, the company expects Lipaglyn to be in the top 50 drugs in the segment with a targeted sales of Rs 100 crore in the next 3-5 years. Overseas, the company sees regulatory approvals in some emerging and developed markets coming in next 12-24 months.

“We will also initiate clinical trials for markets like Europe and US and have earmarked $150-200 million. We will look for a marketing partner for sales/distribution of this drug there,” said Ganesh Nayak, COO & ED, Cadila.

Cadila is also working on eight more molecules. It has thus far spent $250 million towards these developments, including Lipaglyn.

It will continue to spend 6-7% of its annual revenues on research and development apart from Rs 500 crore capital expenditure.

ZeeQ to bring back CBeebies

This story first appeared in DNA Money edition on Wednesday, Jun 5, 2013.

BBC Worldwide is set to re-enter the pre-school edutainment broadcasting in India. The main commercial arm and a wholly owned subsidiary of the British Broadcasting Corporation (BBC) has inked an agreement with Zee Group’s edutainment channel ZeeQ to broadcast content from its pre-school brand CBeebies.

ZeeQ is India’s only edutainment channel for kids in the age group of 4-14 years. On the other hand, CBeebies is a pre-school brand aimed at children aged six years and below.

Subhadarshi Tripathy, business head, ZeeQ, said the CBeebies content is very relevant for ZeeQ considering the channels also follow the same principals in selecting and producing content.

“The arrangement is not only getting the content on to our channel, but also having CBeebies as a band on ZeeQ,” said Tripathy.

The CBeebies brand will launch on the ZeeQ channel starting July 1, 2013. Currently, ZeeQ is available on Dish TV and Videocon d2h in addition to all the leading multi-system operators across the country.

Tripathy said that ZeeQ pays for the content with BBC Worldwide while handling the air-time sales. “This we will do in agreement with BBC Worldwide following a set of dos and don’ts as prescribed by them,” he said.

Myleeta Aga, senior vice-president and general manager - India and content head -  Asia, BBC Worldwide, said that partnering with ZeeQ brings CBeebies’ favourite programmes back to Indian TV screens.

“The CBeebies time band on ZeeQ is just the beginning of our partnership. We look forward to working with Zee to continue to bring popular and award-winning CBeebies programmes to ZeeQ,” said Aga.

Calling it a long-term association, ZeeQ officials said that this license agreement will see CBeebies programmes – Teletubbies, 3rd & Bird and Charlie and Lola – being aired on ZeeQ from Mondays to Thursdays for an hour (between 9:30 am and 10.30 am), with a two-hour repeat telecast on weekends (between 11.00 am  and 1.00 pm).

The association will help ZeeQ tap the pre-school segment (0-3 years) as well and strengthen its current portfolio of programmes.

The channel currently airs a mix of live action and animated shows. Some of its prominent shows include Teenovation, Science with BrainCafe, Amar Chitra Katha Heroes, Sid the Science Kid, The Weekly Wrap and Word Match.

Cement companies may hike prices this month

This story first appeared in DNA Money edition on Wednesday, Jun 5, 2013.

Cement firms may raise prices this month as the demand is showing signs of improvement and also because they are looking to gain a price edge ahead of the lean monsoon season.

“Discussions are happening on increasing prices by Rs 10-15 per bag. My sense is that cement companies would increase prices by Rs 10, if not more,” said an industry source requesting anonymity.

Cement firms have been unable to pass on rise in costs — railway freight charges rose last year (25% weighted average) and coal prices have gone up 10% — due to lacklustre demand.

Sudhir Bidkar, CFO, JK Lakshmi Cement, said prices in April were lower than the March quarter, but things improved post mid-May.

“We have been able to at least get back to the realisation levels witnessed in March, particularly from the middle of May. While sustaining it, we are also looking for signs of improvement in demand to be able to increase prices,” Bidkar said during the fourth-quarter earnings call last week.

Though Bidkar did not quantify the extent of price hike, he said it will only be possible if demand pick up.

“There have been various reasons — like shortage of labour and excessive heat — for not being able to increase cement prices. However, with labour now starting to come back, one can hope there will be a price increase to some extent in June,” said Bidkar.

Analysts said given that June to September is a lean season, cement companies generally increase prices before monsoon sets in. This approach helps them arrest decline in prices, giving them a bargaining window for monsoon sales.

“The peak season this year has been really bad for the sector with prices under considerable pressure owing to subdued demand. Sales in monsoon may get further fall leading to more pressure on pricing. The pre-monsoon price increase mainly helps in maintaining the price levels,” said an analyst with a domestic brokerage.

In fact, markets in south India like Andhra Pradesh, which saw the biggest price decline in April, saw price increases of Rs 10-30 per month, the analyst said.

Cement, unlike consumer products, has traditionally had its pricing based on expenses that are externally influenced.

“It’s totally a demand-supply driven market unless you influence it adversely through some changes either in demand supply or in costs. While there are cost pressures, at the same time it is not as though the seasons are behaving traditionally. And with monsoon approaching we should be getting into a lean season, but then this year has also sort of bucked the seasonal trend,” said an official from one of the top cement makers.

Dr Reddy's, Fujifilm call off alliance

This story first appeared in DNA Money edition on Tuesday, Jun 4, 2013.

Dr Reddy’s and Fujifilm have called off their partnership to tap the generic drugs market in Japan after almost two years of planning and market analysis.

The companies had in July 2011 inked a memorandum of understanding (MoU) with plans to seta joint venture for developing and manufacturing drugs in Japan and had even conducted studies on business aspects.

“However, as Fujifilm realigns its long-term growth strategy for the pharmaceutical business, both companies have led to a mutual agreement to terminate the MoU,” the companies said in a joint statement on Monday.

GV Prasad, chairman and CEO, Dr Reddy’s Laboratories, called it an unfortunate development. “However, I want to reinforce our commitment towards a planned entry into Japan to bring affordable and innovative drugs to more patients worldwide,” he said.

The companies will continue to explore partnerships in other pharmaceutical businesses, the statement said.

“In the long-term we will be focusing more on priority fields such as new drugs in cancer, more value-added super generic,” said Takatoshi Ishikawa, director corporate vice-president and general manager of pharma products division, Fujifilm.

Analysts made light of the development. “We haven’t changed our estimates on Dr Reddy’s given the JV does not contribute anything,” said Sarabjit Kour Nangra, VP-Research, Pharma, Angel Broking.

When Rakesh Jhunjhunwala grilled Aurobindo Pharma brass with some hard questions

This story first appeared in DNA Money edition on Monday, Jun 3, 2013.

It was a ‘rare’ occasion when Rakesh Jhunjhunwala, partner in asset management firm Rare Enterprise, logged into the fourth-quarter earnings call of Aurobindo Pharma on Friday. The multi-billionaire investor was raring to ask the company’s top management some hard questions and pounced on the opportunity as soon as the operator unmuted his line. Here’s what followed, verbatim:

Rakesh Jhunjhunwala (RJ): I’d like to know how much is your net foreign currency (dollar) receipts, considering you have a sale of Rs 5,800 crore, of which Rs 5,000 crore is from overseas markets. What are your expenses really like, out of this Rs 5,000 crore?

Robert Cunard (RC), CEO, Aurobindo USA: It may be in the range of $250-300 million... I mean exports minus imports and other expenditure in the foreign currency for the year as a whole.

RJ: Right. So what is your net foreign exchange receipts?

RC: In the range of $250-275 million, in import expenditure.

RJ: Import expenditure is about $300 million?

RC: No. Net foreign receipts in dollars is in the range of $250-275 million.

RJ: That means your gross receipts is Rs 5,000 crore, which is nearly $900 million, and you are incurring $600 million expenditure outside India?

(Pin-drop silence from the Aurobindo Pharma side for 15 seconds)

Sudhir Singhi (SS), CFO, Aurobindo Pharma: In that number, domestic sales worth Rs 1,493 crore is there as well.

RJ: Foreign sales is Rs 4,500...

SS: Yes, Rs 4,000 crore is exports sales.

RJ: Rs 4,000 crore is export sales, that means about $750 million.

SS: Rs 4,000 crore divided by 55... that is approximately $725 million.

RJ: Then your expenses is about $400 million?

SS: Sir, that includes the import of raw material for API, which could be a considerable number. This could be a couple of hundred million dollars.

RJ: But you are following I’m told... And, what is your debt in foreign exchange?

