Introduction

Foreign Market Entry Modes

The decision of how to enter a foreign market can have a significant impact on the results. Expansion into foreign markets can be achieved via the following modes: ▪ Exporting (Direct/ Indirect Exporting) ▪ Licensing/ Franchising ▪ Contract Manufacturing ▪ Management contract ▪ Assembly Operation ▪ Fully Owned Manufacturing Facility ▪ Joint Venture ▪ Mergers & Acquisitions ▪ Strategic Alliance ▪ Third Country Location ▪ Counter Trade ▪ Direct investments

Heading : Mahindras Take a Giant Leap with Insurance Arm Deal
By : Satish John, Mumbai.
Date : 21st Septermber 2012
News Paper : Economic Times
Us-based LeapFrog’s purchase of 15% in a key Mahindra & Mahindra Group subsidiary hasgiven the auto to tourism group several fold returns on its original investment and the third such high return investment for its investors in less than a decade.
LeapFrog, the world’s largest insurance investor for low-income customers on Thursday said ti would buy a 15% stake in Mahindra Insurance Brokers for Rs. 80.41 Crore.
This firm which is subsidiary of the much bigger and better know M&M Financial services was started in 2004 for a measly Rs. 50 Lakh.The LeapFrong purchase values the firm at Rs. 520 crore.
LeapFrog specfialises in investing in companies that cater to rural markets.”We feel very proud that we invested Rs. 50 Lakh and today it is values at RS. 520 crore”Said M&M Chairman&MD Anand Mahindra, in an interaction with ET.
The investment marks the third such multi-bagger or high retun investement for the group in the part eight years after M&M Financial and Tech Mahindra, the group listed technology arm.

Heading : Walmart hopes to open first India store within 18 months
By : PRESS TRUST OF INDIA
Date : 22nd September 2012
News Paper : Business Standard

Walmart expects to open its stores in India within the next 12 to 18 months and is reaching out to the states that are ready to allow foreign direct investment (FDI) in multi-brand retail. Walmart Stores President and CEO for Asia Scott Price said in an interview to The Wall Street Journal that “the company is capable of opening stores within 12 to 18 months and would be seeking permission to do so from the states that have already indicated their willingness” to have the US retailer set up shop. “Two years would be a reasonable time frame in total,” he added.Showing a resolve for reforms, the government yesterday notified its decision to allow global retail giants like Walmart to open stores in India amid opposition even from its own allies. With this notification, multinational retailers can invest up to 51 per cent to open stores in 10 states and UTs that, till date, have agreed to implement the decision. These are Andhra Pradesh, Assam, Delhi, Haryana, Jammu & Kashmir, Maharashtra, Manipur, Rajasthan, Uttarakhand, Daman & Diu and Dadra and Nagar Haveli.
Price, however, said the company had not yet decided where or how many stores it would like to have in India. But he added that his company expected to continue in retail its current partnership with Bharti Enterprises in a chain of 17 cash and carry stores. Walmart Stores Inc is not in discussion with any other company for a potential retail partnership at present, Price was quoted as saying in the WSJ report. Price said he was confident that the reform would be permanent and that the company was committed to India’s long-term future.

Heading : AirAsia has no immediate plans to enter India: CEO
By : Reuters
Date : 23rd September 2012
News Paper : Business Standard
A plan to buy 100 Airbus aircraft will be submitted to the board of Asia's largest budget carrier, AirAsia, in about two weeks, the airline's chief executive officer, Tony Fernandes, said yesterday, in a deal that could be worth $9 billion. He also said he had no immediate plans to enter the Indian market because he thought the aviation fuel tax and airport charges were still too high. Reuters reported earlier this month that AirAsia was putting the final touches on the deal, ending a flirtation with
Canada's Bombardier. Fernandes said the order will involve a mix of aircraft and not just Airbus A320s. "I'll be submitting it to the board in two weeks," Fernandes told Singapore's Foreign Correspondents Association. AirAsia, with an operating fleet of more than 100 aircraft, has ordered a total of 375 Airbus jets as part of dramatic expansion plans that now include the acquisition of Indonesia's Batavia Air. It has said it will accelerate deliveries as rising demand helps it offset high fuel costs.
Turning to India, which last week said it will allow foreign carriers to take stakes of up to 49 percent in Indian airlines, Fernandes said he had no immediate plans to enter the market because he thought the aviation fuel tax and airport charges were still too high. Indian newspapers had speculated AirAsia could be the first overseas carrier to take advantage of the new rules. Fernandes, who owns Formula One team Caterham, said he is in Singapore to interest Asian bankers in financing aviation deals that historically have been dominated by European lenders. The F1 race in Singapore had attracted financiers from around the region, he said. "We're trying to get Asian banks interested. I think by introducing Asian bankers to the aviation market, costs will reduce. Asian banks have much more liquidity than European banks," he said. He said another source of funding for the aviation industry could come from wealthy individuals who are searching for yield products and would be interested in putting money into aviation trusts that would buy aircraft and lease them to airlines.
"Cost, cost, cost. That's my focus over the next few months," Fernandes had said in a Tweet earlier on Friday. He added that the public listing of his long-haul budget carrier, AirAsiaX, was progressing and appeared imminent, although he would leave the final decision to management. "I reckon it will be in December," he said, without indicating how much the IPO could be worth. Earlier reports this year said the IPO could be worth $250 million. AirAsia reported last month a three percent year-on-year fall in second quarter net operating profit to 130.94 million ringgit due to higher user charges and rental commitments even as revenue rose 9 percent to 1.18 billion ringgit.

Heading : Digital Domain to be partly owned by Reliance Media Works
By : Gaurav Laghate
Date : 24th September 2012
News Paper : Business Standard
Titanic and Avatar-famed Hollywood film-maker, James Cameron’s co-founded, visual effects and animation company, Digital Domain would now have an Indian part-owner in Anil Ambani, who, along with Chinese company Beijing Galloping Horse, has acquired the bankrupt firm. Reliance Anil Dhirubhai Ambani Group-controlled film and media services company, Reliance MediaWorks (RMWL), has jointly bid with Beijing Galloping Horse Film & TV Co, sources close to the development confirmed, to Business Standard. The visual effects company, it is learnt, has acquired for $30 million. While Reliance would hold 25 per cent stake, the majority 75 per cent would remain with Galloping Horse. Though the details of the bid would be announced later this week, it was result of Digital Domain filing for bankruptcy earlier this month. Digital Domain runs operations in Los Angeles and Vancouver. Amid media reports, the company has $14 million in debt but $50.7 million in losses as of 30 June.
When contacted, a Reliance MediaWorks spokesperson refused to comment. Digital Domain was founded in 1993 by Cameron along with Stan Winston and Scott Ross. So far, it has delivered innovative visuals for more than 90 movies including Titanic, Pirates of the Caribbean: At World’s End, the Transformers trilogy and Tron: Legacy. Interestingly, both Reliance and Galloping Horse have had existing partnerships with Digital Domain since last year. In July 2011, Reliance had partnered with Digital Domain to create a digital production pipeline.

