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Lagaan may have been
bowled out on Oscar night, but India's prolific movie industry (some
1,000 films were produced last year) stands to score nevertheless.
Aamir Khan's hi-decibel marketing of Lagaan in Hollywood has made
big American studios look at Indian movies for funding and distribution
opportunities. Says Aditya Shastri, Managing Director, 20th Century
Fox India: ''Yes, we would definitely be interested in distribution
of quality Hindi films provided they add value to our repertoire
and brand.''
That will
help Bollywood in several ways. One, it will weaken the underworld's
clout in the industry and attract ''clean money''. Also, better
marketing will prompt the use of better scripts and technology.
But there are some preconditions. Points out Vikramjit Roy, Manager,
Columbia Tristar Films India: ''Indian producers will need to hone
their marketing and pr skills if they want international studios
to take them seriously.'' Bollywood, take note.
-Abir
Pal
EXCISE
Punishing The Pariah
Taxing cigarettes is the latest
fad among states.
Cigarettes
are increasingly injurious to their manufacturers' health. On April
4, 2002, the Delhi government proposed a 20 per cent luxury tax
on cigarettes (besides pan masala and gutka), joining the ranks
of cigarette-unfriendly states such as Andhra Pradesh, Maharashtra,
Gujarat, and West Bengal. Cigarettes, being a concurrent list item,
can be taxed by both the states and the Centre, which already taxes
cigarettes at between Rs 135-Rs 1,470 per thousand sticks. Delhi's
decision could encourage non-taxing states to follow suit. Delhi's
tax, to be levied at the first point (either the factory or the
distributor), will fetch an estimated Rs 5 crore of the Rs 20 crore
additional revenue that the state's 2002-03 budget hopes to generate.
-Subhajit Banerjee
INTERNET SERVICE
Day Of The Internet Dog
Critics sniggered when Satyam
Infoway took its cyber cafes national. With internet telephony arriving,
it's Satyam that's having the last laugh.
Other
Internet Service Providers (ISPs) may be downsizing their cyber
café chains, but Satyam Infoway's i-Way is growing. Why?
For one, the i-Ways fetch a quarter of Sify's access revenue (25
per cent of about Rs 45 crore) and are also profitable. But the
bigger reason of late is the arrival of internet telephony, which
makes international calls vastly cheaper. And Sify not just has
700-plus i-Ways spread across 10 cities, but also the best infrastructure
in business-a $80-million (Rs 390 crore) backbone that stretches
across 53 cities. What it means is that Sify is best placed to cash
in on the internet telephony boom. Says R. Ramaraj, CEO, Satyam
Infoway: ''It's an incremental source of revenue not likely to make
a large difference to our fortunes. But it is a killer application
like the e-mail, which will draw many first-time users to the internet.
This will favourably impact the bottomline in course of time.''
The i-Way franchisees are grinning from ear
to ear. Take for instance Sujatha Sridhar, one of i-Way's earliest
franchisees. Her 24-hour cyber café, Sridhar claims, is already
making a cash profit of Rs 8,000 a month, but the big growth that
was expected to happen only in 30 to 36 months could happen sooner.
''IP telephony will bring booming business to the café,''
declares Sridhar. Sify's Vice President (cyber cafes), V.V. Kannan,
is more measured. ''We expect an initial surge and then the business
will stabilise, much like an inverted hockey stick.''
Today, the i-Ways have 2 lakh active members.
But the numbers are growing by 500-1,000 every day. Inexpensive
''pre-paid'' cards that cost as little as Rs 20 and to-the-minute
billing are some of the reasons why i-Ways score over mom-n-pop
cyber cafés. But the biggest differentiator is its wireless
broadband network (Sify has been provided a frequency spectrum of
5.7 Ghz). At the moment, only 40 per cent of i-Ways are broadband
enabled, but Kannan says that by the end of April, all will be on
broadband.