SS: Our debt in foreign exchange is approximately $600 million.

RJ: So, you don’t have a natural cover on the debt, no?

SS: No no... Sir, what happened, see, we don’t hedge it from the operations. We have a surplus of about $300 million for which we take for trade operations a working capital borrowing in foreign currency, which is approximately $330-340 million. So, as far as operations are concerned, we are fully hedged.

RJ: No no, but your debt is $700 million, no? What is your debt in foreign exchange?

SS: Yes, the remaining debt (term loan) is repayable somewhere in the years 16, 17, 18, 19 and 20, so we are having a natural hedge by growing exports over a period of time.

RJ: Therefore, are you dividing your forex debt into two parts – one which is payable in the near future or is a permanent debt or one which is payable after a certain period of time?

SS: Yes, we are dividing it into two parts. The debt which is falling (due for) maturity over a period of one year is considered to be sort of working capital or including working capital, short-term loan. If you see that portion, which is about $350-375 million including debt repayable within one year, against which we have an extra hedge, net from the trade operations, i.e. exports minus import...

RJ: Yes, I understand that. But then the balance $300 million debt which is payable over the next 4-5 years, how are you accounting for the loss in foreign exchange there? You are passing it through the profit and loss (P&L) account or capitalising it?

SS: No, we are not capitalising it. Whatever the loss is there – quarter end as well as year end – we restate and charge the difference to the P&L account. So this year, you see our loss on account of forex is being accounted in the P&L account.

RJ: That means if the dollar goes up, you are a net loser.

SS: We will be the loser on the restatement of the loss, notionally.

RJ: If you are charging it to the P&L account, that means today dollar has gone up from Rs 54 as of March 31 to Rs 56.5, so to that extent, on your one-year loan, your loss is covered. But for $300 million, you will have to provide it in the balance sheet.

SS: Yes, every one rupee depreciation on the dollar we would be losing on the restatement Rs 30 crore. For instance, from Rs 54 to Rs 56 today, we are losing Rs 2. As on date if we account for it in our P&L account, we will be the loser by Rs 60 crore.

RJ: On the entire debt?

SS: On the entire debt of $700 million.

RJ: You also have a choice wherein you can differentiate a long-term debt as short-term? Why don’t you charge the loss on long-term debt directly to your balance sheet?

SS: Because we have not exercised the option which the government has given – I recollect two years ago – so we decided as per the accounting standards in the
Institute of chartered accountants that we charge it to the P&L account.

RJ: But that’s not a true reflection of your profits, no?

SS: It isn’t, but please understand that we classify the portion of the forex as interest. So, our interest cost on foreign currency is only 3.75% and if you add the rupee depreciation that has happened, 6.7%, the interest cost would have been 9%, which is nothing, but if we could have taken loan in INR (rupee), our cost would be 9-10%.

RJ: What kind of sales growth are you expecting this fiscal?

N Govindarajan (NG), MD, Aurobindo Pharma: We are clear that it should be over 20%.

RJ: So, that will mean sales of around Rs 7,000 crore.

NG: Yes sir. It will be a little over that number.

RJ: What kind of a margin improvement are you indicating?

NG: We don’t talk about specific numbers, but I’ll put it that we are expecting a minimum improvement of 200-300 basis points in fiscal 2013-14.

RJ: Does cash flow on your budgeted profit allow for any debt repayment?

NG: Yes sir.

RJ: What’s your plan? How much debt do you want to repay?

SS: As we said, we have about $47.5 million loan coming for repayment, which we are confident of repaying in the current year and the rest will continue.

RJ: That means you are repaying $50 million this year?

SS: That’s right sir.

RJ: Ok sir. Thank you.

(Sigh of relief from Aurobindo officials)

Siti Cable sees subscriber base doubling by March

This story first appeared in DNA Money edition on Saturday, Jun 1, 2013.

Siti Cable Network, which reported a 352% year-on-year increase in consolidated operating profit for the fiscal 2013 to Rs 86.96 crore, is looking to double its subscriber base to six million in fiscal 2014.

Total revenue at the multi-system operator for the last fiscal increased 33% to Rs 483.66 crore.
V D Wadhwa, chief executive officer, Siti Cable, said, “We are planning to grow the subscriber base  over 100% this fiscal.”

The new subscribers will largely come from the cities under Phase II of digitisation in addition to some of the Phase III locations where the company enjoys monopoly.

The company also exceeded its target of touching 2.5 million subscribers, closing the last fiscal with an subscriber base of 3 million.

Wadhwa said the company has taken several key steps like providing own-your-customer (OYC) system, carriage revenue share, training for business partners and customer education to ensure smooth transition to the digital regime.

“We have made a conscious effort to align our people, processes and technological upgradation more closely with our business strategy, thereby giving ourselves the best chance to capture emerging opportunities in the industry especially broadband, value-added services (VAS), etc,” he said.

During the fiscal, the company consolidated its presence in the country by expanding in the central, western and eastern regions.

Sanjay Goyal, chief financial officer, Siti Cable, said there is concerted understanding among major digital cable players and everyone is working towards expanding their reach on the ground.

“Digital Addressable System (DAS) cities and towns are getting stabilised gradually and we are already seeing majority of the collections for the first three to four months starting to flow into the system. While pricing has been increased, we expect it getting reflected either in June or July. Also tier-based pricing (ranging from Rs 100 plus taxes to Rs 267 plus taxes) has been finalised, which will be implemented in the next few months,” he
said.

This apart, Siti is also pursuing expansion in the regions it is currently present through joint venture and partnerships.

The company has presence in 60 DAS cities, of which 20 have already been covered in Phase I and II.

The rest are in the subsequent phases of digitisation.

Of its overall revenue, close to 65% comes from carriage/bandwidth charges.

“This year, however, it has come down to 45%, and close to 20% is from set-top-box activation and the balance from subscription that grew almost 300% last fiscal, mainly due to DAS invoicing and collections being done in Phase I and II cities,” said Goyal.

Siti Cable currently enjoys an average revenue per user (Arpu) of Rs 104, net of local cable operator’s share of revenue.

The weighted Arpu, according to company, is Rs 175, of which 33% is shared with the local cable operator.

Orient-Express provision costs IHCL dear

An edited version of this story first appeared in DNA Money edition on Friday, May 31, 2013.

Tata group’s hospitality business, Indian Hotels Co Ltd (IHCL) reported a standalone loss of Rs 338.90 crore in the fourth quarter of fiscal 2013 (Q4FY13) against a profit of Rs 65.21 crore in the Jan-March quarter of FY12. The loss, company officials said, was largely on account of exceptional expenditure to the tune of Rs 424 crore on account of provisioning for some impairment in the value of investments in Orient-Express Hotels (OEH) and BJets Pte Ltd (a private air charter company).

According to Anil P Goel, executive director - finance, IHCL, impairments to the tune of Rs 373 crore in Orient-Express Hotels (Rs 305 cr) and BJets Pte Ltd (Rs 68 cr) have been recognised in the books. “We have an offshore subsidiary company called Taj Hong Kong through which we have a variety of important off-shore investments. What we have done is looked at value of IHCL’s investment in the subsidiary company and re-looked at the valuation of the underlying portfolio, compared the upside and downside and based on the calculations we have recognised the said investments in OEH and BJets,” said Goel.

In addition, the company has created a provision of Rs 27.55 crore, to satisfy the obligations of BJets Pte Ltd, an associate company, currently under restructuring. Another Rs 23 crore has been incurred towards the settlement of a dispute that was under arbitration for over 25 years.

As for company board’s final decision on OEH investment that was to be taken in March 13, Goel said that the board has not yet taken a call on the same.

The standalone turnover of the company for the year ended FY13 was Rs 1875.86 crore as against Rs 1808.73 crore in the previous year. Profit after financing cost but before exceptional item was Rs 223 crore as compared to Rs 236 crore.

IHCL said that isolating the impact of the extraordinary provision of Rs 424 crore, the profit after tax for the standalone company would stand at Rs 147 crore. However, on a consolidated basis, it would be a loss of Rs 7 crore as against profit of Rs 3 crore for the preceding year.

For the fourth quarter FY13, IHCL reported an almost flat turnover of Rs 556 crore as compare to Rs 560.15 crore in the corresponding quarter of the previous fiscal.

