Posts from — July 2008

On August 6, the music video of rapper Snoop Dogg and India’s Akshay Kumar will release in advance of the much anticipated (in India) movie Singh is Kinng.

Most Bollywood (Indian) movies are musicals and the songs are released in advance of the movies. The producers report (legal) sales of half a million copies of the songs for this comedy. For a glimpse of the song take a look at…

Snoop Dogg is planning a visit to India according to a report by Heather Timmons in the New York Times.

What all this mean for American businesses? It’s one more indication that revenue from India is becoming important to the entertainment industry. I don’t expect this particular movie to be a hit with mainstream American audiences or even with Snoop Dogg’s core audience. But it could be another step in building the bridge between Hollywood and Bollywood.

You read it here before the Los Angeles Times published it!

A short time ago, 275 members of India’s lower house of Parliament  voted in favor of the government and 256 against it. This means that the UPA coalition government of Prime Minister Dr. Manmohan Singh will stay in power.

The crisis arose when Singh’s government decided to press ahead with the next step of the US-India Civil Nuclear Accord, even though its coalition partner, the Communist party, announced that it would withdraw support for the government.

A small party in the northern state of Uttar Pradesh, the Samajwadi Party led by former UP Chief Minister Mulayam Singh Yadav, decided to support the UPA government.

General elections are due in India in 2009.  The historic Civil Nuclear Agreement, which will (eventually) enable India to buy uranium for its power plants (even though it has exploded a nuclear device and not signed the nuclear non-proliferation treaty) will require additional steps in the U.S. Congress.

For US-India business interests, this is a good step. Pre-mature elections would have caused uncertainty in an economy already hit by food and fuel inflation.

General parliamentary elections aren’t due until 2009, but a special session of India’s legislature is to meet in New Delhi on Monday. The Communist Party of India (Marxist) which was supporting the government from the outside, has withdrawn support in light of Prime Minister Manmohan Singh’s decision to forge ahead with the next steps on US-India Civilian Nuclear Agreement.

A small regional party in Uttar Pradesh has stepped forward to support the government. As a result of frenetic dealing and negotations, it seems that Dr. Singh and  his “UPA” alliance have mustered enought votes to survive the expected “no-confidence” vote which is expected to the primary agenda item of the special session in New Delhi.

The first steps to the Nuclear agreement were signed in 2005, but its passage on both American and India sides has been fraught with questions.  Additional hurdles remain inside and outside of India. But this current crisis is the most serious challenge so far.

Stay tuned for some excitement; nothing is final in India until it’s final.

Anil Ambani and his $42 billion fortune are looking to make their mark in Hollywood.  Negotiations are under way between Anil and legendary director Steven Spielberg to provide $600 million in equity, enough to let DreamWorks separate from parent Paramount Pictures (a Viacom entity).  But Anil’s Hollywood aspirations don’t stop there, he’s also buying up theaters, signing deals with powerhouse actors, and plans on  funding major American motion pictures in the near future.

When elephants start to mate, the world pays attention.  No, I am not talking about the Paramount Pictures parody, The Love Guru, although  there is some of that (elephant mating, I mean)  in the Mike Myers flop that released last month. I refer to the possible deal between Hollywood’s sixty-one year old legendary movie director, Steven Spielberg and the billionaire husband of a former Bollywood film star, a man barely known in America until last month, Anil Ambani.

Apparently Ambani’s company will provide Mr. Spielberg and friends at Dreamworks with up to $600 million in equity; this will enable Dreamworks SKG, to separate itself from Viacom’s Paramount Pictures. Not to mention from the phallic comedic sense of Mike Myers. Someone on the inside leaked news about the half-billion dollar agreement in progress to the Wall Street Journal and Ambani and his team are under the spotlight sooner than they might have preferred; this will certainly affect the tenor of the negotiations and could even jeopardize their successful conclusion. Welcome to negotiation, Hollywood style Mr. Ambani!

Is Ambani yet another star-struck rich man about to be seduced by the glamour of the world’s most powerful entertainment industry? After all, Matsushita of Japan tried this with little success when it invested $6 billion into Universal Pictures.  Sony Corp of Japan, Seagram’s of Canada and Vivendi SA of France have had their own challenges as they have attempted to play in Hollywood but things haven’t gone according to the script that they preferred. But Ambani is different and determined. He has a plan of which Spielberg and friends are only a part. An important, but not crucial part.

