Tata Nano- Tax incentive package by WB govt. in 2008

This article gives the entire list of tax incentives and other relaxations offered by WB govt during 2008 to win Tata Nano's Manufacturing unit to be located in Singur..together the package was one of its kind...which clearly shows the leading role of such packages in company's decision regarding their plant locations...

West Bengal’s costs to retain Tata Nano beginning to mount

This comes on the top of tax and other incentives already being offered by the state to the company

Mint :Tue, Sep 16 2008.

Romita Datta

• 

Kolkata: The recent decision of the West Bengal government to raise the compensation offered to farmers at Singur who gave up land for a Tata Motors Ltd car factory effectively raises the cash incentive offered to the company’s Tata Nano project to at least Rs300 crore.

This comes on the top of tax and other incentives already being offered by the state to the company.

A state government official, who didn’t want to be named, said most of these incentives were offered because West Bengal had to match those dangled by the Uttarakhand government.

The official pointed out that even if Tata Motors only made 200,000 cars a year at the plant, the government would get revenue of at least Rs500 crore.

Mint couldn’t immediately verify this number or the basis on which it had been arrived at by the official.

Much of it, however, will likely come from excise duty, since Tata Motors has been granted exemption from most other levies for varying periods of time.

The state had estimated it would earn at least Rs500 crore from all taxes combined—Central sales tax (CST), value-added tax (VAT) and excise duty. But it wouldn’t start earning from sales of the Tata Nano from Day 1, because it would be returning CST and VAT in the form of a loan bearing an interest of 0.1% till it has fully matched Uttarakhand’s incentives.

The Tata Nano is expected to sell for at least Rs100,000 each.

The magnitude of some of these incentives came to light following a March report by India’s audit watchdog and the recent release of part of the agreement between the state and Tata Motors on the website of the West Bengal Industrial Development Corp. Ltd, or WBIDC.

A spokesperson for Tata Motors spokesperson said his company didn’t want to comment on issues “not in the public domain”.

The auto maker recently moved the Calcutta high court seeking to restrain the state government from revealing the full text of the agreement, parts of which have already been published on the WBDIC website.

Mamata Banerjee , leader of the state opposition party, the Trinamool Congress , has been demanding the release of this agreement even as she has been leading the protest against the Tata plant.

The issue came to a head in late August after Banerjee started a protest in front of the plant and Tata Motors chairman Ratan Tata said he would consider moving location.

The state leased 645.67 acres to Tata Motors for 90 years for an annual lease rent of Rs1 crore for the first five years, going up to Rs20 crore a year from the 61st year.

In a report released in March, the comptroller and auditor general of India, or CAG, valued the land allotted to Tata Motors at Rs96.72 crore, and pointed out that West Bengal had offered a subsidy of Rs76.11 crore on the plot allotted to the company. To derive this figure, CAG calculated the net present value of the total lease rent that Tata Motors would be paying through the 90 years.

The government spent more than Rs140 crore to acquire the 997-acre project site.

CAG said West Bengal should have realized at least 95% of the market value of land as one-time lease premium from the auto maker in keeping with directives of the Union government.

The government also offered incentives to component manufacturers.

According to the part of the lease agreement between the West Bengal government and Tata Motors that is in the public domain, the state allotted 290 acres at Singur to makers of auto parts at an annual lease rent of Rs8,000 per acre for the first 45 years, and Rs16,000 per acre for the next 45 years.

This apart, the West Bengal government offered a loan of Rs200 crore to Tata Motors at a nominal interest rate of 1%. The repayment of this loan starts from the 21st year in five annual instalments.

WBIDC, the key facilitator for the project, had borrowed Rs200 crore at 10% a yearfrom another state government enterprise for acquiring the land.

The government also agreed to offer electricity to the factory at Rs3 per unit, or 1kWh, which according to Moloy De, chairman and managing director of West Bengal State Electricity Board, or WBSEB, is the standard rate offered to most industrial units in the state.

But the government has agreed to compensate the auto manufacturer if WBSEB raises the tariff by anything more than 25 paise per unit within five years.

The annual loans will be repaid after 30 years. The agreement does not, however, specify the number of years for which the state government will be returning VAT and CST earned on sales of the Tata Nano in the form of loans.

