Category Archives: Business

Arnold: "Must be a cultural thing"

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Recently Gov. Arnold Schwarzenegger of California spoke at the 2006 TiEcon conference in front of a large group representing the Indian American business and entrepreneurial community. The conference was held in Silicon Valley and dealt mostly with the intersection of California, business, and Indian Americans. A mash-up clip featuring the highlights of his talk are available on the internet. It is worth seeing (scroll down just a bit on the linked page) especially for the zinger that Schwarzenegger unleashes about a quarter way through the clip when he notices that all of his co-panelists are men. What’s up with that?

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Fear of a Brown Magnate

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Mittal-steel.jpgA big current international business story is the attempted takeover of Arcelor, a Luxembourg-based steel manufacturer, by London-based, desi-owned Mittal Steel, the voraciously successful family business of Lakshmi Mittal. Arcelor is itself the result of a merger of European steel firms, a logical consolidation in its day since steel is a sunset industry in Western Europe and many firms enjoyed protections of state ownership or subsidies that EU rules no longer permit. However, European politicians have retained a bit of a proprietary cultural interest, as it were, in firms like Arcelor, since even without state ownership they possess a sort of vestigial patriotic value as “national champions,” and they still employ a fair number of people, if far fewer than before, in depressed industrial areas.

Well, ever since Mittal made his first overtures to Arcelor shareholders (which Manish blogged here in January), followed by a formal takeover bid once he got permission from competitive authorities, Arcelor has done everything possible to wriggle away from its suitor. Fair enough – that’s what companies threatened by hostile takeovers do, especially when it becomes clear that their management don’t enter into the buyer’s plans for the future. But with investment analysts lining up in favor of the Mittal bid, there’s also been, of course, speculation that even though Mittal is a London-based, London-quoted firm, it may just be a little too brown for the comfort of the European industrial bourgeoisie.

All this could be dismissed as reading-ethnicity-into-everything, and to some extent probably is. (Though…) Still, itÂ’s remarkable to see that this week the board of Arcelor found themselves rushing into the arms of what is known in business lingo as an, ahem, white knight, in the form of a Russian firm of the new-oligarch variety. The merger deal with Severstal is framed as a purchase by ArcelorÂ… except that it is funded by an increase in ArcelorÂ’s capital via investment by Alexei Mordachov, SeverstalÂ’s 38-year-old chairman. By funding ArcelorÂ’s purchase of his firm, Mordachov takes a 32 percent interest in the merged firm, which would become the worldÂ’s largest steel producer, ahead of Mittal.

The London business writers are having a field day with this one. “The putrid stink of hypocrisy hangs in the air,” says The Observer‘s Richard Wachman, noting that Arcelor, having criticized Mittal for non-transparency in past business dealings, has found its savior in the land where opaqueness and favoritism are essential components of business success. And The IndependentÂ’s business columnist Jeremy Warner cold lays down the card:

Is it cos I’s brown? The Arcelor board appears so appaled at the prospect of takeover by the Indian-born steel magnate, Lakshmi Mittal, that it will do almost anything to avoid his clutches – right down to surrendering control to the Kremlin. Okay, so I’m exaggerating to make the point, but only a little.

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The Da Vinci Cody’s

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Cody’s, a landmark, 43-year-old indie bookstore in Berkeley, is closing July 10 due to declining sales (thanks, Saheli). It was attacked during the Satanic Verses fatwa in 1989:

Cody’s Books, Berkeley, California was firebombed about 4:30 a.m. when a pipe bomb was hurled through a back window just thirty seconds before a similar attack occurred at a nearby Waldenbooks store. One of the world’s finest general bookstores, Cody’s was bombed just fourteen days after Khomeini [issued a fatwa against Salman Rusdhie]… During the cleanup another bomb was found on the floor in the poetry section of the store. The owner of the store… stood across the street while the bomb squad worked with the bomb and as it exploded. [Link]