Ambani’s entry to Hollywood is better compared with Australian-born Rupert Murdoch, chairman of News Corp which owns the Fox film and television properties. , now a US citizen, is probably the most successful foreigner to enter Hollywood.  The 77-year old Murdoch is worth about $9 billion according to Forbes, less than a fourth of the 49-year old Indian.  Murdoch’s initial success was rooted in a relatively ancient medium, print media. But Ambani has backed into films from the more modern medium of wireless telephony. Murdoch

Just who is Anil Ambani?  Worth at least $42 billion, the Wharton MBA is on a roll this past year via his Reliance ADAG Group. (His estranged brother Mukesh Ambani, runs Reliance Industries Limited, a petrochemicals giant). His Reliance Power is developing 13 large fossil fuel power plants in India, the first of which is a 4,000 megawatt behemoth expected to come online by 2013. Ambani’s team won the project after a prolonged battle that ended last August; the company raised a record $3 billion on the Bombay Stock exchange in February. Most American’s don’t realize it, but Ambani has over a million customers in the United States, mostly from ethnic Indians who use Reliance India Call to make telephone calls to India. In fact, most of Ambani’s wealth resides in Reliance Telecommunications, India’s second largest cellular phone company. The world’s largest private undersea cable system, Flag Telecom Ltd, is also a part of this empire and is currently laying another 30,000 miles of cable in a $1.5 billion expansion.

Multi-tasking is in the blood of this younger son of India’s most legendary self-made billionaire, the late Dhirubhai Ambani. Even while one of teams discusses the possible exit of Spielberg, Stacy Snider, and others from Viacom/Paramount, there is another team working on a much bigger deal in South Africa. Reliance Telecommunications recently displaced its larger Indian competitor, Bharti Airtel, in merger discussions with South Africa’s MTN Group in a bid to create a unit that would have more subscribers than AT&T Wireless, the largest American cellular provider.

BIG plans in entertainment

Growing up in Mumbai (then called Bombay) Anil was attracted to the world’s most prolific movie industry, commonly referred to as Bollywood.  He married Tina Munim, who had starred in over 30 movies, several opposite India’s leading male stars of the time.  While Munim does not play an active role in the business, she did go to college in California, and like her husband, has some understanding of the American mind-set.  A vegetarian and a teetotaler, Ambani sleeps just five hours a day and spend at about two hours exercising and practicing yoga.

While he has run the Mumbai Marathon, Ambani in 2008 seems more like a sprinter.

Three years earlier, Ambani acquired control of one of India’s largest publicly held entertainment companies, Adlabs Films which had interests in film processing, production, exhibition & digital cinema. American investors might have noticed that New York based billionaire George Soros invested $100 million for a 3 percent stake in Reliance Entertainment in February this year. Since Soros’s investment, Reliance Entertainment rapidly bought up over 200 movie theaters in two dozen American cities, as reported by Business Week in April. The theaters and indeed the rest of the company are being rebranded as Reliance BIG Entertainment.

At the Cannes Film Festival last month, Ambani’s team announced that they planned to invest $1 billion into filmed entertainment in India over the next 12-15 months. The chairman of Reliance Entertainment, Amit Khanna, revealed Ambani’s ambitions when he said “We believe we are creating 21st century’s truly integrated media and entertainment company.” And sure enough the BIG team made another announcement at Cannes shortly:  heavyweights Nicolas Cage, Jim Carrey, George Clooney, Tom Hanks and Brad Pitt had each signed separate deals with Reliance to develop a total of as many as 30 scripts which would lead to ten Hollywood movies eventually.

Make no mistake; Anil Ambani aspires to displace Rupert Murdoch in Hollywood. With or without the Dreamworks deal.

By Christmas this year, the world’s largest refinery complex will be operational in western  India.  It will  produce 1.1 million barrels a day. Recent development  is partly financed by a loan guarantee from the Export Import Bank of the United States. American companies have played a major export role in the new refinery’s  success.  San Francisco based Bechtel provided design and project management, Kansas City-based Black & Veatch sold sulfur and gas treatment units, New Jersey’s Foster Wheeler provided industrial heaters, and UOP near Chicago supplied catalytic converters.

In 2007,  American sales into India shot up  a breathtaking 74.3% percent according to US government numbers.  Despite the slowdown, 2008 numbers so far have recorded a further 46.3% increase.  The gain spans many sectors. For instance Aircraft sales were up three times primarily on account of Boeing’s civilian successes. And the military wing of Boeing has just bid on a $10.5 billion fighter project. Another American vendor, Lockheed Martin is also in the race.  Sales of boilers and machinery rose  by  more than a third. So did fertilizers. And optical  and medical instruments rose 26%.

India is already among the top 20 trade partners for the United States but the future holds a much larger potential. My company’s clients are seeing rises in orders from India regardless of industry. In my book, Business in 21st Century India, I talk about the Six C’s driving demand in India.  Few western executives can afford to ignore the potential of India in these challenging times.