Eight years after their high-profile corporate family split, the Ambani brothers have signed their first business deal together. Mukesh Ambani’s Reliance Jio Infocomm, a unit of Reliance Industries (RIL), has signed up with younger brother Anil Ambani’s Reliance Communications (RCom) to use the latter’s fiber optic network to roll out its new 4G telecom services.

While the deal is non-exclusive — both firms are free to sign up with other partners — and the size is not too big at Rs. 1,200 crore (US$220 million at the exchange rate of Rs. 54.60 to a dollar), it is indicative of bigger changes ahead. According to a statement by RCom, this deal is “the first in an intended comprehensive statement of business cooperation” between the two firms. The statement adds that there will be “optimal utilization of existing and future infrastructure of both companies on a reciprocal basis, including inter-city fiber, intra-city fiber, towers and related assets.”

For Mukesh, telecom has always been close to his heart. He was considered the brain behind Reliance’s telecom foray (with CDMA technology) in 2002. But the acrimonious split saw the telecom business fall into Anil’s kitty along with gas, power, financial services and entertainment. Mukesh got the flagship RIL. In June 2010, a month after the non-compete clause between the brothers was scrapped, Mukesh created a flutter when he re-entered the telecom arena. Mukesh acquired a low profile firm called Infotel Broadband — the only company to get a pan-India broadband wireless access license — a day after it won the license. (This company was later renamed Reliance Jio Infocomm.)

Mukesh is now getting ready for the big leap – delivering high speed data and voice services over 4G networks. Using RCom’s ready infrastructure will minimize the rollout time. Telecom also provides the flush-with-funds Mukesh a great outlet for investing his money. There is not too much scope for this in his petrochemicals business at present. His other big focus area — retail — has also proved to be tough.

Anil, meanwhile, is struggling. The tie-up with his brother allows him to monetize RCom’s excess capacity and reduce his debt burden. As of December 2012, RCom has a gross debt of Rs. 38,558 crore (US$7 billion). The shares of RCom rose by 11% after the announcement of the deal with RIL.

Talking to business daily Economic Times, Gartner’s research director Kamlesh Bhatia, said: “RIL will be able to reduce time to market for its 4G services as it no longer has to build an infrastructure right from scratch and then wait to see right of way. For RCom, monetization of [its] existing network will be the biggest advantage.”

In a note to their clients, analysts Nilesh Banerjee, Vikas Jain and Siddharth Raizada at Goldman Sachs Equity Research, said: “Our scenario analysis suggests RCom’s leverage will not change significantly even if the entire Rs. 1,200 crore amount is recorded upfront, but does indicate some impact if RCom earns further revenues from more such agreements.” Telecom analysts at Nomura described the tie-up as a “win-win deal” for both companies but added that a “lot more work needs to be done.”

It now remains to be seen how the sibling tie-up impacts other players in the sector and the end consumers.

India is considered one of the most challenging markets globally for private equity investors. According to numbers shared by Chennai-based research and services firm Venture Intelligence, after the boom in 2007 which saw 523 PE deals totaling US$14.3 billion, the industry dipped to 287 deals totaling US$4 billion in 2009. While it picked up in 2011 to 494 deals totaling US$10.4 billion, last year it again saw a dip to 438 deals and investments of US$8.9 billion.

So where is PE in India headed? Debating this at a recent event hosted by Venture Intelligence in Mumbai, industry players said that given India’s inherent economic strength, the PE industry will bounce back — but PE firms will have to play a more responsible role.

Pointing out that PE is very nascent in India, “seven to 10 years at best since it has gained scale,” Neeraj Bharadwaj, managing director of Carlyle India, noted that until now, the returns have not been very positive for most funds. “People have had one-off exits; at the fund levels, performance has not been that great…. But I see that changing. I think we are at a watershed moment.” According to Bharadwaj, volatility in the public market has made fund raising there difficult, especially for large amounts, so “more big deals and reasonable valuations” are expected to happen with PE.

Bharadwaj added: “A very interesting trend in India is that [there are] many more buyouts happening — multinationals looking to divest their Indian businesses, first-generation entrepreneurs willing to let go of their businesses and not necessarily passing it on to the next generation. I see these as positive trends for private equity; PE 2.0 will be a lot more positive than PE 1.0.”