Heading : Metro Cash & Carry India to open four stores this year
By : K Rajani Kanth
Date : 25th September 2012
News Paper : Business Standard

German wholesale retailer, Metro Cash & Carry, is planning to open four new stores in India by the end of 2012, of which two would come up at Zirakpur in Punjab and Indore in Madhya Pradesh. “The average investment in our new wholesale distributions centres will be approximately ~70 crore each,” a company spokesperson told Business Standard, while declining to spell out the locations for the other two stores. Metro Cash & Carry, a sales division of Metro Group, currently operates 11 wholesale distribution centres — two each in Bangalore, Hyderabad and Mumbai, and one each in Kolkata, Ludhiana, Jalandhar, Delhi and Jaipur. Traditional Indian wholesale markets, while extremely efficient, find that they have to expand their procurement and distribution models to accommodate the increased number of products that are in demand in the market at present. The number of products consumed by the average Indian has multiplied several times over the years. This is because customers have a greater awareness of global market trends, and higher expectations in terms of quality, range and services, he said. “Metro is able to offer an economical alternative that maintains a wide assortment of over 10,000 food and nonfood products in a clean buying environment, all available under one roof, at low wholesale prices. This is steadily finding traction in the Indian market, where Metro Cash & Carry’s wholesale operations serve professional customers (B2B) in India,” he added. The company achieved global sales of about ^31 billion in 2011, the spokesperson said, adding they were not at liberty to disclose revenues for Metro Cash & Carry India.

Heading : Policy change triggers single-brand retail rush
By : Nivedita Mookerji & Raghvendra Kamath
Date : 25th September 2012
News Paper : Business Standard

After proposals by IKEA and Pavers, another bunch of foreign single-brand retail applications is on its way to India, prompted by easier sourcing and brand ownership rules. At least half a dozen such applications, including those from Celio, Gruppo Coin and Artsana, are in the works and are expected to be sent to the government in a few weeks.
These global chains planned to either raise foreign direct investment (FDI) in their existing ventures in India or set up shop in the country afresh, with 100 per cent ownership, said sources close to the development.Global chains Hennes & Mauritz (H&M), Mango and Tommy Hilfiger could follow soon, they added. Last week, the Cabinet, while allowing 51 per cent FDI in multibrand retail, tweaked single-brand foreign investment norms related to sourcing and brand ownership. Instead of sourcing 30 per cent from micro, small and medium enterprises (MSMEs), these chains would now have to source that amount from India, “preferably from MSMEs”. On branding, the government has done away with the rule stating the brand owner and the applicant company must be the same entity.
After the government had notified the 100 per cent FDI rules in single-brand retail in January, it had received only a few applications. While shoe chain Pavers UK proposed to invest $20 million in the country, Swedish furniture maker IKEA had sought to invest ^1.5 billion. A proposal from Zara Holding to bring Massimo Dutti stores into India was rejected by the Foreign Investment Promotion Board (FIPB), as the brand owner and applicant company were different entities. French clothing retailer Celio and Italian apparel firm Gruppo Coin (OVS) are likely to approach the Department of Industrial Policy & Promotion in a few weeks with their respective proposals to increase their equity in their Indian joint ventures (JVs) to ‘absolute majority’, it is learnt. Currently, Celio holds 50 per cent stake in a JV with the Future Group. Oviesse SPA, a subsidiary of Gruppo Coin, owns 37.5 per cent in a JV with Mumbai-based Brandhouse Retails. Both Celio and Gruppo Coin didn’t reply to questions emailed by Business Standard.
However, a senior Future Group executive confirmed Celio planned to increase its stake in the venture. A Brandhouse Retails spokesperson declined to comment on the matter. On Celio increasing its equity, a Future Group executive said, “They want to take advantage of the policy changes in single-brand retailing, as they are bullish on growth.” Swedish fashion major H&M may also foray into India on its own. H&M is the second-largest European apparel maker after Spain’s Inditex group, which operates the Zara stores. Italian health and wellness products major Artsana SPA plans to open a fully-owned retail business in India. Artsana, which currently has a cash-and-carry venture in the country, did not reply to questions on the company’s retail plans.

Heading : IKEA investment clearance may take a while
By : Nivedita Mookerji
Date : 26th September 2012
News Paper : Business Standard

The ^25-billion Swedish furniture major IKEA is likely to send its final set of replies and clarifications to the department of industrial policy and promotion (DIPP) next week.
This could mark an end to the back and forth taking place between the two sides since the company’s application was filed on June 22 and the St Petersburg announcement by commerce minister Anand Sharma.
DIPP’s queries are on the company’s request to have a 10-year leeway to start local sourcing and other relaxations sought in sourcing norms and brand-ownership issues. Other issues DIPP sought clarification on included a request from IKEA to engage its own chartered accountants to check whether the company followed sourcing norms.
Once DIPP vets the IKEA reply, the company’s application will be forwarded to the Foreign Investment Promotion Board (FIPB). After the FIPB clearance, it will go to the Union Cabinet for approval, as the investment amount involved is over ~10,000 crore. The entire process could take three to four months, sources pointed out. Dilution of the sourcing clause in the single-brand retail policy, announced September 14, will benefit IKEA immediately. Earlier, it was mandatory for singlebrand chains to source 30 per cent from MSMEs. Now, they must source that much from India. The Cabinet has tweaked the policy to state that MSME sourcing is “preferable”.
IKEA, which had told the government in its June 22 proposal that it was impossible to follow the 30 per cent MSME sourcing norm, has been in discussions with the commerce and industry ministry on relaxing the rulebook. IKEA said: “We are positive to the development and remain hopeful we will soon be able to set up our first store in the country, subject to 100 per cent approval of our application by the government.” IKEA wants to invest ^1.5 billion over the years in India. Another single brand norm that has been changed relates to brand ownership. “Only one non-resident entity, whether owner of the brand or otherwise, shall be allowed to undertake single-brand product retail trading in the country for the specific brand….” Till now, the investment had to be made by the owner of the brand. This step will benefit many single brand companies like Spanish clothing giant Zara and even IKEA. IKEA may set up its first two to three stores in India within three years of getting government approvals, it is learnt. The company has a vision of establishing 10 stores over a 10-year horizon, and around 25 stores over a longer period.