Company’s debt on books on a standalone basis stood at Rs 2,500 crore while on consolidated basis it is Rs 3,800 crore. The company received Rs 370 crore in the form of cash from promoters of which Rs 270 crore has been used to retire debt.

IHCL opened six hotels with 677 guestrooms in FY13 and the total tally currently stands at 119 hotels with 14,423 guestrooms as on March 31, 2013. The company will launch 21 hotels in the next two years with a total of 2,688 guestrooms across the country.

The capital expenditure in the next 18 months will be to the tune of Rs 200 crore for two greenfield Vivanta by Taj projects in Dwarka and Guwahati. This will be funded through internal accruals.

IHCL is also restructuring the shareholding of its 20-odd international assets housed in different subsidiaries. Goel said that IHCL wants to through an elegant structure shift all of it into one international entity.

"It will be one apex offshore company owned by IHCL, As a result of this exercise, the profile of those 20-odd assets becomes visible through one entity and effectively what it becomes is that the some of the parts become more valuable. We are moving in that direction to have that flexibility and in a perfect world I’d like to do it in the current fiscal," Goel said.

Also, IHCL managing director Raymond N Bickson's tenure with the company gets over in July 2013. when asked, Bickson said he will be applying for an extension.

Max calls off Rs 540 crore Speciality Films sale

An edited version of this story first appeared in DNA Money edition on Friday, May 31, 2013.

Max India founder and chairman Analjit Singh’s plans to raise Rs 540 crore by selling Max Speciality Films (MSF) has fallen through owing to valuation mis-match. MSF is in the business of manufacturing flexible polymer films for multitudinous applications in food, non food, and industrial packaging, leather coating films.

Confirming the development, Mohit Talwar, deputy managing director, Max India, said the speciality films’ sale deal has been called off. “The non-binding term sheet we’d got into for our plastics business is unfortunately not going through. There were valuations differences and this business has gone through a bit of a struggle given the market conditions as a result of which we did not go ahead with the transaction,” said Talwar.

In September 2012, Max India had said that the decision to sell MSF was is in line with the group's strategy to focus on service oriented businesses of life. The company board had then approved the proposal for sale of 100% equity to Treofan Germany GmbH & Co - a German global technology leader for biaxially oriented polypropylene (BOPP) film. Established in 1990, MSF had registered revenue of Rs 703 crore, a growth of 77% over its revenue in the previous fiscal i.e. FY11. Its earnings ebitda also witnessed an increase of 50% over previous fiscal to reach Rs 77 crore.

Talwar added that the speciality films business has enough tailwinds as a result the company has now decided to add another line. “An approval for the same has already been received from the board,” he said. The equity component for this business, according to Talwar, is not significant and the company management is working towards a situation where there are possibilities of going in for part or full monetisation through a strategic investor.

In another development, IFC Washington (existing investor in Max Healthcare) is set to increase its stake in Max Healthcare from the current 2.3% to 7.5%. IFC also holds some shares in the healthcare vertical.

According to Talwar, Max India has got into an understanding with IFC Washington for a partial conversion of the preference shares into equity. “This transaction places a value of Max Healthcare at about Rs 2000 crore of pre-money. What this really means is that it cleans up the balance sheet, improves debt-equity ratio and also brings in some amount of liquidity in the company. As a result of this transaction, our other joint venture partner (Life Healthcare) who gets diluted, will be topping up upto 26%,” said Talwar.

We are a niche realtor focusing on creating landmark developments: Kailash K Agarwal

Kailash K Agarwal
with son Nishant Agarwal

An edited version of this Q&A first appeared in DNA Money edition on Thursday, May 30, 2013.

A non-resident Indian (NRI), Kailash K Agarwal, chairman, Avighna India Ltd, had a tough time searching for a quality residence in Mumbai to live in. The experience led him to conclude that finding a house that meets all the requirements is a dream come true. Ending his search, Agarwal went on to build his own residence Nishika Terraces - a 18 storey tower featuring six duplex apartments on Worli sea face. The most astonishing aspect about Nishika Terraces is that the state-of-the-art development was completed in a record eight months.

Taking this experience forward, in 2006 Agarwal acquired a seven acre mill land at Currey Road to launch the company's second luxury development called One Avighna Park - a pre-certified platinum rated project under Indian Green Building Council (IGBC) green homes rating system. The project, currently in a fairly advanced stage of construction, has already won five prestigious International Asia Pacific Property Awards in 2012 including the 'Best Residential High Rise Development' in the entire Asia Pacific region.

Earlier this month, One Avighna Park once again won seven International Property Awards held at Malaysia and will once again compete for the best residential development in the APAC region, the finals will be held in December this year. He spoke about the awards and the key highlights that led to winning the awards twice in a row. Edited excerpts:

Despite stiff competition, this is the second year the Mumbai project has won the International Property Awards.

Yes. The One Avighna Park project at Lower Parel has been awarded the Best Residential High-Rise Development and the Best High-Rise Architecture in the entire Asia Pacific (APAC) region. The competition was between developers from 23 countries including Australia, New Zealand, China, Singapore and Malaysia. The project also won awards in the categories of Best Interior Design Apartment, Best Renovation / Redevelopment and the Best Landscape Architecture in India. Last year, International Property Awards conferred One Avighna Park with the prestigious Best Residential High-Rise Development in the World.

Could you share the reasons and key highlights of the project that got it the awards?

First and foremost, we chose a rather unconventional approach to developing the exclusive residential development i.e. making luxury practical. Several proactive steps are being taken to ensure luxury doesn’t become a burden for residents. For instance, consumption of water, the development offers a long-term sustainable solution – treating sewage water and using the recycled water in areas where maximum water is consumed i.e. flushing, gardening and other such ancillary services. This will drastically reduce water consumption.

Common areas have been designed to have maximum natural light and ventilation ensuring significant reduction in power consumption. Being a cluster redevelopment, residents will also enjoy substantially lower property taxes – a life long benefit that holds great value.

As far as quality of construction is concerned, majority of the materials have been imported from Europe and America. The execution of mechanical, electrical and plumbing works have been contracted to a firm in UAE. We also have eight layer water proofing in deck and wet areas to arrest leakage problems for a period of 50 years at least. In fact, we have over 300 workers flown down from various Gulf Cooperation Council (GCC) countries to ensure international standard execution and workmanship.

Cluster developments typically tend to be very challenging. How did you deal with the hurdles posed by this project?

Managing tenants and convincing them to give their consent was quite challenging for sure. After continuous discussions with the 800 tenants explaining them the benefits and the change it will bring to their quality of life and living standards, we managed to get 100% consent for the development.

We have already shifted 90% of the tenants in to the redeveloped towers and another 10% will be shifted in three to four months from now. I must also confess that the two political bodies namely Shiv Sena and Maharashtra Navnirman Sena (MNS) extended all the help in getting this project off the ground.

We had asked for some concessions from the government which are very practical. The chief minister has promised and is working on it. However, since the final approvals from the government's side is yet to be received, suspicion tends to build up in the minds of the tenants.

Also, we have seen developers do the for sale component very seriously while the free component generally gets a step-motherly treatment.

We have stayed away from that approach to business and have ensure the tenants get an enhanced quality of life in the rehabilitated towers. We have taken Gold certification under the Indian Green Building Council (IGBC) green homes rating system for these towers which is unheard of in the Indian real estate sector.

What is the current status of this development? How are you funding it?

Of the two towers, one has already reached 51 floors and the second tower has reached 36 floors as we speak. When completed the two towers will be 64 floor tall with 278 apartments in 3-, 4- and 5-BHK configurations. We are targeting to complete and hand over the development with building completion certificate by mid-2014. Funding this development is being done completely through internal approvals.

One Avighna Park

How has the market responded to this project? Are you also targeting the NRI buyers?

Sales were opened just a few months ago and we are taking the by invitation only approach to finalising the buyers. In fact, we are closely screening buyers to ensure creation of a community of like-minded people. We are also staying away from selling to the investor community. Most of the buyers currently include gold and diamond traders as we also have a Jain Derasar (temple) there. We may also look to tap the NRI buyers as well in the near future.

Your company has land parcels in Thane and Pune. What are the plans like for these locations?

Out entire focus currently is on completing the One Avighna Park development. Unless and until this project is completed and handed over to the buyers we will not undertake any new project. We are a niche realtor focusing on creating landmark developments and we want to continue the same way in the future as well.

