Bajaj: Riding into glory

From riding the Chetak scooter to zipping past the Pulsar 220CC, it has been an evolution for Bajaj Auto. India's second largest two-wheeler maker's origins is rooted in Bachchraj Trading Corporation, first set up to trade in a few 2 and 3-wheelers.
Founded by Jamnalal Bajaj, who associated closely with Mahatma Gandhi during the freedom struggle, the Bajajs' have seen real growth starting from the sixties. Though Bajaj started off as dealers in imported 2 and 3-wheelers, it was only in 1960, that it started manufacturing, having obtained the precious manufacturing licence from the government. In mid-sixties, current Chairman Rahul Bajaj took over the reins as the CEO, but the eighties are still seen as the best years for Bajaj.
"The decade of the 80s was the greatest decade for Bajaj Auto. We did well in the 70s, but 70s was a disaster for Indian industry. It was the height of misguided socialism. No technology was allowed to come," reminisces Bajaj.
Interestingly, during the 80s, Bajaj Auto's production jumped 8 fold to touch 8 lakh units! In the 80s, the company also touched the magic figure of Rs 100 crore, which was in 1980-81. But the rapid expansion saw a cooling off in the 90s. Volumes grew by only about 78%, partly because the scooter king was faced with consumer preference shifing from scooters to bikes. Bajaj had no presence in bikes and had to forge an alliance with Japanese major Kawasaki to get a jumpstart in the motorcycle business in 1986. That was not good enough to fight the new rivals - the Munjals with the Hero Honda joint venture.
As a result of the Kawasaki partnerships, Bajaj succeeded where LML and Kinetic had failed.
That success called for a crucial makeover time for the Bajaj management. The next generation Rajiv Bajaj and Sanjiv Bajaj were inducted into the company in the early nineties. The young energy of the two brothers backed by an equally energetic research team helped Bajaj Auto roll out a winner in this Pulsar in 2001.
This model, the first indigenously developed one by the company, catapulted what was then called a 'niche segment' with sales of around 10,000 units per month among three players to around 60,000 now. Pulsar today has a market share of over 50% in that category.
In the last six years, constant upgradation has led the Pulsar grow from a single variant to four engine options now. A unique technology feat was achieved with what Bajaj calls DTSi having two spark plugs and added frills. Bajaj is itching to push its frontiers to the global markets with buyouts being eyed in Europe.
It will be more to enter new markets or acquire prestigious brands than technology, because, as MD Rajiv Bajaj sees its, "I believe technology is actually to be grown inside out. It's never to be acquired from outside in and certainly, in this business, which is not new to us."
For the business, which is new to the company, Bajaj has started talking to French car major Renault to explore a collaboration for 'very competitively priced vehicles'. This move could also be to pre-empt any problem similar to the scooter to motorcycle shift it faced earlier. That deal may take shape early next year.
While these moves are expected to grow Bajaj into a full fledged automobile company, Rahul Bajaj has clearly charted out the succession plan. The financial acivities of the company have been demerged and will be led by Sanjiv Bajaj. It has been a gradual, seamless handover of responsibilities carefully planned by the Bajaj patriarch.
Says the Chairman, "I take more credit for that change than I take for whatever little I did in the 60s, 70s and 80s."
There are others who also commend the transition of the company. Shankar Sharma, who heads a share broking business with a portolio of over USD 100 million, is one of the few who had a bullish view about Bajaj Auto even during its tough times in early 90s.
"You have to credit them for changing the DNA from a monopoly, to being an aggressive, lean and agile company," he said.
Bajaj Auto has no choice. It's history to wait for a Bajaj Chetak for eight years. So, Bajaj is not wasting time to launch its next motorcycle platform with another technology upgradation, due in September. And it's also leveraging its arrangment with Kawasaki's Philippine subsidiary to export around 100,000 bikes. All these activities to capture a 10% share of the global 2-wheeler market.
And as a four wheeler manufacturer, well it will only start on that jounrey in 2009.

How MTV made it big in India

Multinational corporations often take the one-size-fits-all approach to new markets and refuse to understand the local nuances and differences that make markets like India somewhat unique.
When I look at the beverage companies to the fashion industry, the big international brands have often made the mistake of applying the same positioning and communication to the Indian market.
In the case of MTV, too, we initially followed the content and template that was used all over the world. We realised that it did not work and came back to reinvent and get a local product. I would put that down as the biggest learning.
You cannot base the channel's content or channel strategy on the chat you had with a guy in the bar last night. The approach is to normally extrapolate that and assume that the country is full of people who are westernised, speak English, listen to rock bands and have travelled the world.
When this happens you have completely misread the market. MTV did precisely that and relied on the "headbangers" fad that was quite hot at that time.
Even a couple of weeks ago, I met someone who told me how she regretted that MTV had gone local. I tell friends like her to come home, because for the kind of music and content that people like she are talking about, I can pretty much fit them all into my living room. In the office, we jokingly call this the "come home" channel.
Most players in our industry who went local -- from Star Plus, which started by going completely local, through to Sony, Discovery and MTV -- realised that it was necessary to embrace a wider audience.
At the same time, for us there was a growing audience that wanted the original template (western music). Instead of diluting the local content from MTV, in December 2004, we decided to serve the purpose by launching another channel, Vh1.
In MTV's case, when we flicked the switch from 100 per cent international to almost entirely local content, we crafted a product totally based on consumer research and insights.
That's critical. You do not get consumer insights by asking a bunch of kids from Malabar Hill in South Mumbai to decide what the rest of the country wants to watch.
You first decide who it is that you want to serve. If that happens to be kids sitting in Gorakhpur and Chennai or other small towns in the country, then you need to talk to that audience and find out what makes it tick.
So, research was the key determinant to the change of strategy. If MTV is as mainstream and mass as you get it in the US, why should I shove it down the throat of an Indian audience because the cocktail circuit likes it?
The philosophy now is to embrace the widest possible base of a youth audience in the country. We started with deconstructing the product and feel of the channel, rebuilding it based on blocks of knowledge that we had on the market, what the customers wanted and what we could lead them towards.
When we started off, the Indian pop music industry was more or less non-existent. There were just half a dozen videos shot in a year compared to around 200 videos shot every year at present. We helped stimulate that industry.
More recently, we launched a daily soap on the channel, which struck many as a "bold" move. But the strategy was based on irrefutable logic: we had gained our leadership in the music and lifestyle space; growth needed to come from elsewhere and the insight clearly was that the youth were heavy soap viewers.
We also could not ignore the fact that the Indian households were largely single TV households. You cannot grab the remote from the housewife and give it to the kid. So the only way to grab the eyeballs in the family was through a soap.
It's been a constant evolution for us. If you take two points in time, the channel has evolved radically. But the change has been constant as well as overnight.
MTV has evolved from changing the music to changing the whole environment (including the veejays), to have more Hindi spoken on the channel, to including programming formats beyond music. We see the channel has evolved as a youth destination and is intruding into the general entertainment space.
Another big lesson that MTV taught us was that the same principles need to be applied to our children's channel, Nickleodeon, and we have just taken the channel local on the same principles.
The big takeaways from our experience are that Bollywood is bigger than what you expect it to be; and language is critical.

Birth of India's fastest-growing tea brand

Daund, a taluka in Maharashtra's Pune district, has all the makings of an Indian ruralscape -- green fields, dhoti-clad villagers and grazing livestock. The only blot on the landscape: unlike most of rural India, villagers in this part of the country treat visitors from the city with suspicion. Why? The suave visitor could be an electricity board official out to expose power thefts.
It's hard to imagine the residents of this highly rural community taking kindly to something so citified as leaf tea -- dust tea is king in rural India. Yet, that's exactly what's happened, and that too, with a small, regional brand that's gone on to become the fastest-growing tea label in the country.
When the Sapat group, a Rs 80-odd crore (Rs 800 million) company that makes packaged tea, decided to establish its brand in these markets, it wasn't exactly a cup of tea. Yet Sapat managed to double market shares from 3.62 per cent in 1999-2000 to 7.3 per cent in 2004-05 and volumes shot up from 1,362 tonnes to 3,000 tonnes in the same period (source: ACNielsen ORG-MARG).
In the last fiscal, Sapat grew at 41 per cent and was labelled the fastest growing packet tea brand in India by AC Nielsen ORG-MARG.
The Nasik-based company made this feat possible by sticking to the rules of the hinterland. As the company launched its new brand of leaf tea, Parivar, in 1999-2000, it knew that villagers would not warm up to a company salesman. Other marketing initiatives would have little impact or be counter-productive.
"Television gives little reach in these regions. Products advertised on outdoor hoardings are perceived as costly," points out Vinod Habade, sales manager, Sapat.
Even without the added "burden" of an outdoor media presence, Parivar was an expensive brand. When the average market price for a 250-gm pack of tea was Rs 32, Parivar carried a Rs 43 sticker. The price justification: Parivar was a leaf tea brand. (After tea leaves are picked, they are dried and fermented to make granules. The bigger granules are packed as leaf tea while smaller granules are passed off as dust tea).
That was a problem. Because Sapat had been selling dust tea for over nine decades and the villagers liked it -- they believe that dust tea is kadak chai (strong tea). Retailers in Daund say that villagers are so sensitive to the strong element in tea that, when Brooke Bond A 1 Kadak Chaap was renamed A 1 Daana Taaza, sales took a hit.
Then, Sapat could not afford mammoth marketing spends. "We understood that we had to keep it simple and create rural resources at a rural cost," says Nikhil Joshi, managing director, Sapat.
The company found that each village had a population of youth with spare time on their hands. Sapat recruited these young men, all of whom met one simple precondition -- they had to pass their twelfth grade and possess decent communication skills.
The youth called CAs (communication agents) played the role of brand ambassadors in their villages. The company used its brand name, Parivar, which means family, to good effect. The CAs visited every house and welcomed residents to be a part of the Parivar.
Sapat created Parivar-branded nameplates on which the CAs wrote the household's name. Families who agreed to fix this nameplate on their doors were given a free sample pack of tea.
Soon, most families in a village wanted to have their names written on Parivar's metal nameplate. The company contacted close to 500,000 households across 1,600 villages in Maharashtra through this programme.
Sapat executives claim that this initiative earned them some brownie points. Villagers began to look at Parivar as a bonding factor, as the entire village started showing off uniform nameplates.
Having put its name on the doors, the company decided to get into the mind of rural consumers. This was best done through village schools, given that teachers and principals are largely appreciated by the community.
The CAs contacted school principals and handed them quiz sheets that were distributed to students. The questions covered subjects ranging from politics, mathematics and tea habits. Students were given erasers and sample packets of tea when they returned these questionnaires.
Simultaneously, company vans visited villages distributing discount coupons. Sapat also enlisted the support of its stockists and retailers with extra incentives. In all household deliveries, retailers were asked to deliver only Parivar tea packs.
The company solved the issue of consumer resistance by offering a money-back guarantee to dissatisfied customers. It backed this offer with a complimentary packet of Britannia's Tiger biscuits, as tea with biscuits is a perfect fit across the country. To ensure repeat purchases, used packs of Parivar tea could be redeemed at retail shops, for discounts on the subsequent purchase.
However, the initiative was not without its share of resistance. "The biggest hurdles were manpower monitoring and stockist alignment," says Joshi. The company had a tough time convincing stockists to supply goods on credit to retailers from smaller villages.
"Stockists felt that smaller retailers would default on payments. But as the product offtake increased, they realised the potential and agreed to support us," adds Habade.
To supervise the efforts of its CA network, the company established a team of auditors who verified the work of the CAs. These auditors were village elders.
At present, Sapat earns 60 per cent of its revenue from Parivar. In 2004, the company entered the markets of Madhya Pradesh and is planning to launch its products in Gujarat soon.For Sapat, the eighth largest tea-maker in the country, gunning for the top slot might be a distant dream. But for now, the villages in Maharashtra have given it enough reason to throw a tea party.