Heading : Indian leather industry looks at life beyond Europe
By : T E Narsimhan
Date : 26th September 2012
News Paper : Business Standard

Stung by a seven per cent fall in its order book in the first four months of the current financial year, the leather industry is looking for export destinations other than the crisis-hit Europe, which accounts for 60 per cent of its revenue. The slippage is painful, as it comes against the backdrop of a 23 per cent growth in 2011-12. However, M Rafeeque Ahmed, chairman of the India Council for Leather Exports, is wistful: “It was really a record year for the industry. We achieved a revenue of $4.9 billion (around ~25,160 crore today) in 2011-12 against the target of $4.7 billion.” Ahmed says the industry is slowly coming to terms with the new reality, as order inflows from Europe has dropped by an average 20 per cent due to the severe slowdown in that region. While tier-I companies like Ahmed-owned Farida Group, one of the largest finished leather exporters in the country, reported 10-12 per cent drop in order flow from Europe, tier- II and III companies saw a fall in the range of around 20-25 per cent. S Srinivasan, a Chennaibased exporter, says orders have declined by around 25 per cent. The industry is now looking at non-European countries and is also joining hands with its counterparts in Pakistan, Sri Lanka, Afghanistan and Bangladesh to combat the raw material shortage and price crunch due to recession in European markets. Ahmed says warm winter and the general economic slowdown have brought down public spend in Europe. For instance, per capita usage of footwear in European countries is 4.5 pairs, which has now reduced by one pair. “It (cutting one pair of footwear) means a 20 per cent cut in the orders from Europe,” he adds. According to Neeraj Kumar Gupta, executive director, India Trade Promotion Organisation (ITPO), the industry is also exploring other potential markets, including Southeast Asia, Japan, Korea, Africa and Latin America. Paresh Rajda, regional chairman of the Council for Leather Exports, adds other markets being looked into are Southeast Asian markets, which are currently dominated by China.
The industry is hopeful that the second half of this financial year will bring in new orders coinciding with year-end celebrations, including thanksgiving and Christmas. “Looking at the current scenario and the estimated order inflow, the industry may not grow to the level of last year. At the most, we will report 10 per cent growth,” says Ahmed. The other problem, of course, is availability of raw material due to demand for hides and skins in international markets, after the floods in Brazil, Australia and Pakistan, which in turn pushed up the price of raw material. Besides, labour cost and power cost are also eroding the margins on the products by around 10-17 per cent.
To address the raw material issue, price-crunch due to recession in European markets and create a regional brand image, a regional industry association called Leather Industries Association of South Asia (LIASA) has been formed. Initially, it will be represented by India, Pakistan, Bangladesh, Sri Lanka, Nepal and Afghanistan. Ahmed, who will spearhead LIASA, says the idea is to explore market and product diversification strategies, reducing transaction costs, improving design efficiency and moving up the value chain. “More emphasis will be on inter-trade possibilities.” For instance, according to him, India has got the best component base which other countries like Pakistan, Bangladesh and Afghanistan have, but they have good cow leathers, which currently source from Europe by Indian companies.
Will China's loss will be India's gain?
In the first half of 2012, the Chinese leather industry had slowed down. Data from the China Leather Industry Association shows the export of leather, fur and relevant goods such as leather shoes and clothes in the first half of 2012 reached $33.5 billion with a year-on- year growth of 9.1 per cent against 27.84 per cent in 2011. Imports, which reached $3.76 billion with of 9.3 per cent, also dropped from 20.24 per cent in 2011. Besides, trade surplus in the leather industry reaches $29.702 billion, up 9.05 per cent. Industry sources say rising cost of production in China has been diverting to various countries. According to estimates, labour costs in the Chinese leather industry have increased from $0.39 per hour in 2003 to more than $1 per hour in the recent years. According to Ahmed, if India wants to use the opportunity, the first focus should be investing in capacity and address infrastructural issues like power, labour cost, etc.

Heading : News Corp gets CCI nod for STAR buying out ESPN in joint venture
By : BS Reporter
Date : 27th September 2012
News Paper : Business Standard

The Competition Commission of India (CCI) has approved Rupert Murdoch-owned News Corp’s acquisition of ESPN’s interest in Asian sports broadcasting joint venture company ESPN STAR Sports (ESS). In June, ESPN, owned by The Walt Disney Company, and STAR, owned by News Corp, had called off their joint venture (JV), 16 years after it was formed. The two companies had entered into a definitive agreement under which STARTV-ATC, an indirectly wholly-owned subsidiary of News Corp, was scheduled to acquire ESPN’s 50 per cent equity in ESS.
The proposed acquisition would result in a change in ownership of ESS India subsidiaries. The deal also meant News Corp would have complete control over ESS, which operates 25 television networks and three broadband networks covering 24 markets in Asia, while Disney would exit the sports segment in Asia.Earlier, STARTV-ATC had appointed Dhall Law Chambers, headed by former CCI chairman Vinod Dhall, to file the pre-merger statement with CCI.
Taking to Business Standard, Dhall said, “The competition law in India requires every acquisition or merger above a certain threshold, in assets or turnover, to be looked into by CCI, if it would hurt the competition in any manner. So, according to the law, we filed with the CCI to get its approval.” The CCI stated though the proposed combination resulted in the transfer of joint control to sole control, it would not result in the elimination of any competitor, as JV partners News Corp and ESPN were not competing for broadcasting of sports channels in India. Dhall said, “The CCI observed the broadcasting sector was regulated by the Telecom Regulatory Authority of India, which has framed rules prescribing the maximum rate to be charged by a broadcaster for its channels. The mandatory sharing of live broadcasting signals for sporting events of national importance with Doordarshan constrains the bargaining strength of broadcaster vis-a-vis MSOs/DTH operators/advertisers.”

Heading : RIL signs 15 yeas oil contract with Venezuela’s PDVSA
By : BS Reporter
Date : 27th September 2012
News Paper : Financial Express
The country’s largest private oil and gas explorer, Reliance industries signed a 15 year oil supply contract with Venezuela’s state oil company, PDVSA in Caracas on Tuesday. Venezuela’s Orinoco oil belt is expected to supply up to 400,000 barels of crude oil per day to India to boost energy requirement of the country. Reliance is supposed to source ultra heavy crude from the Orinoco oil belt that will also help Venezuelan state owned petroleum company to increase production. “Companies like Reliance and Essar are processing large quantities of heavy crude or ultra heavy crude, which are 8-10% cheap and give them distinct advantage to increase the gross refining margins.”B N Bankapur, former director refinery IOC said.
Private refining companies such as Reliance Industries and Essar oil enjoy higher refining margins of around $1-/barrels owing to the higher complexity of their refineries.
Mukesh Ambani chairman Reliance Industries said in the recent AGM that the company will be sourcing eight new crudes to enhance margins for it’s Jamnagar refinery, which had over 1.3 Mn barrels per day of crude throughput.
According to reports, Venezuelan oil minister Rafael Ramirez said the South American Opec nations was currently sending 270,000 barrels per day to Reliance under a 2008 agreement, an amount that would increase to between 300,000 bpd and 400,000 bpd. The agreements were signed in the presence of Rafael Ramirex, Venezuela’s energy minister and president of PDVSA, Reliance Team headed by PMS Prasad, executive vice president of RIL and members of Indian Embassy in Caracas, among others.
Analysis : Venezuela is gaining more importance as Indian refiners are looking at other alternative arrangement to source oil other than Iran. Due to western sanctions imposed on Iran, Indian refineries are looking for alternative sources to import crude. India imports 83 % of its crude oil requirements annually. India’s provisional crude oil import during 2011-12 stood at172.11 million tonne.