India Vs China - No!! "India and China"

During the discussions so far on India and China , the two rapidly growing giants from Asian continent, the tune used to be that although India is competing with China in many areas but China is always ahead on all counts. The article below tries to establish giving substantial evidence that India is slowly going ahead of china in some very critical areas of world trade.

If India and China can complement each other based on their unique strengths and if strategically unite together then it will soon become a major power and would lead an new era of Asian Dominance in future time to come.

India Eyes Value, China Volume to Exports

Differentiating products & moving into goods higher up value chain help exporters face competition from China

SMRITI SETH NEW DELHI

ET, 23/7/2011
India’s exports have remained buoyant in the face of competition from Chinese goods and a slowing world economy, thanks to exporters differentiating products and moving into goods higher up the value chain.
India’s share in merchandise world trade rose from 0.7% in 2000 to 1.4% in 2010, making it the 20th largest exporter in the world, according to the WTO’s 'World Trade Report 2011'. Amongst other things, the rising share in world trade can be attributed to a shift towards better quality and high-value products — a strategy that has helped it grow alongside China in the array of products the emerging powers sell to the richer nations.
“China is the market leader in low-cost products. So, instead of competing there, we improve the quality of our exports and move up the value chain to offer a different basket of goods, (albeit) at a higher price,” Engineering Export Promotion Council chairman Aman Chadha said.
India’s exports of engineering goods in 2010-11 accounted for 38% of its total exports that year while textiles made up 14%.
On the other hand, China — the largest exporter of manufactured goods in the world with a 10.4% share of global trade in 2010 — has seen its trade surplus reduce to zero in 2010 and 2011. Therefore, rather than competing with China, which has technology and skilled labour to produce goods at lesser cost, Indian exporters are trying to diversify their product range.
Cotton Textiles Export Promotion Council’s executive director Sidhartha Rajgopal seconds the view.
“We do not compete with China, rather we complement each other. We focus on different product lines. India does well in the medium and upper end of the market, while china does well in the lower end, where they charge low prices,” Rajgopal said.
Asia’s third-largest economy also enjoys an advantage over China in terms of services related to these manufactured goods, which helps in differentiating products.
“China follows the assembly line production approach, i.e. on mass scale. India has small batch process, so it has the advantage of using services in manufacturing. For instance, design in ready-made garments allows strategic diversification of goods,” said Nisha Taneja, professor at ICRIER, a think tank.

Why business love sex

A very insightful article for marketing guys giving do and don'ts when the choice is sex...

