Mumbai first?: Not yet, but the city is trying its best to come a better place to work and live

There's something in the air in India's cities and it isn't the smell of diesel fumes. Rather, it is the halo of good governance. This is a recent phenomenon. A combination of factors-near-bankrupt municipal corporations, political interference, the constant influx of labour, and the absence of urban planning-ensured that most cities adopted a minimalist approach to urban governance (in terms of activity, not the size of City Hall) all through the 1980s and 1990s. The 2000s have been different.

Big business has had a lot to do with this. Over the past decade, the chief ministers of several states have transformed themselves into salesmen pitching their province as an investment destination. Their initial attempts revolved around giveaways. Then they started focussing on urban infrastructure. This decade has seen the pitch being refined further to incorporate financial soundness and quality of life.

Companies, too, have a vested interest in the betterment of cities. The reasons behind an individual's decision to work for a company include the quality of life in the city where the company is located. That fits in very well with another trend: an increasing awareness among citizens of their rights.

Bangalore and Hyderabad were the first Indian cities to focus on urban governance, the first through a public-private partnership, the Bangalore Agenda Task Force (BATF), and the second through a top-down initiative championed by Chief Minister Chandrababu Naidu. Today, tens of cities are emulating them. Mumbai boasts Bombay First, a BATF-style initiative that aims to transform the city into a world-class metro. Delhi has its Bhagidari scheme, a government initiative that involves resident welfare associations.

The quality of financial management is at the core of some efforts at better urban governance. Bangalore's city corporation was the first in the country to move to a fund-based accounting system (read: a double-entry book-keeping system). Today, the corporations of Indore and Bhopal have already implemented a fund-based system, and those of Ludhiana, New Delhi, and Jabalpur are in the process of doing so. Systems such as these will help corporations manage their finances the same way companies do.

Circa 2004, a clutch of city corporations, including Nagpur, Surat, Vishakhapatnam (Vizag), Bhopal, Dehradun, Hyderabad, and Delhi are either in the process of raising money through the issue of (muni)bonds or are considering doing so. "A good financial model is a precondition for successful urban transformation," says S.S. Bhandare, the Chief Executive Officer of Bombay First.

Urban planning is at the heart of some others. The corporation of Madurai has engaged the services of a local university to develop a geographical information system (GIS) to help it address a host of growth-related issues. "We find it increasingly tough to manage rapid urbanisation in the context of utility and emergency services," says A. Karthik, the Commissioner of the city corporation, who sees the GIS solving some of these problems. And the upgradation of roads and other utilities, at the heart of still others. For instance, the Kolkata Municipal Corporation has turned yesterday's City of Joy into today's City of Trenches in an effort to future-proof the city's roads. "Today's pain, tomorrow's gain" is the evocative message on men-at-work signs at all major roads. "When the projects are completed next year, traffic congestion in the city will ease," promises the city's mayor, Subrata Mukherjee.

The significant thing about the wave of better urban governance sweeping through India is the emphasis on outsourcing or privatisation: Vizag, for instance, has called for bids to manage the city's water supply. Indeed, the urban governance phenomenon has gained critical mass enough to serve as a campaign platform. Arun Bhatia, Pune's former municipal commissioner is contesting the coming elections to the lower house of Parliament from Pune. His promise: to make Pune the best-governed city in the country. And as this magazine goes to press, V. Ravichandar, a member of batf and a Bangalore-based market research consultant, is preparing to launch ideasforgov.org, a resource of sorts for progressive city-planners.