But could international long-distance companies
like Bharti Telesonic spoil Sify's party? It's a possibility, since
rates are set to come down. Says Sunil Mittal, Chairman and Group
Managing Director of Bharti Enterprises: ''Today, a call from Delhi
to the US costs Rs 41 (per minute), but we expect this to come down
drastically by the end of the month. Perhaps even 50 per cent.''
Also, world over, internet telephony accounts
for a small percentage of international traffic. With calls getting
cheaper, coupled with internet telephony's poor voice quality (the
government mandates such a difference), cost will cease to be a
great advantage for cyber cafés like i-Way. Still, Ramaraj
is not too worried. ''Initially they will try to break the monopoly
of vsnl, after that they will focus on returns,'' says he. ''Therefore,
ILD pricing will not be a threat for the next few years.'' What
then? That's a question Ramaraj will need to figure out.
-Nitya Varadarajan
Q&A
"Exports Is A People's Venture"
Two days after presenting
his first five-year export-import policy (2002-07), a relaxed 68-year-old
Union Commerce and Industry Minister, Murasoli Maran spoke
to BT's Ashish Gupta on various
facets of the Exim Policy. Excerpts from the interview:
What is the main thrust of your new Exim
Policy?
The focus this time has been to make exports
a ''people's venture''-to ensure that our export policies are no
longer inward looking. Therefore, we have involved almost all sections
of society-agriculturists, village artisans, people working in handicraft
and cottage industries, and IIT graduates who are working in high-tech
areas. We have also realised that unless the state governments are
made partners in this venture, we can never achieve our objective.
So, we have also taken them into confidence.
One of your focus areas is agri exports.
But is the Commerce Ministry doing anything to ensure that exporters
adhere to the stringent safety standards abroad?
We expect the agri-zones to take care of that.
All we are trying to do is to provide certain facilities and the
critical infrastructure support to agro exports.
Another thrust area of the policy is the
development of small towns of export excellence like Ludhiana (woollen
knitwear), Panipat (woollen blankets), and Tirupur (hosiery). What
kind of assistance have you planned for them?
We have decided to offer special incentives
to these three industrial clusters because we see them as centres
of export excellence that can compete with the best in the world
with a little assistance. So we are providing them common credit
facilities and common services. Infrastructure needs of these clusters
will also be taken up on a priority basis.
How does the new Exim policy reduce transaction
costs, which continue to be a major impediment in spurring exports?
We are doing everything to cut red tapism and
have succeeded to a large extent. For instance, Customs officials
have been directed to avoid random checking of exporters' containers.
The system of maintaining Duty Entitlement Certificate is also gone.
The new eight-digit classification of goods will reduce transaction
costs. Thus, we are moving from a situation of doubt and suspicion
to one of trust and confidence in our exporters.
You have talked of continuing with the existing
schemes including the DEPB scheme, which many experts consider as
WTO-incompatible.
DEPB is completely WTO compatible. But we are
working out a single scheme that will replace the multiple schemes.
This scheme will not only be transparent, easy to administer, but
will also ensure that the exporters get back their money on time.
Other than cheap funds, what additional
benefits can the exporter hope to draw from the overseas banking
units set up in the Special Economic Zones?
It is a path-breaking move that will help exporters
and also ensure that SEZs become the magnet to attract foreign direct
investment into the country.
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| Time to set the sparks flying |
ASSOCIATION
Come Together, Right Now
An embattled electrical industry comes up with
a four-point agenda to boost exports.
Last year, the 400-odd
members (including L&T) of the Indian Electrical & Electronics
Manufacturers Association (IEEMA) produced goods worth Rs 40,000
crore. Yet, their exports were negligible. Now, the association
wants to rally its members together to become globally competitive.
It has unveiled a four-point competitive agenda that sets a target
of Rs 5,000 crore in exports by 2003. The action plan includes:
building up the Made-In-India brand in focus countries; enhancing
product development to meet global standards in terms of safety
and energy efficiency; cost-cutting without compromising on quality;
and, interacting with the government. Says V.P. Mahendru, ieema's
President: ''We need to pool our interests to beat global competition.''