Heading : Arvind acquires India operations of Debenhams, Next, Nautica
By : BS Reporter
Date : 28th September 2012
News Paper : Business Standard
Arvind Lifestyle Brands, a subsidiary of the Ahmedabadbased denim major Arvind, has acquired the business operations of British fashion retailers Debenhams, Next and American lifestyle brand Nautica in India from Planet Retail. "The acquisition signals our entry into the department store segment and also the globally fast-growing apparel speciality retail segment. American sportwear lifestyle brand Nautica makes us the dominant player in the sportswear segment. With this, we have taken a big step towards strengthening our position in the Indian fashion industry,” said Sanjay Lalbhai, chairman and managing director, Arvind. “These acquisitions will accelerate our growth and contribute to our vision of achieving sales of ~5,000 crore over the next five years," he said.
Added J Suresh, managing director and chief executive officer of Arvind Lifestyle Brands: “We plan to achieve ~500 crore revenues over the next five years from the current ~70 crore by investing ~150 crore in these three brands."
The company termed the acquisition of Debenhams as significant mainly because it gives Arvind an entry into the luxury department store segment. Arvind plans to increase the current number of Debenhams stores in India from two to eight over the next three years. While through acquisition of Indian businesses of Next, Arvind will enter the fast growing segment of the apparel specialty retail. It plans to increase the number of Next stores from three to 12 in the next three years.

Heading : BP to sell plant in Malaysia to RIL for $230mn
By : Ajay Modi
Date : 29th September 2012
News Paper : Business Standard

BP will sell its interests in purified terephthalic acid (PTA) production in Malaysia to Reliance Industries Limited (RIL) for $230 million, a company statement said. The agreement concerns BP’s 100 per cent equity in BP Chemicals (Malaysia) Sdn Bhd (BPCM), located at Kuantan on the east coast of Malaysia. BPCM’s PTA plant, commissioned in 1996, has nameplate production capacity of 610,000 tonnes a year. “Reliance (through Reliance Global Holdings Pte Ltd) has agreed to purchase BP’s interest in BPCM for $230 million in cash, and both parties anticipate completing the transaction in 2012,” it said. Nick Elmslie, chief executive of BP Petrochemicals said: “BP has a major, global PTA business, with one fifth of global PTA production capacity and a track record of leading technology. We will continue to concentrate our PTA strategy on deploying new technologies into high growth markets like China, where we are in the middle of a considerable expansion programme, and in OECD markets where our technology gives us an advantage and high utilization rates”.
All current staff of BPCM is expected to transfer to the new owners under equivalent terms and conditions. BP’s acetic acid manufacturing and marketing business in Malaysia is unaffected by this sale, the statement said. James Yim, head of BP's aromatics business in Asia, said: “This is an efficient plant with a good market position in the region. RECRON Malaysia, part of the Reliance Group, is already our largest customer in Malaysia and Reliance Industries is a significant feedstock supplier at Kuantan, so Reliance is a natural owner of this plant.”

Heading : Xerox to focus on sub-~10,000 category in India
By : Sounak Mitra
Date : 29th September 2012
News Paper : Business Standard

In the Indian market, Connecticut based Xerox would focus on low-end printing products — priced below ~10,000. For this, it would target homes, home offices and small enterprises. Herve Tessler, president (developing markets operations) of Xerox, said, “Currently, Xerox has low single-digit market share in the category. We want to raise this to a high single-digit share in two years.” With a share of about 45 per cent, Hewlett-Packard (HP) dominates the low-end printing products market in India. HP is followed by Canon, which has a market share of 25 per cent. “We are also planning to introduce Indianised products in the low-end category. Localisation is very important in price-sensitive, volume-driven markets like India,” Tessler added.
Though India was one of the fastest growing markets for Xerox, the company hadn’t been able to tap the country’s true potential yet, Tessler said, adding, “We have been present in India since 1983. But now is the time to crack the market.” Over the next few years, Xerox aims to grow 20-30 per cent in India, Tessler said. Currently, the company’s growth in India is less than 20 per cent. The company, which employs about 10,000 employees in India, expects to hire more people, depending on growth. Services, which account for about 55 per cent of Xerox’s global revenue, contribute about 30 per cent to its revenue from India. “By 2014, we aim to get at least 50 per cent from our services business, and the rest from the technology business,” Tessler said. To boost its services business in India, the company was banking on its managed print services, a category growing 30-50 per cent, across sectors, he added. Xerox is holding discussions with the Centre, various state governments and courts for managed print services. “We don’t see this coming in within five years. But it would boost the services business in the future,” said Tessler. In the high-end printing products segment in India, Xerox has a market share of about 50 per cent market share, while in the mid segment, it has a 12 percent market share.
The company also plans to tap Turkey and African nations as future growth markets, as sales in Europe in the past year were not as high as expected. “Both Turkey and the African continent are almost untapped. These hold huge potential for us. Sales in the US were satisfactory. In Europe, too, sales were hit. We are growing at a faster pace in developing markets,” Tessler said. Currently, Brazil, Russia, India and Mexico are considered Xerox’s key developing markets. Its India operations provide services to neighbouring countries such as Sri Lanka, Nepal Bhutan.

Drug makers eye M&As to tap markets at home and away
SUSHMI DEY
New Delhi, 2 October
Amid concern multinational companies may buy out Indian drug makers and dominate the pharmaceutical industry here, analysts say it is time domestic companies considered acquisitions and alliances, both at home and abroad. Helped by strong finances, many have already started treading this path. Almost all major domestic drug makers - —from Sun Pharma and Dr Reddy’s Labs to Lupin and Glenmark — aspire to establish their presence in foreign markets. The reason: A patent cliff and generic competition in the generic segment in the US, the primary market for Indian companies. Also, analysts say the product portfolio and therapy coverage of Indian companies have gaps. And, so far, these companies haven’t been able to record significant presence in emerging markets.
“The slowdown in the number of products going out of patent has already started and, therefore, the number of foreign generic launches would also fall in the coming years,” says Anjan Sen, director, Deloitte India. “Till domestic companies are able to introduce their own molecules, they would have to look for growth in these markets through acquisitions and alliances.” A recent report by IDFC Securities stated there were significant inorganic growth opportunities for Indian drug makers, and these would help them expand their product offerings.
“Indian players have relatively narrower US portfolios, compared to global generics, in terms of therapy coverage and portfolio size. They also have limited presence in most emerging markets. Therefore, we see significant inorganic growth opportunities to fill in these portfolio gaps,” the report added. Some companies have already started down this road. For instance, Sun Pharma’s acquisition of Taro enabled it to penetrate the lucrative dermatology segment, while Lupin has been able to secure a strong foothold in Japan through its Kyown acquisitions.
Indian companies are also scouting for buyout targets in the domestic space, as this is expected to strengthen their presence through strategic brand acquisitions in target therapies. In a recent interaction with Business Standard, Lupin Chief Financial Officer Ramesh Swaminathan had said the company was scouting for acquisition targets in India to diversify into new therapeutic segments. According to Praful Bohra, senior analyst, Nirmal Bang, now, drug makers have increasingly started considering niche therapy segments and are trying to establish themselves with their own products. For instance, companies like Lupin and Glenmark are focusing more on oral contraceptives and dermatology products in the US.
Of late, Dr Reddy’s Labs and Lupin have built their own sales force in the US and are selling branded generics under their brand names. Sources say Cipla and Wockhardt, too, are working towards this. “This enables the company to create its own identity, and this is good for the branded fanchisee model,” said Bohra. Apart from acquisitions with reasonable valuations, companies are also eyeing alliances, especially for sales and distribution, says Sen.