HDIL braces for legal fight after MIAL notice

An edited version of this story first appeared in DNA Money edition on Thursday, May 30, 2013.

Housing Development & Infrastructure Ltd (HDIL) plunged 10.3% in the intra-day trade on the news that Mumbai International Airport Ltd (MIAL) has served a notice of termination for its slum rehabilitation project citing unsubstantiated charges. The company shares recovered part of the losses to close 6.8% lower at Rs 47.95 in Mumbai trading on Wednesday. The realtor is set for a legal battle with MIAL and may also file for damages.

Hariprakash Pandey, vice president - finance, HDIL, said the company has not accepted the notice. "The termination notice is completely unwarranted and company will take all the necessary legal steps and is also looking at filing (as said by company chairman Sarang Wadhawan) as damage claim on MIAL," said Pandey. He added that their legal counsel has advised the notice of termination is not tenable in the court of law and that the realtor has initiated legal remedies available to it.

While HDIL claims it has fulfilled all the obligations pertaining to the slum rehabilitation project MIAL feels otherwise. According to sources, MIAL entered into Slum Rehabilitation Agreement with HDIL in October, 2007 and as per the said agreement, HDIL had to complete the slum rehabilitation within four years i.e. by 2011.

"However, HDIL continuously failed to perform and MIAL issued a Cure Notice in June 2011. Because of non-performance of HDIL, the MIAL board took a decision to terminate the agreement and accordingly, in the month of February, 2013, MIAL terminated the said agreement,” MIAL sources said.

However, HDIL management said they have already handed over over 1,000 apartments for the Sahar elevated road and that more than 16,000 apartments are ready clearly substantiating the company has have fulfilled obligations.

"We have applied to the Maharashtra government for taking possession of over 7,000 apartments, which has been pending for over a year now. There have been issues regarding the eligibility criteria of the slum dwellers and the Maharashtra government has taken cognisance of it. There is a policy issue with respect to eligibility norms of the slum dwellers which needs to be resolved. Our apartments are ready since over two years now but issue will only get resolved after the government comes up with clarity on the criteria and expedite the hand over process," said Pandey.

HDIL said it will continue work on the approximately 27,000 units and keep on receving the transfer of development rights (TDR) from Government of Maharashtra against these units.

However, following a conservative accounting policy, the company has written-off the unabsorbed costs on its books (profit and loss account as an exceptional item) around Rs 441.98 crore accumulated over a period of 3-4 years. The unabsorbed costs pertains to 65 acres of land HDIL is supposed to get after the completion or substantial completion of the slum rehabilitation project.

The market is also abuzz with rumours that banks have termed their lending to HDIL as non-performing asset (NPA). The company management said they cannot comment on this matter unless there is proper information given by the banks themselves. "There was some issue with bank payments in fourth quarter but none of our bank accounts are frozen as of now," said Pandey.

Prior to termination, MIAL also invoked HDIL's performance securities in the form of bank guarantee worth Rs 25 crore, MIAL sources said. Now that the termination notice has been served the HDIL management feels there is no question of any other performance security to be invoked. "There was a promissory note worth Rs 275 crore but that cannot be invoked as the agreement itself has been terminated," said Pandey.

Bajaj Electricals to double advertising spend to Rs 75 crore in FY'14

An edited version of this story first appeared in DNA Money edition on Tuesday, May 28, 2013.

Coinciding with its platinum jubilee celebrations, Bajaj Electricals will more than double its overall advertising spend for the current fiscal i.e FY14. The company has earmarked Rs 75 crore towards advertising as compared to Rs 38 crore it spent in FY12. The company is also looking to increase its sales turnover by 25% to over Rs 4,200 from Rs 3,416 it registered in fiscal 2012-13.

Anant Bajaj, joint managing director, Bajaj Electricals Ltd, said the company has a very elaborate spent planned considering it is their 75th year in business. "We clearly have on our mind to spend a significant money on advertising this year. In fact, you should soon start seeing significant visibility being created in the market place for our brand and products alike," said Bajaj.

Over the years, the management has been aggressively working on its distribution, product range and the consumer's requirement (in terms of a product) and it feels that advertising will only help it become better. "We have achieved very good traction in the market despite not spending too much in the past mainly because we have been smart in our spending. While continuing with that strategy, we will work smartly towards being more visible vis-a-vis competition," added Bajaj.

In another development, the company is also planning at taking its exclusive Bajaj World stores international. "A store has already been opened in Nepal, and talks are currently on for opening in Ghana, Nigeria, Sri Lanka and South Africa," said Bajaj adding that all these stores will added through exclusive franchise agreements.

As on May 1, 2013, the company had 42 Bajaj World stores operational in India and the management is looking at opening another 13-odd outlets in the next 45 days. A total of 75 stores are likely to get operational by the end of this fiscal.

The company is also in the advanced stages of setting up a new research and development (R&D) centre in Mumbai. It has a capex planned of Rs 45 crore, though not all of it has been invested in the centre as yet.

And with e-commerce starting to gain traction in the country, Bajaj Electricals has launched its e-retailing market place as well. The e-commerce portable has been up and running for the last five to six months. Bajaj said that the company is quite pleased with this initiative which has been giving them Rs 6 lakh to Rs 10 lakh worth business every month.

"We are currently selling most of the products available in the market but will gradually launch products that will be sold only through the e-commerce portal thereby creating a differentiation in the market place," he said.

The company also reported fourth quarter results for the fiscal 2013 wherein its net profit plunged 99% year-on-year to Rs 0.62 crore mainly due to restructuring of its engineering and projects (E&P) business. E&P sales declined 22% to Rs 285 crore in Jan-March and losses stood at Rs 51 crore as compared to a profit of Rs 21 crore in the fourth quarter a year ago.

Its net sales for the three-month period gained just 5% from a year ago to Rs 1,114 crore. Sales from consumer durables rose 22% to Rs 544 crore while lighting sales were up 15% to Rs 285 crore.

Wockhardt says speeding up process to be up to speed

This story first appeared in DNA Money edition on Saturday, May 25, 2013.

Drugmaker Wockhardt has stepped up efforts to mitigate the impact of an ‘import alert’ by the US Food and Drug Administration (FDA) for its units at Waluj in Aurangabad. The company will hire a US consultant and submit a corrective action plan within a fortnight.

”The consultant will be helping us in bringing this facility in compliance in a month or two maximum,” said Habil Khorakiwala, chairman, Wockhardt, during an analyst call on Friday.

Wockhardt has two facilities at Waluj, — one manufacturing injectables for the US and another that is not for US exports but has a product filed in that area.

”The FDA has observed non-compliance in terms of standard operating procedure and several other areas. This we are in the process of correcting. We will have clear replies to FDA within 15 days of the corrective measures and timelines we propose in terms of correction,” said Khorakiwala.

As a result of the import alert, Khorakiwala expects Wockhardt’s revenues to be impacted by Rs 550 crore, while margins are likely to be down 2%.

Anshuman Gupta & Prashant Nair, analysts with Citigroup, on Friday said they see revenues hit on two counts viz. discontinuation of approved products like Geodon, Comtan, Stalevo, Zithromax etc and delay in new approvals from the unit.

”While we don’t know how many abbreviated new drug applications (Andas) were filed from Waluj, we believe the list includes a few key products such as Reclast, Zometa, Adenoscan, Tricor, Arthrotec over this and next fiscal. We cut our topline estimates for the 2 years by $140m/$180m and await more clarity on potential mitigating measures (site transfers for instance) Wockhardt can explore,” Gupta and Nair said in a note.

Khorakiwala said Wochardt has over 47 Andas pending of which 50% has been filed from the facility that has received an import alert.

Chaitanya Joshi takes JWT Portfolio Night All-Star crown

Chaitanya Joshi

This story first appeared in DNA Money edition on Saturday, May 25, 2013.

Chaitanya Joshi, currently with Draft FCB Ulka, came out on top when he was adjudged the ‘All Star’ winner on Friday at JWT’s Portfolio Night 11 held in Mumbai. A gold medalist from Mudra Institute of Communications, Ahmedabad (MICA), Joshi was picked from a total of 90 contestants for the coveted title. He is now headed for New York where he will compete at the Portfolio Night All-Stars Creative Challenge in August.  

Colvyn Harris, CEO, JWT South Asia, terms a Portfolio Night ‘All-Star’ as the one who is rated as the most talented young creative and notches up the highest score of the evening. “This is the first time ever in the 11-year history of Portfolio Night that this has been instituted,” said Harris.

