Dance bars: Cheap but lucrative

The art of imposing a ban" is certainly a title Maharashtra's Deputy Chief Minister R.R. Patil should never attempt writing. His heroic attempt to restore Mumbai's morality by shutting down its 1,250 or so dance bars appears to have come a cropper due to a small technical snag. It apparently escaped Patil's attention that the "dance performance licence" issued to establishments is the same across five-star hotels, discos and pubs, exclusive membership clubs and just about every establishment where its members are likely to shake a leg. Fortuitously for Mumbai's bar owners, they are covered under the same licence. That discovery has, at least for the moment, put paid to Patil's attempts, meaning that this peculiar entertainment industry is back to business.

Just how big is it? Apparently, some 75,000 dance girls and 300,000 male employees work in these bars. According to Pravin Agarwal, owner of the Ellora Bar in suburban Borivali and Vice President of the Fight for Rights of Bar Owners Association, a trade association, the dance bars are divided into three categories. "In the uppermost class, each dance bar would make about Rs 50,000 per night on liquor sales and about Rs 1 lakh per night on the dancers, while in the lower-most category, it would be about Rs 5,000 per night on liquor and the dancers would collect about Rs 10,000," Agarwal reckons. The Honorary President of the Bhartiya Bar Girls Union, Varsha Kale, estimates that each bar grosses anywhere between Rs 25,000 and Rs 1 lakh per night (a lucky one, however, made Rs 93 lakh when a gentleman called Telgi paid it a visit not too long ago).

So, assuming conservative takings of Rs 50,000 per night for the 1,250 dance bars, the industry should be pulling in more than Rs 2,281 crore per annum. The number of bars has been doubling every year since 1988 up until this year, according to Kale, but Agarwal feels that things are beginning to slow. "We are not likely to see the boom of 1996-99 again," he says. Maybe, but the show will go on.

-Priya Srinivasan

ODD
Subrata Roy's Curious Case

Sahara's Roy: Mysterious illness

He was last seen in public on April 1, when he paid a visit to Sahara Group's prestigious, but white elephant, Amby Valley project. Since then, though, bizarre stories have been emanating about the state of health of Sahara Parivar supremo, Subrata Roy. One has it that he's grievously unwell, while another attributes his sudden disappearance from public life to a debilitating heart ailment. To add to the confusion, somebody in Allahabad filed a habeas corpus with the local court, claiming that Roy was being held captive by his wife and colleagues, who were plotting to transfer Sahara's assets out of the country. While a statement issued in the name of Subrata Roy called the allegations "extremely painful, false and highly defamatory" and explained his public absence ("I am under the treatment of doctors, who have advised me complete rest," it said) the buzz refuses to die down. Maybe its time Roy bought some airtime on his own television channel.

-Kumarkaushalam

CAG On Overdrive
Is the state auditor being overzealous?

The Comptroller and Auditor General HQ: Courting controversy constantly

The past fortnight has seen the comptroller & auditor General (CAG), the government's auditor, kick up controversy over three different issues: One, it has hauled up auto companies for not passing on the excise duty cuts to consumers; two, it has accused a clutch of pharma companies, including Cipla and Nicholas Piramal, of claiming excessive deductions for R&D expenses; and three, more famously, it has found fault with the valuations in disinvestment of the Centaur hotels at Juhu and the airport in Mumbai. Arun Shourie, the then disinvestment minister on whose watch the hotels were sold, has already made known what he thinks of the CAG's valuation skills: "idiotic". We'll refrain from going further into the Centaur issue, since it has been written about extensively in the recent days. Instead, we'll look at CAG and why controversy is its constant companion. One problem with CAG, most government ministries will tell you straight off, is that it works in glorious isolation. There is no system of discussion with secretaries to the government, or with the heads of departments before the audit report is finalised. That leaves a yawning gap in the report, with the concerned department invariably challenging the conclusions made. As a result, the main purpose of audit-improvement of administrative set-up and the systems and procedure-takes a back seat. Instead, the CAG gets into slanging matches with the departments it audits. The battles get worse when the department or the issue concerned is economic or scientific, because-CAG's critics say-it doesn't have the necessary skills to audit them.

That's likely the case, but there's no denying the fact that CAG is stressed. While the quantum and complexity of government dealings have increased manifold, CAG's headcount hasn't increased in proportion. Besides, and possibly the greater justification for CAG's paranoia, given the corruption in Indian bureaucracy, the chief auditor probably needs to be a muckraker.

-Ashish Gupta

Is TRAI Playing Favourites?
GSM operators cry foul over proposed allocation of additional spectrum to CDMA rivals.

TRAI's Baijal: CDMA-friendly?

The Telecom Regulatory Authority of India's (TRAI's) 142-page recommendations on spectrum issues (including a provision for more spectrum to CDMA operators in their 800-mhz band space within a month) have, as anticipated, rival GSM operators crying foul. "TRAI is making CDMA operators (led by Reliance Infocomm) enter the 3g space via the backdoor," fumes T.V. Ramachandran, Director General, Cellular Operators Association of India (COAI). TRAI's Chairman, Pradeep Baijal, however, is unfazed by the accusations. "An issue is being made out of something that is not there in the recommendations," he says.

The GSM lobby's fear boils down to two points: One, operators like Bharti have reached a point where they need additional spectrum to grow their subscriber base. Two, an early allocation of extra spectrum to CDMA operators will allow them to launch 3g services within a month via the Evolution Data Only (EVDO) technology and thus gain a headstart in the most anticipated revolution in the telecom industry. The GSM players (who currently operate in 900 mhz and 1,800 mhz) would have to wait until the imt-2000 spectrum is made available to them-and that could take until 2007.