‘Mandatory reference of M&As to CCI good for consumer protection’
BS REPORTER
Mumbai, 5 October
The mandatory reference of mergers and acquisitions (M&As) in the financial sector to the Competition Commission of India (CCI) will be good for consumer protection, as it will check monopolistic tendencies, senior bankers said. The Cabinet had on 4 October, cleared amendments to the Companies Bill. One of the amendments suggested other regulators should mandatorily refer matters impinging on ‘competition’ to the CCI. According to senior bankers and experts, the Reserve Bank of India (RBI), the regulator for banks and non-banking finance companies, is doing a good job in improving customer services and protecting depositors’ interests. They said the system is evolving to have specialised bodies to check monopolistic tendencies, they added. Maintaining financial stability, one of the key responsibilities of RBI, and monopoly are two different things, said Rajesh Mokashi, deputy managing director at rating agency CARE. According to a public sector executive who did not wish to be named, the new move will go a long a way in consumer protection. It will be useful for an outside body to study the in-depth market implications of any M&A in the financial sector, he added. While issues of monopoly and consumer interests get focus, An official with the Indian Banks’ Association, however, cautioned we might see a turf war among various regulators, as much of the work could involve interpretation.

Dabur looks at health care buys abroad
VIVEAT SUSAN PINTO
Mumbai, 5 October
Consumer products major Dabur is eyeing acquisitions in the healthcare segment to beef its international business. In foreign markets, so far, the company has primarily focused on the personal care segment, acquiring Hobi Kozmetik in Turkey and Namaste Laboratories in the US. The company is present in markets across West Asia, North Africa and Asia, and these operations account for international revenue of about ~1,600 crore, about 30 per cent of its ~5,305-crore turnover. The move to acquire healthcare companies abroad is important, considering Dabur’s need to tide over regulatory issues in foreign healthcare markets, where government intervention is high, says P D Narang, group director, Dabur India. Currently, Dabur exports its healthcare products from India. “A local acquisition would give us a better foothold in the healthcare space abroad, since that is a category we are eyeing for the long term,” he adds. Narang, however, declined to specify the likely targets abroad.He admits the personal care segment was easier to crack, owing to few regulatory hurdles. However, unlike other mid-tier fast-moving consumer goods companies, Dabur hasn’t made a flurry of acquisitions, hoosing to move cautiously instead. Narang says the acquisition of Hobi Kozmetik two years earlier was necessary, as Dabur felt a foray into Turkey was best possible through a local buy. Similarly, its acquisition of Namaste in 2010 was intended to facilitate its entry into the African market, as Namaste’s ethnic hair products were popular in markets such as Nigeria and South Africa. Both acquisitions were sub-~500-crore deals. Company executives say acquisitions in healthcare or personal care segments abroad are unlikely to exceed ~500-600 crore. Dabur’s international business has been growing at a healthy clip of 24-25 per cent annually. Narang says this is sustainable, given the competition abroad is not as high as in India, where the company has recorded 16-17 per cent growth annually.
Dabur is also considering expanding its footprint in the African market, primarily by pushing Namaste’s products beyond its strongholds of Nigeria and South Africa. Experts estimate the ethnic hair care market in Africa at ~5,000-6,000 crore. Companies such as Marico and Godrej Consumer Products have also made strong inroads into that market, primarily through acquisitions.

Nissan plans small car made entirely in India
SWARAJ BAGGONKAR
Mumbai, 7 October
Nissan, one of the three largest car makers in Japan, is planning to develop a compact car made fully in India. The company’s Indian subsidiary, Nissan Motor India, is rapidly strengthening its research and development (R&D) wing for the purpose. International companies such as Toyota and Ford, and domestic market leader Maruti Suzuki have already done this with products developed majorly in India. Work on models such as the Etios, Etios
Liva, Figo and Ertiga, respectively, was carried out in the country, keeping Indian consumers in mind. Takayuki Ishida, managing director and chief executive, Nissan Motor India, said, “We have already recruited 3,000 people for the R&D centre. And, some of the people are developing that vehicle for us along with Nissan’s technical centre. Their current capability allows them to develop some parts of the vehicle. They are able to do minor changes in the car now. Gradually, their capabilities will increase.” Nissan’s entry-level car in India at present is the premium hatchback Micra priced ~4.21 lakh (ex-showroom Delhi). The company has six products on offer, including three fully imported models. Earlier this year, Nissan announced the introduction of a new brand Datsun in 2014. It would be a low-cost brand serving customers in the ~2-4 lakh price band. Nissan will remain a relatively premium brand in India. “I can’t speak specifically on this but in the next four to five years when the R&D capability dramatically improves, I think we have an opportunity (to make that car). We can expect some development from the R&D team, using India’s knowledge, for a compact product. At the moment, we have not completed the studies about it but, potentially, I think we have a good opportunity,” added Ishida. Products developed in India have proved to be best-sellers not just in India but in foreign markets as well. The Etios from Toyota
Kirloskar Motor, for instance, is on target to sell 20,000 units in South Africa by the year-end even as the company prepares to begin shipments to Brazil. Similarly, Ford Figo, the entrylevel hatchback made in Chennai is shipped to South Africa, north Africa and Mexico among 50 foreign markets. Ford, the US-based car maker which has manufacturing facilities in several parts of the globe, makes the Figo only in India. Nissan is eyeing similar success with the new small car. The Japanese company, which currently exports two-thirds of its production from India, is also talking about making India a larger base for production and export. “We have a good opportunity to make India the manufacturing base. We need to think about growing the Indian market, how we can satisfy India’s growing demand and even outside demand from India,” added Ishida. Ishida said both Renault and Nissan, which use each other’s technology for car production and model selection, could also utilize R&D resources for the new compact car in the future. It is, however, not clear if the new car would be sold under the Nissan or the Datsun badge.

