Tie-up to spread risks: Valia

Written by MG Arun | Vaishnavi Bala | Mumbai | Updated: Oct 27 2012, 08:14am hrs
Alliances in the Indian telecom space have thrown in many a surprise, and Telenor's announcement on Friday to partner Sudhir Valia's Lakshdeep Investments & Finance is another.

Valia, 56, a chartered accountant and director on the board of Mumbai-based Sun Pharma, has had very little to do with telecom, just as his brother-in-law and Sun promoter Dilip Shanghvi. However, Valia, who has had a two-decade stint with Sun, has pursued other business interests in his personal capacity, including real estate.

Valia will now hold 26% stake in Telewings, the JV with Telenor, which had earlier roped in realty company Unitech in 2009 as partner before relations turned sour.

This is a way of spreading risk, we do not want to put all eggs in one basket, Valia told FE. Asked why the pharma business should be risky, since generic drug sales have been growing consistently overseas and in India, Valia said, We already have other investments in our personal capacity. He said in real estate business, his company has several projects in Mumbai, although it is not into project execution. Telecom is high risk, but that brings in high bargain power too, he added.

The new company has just been named, and the registration process is on. I have put in just around R1 lakh, said Valia. When asked about the high stakes involved in the business as it goes to the spectrum auction stage, he said, This is a complex process. When they (Telenor) complete their actions (with Unitech), it may or may not bring in liabilities. I can't put a figure, things will be quite dynamic.

Operational acumen isnt essential for a partner in this context, analysts said. The fit seems to be right given that the partner will play a minor role in the operations compared to Unitech, says Srinivas Rao, an analyst with Deutsche Bank. They were looking for someone who would be a partner, but not be involved in operations that much.

He added: If the government did not have a tab of 74%, then Telenor would have gladly been in the space without the need for a partner.

Valia has been a whole-time director on the Sun Pharma board since February 11, 2005, and had been responsible for finance, commercial, operations, projects and quality control. However, he stepped down from day-to-day activities around a year back, and Uday Baldota, who also heads investor relations and communications, now handles the finance team.

Valia is also director on other group firms like Caraco, Sun's US arm, and Israel's Taro, where Sun holds a majority stake.

Indias cash-rich pharmaceutical entrepreneurs, who have built their businesses on the back of a law that allowed reverse engineering of medicines until 2005, have been investing in diverse businesses for growth. Ajay Piramal, chairman of Piramal Healthcare invested R5,900 crore for a 11% stake in Vodafone India after he sold off his companys domestic formulations business to US firm Abbott Laboratories.