The Little Sisters must come of age
Chhabria cloud over Dunlop
Command to set up more base stations
Philips to focus on outsourcing
Fera charges to be dropped

 
 
THE LITTLE SISTERS MUST COME OF AGE 
 
 
FROM SATISH JOHN
 
Mumbai, April 6: 
Manu Chhabria was on the comeback trail when Death showed him his calling card. His second coming was more subdued than his first when he came, saw and conquered a few Indian corporates.

Towards the fag end of 2001 — in November to be more precise, Chhabria returned to India after a gap of five years with a mission to consolidate his holdings and the future of his Indian group companies.

His agenda also included plans to induct his three daughters into the Jumbo fold. On being asked about the succession plans and whether it was already charted out by the Chhabria senior, the officials at Shaw Wallace today declined to comment.

“It is too early to comment on such issues,” the official said. However, Chhabria who was a chronic diabetic had ironically already charted out the future of his three daughters. After being bruised on many an occasion by the high mobility of the senior management who quit his group, and the high-profile brawl with his younger brother Kishore, Manohar Chhabria was keen to involve his immediate family in the management of his group companies.

“They are all qualified and experienced,” Chhabria had riposted when The Telegraph had quizzed him on the induction of his daughters.

Komal Wazir was inducted on the board of Chhabria’s flagship company Shaw Wallace as an executive director. Bhavika Godhwani, his eldest daughter, was recently inducted into the board of engineering group company Hindustan Dorr-Oliver as an executive director. Kiran Chhabria, his youngest daughter, has also been recently drafted into Jumbo Electronics and is based in Dubai.

Cynical observers said the induction of the daughters as a defensive strategy when he was finding it difficult to retain loyalty of some of his top staff.

Or was it the prudent business mind that was preparing for the worst? He also built bridges with his brother, who left him at one point to join hands with his arch-rival Vijay Mallya. It is said he was prodded by his parents, but sources say it was a realistic mind.

He had in the past told The Telegraph that several issues were sorted out with his younger brother. “Let him return my Officer’s Choice and BDA Distilleries and all will be hunky dory between us,” he had drawled then.

“The big question now is whether he (Kishore Chhabria) will play a role in advising the three daughters”? While sources say he has a lot on his plate, what with the Sebi order directing him to sell major part of his Herbertsons holding which is currently contesting. Further, it would be tough for the Chhabria daughters to take to their uncle who acquired one of Shaw Wallace’s prized possession through some deft manipulation when Chhabria was away minding his businesses in the Gulf.

Despite the late Chhabria’s travails, one group company that increasingly was identified as his flagship company — Shaw Wallace — scored highly in ramping up market shares to the envy of its rivals.

His recent visit saw him visiting the Balaji temple in Tirupati apart from visiting the plants and offices of his group companies.

Facilitating his recent visit was also the fact that the Fera cases were behind him and he was now free to visit the country without any hindrance from Indian law enforcers. He was keen to shed the image inherited through a series of squabbles with law enforcement agencies and a few of the Indian industrialists.

The last few months saw him steadily increasing his stake in his group ventures when he merged group subsidiaries and acquired shares in the listed group companies. His ultimate plan was to delist his companies by buying out the stakes of his fellow shareholders in the companies he controlled.

What was heartening to him, was that except Dunlop India most of his companies were on the path to recovery. The engineering outfit Hindustan Dorr-Oliver and also the environment engineering outfit Mather & Platt were making steady progress with huge orders from Iraq.

   

 
 
CHHABRIA CLOUD OVER DUNLOP 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, April 6: 
The future of the ailing tyre company Dunlop India Ltd (DIL), which has a payroll of 7,500, has become uncertain with the death of Manohar Rajaram Chhabria.

Before his death, Chhabria, who holds a 44 per cent stake in DIL through the Jumbo Group, had appealed to the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) to convert into equity the Rs 26 crore that he had invested to reopen the factories at Sahagunj and Ambattur.

The company had declared suspension of work at the two factories in February 1998, on the grounds that it had become sick and was referred to the Board for Industrial and Financial Reconstruction (BIFR). The Ambattur factory reopened in February 2000 and the Sahagunj factory in March 2000. However, both the factories were again closed in August 2000, owing to the shortage of working capital.

“It is not clear who will now hold the 44 per cent stake in DIL after his death. The succession plan has yet to be unveiled. Till that is sorted out, uncertainty looms large on Dunlop,” said a top-level Dunlop official said.

The company had submitted an independent share valuation report to AAIFR carried out by Haribhakti & Company, who put the share’s intrinsic value at Rs 10.29.

According to Haribhakti’s report, the shareholding of Chhabria would have exceeded 70 per cent in DIL.

Simultaneously, Saha & Gupta, appointed by Industrial Development Bank of India, the operating agency of DIL, suggested a share value of Rs 47. The paid-up capital of DIL is Rs 14 crore. Following this, the AAIFR said that “in fairness to the promoter and associates and other secured creditors (banks/debenture holders) of DIL, we have decided that the conversion of Rs 26 crore into equity should be based on calculations according to Sebi’s guidelines, keeping December 31, 2001, as the reference date, subject to a minimum of Rs 10 per share of the face value of Rs 10.”