According to K.P. Balaraj, cofounder and managing director of WestBridge Advisors, unlike earlier, “there is a huge focus on more reasonable valuations. Both entrepreneurs and investors are now looking at a win-win partnership.” Balaraj suggests that “investors who invest in funds are still excited about India.” He expects that in the next five-to-ten years, there will be another PE boom in India, but of a different kind. “On the local side, there will probably be smaller, more focused funds — maybe more mid-market funds, health care or consumer funds. And there will be the very large global franchisees — Blackstone, Carlyle, Sequoia — who will build a far more diversified portfolio.”

Akhil Gupta, senior managing director and chairman of Blackstone India, emphasized the responsibility of the investors. “We have to play the same role that venture capitalists played in Silicon Valley. It was not just money that they gave. It was the guidance, the network, the governance practices. This role is important for us because the opportunities for the promoters [in India] are way beyond what they imagined five years back.” Gupta also stressed the long term potential for PE in India. “We have to be patient. The India story is three steps forward, two steps backwards. But I think it will change…. A billion people’s aspirations will drive the country’s growth. If I take a dynamic view, I remain bullish.”

Ashish Dhawan, cofounder of Chrys Capital, however, raised concerns over the issue of governance in this space. “What has bothered me in the 13 years that I have been active in this segment is that I didn’t see any improvement at all in corporate governance. In fact, it may have declined for a period of time when lots of money was readily available. That tide has to turn. If minority investing has to be successful, then corporate governance has to improve.”

Oats have been a breakfast staple in many Indian homes for a long time. Now, marketers seem to have woken up to the business potential of this humble food.

Currently pegged at around US$37 million, the oats market in India is estimated to have the potential to leap three-fold by 2015. Buoyed by growth prospects, the segment has seen the entry of new players in recent years. These include GlaxoSmithKline Consumer Healthcare, Kellogg India and biscuit maker Britannia. According to some industry watchers, Hindustan Unilever and Nestle India, two of the biggest food companies in India, are getting ready to enter the ring as well.

So what has brought about this change? Industry players say that oats first started becoming popular for their health benefits. Now, taste is the new ingredient in the marketing mix. Sameer Satpathy, executive vice president and head of marketing–consumer product business at Marico, says: “Oats as a category had always existed and its health benefits were known, but not to the mass consumer. Today, marketers are creating awareness for the category which is [attracting] more people. Brands are also investing in developing and customizing oats to the Indian palate.”

Satpathy points out that Marico, which made its oats debut in 2010 under its Saffola brand, realized that consumers perceived health and taste at the opposite ends of the spectrum and decided to bridge the gap. “We believe that growth can be unlocked only if there is no tradeoff. And hence our research and development team was given a simple brief: How can we make oats not just acceptable, but relished by Indians?”

In October last year, Marico launched six variants including veggie twist, peppy tomato, classic masala (spicy) and curry and pepper. PepsiCo, which introduced its Quaker Oats in India in 2006, also added a host of variants last year. These include masala, kesar with kishmish (saffron and raisins), lemony veggie mix and strawberry with apple. Britannia, too, has plain, strawberry, savory and multi-grain porridge oats. These come in varying sizes ranging from single serve sachets, pouches, economy jars and boxes. Some brands even offer in-store sampling to woo potential buyers.

Industry analysts say that the category, which is growing at over 25% per annum, is still evolving. “Whenever a food product starts transitioning from nutrition into taste and then [to] trends and fashion, the category grows,” notes Jagdeep Kapoor, chairman and managing director of Samsika Marketing Consultants.

This transition is evident in many other food and beverage categories in India. Take, for instance, olive oil, prunes, almonds, fruit juices and green tea. “Health is the latest fad in India. And everybody wants to milk a winning formula. All these products have graduated [further] from the health platform and are today a hit with a young and upwardly mobile target audience…,” says Vinay Adhye, business head of Sahakari Bhandar, a Mumbai-based food and grocery chain.

The rising income level of India’s 330 million-member middle class is another contributing factor. Consumers can afford to change their eating habits to factor in health, convenience and taste. “I see a pattern here. Companies have realized that operating in a niche does not work to their advantage. If they want to go main stream, they have to cater to the entire family,” observes Damodar Mall, director-food strategy at the Future Group.

So, as part of their new strategy, players are promoting oats for use in traditional Indian dishes. PepsiCo, for example, is urging customers to use its Quaker oats to make idlis (rice and lentil cakes), dosas (rice and lentil pancakes) and upma (semolina porridge). Bangalore-based food company MTR has launched oats idli mixes.

A local menu is something that other multinational food companies are also dishing up. Subway, for instance, has opened vegetarian outlets in the country and McDonald’s has announced similar plans. “You need to keep moving if you want a large slice of the Indian market,” says Mall. “In terms of food, India is not merely an emerging market but an assertive market.”