Maritime policy: Sailing in the right direction

For D.T. Joseph, secretary in the ministry of Shipping, it is redemption time. For 35 long years, as an official with the ministry in different capacities, he has witnessed the gross neglect of this sector, although it carries 95 per cent by volume and 70 per cent by value of the country's total trade. So, within months of assuming the top post at the ministry, Joseph has come out with a draft policy for the maritime sector (ports, shipping and inland water transport) that's being seen as a first of its kind aimed at boosting public and private investments, competition and efficiencies. "If it translates into reality, it will give the sector a positive boost," says A.R. Ramakrishnan, coo, Essar Shipping. Adds Vijay K. Sheth, Managing Director, Great Eastern Shipping: "It is an endeavour to migrate from an issue-based decision-making process to a system-based approach to eradicate delays and discretion."

Ask Carin I. Fischer, Senior Corporate Adviser, Hill and Associates, a maritime security consultancy, and she'll tell you that the policy has the potential to turn ports like Kochi into an international hub, given its efficient container terminals, good rail and road connections, and a strong inland waterway system. What helps? The policy's thrust on multi-modal transport, besides its focus on minor port development and the end to Container Corporation of India's monopoly in hinterland-to-port transport. However, quite a few outdated legislations such as the Coasting Vessels Act 1838 need to be amended. But there's no doubt that winds of change have begun to blow.

-Ashish Gupta

A Number's Game
Pharma firms war over data protection.

In the high-stakes world of pharma, marketing battles actually boil down to the molecular level. It's the discovery of new molecules that better treat a problem (like erectile dysfunction in the case of Pfizer's Viagra) that gets the cash register ringing for its marketer. So, it comes as no surprise that a debate is raging worldwide on protecting the data that companies disclose when they apply for a patent. That protection to such data should be provided is a no brainer and, in fact, nobody's arguing about that. What's a bitter bone of contention, however, is a related question: Just how long should the data protection be provided?

There are two different answers coming from two different camps, which can roughly be divided into one of the innovator and the other of the copycats. The latter, like the Indian Pharmaceutical Alliance (it represents 14-odd Indian drug companies), say that data protection should be only as long as the patent period, which is typically 20 years. The innovators, led by the Pharmaceutical Research and Manufacturers of America, contend that the protection should be extendable beyond the patent life to another five or 10 years.

The conflicting opinions are easily explained. When marketers of a generic drug (which is a cheaper copy of the original patent-expired drug) apply for approvals, they claim ''bioequivalence'', or a similarity in molecular structure to the innovator's product. The benefit is that instead of conducting expensive and time-consuming clinical trials themselves, they simply refer to the latter's submitted data for approval. Extending data protection beyond the patent life would offer the innovator (and not the generic-maker) the opportunity to launch a new version of the drug closer to the date of patent expiry. Says D.G. Shah, Secretary General, IPA: ''The data protection, if granted, will cover even products for which patents have already expired. It would also be applicable to products for which patents were filed before January 1, 1995, and will go beyond India's obligations under the trade-related intellectual property rights.''

Expect to read more of this war in the days to come.

-Ashish Gupta

Room For A Jig
About the Chairman and her dancing shoes.

Jennie Chua: A balancing act

A 60-something grandmom who loves ballroom and Latino dancing, not to mention rock 'n' roll, hardly sounds like the head of a top global luxury hotel chain, right? But within minutes of meeting Jennie Chua, CEO and Chairman of the Raffles group of hotels-the lady was in Mumbai last fortnight to sew up an alliance with the Taj group of hotels-you know here is somebody who does equal justice to both her personal and professional life. The professional part doesn't end at Raffles-Chua is also a director in 32 companies, and also serves on 18 government and community service boards and committees.

Chua has little to complain about gender discrimination or the existence of a glass ceiling. But she will tell you that if a family life is what you hanker for, then tourism should be the last industry on your career horizon. The accolades that keep pouring in might provide some solace perhaps-last year Chua was featured in BusinessWeek's 25 Stars of Asia, the only Singaporean to feature on that list.

She'll tell you she's keen on retiring soon, but she'll also add she's been saying this for the past 10 years now. But it looks like she's pretty serious this time round, as she wants to spend time with the family. "You aren't going to think of your last promotion on your deathbed, it's as simple as that."

-Priyanka Sangani

Public Unity
M&As loom large over the public sector.

On august 12, 2004, petroleum minister Mani Shankar Aiyar stunned the oil world with his grand plan of merging Oil and Natural Gas Corporation, India's biggest exploration and production company, with Bharat Petroleum Corporation and Hindustan Petroleum Corporation Limited, two refining and marketing companies. He also unveiled his plan to unite Indian Oil Corporation, the country's biggest refining and marketing company with Oil India, a smaller exploration company, and ONGC's Assam fields. Both resultant behemoths would be present all along the oil value chain and big enough to take on global competition.

The United Progressive Alliance has, indeed, displayed a trigger-happy bent of mind when it comes to public sector M&As. News of a possible merger between Mahanagar Telephone Nigam Limited and Bharat Sanchar Nigam (two of India's biggest public sector telecom players) has being doing the rounds for some time. As has that of a merger of infrastructure-financing companies such as IL&Fs and IDFC with IDBI, a development institution, and the possible merger of some weak banks with some of the stronger ones. In the manufacturing sector too, there are reports that Steel Authority Of India (India's biggest steel maker in the public sector) is all set to take over IISCO.

The government, it is clear, has woken up to the benefits of scale. "Exploration is a highly capital intensive and risky business and only those companies which have deep pockets can engage in such activities," says Gokul Chaudhri, Partner, Ernst & Young. And M&As in the banking and financial services sector will help companies raise capital, as also meet norms related to capital adequacy and non-performing assets that are rapidly becoming stringent. "While manufacturing sector needs consolidation to grow, for banking and financial services sector, it is a question of survival," says a Mumbai-based banking analyst. And the government seems to be doing its bit towards that objective.

-Supriya Shrinate and Ashish Gupta

RANGE-BOUND
Up, But Not Away

It's an economic truism: any increase in inflation will, sooner than later, result in an increase in interest rates. Today, with the Wholesale Price Index standing at 8.17 per cent (the week ending August 21, 2004), a four-year high, it is but natural that interest rates should inch up.

They have: money market rates are up by a per cent; mortgages major HDFC has already hiked its home loans rate by 25 basis points; and experts predict more increase all around. The yield curve, too, has become steeper. This means the difference between short-term and long-term interest rates has increased, according to Ananda Bhowmick, an analyst at credit rating agency Fitch.

However, this doesn't necessarily mean interest rates will zoom North. Surjit Bhalla, Managing Director, Oxus Research and Investments, reckons they will be headed South shortly. His logic? Lower global growth rates, a cooling off of China's overheated economy, and the consequent lower demand for crude (and the resultant lower inflation). Even commodity prices, he explains, will come down because of the same reason. That could explain why, although inflation is expected to go up to 6.1 to 6.2 per cent in the short-term, it is expected to come down to 3.5 per cent in the long-term. Don't lose any sleep over interest rates yet.

-Ashish Gupta