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CASE STUDIES

Pizza Wars
"We are not really competing with Domino's we're not in the same category. Domino's is more delivery and take-aways, while we offer a complete dining experience in addition to delivery and take-away options." - Pankaj Batra, Marketing Director, Tricon Restaurants, India. "One has to take risks to reach economies of scale. Domino's also shook up competition when it reached a target of 100 outlets." - Hari Bhartia, Co-Chairman, Domino's Pizza India. Introduction Until 1996, Pizza in India was synonymous only a bready dough base slathered with some ketchup. Since 1996, there was a proliferation of 'high-priced branded' pizzas in the market, with the entry of international pizza chains. Domino's1 and Pizza Hut2, the two big US fast food chains entered India in 1996. Each claimed it had the original recipe as the Italians first wrote it and was trying desperately to create brand loyalty. Domino's and Pizza Hut tried to grab as large a slice of the pizza pie as possible. While Pizza Hut relied on its USP of "dining experience", Domino's USP was a 30minute delivery frame. To penetrate the market, both the players redefined their recipes to suit the Indian tastes. Domino's went a step ahead by differentiating regions and applying the taste-factor accordingly. Domino's also made ordering simpler through a single toll-free number through out the country. Domino's and Pizza Hut expanded their market ever since they entered India. Domino's had grown from one outlet in 1996, to 101 outlets in April 2001. Pizza Hut too, which began with just a single outlet in 1996 had 19 outlets in 2001.

Coco-Cola's Thirst For Rural Markets


"We want to be the Hindustan Lever of the Indian beverage business." - Sanjeev Gupta, Deputy President Coca-Cola India in May 2002.2 "The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product." - Sanjeev Gupta, Marketing Director Cola-Cola India, in August 1995.3 'Thanda' Goes Rural In early 2002, Coca-Cola India (CCI) launched a new advertisement campaign featuring leading bollywood actor Aamir Khan. The advertisement with the tag line 'Thanda Matlab Coca-Cola4' was targeted at rural and semi-urban consumers. According to company sources, the idea was to position Coca-Cola as a generic brand for cold drinks. The campaign was launched to support CCI's rural marketing initiatives. CCI began focusing on the rural market in the early 2000s in order to increase volumes. This decision was not surprising, given the huge size of the untapped rural market in India. With flat sales in the urban areas, it was clear that CCI would have to shift its focus to the rural market. Nantoo Banerjee, spokeswoman CCI, said, "The real market in India is in the rural areas. If you can crack it, there is tremendous potential."5 However, the poor rural infrastructure and consumption habits that are very different from those of urban people were two major obstacles to cracking the rural market for CCI. Because of the erratic power supply most grocers in rural areas did not stock cold drinks.

Meru Cabs
A year ago, Neeraj Gupta started a round-the-clock taxi service called Meru Cabs. In a city where the words commuting and comfort were never uttered in the same breath, the cab service, completed with polite drivers, who came on time and presented you with a bill at the end of your journey, was nothing short of a revolution. No wonder, then, that today the company receives 1200 calls a day from commuters looking for comfort. Gupta is now raring to enlarge the companys footprint. I am determined to have 5000 Meru cabs plying around the city by the end of December, he said. When your business is well thought out, nothing can stop you from progressing, said Gupta. Got The Idea From:Singapore, where Gupta was bowled over by the seamless function of a 24446-vehicle, round-the-clock taxi service. He has made three trips to Singapore to study its taxi system. Starting Doubts: The government had stopped issuing permits to taxi drivers by the start of 1997. So the company had to convince the black-and-white taxi drivers to join hands with them. But drivers feared losing their freedom. Money Problems: Luckily, Gupta got a loan of Rs.10 crore from India Value Fund, a private equity firm, at the start. If the taxi service had not taken off, he would have just used the vehicles for his private fleet business. Other Obstacles: Gupta has not yet broken even. Thats because his company spends almost Rs.8000 on each driver when they join. This covers the cost of renewing their licenses, tuning their vehicles and training them. Outstanding personal qualities: Appetite for risk Meticulousness Relentless Innovation

Raj Travels
Lalit Sheth started Raj Travel World with just Rs.2,200 to his name, no office and no contacts in Mumbai. The 52-year old overcame several obstacles to get a foothold in the citys already flourishing travel business. One of the first to offer premium tours that did not cut corners, he went on to build an Rs.300-crore company with a loyal customer base of 5,000 tourists a day. Sheths company has revolutionized the way Mumbai travels by making the journeys fast, comfortable and fun. Got The Idea From: Sheth decided to open a travel agency because that was all he knew. At the age of 16, he had taken 93 children around a tour to Nepal all by himself as the secretary of a childrens welfare club. So when he arrived in Mumbai from Calcutta in 1976, he targeted travel agents for work. Starting doubts: Even though Sheth did not know whether there would be takers for his premium tours, he stuck to his business model, a decision that proved to be shrewd. As disposable incomes went on increasing in this society, more people wanted to travel, and they wanted to do it efficiently and comfortably. Money Problems: Without a track record, Sheth was forced to run his business without borrowing money until 1985. But that he year applied for a bank loan to open new branches and has since kept borrowing to expand. Other Obstacles: The industry has high staff attrition rates, but Sheth is trying to combat that with generous performance-based incentives. Today, margins are becoming thinner as advertising costs balloon. Outstanding Personal Qualities: Ambitious Intelligent Risk taker Street Smart