Exports to US rise despite slowdown
DILASHA SETH
New Delhi, 7 October
The US’ share in India’s total exports rose to 11.3 per cent in 2011-12 from 10.1 per cent in the previous financial year, and 10.9 per cent in 2009-10, despite the slowdown there. In value terms, India’s exports to that country grew 37.3 per cent in 2011-12, to $34.7 billion, according to data released recently. As a large number of patented drugs went off-patent towards the end of this year, the share was likely to increase further, experts said. Federation of Indian Export Organisations Director-General Ajay Sahai said: “Despite a price advantage, barring a few big players, Indian pharmaceutical companies were not able to get entry into the US earlier. This will change now.” The importance of the US as an export destination could be gauged from the fact that though the combined population of India and China was six times that of the US, the combined consumption of these two economies was just about 60 per cent of the US, Sahai explained. The share of the US in India’s total exports used to be even higher earlier. It was 12.7 per cent in the pre-financial crisis year of 2007-08 (it came down to 11.4 per cent in the crisis period of 2008-09). In 2002-03, a little over 20 per cent of India’s exports went to that country. In value terms, India’s total exports in 2011-12 stood at $303 billion, up 21.8 per cent over the previous year. Sahai said the top 13 export destinations for India, accounting for over $200 billion a year, were not emerging economic but advanced ones. (GRAPH NEEDS TO BETAKEN FROM NEWS)

IKEA will source from MSMEs where feasible
NIVEDITAMOOKERJI & SURAJEET DAS GUPTA
New Delhi, 10 October
Replying to queries by the Department of Industrial Policy & Promotion (DIPP), Swedish furniture major IKEA has said it would source from micro, small and medium enterprises (MSMEs) “where it is feasible”. Last month, the government had tweaked the single-brand retail policy, saying 30 per cent sourcing from the MSME sector was preferable, not mandatory”. The company would “source (products, components, material for exports and domestic sales, etc) 30 per cent of the value of goods purchased (excluding all taxes and duties) for its retail activities in India, from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors relevant to IKEA, where it is feasible”, it stated. It added for the India market, Inter IKEA System, the owner of the IKEA brand, had already signed a franchisee agreement with group company Ingka Holding Overseas. This, the company said, was a departure from its standard global practice, as franchisee agreements were signed only after establishing a territory penetration plan for that country. The exception showed the company’s commitment to the India market, IKEA told the government in its reply. Now, its proposal would be taken up by the Foreign Investment Promotion Board (FIPB).
After IKEA had, in an application on June 22, mentioned setting up a ‘Swedish food market’, DIPP had sought clarity on the matter. IKEA clarified while the food market was not its primary business activity, it was linked and incidental to the company’s retail store business. Swedish food markets at its retail stores are part of IKEA’s global concept, it stated. Swedish food markets are located close to the exits of IKEA retail stores across the world. These sell Swedish meatballs, chocolates, packages of gravy, Scandinavian biscuits and crackers, salmon, soft drinks, etc. All these products are sold under the IKEA brand. Elaborating on its ‘flexible payment options’, IKEA said it might offer customers the option of paying for products on an interest-free, deferred payment basis. This, too, was part of the company’s business and sales policy, it stated. On its initiative to collect and purchase old furniture, IKEA said the facility was only for customers who no longer needed their old furniture. Such old furniture is collected and/or purchased by the IKEA group. These are either donated to needy families through charitable organisations or given to third-party small businesses on an “as-is-where-is” basis, the company stated. It added the publication activity it mentioned in its proposal referred to catalogues,brochures, guides, manuals and pamphlets. IKEA plans to set up 25 stores in India, and increase the store count on the basis of market development. In the first stage, it plans to invest ^600 million, and an additional ^900 million at a later stage.

Japan’s Softbank snaps up Sprint
REUTERS
New York/Tokyo, 15 October
Japanese mobile operator Softbank Corp said it will buy up to 70 per cent in Sprint Nextel Corp, the third largest US carrier, for $21.1 billion (£13.1 billion) — the most a Japanese firm has spent on an overseas acquisition. The deal, announced jointly by Softbank's billionaire founder and chief Masayoshi Son and Sprint CEO Dan Hesse at a news briefing in Tokyo, will provide entry into a US market that still shows growth, while Softbank's home market is stagnating. It will also give Sprint the firepower to buy peers and build out its 4G network to compete better in a US wireless market dominated by AT&T and Verizon Wireless, analysts have said. While US analysts have long said the telecoms industry needs consolidation, few looked to Japan as a catalyst for that. But Son, known for his risk-taking, is betting that US growth can offer relief from cut-throat competition for subscribers in Japan's saturated mobile market. Combined, Softbank and Sprint will have 96 million users. Softbank said that as part of the deal it would buy $3.1 billion of bonds convertible into Sprint stock at $5.25 a share. Sprint shares closed on Friday at $5.73. Softbank shares tumbled more than 8 per cent earlier on Monday, and closed at their lowest in 5 months, down 5.3 per cent. The stock has lost more than a fifth of its value — or $8.7 billion — since news first broke late last week of the firm's interest in Sprint. Investors are concerned that Son may be offering too much to enter the United States telecommunications market. "There is always a risk when you face a big challenge," Son said at the briefing. "It could be safe if you do nothing and our challenge in the US is not going to be easy at all. We must enter a new market, one with a different culture, and we must start again from zero after all we have built. But not taking this challenge will be a bigger risk." Four banks have approved loans totalling 1.65 trillion yen ($21.1 billion) to Softbank, three sources with direct knowledge of the matter told Reuters earlier on Monday. Mizuho Financial Group Inc, Sumitomo Mitsui Financial Group,Mitsubishi UFJ Financial Group and Deutsche Bank submitted a commitment letter to Softbank promising the loans on Monday. Sprint, which has lost money in all of the last 19 quarters, has net debt of about $15 billion, while Softbank has net debt of about $10 billion. Brokers have warned that the deal could leave Softbank with "unacceptably high" gearing, a ratio of its debt to shareholder capital. Standard & Poor's has warned the deal "may undermine Softbank's financial risk profile" and would pressure its free operating cash flow for at least the next few years. The companies said Hesse would remain as CEO of Sprint. "It's the same (market) reaction as when Softbank said it was going to buy Vodafone a few years ago. Everyone came out and said it was far too expensive," Fumiyuki Nakanishi, general manager of investment and research at SMBC Friend securities, said ahead of the announcement. Softbank bought Vodafone's Japan unit for $15.5 billion in a 2006 deal that propelled the firm into the mobile carrier business. "Son made a company worth 3 trillion yen, and now it will be worth 6 trillion yen. That's quite impressive, and I think investors will realise he's making the right decision down the road," said Nakanishi.

