Posts from — September 2010

The Hollywood Reporter says that Lucknow, India based Sahara India Pariwar, may be ready to bid for Leo, the Lion and his MGM Entertainment. The Wall Street Journal reports that the bid for the studios that owns the James Bond franchise, (and precious little else) may be as high as $2 billion.

Bloomberg News reported that the Broccoli family, producers of the James Bond movies and co-owners of the franchise with MGM are involved and that Barbara Broccoli and her stepbrother Michael G. Wilson would receive an undisclosed equity stake in MGM if the Sahara deal goes through,

This would be a crazy decision for Sahara, led by Subrata Roy, in my view. MGM has been bought and sold too many times for any Hollywood-watcher to believe there is anything left but debt. Billionaire Kirk Kirkorian milked so much value out of the company when he bought and sold it three (or was it four, I lost count!) times.

When Anil Ambani agreed to invest in Dreamworks and take it private, in collobarations with Steven Spielberg, I praised the decision here and in the Los Angeles Times as well as in the Hollywood REporter. Spielberg has a future. But the future of James Bond is more than overshadowed by the $4 billion debt accumulated at MGM. They need a sucker not an investor. I hope they find one outside of India.

Else it may be time to let Leo the Lion become a Hollywood memory forever. The musical format of Bollywood movies was hugely influenced by the grand epics produced on the Metro-Goldwyn-Mayer lot in Culver City in the 1940s and 1950s. So in a sense Leo already survives in Mumbai and the ghost of Sam Goldwyn must be smiling to watch the story unfold.

Ikea, the Swedish retailer which has expanded in China in a big way, plans to double the amount of goods it buys from India, including textiles, in the next three to four years, to $1.3 billion according to its CEO Mikael Ohlsson quoted in the New York Times.

Ikea said it was investing about $163 million, in social programs to help women and children in India and South Asia. These investments make Ikea the largest corporate partner in the world to aid agencies including Unicef and Save the Children, representatives of those organizations said Monday.

At my company, Amritt, we have seen a huge increase in sourcing inquiries from Western companies who are looking beyond China to buy products and materials for their customers’ needs. Labor issues in China and the rising yuan are leading companies such as Ikea to look further at India and other locations to balance their sourcing plans for 2011 and beyond.

Many large foreign companies have chosen Chennai over other locations for their engineering staff.  Visteon, Caterpillar,  Nissan-Renault, Vestas, Kone, FLSmidth, Nokia, Ericsson, Flextronics, Alcatel, Tessolve, Sanmina-SCI corporation have R&D or product development centers in and around Chennai.

For example Visteon India MD, A Viswanathan said that the  Visteon technical and services centre was set up in 1998 with just 10 people. It has grown into a 110,000 sq ft center with 500 engineers plus 250 employees. They are focused on developing embedded software and hardware engineering.

What it means
Chennai is a serious contender for many Western companies seeking to tap technical talent in India. Take a close look at Chennai if you are willing to consider locations beyond Bangalore.

The slower pace compared to Mumbai and Delhi, the somewhat lower costs and a friendly provincial government, make up for the humidity and heat. It’s airport is undergoing serious upgrades. A huge nuclear power plant in Kudankulam is going to start pumping gigawatts into Chennai’s power starved companies soon.

Chennai is not right for everyone and we often recommend other cities including Hyderabad, Pune, Baroda, Ahmedabad, Mysore for some of my clients. For some Banglaore, Delhi or Mumbai are still the best choice. And this is not the complete list.

The price of wheat is watched in India like the price of gasoline is in the United States. And the gyrations are just as crazy.

Until the 1960′s drought and famine used to produce widespread starvation. Mechanized farming, the introduction of productive dwarf wheat (and American contribution to India’s green revolution, via Norman Borlaug) and better irrigation have mitigated the cycles somewhat, but India is still dependent on the monsoons rains and their vagaries.

This year’s rainfall has come in above the long-term average, a stark contrast to last year’s severe drought.

The Manmohan Singh government supports farmer incomes by paying a guaranteed minimum price for crops, and encouraging farmers to sell only to the government. An export ban in place since 2007, meanwhile, means the excess can’t be dealt with sensibly. Here is how the Wall Street Journal reported it.

While the problem is clear, the solutions involves economics, politics and logistics in apparent tension with one another. Don’t assume any quick solution.

My friends Vipul P Jain in Mumbai and Narendra Kale in Chicago run one of India’s most interesting boutique outsourcers, Kale Consultants..

Rare among Indian IT companies Kale has designed software products for the banking, hospital and airline businesses over the years. I first met Narendra my friend Vipul hire the company to create the first computer software installation in India, for the Taj Palace Hotel in New Delhi.

The company went public in the late 1990s and this week it announced that Spain’s Accelya Holding World is buying a controlling stake, see the Financial Times story today.