Hard Choice

WHY BUSINESSES LOVE SEX

V I V E K K A U L

Ref : CD/ ET 22/7/11

Let me make two sweeping statements at the beginning of this column. When advertising agencies cannot think of a good concept, they try and get hold of a celebrity. When the client cannot afford a celebrity, they get a skimpily clad woman instead. I might be generalising too much, but just hold on. Here are a few questions. Let's see how many of them can you answer. Which mobile phone brand does Mahendra Singh Dhoni advertise? Which mobile phone brand does Amitabh Bachchan advertise? Which mobile phone brand does Saif Ali Khan advertise?
Dhoni advertises a brand called Maxx Mobile. Bachchan advertises Zen Mobile. And Khan advertises Wynncom Mobile. Now let's be honest. You might have known that Dhoni
advertises Maxx Mobile, but the chances of knowing which brands Bachchan and Khan advertise were rather low, unless of course you were connected with the making of these ads in some way.
So what am I trying to suggest here? Taking on Dhoni, who already advertises more than twenty five odd brands, is a dumb thing to do. The same stands true for Bachchan. It is simply not possible for consumers to associate so many brands with a single celebrity, unless of course the advertisement is able to associate the attributes of the celebrity with that of the brand.
Like is the case with Binani Cement which is advertised by Bachchan and goes with the tagline sadiyon ke liye. Or take the case of the Virat Kohli and Genelia D' Souza featuring in the watch and accessories brand Fastrack. The youthfulness of Virat and Genelia goes well with the attributes of the brand.
As Geoffrey Miller writes in Spent - Sex, Evolution and Consumer Behaviour: "Celebrities are portrayed in ads not just for their name recognition, but for the distinctive traits they are believed to have, and these become associated...with the product itself."
At times the celebrity himself may not be advertising too many brands (as is the case with Khan) but there might be celebrity clutter in the overall category, as is the case with mobile phone brands, with everyone from Akshay Kumar to Dhoni being brand ambassadors. Most retail oriented categories suffer from a celebrity clutter these days.
So clearly associating the attributes of the celebrity with the attributes of the brand is very important especially if you happen to be thinking of an advertisement for a product which is plagued with celebrity clutter. The days when Kapil Dev just came and said 'Palmolive da jawaab nahin' or when Sridevi danced inside a Cema bulb, and the advertisement worked, are over.
Now let's look at the second statement I made. Does sex sell? Estimates made in the book Sex in Advertising: Perspectives on the Erotic Appeal suggest that nearly one-fifth of all advertising today uses overt sexual content to sell products. Miller states: "We've done some experiments showing that when men think about attractive women, they intend to spend more money on conspicuous goods (expensive cars, watches, foreign holidays) than on inconspicuous goods (washing machines, shampoo)." A study carried out by Science Daily suggests that men recalled ads with sexual content more than if the ads were sex free whereas women were put off by sexual content in ads. This
explains why so many car ads have sexual content. Brand-guru Martin Lindstrom points to a Volvo ad showing a silhouette of a Volvo's driver's seat with its parking brake sticking up in the air, with the tagline, "We're just as excited as you are".
And if you have always wondered why all the chaddi banian ads in India have a handsome muscled hunk being pursued by a skimpily clad woman, you now know the answer. Deodorant ads fall into the same category, where women start falling over a guy after he has applied the deodorant. At times such ads go overboard with sexual content and are banned. Recently the WildStone deodorant ad, which showed a young woman in a saree running into a young man at a family gathering and being distracted with his body spray.
Of course if you are trying to sell a condom, sex is an essential part of the ad. Who can forget the 1991 ad featuring Pooja Bedi and Marc Robinson which launched Kamasutra condoms? Even today, most condom ads remain loaded with sexual content except of course the government owned Nirodh, which goes with the song Pyar hua, iqrar hua.
But sex does not always sell. Take the case with the ‘Play Safe’ ad of Bisleri, which clearly did not work, because water is something which is bought by everybody. The same can be said about the JK Super Cement ad which had a girl in a red bikini walking out of water ala Ursula Andress in ‘Dr No’ and then stops and looks suggestively at the JK Super Cement hoarding with a voice in the background saying "Vishwas hai, is mein kuch khaas hai". Sex and celebrities do sell, but it is important to get the context right.

