One day in June this year, shortly after star TV announced the second season of its popular game show based on Who Wants to be a Millionaire?, Kaun Banega Crorepati 2, the company's telecom partner Airtel (the service brand of Bharti Tele-Ventures) received 700,000 messages from people who wanted to be on the show. Another television show, Fame Gurukul, this one on Sony Entertainment Television, received 4,000,000 messages over 14 days.

All such messages travel through the networks of India's mobile telcos and, therefore, through air, and if it were physically possible to see them, it will be easy to understand that the air around us is crowded with messages. Some are user-to-user messages, but others are messages sent by viewers in response to a TV programme, those between banks and customers involving routine banking transactions and those involving premium content services being offered by telcos and other content companies, including the download of ringtones, wallpapers, games and the like.

All the latter go through a short code, a three-, four- or five-digit number (sometimes, but rarely, six too) that is different from the nine-digit mobile number used in peer-to-peer messaging and is assigned by the mobile operator. The short code is essentially a number a subscriber uses to download or access an application or content (in industry parlance, it is called application-to-peer messaging).

The short point is this: India is, today, a nation of short codes. Content companies, service firms (such as banks) and the operators themselves are using short codes for promotions, to sell their services, or to simply interact with their viewers or customers as the case may be. By some estimates, there are around 1,500 short codes out there. "There are around 50 million messages a month going out on short code," says a senior executive at Bharti Tele-Ventures. That's 600 million messages out of a total of 13-15 billion messages a year, and at an average of Rs 3 a pop, it adds up to annual revenues of Rs 180 crore, almost half the size of the Rs 400-crore value-added services (vas) market in mobile telephony. "These numbers can easily double in a year," says Kaustuv Ghosh, Country Manager, Mobile 365, a us-based messaging solutions company that has recently set up shop in India. By 2010, the market could be 10 times its current size.

Apart from the government's share (as per licensing agreements, the government gets 15 per cent of the revenue generated by mobile telcos), revenues from short codes are shared between the content owner or service provider (which get to keep 10-35 per cent) and the telco (50-75 per cent; and 85 per cent for its own short code service). Companies entering the business typically get to choose their own codes (in the United Kingdom, for instance, there is a short code management group, an industry body, that does the allotment), and then strike individual deals with operators or hire the services of a technology-provider that serves as an intermediary. The process of configuring a short code across regions could take as much as six months (it usually does less), with the telcos, which control access, calling the shots. That could change if content companies evolve strong short code brands of their own.

-Sahad P.V.

ELSS In Demand
Because investments of up to Rs 1 lakh are now tax free.

Equity linked savings schemes, or ELSS, are suddenly the flavour of the season. Reason: the government has decided that investments of up to Rs 1 lakh per annum in elss will be exempt from income tax. The 2005-06 Budget allows tax exemption for savings of up to Rs 1 lakh in select instruments. The latest decision means individuals can now put the entire corpus of tax-exempted savings into ELSS, turning them, in effect, into tax saver funds. Expectedly, several funds have lined up these schemes to tap the sudden surge in investor interest. In September, Reliance Mutual Fund mobilised nearly Rs 670 crore from its Tax Saver Fund. And last week, Kotak Mutual Fund and Chola Mutual Fund launched their versions of this scheme.

As always, intense competition is benefiting consumers. Almost all the funds are offering free add-ons to differentiate themselves from others. In the process, ironically, all of them are ending up resembling each other. They are offering life covers to go with the ELSS a la the unit linked schemes of insurance companies, popularly known as ULIP. Reliance Mutual Fund's ELSS offers personal accident death insurance with a maximum cover of Rs 5 lakh. Kotak Mutual Fund is offering life cover (for natural or accident deaths) up to twice the investment if that figure is above Rs 1 lakh. For investments of less than Rs 1 lakh, it is offering a life cover equal to the investment in case of natural death and twice the amount in case of accidental death.

Sandesh Kirkire, CEO, Kotak AMC, says: "ELSS schemes give fund managers lots of flexibility, as the money remains locked in for three years." Adds Sameer Kamdar, Country Head (Mutual Fund), Mata Securities: "The rush for ELSS schemes is driven by the tax concession. The insurance cover is just the icing on the cake."

