INDIA BUSINESS WORLD - JUNE 2006
THE MONTH THAT WAS...

INDIA ON A ROLL; TAKES LION COUNT TO NINE

   IF MONDAY evening suggested that India was knocking on the doors of fame at Cannes , by Tuesday afternoon it was evident that Indian advertising had got off to a flier. Just two days — and five categories of judging — into the festival, and India has taken its tally of Lions to nine: two gold, two silvers, four bronzes and one Promo.

Also, India has won a single nomination for Cyber Lions — Tribal DDB's 'Chartbusters' entry for Times Jobs — taking the number of finalists from India to 59. And, the Indian contingent is confident that the number will only go up once the Press and Film winners are announced. There is a strong rumour that JWT will pick up a Press Gold for its Levi's Slim Jeans work. But so far, the two gold Lions won this year are in the Outdoor category, courtesy O&M's entry for Discovery and Rediffusion's entry for Midland Bookshop. Rediff has already claimed a silver Lion for the same client in Lions Direct.

“This is wonderful news for Rediffusion and India ,” said KS Chakravarthy (Chax), NCD, Rediffusion DYR, speaking about the work for Midland . “I always knew this was a winner for the country. From the time I saw it, I had complete faith in the work. It deserves every accolade it's got and I'm so happy.”

    India added two bronze Lions in Outdoor through Leo Burnett's entry for Dinodia Photo Library and Everest's finalist for Cancer Patients Aid Association. And in Media, three of the six shortlisted entries from India claimed metal. While Leo Burnett won a silver Lion for Prerana, Madison won two bronzes — one each for P&G and Cadbury.

   “We're delighted at Madison winning its first Cannes Lion, and that we've opened our innings with not one but two awards. But what delights me even more is that we won in two critical categories at opposite ends of the spectrum: one in the highly-established category of television and the other in new media. It feels good that our ideas in new media are considered cutting edge by global standards.”

The Grand Prix Campaign in the Outdoor category was awarded to Fallon London for its work for Tate Britain . The campaign for Tate Britain edged past the work done by Whybin\TBWA Auckland for Adidas by a very narrow margin. “Arriving at a decision on the Grand Prix was tough as there were so many opinions on what communication should be like in the future,” admitted Fernando Vega Olmos, outdoor jury president and president of Vegaolmosponce , Argentina . The Grand Prix in Media went to Universal McCann Sydney for the ‘Lynx Airline' campaign for deodorant brand Lynx. (The Unilever brand is marketed under the Axe name in some markets) “We were looking for a matrix that gave proof of success in the market, and we were looking for campaigns that were extendable - where the idea could travel around the world, and maximised all possible touch-points very well,” said media jury president and CEO of Starcom MediaVest, Renetta McCann. “We also wanted to award work that was interactive and involving - work that invited the consumer into the brand.”

Rediff, Burnett and Madison lead India 's table with two Lions apiece, while O&M, JWT and Everest have one Lion each. With results from Press and Film yet to be announced, there's a fair amount of confidence that India will end up with a record number of gongs.

THE US-based Mylan Laboratories is said to be in advanced talks with the promoters and private equity (PE) funds to buy a majority stake in Matrix Laboratories for over Rs 2,000 crore. This will help it establish a foothold in the fourthlargest drugs market by volume.

Foreign private equity investors such as Newbridge and Temasek, who hold around 38% in Matrix, are looking for a negotiated exit. Some of the Indian promoters of the Secunderabad-based Matrix are also looking to sell their stake. The transaction could be struck at Rs 320-350 per share, a substantial premium to Wednesday's closing market price of Rs 220.

If the deal goes through and PE investors sell the entire 38%, it would be one of the largest cross-border transactions in India . Indian promoters hold 17% in the company. They are not expected to divest completely, and negotiations are on for a minimum 10% sale. Mylan will go for an open offer subsequently. Sources close to the deal said the term sheet has been signed and final due diligence is currently on.

“I don't want to comment on market rumours,” Matrix CEO Rajiv Malik said.

The company is currently in consolidation mode and has taken strategic initiatives over the last one year, he added.

Sources, however, said PE funds, some of whom have board representation, have been looking at exit routes for over a year. The foreign promoters are India Newbridge Investments (holding 17.36%), India Newbridge Partners FDI(3%), India Newbridge Co Investment (5%), and Maxwell Mauritius — part of Temasek (2.8%). Indian promoters hold 17% stake in Matrix while FIIs hold around 17%. The major FIIs include Master Trust Bank of Japan (2.39%), PRU India Equity Open (1.35%), HSBC Global Investment Fund (1.65%), Merrill Lynch Capital Markets (1.25%) and Deutsche Securities Mauritius (1.08%).

If the Mylan-Matrix deal goes through, it may set a new trend in the domestic pharma market. Pharma MNCs such as Teva, Pfizer, Novartis and GSK have been on the prowl in the local market for the past one year. Though they have identified acquisition targets like Cipla, Aurobindo Pharma, Orchid Labs, apart from Matrix, high valuations quoted by the Indian promoters had kept them away.

AROUND one year ago both Teva and Mylan were in race to acquire Aurobindo Pharma. However, the deal fell through in the final negotiations over valuation issues. Teva had also held negotiations with Matrix around the same time.

Matrix is gradually emerging as one of the frontline players in the pharma outsourcing space. A robust pipeline targeting the developed markets of Europe and the US , strong relationships with both generics and innovator companies have held Matrix to become one the strong Active Pharmaceutical Ingredient (API) company in India over the past few years.

Matrix derived close to half of its revenues on fiscal 2003 from a single product, Citalopram. As of March 2004, the contribution from the same product fell to 33%. This is expected to decline further, as other initiatives of Matrix, notably its developed market foray and the supply of anti-retrovirals (for treatment of patients suffering from AIDS as part of the agreement signed with the Clinton Foundation), kick in.

Last year, Matrix has completed one of the largest overseas acquisitions by an Indian pharmaceutical company. It acquired controlling stake in Docpharma NV , one of the leading generic pharma company. Matrix has also acquired companies in China and Switzerland . Mylan Laboratories is one of the world's leading manufacturers of prescription medicines specialising in developing, manufacturing and marketing generic pharmaceuticals.

The Pittsburgh-based Mylan manufactures and markets over 140 generic products in approximately 360 product strengths, covering over 40 therapeutic categories. It manufactures products for conditions ranging from angina to arthritis, depression to diabetes, pain to Parkinson's disease, and schizophrenia to sleep disorders, to name just a few.

For the year ended March 31, Matrix reported a consolidated net profit of Rs 199.2 crore on a net sales turnover of Rs 1,158.6 crore. Earnings per share on consolidated basis as on March 31 worked out to Rs 13.23 on a paid-up equity capital of Rs 30.7 crore with a face value of Rs 2 per share.