The secret behind Ajay Piramal's success

Ajay Piramal's favourite story is "Foootprints on the sands of time".
The story goes like this: One night the author dreamt that he was walking along the beach with the Lord. Across the dark sky flashed the scenes from his life. For each scene, he noticed two sets of footprints in the sand, one belonging to him and the other to the Lord. But when he looked back at the footprints, he noticed only one set of footprints at the lowest and saddest times of his life. Disappointed, he asked the Lord as to why He left him when he needed Him the most. He whispered: "My child, when you saw only one set of footprints, it was then that I carried you".
The story, Piramal says, has acted as a guiding spirit for him. He was 29 when his father died suddenly in New York. His brother Ashok took over, but five years later, he too died of cancer, leaving behind his young widow, Urvi, with three children aged less than 10 years.
Just before that, his other brother Dilip had decided to separate his business. Meanwhile, a year-long textile strike led by Datta Samant dealt a crippling blow to the textile industry and Morarjee Mills, the group's main business venture then, was deep in the red. "Life looked bleak when I became chairman of the group at the age of 29. But I survived as the Lord must have carried me when I needed Him the most," Piramal says.
Going by his track record, there is hardly any doubt about that. From owning what was then an almost defunct textile company, Piramal today is the chairman of a Rs 4,000-crore (Rs 40 billion) group, comprising Nicholas Piramal, the fourth-largest pharmaceutical company in India, Morarajee Weaving and Spinning and Gujarat Glass. Piramal is also the chairman of the group's retail operations, which are now looked after by his nephew.
Each of his three nephews (Urvi Piramal's sons) is now in independent charge of separate businesses. He felt deeply hurt by what he calls sensational reports in sections of the media about differences between him and his sister-in-law Urvi and his nephews over control of businesses.
"As their uncle, I did my duty by holding their hands in the formative stages of their life. Now they are independent. But we are all part a big family. The story 'Footprints…' applies to me as much as it does to my nephews and my own children -- Nandini and Anand," Piramal says.
I am at his 10th floor office at Nicholas Piramal Towers in Mumbai's Peninsula Corporate Park. The influence of the Lord is omnipresent: the walls have inscriptions from the Bhagavad Gita. Pride of place has also been given to Zen-style sculptures of the 18 verses in pure black granite rock -- billions of years old -- from near the ancient city of Hampi. Bhagavad Gita is one of the greatest management books as it prescribes optimism and freedom from stress, he says, while ushering me to the lunchroom, which would easily give any five-star hotel in the country a run for its money. The food is strictly vegetarian, Piramal informs me in a slightly apologetic tone.
He needn't have as Piramal plays the role of a host almost to perfection. He is in a nostalgic mood and talks passionately about how he diversified from textiles to a totally unrelated area like pharmaceuticals.
"Manufacturing is finite but human intellect is infinite. Textile is all about manufacturing and industries like pharmaceuticals are all about human intellect," Piramal says.
In 1988, he heard from a friend that Nicholas Laboratories, an Australian MNC that was exiting India, is up for sale. There were many large suitors but Piramal decided to meet Mike Barker, the man in charge of selling the company, and told him that he had no track record, was only 33 but was confident of achieving his dream of putting Nicholas among the top five pharma companies in India (from 48th at that time). Barker laughed with disbelief but decided to sell the company to him after hearing out the "young and untried entrepreneur's" turnaround plan.
Piramal says proudly that a decade later he went to see Barker in retirement in Kenya armed with Nicholas' annual report which showed that the company was among the top five pharma companies in India through a string of overseas acquisitions like the Indian subsidiaries of Roche, Boehringer Mannheim, Rhone Poulenc, ICI and Hoechst Research Centre. The tradition continues till date as Nicholas sealed two acquisitions over the last two months and is looking out for more.
He is also immensely proud of Crossroads, India's first shopping mall. The company had a large factory in the centre of Mumbai and if he wanted to expand, civic permission was impossible to get. Moreover, the cost of manufacturing was one of the highest in India. The three factory buildings of the pharmaceutical company were converted into retail space with the help of architects from Singapore. On the opening day, cars lined up for miles and the McDonald's ice-cream shop in the mall sold more cones in a day at the Crossroads than in any other store in Asia.
We are through with the rather sumptuous lunch, and Piramal says his father had taught him an important lesson -- being with animals teaches you to have respect for all living things. His love for horses (Daffodil, a pure white filly, is his favourite) is hereditary and Piramal remembers his father's haveli in Bager, Rajasthan.
There were two ways to enter the house, one a staircase and the other a ramp, which was made so that a horse could go with its master to his bedroom. As we walk down the corridor to the lift, he also remembers a blind cheetah on the South African savannah. She was blinded in one eye by a snake but could still hunt and protect her cubs and didn't let her disability turn her into a useless creature. "Disabilities and misfortune can make you stronger," Piramal says. The Lord must be pleased, indeed.

Naresh Goyal's success story (Jet Air)

Naresh Goyal had to walk for a few miles everyday to school as his parents could not afford a bicycle for him, and started his career as a cashier at his maternal uncle's company at a starting salary of Rs 300 a month.
Today, the net worth of the Jet Airways promoter is over Rs 81 billion (Rs 8100 crore), which makes him the sixth richest Indian as per the Business Standard Billionaire Club.
Goyal, however, hasn't forgotten his humble past. A reason why he remains modest and avoids the limelight. For e.g. minutes after announcing his decision to buy Air Sahara for Rs 2,225 crore (Rs 22.25 billion) - a deal, which gives him control over almost half of India's domestic aviation airspace - Goel refuses to give it much importance and said, "It's no big deal. I am neither happy nor excited. Such acquisitions have been the way of life in the west."
The modesty has been interpreted in many ways. While his associates say it shows that the man has his feet firmly on the ground, others say it's his way of avoiding controversies.
Which is understandable, as Goyal has had his share of questions raised about the origin of funds. More recently, the US government has been dragging its feet on giving Jet permission to fly to that country because of what it called the airline owner's questionable links.
For the moment, however, the 56-year-old Goyal is on Cloud 9, and says he is "open to all new trends and will grab the opportunities coming his way."
He has been doing precisely that ever since he got into the civil aviation industry 36 years back. He also has clear ideas about which way to go. For example, he thinks low cost airlines are just a myth in India.
There is nothing to call low cost carriers in India because there is no alternate second airport such as in Europe or the US. All airlines are paying for the same fuel, navigation, landing charges, which add up to 80 per cent of the total cost. There is hardly anything you can do with the balance 20 per cent.
Goyal holds a Bachelors of Commerce degree and after completing his education in 1967, joined the travel business as a general sales agent for Lebanese International Airlines.
Subsequently, he was appointed the public relation manager of Iraqi Airways in 1969 and from 1971 to 1974 was the regional manager for ALIA, Royal Jordanian Airlines.
During this period, he also worked with the Indian offices of Middle Eastern Airline, where he gained experience in various areas including ticketing, reservations and sales.
He was, thereafter, appointed regional manager of Phillipine Airlines where he handled the commercial operations of the airline in India.
He started on his own in 1974 by floating Jetair Private Ltd (then known as Jetair Transportation Private Ltd) to provide sales and marketing representation to foreign airlines in India. Shortly thereafter in 1975, he was appointed regional manager of Phillipine Airline in India.
Finally, in 1992, he took the big step of setting up his airline - Jet Airways. A firm believer in numerology, Goyal is fond of number "5". People close to him say his decision to acquire Air Sahara was also taken on the 5th many months ago. In his free time, he loves watching Bollywood movies for their emotional and entertainment value. But the bigger reason, as he once said, is, you don't have to remember what you saw last time.