-reported by Sahad P.V., Arnab Mitra, E. Kumar Sharma, Nitya Varadarajan,
Roshni Jayakar, and Venkatesha Babu

BSNL
Video-on-demand

Quietly for a year now, the state-owned Bharat Sanchar Nigam Ltd (BSNL) has been trying out a video-on-demand service in Kolkata. Now, the telecom giant, which offers the service under its DataOne Broadband umbrella, is gearing up for full-blown service in Kolkata, plus a nationwide roll- out, starting with Bangalore and Pune. How does BSNL's video-on-demand service work? For starters, in a 10-year contract, the content has been outsourced to a Bangalore-based telecom and media solutions outfit called

I-Spatial, which in turn has tied up with popular pay channels. It already has a database of multilingual movies, events and sports programming. To access the service, the subscriber must cough up Rs 1,000 in monthly fee and Rs 35 per view. The set-up box is provided by BSNL free of cost. BSNL's target: a million customers by the end of 2004-05. ''At an incremental investment, we see a substantial rise in revenue," says N.K. Mangla, Director (Marketing & Commercial), BSNL. Competition (read: Reliance Infocomm) should soon come snapping at BSNL's heels.

-Sudarshana Banerjee

SECOND
Selling To The Young
Marketers know this is critical to their success in the Indian market. Have political parties caught on?

Forget Rahul Gandhi's political credentials: He's 34; will that appeal to the country's 220 million voters under 30?

Generation next of the Indian electorate has arrived and here are the numbers to prove this: 220 million of the 669 million Indians who can vote are in the 18-30 years age group. Marketers have long realised the importance of the youth market and catered their products or communication to tap into this mother lode. "Whether you are selling jeans or motorcycles or mobile phones, you just cannot afford to ignore the youth market," says Partha Sinha, Executive Vice President (Strategic Planning), Ambience Publicis. With the numbers staring them in the face, the country's two largest political parties, the Bharatiya Janata Party (BJP), part of the ruling National Democratic Alliance (NDA), and the Indian National Congress (INC), have responded with manifestos targeted at the young.

Only their efforts at wooing the young seem insincere and, worse, fundamentally flawed. "There's a genuine lack of knowledge about what makes this audience tick," says a leading psephologist. "The BJP and the Congress are both unsure of the way here." That's not far off the mark. Indian politics has traditionally been driven by caste equations with parties being loath to look at anything else.

Electoral dynamics have made it possible for parties to do this. With an average of nine contestants per constituency, both the BJP and the Congress have grown to believe that there is far more sense in cobbling opportunistic local-level poll alliances. Polarisation on the basis of gender and age, the prevailing logic goes, is non-existent. For instance, smart alliances helped the BJP, with a vote share of 23.75 per cent (182 seats) in the last general elections, put one over the Congress, which had a vote share of 28.30 per cent (114 seats).

However, as Partho Rakshit, Managing Director of market research firm ACNielsen India, puts it, "There are definitely voting-pattern skews on the basis of gender and age, and political parties have just about started looking in this direction." There's a reason, and a pretty strange one, behind this. Opinion polls claim the result of the elections to the fourteenth Lok Sabha is a forgone conclusion, with the BJP and the NDA gaining a few more seats and the Congress losing a few more. If that is indeed the case, then, an emphasis on the young could fetch the BJP a few more seats (and reinforce its dominance of the coalition) or help the Congress cut its losses. Which is why both parties suddenly want to be seen as being close to the young.

At one level, this translates into a "younger" product. "The entry of around 30-odd young leaders, including Rahul Gandhi, is our clear message of being one with the youth," says Tom Vadakkan, the head of the Congress' media cell. Even the BJP, traditionally a party of the old, is fielding a clutch of young candidates according to its General Secretary Mukhtar Abbas Naqvi. A fourth of its candidates, he stresses, is under the age of 45 years. Unfortunately, most young leaders across both parties are scions of political dynasties with their youth being purely incidental. And both the Congress and the BJP are hoping that the messenger can masquerade as the message itself.

