What would you say to a loss of Rs 14,000 crore in just a period of just over a year? A calamity, a disaster or a PIPE dream? “The herd mentality affected investors as much as any one else,” said Jagannadham Thunuguntla the equity head of Nexgen. Thunuguntla was referring to the rationale that made investors put their money into Indian companies in 2007.

1. PIPE Dreams:
valuations turn sour
AFTERNOON DESPATCH & COURIER
THURSDAY, NOVEMBER 13, 2008 ADC Business 15
CORPORATE BRIEFS
Sama flies into Mumbai
Mumbai: Sama Airlines, a low-fare Saudi Arabia carrier, will fly to
Mumbai; its first destination in India. Sama Airlines will fly from
Dammam to Mumbai and return with three flights per week. Andrew
Cowen, Sama CEO said: quot;The addition of Mumbai as Sama's first des-
tination in India is a part of our strategy to meet the huge demand for
low fares travel between Saudi Arabia and India. quot; GACA statistics
show that the number of travellers between Saudi Arabia and India
in 2006 was more than 1.2 million travellers. Mumbai is the business
capital of India, and considered as India's gateway to many domes-
Religare strengthens Bancinvest channel
tic and international destinations.
Mumbai: Religare, a financial services provider and Karur Vysya Bank
have announced a strategic tie-up offering Religare’s equity trading
services to the Bank’s customers. This will eventually be followed by
a roll-out of the entire spectrum of Religare’s services to the Bank’s
customers. The partnership is a step forward to further strengthen
the “Bancinvest” Channel created by Religare, which already in-
cludes tie-ups with existing banks. This new alliance is in line with
Religare’s strategy of increasing its reach and penetration across the
country. This also facilitates the creation of new business opportu-
nities and seamless customer centricity by leveraging the core com-
Fortis’ expansion plans
petencies of both the organisations.
New Delhi: Fortis Health-
care has earmarked a fund
of around 500 million dol-
BY MANIK K. MALAKAR nies in 2007. The total number of Real Estate stocks. Thunuguntla lars for acquisitions and is
deals tracked was 63 of which an estimates that 99 per cent of in- soon going to add one more
hospital to its kitty, a top of-
W
hat would you say to a astounding 60 deals have shown vestors have real estate in their
loss of Rs 14,000 crore in value erosion. portfolios. ficial of the company said
just a period of just over a The loss was felt across the The media sector was particu- on Wednesday. quot;The group
year? A calamity, a disaster or a board, as all sectors saw a capital larly hard-hit by the downturn in has earmarked a fund of
PIPE dream? erosion. Nexgen tracked a total of economic conditions. “This is be- around half a billion dollar,
This is exactly what happened to nine sectors including the vaunted cause the media sector has a high which would be spent
the Private Equity Investments of IT/ITES sector and telecom gestation period,” Thunuguntla ex- mainly on acquisitions,quot;
investors in Indian companies in among others. There were a num- plained. “When valuations Fortis Healthcare CEO and MD Shivinder Singh told reporters here
the year 2007. The disastrous fall in ber of high profile deals in 2007 dropped it was natural for investors without giving any time span. When asked about the sourcing of the
HK lawmakers debate Lehman probe
the stock markets from its peak in and these in turn led to other in- to sell, he explained. The media fund, Singh said, it will be through mix of debt and internal accruals.
January to today’s dismal levels vestments. sector saw a value erosion of more
has resulted in a wealth erosion of Investors typically looked for re- than 80 per cent in the period.