Mr. Bhagwan Gawai- Slum boy to millionaire global citizen

From Slum Boy to Millionaire, a True Global Citizen

Bhagwan Gawai’s life story sounds nothing short of a fairy tale

NAREN KARUNAKARAN MUMBAI

ref: ET 18th July 2011

BNP Paribas in Paris, one of the world’s largest banking groups, is mindful when it transacts with Bhagwan Gawai, a small customer, but with considerable potential. The bank recently extended a $50-million line of credit to his business group. Gawai, who as a young lad, worked on construction sites, alongside his illiterate mother and brothers, is now truly a global citizen. As an itinerant businessman, trading in petroleum products, petrochemicals and commodities, his interests straddle the globe. He led an itinerant life earlier too. But back then, he was constrained to do so, as his family moved from one construction site to the other, hauling gravel or laying bricks, raising Mumbai’s factories and plush houses. Eventually, the family settled down at a sprawling slum, Hanuman Nagar, an address that continues to resonate in his life, for the family still retains the shanty. “When we migrated from Buldana in rural Maharashtra to Mumbai, we lived and worked at the site that is now the Mahindra & Mahindra plant in Kandivali,” recalls
52-year-old Gawai, now chairman and CEO of Saurabh Energy DMCC, his trading bridgehead in Dubai. Through the previous decade, his company, established in a joint venture with an Arab partner, recorded a peak turnover of $400 million. In 2008-09, when his partner wound up his numerous businesses following a death in the family, Gawai launched Saurabh Energy, at the Jumeirah Lake Towers Free Zone, on his own. He, however, had to start all over again, beginning with securing registrations from oil companies like Shell, BP and the Emirates National Oil Company (ENOC). Gawai buys petroleum products like naphtha, petrol, diesel, bitumen, furnace and base oils from them for onward sales. Today, his firm has a turnover of $20 million. “In a couple of years, I will gather the same momentum as before,” he says.
PRIDE AND PREJUDICE
This innate confidence in himself and his abilities, and a perennial urge to seek challenges, has brought Gawai to where he is today. “He always wanted to test his talents, in newer ways,” recalls Dilip Rumde, chief manager at the Girguam branch of the Bank of India in Mumbai, and a first mentor of sorts to Gawai. When Gawai was studying in Mumbai’s Siddharth College, he worked with Rumde at a small electroplating unit as a part-time accounts assistant. Gawai’s early years in a job were quite uneventful. “I got my first proper job, as a clerk with L&T, after appearing for a written test,” he says, implying that merit was the sole criterion for his selection. After some prodding, he concedes his first big job break came on the strength of reservations for scheduled castes (SCs), when he was appointed officer-trainee with HPCL, the public sector oil-marketing company, in 1982. Talent alone wouldn’t have sufficed. At HPCL, his talent was recognised. But soon, the pitfalls of a public sector work ethic overwhelmed him, as he hit a glass ceiling in growth. Gawai attributes this to caste prejudices — subtle, subterranean, never overtly articulated. While affirmative-action policies enabled him to secure entry in a governmentowned company, the absence of a mentoring, nurturing culture in the PSU stymied his progress and aspirations. He then passed through a difficult phase, both in the office and at home. His marriage, to a woman of a better economic standing than his, turned turbulent. His friends suggested it was about time he relocated from the slum; tear himself from the past. “Although he never wanted to live separately from his mother and brothers, his move to the HPCL housing colony with his wife saved the day,” recalls Rumde. Workplace, however, continued to provide little succour. “My immediate seniors gave me good grades during appraisals,” says Gawai. “But when my papers moved to the human resources department, they were always tampered with.” It prompted him to file a court case to secure his promotion, which he eventually won. By then, in disgust, he had decided to move on.
MOVING ON
In 1991, he took three months leave of absence to explore a job offer from Caltex, the petroleum major, in the Gulf. Although unsure, he quit HPCL and moved to Bahrain. It changed his life. In the late-nineties, the Dubai government was keen to set up a diversified energy company and refinery. By then, Gawai was well known in oil circles. ENOC was eventually incorporated. Gawai joined as its fourth employee, entrusted with the task of sourcing all feedstock for the refinery. The salary was good: 50,000 dirhams a month.
THE NEXT LEAP
An Arab businessman, from whom he often hired ships to move feedstock, goaded him. He was willing to be his partner. In 2003, Gawai turned businessman. “In the very first year, we hit a turnover of $80 million,” he says with pride. His clients now come from West Asia, parts of Europe, even Singapore and the Far East. His network began to expand. Gawai now has interests in chemicals, biofuels, marine engineering, logistics, telecom and BPOs, through equity holdings in a raft of companies. Through all of this, as he reaped profits, rose in status and privilege, he never forgot his roots. His two daughters and son are as grounded as he is. Gawai has been instrumental in bringing together a group of over 30 Dalit achievers from across the world. He is coaxing them to invest, bit by bit, in sound projects through a holding company that they have formed: Maitreya Developers. “He is very transparent in his dealings, and would like people to participate in and benefit from his growth,” says Satish Mapara of the Dubai-based GlobeApex Management Consultants. “There is a degree of innocence in him, which sometimes works to his detriment.” He has seen the rise of Gawai from close quarters since the mid-nineties. He now wants to diversify into coal. Saurabh Resources, incorporated in Labuan, Malaysia, recently acquired an interest in a coal mine in Indonesia, the world’s largest exporter of thermal coal.
Bhagwan Gawai
Saurabh Energy DMCC
BUSINESS
Trading in petroleum products, petrochemicals and commodities
YEAR OF STARTING
2008-09 REVENUES: $20 mn EMPLOYEES: 11

Lenovo's strategy

Lenovo's growth will come from small towns, not just big cities, says President Rory Read...

