In India's Silicon Valley folklore, where the engineer from IIT is the inevitable hero, the story of Bagalur Venkatasubarao Jagadeesh reads unlike anybody's. He is neither an IIT nor an IIM grad. In fact, he grew up in the dusty village of Bagalur, some 30 kms north of Bangalore. He studied in a village school that had no desk for the students and got his engineering in electronics from another B-grade engineering college. Yet, the 47-year-old Jagadeesh has today a place of his own in Silicon Valley's Indian Hall of Fame, rubbing shoulders with the likes of Vinod Khosla, Vinod Dham, Kanwal Rekhi, Suhas Patil, Sabeer Bhatia, and Gururaj Deshpande. And he has no one else but his own innate intelligence and a knack for spotting and seizing opportunities, to thank for it.

Jagadeesh's climb to fame started in 1994, when he teamed up with K.B. Chandrashekhar to set up Exodus Communications, an internet hosting service provider. At its peak, nearly 40 per cent of the world's internet content was passing through the server farms set up by Exodus in California. "We might have contributed to California's power problems, given the amount of electricity consumed by our data centres," Jagadeesh says jokingly. By the time he sold his stake in Exodus and also exited the company, Jagadeesh had ensured both his fame and fortune.

But this is hardly about another Indian techie making it big in Silicon Valley. What's unique about Jagadeesh is that he was one of the first Valley entrepreneurs of Indian origin to start funding companies back home. Over the last five years, he has angel invested in a host of Indian companies such as Netmagic, NetScaler, Plexus Technologies, Edurite, iNabling Technologies and Televista, besides India-focussed technology funds like Infinity Ventures and Global Technology Ventures. Most of his investments have been between half and a million dollars.

Not all of his investments have paid off. While Netmagic (web hosting), Televista (telemedicine to remote areas), and Edurite (it-enabled education) are chugging along, others like iNabling, which pioneered iStation, a doomed forerunner to the Simputer, and Plexus (software applications for eCommerce) have either folded up or been bought over. Says Jagadeesh: "It is the nature of the game. You win some, you lose some. Angel investing is never easy. My intention in the case of iStation was to provide low-cost e-mail access, as it is the killer app. Unfortunately, it didn't work out." He's lost a couple of million dollars. But Jagadeesh says he's not disappointed or disheartened. "I would like to make more mistakes because that is how one learns." At NetScaler, though, he has no such intentions. Recently, he became the company's President and CEO and wants to make it a successful product company (NetScaler makes next generation networking devices).

The two-and-a-half-year-old company has attracted $68 million worth of funding from some of the best names in the business, including Sequoia Capital, Goldman Sachs, and Bay Partners. It has customers in Google, Amazon.com, and Microsoft. Jagadeesh believes that Indian it companies have to start looking beyond projects at product lifecycles-something he is trying to do at NetScaler. "Indian entrepreneurs have to take more chances; nothing ventured, nothing gained."

He's doing just that by putting money where his mouth is, not merely in business, but in society too. Two years ago, he donated $1 million in cash to upgrade schools run by the Bangalore City Corporation. He is also financially helping Dr H. Sudarshan, a winner of the Right Livelihood Award (considered to be the alternate Nobel), who works with Soliga tribals in interior Karnataka. "The opportunities given to me made me what I am. I want others also to get an opportunity." Some day, some poor boy or girl studying at a municipal school in Bangalore may have reason to thank Jagadeesh.

-Venkatesha Babu

Getting Monstrously Big
With Jobsahead.com in its bag, Monster is twice as big as its nearest online rival.

Sitting pretty: Arun Tadanki of Monster India

The beast from the world of online jobs, monster Worldwide, has scored its first big kill in India. In a deal signed last fortnight, it agreed to acquire the Puneet Dalmia-promoted rival Jobsahead.com for Rs 40 crore. What the deal spawns is the mother of all online recruiters. The new entity, which will retain the Monster name, will command 65 per cent share of the market, boast of 5.5 million unique visitors to its site, a database of 2.5 million resumes, and a client list of 3,500 corporates. Interestingly enough, Monster won't be slashing headcount or duplicate operations. "Rather, a fresh round of hiring in the sales division will take place," Arun Tadanki, Head of Monster India, told BT. Tadanki, who, not incidentally, was the chief marketing officer at Jobsahead.com between 2000 and 2002, also clarified that Monster Worldwide will continue to operate through its internet business division, Monster India, in the country and that there are no plans of setting up any of its other business units-yellow pages or the offline recruitment agency-in the country.

-Sudarshana Banerjee

HANDY
Plug-n-Talk

Talk away: A Hutch zone

You are in Bangalore, and you mobile phone battery is giving up on you. What do you do? Simply find the nearest "high density congregation zone" like the railway station, bus depot, or the city airport.

Courtesy service provider Hutch, several of them sport what are called "recharge zones". Says Samuel Selvakumar, CEO, Hutchison Essar South: "This is a value-added service that we want to offer to our customers, but we have to thank the respective authorities for providing us space to set up these kiosks." Hutch has invested a few thousand rupees on each of the 100-odd recharge zones it has set up in the last 45 days since the project started. By the way, all the recharge zones have different chargers for different handsets, besides which means even customers of rival companies can avail of the facility.

-Venkatesha Babu

Q&A
"The Current Interest Rate Is Apt"

Between governments and a volatile Sensex's rise and fall, Yaga Venugopal Reddy, Governor of the Reserve Bank of India, presented the annual monetary policy for 2004-05. A day after its presentation, BT's Roshni Jayakar spoke to Reddy on the policy and the fiscal outlook. Excerpts:

You have maintained status quo in respect to interest rates. Why?