Waste to wealth: ITC's success story

Anyone who has stayed at the swanky, 16-acre spread of the ITC Sonar Bangla in Kolkata will tell you that the energy requirements of the luxury hotel must be staggeringly high.
Even so, when it opened on introductory tariffs and low occupancies, only to be served up a whopping electricity bill of Rs 7 crore (Rs 70 million) in the first year, the management knew it would have to look for alternative solutions.
Immediately, consultants were hired on the simple mandate: reduce energy consumption. But that would have meant changing and revamping ducting and fittings while guests were staying at the hotel.
Instead, the pumps were retrofitted; the electric heaters were replaced by solar heaters; power-guzzling boilers were removed and condensed steam used to generate hot water; and variable frequency valves were used in the fans (needed for the air-conditioning), so that speeds could be adjusted, thereby eliminating energy wastage.
The result has been amazing. The company's electricity bill has dropped by 20 per cent (while occupancies have gone up by three-fourths). But it's not the reduction of the electricity bill alone that has put the smile back on the face of the management team. By reducing its energy consumption, the hotel has also brought down its carbon dioxide emission levels.
Is that a big deal? Apparently, yes. And that's because you can trade carbon emission reduction certificates in the marketplace just as you sell shares. Which is why ITC is now in the process of getting certification for a reduction of 3,000 tonnes of carbon dioxide emission - certificates it will use for carbon trading.
And if that sounds like so much futuristic gobbledygook, explains Subhash Rustagi, executive vice-president, corporate EHS: "Under the Kyoto protocol, corporates and countries that have not met their emission targets can take credit for our carbon emission reduction by buying these certificates at a price." It's a win-win situation: other corporates, even the countries, are not penalised for their failure (though they have to pay to buy the certificates), and ITC ends up making money that, says Rustagi, "we can reinvest in our environnment programmes".
At a going rate of Euro 14 (Rs 740) for each certificate of one tonne of carbon dioxide reduction, the hotel could earn Euro 40,000 (Rs 21 lakh) a year from just this one hotel. ITC expects that in the next two years, it should be able to certify about 1 million tonnes of carbon for trading. At prevailing trading rates, that would fetch it Rs 70 crore (Rs 700 million) - substantial enough, especially when ploughed back as further investment into its environment schemes.
It might not sound glamorous enough to make headlines, nor might it set the stock markets on fire just yet, but ITC (tobacco, hotels, paper, food) has charted out a quiet but ambitious move to become the only corporation on earth to achieve triple green rating - it is already water positive, and is now moving to become both carbon positive and have zero solid waste.And the deadline to achieve this is 2007. The investment in green is inexorably linked with the lives of ITC's consumers - typically, all of us who are confronted with high pollutants, water shortages, and dirty rivers overflowing with factory waste.
For decades, this has been our story. Now, with corporations making a conscious effort to become green, it's interesting to study how that paradigm can be useful for the bottomline, can reinforce the brand, and also ensure the sustainability of raw material.
Says Y C Deveshwar, chairman of ITC Ltd, "As a company that continuously strives to be 'Citizen First', this commitment finds expression in the company's sustainable development philosophy, which recognises the need to not only preserve but also enrich precious environmental resources, while providing a safe and healthy workplace for its employees.''
All this costs money, and ITC is pouring in substantial investment to go green, though it won't give out a consolidated figure of the spend. Nor is it quantifying those returns on its environmental investments yet. Last year, the company forked out Rs 56 crore on community development schemes, a large chunk of which went into green projects.
The company is estimated to have spent around Rs 15 crore (rs 150 million) to create or restore water reservoirs across the country. Effluent treatment plants to reuse factory waste water in the paperboard and pulp units cost Rs 10 crore (Rs 100 million); and ITC's crack team estimates that every Rs 1 crore (Rs 10 million) investment on energy conservation can be recovered in a three to five year period. But if its carbon trading succeeds, this period could be far less.
Recognition for its efforts are reflected in a report by the Centre for Science and Environment, which does a green rating for the paper and pulp industry. From a ranking of number eight just five years ago, it moved up to and continues to occupy the number one position since 2004.
So what has ITC done to achieve these laurels? Take solid waste, for instance. Company executives churn out some impressive numbers: the group generated over 28 lakh tonnes of solid waste last year - but were able to recycle 81 per cent of that waste. By March this year, it will hit 95 per cent and, of course, by 2007 it will be a zero solid waste company.
A zero solid waste company? Executives have been burning midnight oil to come up with innovative solutions. In hotels, for instance, the challenge lies in food disposal from the kitchen. And how does one deal with all the old linen and towels that pile up in the store?
The findings are innovative - tying up with piggeries to utilise any food that is fit for animal consumption, and converting the rest into compost to be used as manure. The linen and towels are given away to orphanges. Leftover ghee and oil in the kitchens is transported to a soap factory to be used as raw material.
The challenges were the biggest for ITC's Bhadrachalam paperboard plant, which generates the maximum solid waste. The fly ash generated from the boilers in the mill is used to make bricks - ITC has already set up three brick making plants within 100 km of the plant. And to demonstrate that the fly ash bricks are as durable as their more conventional counterparts, they have been used by the company to build its own staff colony.
That, explains Rustagi, is the key challenge - to get people to use waste as raw material rather than dumping it in water or in the ground. So the lime generated as waste in the paper plant is sold to cement units, and any waste paper is converted into pulp, for reuse.
But going carbon positive is a much more complicated task. ITC is adopting a two-pronged strategy of simultaneously conserving energy and opting for massive afforestration to achieve it.
The roll-out seems impressive: Rustagi says that it has already undertaken plantations in 29,000 hectares of land, and hopes to hit 43,000 hectares by the end of March, which should ensure its carbon positive status. (The more ambitious plan, of course, is to cover 1 lakh hectares of land under afforestation, most of it near its paperboard plant in Andhra Pradesh.)
Behind these numbers is a massive human programme in which ITC has roped in over 30,000 farmers, offering them an alternative livelihood. The company offers saplings at Rs 6-8 each to plant on their land. And it supports the farmers by offering advice on how to grow the trees, how much fertiliser they should put in, and when to reap to get the best returns. More importantly, it guarantees that it will buy back the wood after four years at the prevailing market price.
Currently, a farmer with a hectare of tree plantation could earn Rs 43,000 annually from selling the wood. It is also encouraging farmers to undertake intercropping. Or, simply put, to grow other crops side by side with the trees. So, for instance, some have grown chillies. The company, again, guarantees that it will buy the crop.
But company executives are grappling with some serious challenges. For one, many of the farmers have short-term cash needs (for example, a marriage in the family) and sell their trees to contractors even before they have grown to optimum size. ITC is looking at either roping in banks or going ahead on its own to provide loans to such farmers to tide over such problems.
And two, despite the support they give the farmers, they are under no contractual obligation to sell the wood to the company. Laments Rustagi: "We don't have any contract with the farmers, so while we do a lot of the work, other contractors and other competing paper mills come in and buy their wood by paying a few rupees more and take advantage of our efforts."
Even so, the afforestation programme makes sound business sense. It ensures ITC a regular supply of quality wood, the key raw material for making paper - at least 80 per cent of the wood from the trees planted by these farmers is bought by the company.
And company executives say that with 50,000 hectares under plantation, it is more than enough to meet most of the needs of the paperboard plant. ITC might even be willing to pay a higher price to farmers who are near the paper mill since it saves them expensive transportation costs.
Impressive as all this sounds, there are still cynics who question ITC's green credentials, essentially on three counts. First, they question the company's claim that its paper mill has reached global levels of energy efficiency.
Says Chandra Bhushan, associate director, industry and environment, Centre for Science and Environment (CSE), "The energy consumption of global paper companies of a similar kind per tonne of paper is virtually half of that in ITC." But he concedes that its consumption "is much lower than the average Indian paper mill (by around 25 per cent)".
ITC, in its defence, points out that benchmarking numbers is based on PriceWaterhouse Cooper's international benchmarking, and that Indian paper units should not be compared with international plants because of technological differences.
Second, decry cynics, is ITC's claim of becoming water efficient. CSE contends that the per tonne usage of water in the paper plant is at least 30-40 per cent higher than the global average, though it is also true that it is much lower than most other competing paper mills in India.
Third (and the most serious attack) is on its claim of becoming carbon positive. CSE says that ITC has overstated the credit on the carbon it claims to have reduced through the afforestation programe on account of the wrong methodology.
As the trees are cut in four-five year cycles, the carbon retained is again sent into the atmosphere either by burning of the wood or through paper waste.
Says CSE boss Sunita Narain: "We appreciate that ITC has a vision on environment and could be a role model for other companies, but there is no reason for them to misrepresent facts to show that they are carbon positive, or that they have attained global standards in energy consumption."
ITC insists it has followed international guidelines, and taken a year to year calculation while crediting carbon, and admits there are other ways to do it too. But then, rather than carry out its afforestation programme, ITC could have imported its pulp. If anything, the criticism has sharpened its need to stay water positive.
In all its hotels, high-tech water treatment plants (that cost Rs 40 lakh each) ensure that the water used in the rooms, the kitchen and by the laundry department is recycled back for use in the hotel gardens, in the cooling towers for the A-Cs, and even for flushing toilets.
In what is virtually uncharted territory in India, even the muted criticism sounds loud. While there may be a point in what the critics say (though in the whole, they're agreed that ITC's on to a good thing), a company that's going out on all limbs to ensure that it is giving back to the environment what it takes from it, can only be held up in extremely high esteem.
For some years now the message has been clear: investing to become green is not just good for society but, increasingly, a business imperative in a new world. ITC at least has put its words where its mouth is.
The global green index
Carbon positive? Zero solid waste? Water positive? If you're confused, here's our guide for dummies on what makes ITC such a winner:
Zero solid waste: A company that achieves this is either able to utilise its entire waste as raw material for some other industry, or recycle it for use again in the factory. Water positive: This implies that an organisation generates more fresh water through various water harvesting methods than it consumes in its factories.
Carbon positive: Implies a company, through afforestation programmes and efficient use of energy, eliminates more carbon dioxide from the atmosphere than the sum of the carbon emitted by the company through areas like the generation of electricity, running AC plants and so on.

