A three-way-choke: No party got a clear mandate in Karnataka

Andhra Pradesh chief minister Naravarapalli Chandrababu Naidu and Karnataka Chief Minister Somanhalli Malliah Krishna were the glimmer-twins of Indian politics. Both managed to position their respective state capitals as hubs that best represented India's emerging dominance in knowledge-industries such as information technology and life sciences. Today, both have been voted out of power. As this article is being written, Andhra Pradesh has a new Chief Minister, and the process of finding a replacement for Krishna is on. The man himself appears dazed by the verdict which could still see the Congress come back to power if it forges an alliance with the Janata Dal-Secular (Krishna will no longer be cm, however). Did the emphasis on it, biotech, and Bangalore do Krishna in? "I am not so sure," says Krishna. "It may have; however, I feel that three successive years of drought was a bigger factor."

The pundits are divided on what Krishna's exit means for Karnataka's, and more specifically, Bangalore's standing as a destination for investment and a place to do business in. The state's former it Secretary Vivek Kulkarni who quit to embark on an entrepreneurial career as CEO of business process outsourcing firm B2K believes it means nothing. ''All three parties, Congress, BJP, and JD-S have mature leaders and will try and protect the state's image." That's an opinion echoed by Nandan Nilekani, the CEO of Infosys Technologies. "S.M. Krishna played an instrumental role in the growth of the it industry in Karnataka, but the industry had reached a fairly self-reliant stage and will continue to grow." The head of the state unit of the BJP, Anant Kumar claims his party will help the cause of industrial growth without ignoring rural areas. "The Krishna government did nothing when farmers were committing suicide," he says.

However, the fate of reformers such as Krishna worries the managing director of a mid-sized it firm. ''Those people who believe individuals do not matter need to only recall the days of the J.H. Patel administration when Karnataka lost out on all fronts,'' he rues. "If someone like Siddaramiah (S. Siddaramiah, a JD-S leader and the most likely candidate to succeed Krishna) with a limited outlook and pro-poor rhetoric takes over, the state, and more specifically Bangalore will suffer." Watch this space.

-Venkatesha Babu

BROWNIAN MOVEMENT
The Red Queen

It is a strange government congress president Sonia Gandhi will head. The Congress-led coalition has mustered 320 seats in the house. However, of these, only 203 Members of Parliament will actually be part of the government, with key allies such as the DMK, avid supporters such as the CPI and CPI (M), and adventititous supporters such as the Samajwadi Party opting to sit out. In many ways, this is a truly representative minority government.

-Ashish Gupta

''We'll Do 5 Lakh Meals A Day By 2010''

Compass group, a £11-billion food service and hospitality company, wants a bigger share of the mouths in India. Starting April this year, it formed an Eastern Division to focus on growing markets like India. Alain Dupius, Executive Director and CEO of the newly formed division was recently in Mumbai and spoke to BT's Narendra Nathan about Compass' India strategy. Excerpts:

What's the idea behind the setting up of the Eastern Division?

With a smaller base (around 10 per cent of our current turnover now), this part of the market is expected to grow much faster. We expect markets in Russia, India, and China to grow at 30 per cent per annum and this should help us to attain an overall growth rate (for the Eastern Division) of 10-12 per cent. And this will be significantly higher than the global growth rate of around 7 per cent.

What's the business strategy at Eastern Division?

We are trying to accelerate the growth by making more investments. We have a 100 per cent subsidiary in China. In India, we are working together with our partner Radhakrishna Hospitality Services and our investments will be routed through it.

Are there are any India specific targets or strategies?

Our size in India has grown from 20,000 meals per day in 1995 to 150,000 meals per day in 2004. And this is expected to reach 500,000 meals per day by 2010. To achieve this, we will be exploring new areas. For example, we have already started participating in the efforts of Indian Railways to provide quality foods to its passengers. We plan to tap airports and pan-India corporations. Globally, we already cater to big organisations such as Philips and IBM.

FMCG
LG Goes Soft

Starting august this year, LG will launch a new, Rs 30-crore advertising campaign. Nothing surprising, except that it won't be for LG's colour televisions, refrigerators or ACs that Indian consumers have come to know the Korean conglomerate for. Rather, it'll be for the soaps, toothpastes, detergents, shampoos and diapers that LG Care launched in mid-April, starting with Chennai. As it ramps up business, the $1 billion LG Care (globally) will be breaking quite a few rules in the Rs 45,000-crore industry. For one, all its products will be imported, attracting an import duty of 56 per cent. For another, all the selling will be through a single franchisee, Indian Household and Healthcare Ltd (IHHL). ''We are looking at Rs 150-crore sales this fiscal and becoming an FMCG major here,'' says Vijay Singh, MD, IHHL. The franchisee does not rule out manufacture, but says it will need critical mass before doing so. Meanwhile, LG Care is weighing in with its aggressive pricing strategy. ''For the next two years, we will work on zero profits in India,'' says Singh. For the industry's beleaguered HLLs and P&Gs, there's more trouble in the making.

-Shailesh Dobhal

SWIPE
Smart ID Cards

If you are lucky, early next year you will get a National Identification Card (NIC), which will have your name, contact details, picture and finger print biometrics embedded on it. What's so great about it? It's not some dumb piece of plastic, but a smart card that, as per the Home Ministry's ambitious plans, will store a mountain load of data about you and serve as your national identification number. The NIC, a pilot project in 13 states, will eventually become a universal card, linked to everybody from your banker to your doctor, besides doubling as your pan and voter's id card. The L.K. Advani baby, however, must first survive the change in administration.

-Sudarshana Banerjee