Sucheta Dalal :Starry Connections
Sucheta Dalal

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Starry Connections  

Aug 23, 2004

When analysts try to work out whether Balaji Telefilms gains or loses due to Star TV’s 25 per cent acquisition, one would do well to remember that this merely gives Star TV some control over its content pipeline.

With Balaji, Star is only replacing its holding in software producer UTV. Over the years, Star TV has forged relationships in the entire value chain of its core activity through strategic acquisitions (except NDTV TV, where it had an expensive contract). It has also shown great agility to getting out of relationships without rancour. For instance, it divested its 50 per cent stake in Asia Today and cable distributor Siticable by selling back to the Zee group, but quickly replaced Siticable with a 26 per cent in Hathaway Cable & Datacom. Its ownership of Vijay TV gives Star access to south India and a valuable library of software, while the FM channel Radiocity, helps promote its shows.It made a mixed bag of strategic acquisitions during the dotcom boom, but some are languishing. The 25 per cent stake in made money when it was acquired by eBay. It is also putting to use for listing its own programmes. The holdings in, and were supposed to provide synergies with its existing activities. Clearly, StarTV has deep pockets and is a shrewd investor, but it wins some and loses some too.

Publicly Funded

The Mumbai-Pune Expressway is literally facing rough weather these days. On the one hand, multiple landslides and rain-related damage has raised questions about the planning and implementation of this infrastructure showpiece. The Shiv Sena has objected to the Expressway and the Mumbai-Pune segment of the National Highway 4 being handed over to relatively unknown private company called Ideal Road Builders (IRB).

IRB won the maintenance and four-laning contract by bidding Rs 2060 crore of which Rs 918 crore was to be paid upfront to Maharashtra State Road Development Corporation (MSRDC) on August 9. Did someone say private sector? A tombstone advertisement by the company shows that every rupee paid upfront and then some more came from a set of public sector banks led by Canara Bank, which contributed Rs 300 crore. The other financiers were - Union Bank of India (Rs 182 crore); IDBI, Bank of India, Indian Overseas Bank and United Commercial Bank (Rs 100 crore each); Andhra Bank and Corporation Bank (Rs 90 each). Bank of Baroda will fund Rs 75 crore and Bank of Maharshtra is coughing up Rs 50 crore. Although the recent landslides have sent the contractor company scouring for insurance cover, one of the lenders insists that there are no shades of Enron in this PSU-funded deal and banks have done enough homework to be confident about the safety of their loans.

Kerkar’s Catch-22

Finance Minister P.Chidambaram may have stopped short of launching an inquiry into the sale of the public sector owned Centaur Hotel (Juhu, Mumbai) to high-profile hotelier Ajit Kerkar’s Tulip Hotels, but a spate of court cases are likely to dig up enormous dirt on the manner in which Kerkar raised his money. A number of Kerkar’s associates have now sued him, including his Bangalore-based financial consultant and the builder who magnanimously offered his property as security against a bank loan in the hope of raking in a profit. However, it is a Catch-22 situation for the hotelier. He can pay back his associates only if he sells the property, especially at a profit.

On the other hand,if he makes a big profit it will fuel further controversy. In fact, a lucrative deal that had been negotiated has apparently been shelved after the disinvestment seemed set to be subjected to a government probe. Meanwhile,litigation against Kerkar may expose how he acquired the massive hotel without investing any of his own money. One allegation by a Kerkar associate is that he showed a short-term bank loan as his equity capital.

Trading Places

While debt market brokers in India are running scared that they will lose business to the order-matched Negotiated Dealing System of the Reserve Bank of India, things are getting difficult for brokers at the Big Apple too. The New York Stock Exchange’s (NYSE) electronic trade plan apparently plans to allow jumbo electronic trades to ‘‘sweep through the system’’ and bypass floor traders and specialists, say media reports. The move threatens to undercut traditional floor brokers and the seven specialists who offer quotes in the open outcry system. After recent revelations about massive profits raked in by specialists, this is seen as a welcome development. It also highlights how India has moved far ahead of NYSE, with a system that is not only electronic order-matched, but now plans to do away with brokers altogether - at least in the RBI’s NDS.

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-- Sucheta Dalal