AUGUST 1, 2004
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Q&A: Jim Spohrer
One-time venture capital man and currently Director, Services Research, IBM Almaden Research Lab, Jim Spohrer is betting big on the future of 'services sciences'. And while at it, he's also busy working with anthropologists and other social scientists who look quite out of place in a company of geeks. So what exactly is the man—and IBM's lab—up to?


NBIC Ambitions
NBIC? Well, Nanotech, Biotech, Infotech and Cognitive Sciences. They could pack quite some power, together.

More Net Specials
Business Today,  July 18, 2004
 
 
ON THE ROAD DEPARTMENT
Finally Ready For Take-off?
The Bangalore International Airport, conceived in 1989, may actually become a reality.
BIAL's CEO Albert Brunner: Light at the end of the tunnel

It has been 15 years in the making. And with the Centre finally, last fortnight, signing the concession agreement granting requisite approvals for setting up India's first true greenfield airport, Bangaloreans are at last beginning to believe the international airport can take concrete shape, after all. At Khanija Bhavan (Mineral House), where the offices of Albert Brunner, Chief Executive Officer of Bangalore International Airport Ltd (BIAL), there's an air of optimism, and Brunner is hopeful that the airport will be ready three years from today.

Over the years the airport project got bogged down by one delay after the other. In spite of having two central civil aviation ministers from Karnataka during this period-C.M. Ibrahim during H.D. Deve Gowda's prime ministership and Ananth Kumar in the NDA-the project just couldn't take off. Both failed due to a number of reasons.

Controversy has been no stranger to the airport blueprint, which took the shape of a private initiative in 1994. The project duly slipped into rough weather when the two partners, the Tatas and Singapore Airlines, walked out citing governmental delays. The Tatas had already spent close to Rs 5 crore on initial surveys by then.

Mother Of All Funds
Vizag Ho!
Traders Thumped

That's all history today. The Centre's clearance, following a report from a team of the Director General of Civil Aviation (DGCA), is just the shot in the arm Brunner needed. The DGCA report is subject to the Karnataka government's approval for using the land. The state has to give a land-user's certificate to the company, which incidentally had applied for it nearly one and half years ago. P.G.R. Sindhia, Karnataka Industries and Infrastructure Minister, avers that "all major problem are out of the way. The only big agreement that is pending with the air traffic control to coordinate aircraft between HAL (the existing Bangalore airport), Jakkur (flying club) and the new project". Sindhia also declares the government is ready to hand over the 4,300 acres of land acquired for the purpose to BIAL.

Civil aviation ministry officials said the government has reworked the long-pending concession agreement with BIAL, paving the way for private investors to start work on arranging funds and beginning construction. In what is seen as Minister of State for Civil Aviation Praful Patel's first gift to India's aviation capital Bangalore, the civil aviation ministry has also decided to discontinue all scheduled and civil flights from the existing HAL airport once the new greenfield airport is operational.

If there's anybody who needs to be convinced about the need for an international airport at Bangalore, the air passenger traffic figures would surely help do the needful: 30 lakh as of 2003, which will double by 2007. International airlines, like Lufthansa, Malaysian Airlines, Singapore Airlines and Sri Lankan Airlines, have already commenced operations, and more should follow soon.

Officials say the concession agreement (CA)-almost two and half years in the making-was redrafted after consultation with the law ministry. BIAL and the Karnataka government had sent back the ''final draft'' cleared by the earlier government, stating that 40 unacceptable clauses, including ambiguity over closure of the existing HAL airport, had to be changed. The ca will be followed by other documents-financial closure, state support, land lease deal and the air traffic management agreement-and officials expect them to be in place by August 2004.

The delays have already lead to a cost escalation of about Rs 4 crore a month. But if the market is the best barometer of indications to come, it seems happy days are here again. Reason: Land prices along the road to Devanahalli have shot up thanks to market-friendly realtors who have done more to publicise the cause of the airport than the governments, both the state and the Centre. Meanwhile Albert Brunner and Bangaloreans are keeping their fingers crossed.


Mother Of All Funds
Three quarters of the portfolio of Kotak MF's new offering will be made of non-Kotak fund schemes.

