Innholdsfortegnelse for 20 November 2016 i Business Today

This year, the fireworks started a week before Diwali. On Monday, October 24, the board of directors of Tata Sons, on the advice of the principal shareholders – the Tata Trusts – decided to “replace” the chairman of Tata Sons, Cyrus Mistry. The move was not only fairly abrupt, it hinted at all sorts of backroom manoeuvring. From the details that have come out so far, Mistry came to know of the impending move just before the board meeting when one of the directors told him to resign or else. At the board meeting itself, the agenda to remove Mistry was tabled under “any other business” so that the mandatory 15-day notice could be waived. And, according to a letter written by Mistry, he was not even given an opportunity…

POWER EQUATIONS WHAT: CII Renewable Energy Summit WHEN: November 11, New Delhi WHAT TO LOOK FOR: Given that India’s renewable energy potential is 896 GW, CII will provide a platform to discuss strategies and policy initiatives to scale up rooftop solar deployment, off-grid energy solutions, investment potential and smart grid implementation with a special focus on the northern states TOWARDS GROWTH WHAT: The India Finance Forum 2016 WHEN: November 11-12, Chennai WHAT TO LOOK FOR: The CII event will provide a platform for finance professionals to discuss and deliberate on the recent policy initiatives by the government, including GST, Make in India and Ease of doing Business, to meet the emerging challenges for the sector BUILDING ON WHAT: India Infrastructure Summit 2016 WHEN: November 16, New Delhi WHAT TO LOOK…

DIVIDE AND RULE 21 NEW DISTRICTS 25 NEW REVENUE DIVISIONS 125 NEW MANDALS 4 NEW POLICE COMMISSIONERATES 23 NEW POLICE SUBDIVISIONS 28 NEW CIRCLES 91 NEW POLICE STATIONS On October 11, the Telangana government announced “a Dasara gift to the people of Telangana” with much fanfare and full-page newspaper advertisements. The youngest Indian state was “reconstituting its 10 districts into 31 smaller districts” with the promise of “bringing administration to the doorstep” of its people – a great idea that could have far-reaching impact. After all, administrators say, optimising districts is certainly a good move. But then, does the state need 31 districts? Earlier, the plan was to have 17 districts, in line with the number of parliamentary constituencies. Says Narsing Rao, Principal Secretary to Telangana Chief Minister K. Chandrashekar…

You may have a million followers on Twitter and a million fans on Facebook, but all it takes is one annoying post to turn them against you. Cricketer Yuvraj Singh learnt it the hard way when he launched his clothing line YWC Fashion and got his fellow sportsmen to tweet about the launch event. “Hope your event was a splendid success @ YUVSTRONG12. Wish I could have been a part of @YWCFashion! My good wishes are with you,” read the tweets from Gautam Gambhir, Brett Lee and Saina Nehwal, among others. Not one to mince 140 characters, Virendra Sehwag hit back with a tweet slyly chiding him for the barrage of promotional tweets. His tweet was liked by 1,688 people. No one likes being spammed, not even by celebrities. According…

October 24, 2016 Ratan Tata and Nitin Nohria meet with Cyrus Mistry before the board meeting and ask him to step down. Mistry refuses, says he will test the board of directors of Tata Sons 2 PM Tata Sons board meeting starts at the iconic 4th floor boardroom at Bombay House. Nine-member board present in full strength as per legal advice Right at the start, an independent director moves a resolution under “any other business” to replace Cyrus Mistry as chairman. The resolution is approved by three majority directors and an independent director. Since Cyrus is an interested party, the meeting is chaired by former defence secretary Vijay Singh, a director at Tata Sons. Mistry is voted out Between 3:15-3:30 PM An independent director proposes induction of Ratan Tata as…

Ratan Tata and the Trusts and the Tata Sons board did not get good advice on how to fix the publicity that would inevitably follow the messy removal If the intention was to send out shockwaves through the corporate world, create intense media buzz and speculation, and give rise to headlines and television debates, the sudden “replacement” of Cyrus Mistry as Chairman of Tata Sons by the board of directors, the effort succeeded spectacularly. On the other hand, if the intention was to move out an irksome chief discreetly and with minimum fuss, and to let him go with grace and dignity as is often understood as “the Tata way” of doing things, the board meeting and subsequent announcement achieved exactly the opposite. Three days after the boardroom coup,…