Protect _& Attack

LENOVO'S GROWTH WILL COME FROM SMALL TOWNS, NOT JUST BIG CITIES, SAYS PRESIDENT RORY READ

N I K H I L M E N O N

ref: ET/ CD 22/7/2011

His father worked with IBM for 38 years and he put in 23 years himself before moving to Chinese technology company Lenovo when it took over IBM's PC business. Now Rory Read, the President and COO of the $22 billion Lenovo Group, says the move was a perfect opportunity for him to work for a truly global company. Read travels to emerging markets regularly and is in India every four months to meet with the local team and customers. In an exclusive interview with CD, he talks about the structure of global enterprises, emerging market strategies, and the future of the netbook:
How does India compare with other emerging markets?
Indian consumers value quality innovation. They look for high value at a good cost and we have been trying to give them that. Lenovo has been improving the quality of its customer experience (measured by repair actions on defects) by over 50% annually. That is why we have grown from 7% market share three years ago, to around 10.2% today. We started the last financial year with 130 stores and ended it with 450. The plan is to get to 1000 exclusive stores, and not just in the main cities but in smaller towns. We are replicating the models that have given us an advantage worldwide.
As an east-west company, how do you manage to keep your culture consistent?
We have something called 'Lenovo way' which is a shared culture based on the twin pillars of ownership and commitment. The first involves putting our customer and partners first. The second says 'I do what I say and own what I do'. This culture was formed by our chairman. The second foundation of our culture is called 'Protect and Attack'- we protect our core market and attack the emerging ones. We have 27,000 employees and every day matters for us. We have also doubled our marketing investment and launched a global marketing campaign created by Saatchi & Saatchi which says that Lenovo is for those 'who do', and not for those who 'want to do'.
Does the Chinese government's stake in Lenovo affect the way you function?
I've been with Lenovo for the last five years and I can tell you that we are structured just like any other global enterprise. There's naturally some Chinese heritage because of our origins, but our business has the flexibility to run as a global enterprise. We have a Lenovo Executive Council (LEC), comprising of the company's top nine executives worldwide. The LEC meets every month in either China or the US and four times a year in one of the key markets. One of the first areas where we brought the LEC was India, because we wanted to understand the customer here. The nine executives represent every business function across the organisation. Our 'Protect and Attack' strategy was developed by the LEC over a 30-day period. The LEC allows us to combine our Eastern and Western business approaches and find common ground.
How did the global economic downturn affect Lenovo?
The effect was deep across every industry. No business was spared - and Lenovo too saw significant pressure across our portfolio. That's when Yang Yuanqing and Liu Chuanzhi came back on board and we put in work around building the 'Lenovo way' and 'protect and attack' strategies. We also put the LEC in place and because of the clarity that has given us, we have executed our plans well. The last four quarters have actually seen Lenovo exceeding the PC market growth.
Where are PC prices headed? Do you think the netbook will vanish?
PC prices are going down and we don't expect that to change. Since about 85% of the price of a computer is components, our game plan is to outgrow the market and achieve greater scale so that we can offer better prices. As for netbooks, we saw them reach a peak in demand about a year ago, but then demand began to drop and consumers went back to PCs. So we believe that the demand for netbooks will not vanish, but will merge into entry-level laptops.
Does Lenovo plan to get into developing software?
We will create software around the User Interface and utilities of our existing offerings, including the LePad tablet and LePhone. We are also doing work around cloud-ready clients - such as front cameras, on board memory. The challenge now is to 'dumb it down' further, so that the end client or device can handle it. But no, we have no plan to develop our own operating system software.
Do you see IBM as competition in the enterprise services space?
We have a strong partnership with IBM, ever since we acquired its PC business. We are working well and augmenting each other. In many cases, we are part of the IBM solutions being implemented in enterprises. There is no conflict.

The Art of the Smart - "Negotiation"

Do you have what it takes to strike a good deal?

In todays era of mergers and acquisitions, negotiation skill has assumed tremedous importance. Although we can debate on whether one can be a good negotiator by simply knowing various tactics employed by persons of repute during their successful negotiations, certainily there is no disadvantage in it.