… the store announced that it would continue to sell Salman Rushdie’s controversial “Satanic Verses” — a decision that Ross called “our finest hour.” [Link]

Rushdie was pithy as ever:

“Rushdie came to the store once, a surprise visit when he was still in hiding,” Ross said. The author gave the bookstore 5-minutes notice to announce that he was in the store and would sign books. “There’s a hole above the information desk from the bombing. Someone scribbled ‘Salman Rushdie memorial hole.’ When Rushdie was here, he looked up and said, ‘Some people get statues, others get holes.’ ” [Link]

Cody’s blames the closure on competition from online textbook and academic bookstores and the general decline of Telegraph Ave., a street which rocks out with revolutionary flava but isn’t all that safe at night.

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In search of the great American…Indian fast food restaurant

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For years I have been telling friends that what the U.S. needs more than ANYTHING right now is an Indian fast-food chain. If I am going to be convinced by advertisers to slowly poison myself with grease then I would much rather do so

Puff puff…give

at the hands of a warm samosa than a burger and fries. And what about those long drives across America? When we pull up to a gas-and-go we currently have a choice between tired old Subway and toxic McDonalds. We can’t find a warm nan filled with paneer tikka anywhere. Recently the Indian restaurant chain “Hot Breads” announced that it was trying to spread some of its love around the U.S.

The Hot Breads chain has had great success in India, but the company is really hoping to put the hot in Hot Breads as it begins franchising in the United States.

“We have great plans of opening up Hot Breads here,” said M. Mahadevan, who first launched the Hot Bread chain in Chennai, India, in 1988. “We have a plan here for nice growth.”

With over 20 locations in India in cities such as Bangalore, Chennai, New Delhi and Pondichery, two in Bangladesh, four in Nepal, one in Paris and about 40 in the Middle East, there is no reason to think Hot Breads won’t fly in the United States…

Hot Breads features bakery items such as croissants and pastries with an Indian twist. In India, Hot Breads is touted for its French baking traditions, but in the United States it is the connection with India, and its pastries filled with spicy vegetables and meat fillings, that have connected with the India American customers. [Link]

Now please don’t get me wrong. Looking at their menu you will see that this is just a baby step. The food they serve seems to be sort of an Indian-French hybrid. The Taj Mahal wasn’t built in a day however. If enough people eat this stuff then maybe an establishment like Kati Roll will decide to franchise as well. Just imagine a bouncer at every highway truck stop trying to fend off paneer lovers and keep the peace.

Mahadevan said that Hot Breads has scored as a brand that Indian Americans are familiar with from India. He added that it gives Indian Americans a sense of belonging here because they can visit a store, smell the curry and Desi coffee and be reminded of Hot Breads they have visited in India. [Link]

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Come Home

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Singer-songwriter Shaheen Sheik, a friend from college, just signed with Times Music in Bombay and is on a promo tour here this week. (Watch her video.) Last night she sang on a TV show with a name that’s a paragon of ridiculously nontransitive branding, the Tuscan Verve Zoom Glam Awards. Other nights she slums with the plebeians. That’s usually when I get to see her.

A few of us went to see her first performance at a downtown Bombay club called Prive, which is around the corner from the Gateway of India. It’s decorated like a Southern strip club (black lacquer ceilings, gold bead curtains and lap dance seats), albeit one with floating roses. It was an odd venue for folk-pop ballads, but Shaheen sang four gorgeous melodies and encored with a cover of ‘In Your Eyes.’ Like most desis of a certain age, the duet guitarist provided by the label knew Pink Floyd, the Eagles and Led Zep but was baffled by Peter Gabriel.

There’s an interesting tradeoff when Indians in the diaspora come back to promote their wares (Apache Indian, Salman Rushdie…) On one hand, the potential market is huge with a built-in cultural interest. On the other, the middle class is limited in size, and you earn less per unit than in your home market after currency conversion.

