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Thursday, October 25, 2007

The Jai Corp story

All lights fall on Mukesh Ambani’s backroom boy Anand Jain who now leads a big infrastructure rollout from the front.BAIJU KALESHIn the Ambani versus Ambani drama, a man from the margins is now hogging the script. Anand Jain of Jai Corp Ltd has launched himself from the shadow-boxing between the two brothers to the brightly-lit corporate proscenium. Jain, Mukesh Ambani’s school friend from third standard and trusted financial advisor, has seen his fortune taking shape through the cut and thrust of the biggest corporate joust of the country. Jain’s company — Rs 350-crore Jai Corp — shot into limelight last week after it sold shares worth Rs 2,200 crore to a clutch of foreign financial investors. Jain’s family sold 12.6 per cent (2.9 crore shares) of its 87.6 per cent stake at Rs 1,035 a share. Jai Corp stock skyrocketed to astronomical levels of Rs 20,000 from Rs 9,000 in a fortnight, stunning many retail investors who had sold their shares two years ago for a measly Rs 60 a share. K. Balakrishnan, a retail investor, who sold his 31 shares for a profit of Rs 29 a share in 2005, regrets not holding on to them. “They would would have fetched Rs 6 lakh now,” he says, wondering what is driving the stock now. Balakrishnan will not wonder who Jain went to school with. Jain is not only Mukesh's trusted financial advisor but also his school friend. Behind his bond with Mukesh is a relationship of more than 25 years, which also saw Jain supporting Mukesh through the family business split. Jain is keen to unlock value in his galvanised plain and corrugated steel sheets.In a presentation to investors he hinted unlocking value in this steel business through a public offering or a private placement of shares. Reliance Industries chairman Mukesh Ambani’s close relationship with Jain helps him circumvent a non-compete clause he signed with his brother when they carved up their father’s business in June 2005.

Mukesh is bound by the agreement to stay away from businesses which Anil is in, for the next five years. However, Jai Corp is launching into many of those businesses with Mukesh’s support. The market capitalisation of Jai Corp shot up from Rs 339.76 crore in October last year to the stratospheric Rs 19,515.02 crore on Wednesday, 17 October. Just a year before, the market capitalisation was just Rs 96.18 crore in the same month when the company was still weaving yarn and making galvanised corrugated steel and jumbo bags used to pack cement and food grains. When Jai Corp moved to infrastructure projects, its market fortune also took a turn. The stock soared on the BSE to reach newhighs when the board announced a 1:1 bonus and a stock splitof 1:10. As Jai Corp diversified into real estate over the last two years, Jain found himself in the land of plenty. He became the chairman of two SEZs in Mumbai and also floated a real estate focused asset management company. Last year, he launched the country’s largest real estate investmentmanagement company — Urban Infrastructure Venture Capital (UIVCPL ) — with a fund that manages $1.1 billion (Rs 4,400 crore). UIVCPL is the Indian advisor to Urban Infrastructure Real Estate Fund, a Mauritius-based offshore fund for investing in India. Sources say he is one of the largest real estate owners in the state. {mospagebreal} Just as Jai Corp's stock made a vertical lift, Jain's designs also leapt up from the drawing board. He is among the high riders of an incipient infrastructure boom, and if he carries on with his ambitions andhis spot of luck also holds, he might get into the top corporate order. As real estate seems to be yielding surreal gains to him, he is seen to be pulling out all stops. From ports to airports to power, every sector that shines is his. The Mukesh Ambani spring board has flung him high. Jain has joined hands with his friend Mukesh to promote Special Economic Zones (SEZs) and develop ports in Navi Mumbai and Maharashtra’s Raigad district.


Jai Corp is building a power station, a port and an airport for Mukesh’s SEZ projects.Mukesh has acquired more than 50 per cent ownership in the Navi Mumbai SEZ. The remaining stake is owned by Nikhil Gandhi, who is the original promoter of the project, Jai Corpand City and Industrial Development Corporation. Jai Corp is also expanding the greenfield Rewas Port near Mumbai, which it jointly owns with Maharashtra Maritime Board, Amma Lines and Reliance Logistics. Sources say Jai Corp will bid for developing a large airport in Navi Mumbai, adjacent to the SEZ. Jai Corp also has plans to foray into power generation and its distribution and transmission to the SEZ, and will float three special purpose vehicles to undertake this business. It will also build a 700MW gas based power plant within the SEZ.People affected by the Mukesh Ambani-promoted MSEZ would be given 12.5 per cent of the developed land, a compensation at market rates for their land, assurance of employment after successful completion of training, and two years’ sustenance payment for landless labourers.Village infrastructure would also be upgraded by spending around Rs. 90 crore.

Mukesh trusts Jain so much that he has made him chairman of Reliance Haryana SEZ, a joint venture between RIL, which holds 90 per cent in it, and the Haryana government. Jain, a commerce graduate with a passion for the stockmarket and real estate business, has been a financial advisor and trouble-shooter to his friend, a role that has earned him the wrath of Mukesh’s younger brother Anil Ambani. During the fight with Mukesh to split the Reliance group, Anil had alleged that the rift with Mukesh was created by Jain and Manoj Modi, who now heads Reliance Retail. “My relationship with Mukesh is friendship without any expectations from him,’’ Jain recently told a close friend. Though Jain does not own a single share, he acts as a strategic advisor to RIL for all stockmarket and real estate transactions. RIL’s portfolio of investments was about $28 billion (Rs1.12 lakh crore), including the shares of RPL, Mukesh told shareholders at the last AGM.Though Jain operates from a small office at Nariman Point, he is now in the middle of the hottest corporate action. His company is developing an SEZ outside Mumbai which will house an International Financial Centre, an IT park, and a diamond bourse that would rival Antwerp’s. The IT park will bring in several IT companies into Maharashtra, which lost business in this space to Southern cities such as Bangalore, Chennai and Hyderabad. “We can even provide uplinking facilities for media entertainment companies,’’ says a company official who does not wish to be quoted. A neighbouring city will reduce traffic congestion in Mumbai. The company has even proposed the setting up of a hovercraft service along the city’s coastal line connecting it to Navi Mumbai. {mospagebreal} Sources say Jain, who is a master in solving complex problems, has turned the SEZ deal in Reliance’s favour wielding his negotiating skills with Nikhil Gandhi, the original promoter of Maha Mumbai SEZ. Gandhi initially approached the Tata Group to partner him to build the special economic zone. But when the diversified conglomerate took time to arrive at a decision, Jain spotted the opportunity, took the lead and clinched the deal for his friend Mukesh. Jain is also gifted with a skill to settle family disputes. Sources said he amicably settled the dispute in Arvind Poddar family that owns Balakrishna Industries. Jain may be known by the redoubtable company he keeps, but his eye-popping success is due also to his own business acumen. Jain is the man who knew his moment and did not miss his chance.His spectacular jump into the rapids of mainstream business will repeatedly test this very instinct of his.
"Sources"


Regards,
ARUN
I may be reached at-arunanalyst@rediffmail.com

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