It is of course a coincidence, but the pace of corporate news in India is accelerating while the new government, whose election last week sparked a surge of corporate optimism and a stock market boom, dithers over which ministers to appoint to which jobs.
In the news are two family businessmen, both market leaders, who have wanted to internationalise their businesses -- Sunil Bharti Mittal, founder and chairman of Bharti Airtel, and Malvinder Singh, who inherited his chairman's and chief executive's position at the top of Ranbaxy Laboratories.
One now looks like succeeding, while the other appears to have failed.
A year ago Mr Mittal started audacious $19bn merger talks with MTN, a leading South Africa telecom company, but was ousted by Anil Ambani's Reliance Communications. Mr Ambani's bid was then mischievously foiled by his estranged brother, Mukesh, who claimed prior rights to Reliance Communication's shares in any deal.
Also a year ago Mr Singh amazed India's corporate world by selling control of Ranbaxy to Daiichi Sankyo of Japan, while staying in charge as chairman and chief executive.
Now the fortunes of these three men have been reversed:
- Mr Mittal is back with a bid for a new $24bn deal that would give him control of MTN and potential to build one of the world's biggest mobile phone businesses.
- Mr Singh and his brother left the Ranbaxy board along with two other executives in what looks like a Daiichi coup.
Mr Singh's apparent ouster is a sad end for the family's links with Ranbaxy, which has spearheaded the Indian pharmaceutical industry's international growth. However, he has other interests -- in Fortis healthcare and hospitals, and Religare financial services. He remained chairman and chief executive and managing director when Daiichi bought control, but the share price has slipped by more than 60 per cent since then and a $150m loss is forecast for the year.
More significantly, there are continuing US drug regulatory problems with over 30 Ranbaxy products and it looks as if the Japanese, after watching from the sidelines, decided to signal to the US that Daiichi is now in charge. The changes, which saw an Indian executive promoted to chief executive and a Daiichi executive coming in as chairman, were billed on Sunday as "amicable" -- but mr Singh, who was to have held the jobs until 2013, did not appear at the announcement press conference.
It has never been clear how seriously, nor for how long, Mr Singh wanted to straddle the potentially ill-fitting two roles of being a hired top executive in a Japanese group, and a healthcare and financial services entrepreneur, but clearly the mix did not gel.
Mr Mittal is much more sure of what he wants to do. Having batted successfully for years against the powerful Ambani brothers, he has made Bharti the undisputed market leader and the world's third largest mobile services operator -- it announced 100m customers ten days ago. He has said he now wants to expand globally, and clearly his Bharti Enterprises group is primarily eyeing the world's next big telecoms growth area of Africa.
Like Singh, he is willing to sell some of the Bharti stake to achieve his ambitions, but he will not cede India-based control. Last year's talks eventually failed on MTN's plan to base the merged group in South Africa, which Mittal would not accept, even though it looked as though he would have been in control. Now he plans to acquire a 49 per cent stake in MTN which, along with its shareholders, would get 36 per cent in Bharti, producing a merged Delhi-based Indian business.
A year ago he seemed not to have ring-fenced his MTN talks well enough, nor fully mastered the intricacies of South Africa's politics and focus on black economic empowerment. That left a gap that allowed Anil Ambani to burst in.
Mr Mittal's pride was hurt -- he had just ended a year as president of the CII, a leading Indian business federation, and had won many top businessmen awards. He was also facing delays building up a retail store business in India with Wal-Mart (which would have been opening its first wholesale store this week in his home state of Punjab, were it not for religious-related riots. Now Mittal has presumably organised his pieces better on the South African chessboard.
He has secured exclusive talks until July 31 to seal the deal, which will have to clear various regulatory hurdles. These include India's foreign direct investment regulations that the last government controversially eased just before the general election, though both finance ministry and Reserve Bank of India officials later filed objections.
The MTN deal would be fine under those changes, which look like being maintained by the new government with Pranab Mukherjee confirmed as finance minister.
Copyright: The Financial Times Limited 2009