Airtel Magic - Selling a Prepaid Cellphone Service


"Magic's success can be attributed to the one on one relationship that the brand has built successfully with its customers. Add to that the vibrant colours, the local language and simplicity that the brand communicates with, and the celebrity association, Magic creates a lasting bond with its customers." - Vivek Goyal, CEO, Bharti Mobitel Ltd., in January 2002. Casting the Celebrity Magic In 2002, the leading Indian telecommunications company, Bharti Cellular Limited (Bharti) signed the famous cricket player Saurav Ganguly and leading movie stars, Madhavan and Kareena Kapoor as endorsers for its brand, Airtel Magic (pre-paid cellular card). Its objective was to create the highest recall for Magic in the pre-paid cellular telephony segment by cashing in on the two biggest passions of India movies and cricket. Bharti also changed the tagline for Magic from 'You Can Do Magic' to 'Magic Hai To Mumkin Hai' (If there is Magic, it's possible). The move attracted considerable media attention, as it was unusual for a company to spend so lavishly to promote a single brand. In October 2002, Bharti launched a television commercial (TVC), featuring Shah Rukh Khan (leading actor, already endorsing Magic since a couple of years) and Kareena Kapoor. The TVC, developed by one of India's leading advertising agencies, Percept Advertising, was the first of the series of four TVCs for Magic's new campaign. According to Bharti, the TVCs aimed at attracting young adults in SEC B and C categories of the Indian market1. Commenting on the new developments, Hemant Sachdev (Hemant), Director, Marketing and Corporate Communications, Bharti Enterprises, said, "The aim is to be relevant to the masses and make all their dreams, hopes and desires come true instantly, at Rs 3002 per month."

However, industry observers felt that these actions were necessiated by the intensifying competition in the pre-paid cellular card segment in India in the early 21st century However, industry observers felt that these actions were necessiated by the intensifying competition in the pre-paid cellular card segment in India in the early 21st century (Refer Exhibit I for a note on cellular telephony). Many new players (national as well as international) had entered the segment and the competition had become quite severe. Besides Magic, the major players in the pre-paid card segment in 2002 included Idea (Tata, AT&T and Birla Group), Speed (Essar), Hutch (Hutchison), Wings (RPG), Cellsuvidha (Fascel) and Yes (Usha Martin). In October 2002, Magic led the market, with 30% of the market share. Bharti claimed that its strategies were one of the most ambitious experiments ever in the Indian pre-paid cellular telephony market. However, given the increasing competitive pressure, doubts were being expressed regarding the ability of Bharti's marketing initiatives to help Magic retain its 'Magic' in the future.

Brittania
The story of one of India's favourite brands reads almost like a fairy tale. Once upon a time, in 1892 to be precise, a biscuit company was started in a nondescript house in Calcutta (now Kolkata) with an initial investment of Rs. 295. The company we all know as Britannia today. The beginnings might have been humble-the dreams were anything but. By 1910, with the advent of electricity, Britannia mechanised its operations, and in 1921, it became the first company east of the Suez Canal to use imported gas ovens. Britannia's business was flourishing. But, more importantly, Britannia was acquiring a reputation for quality and value. As a result, during the tragic World War II, the Government reposed its trust in Britannia by contracting it to supply large quantities of "service biscuits" to the armed forces.

As time moved on, the biscuit market continued to grow and Britannia grew along with it. In 1975, the Britannia Biscuit Company took over the distribution of biscuits from Parry's who till now distributed Britannia biscuits in India. In the subsequent public issue of 1978, Indian shareholding crossed 60%, firmly establishing the Indianness of the firm. The following year, Britannia Biscuit Company was rechristened Britannia Industries Limited (BIL). Four years later in 1983, it crossed the Rs. 100 crores revenue mark. On the operations front, the company was making equally dynamic strides. In 1992, it celebrated its Platinum Jubilee. In 1997, the company unveiled its new corporate identity - "Eat Healthy, Think Better" - and made its first foray into the dairy products market. In 1999, the "Britannia Khao, World Cup Jao" promotion further fortified the affinity consumers had with 'Brand Britannia'. Britannia strode into the 21st Century as one of India's biggest brands and the preeminent food brand of the country. It was equally recognised for its innovative approach to products and marketing: the Lagaan Match was voted India's most successful promotional activity of the year 2001 while the delicious Britannia 50-50 Maska-Chaska became India's most successful product launch. In 2002, Britannia's New Business Division formed a joint venture with Fonterra, the world's second largest Dairy Company, and Britannia New Zealand Foods Pvt. Ltd. was born. In recognition of its vision and accelerating graph, Forbes Global rated Britannia 'One amongst the Top 200 Small Companies of the World', and The Economic Times pegged Britannia India's 2nd Most Trusted Brand.

