Co-owned by Paris-based Accor Group and Carlson Companies of the US, Carlson Wagonlit is the world's second-largest travel management company with $11.5 billion (Rs 50,600 crore) in annual sales. Recently, the company's coo for Asia Pacific, Berthold Trenkel, was in India. He spoke to BT's Kushan Mitra on the booming travel business. Excerpts:

How much has the Indian corporate travel market grown since 2001?

Indian corporates are travelling a lot more now, especially abroad. In fact, last year over 70 per cent of our revenue, which totalled Rs 615 crore, came from international bookings. This year we expect to do over Rs 850 crore worth of bookings in India. Overall, in Asia-Pacific, our revenues touched $1 billion (Rs 4,400 crore) last year, close to 40 per cent growth, but a lot of that was also due to a post-SARS rebound in travel. India is currently Asia's fourth largest market after Japan, China and Australia.

I am sure a lot of your revenues come from MNCs based out of India.

Not true. While we are the travel agency of record for many large multinationals like GE, last year 60 per cent of our revenues came from local companies. We handle the travel requirements of many large Indian corporates such as Infosys, Wipro, Satyam and L&T. And while MNCs see a lot of inbound travel, Indian companies do a lot of outbound travel. As these companies get more international business, they will travel more.

How is your model different from that of other travel agencies?

We don't work on a commission basis, which means we charge a fixed fee for each booking or hotel reservation and not take 5 per cent off the top of every air ticket. That means we will try and sell the lowest possible fare. Plus, we encourage firms that travel a lot to have fixed deals with airlines and then we become the intermediary between them.

How will low-cost air travel impact corporate India?

Well, in India unlike in Europe or South-East Asia, these low-cost carriers fly between major cities. It's not like Ryanair flying to Frankfurt-Hahn, which is 70 km from downtown, or Asian LCCs (low-cost carriers) flying to tourist destinations. However, it is still too early to say what impact it will have, because there have been problems with cancellations and delays, and they have very restrictive fares and low frequency. Corporates need flexibility with travel. You can't do that with one or two flights a day between Delhi and Mumbai.

Own Your Own Plane
Can't afford one? No problem. Just buy a part of it.

Club One Air's Singh: He'll have you jetting around

Another airline? Groan. But this one's different. Because you will actually own (partially, at least) the aircraft you're flying in. How? Buying a jet costs the earth: $4-20 million (Rs 17.6-88 crore), depending on whether it's pre-owned or brand new. Then, there's the monthly maintenance bill of Rs 25-40 lakh.

But what if you could buy fractional ownership in a jet at a fifth or a sixth of these amounts? That's what Manav Singh, Managing Director, Club One Air, plans to offer. "People don't have to spend crores buying and maintaining a jet; we will be their asset managers," he says. The deal is simple. "You pay a certain amount, say Rs 5-6 crore, to buy a share in a plane and a few lakhs every month for maintenance. Since the costs are shared, it becomes that much more affordable," he adds.

In return, you get 160 hours a year in a luxury seven-seater business jet (a Citation II or Citation XL), which can fly non-stop to anywhere in the country. All you have to pay for is the cost of fuel-around Rs 50,000 an hour. "In the long run, it is cheaper for a company to buy this rather than charter a small jet at Rs 1.85 lakh an hour," says Singh, who already has a fleet of three aircraft (Citation jets). He plans to acquire another two before he begins operations in late August. His total investment: Rs 75 crore. Singh is thinking big-he hopes to have a fleet of 30 such jets by the end of next year. But he concedes that making money in the aviation business is tough. "I don't think I'll be making money until I have a fleet of at least 50 aircraft, and that is still a few years away." Maybe, but the progress of this airline will be interesting to watch.

-Kushan Bitra

Win Some, Lose Some
TCS' merger with TIL brings operational synergies, but at the cost of profit margins.

TCS' Ramadorai: Moving up the value chain

Tata consultancy services, the country's largest it company, recently announced the merger of another Tata Group company, Tata Infotech Limited (TIL), with itself. The swap ratio: 1:2 (or one share of TCS for every two TIL shares held). Says S. Ramadorai, CEO and MD of TCS: "The merger brings strong synergies for TCS. Tata Infotech has a significant presence in the systems integration space and counts several Fortune 500 companies as clients. The combined entity can now offer them end-to-end solutions. TCS also gets a trained team of 3,600 professionals from Tata Infotech. The merger will lead to greater efficiencies, particularly in marketing."