Ballads at Prive

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Templezilla vs. Megachurch

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Earlier Abhi posted about the booming hair trade at the main Venkateshwara temple in Tirupati. It turns out that the sale of devotees’ hair is only one of this massive temple’s revenue streams, which dwarf those of American megachurches. Other revenue streams include cash, gold and diamond donations, laddoo sales and e-hundi.

Tirupati

E-hundi? Yes, electronic donations. You can donate to the temple right from ATMs owned by Andhra Bank and State Bank of India. The lords work in mysterious ways, but especially at withdrawal time:

“Andhra Bank ATM cardholders can make payments into the `hundi’ of Lord Venkateswara of Tirumala, from any of the bank’s ATMs. All they have to do is insert their card, enter the amount to be credited to the hundi account and it would be done instantly. In future, the facility would be extended to make payments for railway reservations and other services…” [Link]

Tirupati is also the most visited temple in the world. It is estimated that more that 50,000 people visit the temple everyday; this makes it almost 19 million people in a year, almost double the estimated number of people visiting Vatican City… Tirupati is the second richest religious institution after the Vatican City… it usually takes anywhere from 2 to 40 hours, depending on the season, to get to the Sanctom sanctorum from the time one registers into the queue system. [Link – thanks, tef]

The temple staff alone amounts to a number of 18,000. [Link]

Hundi collections (cash donation by devotees) account for roughly one-third of the Tirupati trust’s income. It also earns substantial money from the sale of human hair (offered by devotees) and laddoos, apart from interest on bank deposits. [Link]

For added convenience, you can book religious pilgrimages at State Bank branches worldwide. Separation of temple and state, what?

The bank is in tie-up with the Tirumala Tirupati Devasthanams management on a package to get the various `sevas’ in Tirumala temple and cottages booked at any of the bank’s branches in the world. ‘ `e-hundi’ is also part of the software, wherein a devotee can drop his offerings either in an ATM in the country or at the 52 overseas offices in 33 countries. [Link]

The bank was nationalised in 1955 with the Reserve Bank of India having a 60% stake. [Link]

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Incredibly off-k!lter

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Last night I saw an odd Indian tourism billboard in Times Square. It read, ‘Get to know yoga from its mother,’ and the visual style reminded me of old-skool ‘An Ideal Boy‘ posters.

The blurb in an advertising publication says the ads aim for kitsch, but IMO they fall into the chasm between kitsch and cheese. The colors say ‘An Ideal Boy,’ the visual style is fun. But the elements don’t work together. The slogan is lame, its font evokes Dances With Wolves, and the tagline in ultra-serious Bodoni strip it of wit. Indian tourism needs to hire whoever’s penning the witty Citi ‘Live richly’ campaign. I hear Rushdie’s available.

Even the campaign description is off:

Prathap Suthan, national creative director, Grey Worldwide, explains why this campaign stands out: “The difference lies in the expression which, according to me, is very Indian. Where one normally uses photography for billboards, which is a Western expression, the style used to communicate in this ad is the kitsch look… Opting for the kitsch look is based on everyday observations from all over India. These images have been drawn from village folk art and common imagery seen across India, images that bring to mind the colours, uniqueness and diversity of India.” [Link]

Kitsch, like cool, shrivels in sunlight. Trying to explain it kills it. Reading about it in dorky ad pubs kills it. Nonchalant, off-radar irony is the point. Calling it ‘the kitsch look’ voids any street cred. It’s painful even to read. I’ve lost all my Williamsburg karma by writing this paragraph.

Chantal, book me for a fauxhawk. The three hundred dollar kind. Tell them I want highlights, I’m feeling verklempt.

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Bombay Shining

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According to the latest Forbes ranking, the global center of desi wealth is Bombay, not Silicon Valley (thanks, WGIIA). India is the only South Asian country with billionaire private citizens (though a Sri Lankan Tamil émigré to Malaysia made the list), and Bombay has the most.

