JULY 7, 2002
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Nasscom Does Some Brain Racking
Slowdown or not, NASSCOM is still eyeing Indian software revenues of $77 billion by 2008. Just what will make it happen? To get a strategy together, it got some top minds to meet in Hyderabad at the India it and ITEs Strategy Summit 2002. A report on what came of it.


Q&A With Ashraf Dimitri
The CEO of Oasis Technology, a key provider of e-payments software, tries to win over converts to a new system.

More Net Specials
Business Today, June 23, 2002
 
 
RANBAXY
In The Dock Again
Pfizer drags Ranbaxy to court, but you won't find any furrowed foreheads at the Indian pharma giant.
Ranbaxy's D.S. Brar: A favourable verdict

Ranbaxy may be pumping big money into researching and developing new molecules, but you have to wonder how large the budget of the legal department would be.

After all, last fortnight, for the third time in about a year, the group got into a legal tangle with a global pharma major. Ranbaxy Pharmaceuticals Inc, the wholly-owned US subsidiary of Ranbaxy Laboratories, was dragged to court by Pfizer for infringing on its patent for an anti-fungal drug, Diflucan.

Predator-II
Dial FMI for Service
BEL Tolls For Punters
Terms Of The Trade

A $1-billion drug, Diflucan is patented by Pfizer till January 2004. Pfizer wants to extend the patent validity for another on grounds of paediatric usage.

The reaction of Ranbaxy officials to being sued is one of nonchalance, to put it mildy. "It's a normal development," shrugs a company spokesperson. ''So many cases against Ranbaxy only go on to prove that we are a strong global player.''

Multinational drug majors have no recourse save the legal one when companies like Ranbaxy launch cheaper generic variants of their blockbusters when the latter's patents expire.

Asking for an extension of the patent's validity is accepted legal procedure in the drug industry. That could explain the matter-of-fact way in which Ranbaxy has reacted to the suit.

It also reflects the fact that Ranbaxy has had little problems in getting the verdicts in their favour: most past suits have worked to its advantage.

In May 2001, a judge threw out GlaxoSmithKline's appeal, disallowing Ranbaxy from introducing low-cost versions of the $2 billion-a-year antibiotic, Augmentin.

And, in February this year, Ranbaxy cocked another snook at GlaxoSmithKline by getting the US FDA's approval for Cefuroxime Axetil. More power to the Indian multinational!


PUMA
Predator-II
Puma re-enters India, and this time round it's come in with much more than footwear.

Puma on the prowl: Hardselling the lifestyle brand

Puma is on the prowl, yet again. The Euro 1 billion-plus footwear and lifestyle major is back in India after an unsuccessful run from 1991-94 when Puma was being sold by Corona Shoes. It is a different tale now, if Shriti Malhotra, Brand Manager, Puma, is to be believed. "Puma has now entered India as a brand, whereas earlier it was just here for the price-advantage." Puma plans to align its business in India on the global model where the brand has been repositioned from a plain-vanilla sportswear entity to a sports lifestyle brand.

The shift may take a while in India as Puma is primarily perceived to be a sports footwear company, but the current licensee, Planet Sports, is hopeful of changing that. "We'll be able to achieve the global ratio of being a 50 per cent sports entity and a 50 per cent lifestyle brand by 2003," emphasises Malhotra.

Puma plans to infuse Rs 9 crore ($2 million) in the brand in the next three years, with 60 per cent of the funds going into product development and the rest into retail and promotion. Initially, the licensee plans to import from abroad "owing to the high-end brand image". Sourcing from bases in Vietnam, Indonesia and Malaysia has been sorted out to get a lower freight advantage.

Says Pradeep S. Shekhawat, Vice President (Licensing, Business, & Marketing), Planet Sports, "For the first two years, we will import the entire footwear range. Ninety per cent of the apparel range will be locally manufactured."

However, Planet Sports is also considering manufacturing Puma shoes in India from 2003, when it will have the option of roping in contract manufacturers. By all indications, Puma isn't backtracking this time round.


FIRST MOBILE
Dial FMI for Service
An international mobile phone distributor sets up shop amidst a sea of grey.

The next time you pick up a mobile phone from the grey market, spare a moment to think about what you would do if it stopped ringing (or singing, in case you bought that particular brand). The well-heeled will, of course, duly dump it and revisit the grey market, but not everybody can afford to change cell phones the way they change partners. That's where First Mobile India (FMI) comes in. The Indian subsidiary of the Hong Kong-based HK $53.3-billion (Rs 2,61,170 crore) First Mobile Group (FMG) (it sold 4.3 million units last year) is targeting sales of 1 lakh units in India this year, which translates into a turnover of Rs 50 crore.

First Mobile's USP is that it's not just another distributor (worldwide, it sells models of brands like Samsung, Alcatel, Philips, and Siemens, as well as not-so-well-known names like Kyocera, Sendo, Sagem, and Sendo). "We are the only ones to have state-of-the-art service centres providing after-sales service for multiple brands,'' claims Sanjoy Roy, MD, FMI, who sees 5-8 per cent of his revenues coming from after-sales service.

Gross margins in the distribution business aren't too high, hovering in the 3-5 per cent region. That's why FMI has to up sales quickly. The company is gunning for a 10 per cent share of the organised market in 15 months.

