7 Corporate Moves to Watch Out For

Image: Sameer Pawar

Premji’s New School of Thought
While most Indian billionaires may have lagged behind their peers in the West when it comes to corporate philanthropy, Azim Premji, Wipro’s big boss, is trying to write a different script. By transferring about $2 billion worth of his personal shares to the eponymous Azim Premji Foundation earlier this month, the software czar has suddenly raised the bar on the Foundation’s original charter to improve the quality of primary school education across rural India. Earlier this year, Premji already has strengthened the strong team of professionals that run the nine-year old Foundation. But now, they also have the resources to aim for a big scale-up and set up India’s first private University to train education officers.

Infy After Murthy
August 20, 2011 will be a red letter day for Infosys. That’s when N.R. Narayana Murthy will step down as chairman to start his second innings as a venture capitalist. Clearly, Murthy’s successor, widely tipped to be K.V. Kamath, is likely to find it a tough time to take over. The emergence of disruptive technologies like cloud computing are likely to force Infy to invest upfront in product-like solutions and be paid later. What that could do to Infy’s stable business model — and its supernormal margins — is anybody’s guess.


White Knight Lakshmi
Rumours of Lakshmi Mittal, the country’s second richest man, stepping in to bail out his younger brother Vinod has been doing the rounds for the past couple of years. This time, there’s enough action to suggest that L.N.M. may be serious about sealing a deal to buy his brother’s stake in Ispat Industries. With Rs. 7,000 crore of debt, Ispat is in a big mess. Its main plant, in Dolvi, Maharashtra, has been shut for three weeks and IT sleuths have raided offices and homes of its senior officials. That may have prompted patriarch M.L. Mittal to bring the two brothers together to hammer out a deal. If it does materialise soon, it would be Lakshmi Mittal’s first steel making presence in India.


Brothers-In-Arms
For the past few weeks, the Ambani brothers are said to have spent every weekend at their old home at Sea Wind in Colaba trying to hammer out a deal that could help them bury the hatchet forever. On the negotiating table is Anil Ambani’s debt laden Reliance Communications. Mukesh, who is still wedded to his original telecom plan, is keen to buy out Anil’s 67.7 percent stake in RCom plus the Rs. 25,000 crore debt that comes with it. Anil, on the other hand, needs to be compensated for his share of the gas proceeds, which he was promised in the family settlement. Here’s a possible scenario: Mukesh buys Anil’s stake at a price that also compensates the younger brother for his notional loss on the gas deal. And one thing is clear: Matriach Kokilaben would love nothing better if the brothers are able to find a solution.


Divide and Rule
L&T supremo A.M. Naik’s term as chairman will end by September 2012. And the task of finding a successor to lead the engineering and infrastructure behemoth has given its board many sleepless nights. With help from McKinsey and Bain, the board is expected to find answers by next year. And if the grapevine is to be believed, the board may not even have to pick a successor for Naik. McKinsey says that L&T is far too big to be led by one chairman. And discussions have centred around the possibility of creating a holding company structure and listing each of its key businesses in the markets and appointing separate CEOs for each vertical like finance, power, heavy engineering, etc.

Biocon’s Next Big Thing
Even though nothing is really predictable in the pharmaceutical world, Biocon, at least for now, looks sure-footed in its insulin business. With a recent $200 million marketing deal with Pfizer behind it, Biocon’s Kiran Mazumdar Shaw is readying to monetise yet another drug — oral insulin. Call it good timing or fool-proofing the clinical results, the company is adding more pre-launch tests before the drug finally hits the Indian market by mid 2011. With the diabetic population soaring and the global insulin market expected to reach $17 billion by 2013, think of it as Biocon’s best chance to break into the big league.


Into Africa
Bharti Airtel has announced its intention in Africa with a decisive cut in tariffs in the Kenyan markets. Later, in Uganda, it responded to price cut initiated by Warid. It has changed its pricing in 10 out of the 16 African markets in which it is present. It has already launched a re-branding exercise in all the markets. An investment of $800 million is on its way to make its network really strong.  Expect 2011 to also reveal Airtel’s data play in Africa. “There is no DSL (digital subscriber line) in Africa, so wireless broadband is very important Internet play in Africa. Median age is 17-18 years. The youth in Africa will love to browse Internet on Airtel,” says Manoj Kohli, CEO (International) and joint managing director, Bharti Airtel to media in November.

(Research: Mitu Jayashankar, Seema Singh, & Shishir Prasad)