When Keki Mistry, the Vice Chairman and CEO of HDFC, was asked why the company stock had not performed to its potential, he said it was due to the uncertainties in the global environment. “Be it the strengthening of the dollar or events related to the US economy, Europe or Brexit, whenever there is global uncertainty, which may not have anything to do with HDFC or with India, there is a flight to safety, wherein investors pull out money from emerging markets and invest in the US,” he says. In the past one year, holdings of foreign institutional investors in HDFC have come down from 78.17 per cent on September 30, 2015 to 77.27 per cent on September 30, 2016. However, between October 1, 2015 and September 30, 2016, the…

AS YOU DRIVE ALONG THE 25-KM Western Express Highway in Mumbai, every second hoarding is that of actor Kangana Ranaut promoting brand Liva – Aditya Birla-owned, Grasim Industries’ brand of fabric that promises comfort with excellent fluidity and flow. This is the first time that a fibre manufacturer has invested in branding raw material – the Viscose Staple Fabric, a natural fibre that Grasim has been manufacturing since Independence. Besides, it has partnered with 22 apparel brands to create fashion using Liva fabric. But, is the consumer really bothered whether his or her clothing is made out of VSF or cotton? “People know about the fabric, they like it and want to buy it,” says Dilip Gaur, Managing Director, Grasim Industries, adding that the ‘intent to buy’ Liva scores has…

B. Ashok couldn’t be happier. The Chairman and Managing Director of Indian Oil Corporation, or IOC, doesn’t have to run around meeting officials, unlike his predecessors, to seek permission for every piffling increase in prices and timely/sufficient compensation for selling products below market rates. With the dismantling of price control on fuels such as petrol and diesel, the days of being a supplicant are over — the company now has the freedom to sell most of its products at market rates. This is showing in revenue/profit numbers. IOC an per ` , crore half of 2016/17, despite the dip in revenue from `2,11,043 crore to `2,07,475 crore. This is after a 10,399 crore profit in 2015/16, almost double from `5,273 crore in 2014/15. This is the biggest-ever jump in profits…

JUST PAST 10 AM ON SEPTEMBER 20, 2016, Cadila Healthcare had informed the stock exchanges that it had entered into a partnership with Takeda Pharmaceuticals of Japan to develop a Chikungunya vaccine. The stock price immediately shot up by 6 per cent, taking its market capitalisation to 40,238.20 crore. But in just 10 days, it slipped to `39,721.20 crore – lower than the `43,010.50 crore clocked on October 1, 2015. (However, in the BT 500, which ranks companies based on a year’s average market cap, Cadila’s valuation rose 5 per cent.) But Cadila is not alone. Many large pharma companies saw their market caps slip over the past one year, raising doubts of whether the famed defensive sector on the bourses, had lost its sheen. In the BT500, Sun Pharma,…

This is an earthy book for earthy people who can appreciate entrepreneurship at its finest Bandhan: The Making of a Bank By Tamal Bandyopadhyay PAGES: 304 PRICE: 499 Penguin Random House In Bandhan: The Making Of a Bank, Tamal Bandyopadhyay brings alive one of the finest stories of Indian entrepreneurship, and one that Chandra Shekhar Ghosh has come to represent. Ghosh is central to the story, as he should be. The book beautifully traces Ghosh’s life – when he was the head of operations for Village Welfare Society at a salary of 5,000 per month, to launching his own MFI, opening the first four-by-six-foot cubicle office, to discovering the business model, getting SIDBI and ASA on board, rejecting takeover from ASA, acquiring an NBFC, scaling up, embracing computerisation, and finally…

The Millennials By Subramanian S. Kalpathi; Price: 895 With case studies of pioneering organisations, and multigenerational narratives, the book gives a glimpse into the future by explaining the goals and motivations of an inspired generation. The Unusual Billionaires By Saurabh Mukherjea Penguin Price: 499 IIMA - Day to Day Economics By Satish Y. Deodhar Random House India Price: 299 The Rise and Fall of Nations By Ruchir Sharma Penguin UK Price: 799 Grit: The Power of Passion and Perseverance By Angela Duckworth Vermilion Price: 699 Ego is the Enemy By Ryan Holiday Profile Books Limited Price: 499 *Top books by sales for October 10-23, 2016; Includes only books released after Jan 1, 2015; Information provided by amazon.in…