Zia Mody, Founder of AZB and Partners mentions " Before you even start negotiating a deal, you have to get a buy- in from the client on when you should walk away. You have to agree on what the must-haves are and what can be traded. Otherwise the negotiations can go on adnausem"

Harsh Goenka, Chairman of RPG group says " In negotiation, patience is the biggest virtue, followed closely by decency"

Vedika Bhandarkar , MD and Vice chairman, credit suisse " Deal fever happens. You get so caught up in the negotiations that you lose the ability to step back , look at things objectively. You are too much in the weeds and lose sight of the bigger picture."

Refer to the article in CD, The economics times , july 22 , 2001..by DIBEYENDU GANGULY ..

you can follow the link below,

http://epaper.timesofindia.com/daily/skins/ETNEW/navigator.asp?Daily=ETM&showDT=true&login=default&pub=ET

The article covers various cases of negotiations from Indian Inc. and covers the topic very well giving lots of learnings ...

Best Wishes

Foreign drug units face quality check

Foreign drug units face quality check

Ref: Times of India, Mumbai , Tuesday , February 8, 2011 - pg 21

11 Chinese & Two Italian Firms Shortlisted For Inspection

Kounteya Sinha TNN

NewDelhi:Chinese and Italian drug manufacturing units, from where drugs are imported into India in bulk, are now under the scanner. After several import licences of local agents of such overseas units were cancelled due to poor drug quality, the health ministry has given the drug controller general’s (DCGI) office the green signal to send a team of drug inspectors to check foreign units for good manufacturing practices’ (GMP) compliance.

The DCGI’s office has shortlisted 11 Chinese and two Italian drug manufacturing units, which will soon be inspected. A Central Drugs Standard Control Organisation (CDSCO) team will leave for China and Italy soon.

Confirming this to TOI, DCGI Dr Surinder Singh said, “The ministry has given us the go-ahead to inspect foreign manufacturing sites for the first time. A team will leave for China and Italy soon.” A health ministry note, available with TOI, said, “On the basis of complaints and doubts on authenticity of GMP certificate, we cancelled 10 registration certificates and related import licences. All these certificates were from China— from Zhejinag, Jingsu, Henan province and Chongquing.”

Similarly, several cases of imported HIV testing kits originating from Zhejiang and Fujian provinces were declared not to be of standard quality by the government laboratory. “These issues further support this office which stands to carry out foreign site inspections in line with other regulatory agencies of the world,” the note said. According to the rule, once the inspection visit is approved, as has been done in this case by the health ministry, the Indian agent of the shorlisted international company is asked to submit $5,000 within 15 days as a fee. A ministry official said, “Once the fee is submitted, we will leave for inspection.”

So, how did the DCGI select these 13 sites? The DCGI proposes following criteria for inspection of foreign sites. “Drugs which are of critical nature like sterile products, blood products, vaccines and drugs which are consumed vastly like antibiotics, anti-diabetic, antihypertensive drugs, the sites where there is doubt in authenticity or quality of submission are taken as priority,” an official said.

The team will be led by a DCGI official not below the rank of assistant drug controller in position for over two years and who has over five years of experience.

• Govt has cancelled 10 registration certificates and related import licences

• All these certificates were from China

• Several cases of imported HIV testing kits were declared to be of poor quality. Also from China

• An Indian team will leave for China and Italy soon

Role of PE in Paras Pharma sell out

Ref: The Economic Times dtd 17th Dec 2011

M Trivedi took four years to sell Paras Pharmaceuticals for a four-fold gain. But it took him nine years of relationship building to buy the business. One reference check, one CEO hiring and one transaction later, Trivedi convinced Paras promoter Girish Patel that his private equity fund, Actis, could take the business to the next level.

Their relationship goes back to 1997, when Trivedi called Patel to inquire about another Ahmedabad-based company. Introductions made, Trivedi stayed in touch because his fund was big on the consumer business. He liked Paras, and started asking Patel for a stake. Patel refused. "I wasn't sure what value a PE could add," says Patel. "I saw PE as a long-term investor without vision."

But the more he saw Trivedi, the more Patel liked him. When Patel wanted a CEO for his Sterling Hospital, he asked Trivedi for names. He also asked Actis to invest. In 2006, Actis bought a stake in Sterling. It followed it up with Paras Pharma, buying 63% in two instalments for about Rs 540 crore. On Monday, it sold that stake to Reckitt Benckiser for about Rs 2,100 crore.

