Note India desperately needs someone to break the oligopolies and cartels created by numerous sectors such as yarn producers, cement players etc. But you have to find a balance between penalizing them and bankrupting them.Most of the developed countries like USA and European Union have highly developed and advanced competition regulators which impose hundreds of millions in fines against domestic and international companies who indulge in anti-market practises.The fines serve as a great deterrence where powerful corporates try to undermine the market forces through their sheer size.The landmark anti monopoly legal cases against Microsoft,LCD companies have proved to be very effective in punishing super powerful businesses who have shafted consumers through illegal practises.
The company is planning to introduce a big bang plan for broadband coupling a cheap tablet with a cheap monthly plan. This is on the lines of a mobile phone with a monthly connection. Reliance has a good chance of winning the broadband market which remains under penetretad and high cost. It poses a direct existential threat to India’s telecom companies which have failed to compete on data effectively.
Reliance in continuation of its strategy in the media industry has bought a small stake in Den Networks one of India’s largest cable networks though one its subsidiaries. The company is slowly and methodically capturing the entire media development and delivery network in the country. The stake in the cable companies will give it leverage to deliver its broadband and content.
Not only that but with the loss of political power,Sun TV executives can no longer manage to intimidate the industry.The Sun TV COO Saxena was hauled off to jail in a cheating case filed by a film producer.Note this would have never happened in the earlier DMK regime as the police would have refused to even lodge a case let alone put Saxena in jail.Crony Capitalism is not without its dangers and betting on these stocks is not a great idea.The reason is that once the political party loses power which happens quite frequently in India then the businesses close to that party come under serious fire.Note Dayanidhi Maran is also facing the heat in the 2G Scam where he has been accused of amassing huge amounts of money by favoring close promoters.When he was the Telecom Minister the whole Sun TV group of companies used state telecom infrastructure for free.The whole lesson from this is that betting on stocks/companies close to the ruling party might not be a good idea.In fact opening an event driven hedge fund might be a good idea using power changes in crony capitalist democracies.Thanksin stocks are rallying Thailand today as his sister has won the elections.
India’s new anti monopoly watchdog Competition Commission of India (CCI) has belatedly started operations and its first few orders hardly inspire much confidence.Note most of the developed countries like USA and European Union have highly developed and advanced competition regulators which impose hundreds of millions in fines against domestic and international companies who indulge in anti-market practises.The huge fines serve as a great deterrence where powerful corporates try to undermine the market forces through their sheer size.The landmark anti monopoly legal cases against Microsoft,LCD companies have proved to be very effective in punishing super powerful businesses who have shafted consumers through illegal practises.
While I was tearing my hair out at the experience there were a couple of very funny episodes which highlights the complete lack of service quality
1) One of the Tata Indicom Engineers after seeing my laptop connect automatically to the neighbour’s WiFi (I was using it temporarily) said that my Tata Indicom Internet was working fine (how the guy became an engineer seems a mystery,guess there is truth to industry studies that most Indian graduates are unemployable)
2) A Tata Indicom Webstie to give Customer Feedback on submission constantly gives an Error .The link (https://ttslemc.tatatel.co.in/EMC_FEEDBACK/TataIndicomFeedBackDetails.do?messageID=3727423) which was sent to me to “valuable inputs will go a long way in helping us deliver world class services” still does not work.Readers can try out the link also.
Eros International Media Limited (EIML) is one of the biggest owners and distributors of Indian Films.It owns a Film Library of around 1000 Indian Films including some inconic titles.The Company is involved in the business of sourcing,creating and distributing media content which is mainly films.It has grown at a fast clip in the past 3-4 years though the last year was slower on account of the GFC.It is a part of the Eros Group Plc and has till now grown mainly through the financial backing and networking of its parent.There is a lot to like about this IPO and very little to dislike.The valuation on a P/E basis is also not expensive at around 19x.Given that the Indian economy is booming with Entertainment one of the hottest sectors,this is a good play on this sector.Here are some of the highlights from their DHRP