BSE: It now has a Ltd sulfix

You could soon trade BSE stocks on the stock exchange. For starters, the Bombay Stock Exchange has renamed itself BSE Ltd and is considering the possibility of listing its shares. BSE CEO Rajnikant Patel told BT that the SEBI (Securities and Exchange Board of India)-prescribed BSE (Corporatisation and Demutualisation) Scheme 2005 envisages a reduction in the stake of the current owners from 100 per cent to 49 per cent. "There could be an offer for sale, an IPO or a sale to a strategic investor. We will take a final decision over the next two to three months," he informs. The exchange is currently owned by a group of stockbrokers.

BSE, Asia's oldest stock exchange, has no outstanding debts and has a paid-up capital of Rs 75 lakh (each share has a face value of Re 1). It was established as The Native Share and Stock Broker Association in 1875 with 300 members. In 1986, it launched the 30-share BSE Sensex, which is considered a barometer for the health of the country's equity markets. And despite ceding its numero uno position to the National Stock Exchange, it remains among the two top stock exchanges in the country (and the most photographed!). More than 4,700 companies are listed on the exchange, which logs an average daily turnover of Rs 3,600 crore. A BSE deposit-based membership costs Rs 95 lakh and its membership roster boasts 800 names. "We have a strong background and corporatisation will gives us greater operational flexibility," says Patel.

-Krishna Gopalan

TCS Goes On A Drug Hunt
The software company's new project involves delivering not codes, but molecules.

TCS's Vidyasagar: Breaking new ground

About four years after Tata Consultancy Services set up its advanced technology centre for life sciences in Hyderabad in anticipation of the bioinformatics boom, the it major is getting to sink its teeth into a very different project. "For the first time for TCS, a project deliverable is not a piece of code, but molecules," says M. Vidyasagar, Executive Vice President (Advanced Technology), TCS. The company's brave new project is courtesy a deal it struck with Congenia, an Italy-based biotech start-up, in June this year after five months of talks. As part of the deal, TCS will provide "advanced fragment-based lead optimisation solutions for drug discovery". In English, that means TCS will run highly sophisticated computer simulations to identify one or more molecules that will bind to-and thus inhibit the action of-a protein in the body called "P66", which is associated with ageing. TCS will also rope in other research labs for offline "wet lab tests". Congenia will take the molecules through animal tests and human trials and, if successful, to the market.

The euro 1.1-million (Rs 5.72 crore) contract is to be executed over 18 months, and marks TCS' entry into the "lead identification and optimisation" market, which accounts for 15 to 18 per cent of the $40 billion (Rs 1,76,000 crore) drug-makers spend on drug discovery annually. A typical drug, according to Vidyasagar, costs between $700 million (Rs 3,080 crore) and $1.2 billion (Rs 5,280 crore) to test and takes eight to 12 years to bring to the market. TCS will be using its own software product, "Bio-Suite", developed under the New Millennium Indian Technology Leadership initiative of CSIR, to screen thousands of potential lead molecules.

At present, Vidyasagar's team comprises just 34 people, of whom 10 have been put on the Congenia project. But if he's able to deliver the goods, TCS' fledgling division may take on a life of its own.

-E. Kumar Sharma

Travails Of The Travel Agent
Direct online selling of airline tickets and wafer-thin margins are killing the agents.

No buyers: The middleman is dying

The domestic aviation market is in full throttle. This year, it is expected to add five million new passengers to last year's 15 million, and continue adding another five million every year for the next five. But this spectacular growth, fuelled by tumbling ticket prices, has brought little cheer to the 2,000-odd travel agents. Says Travel Agents Association of India (TAAI) President Balbir S. Mayal: "The commission on ticket sales has come down from 9 per cent three years ago to 5 per cent. It could come down to nil eventually." When that happens, most of the travel agents will be forced out of business. Currently, 80 per cent of the domestic tickets are sold via travel agents, but low-cost carriers like Air Deccan are fast changing the equation. Half of Air Deccan's ticket sales are direct. Will the agents survive the zero-commission regime? "Air travel sold alone will not help. They will need to be bundled with other services like medical tourism," says Kamal Hingorani, Vice President at Kuoni Academy of Travel. It's a difficult reinvention that not too many of the travel agents will manage.