It's the service carrot that could help FMI hit those figures. As of today, FMI has three service centres in Mumbai, Delhi, and Chennai. Of course, FMI will need to set up many more such centres if has to be noticed in the market, 85 per cent of which is grey.


BHARAT ELECTRONICS
BEL Tolls For Punters
Bharat Electronics is India's only defence equipment manufacturer that's listed on the stock exchanges. Still wondering why investors are lapping it up?

Even as the markets were tanking last month, thanks to the cries of war-or at least the rattling of the sabres-one stock was calmly more than holding its own on the stockmarkets. In fact, over the past three months, Bharat Electronics Ltd (BEL), in which the government controls 76 per cent with the rest being in public hands, has gained close to 50 per cent; since October, the stock has appreciated over three-fold.

SAME'S DIFFERENT TACK

The year gone by couldn't have been worse for the tractor industry: it could sell just half of its 4 million capacity. Italian tractor major Same Deutz-Fahr thought it a good opportunity to buy out its joint venture partner Greaves (for roughly $5 million) last month. The No. 4 player in the global tractor market will now pump $20 million (Rs 98 crore) in the plant at Ranipet to produce 10,000 tractors.

That number may appear small but Same is targeting the high horse-power (hp) segment-45-50 hp and upwards, which cost Rs 3 lakh-plus per tractor-of which only 6,000 sold last year.

''We find increasing preference towards high hp tractors,'' says Kamal Bali, the company's Commercial Director (Asia).

Bali predicts that the next two years will be flat in terms of overall tractor sales, but growing aspirations of farmers (particularly those upgrading or purchasing their second tractor) will ensure good offtake of high-hp tractors. Now that's a high-powered furrow.

There's a reason of course for the Rs 1,940-crore BEL, which was set up by the government in 1954, becoming the flavour of the season. It's India's only defence company that's listed on the exchanges. And with the government indicating its intention of upping defence expenditure in reaction to border tensions, the company that designs, develops and manufactures, among other things, radars and defence communication systems is in clover. "We have a comfortable order book position of Rs 4,100 crore," says a relaxed Dr V.K. Koshy, Chairman & Managing Director, BEL.

Koshy, however, will soon have to contend with private competition, what with the government throwing open the sector to foreign investment, up to 26 per cent. Already companies like Larsen & Toubro have applied for licences, and are talking to international players in the US, Sweden and Italy for collaborations.

That's why BEL is attempting to de-risk its business portfolio. In 2000-01, 78 per cent of its turnover came from the defence departments. Last year, the figure dropped to 72 per cent. The company has diversified into the telecom/infocom sectors, and has announced plans to launch hand-held computers, smart cards, motherboards, solar-powered traffic signals and even a soundwave-based device to help fishermen detect shoals of fish.

For the moment though, BEL is riding the wave of being India's only listed defence stock. For investors, if greed is good, (talk of) war is better.


Terms Of The Trade
Corporate-speak you can't do without this season. Tear and keep.

BUSINESS PROCESS IMPROVEMENT (BPI)
Enhancing the profitability of the business by improving operating efficiency on the one hand and reducing costs on the other.
Sales continue to be hard to come by and Enronitis has caused analysts and fund managers to take a magnifying glass to financial statements. Which is why this hoary technique is back in vogue, albeit under a new name.

FORCE-FIELD ANALYSIS
Procedure for deciding what factors or forces seem to be contributing to a problem.
Like the few other business tools that aren't focussed on deriving chaos out of order, but on the reverse, force-field analysis is a science-heavy method to ascertain whether there is something like the butterfly effect (you know, one flaps its wings in one part of the world, and an economy crashes in the other).

IRM (INFORMATION RISK MANAGEMENT)
Includes services like Software Asset Management and Business Continuity Management to assist clients across diverse industries manage their infotech-related business risks.
We've been hearing a lot of this lately. Please see the Managing section of this magazine for an agonisingly descriptive know-how.

MANAGEMENT BY EXCEPTION
Any exceptional management decision that cannot be taken at one level and is passed on to the next level.
Bureaucracy, not necessity, is the mother of invention (of management terms).

MAS (MANAGEMENT ASSURANCE SERVICES)
Includes internal audit, risk management and corporate governance services to meet current risk management and internal assurance needs of clients.
Corporates are touchy about all three, internet audit, risk management, and corporate governance. What better way to overcome that touchiness than creating a specialisation?

MBO (MANAGEMENT BUY-OUTS)
Existing management of a company being funded by external investor to acquire the business from the organisation's promoters.
Why run what you don't own when you can own what you run. An eternal favourite.

PEOPLE CAPABILITY MATURITY MODEL (PEOPLE CMM, OR P-CMM)
A framework for successfully addressing strategic workforce issues.
HR pros have always been a little offended at their function being labelled touchy-feely. Here's the antidote.

PURE-PLAY
A company devoted to one line of business, or, whose stock price is highly correlated with the fortunes of a specific investing theme or strategy.
As opposed to diversified; an adjective that can be used indiscriminately.

QUALITY REGISTRAR
Any organisation that issues quality-related certifications (ISO 9000, ISO 9001, ISO 14000).
The 1990s obsession with quality certifications is yet to die out in India

STRATEGIC INFLEXION POINT
Major turnaround point in an industry/company/sector, which may have a positive/negative impact.
If pure-play is salt, this is pepper. Sprinkle liberally.

 

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