As long as it works, nobody will complain.
-Moinak Mitr
THE MASHOBRA MUDDLE
The battle for Mashobra's prized hotel, Wild
Flower, is far from over.
It's
over, it's not. The much publicised spat between the government
of Himachal Pradesh and East India Hotels (EIH) over the historic
Wild Flower Hotel in Mashobra (Himachal Pradesh) has both the players
playing a cat and mouse game. EIH officials insist the issue is
settled, but the state government-which is accusing the former of
trying to elbow it out of the JV by inflating the project cost from
Rs 40 crore to Rs 100 crore-insists it's not. ''The management of
the hotel is with us,'' maintains Ashok Thakur, the state's tourism
secretary. ''We control the property, operations, staff and functioning
of the hotel,'' rebuts Raman Khanna, General Manager (Development),
EIH. (The update on this prolonged battle is that both the parties
are trying for an out-of-court settlement.)
On March 11, the government sealed the company
secretary's office in the resort, following it up two days later
with a takeover bid with the help of local police. On EIH's petition,
a status quo was ordered till March 18, 2002, by the Company Law
Board. Meanwhile, EIH started running the hotel that remained closed
for four days before starting normal operations again. The hotel
had two front offices: one manned by EIH staff and the other by
the tourism department. The business was hit, but the first week
of April saw occupancy go up. As for the other guests, they probably
are waiting for the fight to get over.
-Vinod Mahanta
INNOVATION
Tech World's Little Giant
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S.R. Subapathi: Profiting from bugs
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It
operates in the small-scale sector, clocks Rs 6 crore in turnover,
and if you asked anybody outside Chennai's tech circles, few would
know of its existence. Yet, Q-Max Test Equipments (sic) boasts of
rivals only in the UK and US, and has customers in companies such
as Volkswagen, Motorola, France Telecom, and even the Federal Aviation
Authority in the US. So just what does Q-Max do? It's a printed
circuit board (PCB) testing company that recently bagged a Rs 1
crore order from the integrated circuit manufacturer IDT for its
assembling unit in Philippines. Buoyed by the order, Q-Max and now
wants Intel and AMD as customers.
The man behind Q-Max is S.R. Sabapathi, 44,
a PCB whiz who teamed up with a colleague at Dataprep, a Singapore-based
company that assembled PCs, to launch Q-Max. Now Sabapathi is working
on a unique equipment for holistic testing of central processing
units (CPUs). ''This could become something really big,'' he says.
And you thought hardware had no future in India.
-Nitya Varadarajan
FACE-TO-FACE
''We Need Better Leadership''
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Caparo Group's Swraj Paul
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In India recently, the one-time raider of
India Inc. and the current Chairman of Caparo Group, Swraj
Paul, spoke to BT's Moinak Mitra
about foreign investment in India. Excerpts:
During your last visit to India, you mentioned
that you were looking at certain investment possibilities and said
''something may materialise shortly''. What has materialised?
For almost six years now, I don't look after
Caparo's day-to-day operations. My sons look after them. But we
are building a plant at Indore that will be ready for production
by September.
Why are foreigners hesitant to invest in
India?
Funds will go where it is more effective to
do business and where it takes less time to make decisions. India
has good potential, but there is a need for leadership and productivity
in business.
How do Europeans rank India in terms of
investments?
India is a very good destination because it's
a huge market and it is a very stable country from the political
point of view-I'm not talking of stability provided by any government-but
the greatest achievement of the last 52 years in India has been
its democracy. We have the most established democracy in the world.
Do you see India losing out to China in
the near future?
I don't believe that there is a threat to India
from China because I'm a believer that India is very hardworking
and very productive. We need better leadership-I'm not talking of
political leadership now but better leadership in industry and in
all other spheres. We need focused leadership so that we can get
on with the production of goods that are competitive, better in
quality and cheaper.
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