-Kumarkaushalam

POLICY WATCH
Fiscally Imprudent
The NREGS can derail the government's budgetary estimates.

The Bill is placed: But will it solve their problems

On August 18, 2005, the congress party made history in more sense than one. First, it introduced the populist National Rural Employment Guarantee Bill in the Lok Sabha. Secondly, its President, Sonia Gandhi, made her first speech in Parliament since the party's return to power, lauding the Bill as "the human face of economic reforms that makes economic growth more inclusive and equitable". Thirdly, it promised a job guarantee scheme that was legally binding on the government; earlier schemes were all launched by executive fiat.

The Bill-which seeks to provide 100 days of employment to at least one member of every rural household at a minimum daily wage of Rs 60-holds much promise, claim its advocates. It will help build rural infrastructure, stem the flow of migration to large cities and address the problem of unemployment at the grassroots. This, they maintain, will reduce social tensions and tackle the problem of burgeoning slums in the country. But others say the additional financial outlay will throw budgetary estimates out of gear, sharply increase the fiscal deficit, raise interest rates significantly and hurt the bond market. According to economist Surjit Bhalla, the scheme is likely to push the combined fiscal deficit of the Centre and the states, which is at about 10 per cent of GDP, up by 4-4.5 per cent. "It will sound the death knell for the low interest regime," he says.

The main issue is the absence of reliable statistics on the number of beneficiaries targeted by the scheme; therefore, its cost can't be estimated with any degree of certitude. The Planning Commission says it will cost about Rs 13,000 crore in the inaugural year, when it will be implemented in 200 of the country's 600 districts (it will be expanded to cover all the districts over the next five years). Not everyone agrees with this assessment. Some estimates place the cost in the inaugural year at Rs 40,000 crore. "There will be input costs, insurance and other expenses in addition to the wages," argues Subir Gokarn, Chief Economist at credit rating agency CRISIL. This is not counting the cost of the three-tier administrative machinery that will administer the scheme.

But raising funds is only one part of the problem. Implementation is the other. "Given the quality of our administration, feather bedding-maintaining fake registers of employees-is a real possibility," says Gokarn. Such cases have been reported under the Maharashtra Employment Guarantee Scheme-a state-level job guarantee scheme. Moreover, it is easier to implement such schemes in areas where projects are already underway, than in areas where projects will have to be implemented from scratch. So, the better-off states are likely to gain more than their poorer cousins.

But the biggest question is whether a guaranteed employment scheme can actually be a sound strategy for mass-scale employment generation. "It can only act as a rural safety net in times of emergencies, and can never be a substitute for regular employment," says Gokarn. Real employment is generated only when the corporate sector starts recruiting more workers for its factories. That will happen only when labour reforms-a euphemism for hire and fire policies-are undertaken. The example of the services sector is there for all to see: flexible labour policies have led to the creation of millions of jobs there, and transformed India into the back-office of the world. The prescription for tackling unemployment in the country, therefore, should include more market-driven policies rather than grandiose schemes that can, potentially, create more problems than they solve.

-Ashish Gupta

ROW
A Heavy Metal Scare

Ayurvedic potions: Threat to Big Pharma?

On July 14, 2005, health Canada, the health regulatory agency of Canada, issued a warning to consumers not to use certain ayurvedic medicinal products on health safety grounds. The provocation: a batch of Himalaya Drug Company's Karela Capsule, among other drugs made by different companies, which allegedly breached the permissible lead content of 5 PPM (parts per million). Health Canada also published "a list of unapproved ayurvedic medicinal products... found to contain high levels of lead, mercury and/or arsenic." Big ayurvedic players like Dabur, Hamdard and Zandu Pharmaceuticals were named on the list.

