Tata Sky: Interesting product, boring ads

While the motive behind the idea of home education is noble, the commercials are extremely boring and unwatchable

So, Tata Sky has decided to diversify into the education sector. No, they aren't opening up schools and colleges in the country (the politicians are the ones who are allowed to 'pioneer' those these days), but they promise to bring education into your own homes. With their 'private tutorial' classes on the idiot box. The packages are interactive and called Actve Wizkids, Actve Stories, Actve Learning and Actve English. Clearly targeted at the kids, but also focussing on housewives who would like to brush up on their angrezi when the husband is away at work (or whatever else).
 
Tata Sky has launched a set of new television commercials to promote these packages. The first one features their highly educated (and highly paid) brand ambassador Aamir Khan. And he preaches, while fooling around with his squash racket, about how classrooms are changing in this country. And that now there's no need for benches, desks, classrooms, pin-drop silences, etc. The other ad features a bahu who proudly declares her dear saas will now learn English at home (bad news for Ekta Kapoor… who'll torment the bahu now?). And then the naughty kids have their say on their new 'classrooms'. All are happy that there shall be no corporal punishment anymore (well, not in so many words).
 
While the motive behind the idea of home education is noble, the commercials are extremely boring and unwatchable. Quite shocking, that this sort of drivel is coming from a brand that otherwise dishes out pretty witty and funny ads for its entertainment packages. I think all the suits on the client's and the agency's side pulled up their ties because the subject is education, and decided that it's safe to get serious and preachy. Bad idea, that. They forgot the age-old adage: TV commercials must never bore viewers, whatever be the subject in question. Because you don't just compete with other ads for viewer attention, you also have to battle TV programming, toilet breaks, family conversations, Twitter, Facebook and other numerous distractions.
 
And surely there's a creative way to make education fun. In fact, given that their proposition itself is that Tata Sky makes learning fun, it's strange why they must make their communication so dull. Especially when they have the creative Aamir Khan on their payroll.
 
Perhaps Aamirbhai was having a really bad hair day? Born entertainer that he is, it's unbelievable that he would have missed boredom when he read the script.

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Textile shares boom on their realty values

Punters are hoping for massive value unlocking in Bombay Dyeing, Raymond, Century Textiles, Alok Industries and Provogue, among other companies

A lot of textile stocks including Raymond, Bombay Dyeing, Century
Textiles & Industries, Provogue India, and Alok Industries seem to be rising not because of any change in their fundamental business, but based on the land parcels they own and want to develop — of course, Indiabulls’ extravagant purchase of NTC’s land parcel must have helped. Even so, the pace of the rise in some of the stocks is stunning.

In Raymond’s case, the whole excitement seems to be around a Business  Standard report that it will arrive at a new settlement with its Thane mill workers that will allow it to use the mill’s 126 acres for realty development. The mill is non-operational since December. Raymond had wanted to pay the Thane workers Rs1.6 billion while the mill workers are pressing for twice that amount. The Maharashtra government had also stepped in on the workers’ behalf threatening Raymond with nationalisation.

However, a ray of hope has now opened up for both the workers and Raymond in the form of the Thane Municipal Corporation, which is likely to offer it additional floor space index for the redevelopment of some slums on a portion of its property. Raymond will probably agree to pay the mill workers more than it was initially prepared to only out of the proceeds of the redevelopment — but this solution seems to be acceptable to the government, too, which was initially vehemently opposing Raymond’s realty plans. The meeting to discuss this is to be held tomorrow — expect more action around the stock. Around the same time last year, Raymond had announced its realty plans but it had talked of 15-20 acres of surplus land, which was not a part of its factory. However, the stock languished between Rs170 and Rs250 until 5th August, when it started its phenomenal up-move. Since then, the stock has risen from Rs240 to almost Rs400. On 13th August, HDFC Mutual Fund bought 997,596 shares of Raymond at Rs364.

