Starting today, Moneycontrol will publish a weekly column, Word On The Street, every Friday. WOTS will be your fly on the wall in the world of finance, business and politics, filtering out incessant chatter around stocks, deals and personalities to bring you the most believable stuff our team of reporters and editors have picked up.
Race against time
The clock is ticking for a debt-ridden pharma tycoon who is known for his ability to make a comeback. With repayment deadlines around the corner, he is open to selling a minority stake in his lucrative domestic formulations business. He was in a similar situation about a decade back, but insiders say this time the situation is worse. Bankers say private equity suitors are interested, but only if they can get a much bigger share of the pie than what the promoter is willing to part with. If the tough as nails promoter caves in, then dealmakers expect a bidding war between global bulge bracket funds and homegrown pharma firms. With the board scheduled to meet soon, it will be interesting to see who blinks first. Watch this space for more.
Big on numbers, but zero in substance
The government's Rs 10,000 crore FAME-II scheme has turned out be a damp squib.
"Mark my words. The FAME-II scheme will definitely go through a change once the new government is in place. The current one looks like it was hurriedly typed at the office of a leading car maker," quipped a top-ranking executive of a struggling European car company.
At this point, no manufacturer is fully prepared for electric vehicles, not even Maruti Suzuki. Is this the reason behind the lacklustre scheme being launched just in time to skip the model code of conduct for the general elections?
A nagging question
Was the NAG – the Jet Airways pilots union – batting for the pilots or the management? After listening to what the pilots have to say, one would think that the union's actions were governed by the management’s interest. Insiders say it was an open secret that some of the union officials were close to Naresh Goyal and his wife Anita. All along the crisis, point out some of the pilots, the NAG always threatened to go on a strike but never carried it out. This, despite many of the pilots asking the union to do so. Instead, the public posture helped the management put pressure on the lenders. It is another matter that banks refused to open their taps, and the Goyals eventually had to step down.
Charity can be rewarding…financially too
It is not often that a social initiative by a corporate house does better than the core business.
One such "non-profit" initiative of an emergency ambulance service has turned out to be a money spinner for a business conglomerate, and is said to be more profitable than the core business.
This social initiative was not conceived by the promoters or the stakeholders. Rather, it was a foster child they were forced to adopt. The business group took over the operations under pressure from a top politician in its home state. The previous sponsors of the initiative went bust following an accounting scandal, but the politician was keen that the ambulance services be kept running.
Ironically, for a group saddled with a mountain of debt and losing money on most projects, this reluctant corporate social responsibility (CSR) bet has hit the bullseye.
The turnover from this initiative alone is around Rs 550 crore annually and it has been growing at a steady pace. The icing on the cake of this social initiative is that a big chunk of its running costs is covered by state government contracts spread over 5-10 years. There are only two competitors - both of them operate as commercial enterprises. The nearest competitor is barely one third in size of operations and revenues.
A little bird says the social initiative had become self-sustainable some years ago, but the group is keeping the expenses column crowded so that it is not accused of profiting from this 'social' initiative.
Riding into 'sun'rise?
The former promoter of an agro company which was acquired by an international player is learnt to be scouting for fresh investment opportunities. Having made a 'sweet' profit from the stake sale, he is in no hurry. People close to him say the healthcare and education segments are in his crosshairs, but it is the clean energy and electric transport that he is particularly interested in. He may have ceded control of his crown jewel, but he has solar assets in his portfolio which ties in neatly with any clear energy play.
Policy seeds from Messers Subramanian & Subramanian
Away from the din of election slogans, a team of policy wonks at New Delhi's North Block is assiduously writing a remedial prescription for Indian economy's biggest chronic weakness: agrarian distress. Newly appointed Chief Economic Adviser (CEA) Krishnamurthy Subramanian could well leave his signature in his maiden Economic Survey with a sweeping set of possible solutions for the deep-rooted problems in India's farm economy. The broad contours of these solutions, one understands, will focus on bringing the markets closer to the farmers, use of appropriate technology, and less of red tape. His predecessor Arvind Subramanian, in the Economic Survey of 2017-18, had strongly advocated a universal basic income (UBI) scheme for the poor in India, an ambitious plan involving direct money transfers to families’ bank accounts. The idea has since gained rapid currency and now become a part of mainstream political discourse (Think Congress' NYAY promise). Buzz is that the new CEA could well sow the seeds for an enduring solution to agrarian distress in his maiden policy document.
(Contributed by Ashwin Mohan, Swaraj Baggonkar, Prince Thomas, Viswanath Pilla and Gaurav Choudhury)
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