A great brand undone by half-hearted marketing and ruthless Korean rivals. That's the story of Sony in India. Although the Japanese consumer electronics giant has been in the country for 10 years, it's a minnow compared to LG and Samsung, which have racked up revenues of Rs 4,500 crore and Rs 4,000 crore, respectively (January-December fiscal year), compared to Sony's Rs 850 crore. According to published figures, Sony claims to have a marketshare of 8 per cent in the 'entertainment systems' category, which includes both audio and video. Now, Sony has decided that it won't make audio systems in India. Instead, products will likely be sourced from Thailand, following the Free-Trade Agreement signed between India and Thailand , where it has a much bigger facility compared to the 2 lakh audio units-a-year plant in Daruhera, Haryana. Will CTVs be next? "No decision has yet been made on CTVs," says Mohit Parashar, General Manager (Audio Visual Systems), Sony India. But unless the company gets its act together, CTVs may inevitably follow the audio line out of India.

-Kushan Mitra

"Organised Crime Is Also Spreading Virus"

The recent spate of internet viruses has hit one company harder than others: Microsoft. Will Poole, VP and Head of the Windows division, spoke to BT's Kushan Mitra on the company's bid (in the form of Windows XP Service Pack 2) to fortify its software against viruses. Excerpts:

What's behind the massive rise of viruses and worms on the internet?

A great deal of malicious code is being written by young kids who want bragging rights inside their circle of friends. (The recent MyDoom virus was created by a 17-year-old boy in Germany.) And recently, there has been a perturbing trend where we are seeing organised crime also start to distribute malicious code over the internet usually as email attachments.

How will Win XP SP2 change all that?

SP2 has some radical changes over previous versions of Windows when it comes to the security front. There are four new levels of protection-starting from fundamentally stronger security settings-the Firewall is enabled when the software is installed. Email attachments on Outlook Express are quarantined if they are non-known types and the program works better with the anti-virus software. The default settings on Internet Explorer are enhanced, preventing malicious ActiveX code from installing itself on your computer. And finally, the fourth improvement has been the modification of the compiler code, which prevent the buffer overruns, which allow these viruses and worms to propagate. If SP2 was available on the market earlier, the massive outbreaks of the past could have been prevented, but we have working to get this on the market as fast as we could.

What is happening on the Longhorn project, the successor to Windows XP?

Frankly, the Longhorn project took a hit in the past few months as a majority of the Windows development team worked on getting SP2 to the market as fast as possible. But, we have made progress and we should have a beta version out by next summer.

Bulking Up On Generics
Indian drug companies line up to sell directly in the US.

Strategy shift: They don't need no distributors

There's a new buzzword doing the rounds of pharma companies in India, and it is "front-end model". Huh? Made popular by industry analysts on Dalal Street, the phrase indicates a significant, albeit riskier, shift in marketing strategy of generics abroad-especially in the "regulated" markets of the US and Europe. So far, most of the big Indian companies have sold generics abroad via distribution partners. Now, they want to build their own sales force to push their products. Ranbaxy and Sun Pharma already do that. Following suit is a bunch of others, including Dr Reddy's Labs, which is working on building a field force in the once it is ready with a specialty product, and Wockhardt, which set up a distribution arm in the US this April to supplement its sales initiatives. Ditto Glenmark and Aurobindo Pharma. The former's US subsidiary won't just market formulations, but file for drug approvals too, while the latter-primarily a bulk drug manufacturer-is gearing up for a generics launch. What's prompting Indian companies to abandon, at least partly, their marketing partners? The fact that the generics market in the US alone is expected to touch $19 billion by 2005, and that there's more money to be made when there's no partner to share the revenues with.

-E. Kumar Sharma

Hyderabad's Techies Come Home
Returning software engineers are easing up the IT job market in Cyberabad.