“The valuation according to Sebi guideline will be carried out by the company and vetted by IDBI and reported to AAIFR. The amount of Rs 26 crore shall be converted into the equity of DIL according to this formula as on April 1, 2002. The banks and debenture holders will have the right to convert an equivalent amount that is Rs 26 crore pro-rata from out of their dues (excluding penal interest and liquidated damages which in any case will be waived under the scheme sanctioned in due course) into the equity of DIL at the same rate at which contribution of promoter and associate would be converted into equity. The date for conversion for the banks/debenture holders will be also January 1, 2002,” the AAIFR had said.

   

 
 
COMMAND TO SET UP MORE BASE STATIONS 
 
 
BY ALOKANANDA GHOSH
 
Calcutta, April 6: 
Command, one of the cellular service providers in the city, will add 60 more base stations this year to further improve the quality of its connectivity.

“We will continue to focus on upgrading our infrastructure and providing a better quality network to our subscribers,” says chief operating officer Sanjoy Mukerji. “Currently, we have 132 base stations across the entire coverage area. It is expected to go up to 198 by the year end.”

The Hutchison Whampoa Group associate is also focussing on providing a basket of value-added services. Command has decided not to invest in brand building exercises or marketing campaigns. Mukerji says that most of the investment will be to upgrade network.

Command has already proved stiff competition for AirTel, the Bharti Mobitel brand. February this year saw AirTel lagging behind Command by 51582 subscribers, according to statistics provided by the Cellular Operators association of India (COAI). “We have acquired around 5,000 subscribers in March and expect to maintain this growth throughout the year,” adds Mukerji.

Replying to a query regarding the threat posed by WiLL services to mobile operators, Mukerji said that the strength of CDMA lay in being able to provide service at prices comparable to landline phones. However, he added that this would result in losses for the service providers as they were trying to provide service at one-tenth the price, when the cost of infrastructure ranged between 60 to 70 per cent.

“It is not only connectivity but also value-added propositions that the subscriber requires,” says Mukerji. “Being able to provide both at affordable costs is the main issue.”

Meanwhile, Command has extended the international roaming service from the present three countries to 40 for its pre-paid subscribers. The activation fee for international roaming is Rs 75. Incoming calls are charged at Rs 30 per minute and outgoing SMS at Rs 15. Incoming SMS is free. Subscribers opting for international roaming can also avail of roaming in India as a value-added feature.

   

 
 
PHILIPS TO FOCUS ON OUTSOURCING 
 
 
FROM SUTANUKA GHOSAL
 
Bangkok, April 6: 
Philips has taken a conscious decision to focus more on outsourcing, to remain globally competitive, Guy Demuynck, CEO, Philips Consumer Electronics said.

However, Demuynck, who is also the senior vice-president of Royal Philips Electronics, added “there will be no indiscriminate outsourcing. The quality and design parameters will be laid down by us and will be strictly monitored.”

“Our idea is not to own assets but to manage assets. We do not want to present a fat balance sheet,” he said.

In line with this strategy, Philips has identified Chinese Electronics Corporation as its outsourcing partner and is currently outsourcing its latest Fisio line of mobile handsets from the Chinese company. This will make it much less vulnerable to fluctuations.

Philips is also changing its culture from a technology-driven company to that of a customer-oriented one.

“This, however, does not mean that the company will not offer the latest technology. We would like to extend this technology to as many as people we can. We would like to address two areas of consumer needs—home entertainment and personal expression,” he said.

Speaking to reporters, Frans van Houten, executive vice-president, for Asia Pacific, West Asia and Africa said, “We have decided to address upmarket consumers through our high-tech products and will not pursue the low-market consumers aggressively.”

Both Demyunck and Houten were in Bangkok to launch Philips’ new line of products in the Asia Pacific region.

Regarding the global vision of Philips, Demyunck said, “Our objective world-wide is to become one of the top three players, or bag a share of more than 10 per cent in each region where we have a presence for each market segment we serve. In Europe and Latin America, we have already achieved this target—but we are not there yet in all regions. In some Asian countries we have met our targets, but in others we still need to improve.”

The company aims to increase its global market share by 1 per cent this year. To achieve this, Philips has decided to launch its new line of products simultaneously in Europe and Asia Pacific.

Philips has teamed up with Nike, the world’s leading designer and manufacturing of athletic footwear, apparel and equipment.

The aim is to create a new market for apparel and equipment that combines communications, connectivity and information, to motivate athletic activity.

Rajeev Karwal, senior vice-president, (consumer electronics) Philips India said, “These products will be available in India early next year.”

Other products that will be launched in India and Asia Pacific are high-definition Pixel Plus TV, TV LCD monitor, liquid crystal on silicon projection screen, flat TVs, DVD recorder, brightest multi-media projector, Bluetooth-enabled GPRS handphone, streamium (internet audio player with online music service), pocket-sized 8 cm MP3 CD player and a whole lot of other products.

   

 
 
FERA CHARGES TO BE DROPPED 
 
 
BY A STAFF REPORTER
 
Calcutta, April 6: 
The Enforcement Directorate will drop all Foreign Exchange Regulation Act (Fera) violation charges against Shaw Wallace and Company chairman M. R. Chhabria, following his death today. The Enforcement Directorate was scheduled to finalise and submit later this month charge-sheets against an alleged Rs 77-crore Fera violation case by Chhabria and other directors and officials of liquor major Shaw Wallace.

Charges under Fera are automatically dropped in the event of the death of an accused, a top ED official said. The ED official noted that the charge-sheet would, however, be filed against the SWC as a corporate entity and other directors and officials who were involved in the hawala and illegal money transfers from various places in the country to Jumbo Holdings’ headquarters in Dubai in the mid-’80s.

   
 

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