Challenges in Tracking Black Money This refers to your feature on black money (Hunting Black Bucks, November 6). It has painted a more detailed picture of what goes wrong in mopping up black money like chasing the mirage of wishful thinking without robust strategies. The PAN mandatory conditions overlook the money sharks in oceans and attempt to catch only fish in the smaller ponds. Revamping I-T Act is overdue and stressing it now is like reinventing the wheel. The systemic drawbacks of I-T Act, collusion of officials with wheeler-dealers, pervasive corruption, political chicanery, tardy implementation of schemes and lethargy of government machinery sow the seeds of black money. Radical legislative techniques, heightened diplomatic camaraderie with other nations, and re-crafting and re-tooling the recovery mechanism will force the truant elements to…

In mid-October, the Ruia Group sold its flagship company, Essar Oil, to a Russian consortium for $12.9 billion. The rationale for the deal was clear. The group was reeling under heavy debt, and the sale was meant to reduce its burden by half. However, the tone and tenor of the announcement of the deal, which happened during the BRICS summit in the presence of Prime Minister Narendra Modi and Russian President Vladimir Putin, suggested that it was a development that India should be proud of. It was showcased as India’s largest foreign direct investment (FDI) deal, ever. Technically, it is okay to make such claims. India considers both the inflow of foreign funds for acquisition of existing assets (brownfield investments) and investments made to create new assets (greenfield investments), as…

Post and Earn Facebook now allows people with verified profiles on its network to make money via sponsored posts. Earlier, the company allowed only verified pages to post branded content. With the new policy, verified users, too, can share branded content such as sponsored text posts, photos, videos, Instant Articles, links, 360 videos and Live videos. However, conditions do apply. The social networking site wants people with verified profiles to add a handshake icon to the sponsored post that would let users tag the brand they are promoting. The tagged brand will get a notification from Facebook and will have an option to share it on its page, too. The brand will be able to turn the post into an advertisement using additional spends. Political Match Tinder has rolled out…

I am writing this letter to the Board to emphasise the total lack of corporate governance and to point out the failure on the part of the directors to discharge the fiduciary duty owed to stakeholders of Tata Sons and of the group companies. …I was assured that I would be given a free hand. The previous Chairman was to step back and be available for advice and guidance as and when needed. After my appointment, the Articles of Association were modified, changing the rules of engagement between the Trusts, the Board of Tata Sons, the chairman, and the operating companies. Inappropriate interpretation indeed followed, and as elaborated below, it severely constrained the ability of the group to engineer the necessary turnaround. …the foreign acquisition strategy, with the exceptions of…

FOR EVERY ACTION, there is an equal and opposite reaction.” Far from physics, Newton’s third law of motion was in action in economics in 2015/16 as India Inc. braced for the combined onslaught of a global slowdown, two successive years of drought, a mountain of corporate debt and bad assets, high inflation, and a slow-to-revive domestic economy. Take the case of crude oil, which fuels transportation and impacts every possible industry on earth. As global crude oil prices remained subdued right through the fiscal, the top line of domestic refining majors, some of India’s largest corporates, shrank. This reduced the total income of BT500 companies (non-finance) by 5 per cent in 2015/16. And that triggered ‘reactions’ across India Inc. First, the overall valuation of the Top 500 companies fell 1.5…

BOTH TCS AND RIL ARE MORE GLOBAL COMPANIES CONSIDERING THEIR SHARE OF REVENUES FROM OVERSEAS THE METEORIC RISE of Tata Consultancy Services (TCS) has the name of its chief executive Natarajan Chandrasekaran imprinted on it. Since Chandrasekaran took over as CEO in October 2009, TCS’S consolidated revenue skyrocketed to over `1 lakh crore in the previous financial year from about `30,000 crore in 2009/10. The profits rose to `24,000 crore from `7,000 crore, thanks to reengineering of its business units like banking, financial services and insurance (BFSI) and retail, broadening of geographies including in North America and Europe, and acquisition and retention of top-notch talent. The markets, too, have showered their love on ‘Chandra’ in this period. In May 2012, the IT services giant had first surpassed petroleum refining major…

SO, WHY AREN'T you exploring international markets?” a curious analyst posed to Paresh Sukthankar, Deputy Managing Director of India’s second largest private bank, HDFC Bank. “There are interesting emerging markets, which are investment grade,” reasoned the analyst. This question, in a post-result conference call, was a bit easier to handle for Sukthankar, whose boss Aditya Puri – MD of the bank – was not at the conference. The bank’s strategy all through has been to exploit the huge business opportunity in the domestic market, and going overseas never fascinated its management. It has been proved right time and again, when those who expanded overseas had to beat a hasty retreat. Also, banks that grew at a fast pace without studying the risks had to contend with far lower loan growth…