Satyam's Ravi Gottiparthy: Happy to be back home

I work at the corporate headquarters, head a large team, 'am close to my family and get to spend more time with parents and relatives," says Ravi Gottiparthy. The 37-year-old software professional moved base from Massachusetts in the US to Hyderabad, where he works for Satyam Computers, in June this year and is trying to explain why the move has been good for him. Actually, the move's been good for his employer too. Satyam, for instance, has been hiring, on an average, at least two such tech returnies every quarter for the last three years, and some of the hires have been at the director and senior vice president levels. A.S. Murty, Director & Senior VP (HR) at Satyam, sees this as a growing trend. Says he: "Rise in compensation levels and opportunities to return home along with greater end-to-end responsibilities at workplace are attracting people back." That's benefitting other city companies such as VisualSoft, Infotech Enterprises and ADP, an American firm.

While the growing influx may not have softened compensation (in 1995 a project manager in Hyderabad was earning between Rs 3 and 4 lakh; now the figure is between Rs 12 and Rs 13 lakh) it certainly has improved the quality of talent available in the city. For employers, that's bargain enough.

-E. Kumar Sharma

Weighing In On Lodha
The Birlas launch a new line of attack against the ''outsider'' R.S. Lodha.

R.S. Lodha: In the eye of the storm

The e-mailed press release was short and terse. Issued by a pr firm on behalf of the Birlas on August 17, 2004, it announced that N.G. Khaitan, solicitor, "had filed a petition seeking probate of two mutual and concurrent wills of late M.P. Birla and Late Priyamvada Birla. The mutual wills of 1982 bequeaths (sic) their entire estate to charity." This was preceded by a press conference at which Khaitan released to the media copies of the mutual wills, made on July 13, 1982. He also said it was M.P. Birla's wish that his properties be donated to charity after Priyamvada's death.

While that may well have been the case, a plain reading of the will doesn't say so. The relevant paragraph (Clause 2) says: "Subject to the payment of testamentary expenses and dues of the estate duty...I bequeath all my properties...to my wife Shrimati Priyamvada Devi Birla absolutely and in the event of my wife predeceasing me the executors shall make over and/or donate and/or settle for public charitable purposes my estate as they may think fit...." Priyamvada Birla's "concurrent will" is almost identical.

Lawyers point out that the word "absolutely" in M.P. Birla's will is crucial. It means that his wife became absolute owner of his estate on his demise and was free to do what she wanted with it. "The clause on charity would come into play only if Priyamvada predeceased him," a lawyer points out. Coming to the "concurrent will" that Priyamvada Birla made in 1982, she admittedly did leave her assets to charity by this document, but in the subsequent will of 1999 (which gave her estate to R.S. Lodha), she clearly writes: 'Any will made prior to this date stands cancelled'.

"She was well within her rights to do so," the lawyer points out. Therefore, it follows that she was also within her rights to leave her assets to any person of her choice. "My client is on very strong legal ground," claims Debanjan Mandal, Lodha's solicitor.

The Birlas and their legal advisors obviously know this. So why are they following this line of attack? At the press conference, Khaitan had repeatedly stressed that Priyamvada Birla did not and could not have made the 1999 will. Asked pointedly if he was accusing Lodha of obtaining the will by fraud, he evaded a direct reply. "We'll tell the court what we have to say," he said. There have been subsequent reports of Priyamvada Birla's ill health, her unpredictable behaviour-all pointing to loss of testamentary capacity.

The Birla strategy seems to have short-term and long-term components. First, throw a shroud of doubt and uncertainty over the 1999 will and hope that the court appoints an independent administrator for the M.P. Birla Group. This will deny Lodha the advantage of incumbency and control. The long-term plan seems to be to avoid the uncertainties of the Hindu Succession Act 1956, which will come into play if the 1999 will is set aside by the courts (see Business Today issue dated August 15, 2004). If the court does quash the 1999 will, the previous will (1982) will come into force and its executors-G.P. Birla, Kashi Nath Tapuria, Pradip Kumar Khaitan and any person chosen by them to replace the deceased fourth executor M.P. Birla-will gain control of the estate. The Birla family and its immediate circle will then decide how best to execute M.P. and Priyamvada Birla's desire for charity.

-Arnab Mitra