Kotak MF's Bagga : It's a bag of funds, really

If mutual funds have to attract more retail investors, one way of doing it is via innovation. The Kotak Equity Fund of Funds Scheme has done exactly that, as it will not restrict its investment to just Kotak mf schemes. Up to 75 per cent of the portfolio will be invested in diversified equity schemes, across fund houses and fund manager styles. "What we are launching is a fund of funds and not a scheme of schemes," says Ajay Bagga, CEO, Kotak Mutual Fund.

Every quarter the portfolio will be reviewed and rebalanced based on the recommendations of an external research agency. But the offer document places some major restrictions on possible investments: First, the scheme can invest only in big fund houses with a minimum of Rs 5,000 crore of assets under its management-as per industry data only 12 Indian fund houses can boast of this. Second, the fund houses should have a reasonable equity exposure of at least Rs 500 crore. Third, the schemes selected should have a track record of at least one year and a minimum Rs 50 crore in assets. To ensure a diversified portfolio, only up to 25 per cent of the portfolio will be in one scheme. IPO ends on July 19.


Vizag Ho!
Move over Hyderabad, Vizag's getting hotter by the day.

HSBC's Brooker: Zeroing in on Vizag

If scores of pharmaceutical manufacturers and it-enabled service providers are making a beeline for Vishakhapatnam (or Vizag), it's simply because it's the next best alternative in Andhra Pradesh to a packed out Hyderabad. Pharma majors, including Aurobindo Pharma, Dr. Reddy's and Divi's labs have already set up a second base in and near Vizag. And some 40 units have made initial payments for taking space in the town's proposed pharma city, spread over 2,000 acres, and expected to be ready by mid-2005. Alongside, it/it-enabled service providers, led by HSBC, are also zeroing on Vizag.

Since the past five years, in keeping with the needs to control pollution, no new licences have been issued for expansion of facilities in the landlocked state capital. "Vizag has a sea port, an airport and universities," points out Venkat Jasti, President, Bulk Drugs Manufacturers Association. "For pharma units, it is necessity that's taking them to Vizag." What's more, Vizag has always been an excellent talent sourcing base for the drugs industry, courtesy the Andhra University's strong pharma department and the Andhra Medical College.

The wooing of ITEs/BPO firms is also happening in right earnest. At his recent (and first) meeting with the heads of it units in the state, Chief Minister Y.S. Rajashekhara Reddy, was liberal in his praise for HSBC, which hopes to have 1,500 people by the year-end for its transaction processing and BPO facilities in Vizag. ''I would like to congratulate HSBC for being a pioneer and deciding to locate their BPO in Vishakhapatnam after comparing locations internationally.''

To encourage more players to duplicate the HSBC model, the chief minister told IT/ITEs players that the state was now considering special incentives to companies setting up operations in tier-II cities in the state. According to Colonel M. Vijay Kumar, Director, Software Technology Parks of India, Hyderabad: ''it activity witnessed a pick-up in Vizag post-2000.'' The infrastructure costs are at least half that of Hyderabad (though the costs of key components like power and telecom remain the same). Vizag now has a mini-Hi-Tec City (spread over 2 acres where units can locate their own facility; the first to do that has been HSBC). The grapevine has it that other majors like GE and Adaptec are also looking at the region. The more the merrier.


Traders Thumped

BSE: Budget blues for the brokers

Why exactly were punters unhappy with Chidambaram's transaction tax?

For starters the levy of 15 basis points was well above the market expectations. As the current brokerage cost for most day-traders and arbitrageurs is in the range of 5-10 basis points, the proposed tax trebles costs. Result? Volumes will dry up, as day trading accounts for more than 80 per cent of volumes. That's bad news for all investors, short or long term.

The 0.15 per cent tax is devastating for bonds as gains are very small (usually 10-20 basis points). "A 50 basis point move is big here", explains Rajiv Anand, Head (Investments), at Standard Chartered Mutual Fund. Further, most participants in this segment don't come under capital gains tax-mutual funds are exempt from tax, whilst banks account gains under business income-so Chidambaram's tinkering with those levies means little to them.

 

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