ON OCTOBER 6, Naveen Jindal-run Jindal Steel and Power (JSPL) said it had defaulted on payment of interest on non-convertible debentures (NCD) because of a cash flow crunch. It is a complete contrast to the heydays of the steelmaker at the turn of this decade. The share price of the company was at its peak at above `700 and its market value was higher than established biggies such as Tata Steel, SAIL and JSW Steel. The company had a consolidated profit of `3,800 crore on revenue of nearly `13,000 crore in 2010/11. However, in the past one year, the market value of JSPL has fallen 43 per cent and the share price stood at around `75 at the end of September 2016. In the previous financial year, the steelmaker made…

1 RELIANCE INDUSTRIES ITS NET PROFIT EQUALS TOTAL NET PROFIT OF ALL COMPANIES RANKING BETWEEN 201 AND 500 PUT TOGETHER 114 DISH TV INDIA WITNESSED 416-TIMES GROWTH IN NET PROFIT 230 APAR INDUSTRIES GREW ITS PROFITS BY A WHOPPING 217 PER CENT 348 MAN INDUSTRIES (INDIA) THE COMPANY'S 51 PER CENT RISE IN NET PROFITS DOES NOT REFLECT IN ITS MARKET CAP 477 SUZLON ENERGY RANKS LOW IN TERMS OF NET PROFIT BUT STANDS AT RANK 179 IN TERMS OF AVERAGE MARKET CAP…

5.63 lakh crore, worth of investment commitments to Madhya Pradesh across sectors during the two-day Global Investors’ Summit in Bhopal, said Chief Minister Shivraj Singh Chouhan 86,000 crore, or $13 billion, of cash, the Essar Group will get from selling 98 per cent stake in its oil unit and other assets. This will not only help it reduce operating company term debt by half, but will also wipe out a substantial part of the holding company’s debt, making it the largest debt reduction exercise by an Indian business THE INSIDER D.N. Prahlad’s appointment as an independent director on Infosys’s board has not gone down well with at least one proxy advisory firm. A relative of founder N.R. Narayana Murthy, Prahlad is being seen as a nominee of the founder-promoters, and…

NATARAJAN CHANDRASEKARAN CEO & MD, Tata Consultancy Services The strongest contender from within the group, Chandra — as he is affectionately called — brings the backing of the company that accounts for nearly two-thirds of the group’s market cap and has been its cash cow for decades INDRA NOOYI Chairman & CEO, PepsiCo Inc. One of the most decorated Indian-origin CEOs of MNCs, Nooyi’s name crops up yet again for her phenomenal record as an acquisition strategist and for steering PepsiCo from a carbonated beverages company to a health foods company NOEL NAVAL TATA Chairman, Trent & MD, Tata International Ratan Tata’s half brother has remained in the shadows and prefers to dodge the limelight, but has always been considered a contender not just for his Tata surname but also…

THE NEWEST KID on the bourses, RBL Bank (formerly known as Ratnakar Bank), is giving a kind of complex to some of the well-established, large public sector banks (PSBS). This old-generation private sector bank has debuted in the market with a market capitalisation of `12,000 crore-plus, which was neck and neck with the country’s fourth largest bank, the Bank of India. In contrast, the total assets of this (till recently) small regional bank are just one-20th of the Mumbai-headquartered bank. (In the month since its debut, RBL Bank has overtaken Bank of India in market cap.) Stock markets are ruthless, and have no compunction in giving harsh reality checks to companies irrespective of their brand, size and scale. The market rewards high and stable growth, consistent profitability, and high quality…

When we decided to tweak the methodology of the BT500 this year, it was only the third time in our flagship listing’s 24-year history. In 1993, we began with ranking companies on the basis of their market caps as on March 31. In 1997, we made the first change – ranking companies by average market capitalisation between April 1 and March 31. In 2002, we began using average market capitalisation between April 1 and September 30, to give the numbers more currency. And this year, we have reverted to the 12-month ranking, but with a twist – we have taken the period from October 1, 2015 to September 30, 2016. This gives us the dual advantage of having both 12 months’ numbers, as well as the most recent numbers from…