“It was wonderful to see 90 bright, young minds unleashing their creativity with the legends of Indian advertising. We hosted the event with a view to giving back to the industry and recognising and guiding aspiring young creatives to carve a career for themselves,” he said, adding the entire JWT team worked overtime to create and put together this event.

Tista Sen, national creative director (NCD) and senior vice-president, JWT India, who was part of an impressive array of 28 reviewers, talked about two types of portfolios that hogged the limelight. “One category included kids in college who were sharing their college projects and there were others who had put together different ideas to showcase their writing skills, mock up advertisements, art direction and illustrations skills. I met and reviewed some very interesting portfolios. Despite just starting out in life, the kids were very clear on what they wanted to be and do, which I think is fantastic,” Sen gushed.

Portfolio Night is an event that provides a platform to aspiring ad copywriters, art directors and designers to pitch their cases with renowned advertising creative directors. Ford Motor Company has partnered with Portfolio Night for the All Stars Creative Challenge and together with Ford’s agency Team Detroit, the Portfolio Night All-Stars will tackle a Ford creative brief.

Singh family rebuts Daiichi charges

This story first appeared in DNA Money edition on Friday, May 24, 2013.

The Singh family on Thursday said Daiichi Sankyo’s allegation of concealment and misrepresentation regarding drug research at Ranbaxy Laboratories is false and baseless.

On Wednesday, Daiichi Sankyo said it is weighing legal options to sue the former promoter-shareholders of the New Delhi-based generics drugmaker.

The Singh brothers — Shivinder & Malvinder — had sold Ranbaxy to Daiichi in 2008 for $4.6 billion. Daiichi bought a 51% stake — including 34.8% that the Singhs held — in June 2008.

The Singh family claimed that Daiichi Sankyo purchased their interests in Ranbaxy in 2008 after a long negotiation process, as is typical of deals of this magnitude, and after conducting full due-diligence.

“At every step of the way during the negotiation process, Daiichi Sankyo and its representatives were made aware of the on-going FDA and Department of Justice
investigations. They were also given full access to the documents at Ranbaxy pertaining to the FDA and DoJ investigations,” the Singh family said in a statement.

They added that Daiichi Sankyo went into the deal after satisfying itself with its due diligence and with the benefit of legal advice.

“The belated suggestion, made years after the fact, that information was concealed from and/or misrepresented to Daichii Sankyo is false and designed to divert attention away from Daiichi Sankyo’s own failures,” they said in the statement.

FDA import alert a Rs 550 crore hit for Wockhardt

This story first appeared in DNA Money edition on Friday, May 24, 2013.

An ‘import alert’ by the US Food and Drug Administration (FDA) on one of its plants is likely to cause a sales loss of $100 million or over Rs 550 crore, Wockhardt said.

The FDA has expressed concern on the drugmaker’s export-oriented facility in Aurangabad.

The Wockhardt management, however, said it should be able to restore most of that ($100 million impact on revenues) within six to nine months by shifting production elsewhere. “That is a worst-case scenario,” said Habil Khorakiwala, chairman.

Shares of Wockhardt fell 20% on Thursday to their lowest level in more than seven months, post the import alert published by USFDA for the Aurangabad unit.

Interestingly, the company’s shares had corrected sharply by over 20% earlier in April when FDA had sought clarifications on the company’s injectables facility in Aurangabad as it was not satisfied with the processes/systems there.

Calling it a routine matter, the company spokesperson has then said that there was nothing more to disclose.

Analysts familiar with the development had said that the company was issued FDA 483 letter for the Aurangabad unit which would be followed by a warning letter, if FDA is not satisfied with the response.

“However, it’s not something to be worried about as the said unit doesn’t contribute more than 3-4% of Wockhardt’s US revenues,” Bhavika Thakker, research analyst, IIFL had said.

Typically, in an FDA 483 letter scenario, once observations are given by the USFDA, the company is given one month time to rectify and submit their response.

Analysts had also said, in case the facility receives a warning letter, it would only affect new approvals in injectibles and not affect current revenue stream materially. The Aurangabad unit currently does not materially contribute to the company’s revenues as it does not include Toprol XL, Flonase or any high value product.

Dentsu acquires Capital 18's stake in Webchutney

An edited version of this story first appeared in DNA Money edition on Friday, May 24, 2013.

The Dentsu India Group has acquired 80% stake in Webchutney from Capital18 (venture capital arm of Network18) for an undisclosed sum. With around 200 employees, Webchutney is one of India’s leading digital agencies working in the areas of web design, social media, mobile and experiential digital advertising.

Rohit Ohri, executive chairman, Dentsu India Group, said, that partnership with Webchutney is another step in building the network of the future. "We’re now going to be able to put world class digital solutions in the centre of our offering to our clients," said Ohri.

Webchutney is Dentsu's first acquisition in the digital space. The integrated communication solutions provider had earlier acquired stake in Taproot India as well.

Though financial terms related to this deal were kept under wraps, Network18 informed that this divestment was in line with its strategy of monetising its investments and claimed the investment has generated a return of over 300% to the company.

Network18 held 70.06% stake in the company, through its investment arms Capital18 Limited Mauritius which held 49.42% stake and Capital18 Fincap Pvt Ltd which held 20.64% stake.

In the works for a while now, earlier media reports had pegged the deal size to be between Rs 40 crore and Rs 60 crore. For the fiscal 2012, Webchutney had registered a profit of Rs 6.35 crore on total revenue of Rs 21.55 crore.

Founded by Sidharth Rao and Sudesh Samaria in 1999, Webchutney will continue to operate independently under the management control of its current leadership.

Optimism has now reached fast-moving consumer goods companies: Mark Patterson

Mark Patterson

This Q&A first appeared in DNA Money edition on Thursday, May 23, 2013.

Mark Patterson plays key roles in GroupM, the world’s No.1 media investment management operation which serves as the parent company to WPP’s media agencies.As CEO for Asia Pacific and chairman of China operations, Patterson oversees GroupM’s business across a humongous region. He tells why India and China are now growth-drivers in the region. Excerpts from the interview:

Could you share your views on the advertising industry in the Asia-Pacific (APAC) region?
It’s really difficult to give an overall APAC situation. There is small single-digit growth in some markets, mega growth or high double-digit growth in a few other markets and everything else in between. That spectrum and diversity make it very difficult to identify what’s common between them because they are all so uncommon.

How do India and China compare with other regional markets?
India and China certainly fit in the scale of growth bucket. For our business and most other businesses, they are the engines or drivers of growth. It is like... the more we put in, the more we get from these markets. It’s a question of prioritising and there is no disrespect to other markets.

How does GroupM plan to grow in India?
We have been having a significant scale for some time. In India, we had to be braver, take more risks, be smarter about our growth strategy. When you have a certain scale, there is natural organic growth. We’ve reinvented ourselves several times over in the last few years. Being here for over a decade now, we have always had the ability to continue to challenge, develop and innovate, and to shape and lead the market. I think India is unique in that regard and we had to do a lot more differently here than in some other markets.

What were the focus areas of discussion during your India visit?
We spent time talking about MashUp (a joint venture with television production company Optimystix) which is a unique Indian proposition to deliver industrial-scale sustainable engagement online videos. Our mobile play with Madhouse, which is a Chinese company, is something that, in a way, brings China and India together, which is very unique.

Discussions largely focused on continuously diversifying and extending new services to other markets where they aren’t available.

Will you also be looking at some inorganic growth?
While we have been very acquisitive over the years, it doesn’t have to be that way always.

Our recent initiative MashUp is a great example of using partnerships as a strategy to deliver certain offerings in the market. In fact, we have another 4-5 such partnerships currently under discussion. We will work on delivering new services and continue to offer integrated broader solutions to clients.

You met top clients. What did they say?
Our discussion brought out one thing that’s common – cautious optimism. And that has now reached the fast-moving consumer goods (FMCG) companies. That’s sort of the key phrase across, something I would not really like to disagree with in most markets, to be honest.

I’ve spent a lot of time in China where the growth rate is still great, but it’s not what they were and there is still a degree of uncertainty. There is, sort of, this basic pessimism in Australia, while Japan seems to be gathering optimism.