Today, more than a century after those tentative first steps, Britannia's fairy tale is not only going strong but blazing new standards, and that miniscule initial investment has grown by leaps and bounds to crores of rupees in wealth for Britannia's shareholders. The company's offerings are spread across the spectrum with products ranging from the healthy and economical Tiger biscuits to the more lifestyle-oriented Milkman Cheese. Having succeeded in garnering the trust of almost one-third of India's one billion population and a strong management at the helm means Britannia will continue to dream big on its path of innovation and quality. And millions of consumers will savour the results, happily ever after.

Fairness Wars
"The saffron and milk combination in Fairever clicked with the people because they were familiar with the goodness of the products. And we changed the rules by introducing saffron which had never been used in fairness creams in the past."

- C.K. Ranganathan, CEO & MD, CavinKare Ltd "Fair & Lovely continues to grow in a healthy manner. Only two out of ten Indians use face creams. That means strong growth prospects for all brands." - A HLL Spokesperso Who's The Fairest of Them All? In June 1999, the FMCG major Hindustan Lever Ltd. (HLL) announced that it would offer 50% extra volume on its Fair & Lovely (F&L) fairness cream at the same price to the consumers. This ve was seen by industry analysts as a combative initiative to prevent CavinKare's Fairever from gaining popularity in retail markets. HLL's scheme led to increased sales of F&L and encouraged consumers to stay with F&L and not shift to the rival brand. In December 1999, Godrej Soaps created a new product category fairness soaps by launching its FairGlow Fairness Soap. The product was successful and reported sales of more than Rs. 700 million in the first year of its launch. Godrej extended the brand to fairness cream by launching FairGlow Fairness Cream in July 2000. By 2001, CavinKare's Fairever fairness cream, with the USP of 'a fairness cream with saffron' acquired a 15% share, and F&L's share fell from 93% (in 1998) to 76%. Within a year of its launch, Godrej's FairGlow cream became the third largest fairness cream brand, with a 4% share in the Rs. 6 billion fairness cream market in India. The other players, including J.L. Morrison's Nivea Visage fairness cream and Emami Group's Emami Naturally Fair cream, had the remaining 5% share. Clearly, the fairness cream and soaps market was witnessing a fierce battle among the three major players HLL, CavinKare, and Godrej each trying to woo the consumer with their attractive schemes. Background In 1975, HLL launched its first fairness cream under the F&L brand. With the launch of F&L, the market, which was dominated by Ponds (Vanishing Cream and Cold Cream) and Lakme (Sunscreen Lotion), lost their dominant position. The dominance of HLL's F&L continued till 1998, when CavinKare launched its Fairever cream in direct competition with F&L. Within six months of its launch, Fairever captured more than 6% of market share. The success of Fairever attracted other players. Every product in this segment was witnessing growth higher than the overall personal care product category growth.

The fairness cream market was growing at 25% p.a., as compared to the overall cosmetic products market's growth of 15% p.a. In 2000, there were 7 main brands in the fairness product market across the country. Fair (Ness) Wars In 1998, CavinKare launched Fairever fairness cream. The company took care to stick to the herbal platform that its consumers had come to associate with all CavinKare products. Fairever seemed to be an instant success. Fairever's market share jumped from 1.23% in 1998 to 8.13% in 1999. The brand was expected to grow from Rs 160 million 1999 to Rs 560 million in 2000. Its success attracted many players, including Godrej (FairGlow) and Paras Chemicals (Freshia). Existing products like Emami Naturally Fair and F&L were promoted with renewed vigor

Reinventing Bisleri
"Old cola rivals Coke and Pepsi are discovering there is more money in water than coloured water. Things are warming up in the Rs 10 billion bottled-drinking water market and competitors, including Parle's Ramesh Chauhan, face the threat of a whitewash." - Business Today, September 16, 2001. Introduction In the early 1990s, Parle Bisleri Ltd's (Parle Bisleri's) Bisleri1 had become synonymous with branded water and had a market share of 70%. In the late 1990s, Bisleri's market share began to erode with new players entering the market. The new players also positioned their products on the purity platform and Bisleri felt the need to differentiate itself from the crowd. In the late 1990s, Bisleri launched its Pure and Safe ad campaign to convince the consumers that it was the only pure and safe branded water in the market.