TRAI has recommended that imt-2000 (3g) in the 2-ghz band (currently held by defence forces) should be made available to both CDMA and GSM operators. As for CDMA operators' demand for 1,900 mhz (a frequency band that CDMA operators use internationally), TRAI notes that the armed forces would not be able to give it up. The current fight is happening because spectrum is a scarce resource, and whoever corners the lion's share of it in effect ensures future growth at the cost of competing technologies. Ratan Tata, Tata Group Chairman, has suggested that the spectrum be allotted to the operators who agree to pay the highest revenue share, besides a licence fee (of around Rs 1,500 crore per operator on an all-India basis). Tata's suggestion doesn't have too many supporters, simply because, the industry fears, such a system would jack up operating costs, making 3g unviable.

With TRAI recommending that efforts be made to move in the direction of technology-neutral spectrum allocation (which basically means allotting spectrum without regard to the unique needs of the two competing technologies), the fight over spectrum is far from over.

-Kumarkaushalam

BUSINESS ON THE EDGE
Phones That Do More
Why Nokia's head of multimedia is bullish on his firm's new phones.

Nokia's Vanjoki: Ngaging India

The photograph on this page is one reason. It was taken on one of the company's new N-series phones, you see, transferred to a computer using Bluetooth, and then, on to the page. The thing about this particular phone, apart from a swivel-screen a la a digital camcorder, and still and video cameras is that it has a Carl Zeiss lens, and a resolution of 2 Megapixel. That's the highest yet on a camera phone, and it involved a superior quality lens (that's where Zeiss comes in), a 2-Megapixel sensor, and some tweaking in the associated software. There are prototypes of camera phones that boast 5-Megapixel, even 7-Megapixel resolution, but as Nokia's head of multimedia explains, you can put a camera with 10-Megapixel resolution on the phone and still achieve nothing. Reason? The lens and sensor that would be required to translate this into a true 10-Megapixel resolution would make the phone big, as big as, say, a decent-sized Neal Stephenson book.

"This is truly high-quality," says Ansii Vanjoki, the aforementioned head of multimedia of Nokia (his designation reads Executive Vice President & General Manager, Multimedia, and Member of the Nokia Group Executive Board). The man is in India, like other members, to attend a meeting of the executive board, the company's way of doffing its hat to the Indian market (one of the most attractive markets in the world for a handset and equipment manufacturer like Nokia). "It is almost professional quality; you can hardly make out the difference," he adds.

Vanjoki, a biker with two bikes, a Harley and a Triumph (pictures of both are on his phone) is convinced that this year, 2005, or the beginning of 2006 will finally see telephony becoming just another function of a mobile phone. "It is still the primary function, but that will soon change," he laughs. People have already started buying phones on the basis of applications rather than telephony, claims Vanjoki. It could be calendar or e-mail applications for some, music for others, and photography for still others. He offers the example of the UK's Rock Entertainment, which recently announced that it would forge relationships with major movie studios to offer movies on disposable memory cards for phones, as one instance of the world going the multimedia phone way.

After a not-so-hot 2004, Nokia seems to have recovered, with first quarter profits (January-March 2005) up 18 per cent and sales, 17 per cent. Much of the company's troubles revolved around its tardiness in launching clamshell phones at a time when the world was moving towards them; it doesn't want to repeat the mistake with multimedia. Being at the vanguard of this revolution (as Vanjoki describes it) isn't just a function of technology and marketing; it requires an understanding of everything from psychology to biology. For instance, the Ngage, Nokia's gaming phone, revolves around the premise of "social computing". "It isn't a solo-player device like the new PSP," he says, referring to Sony's PlayStationPortable.

Nokia's own research would seem to suggest that consumers are moving rapidly towards function-rich phones; the success of these phones, like Nokia's N-series ones, however, would also depend on the operating environment. For instance, the n91 comes with a 4-gb hard disk and can serve as a music player (like the photography thing, the company has invested in improving the quality of sound). However, its success depends on mobile telephony service providers offering music downloads as a value-added service. Indian telcos, says Vanjoki, are ready to offer such services. Unlike the US, he adds, the Indian mobile telephony market had leapfrogged several stages to arrive at the edge.

The BT 50 Index
The market is gaining in strength.

The market appears finally convinced of the sustainability of corporate earnings, and as confirmation, the BT 50 moved up by 12.44 points (5.27 per cent) in the last fortnight. A rally by the beaten-down pharma (BT Pharma index moved up by 5.37 per cent) and banking (BT BFI has moved up by 6.24 per cent) firms also helped. And with international oil prices on the descent (it has gone below the $48 or Rs 2,112 per barrel mark), this trend is expected to continue for some more time.

Our flagship free float methodology-based index-BT 50-has completed two years now. The free float methodology has several advantages: first, it considers only the value of stocks freely available in the market (after excluding the part held by promoters and other strategic investors) and the weightage assigned to individual shares is more representative than the market capitalisation-based methodology; second, it takes care of the perpetual selection dilemma regarding closely-held companies. For instance, the inclusion of these companies may distort the index based on total market capitalisation methodology, but dropping them altogether may reduce its representative character. The free float methodology facilitates inclusion of large closely-held companies but assigns them a lesser weightage. After the success of our broad market free float index (that the Sensex subsequently decided to adopt this is testimony to the efficacy of the free float method), we decided to launch sector indices using the same method. While the general index captures the overall movements (covering several sectors), sector indices capture the movements in individual sectors. All these indices have a common base period (January 1, 2002). The weightages are reassigned every quarter after companies declare their ownership details. The base value of all BT indices is 100.

-Narendra Nathan