The secret of Nimbus' success

His diamond earstuds glisten as the sun peeps through the window overlooking the sea at the Ming Yang restaurant on the first floor of Taj Lands End at Bandra. It's perfectly in sync with Harish Thawani's "bright mood", as we settle down for lunch on a lazy Saturday afternoon.
The executive chairman of Nimbus orders beer for both of us and says he is eagerly looking forward to the first Sunday in nearly four months when he will not meet any clients, writes
He was an accomplished chess player and could have made it to the national ranks if he had the money. During college days, he used to earn "big money" (Rs 300-400) by fixing the Wi-Fi systems of some of his rich classmates. The son of a development manager at the Life Insurance Corporation, Thawani says he was quite happy to get a break in the advertising world (Lintas, Chaitra Leo Burnett) and its "middle class" salary soon after doing his graduation in economics from Bombay University.
Twenty years later, Thawani hopes Nimbus, which was founded by him in 1987 as an advertising company, will cross the $1-billion mark in sales within the next four years, from around $250 million now. That's a long way from the early 1990s when his only claim to fame was Superhit Muqabla, a countdown show.
Till a few years ago, his "middle class mindset" was quite content with the Rs 100-crore (Rs 1 billion) sales figure that Nimbus achieved. But a chance meeting with steel tycoon Lakshmi Mittal in London - where the two started discussing their common passion about sports - changed his outlook forever.
"I learnt to dream big. I was only too happy at that time if Nimbus could achieve a 25 per cent growth in its annual turnover. But here was an Indian who dreamt of ruling the world in the business he was operating in. On my way back to the hotel, I asked myself the simple question: why can't I also dream big - really big? I just refused to think small any more," says Thawani.
That's perhaps the reason why his office did not throw any party even when Nimbus stunned everybody by winning the four-year contract for the cable, broadband and direct-to-home rights of cricket for an eye-popping $612 million (Rs 2,755 crore). "For us, the deal was no great shakes. It had to happen as we had worked out our numbers well in advance," Thawani says with a straight face.
He's a strict vegetarian and orders a Cantonese fried rice and bean curd, and I settle for a garlic chicken with steamed rice. But what about the criticism that he has paid a price which just isn't worth it? That's a question he was perhaps waiting for. Thawani rolls up his sleeves and starts rattling off figures that serve as astonishing pointers to the growth of cricket rights.
The Indian television rights for the 1992 Cricket World Cup were licensed to Nimbus for $525,000. By 1999, this had grown 24 times to $12 million. In 2000, the International Cricket Council awarded to the WSG-Nimbus alliance rights for two World Cups and four Champions Trophy events at $550 million.
The 2003 World Cup itself derived $75 million TV revenues from India alone - a rise of over 150 times in 10 years and a rise of over six times in four years. The 2007 World Cup is expected to derive licensing revenues from Indian television alone of over $200 million - an almost 300 per cent rise over the last World Cup.
Thawani seems unstoppable now and says his bid was predicated on the fact that cricket is the biggest entertainment asset in India. Its sustained ability to power TV ratings outperforms any movie or soap opera. Cricket's break viewership at 96 per cent of match viewership is twice as high as that of any other TV programming. "No other sport in India comes even within 1/100th the viewership of cricket," says Thawani.
The food is the standard five star fare and Thawani doesn't show much interest. He declines dessert as "it will surely put him to sleep", but seems to be in a mood to talk. He gives credit to Sourav Ganguly (for the aggression he brought into the game and Indian cricket's huge leap under his leadership) and Sachin Tendulkar (whom somebody would go miles to see) for the astonishing rise in the game's popularity among the Indian diaspora all over the world.
There's more. The emergence of four DTH platforms by end-2006 would provide a robust new stream of licensing revenues. Nimbus, he says, is exceptionally strong in overseas rights syndication and its edge in those markets alone gives it a 10-15 per cent financial superiority over other sports marketing agencies or sports broadcasters.
For instance, most bidders estimated revenues of $75-85 million from international markets, while Nimbus has already crossed sales of $120 million and will probably achieve $135-140 million over the four-year term.
"Cash is not a problem. Time is," Thawani says. There is no doubt in that. As if selling the ad spots and tying up deals all over the world aren't enough work already, Thawani is also leading a move to acquire a TV channel in partnership with a strategic investor and plans to dilute his stake in Nimbus further to raise around Rs 500 crore (Rs 5 billion).
It was only a few months ago that 3i, a UK-based private equity and venture capital company, picked up 33 per cent stake in the media company for around Rs 200 crore (Rs 2 billion), bringing down Thawani's stake in Nimbus from around 85 per cent to 54 per cent.
As we walk towards the foyer where his silver-coloured Merc is revving up, Thawani says the reason why he has banked so heavily on cricket for a livelihood is simple: India is the new cricket superpower as it provides between 60 and 80 per cent of world cricket revenues.And his greatest satisfaction is that Nimbus has finally shown that it can beat the world. Not bad going for somebody who, by his own admission, was a "middle class failed sportsman" till a few years ago.

The amazing rise of Sun TV

Back in 1992, so the story goes: Kalanithi Maran sought Zee TV's permission to use its transponder time when the channel was off air.
He believed Zee would not object because it would be recovering some of its rentals, but for some reason, Zee did not agree. So, Maran worked out a deal with ATN and went on to launch Sun TV.
In these thirteen years, he has built up a business that would be the envy of any broadcaster: Sun's channels command the highest audience shares in all the four southern states and viewership ratings for Sun TV during prime time in Tamil Nadu are way above those for Star Plus or Sony Entertainment (source TAM).
"We have a share of 70 per cent in the television market in Tamil Nadu and a 91 per cent listenership share in radio," claims the ebullient 40-year-old chairman.
Today, Sun TV is roughly one-fifth of the size of Zee. Its revenues for FY06 should hit Rs 325 crore (Rs 3.25 billion) compared with Zee's Rs 1,505 crore (Rs 15.05 billion). But if its initial public offering goes through, Sun's market capitalisation will be around Rs 5,000-6000 crore (Rs 50-60 billion) or half of Zee's Rs 10,000 crore (Rs 100 billion).
Multi-pronged growth strategy
The key to Sun's success, say industry watchers, has been the control over the distribution; it would be difficult for rival broadcasters to fight this even with superior content.
They also believe Maran's political connections have helped but concede that the model is well thought out. Maran is now planning a foray into DTH through a group company, which would give him even greater control over the distribution.
Sun TV's multi-pronged growth strategy is based on:

• Cashing in on audience share in a better environment
• Converting FTA channels into pay channels
• New niche channels for children and documentaries
• 41 new FM radio stations
• Leveraging the group's distribution business
• Topline should grow faster

Surprisingly enough, the topline growth in FY05 was an unimpressive 7 per cent.
For a broadcaster, which, through its four Tamil channels, has enjoyed the highest audience share among all networks (including national networks) in Tamil Nadu for the past three years - 59 per cent - and the highest audience in Kerala too, sales at Rs 290.3 crore (Rs 2.9 billion) did not reflect much pricing power.
For FY06, Sun should see a smarter increase of 12 per cent to around Rs 325 crore (Rs 3.25 billion), though that too is disappointing.
Analysts, however, are betting big on the future in anticipation of larger revenues from advertising in a strong environment. Besides, with subscription revenues kicking in, sales, they believe, should grow 75 per cent in FY07 and 45 per cent in FY08.
Sure enough, the environment, today, is far better. Rajesh Jain, director, KPMG, says, "The advertising pie for television is growing faster than before and consumers can afford to spend more on entertainment and are willing to do so."
So, Sun should command better pricing power, given its already high market share and the fact that it operates in the fairly affluent states of Tamil Nadu and Kerala.
Analysts estimate the ad spend for the Tamil and Malayalam C&S TV markets at Rs 350 crore (Rs 3.5 billion) and Rs 100 crore (Rs 1 billion) in FY05 respectively. Despite this, it is hard to see the topline touching Rs 835 crore (Rs 8.35 billion) in the next couple of years, analysts predict.
Going pay should pay off
What will drive revenues is Sun's plan to make its remaining free-to-air channels, including its flagship channel Sun TV, pay channels. Maran says Sun TV will be priced between Rs 15 and Rs 20, and believes reporting by cable operators will rise from the current 20 per cent to at least 35-40 per cent.
Industry watchers believe that the pay TV opportunity in Tamil Nadu and Kerala is large and will increase with the arrival of new platforms like DTH. The number of cable TV households is around 12 million and the estimated size of the cable subscription revenue market is around Rs 2,500 crore (Rs 25 billion).
Besides, the average cable monthly subscriptions are in line with the national average of Rs 175-200 and the possible size of the pay TV market assuming a 15 per cent share for broadcasters is around Rs 380 crore (Rs 3.8 billion).
Sun's pay TV revenues in FY05 were Rs 40 crore (Rs 400 million) and since its programmes command a high viewership, cable operators would be willing to carry the channels.
Analysts expect its pay TV revenues to touch Rs 220 crore (Rs 2.2 billion) by FY08. The other opportunity lies in the overseas markets, where there is a large affluent Indian population. Sun does not earn cable revenues since the business is housed in a group company.
The DTH venture, too, will be set up in a group entity since regulations do not allow DTH in a broadcasting company. However, there will be indirect benefits since the same promoter controls all the businesses.
Content - a big strength
Sun has built up a large library of around 2,600 films, in Tamil and Malayalam, which has helped it retain its prime position. Besides, it continues to buy rights for films.
"We have the first right of refusal with most film producers," claims Maran. The company believes in both outsourcing content and producing content in-house, for which it has built studio facilities.
Producers making content for Sun have to enter into an exclusive arrangement with the company and cannot produce serials or programmes for any other channels.
They typically purchase a time slot (say half an hour) on the channel and sell a portion of the airtime -- usually four minutes, the remaining airtime of three minutes being marketed by Sun.
Given that producers also need to sell airtime, they would look for channels with high viewership, which Sun offers.
Tuning in to the radio
Advertising revenues from FM radio are tipped to grow multifold from Rs 300 crore (Rs 3 billion) at present to at least Rs 1,000 crore (Rs 10 billion) by 2010, according to KPMG's Jain. Industry experts say the share of radio in total advertisement revenues should grow to at least 5.5 per cent from the current 2.3 per cent.
At present, Sun TV runs three radio stations � in Chennai, Coimbatore and Tirunelveli. Maran says the company will retain 45 licences in all - in Phase II; Sun TV won licences for all nine A-category cities and for 21 out of 22 south Indian cities.
The gameplan is to run 22 stations in the south and 23 stations in the north. They would be up and running by the year-end. Sun's strength lies in its ownership of film music rights for a large number of films.
The management is hoping to garner advertisements from local retailers and restaurants, which would typically not use television or print - 85 per cent of radio revenues are from local advertisements.
Revenues from Tirunelveli - a small, C-category town with a population of 0.41 million - amounted to Rs 2.8 crore (RS 28 million) in FY05 and Rs 1.3 crore (Rs 13 million) in H1FY06. From Coimbatore, Sun is estimated to have earned Rs 5.6 crore (Rs 56 million) in FY05 and Rs 3.2 crore (Rs 32 million) in H1FY06.
Valuations are a big bet on the future
The price band of Rs 730-875 implies a market capitalisation of Rs 5,037-6,037 crore (Rs 50.37-60.37 billion) for Sun. Compare this with Rs 10,000 crore (Rs 100 billion) for Zee, which has a similar business model except that it has distribution but no radio business.
Revenues for Zee were Rs 584 crore (Rs 5.84 billion) versus Rs 218 crore (Rs 2.18 billion) for Sun in the nine months to December 2005. Its market cap to sales (FY06), at the higher end of the price band, is around 18.5, while for Zee it is 6.5. Sun's EV/EBITDA multiple for FY06 is 28 times compared with Zee's 40 times.
Sun's programmes are popular. Going ahead it should gain from higher advertisement revenues. Zee, on the other hand, while seeing better viewership ratings, is unlikely to see increased pricing power.
Analysts believe Sun's earnings will grow at 48 per cent compared with 6-10 per cent for Zee between FY05 and FY08, given that its pay TV revenues will grow faster. While the numbers are not impossible to achieve, given the potential for growth, Sun may take longer than time estimated to get there.