A status quo doesn't mean indecision. Often, status quo is ideal even in changed circumstances.

Can one say that the RBI has started the process of preparing the market for eventual rate tightening?

It's difficult to say. Perhaps you are saying it on the basis of the perceived position of the Federal Reserve (in the US). In our situation, what we have done is to analyse the current situation and indicate the various uncertainties. But as long as domestic factors dominate, which they will, and the intensity of global uncertainties is not beyond what is currently appreciated, the current interest rate is appropriate. We are not giving any indication of the direction, but our preference is for stability by virtue of the domestic circumstances.

Will the soaring oil prices fuel inflation to around 5 per cent?

We are talking of the year (2004-05) as a whole and so it is not necessary that your inflation projection keeps going up and down, depending on oil prices. You have to take a longer point of view-how much of (the high) oil price will be there, how long will it be sustained and how will it relate to other prices. On overall assessment of the current indications of oil price outlook, around 5 per cent inflation is a realistic estimate. But on the basis of current knowns, there is no upward bias.

Your assessment of the fiscal deficit is based on the interim budget. But there's a new government in power and disinvestment may not fetch any money.

We don't expect the fiscal deficit to be unmanageable. Our assumption is on the basis of past experience. Also, we have had many years when there have been (interim) budgets and there have been revisions. And on occasions, the difference between the budget estimate and the actual figure has varied between 0.75 per cent and 1 per cent of the GDP (gross domestic product). Whenever there has been slippage to the magnitude of 0.75 per cent, we have managed. The Reserve Bank of India's responsibility is to manage the FISC as a debt manager, and at the same time ensure that it is consistent with macro-stability.

What's your outlook on foreign exchange flows?

We had indicated last November that over a period of time, international liquidity will dry up and that will naturally affect the flows to emerging countries. In that context, I had also explained that flows to India are determined more by its economic fundamentals than international liquidity. Therefore, the impact on India, I think, will be moderate compared with other emerging markets. That's true even now. Moreover, the overall Indian economy is driven more by domestic factors. Sure, we have a link but not that much of integration with the rest of the markets with regard to capital inflows.

Boom Inside the Box
The home PC market is surging, courtesy rock-bottom prices.

Neo: PC+TV+radio+DVD player+game station

In the first quarter of 2004, personal computer sales jumped to 236,683 units-a 40 per cent growth over the same period last year. What's behind the boom? Low prices and easy financing. In the last quarter, market leader Hewlett-Packard was offering a home pc at Rs 80 a day-a scheme that helped boost sales 73 per cent.

That figure, however, is modest compared to the growth the local box biggies have clocked. HCL racked up a near 150 per cent jump in volumes and Zenith a comparable 133 per cent in the first quarter. In the process, the grey market for assembled PCs is shrinking (thanks to cuts in duty rates). But to offset low margins, manufacturers are coming up with snazzy new launches at the higher end.

Take HCL. Its Rs 1 lakh Neo is both a computer and a television, besides doubling up as a radio, a DVD player and a gaming station. A windows key on the remote control starts up Windows XP media centre and up comes the menu. Hot buttons let you flip through your photo albums, pick movies or music, play radio or watch TV. The widget even stores half-hour of tv programmes and you can rewind it anytime and watch it on a 17 inch, 16x9 wide screen format LCD monitor with surround sound. (Microsoft has worked on the user interface.) PC buyers, rejoice.

-Vidya Viswanathan

Lemon of a Deal?
HSBC gets the RBI's nod for UTI Bank. How it must wish it hadn't.

In the doldrums: HSBC's Niall Booker

For months, the reserve bank of India kept Niall S.K. booker on tenterhooks over his UTI Bank deal. Last fortnight, the central bank finally allowed HSBC's CEO to buy 14.71 per cent stake in UTI Bank from Actis, but not before crippling it with a verdict: HSBC cannot buy an additional 5.37 per cent it had planned to from Actis. Worse, it can't even lay claim to a board seat. Although Booker has always maintained that UTI Bank is merely a financial investment, his endgame was apparent. The two banks had synergies in areas of credit cards, payment systems, and investment banking. Points out a Mumbai-based analyst: "HSBC is not a portfolio investor, and obviously they were looking at integrating operations of the two banks at a later stage."

Where does RBI's ruling leave HSBC in the UTI deal? Stranded. It does have options, though. For example it can persuade RBI to allow it a board seat considering that Bennett, Coleman & Co.'s Vineet Jain (promoters of Times Bank India) has a board seat on HDFC Bank, although it owns a mere 3.11 per cent stake. The other option for Booker is to sell the 14.71 per cent stake in bits and pieces. The good news for HSBC: It's unlikely to lose money on such a deal, given UTI Bank's fundamentals.

-Swati Prasad

PROVIDENCE
Tea Break

Best picks: Tea exports are looking up

There's a nice story waiting for those who can read the tea leaves. After a difficult phase, things are looking up again in the tea industry. Exports in the first quarter of 2004 are up 25 per cent to 37.14 million kg. Providing the ballast for this heady brew is demand from Iraq and Pakistan. The former imported 12.69 million kg in calendar 2003 while our north-western neighbour bought 6.43 million kg. "I can't give you exact figures for the current year, but we expect to improve on last year's efforts," says Tea Board statistician, M. Paramanandhan. According to the board's figures, average price realisation for the week ended May 8, 2004 (the last auction before BT went to press) is up at Rs 70.44 per kg for North Indian teas against Rs 61.11 for the year-ago period. For South Indian varieties, the corresponding figures are Rs 45.50 and Rs 41.30, respectively. The best part is that for the first time in three years, the selling price is keeping ahead of the cost of production. Tea is making money-again.

-Arnab Mitra