Generally, people are getting to shorter-term outlook and clients are looking month to month, quarter to quarter, at best. Nobody is prepared to go beyond and make a prediction whether this is going to be a good year. The basic question is — how good will it be?

The risk with making a prediction is that you can always go wrong. But what I also found out is that the mood can change quite quickly; I could be in a particular market where four months hence things will have gone one way or the other for whatever reasons. It could be a 10-20% shift in sentiment rather than a 5%.

Any thoughts on agency-media relationships in the context of changing market dynamics in India?
The relationship we have with media partners is crucial on so many levels. The way we contract and work with media partners is changing as much as the way we contract and work with clients. If we have our people going on that side (media and clients), the circles all overlap and so can help down the line. One of the advantages of our network is the fact that we have scale, our people go out into other parts of business, but we always have that connection. In the end, it’s the relationship that works in this business.

Dish TV subscription revenues grow 15%

This story first appeared in DNA Money edition on Thursday, May 23, 2013.

Dish TV, India's top direct-to-home (DTH) company, has reported a 6.5% year-on-year rise in operating profit for the quarter ended March at Rs 120 crore and a 7.6% increase in standalone operating revenues at Rs 555.4 crore.

The company, a market leader with a 24% share, recorded 15.3% on-year growth in subscription revenues at Rs 500.1 crore.

Operating profit margin for the quarter stood at 21.6%. Reporting first full year of positive free cash flow this fiscal, Dish TV's net loss for the January-March quarter was down to Rs 43.6 crore against a loss of Rs 49.02 crore a year ago. The company said losses continued to be influenced by depreciation and write-off policy.

On future potential, Subhash Chandra, chairman, Dish TV India, said, “In the media sector, digitisation, though not fully up to speed, holds big potential for the industry. DTH platforms, in particular, look forward to a level-playing field, contributing to meaningfully higher ARPUs and stickier subscriber base over time. Dish TV’s industry leading initiative, to hike acquisition and pack price is likely to be a catalyst to achieve that.”

The company added 0.2 million net subscribers in the March quarter, touching a total of 10.7 million net subscribers. Its subscriber acquisition cost at Rs 1,996 was down compared with Rs 2,201 in preceding December quarter. Higher winbacks reduced average churn for the quarter to a low of 0.8% per month compared with 1% in the previous quarter.

Consolidated total income was up 10.66% to Rs 2,166.80 crore in fiscal 2013 from Rs 1,957.93 crore in the previous fiscal. Consolidated net loss halved to Rs 66 crore from Rs 133.14 crore in the previous fiscal.

Jawahar Goel, managing director, Dish TV, said, “Fiscal 2013 saw most players in the Indian DTH industry evolve to the next level. Under Dish TV’s leadership, the industry pulled off a significant increase in the acquisition price over the last several months, thereby reducing the effective cash burn per subscriber. While the resultant decline in industry gross additions is marginal, it is expected to be well compensated by quality of subscribers. There was no respite though, from the multiple taxation which the DTH industry is reeling under. Uncertainty on the rollout of Goods & Services Tax (GST) continues to be an overhang on the earnings potential of the industry.”

The ARPU for the quarter at Rs 157 was down compared with Rs 160 in the immediately preceding quarter. “However, on a like-to-like basis, ARPU for the quarter would have been Rs 160, considering that revenue is recognised over a 90-day period in the fourth quarter compared with 92 days in the third quarter. On the expenses front, a 5.1% year-on-year increase in content cost for the fiscal remained well within the guided range of 10-12% hike,” said Goel.

Daiichi weighs options to sue Ranbaxy Labs promoters

This story first appeared in DNA Money edition on Thursday, May 23, 2013.

Daiichi Sankyo, the Japanese parent of Ranbaxy Laboratories, is weighing legal options to sue the former promoter-shareholders of the New Delhi-based generics drugmaker.

The Singh brothers -- Shivinder & Malvinder -- had sold Ranbaxy to Daiichi in 2008 for $4.6 billion. Daiichi bought a 51% stake -- including 34.8% that the Singhs held -- in June 2008.

In a statement, the company said it believes “certain former shareholders” of Ranbaxy concealed and misrepresented critical information concerning the US Department of Justice and Food and Drug Administration (FDA) investigations.

“Daiichi Sankyo is currently pursuing its available legal remedies and cannot comment further on the subject at this time,” the company said.

“Daiichi Sankyo continues to support Ranbaxy in its efforts to address and correct the conduct of the past which led to the investigations by the US Department of Justice and the FDA. These efforts include significant changes to Ranbaxy’s management, culture, operations and compliance,” it said.

Arun Sawhney, CEO and managing director, said: “Ranbaxy is a different company today.

The steps we have taken over the recent years reflect the wide-ranging efforts of the current board and management to address certain conduct of the past and ensure that Ranbaxy moves forward with integrity and professionalism in everything we do. We are fully committed to upholding the high standards that patients, prescribers and all other stakeholders expect.”

The comments follow a detailed excoriation of Ranbaxy’s past practices by the Forbes magazine in its latest issue.

“All Ranbaxy products currently in the global market are safe and effective,” Sawhney said.

The company, he said, has made investments of over $300 million (Rs 1,650 crore) in its manufacturing facilities to install state-of-the-art technologies.

“We have also instituted a rigorous new code of conduct for all Ranbaxy employees, with clear accountability for compliance,” he said.

Sawhney said Ranbaxy has successfully launched several new generic equivalents across the world recently, and maintains a robust pipeline of important new products.

“We look forward to continuing to enrich lives globally with quality and affordable medicines.”

Myths make advertising exciting and desirable

These Q&As first appeared in DNA Money edition on Wednesday, May 22, 2013.

Portfolio Night 11, a global event to nurture young talent in the advertising industry by giving them an opportunity to showcase their ideas to creative directors of the country is taking place today evening at the JWT India office in Mumbai. Ashish K Tiwari spoke to four of the 30 jury panelists, who would judge the work at the Mumbai leg of the event which is being simultaneously held in 20 cities globally. JWT, a unit of WPP, the world's biggest communications company, hosting the Mumbai event.

Myths make advertising exciting and desirable

Josy Paul, chairman and chief creative officer, BBDO India

 

What are the key aspects you would look for in a portfolio?
I look for the work, the passion, the hunger, the madness inside, the look in the eyes, the truth about the individual. A portfolio is about the work, but it is also about the person.

What are your views on the various myths people have about advertising and the industry in general?
Myths are important. They play an important role in building an aura around the industry. Myths add to the conversation and make advertising exciting and desirable. We need more myths. Myths are the advertising agency for advertising.

What is the myth that you would like to bust for those waiting to enter the industry?
I'm not in the business of busting myths. I'm in the business of creating them. Myths add sizzle to people, brands and life. It gives people something to share and pass on. All I can say to the newcomers is follow the myths. Think for yourself. Find out for yourself. Seek your own truth. That's the reason you are here in the first place.

Did you have a myth on advertising before joining the industry? What was it and how did you develop that myth?
I was clueless when I joined advertising. I had no myths about the industry. But I had a myth about myself. I thought I was creative. People told me I wasn't. So I spent my early years trying to prove that I am creative. I'm still trying. I have lots more to discover. My myth is my fuel. My myth makes me me.

How did it get busted when you actually got into advertising?
I was fortunate that people didn't believe the myth about me. The myth that I was creative. But then one day I met this amazing man called Suresh Mullick. He publicly acknowledged me as being creative. He called me 'Youth of India'. I tried to live up to his belief about me. In time I lived out my own myth.

Any other observations that you'd like to share with the people looking to make a career in advertising?
I'd ask the freshers one question -- What's the myth you have about yourself? Your myth will give you energy. It will drive you, keep you hungry. And even if the creative directors who are judging you at Portfolio Night don't acknowledge your myth about yourself, it's okay. Go your way. Your myth will take you to where you belong. You can be great if you focus, believe and follow your myth.

Advertising is not just about hanging out with fancy models

Piyush Pandey, executive chairman and creative director-South Asia, Ogilvy & Mather India

 

What are the key aspects you would look for in a portfolio?
The ideation process, the freshness in thinking.

What are your views on the several myths people have about advertising and the industry in general?
The biggest myth is that you can express yourself the way you feel like. In reality there is a method to this madness and yet there is some madness to the method.

What is that myth that you would like to bust for those wanting to enter the industry?
The myth that I want to break is that advertising is not rocket science. End of the day this is serious selling of a product creatively.