At another level, it translates into "younger" communication. BJP's Naqvi is confident that the party's "message of development will strike a chord with the young who have a stake in the India of the future". He points to the 20-million SMS messages sent out by the party as further evidence of its intensity in targeting the young. The Congress, much of whose communication has been negative (like the ad targeting the young by referring to the problem of unemployment), is "currently offering a reality-check of BJP's false propaganda", according to Vadakkan, but will "soon move into communicating our vision for the country". Still, as Santosh Desai, President, McCann Erickson, points out, "We're still in the publicity mode in political communication," with both parties adopting a product-heavy approach rather than answering, as any good marketer will, what the electorate, or a particular segment of it (like the young), stands to gain by voting for it. Which is probably why the MTV and Channel V appearances parties have planned for their young candidates-the assumption being that anything that is advertised on these channels is popular with the young-may fall flat.

-Shailesh Dobhal

DASHBOARD

TEN SPORTS
The Ten Sports-DD wrangle has fallen off the radar of the press and not even an Indian win at Multan is enough to resuscitate it.

MARKET MISHAPS
All is overshadowed by the 10.4 per cent growth of the economy in the October-December quarter; the market heads north.

OUTSOURCING
An Information Technology Association of America study shows that the phenomenon creates net new jobs in the US.

IPOS
With ICICI Bank's issue on at the time this magazine goes to press, and the TCS one in the air, the boom rolls on.

Matrix Revolutions
Matrix Laboratories CEO N. Prasad answers some pressing Qs.

How critical was the move to sell 15 per cent of the company to Newbridge and Temasek from the growth perspective?

That money will come in by the end of April. So as of now, our growth has been funded entirely by internal accruals. Then, both Newbridge and Temasek are major investors and have several investments in pharma across the globe. We could network with these companies. More significantly, their presence helps enhance the image of the company and provides financial stability as they bring in Rs 350 crore.

You have always been aggressive in terms of acquisitions? And now you will have a war chest too.

Yes, we have funds. Over the past two years, we have only tried to leverage existing opportunities. Much of this has been driven by the fact that time-lines in the pharma business tend to be long and the acquisition route is sometimes better than setting up a unit from scratch. We have successfully integrated Vorin and Medicorp (the two merged with Matrix in 2002). Medicorp helped us gain early entry into the US market by at least two years as it had a US FDA-approved facility. As for recent acquisitions, the Vera Labs (Matrix acquired Vera and three subsidiaries in 2004) one means we now have the largest US FDA-approved facility (the combined capacity of Matrix and Vera) in India.

Does the company have an appetite for more acquisitions?

Yes, we are open to new acquisitions that can enhance value.

Will management control change after the open offer by Temasek and Newbridge?

No, it will not. The promoter-holding will reduce from 60 per cent to 40 per cent.

Is your share overpriced at Rs 1,500? Is the price a function of the relatively low liquidity of the stock?

Low liquidity is not really the key issue. The company's price-earnings multiple is in the region of 12 to 15 as compared to 20 to 30 for the pharma majors. However, steps are being taken to increase the liquidity. We are currently listed on the BSE and now want to list on the NSE. There is also a proposal to split the share, but that needs to be examined.

-E. Kumar Sharma

MIND-READING
New New Tool

Not Delta Force duh: This is DeltaQual

For harried marketers desperately trying to fathom customer psyche, there's a new tool in town, DeltaQual. Developed by ACNielsen, DeltaQual leans heavily on techniques drawn from anthropology, neuro-psychology, and behavioural science to access hidden drivers of consumer behaviour. "This heuristics-based decision-making system gives us insights into how consumers behave, why they behave the way they do, and what can be done to change their buying habits," says Rashmi Varma, Associate Director, ACNielsen ORG-MARG.

DeltaQual is based on recent research in cognitive psychology, which reveals that although consumers have thousands of brands in their heads, they waste little time thinking about them. Created by ACNielsen's New Zealand office over two years, the model revolves around Omega Rules and Delta Moments. The first is the mental checklist customers use while shopping, while the second lists instances when something can cause a customer to re-evaluate existing opinions and deviate from the habitual. "Using DeltaQual, we came up with insights like the fact that Indians don't like to drink cola at breakfast and that a second credit card is about ego-needs and not functionality," says Varma. That's alpha-stuff.

-Abir Pal