Bombay Dyeing shares started rising a little before Raymond. From 2nd August, the shares have risen from around Rs550 to almost Rs700 now.Chairman Nusli Wadia had said at its AGM last week that the company was focusing harder on its real-estate business and was looking at this business to clear off it Rs18 billion debt. The company’s real-estate business was Rs5.6 billion in FY10, twice as much as in FY09. Bombay Dyeing has a 67-acre land bank in Mumbai. Its textile business has been incurring losses for quite some time now — late June, RIL was said to have purchased its 165,000tpa polyester unit for Rs3 billion. This is not confirmed by the company.

Bombay Dyeing is also believed to have sold property to Axis Bank for
Rs7.8 billion in May — again not confirmed by the company. BD has apparently relocated its textile mills to Pune and is planning two real estate projects on the freed land in central Mumbai. The general belief is that it has the potential to develop almost 8 million sq ft of land in central Mumbai.Century Textiles is already in the process of building two commercial buildings on its 16 hectares in Worli in Mumbai.

Alok Industries is planning to sell its real estate in Mumbai to cut its debt and apparently expects around Rs7 billion (expectations may have risen after the recent Indiabulls deal where it bought just 8.3 acres of land from National Textile Corporation in Worli for a whopping Rs15 billion). The shares of Century Textiles have moved up from almost Rs450 to Rs500 while Alok Industries is steady at Rs20. Provogue, which plans to develop real estate in Tier-II cities, has risen from Rs58 to Rs67. Among other stocks with embedded real estate value is DCM. The Punjab and Haryana High Court recently cleared 250 acres of land for sale from its closed unit.

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COMMENTS

Sagar Mehta

7 years ago

Thanks to Moneylife one actually knows the why's & how's of the sudden movement of textile co. shares upwards.Sadly with real estate taking focus & front seat,an era comes to an end with the likes of Raymnd & Bombay Dyeing shutting downs its units.Thane has lost one of its icons to the real estate greed

RNandakumar

7 years ago

Thanks to Moneylife now I know the real reason behind the meteoric rise of Raymond shares. As a share holder of this company I was hoping to get some extra benefits out of the sales of the land holdings of this company. When VSNL shares were diluted one of the selling points was its huge land holding. I reliably learn that share holders will have nothing to do with it.

R Balakrishnan

7 years ago

The sad part is that all the real estate upside generally goes only to the promoters. I know of a textile co that sold all the flats to the promoters relatives at half to a fourth of the market price. The relatives made the money. If you see, the mill owners rarely sell the land and give the money as dividend to the shareholders. Their belief is that the land belongs to 'them' and the minority shareholders have no right over it. Since they cannot legally cheat you, they find many ways to take the cream out for themselves and the dregs for the non promoter shareholder. I trust NONE of the companies named in this article.

Financial Technologies: What’s cooking?

While a Singapore exchange promoted by it has got the recognition, its regular technology products are doing very well. Market players are building positions, expecting some major announcement soon

There are expectations of some big announcement from Financial Technologies fuelled by promoter statements to the media that they would continue to unlock value in its various ventures by broadening their investor base. There is also market talk that its tussle with the Securities and Exchange Board of India (SEBI) could end which would be a big beta for the stock.

Financial Technologies (FT) used to be a software technology provider but eventually evolved into an incubator of exchanges. Its biggest aces are MCX and MCX-SX - the largest commodity and currency exchanges in India. FT has investments in 10 exchanges and 11 ecosystem ventures spread across India, the Middle East and Southeast Asia. Most of its value is centered around five key ventures - MCX (Multi Commodity Exchange), MCX-SX (MCX Stock Exchange), IEX (Indian Energy Exchange), NSEL (National Spot Exchange) and NBHC (National Bulk Handling Corporation). FT also has an interest in other exchanges like Dubai Gold and Commodities Exchange (DGCX) and IBS Forex. Stake sales in its ventures will be a key value driver for this stock. Incidentally, NSEL was looking at an IPO in June and in May, and FT had said it expected three of its international exchanges to go live this year.