The inspiring rags-to-riches tale of Sarathbabu

When 27-year old Sarathbabu graduated from the Indian Institute of Management, Ahmedabad, he created quite a stir by refusing a job that offered him a huge salary. He preferred to start his own enterprise -- Foodking Catering Service -- in Ahmedabad.
He was inspired by his mother who once sold idlis on the pavements of Chennai, to educate him and his siblings. It was a dream come true, when Infosys co-founder N R Narayana Murthy lit the traditional lamp and inaugurated Sarathbabu's enterprise.
Sarathbabu was in Chennai, his hometown, a few days ago, to explore the possibility of starting a Foodking unit in the city and also to distribute the Ullas Trust Scholarships instituted by the IT firm Polaris to 2,000 poor students in corporation schools.
In this interview with rediff.com, Sarathbabu describes his rise from a Chennai slum to his journey to the nation's premier management institute to becoming a successful entrepreneur. This is his story, in his own words.
Childhood in a slum
I was born and brought up in a slum in Madipakkam in Chennai. I have two elder sisters and two younger brothers and my mother was the sole breadwinner of the family. It was really tough for her to bring up five kids on her meagre salary.
As she had studied till the tenth standard, she got a job under the mid-day meal scheme of the Tamil Nadu government in a school at a salary of Rs 30 a month. She made just one rupee a day for six people.
So, she sold idlis in the mornings. She would then work for the mid-day meal at the school during daytime. In the evenings, she taught at the adult education programme of the Indian government.
She, thus, did three different jobs to bring us up and educate us. Although she didn't say explicitly that we should study well, we knew she was struggling hard to send us to school. I was determined that her hard work should not go in vain.
I was a topper throughout my school days. In the mornings, we went out to sell idlis because people in slums did not come out of their homes to buy idlis. For kids living in a slum, idlis for breakfast is something very special.
My mother was not aware of institutions like the Birla Institute of Technology and Science, Pilani, or the Indian Institutes of Technology. She only wanted to educate us so that we got a good job. I didn't know what I wanted to do at that time because in my friend-circle, nobody talked about higher education or preparing for the IIT-JEE.
When you constantly worry about the next square meal, you do not dream of becoming a doctor or an engineer. The only thing that was on my mind was to get a good job because my mother was struggling a lot.
I got very good marks in the 10th standard exam. It was the most critical moment of my life. Till the 10th, there was no special fee but for the 11th and the 12th, the fees were Rs 2,000-3,000.
I did book-binding work during the summer vacation and accumulated money for my school fees. When I got plenty of work, I employed 20 other children and all of us did the work together. That was my first real job as an entrepreneur. Once I saw the opportunity, I continued with the work.
Life at BITS, Pilani
A classmate of mine told me about BITS, Pilani. He was confident that I would get admission, as I was the topper. He also told me that on completion (of studies at Pilani), I will definitely get a job.
When I got the admission, I had mixed feelings. On one hand I was excited that for the first time I was going out of Chennai, but there was also a sense of uncertainty.
The fees alone were around Rs 28,000, and I had to get around Rs 42,000. It was huge, huge money for us. And there was no one to help us. Just my mother and sisters. One of my sisters -- they were all married by then -- pawned her jewellery and that's how I paid for the first semester.
My mother then found out about an Indian government scholarship scheme. She sent me the application forms, I applied for the scholarship, and I was successful. So, after the first semester, it was the scholarship that helped me through.
It also helped me to pay my debt (to the sister who had pawned her jewellery). I then borrowed money from my other sister and repaid her when the next scholarship came.
The scholarship, however, covered only the tuition fees. What about the hostel fees and food? Even small things like a washing soap or a toothbrush or a tube of toothpaste was a burden. So, I borrowed more at high rates of interest. The debt grew to a substantial amount by the time I reached the fourth year.
First year at BITS, Pilani
To put it mildly, I was absolutely shocked. Till then, I had moved only with students from poor families. At Pilani, all the students were from the upper class or upper middle class families. Their lifestyle was totally different from mine. The topics they discussed were alien to me. They would talk about the good times they had in school.
On the other hand, my school years were a big struggle. There was this communication problem also as I was not conversant in English then.
I just kept quiet and observed them. I concentrated only on my studies because back home so many people had sacrificed for me. And, it took a really long time -- till the end of the first year -- to make friends.
The second year
I became a little more confident and started opening up. I had worked really hard for the engineering exhibition during the first year. I did a lot of labour-intensive work like welding and cutting, though my subject was chemical engineering. My seniors appreciated me.
In my second year also, I worked really hard for the engineering exhibition. This time, my juniors appreciated me, and they became my close friends, so close that they would be at my beck and call.
In the third year, when there was an election for the post of the co-ordinator for the exhibition, my juniors wanted me to contest. Thanks to their efforts I was unanimously elected. That was my first experience of being in the limelight. It was also quite an experience to handle around 100 students.
Seeing my work, slowly my batch mates also came to the fold. All of them said I lead the team very well.
They also told me that I could be a good manager and asked me to do MBA. That was the first time I heard about something called MBA. I asked them about the best institution in India. They said, the Indian Institutes of Management. Then, I decided if I was going to study MBA, it should be at one of the IIMs, and nowhere else.
Inspiration to be an entrepreneur
It was while preparing for the Common Admission Test that I read in the papers that 30 per cent of India's population does not get two meals a day. I know how it feels to be hungry. What should be done to help them, I wondered.
I also read about Infosys and Narayana Murthy, Reliance and Ambani. Reliance employed 20,000-25,000 people at that time, and Infosys, around 15,000. When a single entrepreneur like Ambani employed 25,000 people, he was supporting the family, of four or five, of each employee. So he was taking care of 100,000 people indirectly. I felt I, too, should become an entrepreneur.
But, my mother was waiting for her engineer son to get a job, pay all the debts, build a pucca house and take care of her. And here I was dreaming about starting my own enterprise. I decided to go for a campus interview, and got a job with Polaris. I also sat for CAT but I failed to clear it in my first attempt.
I worked for 30 months at Polaris. By then, I could pay off all the debts but I hadn't built a proper house for my mother. But I decided to pursue my dream. When I took CAT for the third time, I cleared it and got calls from all the six IIMs. I got admission at IIM, Ahmedabad.
Life at IIM, Ahmedabad
My college helped me get a scholarship for the two years that I was at IIM. Unlike in BITS, I was more confident and life at IIM was fantastic. I took up a lot of responsibilities in the college. I was in the mess committee in the first year and in the second year; I was elected the mess secretary.
Becoming an entrepreneur
By the end of the second year, there were many lucrative job offers coming our way, but in my mind I was determined to start something on my own. But back home, I didn't have a house. It was a difficult decision to say 'no' to offers that gave you Rs 800,000 a year. But I was clear in my mind even while I knew the hard realities back home.
Yes, my mother had been an entrepreneur, and subconsciously, she must have inspired me. My inspirations were also (Dhirubhai) Ambani and Narayana Murthy. I knew I was not aiming at something unachievable. I got the courage from them to start my own enterprise.
Nobody at my institute discouraged me. In fact, at least 30-40 students at the IIM wanted to be entrepreneurs. And we used to discuss about ideas all the time. My last option was to take up a job.
Foodking Catering Services Pvt Ltd
My mother is my first inspiration to start a food business. Remember I started my life selling idlis in my slum. Then of course, my experience as the mess secretary at IIM-A was the second inspiration. I must have handled at least a thousand complaints and a thousand suggestions at that time. Every time I solved a problem, they thanked me.
I also felt there is a good opportunity in the food business. If you notice, a lot of people who work in the food business come from the weaker sections of the society.
My friends helped me with registering the company with a capital of Rs 100,000. Because of the IIM brand and also because of the media attention, I could take a loan from the bank without any problem.
I set up an office and employed three persons. The first order was from a software company in Ahmedabad. They wanted us to supply tea, coffee and snacks. We transported the items in an auto.
When I got the order from IIM, Ahmedabad, I took a loan of Rs 11 lakhs (Rs 1.1 million) and started a kitchen. So, my initial capital was Rs 11.75 lakhs (Rs 1.17 million).
Three months have passed, and now we have forty employees and four clients -- IIM Ahmedabad, Darpana Academy, Gujarat Energy Research Management Institute and System Plus.
In the first month of our operation, we earned around Rs 35,000. Now, the turnover is around Rs 250,000. The Chennai operations will start in another three months' time.
Ambition
I want to employ as many people as I can, and improve their quality of life. In the first year, I want to employ around 200-500 people. In the next five years, I hope to increase it by 15,000. I am sure it is possible.
I want to cover all the major cities in India, and later, I want to go around the world too.
I have seen people from all walks of life -- from the slums to the elite in the country. That is why luxuries like a car or a bungalow do not matter to me. Even money doesn't matter to me. I feel bad if I have to have food in a five star hotel. I feel guilty.
Personally, I have no ambition but I want to give a house and a car to my mother.
Appreciation
I did not expect this kind of exposure by the media for my venture or appreciation from people like my director at the IIM or Narayana Murthy. I was just doing what I wanted to do. But the exposure really helped me get orders, finance, everything.
The best compliments I received were from Narayana Murthy and my director at IIM, Ahmedabad. When I told him (IIM-A director) about my decision to start a company, he hugged me and wished me luck. They have seen life, they have seen thousands and thousands of students and if they say it is a good decision, I am sure it is a good decision.
Reservation
Reservation should be a mix of all criteria. If you take a caste that comes under reservation, 80 per cent of the people will be poor and 20 per cent rich, the creamy layer. For the general category, it will be the other way around.
I feel equal weightage should be given for the economic background. A study has to be done on what is the purpose of reservation and what it has done to the needy. It should be more effective and efficient. In my case, I would not have demanded for reservation. I accepted it because the society felt I belonged to the deprived class and needed a helping hand.
Today, the opportunities are grabbed by a few. They should be ashamed of their ability if they avail reservation even after becoming an IAS officer or something like that. They are putting a burden on the society and denying a chance to the really needy.
I feel reservation is enough for one generation. For example, if the child's father is educated, he will be able to guide the child properly.
Take my case, I didn't have any system that would make me aware of the IITs and the IIMs. But I will be able to guide my children properly because I am well educated. I got the benefits of reservation but I will never avail of it for my children. I cannot even think of demanding reservation for the next generation.