Did you have a myth on advertising before joining the industry?
The myth that I had been told about, is that you get to hang out with fancy models. This is definitely not the truth. I've tried to break the myth by telling people that it's sheer hard work but they refuse to believe me.

How did it get busted when you actually got into advertising?
I think it got busted when I found that we spent more time running to client's office, running to media houses to deliver artworks, running to slide makers for big presentations. So I never got to see the fancy models that I could run after.

Any other observations you'd like to share with the people looking to make a career in advertising?
It is an exciting business because you're addressing and solving different things every week. This sheer variety is unlikely to come to you on a weekly basis in any other business. So if you have the passion, this is a great business to be in.

Never be attached to your ideas

Ravi Deshpande, chairman and chief creative officer, Contract Advertising

What are the key aspects you would look for in a portfolio?
When I look at a portfolio, I am usually most impressed by great craft, or at least the promise of great craft. At the same time, I look for simple, imaginative ideas that answer a particular need. It’s important that the work is in good taste. Creativity is most important. Yet there shouldn’t be a logical flaw in the way the idea is conceived.

What are your views on the various myths people have about advertising?
Many of the old myths about advertising are not relevant anymore. The world’s more transparent now. People know more about everything. I think people realise that advertising is not like they show it in Mad Men.

What is that myth that you would like to bust for those waiting to enter the industry?
That it’s just about great work. Nothing else matters. And great work requires a tremendous amount work, not just talent.

Did you have a myth about advertising before joining the industry?
I did not have a myth. I wanted to get into architecture. Advertising was the second choice. But that was then.

Any other observation that you’d like to share with the people looking to make a career in advertising?
1. Be nice to others. In today’s collaborative world, you need to be a great team player.
2. Don’t be too disillusioned by your talent. It is only 5% of the reason for your success.
3. Never be attached to your ideas. It is better to pre-empt the death of your favourite idea, and be prolific.
4. Concentrate most on your key craft. But read up, learn and stay interested in other disciplines.

A curious mind is what you need

Senthil Kumar, National Creative Director, JWT India

What are the key aspects that you would look for in a portfolio?
First, I would ask every aspiring young chap to showcase only 10 best pieces of work in the portfolio. This would force the candidate to be a judge of their own work first and help understand their point of view on advertising. Next, I would look for original ideas.

What are your views on the various myths people have about advertising and the industry in general?
Creative arts are amplified by mythology and the legends that supposedly live these myths. And this just goes to prove that people are really interested in this profession and the industry by spreading these myths through the oldest form of communication ever -- word of mouth.
 
What is that myth that you would like to bust for those waiting to enter the industry?
The myth that advertising is rocket science. I believe that common sense and a curious mind is all that you really need.
 
Did you have a myth on advertising before joining the industry? What was it and how did you develop that myth?
The myth that advertising is difficult if you don’t have training in the visual arts or creative writing.

How did it get busted when you actually got into advertising?
When I started believing in my ideas I lost all unnecessary doubts and just took the plunge.

Any other observations?
Stay hungry. Believe in your ideas. Never give up on an idea. And the best revenge is a better idea.

Zee offers 1:21 bonus of redeemable pref shares

This story first appeared in DNA Money edition on Thursday, May 23, 2013.

Zee Entertainment Enterprises Ltd offered a novel bonus to shareholders as part of its celebration for the completion of 20 years of the Zee brand as it reported a 10.7% year-on-year growth in net profit for the fourth quarter at Rs 180.4 crore.

The Q4 performance was driven by strong advertising and subscription revenues, which grew 15.5% and 13% at Rs 479.2 crore and Rs 454.6 crore, respectively.

Net profit for the full fiscal rose 21.6% at Rs 718.2 crore, while advertising revenues increased 24% at Rs 1,963.9 crore and subscription revenues 22.6% at Rs 1,623.4 crore.

Subhash Chandra, chairman, Zee, said, “The recent policy initiatives by the government and further reforms should help boost business sentiment and improve the investment climate. Despite the backdrop of a slowing economy in the last fiscal, television media industry has continued on its growth path.”

The company’s  board has recommended a cash dividend of Rs 2 per share to celebrate the completion of 20 years of brand Zee.

In a unique approach to rewarding shareholders, the company board also announced distribution of Rs 2,000 crore through bonus issue of redeemable preference shares.

Atul Das, chief strategy officer, Zee, said that equity shareholders will be issued 21 preference shares of Rs 1 each for every one equity share held by a shareholder.

“It carries a dividend coupon of 6% per annum, which implies that every year on this amount shareholders will get 6% dividend and it has a tenure of eight years. Fourth year onwards, every year the company will redeem one-fifth of the nominal value of these preference shares,” said Das.

So for instance, taking Rs 2,000 crore as an approximate number, fourth year onwards Rs 400 crore will be paid back to the shareholders.

“It’s a committed pay to the shareholders. It’s basically setting out the agenda that the investor will receive the payouts every year till the tenure of these shares gets over,” said Das.

Consolidated operating revenues for Q4 rose 11% at Rs 964.3 crore. Operating profit for Q4 rose 51.4% at Rs 242.3 crore, while  Ebitda margin stood at 25.1%. Operating profit for the full last fiscal rose 29% at Rs 954.3 crore, while total revenues rose 21.7% to Rs 3,699.6 crore.

Punit Goenka, managing director and chief executive officer, Zee, said the fiscal 2013 has been good —  both on operating as well as financial parameters.

“Zee gained viewership share with improvement across genres, both in national and regional languages, which led to outperformance in advertising growth relative to industry.

We have also seen steady improvement in our sports business over the last three years.

While investment in sports continues, performance has improved substantially with better monetisation from subscription.”

The company board has also approved enhancement of FII investments in the company beyond the current limit of 49% up to the maximum sectoral limit allowed under applicable foreign direct investment regulations, subject to appropriate approvals.

Thomas Cook to put its commercial spaces on sale

This story first appeared in DNA Money edition on Tuesday, May 21, 2013.

Travel and tour operator Thomas Cook (India) Ltd (TCIL) is selling some of its commercial spaces to raise money for working capital requirements.

The company is understood to have roped in international property consultant (IPC) Jones Lang LaSalle (JLL) as advisor for the office space transactions.

“We are always on the lookout for opportunities that may arise due to changes in the market for this domain,” said Madhavan Menon, MD of TCIL.

He, however, did not share details of the office spaces that may be sold and the kind of money that is being sought to be raised.

TCIL is understood to own around 32 properties or 1.26 lakh square feet (sq ft) of office space across the country. In addition, it reportedly owns over 60,000 sq ft and 43,000 sq ft in Mumbai and Delhi, respectively.

According to JLL’s monthly real estate monitor (May 2013), prime office space in a metro like Mumbai would typically cost anywhere between Rs 21,000 and Rs 30,000 per sq foot. In cities like Hyderabad, it is Rs 5,500-6,000 per sq foot. In Pune, it is Rs 4,750-5,000. Office space in Kolkata costs around Rs 18,000 per sq foot. In Delhi, the per sq foot rate is around Rs 31,500.

TCIL’s south Mumbai property itself is estimated to be worth up to Rs 250 crore.

In May last year, Fairbridge Capital (Mauritius) had acquired a 76.69% stake in TCIL from its erstwhile UK-based parent.

In February this year, TCIL diversified into executive search industry by acquiring a 74% stake in Ikya Human Capital Solutions, a staffing solutions company, for Rs 256 crore.

The Great Summer Escape to 'cool' spots spells travel boom

This story first appeared in DNA Money edition on Monday, May 20, 2013.

Rising mercury levels this summer are bringing glad tidings to the Indian travel and tourism industry. Forget the earlier doom-and-gloom predictions: firms in this sector are now confident of posting a 25% on-year growth this calendar year on the back of people’s penchant to travel to cooler climes to escape the scorching heat.

Citizens are travelling to Indian and overseas destinations far and wide, sources said.

Industry estimates suggest that the number of Indians travelling overseas is set to rise from around 1.5 crore at present to 5 crore by 2020.

A resurgent economy, upwardly mobile lifestyles and increasing discretionary income are driving travel and tourism, said industry experts.

Madhav Pai, director – leisure travel (outbound), Thomas Cook (India), said, “Irrespective of price hikes, Indians are travelling like never before. Clearly, travel is now a ‘must-do’ element in the Indian summer agenda.”