However, in 2000-01, Bisleri faced another challenge. The Cola majors, Pepsi and Coca-Cola and the confectionery giant, Nestle, also entered the branded water market in India. Pepsi and Coca-Cola had an established distribution network. Bisleri realized that with the new players also clambering on to the purity plank, it had to reposition itself to arrest its declining market share. In September 2000, Parle Bisleri launched its Play Safe ad campaign. The company tried to add a fun element to Bisleri to rejuvenate the brand. The ultimate aim was to increase Bisleri's turnover from Rs 4 billion2 in 2000 to Rs 10 billion by 2003. Bisleri Feels The Heat In the early 1990s, the branded mineral water industry was worth Rs 3 billion, producing around 95 million litres in 1992. Parle Bisleri's Bisleri brand launched in 1971, was the leader with 70% market share. After 1993, the branded mineral water industry saw some hectic activity. On an average, every three months, a new brand was launched and another died. In the late 1990s, many international brands were planning to enter the branded mineral water market. Bisleri Feels The Heat In the early 1990s, the branded mineral water industry was worth Rs 3 billion, producing around 95 million litres in 1992. Parle Bisleri's Bisleri brand launched in 1971, was the leader with 70% market share. After 1993, the branded mineral water industry saw some hectic activity. On an average, every three months, a new brand was launched and another died. In the late 1990s, many international brands were planning to enter the branded mineral water market. According to some analysts, the main reason for the boom in branded water was the fact that people were becoming more health and hygiene conscious. Branded mineral water which sold in only 60 towns in 1993, was available in 250 towns in 1997. In 1998, Bisleri's market share came down to 60%, while Parle Agro's3 Bailley had 20%. The remaining 20% was shared by regional players. In 1998, the branded mineral water market had grown to a 424 million litre business, valued at Rs 4 billion. There were 200 brands available in the country. In their bid to garner greater market share, many companies, including Parle Bisleri tried to make quality and the purification processes they used their unique selling proposition (USP). In 2000, the branded water market had grown to Rs 7 billion. New players like Pepsi's Aquafina, Coca-Cola's Kinley and Nestle's Pure Life entered the market. The market was segmented into premium, popular and bulk segments (Refer Table I for the price range in different segments). The premium segment was the least crowded with just four brands: French transnational-Danone's Evian and Ferrarelle

and Nestle's Perrier and San Pellagrino. The popular segment was where most of the action was. Bisleri, Bailley, Aquafina, and Kinley were some of the dominant brands in this segment. In the bulk segment (5, 12 & 20 litres), Bisleri was a major player with Kinley and Aquafina staying out of this segment. Bisleri introduced a tamper proof seal in the 500 ml bottle. However, analysts felt that Bisleri's efforts to reinforce its pure and safe image with a tamper proof seal may not be all that effective as competitors also had similar tamper proof sealed bottles. They felt that it was companies with strong distribution channels that would do well in the long run. Pepsi's Aquafina was strongly placed because it had the backing of Pepsi's distribution network in the country. In August 2000, Coca-Cola India launched its bottled water brand, Kinley. Some analysts said that it would be difficult for Kinley to make a dent in the branded water market in India because it was already overcrowded and highly competitive.

Relaunching Frooti-The Digen Verma Campaign


Our aim was to create hype around the product, so we introduced a mysterious character called 'Digen Verma.' As our target audience is the youth segment, we wanted to showcase their rebellious spirit through Digen Verma." - Ram Sehgal, MD, Everest Integrated Communications. "Frooti has always been positioned as a drink for kids. Now, we want to position it as a drink for the youth, especially, the college-going teenagers. We therefore went in for a real life, down-to-earth person, who, like any college student likes to bunk classes, is a good sportsman and is a popular figure in the college, with whom the teenagers can actually associate themselves." - Alka Bhonsle, Management Consultant, Parle Agrochemicals.

Who is Digen Verma? There was no getting away from him. A poster at a bus stop in Chennai asked, "Will Digen Verma be in the next bus?" Or, when watching a movie; there was bound to be an interruption all of a suOur aim was to create hype around the product, so we introduced a mysterious character called 'Digen Verma.' As our target audience is the youth segment, we wanted to showcase their rebellious spirit through Digen Verma." - Ram Sehgal, MD, Everest Integrated Communications. "Frooti has always been positioned as a drink for kids. Now, we want to position it as a drink for the youth, especially, the college-going teenagers. We therefore went in for a real life, down-to-earth person, who, like any college student likes to bunk classes, is a good sportsman and is a popular figure in the college, with whom the teenagers can actually associate themselves." - Alka Bhonsle, Management Consultant, Parle Agrochemicals. Who is Digen Verma? There was no getting away from him. A poster at a bus stop in Chennai asked, "Will Digen Verma be in the next bus?" Or, when watching a movie; there was bound to be an interruption all of a sudden with a handwritten message saying, 'Digen, your car is being towed'. And, outside in the car park, almost all the cars had stickers on them saying, 'Digen Verma was here.' In many commercial places in metros and even far off places like Simla, there were footmarks accompanied by the mysterious words 'Digen Verma was here' pasted. There were rumours galore about 'Digen Verma' and his identity. Some thought it was a campaign for the launch of some new fashion label, while others thought Digen Verma he was a philanthropist. The enigma called 'Digen Verma' was everywhere, in buses, film halls, colleges, cyber cafes and shopping malls. 'JUST who is Digen Verma?' That's what the nation seemed to be have been wanting to know. In the 15 days that the campaign lasted in (February 2001), Digen Verma seemed to have become the most talked about faceless name in the country. The 'Digen Verma' promotion campaign was one of the most interesting and innovative teaser campaigns ever made in India. Designed and executed by Everest Integrated Communications (Everest), it was a series of teaser campaigns launched by Parle Agrochemicals1 for its mango drink Frooti, which aroused the curiosity of the public, especially teenagers.