almost a staggering Rs 14,000 crore turns of 25 per cent per annum on The companies that will be es- Hong Kong: Hong Kong lawmakers on Wednesday debated whether
or US $ 2.8 billion dollars. their investments. Due diligence pecially hardest hit by the down- to invoke special powers in order to launch an investigation into the
The erosion of valuations in in- however was one of the casualties turn in the market will be the ones sale of investment products linked to collapsed US investment bank
vestments was compiled by Nex- of the hype of 2007. More compa- that have their projects mid way Lehman Brothers Holdings Inc. The motion if passed would em-
gen Capitals which tracked PIPE nies than not rushed to put in their through. These companies will power a subcommittee to order testimony and relevant documents
(Private Investment in Public Eq- money, without taking the time to neither be able to sell their proj- during the investigation. Hundreds of investors who lost money
uity) deals in 2007 and their returns check details thoroughly. Due dili- ects nor complete them, protested outside the legislative building Wednesday while lawmak-
till date. Due to the rough market gence, however, could only be car- Thunuguntla explained. “Such ers were debating inside. They have complained bank sales staff did
conditions of 2008 in the capital ried out by investors who took the companies will face harsh times in not fully explain that the financial products they purchased were
markets such investments have preferred investment route to pick the future,” he said. Real estate and linked to the bankrupt US company, leading them to believe it was a
Workers at Bosch India's plant strike
lost almost 51.65 per cent from in- up a stake. Investors who pur- infrastructure companies will bear low-risk investment.
vestment valuations in 2007. chased shares in the open market the brunt of the downturn.
“The herd mentality affected in- had to take their chances and the However, companies that have
vestors as much as any one else,” current volatile market has proved factored in a balanced Capex (ex- Jaipur: Workers of auto component maker Bosch India at its Jaipur
India second in global
said Jagannadham Thunuguntla negative for them. pansion) plan will be able to carry plant have gone on a strike protesting retrenchment of 170 employ-
the equity head of Nexgen. The herd mentality was wit- on with their plans. Fund raising ees. Describing the strike as illegal, Bosch India Vice- President Ashok
Thunuguntla was referring to the nessed in the high profile Real Es- activity for the near future for Abraham said negotiations are in progress between the company
rationale that made investors put tate sector. The greater number of other companies however is out, management and Mico Bosch Labour Union (MBLU) Jaipur. quot;The
their money into Indian compa- investors had some exposure to he stated. union has struck work without serving appropriate notice even while
conciliation proceedings are ongoing before the Joint Labour Com-
consumer confidence survey
missioner,quot; Abraham said. Services of as many as 118 workmen were
terminated and that of 59 apprentices were discontinued at the plant
citing slowdown in the automotive industry.
D ubai: Indians have the second
most optimistic attitude on
the current world financial crisis
adoption of workforce optimisa-
tion- “outsourcing bug”, according
to the survey, reported PTI.
optimistic for their local job
prospects and state of their per-
sonal finances. “Consumer confi-
after Norway according to a global The UAE has been ranked the dence in UAE remains quite stable
ISB to set up Mohali campus
survey on consumer confidence fifth most optimistic nation in the as the economy is driven by strong
levels. latest the latest Nielsen Consumer domestic growth particularly in
One in two Indians, 45 per cent Confidence Index, preceded by the FMCG and retail sector,” ob-
of Vietnamese and around a third India and Denmark. “Despite served Mathur.
of Russians and Chinese expect being affected by the current “This indicates high single-digit New Delhi: The country's leading business school, the Indian School
the global recession to end within global conditions, consumers in real growth even after inflation of Business (ISB), is setting up another campus at Mohali in Punjab in
a year, according to survey on the UAE and other developing and population growth are fac- an agreement with the Punjab Government and some corporate gi-
global consumer confidence con- markets are aware that their tored in.” Consumer confidence in ants. The ISB, which already has a campus in Hyderabad, is a coveted
cerns, spending and attitudes to medium-to-long-term prospects the UAE dropped by only one management school offering a one-year post-graduate programme
recession. remain strong,” said Piyush index point in the past six months. and is expected to have a campus in Mohali with four specialist in-
In India, home to the world’s Mathur, Regional Managing Direc- Many countries experienced stitutes for promoting research and offering additional specialisa-
second most confident con- tor, Middle East, North Africa and double-digit declines in consumer tions. The 70-acre ISB campus will start its first academic session by
sumers, employment rates will rise Pakistan, The Nielsen Company. confidence in the past year includ- April 2012 and is expected to begin with about 280 students.
in inverse proportion to the devel- Out of 52 countries surveyed, ing the US, UK, Hong Kong, Japan, From bureau and agency sources
oped world, thanks to enthusiastic UAE consumers ranked third most Singapore and Malaysia.