Karan Anand, head-relationships, Cox & Kings, said, “Domestic travel certainly continues to be the mainstay, growing at 30% annually. Outbound is not far behind with an on-year growth of close to 25%.”

Moderate to high growth rates are in evidence everywhere. For instance, Australia’s Tourism Forecasting Council predicts 1.75 lakh arrivals from India in 2013/14, a 9% increase over 2012.

From 41,000 Indian visitors in 2000, Australia received around 1.60 lakh visitors in 2012. Nishant Kashikar, country manager-India, Tourism Australia, said, “Arrivals from India are expected to perform well, with an average annual financial year growth rate of 7.2% through to 2020-21.”

Such figures are encouraging travel and airline companies to offer the world to travellers, in the form of early bird offers, complimentary stays, companion offers, kids-stay-free opportunities, free transfers, discounted sightseeing tours and promotional airfares.

Some of these are for overseas destinations, but they are priced more or less at the same level as that of domestic attractions.

These are driving a good chunk of Indian travellers to short-haul destinations in regions like the South-east Asia, Asia-Pacific and the Middle East.

Other higher priced packages, like the Rs 99,999-per-person week-long tours of Cox & Kings, target destinations like Switzerland, Italy, east European countries, Spain and France.

Of course, there are many takers because such packages include return economy class air ticket, taxes, visa charges, overseas travel insurance, accommodation with breakfast, sightseeing and inter-city train travel on the European Rail Network, said Anand.

If not A, then B, or C – that seems the resolve of Indian travellers these days, said Ashwini Kakkar, executive vice chairman, Mercury Travels. “The recent flash sales announced by a few carriers proved to be a boon for travellers who had already planned their holidays. And, thanks to declining petrol prices, those who were left out are now driving down to the destination with family. They are all holidaying as per their convenience.”

Summer’s momentum is expected to continue beyond the season with a brief pause in June when schools and colleges open. For, a different kind of travellers – double-income-no-kids couples and singles – undertake post-summer journeys. “Monsoon is a time when destinations like Goa and Kerala aggressively promote themselves,” said Pai.

Post-summer airfares are expected to drop, said Anand. “Any such drop would entice consumers to book during the traditional ‘off season’ like the monsoon. Our Drizzlers offering had shown interesting uptake in 2012, and we hope to replicate this success even more emphatically in 2013.”

Popular destinations

Within India: Kashmir, Himachal Pradesh, the North East, the Andamans and other hill stations.

Outside India: South Africa, Canada, the Philippines, Australia and New Zealand are catching outbound travellers’ attention.

Europe and the US continue to be preferred destinations for the Indian traveller

Iceland, Greenland, Morocco, Canary Islands, Galapagos and Ecuador are on the travel radar this year.

Singapore, Malaysia, Thailand, Hong Kong, Macau, Dubai and Mauritius remain popular short-haul destinations

TTK Prestige to enter water purifier mart

This story first appeared in DNA Money edition on Monday, May 20, 2013.

TTK Prestige, the maker of pressure cookers and kitchen appliances, is getting ready to enter India’s Rs 3,200-crore water purifier market where big names such as Aquaguard (Eureka Forbes), Pureit (Hindustan Unilver), Swach (Tata Chemicals) and Kent RO abound.

On Friday, a TTK official confirmed the development during an earnings call. “We will launch the water filter this fiscal.” No further details were divulged.

The TTK move comes amid industry estimates that the segment sales, riding compounded annual growth rate of 25%, will hit Rs 7,000 crore by 2015.

But TTK is facing testing times in the high-end kitchenware segment. Having tested the waters for more than one year, it has now decided not to push ahead with sales and distribution of World Kitchen’s brands “except Snapware” (which is range of spill-proof, nestable and airtight food storage containers made of plastic and glass).

T T Jagannathan, chairman of TTK Prestige, was earlier reported to be looking at Rs 50 crore in sales this year from the February 2012 partnership with the Illinois-based World Kitchen. The latter will now have to set up its own network to market and distribute its brands like Corelle, Corningware and Pyrex cutlery.

For the January-March quarter, TTK’s sales rose 22.3% on-year to Rs 289.46 crore. Operating income went up 32.5% to Rs 43.91 crore and net profit soared 42% to Rs 28.03 crore.

Growth in south India remained flat but rose 70% on-year in the rest of India (10% and 52% for the full fiscal respectively).

So, TTK has earmarked Rs 50 crore for capital expenditure this fiscal, while gross debt of Rs 115 crore is now being sought to be slashed to `60 crore by this fiscal end.

To de-risk, TTK is ramping up its presence in regions other than south India by appointing new distributors and setting up new accounts. This strategy has already helped boost activations 22.3% on-year during the fourth quarter. TTK is also stepping up advertising expenditure.

About  future growth, the TTK official  said, “Emphasis is being laid on our own brand retail stores  focusing on non-south India markets. Currently, 65% of our stores are in south India and one-third elsewhere. That’s something we are planning to correct so that the proportion is in line with our turnover.”

At JWT, focus is on building long-term careers

This Q&A first appeared in DNA Money edition on Saturday, May 18, 2013.

Sapna Srivastava, chief talent officer, JWT APAC, speaks about how the agency sees the Portfolio Night 11 initiative acting as a catalyst for the agency’s soon-to-be-introduced JWT Honours programme that focuses on creating long-term careers in advertising. Edited excerpts:

What prompted JWT to associate with Portfolio Night?
There were two compelling reasons for us take it up. First, to provide the young/ raw students a platform to showcase what they have done and are capable of doing. Secondly, we saw it as a great opportunity to identify bright talent (from the 90 participants) and eventually look into the possibilities of making them a part of JWT. We have always been and want to be known as an agency that helps build careers and hosting an event like this serves that purpose well.

How does the Portfolio Night approach to identifying budding talent?
As an organisation JWT India does not go to campuses as we feel we may not get the best of the candidates as there are many companies vying for the same pool of talent. The difference between campus recruitment and what we are doing through Portfolio Night is that here we’ve got people who are interested in a career in advertising. And while they are participating in the global event, they are actually coming to JWT. So we know these people are serious about a career and not using it as a stepping stone to go elsewhere.

So campus recruitment is not for creative talent and is largely restricted to account management roles for which hiring is done from B-schools.

What is the approach for recruiting creative people then?
There are many colleges that produce really good graduates. However, a lot of candidates write to us about wanting to start their careers and we generally choose from these applications.

Having said that, this year we are proactively launching a programme called ‘JWT Honours’, wherein we will go to colleges and make presentations about careers in JWT.

We will pick about 12 interns in every city, they will come and train with us for 12 weeks and create a book of work which will be evaluated and the best of the lot will be hired.

With this we are creating a whole new platform to help youngsters build their careers and Portfolio Night will act as a catalyst to our JWT Honours initiative, which will focus on creating long-term careers in advertising.

Could you tell us about the profile of candidates who have registered for the Portfolio Night event?
Majority for them are freshers who are either studying or have just passed out of their creative colleges. I think what they are really looking forward to from the event is a feedback on the work they have done while studying. Getting an opportunity to present their book of work to the likes of Prasoon Joshi or Piyush Pandey and getting a comment on what they’ve done is a great thing to have at the beginning of one’s career.

Even if the comment is negative, the young minds will know the direction they have to move thereafter; and if their work is good they will be highly appreciated. In fact, this year Portfolio Night will select the best of the creative minds from across the cities where this event is being hosted and fly them to New York where an All Stars Portfolio Night will be held. So one of the students from the Mumbai event will also go for this event.

Colvyn Harris, CEO, JWT South Asia

We look at it as a initiative towards building a sustainable industry and ensuring that JWT continues to be at the forefront of what we do, that's one element of looking at it from a company's stand point.

From a clients' perspective, we always say that client is at the centre and, their brands and business are our primary concern. And if that is our key focus area then we have to have great talent in the industry and our company. When we say, creativity is at the heart of everything we do, then talent has to deliver on that purpose. The Portfolio Night 11 is fairly interlinked and features perspective from the company, industry and client.

We have 30 jury members (creative heads) and they will be meeting 3 participants each so 90 was our cap. We want the jury to have an in-depth look at the works being presented by each of the candidates and not just flip through it. We looked at a combination of space and time and arrived at the 90 number. Registrations have thus been closed for this years Portfolio Night event and we are now gearing up to hold the event next week at our office premises.