The campaign seemed to have been successful in evoking tremendous interest. Everyone was curious to know who Digen Verma was, or whether he was just a fictitious character. "Just wait and watch," said Milind Dhaimade (Dhaimade), Creative Director of Everest, the brain behind this entire campaign. This campaign seemed to be the most cost-effective way of promoting Frooti. Said Prakash Chauhan, Chairman, Parle Agro: "This has been the most cost-effective mileage we've got for our brand." In terms of consumer engagement, it was a hit too. Said Dhaimande, "The success of the campaign is beyond our wildest dreams." Frooti' Faltering? 'Frooti' was launched by Parle Agro in 1984. It was the first tetrapak drink to be introduced in the Indian market. By 2000, Frooti had a majority market share of the Rs. 300 crore tetrapak fruit drink market. However analysts felt that this 16-year-old brand had been losing its appeal over the years. The brand, which scored a 100 on product likability and quality and a 95 on product recall, had dropped in the top-of-the-mind ranking to 60, from 95 two years ago. The sales of 'Frooti' also had dropped over the years. The situation worsened with the increase in competition. In addition to the threat it faced from soft drinks marketers, Frooti' witnessed heightened competition in its own segment tetrapak fruit drinks2 and juices. With pressure mounting from all sides, Parle Agro was forced to rethink its strategy. To revive the sagging appeal of the brand, it decided on a major relaunch strategy, which focussed on changing its positioning. The relaunch of 'Frooti' aimed at positioning 'Frooti' as a fun, trendy and modern drink targeted at the youth segment, a marked change from its initial positioning as a drink for kids. Said, BL Venkateshwar, Parle Agro vice-president: "There has been a change in the consumer psychology.

Buyback Of Shares By MNCs In India


MNCs are taking advantage of the depressed market conditions to mop up the shares. There is nothing legally wrong in buying back shares, but it should be by paying a fair price to minority shareholders - Kirit Somaiya, President, Investor Grievance Forum[1]. THE BUYBACK OPTION In October 2000, Royal Philips Electronics of Netherlands (Philips), the Dutch parent of Philips India Limited, announced its first offer to buyback the shares of its Indian subsidiary. The open offer was initially made for 23% of the outstanding shares held by institutional investors, private bodies[2] and the general public. The offer was made at Rs.105, a premium of 46% over the then prevailing stock market price. With this, Philips became one of the first multinational (MNCs) companies in India to offer buyback option to its shareholders. Soon after, the buyback option was offered by several multinational companies (MNCs) to increase their stake in their Indian ventures. Some of these companies were Cadbury India, Otis Elevators, Carrier Aircon, Reckitt Benkiser etc. Fund managers which held these companies stocks felt that allowing buyback of shares was one of most favorable developments in the Indian stock markets. It provided a much needed exit option for shareholders in depressed market conditions. Buyback by the company usually indicated that the management felt that its stock was undervalued. This resulted in an increase in the price, bringing it closer to the intrinsic value and providing investors with a higher price for their investment in the company. However, critics of the buyback option claimed that large multinationals had utilized the buyback option to repurchase the entire floating stock from the market with the objective of delisting[3] from the stock exchange and eliminating an investment opportunity for investors. Moreover, most MNCs that offered buyback option reported a steep decline in the trading volumes of the shares of their Indian ventures. THE BUYBACK ACT The buyback ordinance was introduced by the Government of India (GOI) on October 31, 1998. The major objective of the buyback ordinance was to revive the capital markets and protect companies from hostile takeover bids[4]. The buy back of shares was governed by the Securities and Exchange Board of Indias (SEBI)[5] Buy Back of Securities Regulation, 1998, and Securities and Exchange Board of Indias (SEBI) Substantial Acquisition of Shares and Takeover Regulations, 1997.