GVK partners Samsung, Smithbridge for Oz project
BS REPORTERS
Hyderabad/New Delhi, 17 October
Hyderabad-based GVK Power & Infrastructure Ltd (GVKPIL) plans to tie up $10 billion of funds for its Australian pit-to-port project in a year's time. With all approvals in place, the company has awarded a contract to Korea-based Samsung C&T and Smithbridge Group Pvt Ltd of Australia for the port component. GVKPIL, through its subsidiary, Hancock Coal Infrastructure, is erecting the $10-billion project at Abbot Point in North Queensland. "We got all our approvals last week. From this week, we are starting our financing programme and construction contracts. The third quarter of the next calendar year will see financial closure and construction would start,” G V Sanjay Reddy, vice-chairman, GVKPIL, said. He did not give details of the financing. The Terminal-III port is being built with an investment of $2 billion for the Alpha Coal project, involving onshore and offshore infrastructure.

Starbucks takes coffee battle to rivals’ doorstep
VIVEAT SUSAN PINTO
Mumbai, 19 October
Starbucks, the world's largest coffeehouse chain, has finally opened its doors to Indian consumers with the launch of its first store in a Tata-owned property in south Mumbai. And the Seattle-based company had a few surprises up its sleeve for those who thought that the firm would outprice itself in the Indian market, keeping with its premium positioning. The 18,000-outlet company, which operates in 60 countries, has opted to price a cup of coffee in India between ~80 and ~200, while the food, an assortment of which is on offer at the store, is also priced in the range of ~80-200. When compared with the entry-level price of coffee at rival Cafe Coffee Day or the UK-based Costa Coffee, then Starbucks is pricey. An espresso at Cafe Coffee Day is available at ~45. At Costa Coffee, it comes for ~65. However, compared to Starbucks’s pricing in the US, the brand has come down a few notches here. A cup of coffee in the US, for instance, is priced at $3.5 or ~188 (where 1$ equals ~53.84). In neighbouring China, Starbucks is priced more or less in line with its rates in the US — at about $3 to $3.5 a cup. Analysts say that Starbucks has opted to take the middle road with its pricing in India. That is, it is neither too high nor too low. Harish Bijoor, CEO of Harish Bijoor Consults, says: “Effectively what Starbucks has done is that it stratified the market by adding one more layer to it. So you have Cafe Coffee Day at the bottom, Costa Coffee in the middle and Starbucks at the top. So even without being too expensive, Starbucks has in a sense stayed true to its brand promise — of delivering a premium service.” According to Howard Schultz, chairman, president and CEO of Starbucks Coffee Company, the idea is to reach as many consumers as possible with its pricing in India. Experts say that while the average college student, an audience that cafe chains have traditionally targeted in India, may find Starbucks a little on the higher side, the young working professional will not. It is this market that Starbucks appears to be targeting. This again ties in with Starbucks stated premise of being the "third place" outside of home and the workplace to hang out. Young adults, say experts, enjoy that.

Rain CII to acquire Belgium’s Rutgers

BS REPORTER
Hyderabad, 22 October
Rain CII Carbon, a wholly-owned, step-down subsidiary of Hyderabadbased cement maker Rain Commodities, is acquiring fully Rutgers, a Belgium-headquartered coal tar pitch manufacturer, for a gross enterprise value of about ~4,914 crore, or $915 million. For the acquisition, Rain CII has signed a share purchase agreement with Triton Partners, a north European private equity fund that owns Rutgers. The transaction is expected to be completed in the first quarter of 2013.
In 2007, Germany’s specialty chemicals major Evonik Industries had sold Rutgers to Triton Partners.For the financial year ended December 2011, Rutgers’ gross revenue stood at ^831 million ($1,082 million). In a filing to the BSE, Rain CII said the company planned to fund the transaction through a combination of internal cash accruals and proceeds of ^533 million by selling longterm bonds. While Citigroup Global Markets is the financial advisor for the deal, Skadden, Arps, Slate, Meagher & Flom LLP are the legal advisors. Rain Commodities is the world’s largest manufacturer of calcined petroleum coke (CPC). It operates nine coke calcining plants in the US, India and China. The company, which is setting up its fifth water-heat recovery plant in Louisiana in the US, also operates two integrated cement plants in Andhra Pradesh and one fly-ash handling and cement-packing facility in Karnataka. “The acquisition of Rutgers is complimentary to Rain’s core CPC business. Expanding into the tar distillation business accounts for both product and geographical diversification for the Rain Group and provides vertical depth within its core business,” the company said in a statement. Today, the Rain Commodities stock closed at ~41.25 on the BSE, down 4.51 per cent over the previous close, while the benchmark Sensex closed with a gain of 0.59 per cent.