According to data available from the BSE, FT has investments of about Rs9.23 billion in subsidiaries and a JV entity. These companies have losses to the tune of Rs2.7 billion. As of end-June 2010, FT had cash and bank balances of Rs1.5 billion, lower than Rs2 billion at the end of April, and investment in mutual funds of Rs8.6 billion versus Rs8 billion at the end of April.

The company's original business was providing brokerage and exchange software and technology - like companies such as Fidessa and ORC Software do. A Deutsche research report of this May values FT's software business at 19x FY11E earnings (comparable to Fidessa and ORC's valuation) and comes up with a valuation of Rs 1,041/share for just the technology side of the business, which is 45% of its total valuation. The report says that brokerage solutions contribute 27% of revenues, exchange solutions 67%, and ecosystem ventures 6%. FT has a philosophy of only sharing its technology with ventures in which the parent has an equity stake. This ensures, the report says, zero competition and provides high revenue predictability. Deutsche expects the software technology business to report earnings at a compounded annual growth rate (CAGR) of 44% over FY10-12E.

In the brokerage solutions business, its two flagship products are ODIN and Match. ODIN is a computer-to-computer link, multi-exchange, multi-currency front office trading and risk management system that enables trading on multiple markets through the use of a single application - it is apparently used by almost 900 brokerage houses in India and has more than 80% market share. Its competitors are Omnesys, Fidesa, TCS, SDG, Religare Techno Global Services (formerly Asian CERC) and NSE IT.

FT is locked in a fierce tussle with the National Stock Exchange (NSE), which (it says) is attempting to block its software and promote its own using strong arm tactics such as putting ODIN on a watch list, saying there have been member complaints of bugs and performance issues. FT took NSE to court after the latter rejected its application for the issuance of new licenses. The court appointed KPMG to complete a systems audit and asked NSE to not stop issuing fresh licenses. According to the Deutsche report, it faces no competition in its exchange solutions business, which has proprietary software - DOME and CNS.

FT's stock exchange, MCX-SX, got permission to launch currency futures in 2008 and has beaten NSE hands down despite NSE's muscle power, brand equity and reach. But MCX-SX has had to wait to get permission to launch other currency products including the equity segment. MCX-SX then went to the High Court against SEBI, arguing that it is delaying clearance to enter new segments, including trading in shares which is inflicting huge losses. MCX-SX has filed a petition in the High Court over this delay and in a hearing on 10th August, the counsel for SEBI argued that MCX has entered into a buyback agreement with certain banks, which SEBI is inquiring into. A recent newspaper article said that FT had entered into a special arrangement (of helping find a nominee in case they wanted to exit) with some banks and financial institutions that are investors in MCX-SX, assuring them a fixed return for a specified period. SEBI is also not happy with the way in which MCX-SX has complied with public shareholding norms - two promoter entities hold warrants totaling 60% of the ownership. If this controversy ends, MCX-SX hopes that it will have satisfied the regulator that it is fully compliant with SEBI norms, will be able to launch a stock  market -the first time in 15 years - and this will be a big boost for this stock.

This highly entrepreneurial company was set up by Jignesh Shah and Dewang Neralla in 1995. They were actively involved in creating the firm's proprietary software. But the big break for the group came when it got the license to set up MCX which raced to become the dominant commodities market. MCX has 80% share of the market. Last week, FT informed the BSE that its Singapore Mercantile Exchange has got final approval from the Monetary Authority of Singapore as an international commodity and currency derivative exchange.

The promoter group holds about 45% stake in the company while FIIs hold 25% (up in the June quarter) and DIIs hold about 7%. In its latest quarter (Q1FY11), the net profit of MCX jumped up 2x y-o-y to Rs451.5 million from Rs205 million. Its total income went up 45% to Rs941.6 billion from Rs 649.5 billion. The stock is not heavily traded; its market cap is Rs6 billion (Rs3.3 billion free float). The stock is much more active on the futures and options side.
 

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COMMENTS

Narendra Doshi

7 years ago

Wish good luck to FT to move still ahead in the days to come, inspite of some bottlenecks on the way. May the enterpreneur spirit keeps rising & benefit the shareholders from time to time.

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