The ordinance was issued along with a set of conditions[6]intended to prevent its misuse by companies and protect the interests of investors. According to guidelines issued under SEBIs Buy Back of Securities Regulation, 1998, a company could buyback its shares from existing shareholders on a proportionate basis[7] :

McDonalds in Discrimination Row


On July 24, 2008, two Muslim women filed a lawsuit against the world's largest fast food restaurant chain, McDonald's, its management company at Dearborn, Michigan, USA, and one of its managers, alleging that they had been discriminated against during their job interviews because they were wearing the hijab1.2 In the lawsuit filed in Wayne County Circuit Court, Michigan, the women claimed that the discrimination had been going on for years and demanded US$10 million as compensation.3 The two women Toi Whitfield (Whitfield) of Detroit, and Quiana Pugh (Pugh) of Dearborn alleged that the manager had told them that they would not be considered for employment unless they removed their hijab. According to the women, Pugh had approached McDonald's for an interview in July 2008, while Whitfield had her interview in November 2006. In not providing them with a job opportunity due to their religious beliefs, the company had violated a state civil rights law and the representatives of the plaintiffs were considering filing civil rights complaints with the federal and state governments, the women claimed. The lawsuit came at a time when restaurants in the US were taking initiatives to tap the opportunity provided by the large Muslim population in the country. There were around six to seven million Muslims living in the US and Dearborn, in particular, was a Muslim-dominated area.4 Many restaurants in Dearborn had started offering menus with halal5 food to target this segment and the McDonald's outlet in Dearborn was one of them. In fact, the Dearborn restaurant was one of only the two McDonald's restaurants in the US that served halal Chicken McNuggets.6 The case drew a lot of criticism from lawyers and Muslim bodies against McDonald's. "They'll take Muslim dollars, but won't hire Muslim female employees,"7 said Dawud Walid, executive director of the Council on American Islamic Relations-Michigan.

Reliance Petroleum Closes down Petrol Pumps


In May 2008, Reliance Industries Limited (RIL), one of the largest private sector companies in India, owned by Mukesh Ambani, announced that it was shutting down all its petroleum retail outlets (RO) after incurring a loss of Rs. 8 billion1 in 2007-08. Murli Deora, Petroleum Minister, Government of India, announced, "Reliance has informed that sales at their retail outlets was negligible due to selling price differential between private and public sector ROs, leading to the closure of all their 1,432 pumps in the country with effect from March 15."2 RIL had accounted for around 3% of the total petrol pumps operated in the country. Nine hundred of the pumps were operated by the company and the remaining were dealer owned.3 RIL invested about Rs. 40 billion4 in setting up these retail outlets, which were spread across various states of India. RIL entered the petrol pumps business in 2005 and started selling the fuel at a marginally higher price compared to the petrol pumps run by government-owned oil marketing companies like Indian Oil Corporation, Hindustan Petroleum Corporation Ltd., and Bharat Petroleum Corporation Ltd. The RIL outlets did good business and by 2006, they attracted several customers despite selling the fuel at a higher price because they offered good quality fuel in the right quantity and provided customers with additional services like windscreen cleaning, car washing, etc. The pumps had international appeal and most of them had an eatery attached. With the crude prices in the international markets falling during 2006-07, RIL sold the fuel at a price matching the government-owned outlets.

But in mid-2007, with an increase in the price of crude oil, RIL increased the price of petrol and diesel. The increase affected sales adversely. The difference between the price charged by RIL and that charged by the government-owned oil marketing companies became more pronounced. The latter sold the fuel at a price lower than their cost of production as they were provided with subsidies by the government. Private players, on the other hand, received no such subsidy. As a result, RIL's price was Rs.6-14 higher than the prices at outlets owned by the government. And despite selling the fuel at a higher price, RIL still lost around Rs.3 on a liter of petrol and around Rs.6 on a liter of diesel. Public sector retailers too lost around Rs.10 on the sale of every liter of petrol and around Rs.12 per liter on diesel but the losses were covered by the issue of oil bonds by the Government and the subsidies provided by ONGC5 and GAIL 6. Because of the price differential, the customers of RIL switched to other outlets, and RIL's share in the diesel market, which had been at around 14% in 2006, fell to 1% in early 2008. With the business becoming unprofitable, RIL decided to close down the outlets.

With the closure of the Reliance petrol pumps, government increased the supply of petrol and diesel to the government-owned outlets to meet additional demand, at an extra expenditure of Rs 40 billion.7 The closure of the Reliance petrol pumps not only increased the burden on the government but also adversely affected the dealers, employees, and transporters who had been a part of RIL's operations. RIL offered to compensate the dealers who had incurred losses by buying out some of their properties. It planned to invest Rs.50 billion8 in around 300 dealer-owned and company-owned properties, situated at sTrategic locations and converting them into malls and multiplexes. Reliance Industrial Infrastructure9 planned to develop these properties. For the multiplexes, the company planned to enter into joint ventures with Adlabs10 and Yash Raj Films11. It also struck a deal with Marks & Spencer12 to open 50 stores in India, for which it planned to use these properties. These malls would also house RIL's retail brands such as Reliance Jewels, Reliance Footprint, Reliance Fresh, etc. Some analysts were of the view that the idea of investing in malls and multiplexes may work out well for the affected dealers as well as the company as it would help them recover their investment

But some were also skeptical about the success of the project as most of the Reliance petroleum outlets were located on the outskirts of the cities and Indians did not usually prefer to travel long distances for shopping and entertainment. Analysts were of the view that it would be a while before the concept caught on. They said the viability of this new venture could be decided only in the long run. Though Reliance thought of an alternative business venture and planned to compensate its dealers, it lost the faith of the investors who had invested huge money in the company based on its reputation.