Market analysts seem willing to buy that argument but caution that the merger could impact TCS' margins, both at the operating and net levels. "The merger will add Rs 79.8 crore to TCS' bottom line, but its margins will suffer. If we add the 2004-05 profits of the two companies, TCS' net margin reduces from 21.1 per cent to 19.9 per cent. This will take time to correct as TIL's margins are considerably lower than those of TCS," says Harit Shah, software sector analyst at Quantum Information Services. Given the flat topline (q-o-q) growth in the last quarter of 2004-05 and a marginally better 4.83 per cent sales growth (according to US GAAP) in the first quarter of the current fiscal, this can be cause for worry. "TCS can offset the impact of the lower margins by improving operational efficiencies, getting higher billing rates through better execution of fixed price projects (FPPs) and improving its business mix in favour of high-end services like consulting and enterprise business solutions," says Shah, adding: "TIL's strength in high-end systems integration will help TCS move up the value chain; and the acquisition will help TCS become an end-to-end services provider."

As they say, you win some and lose some.

-Priya Srinivasan

POACHING
ADAE's Bharti Fixation

Anil Dhirubhai Ambani Enterprises (ADAE) is raiding Bharti Tele-ventures' human resource pool. Following in the footsteps of Jai Menon, who joined ADAE last month as Head of IT, Rajeev Batra (Chief Architect, Corporate IT and Technology, at Bharti) joined ADAE as Vice President (IT and Technology). Debabrata Chowdhury, Chief Technology Officer (Enterprise Services), Bharti, also jumped ship and joined Anil Ambani as Vice President (Technology Development). Besides, Nalini Gupta, Chief Products and Marketing Officer at Bharti, has joined Ambani's office as Marketing Advisor.

Telecom industry officials point out that the Big 3-Bharti, Hutch and Reliance-have the best talent in the industry. "So it is logical for them to poach from one another," they say. This game has been on for a while. Elder brother Mukesh (when he was Chairman of Reliance Infocomm) had poached Atul Jhamb, the current head of Reliance Infocomm's Mumbai and Maharashtra circles, and Inder Bajaj, head of the post-paid business, from Bharti.

-Krishna Gopalan

A Perfect 10
Hindi news channel pioneer turns 10.

Aaj Tak, India's number one news channel, completes 10 years at the helm of television news business this month. Born as a 20-minute news capsule on Doordarshan, Aaj Tak had an enormously successful run on the state-owned channel between 1995 and 2000, when it went on to become India's first 24-hour Hindi news channel. "People told us that television news would never work, as audience is only interested in entertainment not infotainment," recalls G. Krishnan, CEO of TV Today, the company that runs Aaj Tak (and Headlines Today), on the challenges that the channel faced back in 2000.

But aggressive, objective and engaging news reporting in street-lingo Hindi made Aaj Tak, now a Business Superbrand, a hit with audiences, advertisers and cable operators within just six months of launch. That helped it stay right at the top even as the market for 24-hour news exploded and competition came in from all kinds of players. Says Krishnan: "Apart from maintaining our viewership lead, we still have more than a fifth of the entire genre revenues." The genre rakes in Rs 600 crore in annual advertising revenues.

Aaj Tak has lived with 'Sabse Tez' (which in popular Hindi means, the fastest) as a defining philosophy, not just a tag line. "At Aaj Tak, our aim has always been to capture the changing face of India in the fastest, most imaginative, memorable and accurate manner. This aim nurtures fearless journalism and an uncompromising commitment to integrity of news coverage. And we are proud to have maintained this attitude for 10 years now. This is a great occasion to celebrate as well as to renew our commitment to higher levels of achievement for Aaj Tak," says Aroon Purie, Chairman and Managing Director of TV Today.

Calling India
Global telecom OEMs are flocking to India.

All tuned in: MNCs are all ears

To say that India is a massive market for telecom equipment vendors is to state the obvious. Manufacturers of every hue want a piece of the action. And the decision by BSNL (Bharat Sanchar Nigam Ltd) to float a $5-billion (Rs 22,000-crore) tender for GSM equipment has only heightened that interest. Chinese major Huawei, for instance, is seriously considering a manufacturing facility in either Bangalore or Gurgaon. "We plan to invest over $100 million (Rs 440 crore) over the next three years on a local manufacturing facility and will also expand our R&D centre in Bangalore," says Ram Dev Sharma, Head (Product Marketing), Huawei Telecommunications India. Ericsson, which has had a switching equipment manufacturing facility in Rajasthan since 1993, has now started manufacturing GSM radio base stations (RBS) here. This is its fourth RBS manufacturing facility worldwide; the earlier ones are in Sweden, China and Brazil.

But French major Alcatel's deal with the public sector ITI Ltd is perhaps the most significant pointer to growing multinational interest in India. Says Ravi Sharma, President, Alactel (South Asia): "We will transfer base station manufacturing technology to ITI; it will then make these at its Mankapur plant in up." Also on the anvil is a plan to manufacture mobile switching exchanges in India. The company has not yet decided on a location for this unit. The total investment: euro 500 million (Rs 2,625 crore) in India over the next five years. Sharma, however, clarifies that this should not be viewed as a direct investment but as an investment in technology. It's still early days. More action is expected in the telecom equipment space in the short to medium term.

-Krishna Gopalan