Bottomline 2006: Optimism Inc

That said, despite fears of a stronger interest rate regime, India Inc is brimming with confidence as never seen before. Why, even the split and muck-raking at Reliance did not shake investor confidence levels.

Ambani Vs Ambani

With the demerger process well underway, attention will focus on how both the brothers take their late father Dhirubhai Ambani8217;s vision forward. In that sense, the Ambanis will dominate headlines in 2006 too. Both brothers have announced aggressive plans for their respective businesses which they carved out from the Rs 100,000 crore oil-to-telecom empire.

Apart from the expansion plans in petrochemicals as well as the foray into SEZs, 2006 will see Mukesh Ambani, Chairman of Reliance Industries, put in place its biggest gamble after Infocomm 8212; setting up India8217;s largest retail chain. Meanwhile, cash-richy Anil Ambani will be busy setting up the nation8217;s biggest power project in Uttar Pradesh, where work is expected to begin soon, besides the listing of his group companies.

8216;8216;The entire corporate India will be looking at how both the brothers fare without each other. 2006 will be the year of test of both camps. Any good news will make us shareholders happy,8217;8217; said Pawan Dharnidharka, a Reliance shareholder since the company first went public in 1977.

Corp Governance

The corporate governance issue 8212; some of which were famously raised by Anil Ambani in Reliance Industries8217; board meetings 8212; will hog the headlines for rest of corporate India too with the Sebi deadline to appoint 50 per cent independent directors on company boards ending on December 31, 2005.

Most large companies have already complied with the Sebi8217;s norms for independent directors, audit committees and chairman. However, some small and medium companies are hoping for another extension of deadline. The Company Affairs Ministry is also in favour of another extension as it plans to introduce the Companies Act Amendment Bill in the Budget Session.

But Sebi is unlikely to relent. 8220;We have asked for an extension8230;let8217;s wait and watch,8217;8217; said President of Indian Merchants Chamber, Rajesh Kapadia.

Growth Mantra

Corporates will perform better in the next year too, taking into account that top 100 Indian companies8217; profits grew by 16 per cent in the six months ended September. 8220;We are expecting the next two quarters to be better than the last six months,8221; says Anand Mahindra, vice-chairman and MD of Mahindra and Mahindra.

Thanks to a booming economy and low cost manufacturing, Indian corporates are making record profits and sales. Reflecting the trend, the stocks of Indian companies are now touching dizzying high on the stock exchanges. The going is going to get better from now, feel corporate watchers.

With companies raising Rs 21,000 crore from overseas bond issues this year, not only the Tatas, the Birlas and the Ambanis, even low-profile and medium-sized companies, will take their shopping bags abroad. This year, the Tatas had a spectacular run 8212; picking up steel mills, hotels and chemicals firms abroad worth 1 billion. That said, there8217;s still a question mark over its mega investment plan in Bangladesh.

The big issue in general for India Inc is how they will integrate their domestic and overseas businesses and tackle human resources issues. 8216;I expect the robust growth in Indian economy to continue. We are still looking at fresh acquisitions,8217;8217; said B Muthuraman, MD of Tata Steel.

FTA Fears

There8217;s no secret that India Inc is worried sick about the negative impact from FTAs between India, ASEAN and West Asia countries. Industry fears that the FTAs will work against local companies and that they will discourage investment and inflow of new technology into the country. The government, however, is keen that Indian companies learn to become globally competitive and instead make FTAs yet another opportunity to export more. With a preferential trade agreement in the works with China, expect this conflict to dominate the headlines in 2006. Another area that is finally becoming an investment catalyst is special economic zones 8212; which give special tax breaks. Reliance, Essar and Mahindra 038; Mahindra, among others, have announced mega investment plans on this front. While on-ground action will become evident next year, friendlier labour laws will be the icing on the cake.

PSU Party

Public sector companies 8212; which tower over India Inc with their sheer size 8212;have also joined their private sector partners. ONGC 8212; more in the news for the sparring match between Oil minister Mani Shankar Aiyar and its CEO Subir Raha 8212; is pushing to buy oil fields abroad. Expect more news from the oil PSUs as India tries to tackle the issue of energy security. Public telecom giant BSNL has announced massive investment plans, and SBI is trying to go for an expensive image makeover.

But for investors, the biggest gain in 2006 will be the addition of fresh government paper in the stock market as the government lists profit-making public sector companies.

After all, the bigger pie benefits everyone.