It was Actis' biggest payday in India. It was also the largest 'buyout' exit by a PE fund in India. PE deals are broadly of two types. There are 'growth' deals, where a PE fund buys a minority stake in a company but someone else runs the business. Then, there are 'buyouts', where a PE fund buys an ownership stake and also runs the business.

In the brief history of Indian PE, less than 4% of deals have been buyouts. Actis is the most active player in the buyout space. And the Paras deal, spanning 13 years, epitomises what Actis is about and why it has established itself as the buyout leader.

Although he breathes business and numbers, Trivedi uses words like relationship, trust and chemistry a lot to describe his firm's engagement with companies. "We like to keep in touch whether or not there is an opportunity to invest," says Trivedi.

Take Paras. When he realised Patel wasn't initially interested, Trivedi respected the thought, but kept open a line for conversation. When Patel wanted him to search for a CEO for Sterling, Trivedi turned into a headhunter. When Patel tore a deal with Actis at the last minute citing "family issues", Trivedi didn't tear into him. Instead, he stepped back, and stepped back in when the opportunity arose again.

With the Paras deal, Actis has stamped its name on buyouts. It's a significant exit for Actis, which is known to be a conservative fund that does things on its own terms. It could also be significant for the Indian PE sector because the lure of similar returns could feeds its appetite for buyouts.

It's a progression for PE funds: from being passive managers with a small stake to becoming majority owners and controlling the business. PE investments in India began in the mid-nineties, through growth deals. The first buyout happened only in 2003, by Actis, eight years after the London-headquartered PE fund entered India.

Actis bought an ownership stake in Punjab Tractors, the tractor company owned by the Punjab government. "When we started investing in India, India was entirely a growth market," says Trivedi, who heads the South Asian operations of Actis. "We started doing buyouts because we realised many promoter families were no longer interested in running their businesses."

Yet, buyouts have been few and far between, even for Actis. According to Venture Intelligence, an aggregator of data on deals, PE funds have done 2,085 transactions in India between 2005 and 2010. Of these, just 76, or 3.6%, have been buyouts; the remaining 2,009 have been growth deals.

Three PE firms stand out in the buyout space: Actis, ICICI Venture and Blackstone. Of the three, Actis leads with eight buyouts with a total deal value of $495 million. That buyout number is a fraction of the 37 deals Actis has closed in India.

There are challenges in doing buyout deals, says Sumit Chandwani, executive director at ICICI Venture, the PE arm of ICICI Bank . "Promoter families are not keen to sell their businesses and it's difficult to find funding for such deals," he says. India does not allow investors to buy a controlling stake in a company with borrowed money.

But Chandwani also feels buyouts will pick up in India because of their unmatched returns potential. One of the deals done by Chandwani for ICICI Venture was VA Tech Wabag , a water company. ICICI Venture's investment of Rs 24 crore in the company grew to Rs 700 crore in five years. "The key to high returns lies in two issues: an investor gets control of the investee company and it offers more exit routes," says Chandwani.

So far, India has seen only about 10 buyout exits, with Actis and ICICI Venture accounting for three apiece. That's because the typical investment period of PE funds in such deals is upwards of four years, and it's been only seven years since the first buyout happened.

More exits will give buyouts greater traction, both among PE funds and company promoters. Trivedi is non-committal on the number of exits Actis might do next year. The market grapevine is that lighting company Halonix, where Actis owns 66%, is likely to be one.

Actis, typically, looks for mid-sized, family-run businesses. Also, it operates only in select sectors: consumer, healthcare, financial services, industrial sub-sectors that cater to infrastructure, and business support services. It has a target list of companies in these sectors.

A company is on that list because of what's good about it - for example, quality of management or strategy. "It may also be because their footprint or the footprint of their ambitions coincide with ours," says Trivedi. "Many a times, we have helped companies by putting them in touch with our teams in Brazil and Africa without having any investments in them."

Actis is all about emerging markets. As on March 31, 2010, 51% of its investments were in Africa. This was followed by South Asia (25%), which is mostly India, and China (13%). Last month, Actis promoted four directors - two apiece from India and China - to partners, underlining the importance of the Indian operations.

Unlike most PE funds, Actis does not make investment a precondition for engaging with a company. "In order to add value, you need influence. And influence in India mainly comes through relationships," he says. "We try and build that relationship over a period of time and that has given us many good deals."

