Kolkata, April 12
TEMPLETON'S emerging markets specialist Dr Mark Mobius has picked up four companies that are said to reflect the best of India's corporate sector. The selection Tata Tea, HPCL, HLL and GAIL forms part of a study based on the latest research trip to the country.
The study deals with each of the outfits separately, including features that are unique to each. In the case of Tata Tea, the Tetley acquisition that has been cited, while HPCL's retail focus has been considered crucial. HLL's small, innovative product packaging and a business model involving rural women have been noted. As for GAIL, the company's involvement in city-based gas projects has been mentioned.
Dr Mobius has specifically referred to India's GDP growth, expected to be about 6.4 per cent, down slightly from the previous year because of "adverse weather conditions affecting production." As with China, India's market is not monolithic and has a wide range of companies, some of which may indeed be investing bargains, he has mentioned.
Tata Tea, based in Kolkata (a city he had visited earlier to study the Indian leather industry on behalf of UNDP) has recently acquired the famous British tea outfit, Tetley, the study has pointed out. The company has increased domestic market share with the launch of premium products. "The major tea-drinking countries in the region are the so-called crescent countries, starting with India, Pakistan and Afghanistan, and continuing through eastern Europe. Tata Tea is making efforts to increase sales in these important markets and to boost the world's perception of quality Indian tea," it is stated.
As for HPCL, Dr Mobius has noted that the Government has, inter-alia, capped gasoline and diesel retail prices. In the retail business, HPCL's gasoline and diesel sales have been growing faster than some of its competitors. It is focusing on its allied retail business, which concentrates on developing the corporate brand and expanding retail outlets.
With HLL (where a small vaseline bottle served as a model for the company's micro-printing technology), the innovation that has gone into creating small packs has been underscored. In the foods business, HLL has taken inventory corrections. Its market share is quite strong, with some brands in the process of consolidating. It has exited some of the more competitive segments, as it was not making as much money as expected. "Lever has an interesting work model called Shakti, which has empowered 10,000 women in rural India," it is mentioned.
A major opportunity for GAIL is in city gas projects, where it has taken minority stakes next to investors such as oil companies, the municipal government and private investors.
Incidentally, the Templeton specialist has referred to "disputes over pipeline policy, as many companies, including Reliance Industries Ltd and some public sector companies, wanted to set up their own pipelines," It is important that the Government's pipeline policy be well drafted, while both the commercial viability of the source and the end user's needs should be addressed, he has stated.