Bajaj Allianz's big success story

Vikas Gupta joined Bajaj Allianz close to a year ago. The 26-year-old was entrusted with setting up an office for the life insurance major in Itarsi, a small town in Madhya Pradesh.
Gupta was in charge of finding a suitable location, negotiating the rent, buying the furniture and even hiring a couple of junior managers to work for him. He's now got four sales managers reporting to him, who in turn supervise a team of agents.
It's not the way most insurance companies in India have grown, but small towns and local recruits are the major planks of Bajaj Allianz's distribution strategy. Having discovered that even the smallest towns can prove rich catchment areas, the insurance company is spreading out rapidly into the interiors.
In just about five years, it has rolled out one of the biggest networks in the industry: at present, Bajaj Allianz has around 900 offices across the country, compared with around 330 for market leader ICICI Prudential.
Before the year is out, it will have more than 1,000 offices covering 586 districts, up from the current 450. Bajaj Allianz will be the first private sector insurance player to have a presence in towns like Akola in Chhattisgarh and Uluberia in West Bengal.
"We want to be a mass brand and that's why we're looking at a large footprint. Of course, a geographical spread helps derisk the model, which is particularly important for insurance. Today we earn our premia almost equally from each of the four regions," says Sanjay Jain, marketing head, Bajaj Allianz.
Still, why so many offices? Jain explains that in the insurance business a physical presence is critical. "People need to know we're going to be around, because insurance is a long-term product where the money is paid out after 15 or 20 years."
An office, however small, is a reassuring sign, he adds. Which is why the company has a presence even in towns where the population is less than 50,000, pleasantly surprised by the purchasing power even in states such as West Bengal and Orissa.
The strategy seems to be paying off. For the first time, in FY05-06, Bajaj Allianz notched up a first year premium of Rs 2,715.62 crore (Rs 27.16 billion), overtaking market leader ICICI Prudential, which earned Rs 2,637.48 crore (Rs 26.37 billion) as premium during the same period.
Observes Arvind Mahajan, executive director, KPMG, "Bajaj Allianz seems to have adapted Allianz's global philosophy - you're never too far from an Allianz shop - rather well. It has a more pronounced retail approach compared to others."
The retail approach is combined with one of independence. Once Bajaj Allianz decides on a new location, it typically hires local youngsters to man the office, working on the belief that since insurance is all about trust, customers are likely to have more faith in locals.
The new recruits are given a more or less free hand: they scout around for an office, furnish it, hire managers and agents. "We don't pay great salaries but we give our office heads a lot of freedom.
They take almost all decisions including how they want to spend their ad budgets - whether they want to use hoardings or simply remunerate the agents. In that sense, it's a totally decentralised model," says Jain.
Most offices are small - around 350-400 sq ft - and functional, with an eye on cost control. Speed is of essence, and new offices are up and running within a month of the decision to set it up.
At a later stage, budgets and targets are set and agents found. "In some ways it's like an entrepreneurial effort: they [the local recruits] are the ones driving the business through the agents," Jain adds.
Apart from setting up its own offices in smaller towns, Bajaj Allianz has also beefed up its distribution by teaming up with 10 co-operative banks, around 100 district co-operative banks, as well as some regional rural banks to drive business to it. The banks earn a referral fee, so it's an attractive revenue stream for them.
Recently, the company also joined hands with Godrej Aadhar - the rural retail chain that has around 28 outlets across the country.
"We have agreed to set up shops-in-shops at all Aadhar outlets and we are also talking to other such rural retail chains," says Jain, who adds that the response and interest levels at rural malls has been "a revelation".
Importantly, at every location, whether bank counter or a rural outlet, the company ensures that it posts its own people, the idea being to inspire trust in customers.
While it may use the bank staff for back-office functions, the selling of insurance policies is always done by a company employee. Not surprisingly, Bajaj Allianz already has 18,000 people on its rolls, and will soon be adding another 7,000.
About six months ago, in a bid to strengthen its urban distribution, the company also forged an alliance with GE Money, which has around 200-odd outlets.
However, agents remain the biggest selling channel and so the company ensures that commissions are competitive - the industry average is around 25-30 per cent. Bajaj today has 125,000 agents, way behind LIC's 1 million but ahead of ICICI Prudential's 100,000.
However, in some of the towns, Bajaj has also used local financial advisors, since it believes the comfort level of the customer may be higher with them than with agents.
In keeping with its regional focus, brand building efforts have also been localised; rather than advertise nationally, Bajaj Allianz relies more on vernacular dailies and slots on regional television channels.
"We even have jingles in Bhojpuri," says Jain. And although Bajaj Allianz hasn't leveraged the Bajaj Auto distribution network, the company admits that the Bajaj tag does help enormously, lowering entry barriers in smaller towns.Meanwhile, Vikas Gupta, who had never been out of Madhya Pradesh, is just back from a trip to Egypt, a reward for his performance. Whether it's Bajaj or its people, everyone seems to be going places.

The success story of an Indian animation company

It has been an eventful five years for 32-year-old Rajiv Chilakalapudi ever since he began to nurture his Hyderabad-based animation company, Green Gold Animation Pvt Ltd.
The company that started with just four people in 2001 is now 70-strong. But Chilakalapudi says the employee strength will rise to 1,000 in the next three years. As managing director of Green Gold Animation, he speaks at major business forums in India -- like the ones organised by FICCI, NASSCOM, etc -- as an expert in the field.
The products from his company -- Vikram aur Betal and Krishna are aired on Cartoon Network and Doordarshan. More programmes are on the way, he assures.
In a candid chat with rediff.com, Rajiv speaks about how he made his passion a success.
Cartoons, a passion even as a child
Like all kids, I too was really fascinated by cartoons as a child. I remember getting up very early in the morning on Sundays to watch the Disney cartoons on Doordarshan. I used to wonder why there were only Mickey Mouse and Donald Duck and no Indian characters.
Though I was not an artist, I had lots of ideas then and there. I went on to do engineering as there were no courses on animation back then.
After my graduation from Osmania University in 1995, I went to the USA to do Masters in Computer Science. I worked as a software engineer in the US for three years. All through my studies, and also later on, my desire was to be in the animation industry.
Three years into my job as a software engineer, I began looking at the animation industry with more interest. I found that there were not many animation companies in India, and saw a large potential in the market.
Learning animation
I saved as much money as I could in those three years and went to an animation school in San Francisco.
I then knew animation was what I wanted to do in my life. What I was doing till then was just mundane work where there was no creativity. I didn't enjoy what I was doing. I decided to come back to India. It was intuition that gave me the courage to chuck my well paying job and come back to India to start my own animation company.
My parents were shocked. My father flew down to the United States to dissuade me. He asked me, 'Are you crazy? Why do you want to do this?' I managed to convince him how passionate I was about my plans. Then he wanted to see my business plan. When I showed him my plan, he felt it was a good one, that there was future in it and that it was worth taking the risk.
I came back not only because India is a huge market but also because I love my country. I am very patriotic and I believe that India will be a superpower soon.
Animation company in Hyderabad
I didn't waste time after I reached Hyderabad. I looked for a place immediately. We started with four people. We could not find any animators then. So, we recruited technical people.
I not only invested whatever I had saved but my father's and brother's money too. Altogether my initial investment was about Rs 75 lakh (Rs 7.5 million). We needed Rs 50 lakh (Rs 5 million) for the machinery itself. When we started out, the machinery was very expensive. Even the software was worth Rs 8 lakh (Rs 800,000), but all that has come down now.
Green Gold Animation Pvt Ltd
The year was 2001. We named our company Green Gold Animation Pvt Ltd. I wanted a colourful name. Green is nature and nature is associated with creativity. And, gold is Goddess Lakshmi.
What we did first was create a presentation for a US-based corporate though it was actually not our forte. But initially we decided to do all the jobs that came our way.
Although we did a lot of animation for advertisers, nobody was interested in any animation products, I found. So, we decided to create our own product.
Created an alien named Bongo
Although it was a big risk, we created Bongo. It is an animation-cum-live action television series more on the lines of the alien in the film, Koi Mil Gaya. Bongo is a friendly alien who helps people. We spoke to many TV channels but nobody was interested; every one wanted only saas-bahu serials.
We then approached Doordarshan. Luckily for us, they were looking for children's programmes then. Our programme was first aired on Doordarshan by the end of 2004. Although there were gaps in between, it still is shown on Doordarshan every Saturday afternoon.
It was a great day for us when Bongo was first aired on Doordarshan. We were all eagerly waiting; the titles came and then the power went off. It was an anti-climax. The response also was amazing. It was at number three among all the kids' programmes.
Deal with Cartoon Network
Then we approached Cartoon Network with the idea of Vikram aur Betal. They were not sure about the commercial success of the idea. So they asked us to develop the product and show it to them. The risk was ours.
As we believed in our quality, we made the entire show and delivered it to Cartoon Network. They loved the programme and bought it. That was again, 2004. Vikram aur Betal was a turning point for us. It gave us a huge mileage.
Here comes Krishna!
After Vikram aur Betal, we spoke to Cartoon Network about the tales of Lord Krishna. They accepted that too. The first part of Krishna -- about his birth-- was shown on Janmashtami day this year. It is a 75-minute programme which will be aired on Cartoon Network every three months. It is more like a feature film.
We are also making a film on Chhota Bheem.
The struggle
We struggled immensely in the initial years. For five years, there was nothing but work for us. When we create original content, it is very difficult to sell it. If we can't sell a product, what will happen to the company? It was a very big risk we were taking.
As the market was at a nascent stage then, we thought we would suffer now so that the returns would come later. Our patience paid off as today we are a brand name in the animation industry.
From India, we are the number one animation supplier to Cartoon Network.
Now, we have 70 people working with us. Our revenue is around Rs 2 crore (Rs 20 million) this year. We expect to double our revenues ever year. Now the sky is the limit. I have faith that one day we will make a world renowned movie and will make India proud of us.
Indian content is as yet unexplored and in the future you will see Indian stories being watched all over the world. People are tired of seeing the same old Jack and Jill stories. Indian characters are unique and they will rule the world soon.
The first successful animation film was The Jungle Book and it was based in India and all the characters are Indian and have Indian names. Our first animation feature film of 100 minutes will be on Lord Ganesh and it will be released on the next Ganesh Chaturthi in 2007.
We want to start animation schools all over India as there is severe manpower shortage and a lot of poaching takes place now, which is not healthy for the industry. We may require 1,000 people in the next three years. Our ambition is to be the number one in the world like Walt Disney. In the next ten years, we want to be a global player.