One such deal was Jyothy Laboratories . Actis invested Rs 80 crore in Jyothy in 2004 and realised Rs 160 crore when the company went public in 2007. But that relationship goes back to even before an investment was made. Actis was in touch with Jyothy's Chairman MP Ramachandran and MD K Ullas Kamath as far back as 2001.

Actis helped Jyothy improve its internal controls and management information systems (MIS) as preparation for its maiden public issue. "We also put them in touch with an external advisor for help on certain brands," says Trivedi. "JM (Trivedi) was personally responsible for Jyothy's growth," says Kamath. "Actis has made us professional; it has also shown us the distinction between owner, management and stakeholders."

Glenmark Pharma , a growth deal, was another instance when Actis worked closely with a company's management. "Actis added value to us in terms of corporate governance, MIS and investors relations," says Glenn Saldanha, managing director of Glenmark.

When Actis entered the company in 2002, one of Glenmark's problems was its stock was illiquid - average daily trading volume for the year was 10% of equity. Actis introduced the company to fund managers and brokers. When Actis exited in 2006, with a return of $66 million on an investment of $12 million, Glenmark's average daily trading volume was 140% of equity.

Actis also advised Glenmark on operations in Latin America. "JM trusts the management team of the company where he puts in money," says Saldanha. "Unlike typical PE investors, Actis does its work through the management without meddling with the management."

There have been times when Actis has crossed paths with company managements. One of its buyouts was Nilgiri Dairy Farm, where it bought 65% for Rs 300 crore in 2006. Immediately after the deal, Actis clashed with the Mudaliar family, the promoters, over a host of issues, including alleged mismanagement, sale of hotel properties and a Rs 30 crore rights issue. This January, the promoters dragged Actis to the Company Law Board in Chennai, opposing the company's rights issue. The petition was subsequently withdrawn in April and both sides have since made peace.
Similarly, its relationship with UTI Bank, where it once held 26%, soured over an alleged proposal by the bank's management to induct one of India's largest corporate houses in the bank. "What value will it bring to the financial services business?" Trivedi is reported to have said. Trivedi says: "We are 37 deals and 15 years old. Some differences are normal. Our approach is that we always amicably resolve issues with partners."

Trivedi, 58, is the face of Actis in India. But he's not as high-profile as some of his peers, or as colourful as the man he succeeded at Actis, Donald Peck. While Peck spewed words and chased adventure sport, Trivedi is more likely to retire with an annual report.

For many on the other side of the table, that quiet nature is a big plus. "JM is very approachable and down-to-earth," says Mahesh Singhi, founder and CEO of Singhi Advisors. "Promoters of mid-sized and small-sized companies feel comfortable talking to Actis." Singhi Advisors, a Mumbai-based boutique investment bank, last year advised Actis on a deal that did not materialise.

A chemical engineer from IIT Bombay, Trivedi's first job was at chemicals company Atul Products, on the shop floor. In 1979, he moved to the Gujarat Industrial Investment Corporation (GIIC), where he got his first lessons in equity investing. When GIIC started its venture capital arm, Gujarat Venture Finance, Trivedi joined. He spent seven years at GVFL, raising three small funds and making venture capital investments.

By the mid-nineties, foreign PE funds had started entering India. Trivedi joined Actis, then CDC Capital Partners, in India in 1997 as director, Mumbai office. He took over from Peck, the firm's Delhi-based managing partner in India, to become the South Asia head of Actis in 2007.

While the market focuses on financial returns, Trivedi says there are greater considerations. Actis also measures value it creates for all stakeholders -shareholders, employees, suppliers and customers. "We focus on what we call the 'positive power of capital'," he says. "We try and improve not only the business performance but also the operational performance. We also try and add value to the governance and social aspect of the business."

Even the choice of Paras buyer - Reckitt and not Emami - reflected that mindset, says a person involved in the deal. "Although Emami bid more, Trivedi and Patel felt Reckitt was better placed to take Paras to the next level," he says. "Also, Reckitt's was a cash upfront offer, Emami's was a cash-cum-stock offer, and the cash was staggered." Trivedi says it's not just the end result that counts. "The journey is also important," he says. And that, in his world, revolves around relationships.