Conspiracy theories started circulating when IIT, Chennai, and Rigaku, a Woodland, Texas-based lab, which carried out tests on the same batch of Karela Capsule samples, found lead content of less than 2 PPM, well within permissible limits. "We are happy that the government has taken up the issue with the Canadian government," says S.K. Mitra, Executive Director (Research & Technical Services), Himalaya Drug.

On August 15, 2005, Britain issued a similar advisory against ayurvedic products. These can seriously impact the prospects of Indian companies, which have carved a niche for themselves in the global market for alternative medicines.

Is this a genuine health scare? Or is it just a one-off incident that's been blown out of proportion? The jury is still out on that.

-E. Kumar Sharma

"Content Creators Will Bloom"

Yahoo! Research's Raghavan: Wants to be the information intermediary

In end-July, Prabhakar Raghavan, 44, took over as the Head of Yahoo! Research. An IIT, Chennai alumnus and a PhD from the University of California at Berkeley, Raghavan is currently editor-in-chief of the "Journal of the ACM", a prestigious peer-reviewed journal published by the Association for Computing Machinery (ACM), and is a consulting professor of computer science at Stanford University. Prior to joining Yahoo!, Raghavan was the Chief Technology Officer at Verity, Inc. and before that he worked for 14 years at IBM's Almaden Research Centre. Raghavan spoke to Anil Padmanabhan in New York on his job and the future direction of change in cyberspace. Excerpts:

What attracted you to this job?

It is an incredible and exhilarating opportunity. The opportunity here is to literally touch billions of lives as they create and consume content. The thought that drove the web was that people are creative and have a desire to publish. The web has now provided the medium to permit this. We want to take this to the next step, where people create content and enrich content. And we at Yahoo! want to be the intermediary that handles information in the marketplace.

What will be your focus as the head of Yahoo! research?

Yahoo! Research's operational strategy lays down five focus areas: Search and Information retrieval; Enhancing the user experience; Large scale distributed computing; Monetising the content that will be collaboratively created on the internet; and, finally Data Mining to improve the experience of 400 million users. The web is growing exponentially; given the finite capacity of individuals to consume information, one can begin to collect that portion of the web and annotate your favourite portion. This begins to give rise to a compelling social media experience that will bring this information into view of a user. Here what we have is the implicit use of a trust network and not the retrieval of information through a simple search by key words.

This week is the 10th anniversary of the Netscape IPO. What is the cyber topography likely to look like in the next 10 years?

For one, there will be the phenomenon of a long tail of content creators-not only will there be a surge in volume, but also in the number of content creators. Secondly, the content will not be static html-it can be a podcast or animation. We will have tools that will make it easier to express and create such content. Thirdly, this content will be more dynamic-a stream of content that is emanating from us. What you have to expect is that as these streams grow, people begin to combine their networks. They could use a digital library of old movies to create their own selection of movies. Hence, you begin to see much more of such social media experiences.

Will the revenue model-pop-up ads etc.-too be redefined in the emerging environment?

The revenue model will move from simply placing advertisements in static search engines. Almost the entire revenue will move to dynamic content. Mindset (at Yahoo! Research) is an interesting experience we put out there. It literally allows you to indicate your mindset. One way of thinking about this is to allow you to control the tone of information-like a knob on a television set is used to flip channels.

At the same time you are aware that there has been a shift from mass media to personal media; that is, where the consumer is making the choice of when he/she reads and what they read. What is the message being spelt out here for content providers?

There is an interesting thing going on here. Let us try and view this in two layers. The editorial function is one of imparting trust. Today there are relatively small numbers of editors doing this. Going forward this function gets distributed over a large population-individuals are free to disseminate information. The second layer is that a billion people do not have time to vet the content, hence there is a role for an intermediary to better filter that content such that people can participate and not be overwhelmed.