How Zee scripted its own success story

There is a strong sense of deja vu at Zee TV's Mumbai headquarters. In July 2000, nine of the top 10 programmes on cable television were from Zee. Then came Kaun Banega Crorepati, archrival Star TV's smash-hit quiz show.
In a matter of weeks, KBC annihilated Zee, sending its television rating points crashing - less than a year later, Zee's programmes were nowhere close to the top 10 list and Sony TV had pushed it down further to occupy the No.2 slot.
But now, several failed attempts to connect with viewers later, Zee is finally out of the wilderness: between March and November its prime time viewership averaged 28.5 per cent compared with 12.3 per cent for Sony (Source: TAM). That makes Zee a clear No. 2, still a long way off from Star TV's 41 per cent but a huge leap nonetheless. Star insiders admit the channel has lost some viewership to Zee TV, but add that Sony has been the bigger loser.
The Zee story is looking better to analysts, too; after underperforming the market for nearly three years, the stock is finally doing well, and market capitalisation has more than doubled from the start of the year to Rs 16,600 crore (Rs 166 billion). How did Zee turn back the clock?
The same old story
What seems to have worked for Zee is, rather than trying overly adventurous changes, it stuck to what it does best.
In the immediate aftermath of KBC, the channel had launched its own gameshows - Sawaal Dus Crore Ka and Kam Ya Zyaada. Both sank without a trace and Zee quickly abandoned reality shows, turning instead to its usual soaps for survival.
For perhaps the first time, the channel invested in formal research into viewing habits and preferences. The findings underlined a truth the channel and others like it, already knew: the general entertainment genre is still largely a woman's sphere.
"Also, reality shows, even if they succeed, don't always bring in ratings. And until the subscription environment changes, we are dependent on ratings," adds Pradeep Guha, CEO, Zee Network.
Those associated with the television industry think Zee's decision was wise. Points out Lakshmi Narasimhan, national director, Group M Media, the biggest media buyer in television, "Unless a concept is dramatically new, it is difficult to make it work. So it it probably better that Zee stayed with serials."
Not that the focus on serials paid immediate dividends. It took close to two years for Zee to come up with a winner. That's because in the initial stages, the channel didn't spend too much on production and compared with the fare being dished out on Star TV, the quality of Zee's content was painfully shoddy.
Serials like Kamal, Kohi Apna Sa and Kittie Party came and went without mention. The tide really turned only in October 2005 with Saat Phere (latest TRPs: 5.1), followed by the January 2006 launch of Kasamh Se (TRP: 4.6).
Zee's approach to its serials has become increasingly sophisticated: content heads now research plots and storylines in detail, and are able to course-correct more frequently, at times even on a daily basis.
According to some estimates, the channel now spends around 60 per cent of revenues on transmission and programming, compared with 35-40 per cent earlier.
Zee's strategic shift is working - something even rivals admit. Says Kunal Dasgupta, managing director, Sony Entertainment, "A couple of soaps is all it takes and Zee has managed to get two hits during prime time."
Adds Farokh Balsara, partner and head, media practice, Ernst & Young, "The content has clearly improved. At times if you see soaps on different channels, without the logos it is hard to tell which channel you are watching."
Getting real
Zee's success is as much a function of what its rivals didn't do as it is a function of what Zee did. While Star's Kyonki and Kasauti are still on top of the charts, none of its later soaps - Antariksh, Virasat and the like - have made it to the top 10.
"After KBC, Star has been living off its existing popular soaps," points out a media watcher. And Sony's Dasgupta admits that after two of its popular soaps Kkusum and Jassi - went off air in April 2006, there has been a vacuum.
The more charitable view is that other channels have bet big on reality shows and been disappointed - Sony's talent hunt Indian Idol was a hit only the first time, as was Nach Baliye (Star One); TRPs of Jhalak Dikhla Ja and Bigg Boss, too, haven't gone much over 3 (of course, Bigg Boss is relatively new).
Zee, on the other hand, has capitalised on its musical talent show Sa Re Ga Ma Pa, now in its 13th year. Zee Marketing Head Tarun Mehra points out that thanks to a continuous change in the category of participants, Sa Re Ga Ma Pa remains popular.
For instance, this year's Sa Re Ga Ma Pa Li'l Champs - a three-month long series with child contestants - started with a TRP of 2.7, climbed to 6 and ended with 11.1.
Pushy promos
While trying to beef up the content, Zee has also focused on creating more hype for its shows. Mehra says ad spends in 2006 are up nearly 30-40 per cent over the last year.
"The advertisements in newspapers are mainly for the advertisers; a large part of the advertising budget is being used for below-the-line initiatives," he explains.
For instance, when Sindoor was launched in March 2005, boxes of sindoor were given away to "several lakh" middle-class women in Mumbai, Delhi, Indore, Bhopal and Ahmedabad; similarly, Dulhan was marked with the distribution of mehendi booklets.
"We need to reach out to the women who are our potential viewers and create a buzz," explains Guha.
But it's not just about reaching out and touching the target viewer - the channels also ropes in celebrities to draw in more viewers. Zee managed a first when it convinced Ekta Kapoor (the creative head of Balaji Telefilms, which produces most TV soaps these days) to talk about Kasamh Se on a private FM channel.
Actor Salman Khan and the casts of Dor came on the sets of Sa Re Ga Ma Pa, while Shah Rukh Khan was the chief guest for the Li'l Champs finale.
"We need to outshout the competition," says Mehra. Zee is also paying more attention to its promos, whether on its own network or outdoors. "We have been careless in the past," admits Mehra adding "At time, the colours on the hoardings differed widely from those on the television promotions."
Everyone's buying
While it may tinker around with its shows, Zee's gameplan is to stay with the current programming mix, which centres on soaps. Guha says the channel has no immediate plans to launch reality shows - clearly Zee doesn't want to upset the applecart, not when both the audience and advertisers are happy.
According to Guha, spots for new contracts are fetching rates that are anywhere between 20 and 50 per cent higher than last year. What's more, unlike in the past, Zee no longer offers bonus slots on the network.
"During prime time we are getting double the rate that Sony is," claims Guha. Sony's Dasgupta refused to comment.
Group M's Narasimhan confirms that Zee is getting around 20-25 per cent higher prime time rates than six months ago, but adds that monetising the performance will take time because the majority of the deals are annual contracts. "It could take as long as three quarters," he feels.
Adds Sai Nagesh, executive vice president at media buying agency Insight, "We are recommending Zee and the increase in rates for spots has been around 12-14 per cent. From a media-buying point of view, we also take into account the interactive component of a show and we've found that the response to shows such as the finale of Sa Re Ga Ma Pa has been tremendous."
Ahead in the last mile
The Zee group is also beefing up its distribution network, picking up local cable operators and today claims a subscriber base of 250,000.
Ernst &Young's Balsara believes that with both a cable network (Siticable) and a direct-to-home service (Dish TV), Zee may be in a slightly better position than Star - for its part, Star owns minority stakes in a cable company (Hathway) and a DTH venture (Tata Sky).
"A controlling stake in distribution could be very important with subscription revenues expected to go up," explains Balsara.
With a view to strengthening distribution, Zee has decided to spin off the cable and DTH ventures into separate companies and bring in strategic and financial investors for both. That would also help the management retain its focus on general entertainment.
Serial killer
That may be more important than ever before. With Shah Rukh Khan signed on to host the third round of KBC, Zee will find it a challenge to retain eyeballs on weekday prime time.
The cricket calendar is also booked until April 2007 and advertisers are likely to earmark large portions of their budget for the matches. Guha is aware of the situation.
"Right now we're not going to be doing anything different, although we may experiment later," he says.
"KBC will rule for around three months," dismisses Dasgupta. Even that could be enough to put Zee in a bind. "If the channel is not nimble enough, it could lose the advantage it is building against Star," warns Narasimhan.Zee will need to think fast and come up with alternatives. Or else, this show could come to an untimely end.

An entrepreneur born to succeed

How do you take Rs 10,000 and convert it into a Rs 200 crore (Rs 2 billion) company that is all set to complete a major US acquisition in a year?
Well you need to be taken hostage by your client, be locked in a room for a few hours and also promise to give up your bike in exchange for a job half done - at least that is what Kunwer Sachdev, CEO of Su-Kam, a Rs 200 crore Delhi-based company engaged in the business of power inverters UPS and batteries says as he recalls the time when he began his entrepreneurial venture in the early '90s.
Kunwer Sachdev started out as a cable TV operator and recalls an incident that took place in his initial years, which incidentally was a turning point in his career.
CEO of Su-Kam, Kunwer Sachdev told Moneycontrol, "During the early years of struggle I was into the cable TV business and did not have any domain knowledge. I took up any and all types of projects from people. There was one such project that I could not complete on time. It was for a hotel and seeing that I could not deliver, the owner locked me in a room. I stayed put in the room for two hours until he opened the door and asked for his advance money back. But since I had spent that in buying the equipment, I told him to keep my bike instead should I fail to deliver. Eventually I did complete the job and he was happy. Now he is a very dear friend of mine," recalls Sachdev.
They say entrepreneurs are not taught, they are born and perhaps Kunwer Sachdev is one person who perfectly fits this theory. Additionally, as any entrepreneur would testify, failure is not only an important ingredient but also a very important aspect in any successful venture.
"When I started making invertors in 1997, we experimented with new technologies. We didn't have any idea what we were doing and we kept borrowing components from different products. Money doesn't matter in any entrepreneurship, I started with only Rs 10,000. There were a lot of negatives in the beginning. I remember going to a bank for a loan of Rs 5,000, and they took so much time that I said forget it. From that day I didn't go to banks, I have raised funds in my own way," says Sachdev.
Early this year, the $200 million Reliance India Power Fund, picked up a 20 per cent stake in Su-Kam in a Rs 45 crore (Rs 450 million) deal. Su-Kam has already made inroads into world markets such as Asia, Africa, Middle East and the Pacific Region and is now looking to make a strategic US acquisition.
"We are looking to acquire a company in the US in the next one year. I haven't seen any company that we might want to acquire yet, but the acquisition will be complete in a year. Deadlines are very important for me," says Sachdev.
Sachdev is confident of scaling up his operations in India as well. "We will keep on scaling up. My balance sheet for the last 6 years shows more than 100 per cent growth in each year. It has been a challenge for me to sustain that year after year. This year we installed invertors on all major cell sites across the country, and we have a big order from Reliance Infocomm.
We are in talks with Bharti and other telecom players. Next year, I plan to do Rs 1,000 crore (Rs 10 billion) business, and I can see that happening," concludes Sachdev.