With uncertainty down, M&A deals are back
ABHINEET KUMAR
Mumbai, 23 October
Deal makers are busy again, waking up from the slumber of over a year that followed the US
Treasury debt downgrade, sovereign crises in Europe and policy paralysis in India. In last six days, Indian companies have announced $2.5 billion of outbound acquisition deals, including Tata Group-promoted Indian Hotels’ $1.57-billion bid to acquire Orient-Express Hotels. Raj Balakrishnan, managing director and co-head, mergers & acquisitions (M&A), at Bank of America-Merrill Lynch, said: “Sentiments for M&A have improved globally, and we are seeing transactions in many places.” The investment bank is advising Indian Hotels on its bid to acquire Orient-Express. Balakrishnan’s colleagues in Europe are advisors to Russia’s Rosneft that yesterday announced its intention to buy British oil giant BP’s 50 per cent stake in TNK-BP, in a deal valued at over $50 billion. So, what has changed the sentiment? “QE3 by the US government, the European Central Bank’s interventions to resolve the sovereign crises and, back home, the government’s recent measures to revive the economy have improved sentiments, boosting M&A transactions,” said Balakrishnan. Yesterday, Hyderabadbased Rain Commodities bought Belgian chemical maker Rutgers NV from investment firm Triton Partners for $916 million, in the biggest acquisition by an Indian company this year. The day also saw Dr Reddy’s Laboratories announcing a $45.2-million bid to acquire Netherlands-based OctoPlus NV. An important deal announced this month was of global private equity fund Blackstone acquiring a 12.5 per cent stake in the Sonalika Group-promoted International Tractors for $100 million. L D Mittal, chairman, International Tractors, said: “We would not have concluded this deal six months back.” It took about 18 months of negotiations by Blackstone to seal this deal. “The improved sentiments really helped in closing the deal,” he said. The company plans to use the money to expand its operations by setting up assembly lines and establishing dealership to cover 100 countries, up from 70, by the year-end. “The confidence of Indian companies with stronger balance sheets is back,” said Vedika Bhandarkar, vicechairman and head, investment bank, at Credit Suisse India. “Also, with the initial public offering market quiet, private equity players are pushing for M&A to make exits,” she said. Bankers, in fact, believe the interest in M&A never waned. “We never saw the deal pipeline shrinking,” said Chetan Savla, senior executive director and head, corporate advisory group, at Kotak Investment Banking. He explained how increasing interest from Japan for inbound deals compensated for lack of enthusiasm exhibited by European companies. “It was only that the time lines for deal closure increased due to uncertainties on the economic growth and valuations,” he said. Deals that would usually take six-nine months to close started taking 12-15 months. According to Bloomberg data, $37.2 billion worth of deals have been announced this year, against $40.2 billion in 2011 and $73.2 billion in 2010.
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Telenor rings in new Indian partner
BS REPORTERS
Mumbai/New Delhi, 26 October
Just a fortnight after a bitter divorce with Unitech, Norwegian telecom group Telenor has found a new Indian partner — Sudhir Valia, brother-in-law and confidante of Sun Pharmaceuticals Founder Dilip Shanghvi. Telenor has signed a partnership agreement with Lakshdeep Investments & Finance, a privately held entity controlled by Valia, who is also executive director of Sun Pharma. The joint venture will allow Telenor to participate in the forthcoming mobile licence auctions. Telenor has signed the deal through its wholly owned Indian entity, Telewings Communications The terms of the deal have been kept under wraps and a Telenor spokesperson only said Lakshdeep would eventually pick up 26 per cent ownership in the new company. The man at the centre of it all is clearly uncomfortable with all the media attention. Sitting in his office (decorated with Ganpati idols of all shapes and sizes) in a nondescript building at Mumbai’s Dadar East, Valia, a chartered accountant, says the partnership is “not such a big deal”. The man, who hates business suits even on formal occasions, gives nothing away, except saying Telenor is a very old player and an important one even in India and that he is open to bringing in other partners (under the sectoral foreign direct investment rules, Telenor cannot hold more than 74 per cent stake). Valia, 56, whose sister is married to Shanghvi, holds 0.74 per cent in Sun Pharma, while his wife, Raksha, holds 1.68 per cent. Valia, earlier Sun Pharma’s chief financial officer, is also on the boards of Taro and SPARC. This is not the first time he has bought stake in third companies. A couple of months ago, he had picked up stake in a Mumbai-based brokerage firm. In a statement issued today, Telenor said Lakshdeep would infuse an agreed amount of equity into Telewings. “Upon successful participation in the spectrum auctions and after required government approvals, Telenor will eventually own 74 per cent in the joint venture. Telenor will maintain operational control and, upon necessary approvals, all assets of Unitech Wireless (Uninor) will be transferred to this company for seamless operational continuity.” The company added Telewings had already applied for prequalification to participate in the upcoming spectrum auction. A final decision on whether or not to participate would be taken before the auction starts. Unitech, which had a little over 33 per cent stake in its joint venture with Telenor, is estimated to have invested around ~650 crore in the JV, which operates in 13 circles and has over 40 million subscribers. Apart from the stake-sale money, Unitech could also get another ~560 crore as its share of the refund of licence fee, if cleared by the Cabinet, and also tax refunds on transfer of depreciated assets.
Unitech had valued the firm at ~12,000 crore before it lost its license. However, Telenor had valued the company at only ~4,000 crore, which was not acceptable to its partner. Earlier in February, another Indian drug maker, Piramal Healthcare, had agreed to buy an additional stake in Vodafone’s India unit from Essar Group, after making an initial investment of $640 million six months earlier. In August 2011, Piramal Chairman Ajay Piramal said the company expected a return of as much as 20 per cent from the investment. Piramal now owns 11 per cent in the unit.

Apollo talks to Walmart, Walgreen for expanding pharmacy arm
T E NARASIMHAN
Chennai, 28 October
Apollo Hospitals Enterprises Ltd (AHEL), one of the country's largest networks in the sector, said it had initiated talks with global retail chains such as Walmart, the US’ largest drug store chain, Walgreen Drugs, and others to expand its pharmacy business. The development come in the wake of the recent government decision to liberalise foreign direct investment in the retail sector. Speaking to Business Standard after inaugurating the Robotic Gastrointestinal Surgery International Congress here, Prathap C Reddy, chairman, Apollo Hospitals Group, said they didn’t want to look for venture capital (VC) or private equity (PE) but would prefer a partner who could augment the pharmacy business. “We are talking to companies like Walmart, Walgreen and another European company,” said Reddy.
The company is looking at floating a joint venture with the retailers. This, said Reddy, would make Apollo's pharmacies cost-competitive. Apollo Pharmacy, a division of AHEL, had 1,357 outlets as on June-end, both standalone and attached to hospitals and clinics. The company earlier said it would expand the total number of outlets to 2,000 over the next three to four years. In 2011-12, the pharmacy business reported 1.8 per cent in operating earnings, to ~16.2 crore. The expectation for the current year is 3.5 per cent growth. The Indian pharmaceutical market posted annual sales of ~5,369 crore in 2011-12, said the All India Organisation of Chemists and Druggists. The pharma retail market has 600,000-700,000 outlets. Of these, only 7,000-8,000 would be the total outlets from all the organised retail companies.

Monnet Ispat in talks for coal mine buy in Colombia
BS REPORTER
New Delhi, 19 November

Monnet Ispat and Energy Ltd (MIEL), India's second- largest coal-based sponge iron producer, is set to soon acquire majority stake in a 25-million tonne (mt) coal mine in Colombia. The ~1,960-crore MIEL wishes to feed its steel and captive power plants in India using the coal made available through the acquisition. “Talks are on for the acquisition; annual production capacity of the mine is 50,000 tonnes per annum,” said N C Jha, chief executive officer of Monnet’s mining business, without divulging financial details. The former Coal India chairman said the working mine had reserves of both coking and non-coking coal and the deal was likely to be clinched in a month or two. The development comes on the heels of the scrapping of Jindal Steel and Power’s $2.1-billion contract to develop the El Mutun iron ore deposit in another South American country, Bolivia.
Monnet has been also looking at coal assets in Africa to source coking coal for its steel mills, chairman and managing Director Sandeep Jajodia had told Business Standard in a recent interview. Monnet had acquired Indonesian coal company PT Sarwa Sembada Karya Bumi in Sumatra for $24 million through its wholly-owned subsidiary, Monnet Global Ltd, in 2010-11. The Indonesian mine is expected to begin production shortly. A recent change in the mineral export regulations of the South Asian nation has led investors, including Indian infrastructure companies, to look elsewhere for acquisitions. New Delhi-based Monnet Ispat has sponge iron manufacturing facilities at Raipur and Raigarh in Chhattisgarh. It is developing a 1.5- mt integrated steel plant at Raigarh. It is implementing a 1,050 Mw power plant at Angul in Odisha. MIEL plans to set up an additional 2,000 Mw power generation capacity by 2014. The Monnet Group plans to invest around ~2,700 crore this financial year. Of this, around ~700 crore will be invested in the new steel plant. The rest would be used to set up power capacities. The company’s share price at the Bombay Stock Exchange closed today at ~291, up 0.6 per cent as compared to the previous close.