Kingfisher-Deccan takeover
On May 31, 2007, United Breweries Holdings Limited (UBH), the parent company of Kingfisher Airlines (Kingfisher), a 'value carrier'1 based in Bangalore, acquired a 26 percent stake in Deccan Aviation Private Limited (DAP), which owned Air Deccan (Deccan), the pioneer of low-cost airline in India, also based in Bangalore. UBH paid Rs. 5.5 billion2 to acquire the stake, which made it the largest shareholder in DAP.3 UBH said that it would subsequently make an open offer to all the shareholders of DAP, for an additional 20 percent stake.4 Vijay Mallya (Mallya), the Chairman of UBH (and Kingfisher) who became the ViceChairman of Deccan after the acquisition (Ramki Sundaram became the CEO and Capt. G. R. Gopinath - formerly the Managing Director of Deccan - became the Executive Chairman of Deccan after the acquisition), said that the KingfisherDeccan combine would cover both low and premium fare segments. It was announced soon after the acquisition that Deccan would continue with its low-cost business model.5 The airline would also focus mostly on Tier II and III city routes, while Kingfisher would operate on the high density metro routes.6 The Kingfisher-Deccan combine became the largest domestic airline in India in terms of fleet size, with 71 aircraft.7 The combined entity offered 537 flights to 69

cities daily.8 In addition to this, the combined market share of Kingfisher-Deccan was estimated to be about 30 percent, positioning them in the second place after Jet Airways, a full service private airline, whose market share was estimated to be about 34 percent in mid 2007.9 After the acquisition, both the airlines formed a team to study their operations and suggest areas in which costs could be pruned. The team would also suggest how the two airlines could share each other's infrastructure to achieve maximum synergies.10 Mallya said that Kingfisher and Deccan expected to save Rs. 3 billion, through combined operations, in the first year.11 He said that Deccan's network was a key asset that could be leveraged. Synergies were expected to arise in the areas of ground staff, aircraft, operation and maintenance, ground handling, baggage handling, increased connectivity, feeder services, and distribution penetration. Mallya indicated that the airlines could achieve savings by sharing reservation services, engineering services, service stations, spares, pilots, other crew, and parking bays at airports. Also, both Kingfisher and Deccan operated identical aircraft (the Airbus A-320 family and ATR-72-500). This was expected to save engineering and maintenance costs for both the airlines. Earlier, Deccan had posted a loss of Rs. 2.13 billion during the quarter ending March 31, 2007.12 Kingfisher was also reportedly losing an average of Rs. 120 million, on average revenues of about Rs. 22 billion, every month.13 It was expected that the synergies achieved through combined operations would improve the financial health of both the airlines. international routes. As of mid 2007, the Indian government issued international operations permits only to those airlines that had completed five years of domestic operations. As Kingfisher was only two years old (it started operations in May 2005), it would have had to wait for three more years to fly on international routes. But acquiring a stake in Deccan, which would reach the stipulated condition of five year of operations in 2008 (Deccan started its operations in August 2003), could allow Kingfisher to fly to international destinations starting in the second part of 2008. Mallya said that he would have an internal arrangement to lease out Kingfisher aircraft to Deccan 'to maximize the benefit of overseas routes'.14

In a report released in March 2007, the Center for Asia Pacific Aviation (CAPA), an airline industry consultancy based in Sydney, had predicted that increasing losses and excess capacity would result in consolidation in the Indian aviation sector.15 The Kingfisher-Deccan deal was the third alliance in the Indian aviation sector, since the beginning of 2007. The year saw the merger of Jet Airways and Sahara Airlines (in April 2007), and Air India and Indian Airlines (in early May 2007). Talking about

the trend of consolidation in Indian aviation sector, Mallya said that intense competition and the increasing number of budget carriers had led to under-pricing of tickets, which resulted in losses to the budget carriers as well as to the entire aviation sector. He felt that consolidation among the airlines would lead to less competition and stable fares. Kapil Kaul (Kaul), the CEO of CAPA (Indian subcontinent and Middle East), said that in spite of the encouraging traffic growth projections, it was "extremely difficult for a market to absorb so many new entrants in a short space of time."16 Kaul said that airport infrastructure and manpower shortages would result in increasing costs, and reduced efficiency and flexibility for the Indian aviation sector.