How a small trader became a metal king

Anil Agarwal, 52, dreams of being the best mining and metal-maker in the world. To get there, he thinks three to five years is a "reasonable" time. Surprised? Those who know him are not.
Agarwal, executive chairman and founder of the London Stock Exchange-listed Vedanta Resources, is growing at a very fast pace - from Rs 15 crore (rs 150 million) in 1985 to nearly Rs 20,000 crore (Rs 200 billion) in the nine-month year to 2006.
Agarwal's is a classic story of a small trader becoming metal king. The secret, he says, lies in believing in himself and in the country's potential.
"Also, I am fortunate to have wonderful people with me. Without them, it would not have been possible for me to reach this level," he told Business Standard after announcing the acquisition of Sesa Goa on Tuesday.
Agarwal came to Mumbai when he was 19 after completing his matriculation from Patna in 1975. He was so impressed with the grand edifice of the The Oberoi that he decided to lodge himself there as he set out to pursue his career as a scrap trader.
But due to his poor command over English, he had to seek the help of a friend to book himself in the hotel. Once there, he would eat out so the cost would not exceed the daily rent of Rs 200.
Today, his annual salary is over Rs 4.5 crore (Rs 45 million), not to mention his stock options and shareholding. He owns a home in Mayfair, London, drives a Bentley, wears the most expensive suits and has the best staff in the industry working for him.
But all this has not changed him. "I am a proud Bihari," he says. "But I have done nothing for Bihar and Jharkhand. In fact, this was the added attraction for my interest in Sesa Goa, which has a prospective licence in Jharkhand," he says.
An ambitious Agarwal wants to have a production capacity of 1 million tonnes each in his three areas of business - copper, aluminium and zinc, and wants to set up a 10,000 MW power plant. "We are investing $13 billion to achieve the target and are half way through [to it]," he says.
It was this ambition that drove him to launch a hostile takeover bid to acquire Indian Aluminium (Indal) from the American giant, Alcan, which failed. Instead, he bought the ailing Madras Aluminium. Later, he acquired Bharat Aluminium and Hindustan Zinc from the government and purchased India Foils from the Khaitan group of Kolkata. In all these cases, the Birla group was one of the contenders. On his part, Agarwal shrugs off the theory of rivalry with the Birla group. "There is enough water in the sea for every fish," he says.
As of now, the uncrowned non-ferrous king of the country is making his foray in the ferrous market. Sesa Goa has a reserve of 207 million tonnes of iron ore and produces 10 million tonnes a year, and has mines in Orissa, Karnataka and Goa. He differs with those who believe that he paid a hefty premium.
"The premium of 16 per cent is actually cheap, compared to the international instances where the acquirer pays 40-50 per cent more than the market price," he says. With Sesa Goa in his fold, he seeks to be an integrated metal junction with interests in copper, aluminium, zinc, lead and iron ore.
As for failures, he has had his share. His acquisition of India Foils has proved to be unwise. The company is still bleeding. But he is candid in confession. "India Foils contributes a small portion to the group's overall turnover. We may disinvest our interest when we get the right price," he says.
Iron ore exporters, however, are a happy lot with the company coming under the Vedanta fold. They feel they now have a strong man to fight the steel lobby in the corridors of policy making.

Tata Tea brewing a success story

The scene is a home in small town India. A young girl brings her elder brother a cup of tea as he sits in the verandah. Taking a sip, he remarks that it tastes good.
Overhearing the comment, the wife in the kitchen pipes up. "I'm the one who made it," she says. "But I bought it," the man retorts. "Because I told you to," says his mother standing nearby.
To which the vendor across the lane says, "But I'm the one who sold it to you."
If there are several contenders for praise in the Agni ad film, real life isn't too different. While Tata Tea's marketshare has been climbing in the past year, in June 2007, it inched past archrival Hindustan Unilever for the first time, with volume shares of 19.2 per cent compared to HUL's 18.6 per cent (source: ACNielsen).
This time last year, Tata Tea's volume share was just 17.5 per cent while HUL's was a comfortable 21.5 per cent. Agni's performance - market share increased by 50 basis points in the past year - is just one ingredient in the winning brew.
The volumes game
The television commercial by Dentsu can take only part of the credit for the increase in Agni's sales.
A reduction in prices across SKUs also played a huge part in the brand upping its all-India share to 3 per cent: in October, Tata Tea dropped the price of the economy brand from Rs 128 a kg to Rs 120.
"We felt Agni was not priced correctly for the economy segment; several local brands were eating into its share. Which is why we dropped the price and that has paid off," explains Sangeeta Talwar, executive director, marketing, Tata Tea.
Agni is just part of a new, improved Tata Tea package. Over the past year, the Rs 4,044-crore (Rs 40.44 billion) tea and coffee company has worked on almost all its brands, either dropping the price or strengthening the brew and supporting them with better packaging and new communication.
The effort has paid off in terms of volume marketshare, but in value terms, Tata Tea still has some way to go: although there's been a 90 basis point increase since June last year, Tata Tea's 20.5 per cent share is still far behind HUL's 24.5 per cent.
So, is the volume share increase significant, then? Yes, say industry watchers, given the nature of the tea market in India. Tea is a widely penetrated product in India and though the market is fairly large with annual sales of 800 million kg, it is growing at barely 3-3.5 per cent a year.
And as Boston Consulting Group Partner Abheek Singhi observes, realisations in India are only about a fifth of what they are in the US and Japan. Moreover, only about 40 per cent or 320 million kg sold is accounted for by branded teas. "And that space is crowded with over 500 regional brands," points out Percy Siganporia, managing director, Tata Tea.
Packing in value
The value packs were launched last year to take on these smaller brands. Tata Tea sold its products at price points of Rs 10-11 for 50 gm and Rs 5 for 25-35 gm (the grammage depending on the quality of the tea). Typically, a 25 gm packet would be enough for a dozen cups of tea.
While some of the price points had been explored earlier, this time round Tata Tea's objective was to create a better price-value equation by increasing the grammage. In fact, for some products, the price point was dropped to even Rs 2. Siganporia says the more affordable pricing has brought Tata Tea's brands within the reach of a new set of consumers, making it possible for them to move up from a regional to a national brand, thus fulfilling their aspirations.
That's been reflected in the market share gains. For instance, Tata Tea Premium has seen a gain of 130 basis points to 9.4 per cent at the all-India level, with significant increases in states like Maharashtra.
Moreover, brands like Gemini in Andhra Pradesh - an atypical market where no brand is the leader across the state but only in pockets - have taken away share from the loose tea segment. And Talwar points out that in Tamil Nadu, the Chakra brand has increased its share from 16.4 per cent to 19.6 per cent.
However, Tata Tea is clear that value packs will not be the main growth driver for the firm, especially since margins on these tend to be lower. "Our largest selling SKUs will continue to be the 250-gm packs," says Talwar, adding that what they will do is bring in new customers who, over time, will upgrade to larger packs, becoming brand loyalists in the process.
On more shopshelves
In fact, the smaller packs have helped Tata Tea create a new customer base by penetrating the remotest rural areas, including towns with a population of less than 2,000. Over the past year, the company has explored the hinterland, especially in states like Uttar Pradesh where, in addition to selling in shops, it also sent out several vans that acted as mobile sales counters.
Talwar says the rural thrust will continue this year too. In the urban market, Tata Tea teamed up with four to five big organised retailers, including Food Bazaar, Subhiksha and Reliance Fresh among others in Mumbai, Bangalore, Chennai and Hyderabad, in a bid to improve reach and visibility.
Explains Talwar, "It was a special initiative where we negotiated shelf space and our people worked closely with the retailers to see that our products were well displayed." Among the many initiatives were gondola hiring.
The initiative seems to have paid off - same store sales are up 30 per cent compared to last year. What's more, with these retailers expanding at a fast pace, Tata Tea's products are now available in about 100 big format stores across the country so that its presence has effectively doubled over the past 12 months. And while it's not easy to get great deals from modern trade with good negotiating skills called for, Talwar believes it is well worth the effort because the volumes are coming through.
Wooing the wholesalers...
At the same,Tata Tea is also taking care to see that it keeps its wholesalers and smaller retailers happy. Dealer margins remain unchanged across geographies, but the company has tried to incentivise them with new trade initiatives.
For instance, there's the "Ek Rishta" loyalty programme launched last year for wholesalers, by which they accumulate points according to the quantity of tea they buy from Tata Tea. In return for the points, they are entitled to participate in a lucky draw and win high value gifts such as white goods or gold chains.
Explains Talwar, "Wholesalers are very important for us because they have the reach, especially in the villages. However, they tend to keep switching brands and so we decided that we needed to strengthen our relationship with them."
...and the kiranas, too
Meanwhile, Tata Tea's marketing team has been wooing small retailers and owners of hot tea shops. The company organises film screenings and other community events, making sure the families are invited and, needless to say, serving tea.
"We're hoping the bonding will work," says Siganporia. Sometimes, the relationship-building takes a more practical note - very often, Tata Tea offers its kirana customers better-than-average discounts.
"Kiranas fear being let down by the suppliers, as the bargaining power of organised retail grows. So we are being pragmatic and, at times, absorbing the hit in margins," explains Siganporia.
He adds that as a result, some kiranas today are able to offer customers higher discounts than they were able to do some time back. "The gap between prices offered by big players and the kiranas is narrowing somewhat," Siganporia observes.
Brewing healthy teas
As for buyers, Tata Tea is trying to win them over by coming up with new teas. In late 2006, it hopped onto the wellness platform with Tetley Green tea bags. This was followed up with Tata Tea Life, in March 2007, again for the health conscious.
Says Talwar, "Consumers today are extremely conscious of being fit and improving their health and we are looking to cater for this segment."
Even before that, in November last year, long leaf orthodox teas - Darjeeling, Assam, Nilgiri and Ceylon - priced at around Rs 350 per kg, were launched.
The product was positioned in the premium segment and the idea was to cash in on the growing trend of consumers indulging themselves. The new launches helped Tata Tea's domestic branded business grow 18 per cent in the June 2007 quarter, compared to the same period last year.
The right connect
What also helped were Tata Tea's new advertising campaigns - an essential move, according to BCG's Singhi. "It is critical to stay in touch with buyers, both for protecting market share and also for taking away share from the unorganised segment," he points out, adding that communication could also be used to draw youngsters who are moving away from teas.
Tata Tea has four agencies for its different brands and all worked on campaigns through the past year. While McCann roped in film star Sneha to endorse Gemini in Andhra Pradesh, Saatchi chose a "facing challenges" theme to connect buyers with Kanan Devan - the brand saw a market share gain of 220 basis points in its home market Kerala.