Vinod Khosla fell below the cutoff, as did most desi American techies except Ram Shriram, an angel investor in Google who is now apparently the wealthiest desi in the U.S. So with India’s recent economic growth, Indians are making more money by staying home than emigrating, quite a reversal, even though most who emigrated were not born into ultra-wealthy families. And these figures are in dollars, not even adjusted for purchasing power in the desh.

I suspect the stats are off though. If you were to treat national wealth as personal wealth, as several South Asian ruling families do, I bet the stats would change.

Where the wild things are

The U.S. is still far and away the best place to generate wealth, and New York City alone has more billionaires than any country except Germany:

While New York has the highest number of resident billionaires with 40, Moscow is second with 25, and London comes third with 23. [Link]

Indian billionaires have surpassed Japan’s in terms of total wealth:

A worldwide economic boom has yielded a record number of dollar billionaires in the past year, according to Forbes. Their number rose by 15% to 793 with India taking the lead in Asia… India’s 23 billionaires have a combined net worth of $99bn, surpassing former Asian leader Japan’s 27 billionaires with their total worth of $67bn. [Link]

India, whose BSE SENSEX market was up 54% in the past 12 months, is home to 10 new billionaires, more than any other country besides the U.S. Notable newcomers include Tulsi Tanti, a former textile trader whose alternative energy company owns Asia’s largest windfarm; Vijay Mallya, the liquor tycoon behind Kingfisher beer; Kushal Pal Singh, India’s biggest real estate developer; and Anurag Dikshit (pronounced “dix-sit”), another online gaming mogul, who made his fortune when he and two Americans took their PartyGaming poker company public in London last June. [Link]

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Playing Monopoly

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As Abhi posted earlier, there’s a big outcry in the U.S. over the sale of a British port operator to one based in Dubai. What few people have pointed out is that in the international edition of Monopoly, when you buy P&O, you get India for free:

Yet nowhere else has the deal for P.& O., as the company is known, drawn much anxiety… in other countries it will vastly increase the company’s reach. In India, for instance, Dubai will take control of about half the country’s container shipping operations, but there has been little public outcry there. [Link]

Through this deal the Gulf-based company will have in its kitty India’s three major container terminals… Mumbai… Chennai… and… Gujarat; apart from a share in… Vishakapatnam.

Also, with the development… by Dubai Ports in Kochi, a majority of the Indian container shipping is expected to be in the hands of the Gulf-State backed company… “Dubai Ports is going to rule the India container industry…” [Link]

The deal’s purported security risk would affect desi Canadians as well as Americans via Vancouver:

But what’s at stake, specifically, is the Centerm hub in Burrard Inlet, which handles about a quarter of the shipping containers passing through Canada’s third-largest city. Centerm is where P&O — and soon, Dubai Ports World — makes money by loading and unloading shipping containers…

Vancouver’s ability to safeguard against terrorism is crucial for the continent… In 1999, Algerian al-Qaeda member Ahmed Ressam cooked up a massive bomb in Vancouver… he had been hoping to… [set off] the bomb in… Los Angeles Airport. In 1985, Sikh terrorists placed deadly bombs aboard two Air-India jets at Vancouver’s airport. [Link]

Flat-earther Tom Friedman piles in for the free-marketers:“This is about keeping ‘a bunch of Arabs’ out of our country”

“I think it’s a shameful and has slightly racist overtones to it… This is about keeping ‘a bunch of Arabs’ out of our country, that’s what this is really about. And it’s a bad thing, not only because it doesn’t reflect our real values.”

Friedman points out that American companies like IBM, FedEx or UPS run around doing business in the Arab world. “What if they then turn around and say, ‘You’re not going to take ours, well, we’re not going to take yours…’ ”

“Both sides are guilty of it. When people ransack a Danish embassy in Damascus and the government allows it.. We have nativists in our country. They have nativists in their country that are going to always want to push these issues. Government’s job is to restrain that.” [Link]

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