SATYAM
The government-appointed directors of fraud-hit Satyam Computer Services began a meeting in Hyderabad on Saturday with the focus on how much the company immediately needs to pay salaries and meet other expenditure and on finding a chief executive officer (CEO) to run its day-to-day operations. Satyam, India's fourth largest IT company, has been without a CEO and a group of senior staff members are running the show since Jan 7, when founder-chairman B Ramalinga Raju confessed to massive rigging of accounts and quit. Raju, his brother B Rama Raju, who was Satyam's managing director, and the chief financial officer Vadlamani Srinivas have been arrested and sent to jail till Jan 23. All the three have sought bail and a Hyderabad court will rule on their plea on Monday.

"All six members of the board are attending the meeting," a Satyam spokesperson said. The six are HDFC chairman Deepak Parekh, former president of software sector's umbrella body Nasscom Kiran Karnik, former SEBI member C. Achuthan, Tarun Das, chief mentor of the Confederation of Indian Industry (CII), TN Manoharan, a noted chartered accountant, and Suryakant Balakrishnan, a nominee of the LIC of India. Parekh, Karnik and Achuthan were appointed Jan 11 and the other three on Thursday. This is the first meeting of the expanded board, though Parekh, Karnik and Achuthan had met Jan 12 itself to familiarise with the company's financial position as Raju's confession put the financial irregularities like inflated profits and nonexistent deposits at Rs 70 billion (Rs. 7,000 crores). The government-appointed board's priorities are getting a correct picture of Satyam's finances to determine whether they need to borrow funds immediately for the day-to-day operations and to find a ceo for the headless company. Besides revisiting the figures, the six members will exchange views on probable candidates for the two top posts to lead the company - Chief Executive Officer and Chief Financial Officer. The appointment of a CEO and a CFO are among the priority tasks of the new board, Parekh had said after the first meeting Jan 12. The other concern is the company's liquidity position, which according to Parekh seemed to be favourable provided the figures could be trusted. He said Friday that the company has receivables (payment from customers) of Rs 17 billion (Rs 1,700 crore), which, however, have to be verified. His comments on the receivables came after he met Corporate Affairs Minister Premchand Gupta amid talk of a possible government bailout package to help the company pay salaries, rents and health insurance premium.

Gupta, however, said the government was not offering any bailout to Satyam and the new board can approach financial institutions if funds were required. B Ramalinga Raju, disgraced chairman of Satyam Computer Services, siphoned off the technology giants revenues to acquire "controlling interest" in two of his own companies, a preliminary government investigation report said. The findings are in stark contrast to Rajus January 7 confession that said the company did not have cash reserves. "Neither me nor the managing director took

even one rupee/dollar from the company and have not benefited in financial terms," he had said. But preliminary investigations of the Registrar of Companies (RoC), a copy of which is with Hindustan Times, state that Raju and his accomplices had utilised the cash reserves of the company to acquire controlling interest by purchase of shares in two other companies, owned and controlled by persons closely related to the promoter director of the company. While the RoC report did not name the companies, a senior official in the ministry of corporate affairs told HT that the companies were Maytas Infrastructure and Maytas Properties, both founded and promoted by the Raju family. In fact, the Serious Fraud Investigation Office (SFIO), a multi-disciplinary quasijudicial agency, has been specifically asked to find out whether there was any siphoning of funds of the company. The SFIO is also investigating the existence and adequacy of internal financial controls and reporting within the company (Satyam) and lapses, if any. The ministry had suo motu asked the RoC to begin investigations into Satyam accounts on December 17, a day after the tech giant made an aborted attempt to acquire Maytas Infrastructure and Maytas Properties for an estimated $1.6 billion. While the mandate to verify the details have been given to the SFIO, RoCs prima facie investigations revealed that the companys publicly stated accounts contain serious misstatements and do not reflect a true and fair view of the state of affairs of the company. Securing the interests of employees, customers and investors is expected to remain key as the expanded board of fraud-hit Satyam Computer Services, with six members, holds its first meeting in Hyderabad on Saturday. The board may take a call on the appointment of managing director, chief executive officer of the company as restive Satyam workers, numbering 53,000, await a sense of direction. Our collective endeavour is to help find solutions to extremely difficult challenges facing the company and the priority is, as other board members have said, to safeguard the interest of employees, customers and investors," said Tarun Das, chief mentor, Confederation of Indian Industries, who was appointed to the board on Thursday.

The government on Thursday also named Life Insurance Corp nominee S.B. Mainak and chartered accountant TN Manoharan to join HDFC chairman Deepak Parekh,

National Stock Exchange board member C. Achuthan and former president of software association Nasscom, Kiran Karnik on the board. The initial three-member board appointed by the government after the disbanding of a board led by deposed and disgraced chairman B. Ramalinga Raju met on Monday and named two auditors to revisit the fraud-hit accounts. KPMG and Deloitte, Haskins & Sells have already started the forensic audit of Satyams accounts

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