Interestingly, ELSS has-over the last three months, six months and one year-outperformed diversified funds as well as the BSE Sensex. In the last one year, ELSS has given returns of 76.35 per cent on a compounded annualised basis, compared to returns of 64 per cent by diversified equity schemes and 56.5 per cent by the Sensex.

-Mahesh Nayak

How The Tatas Got To Like Logistics

TMIL's Saxena: Hauling it up

For most companies, logistics is a headache best outsourced to a service provider. So it was for Tata Steel, until three years ago, when it turned its logistics arm into a joint venture company with IQ Martrade Holding, a German company. Today, the Rs 206-crore TM International Logistics, which offers everything from chartering to freight forwarding to port management, is beginning to spread its wings both outside the Tata Group, which accounts for half of its revenues, and the country. "We have drawn up plans to get into logistic business in neighbouring countries like Bangladesh, Myanmar, Sri Lanka and Thailand," says S.C. Saxena, Managing Director, TMIL. His target: Touch Rs 1,000 crore in revenues by 2008. The company has earmarked Rs 250 crore in capital expenditure to, among others, expand its fleet from 14 to 20, set up new terminals on the East and West coasts, and develop a minor port. Considering that the largely unorganised logistics industry is $14 billion (Rs 61,600 crore) in size, the Tatas have more than enough room to grow.

-Ritwik Mukherjee

Should We Worry?
What the future holds for India's best and brightest.

IT & ITES
No. The momentum, it would seem, is with Indian IT services firms. Bigger deals, some in Europe, and new streams of revenues should help their cause. "There will be growth from new service lines and new geographies," says Divya Nagarajan, an IT analyst at Mumbai-brokerage Motilal Oswal Securities. Why, companies, according to Alok Misra, Group CFO, Mphasis, are even showing marginal increases in billing rates.

BANKING & FINANCIAL SERVICES
No. Demand for credit (and credit offtake) is at record levels (30 per cent of the amount available to be loaned out), the retail segment is booming, and companies are investing afresh in capacity creation. Not even a slight slowdown in the economy or a major correction in the capital markets will change that, reckon experts. "Credit offtake may go down to 25 per cent. But that is still very good," says Saijal Doshi, Research Analyst, Angel Broking Services. "There is a large aspirational class out there looking at investment opportunities and there will be significant growth for financial services firms," adds H. Srikrishnan, Executive Director, Yes Bank.

AUTO & AUTO COMPONENTS
Not really. The year has been pretty bad for the Indian auto industry with falling demand (courtesy higher fuel rates, for one) hurting the revenues of most players. The coming festive season, when demand usually peaks, could change that. Alpa Shah, an auto analyst at Khandwala Securities, thinks so and proffers growth numbers of 12 per cent for cars and 13-14 per cent for scooters and motorcycles. "I expect the second half to see great growth," adds Rajive Saharia, Deputy General Manager, Honda SIEL. And with capacities coming on stream, auto component firms look set to benefit from the export market.

PHARMA
Yes. Companies may protect their revenues and profits, but growth will come after 2006 when drugs worth some $13.5 billion (Rs 59,400 crore) go off patent in the US. Even then, says Saion Mukherjee, Pharma Analyst, BRICS Securities, "competition in the US may impact growth". "Wait for the next few years", counters G.V. Prasad, CEO, Dr Reddy's Labs, and R&D efforts "will bear fruit".

TELECOMMUNICATIONS
No. A recent report by Citigroup names India as the 'top choice' for growth in the telecom sector in the entire Asia Pacific region. That shouldn't surprise anyone: India's mobile telephony base is set to increase from 65 million to over 75 million in the next six months. Telcos will invest some Rs 20,000 crore over the next five years to grow the business, increase reach and adopt newer technologies. "Costs will be driven lower and along with the addition of more towns to the network, subscriber numbers will grow like never before," says Vikram Mehmi, Managing Director, Idea Cellular.

FAST MOVING CONSUMER GOODS
No. This year's reasonably good monsoon will help and the benefits of GDP growth seem to be percolating down the economic order. "We are approaching a tipping point in disposable income after which spending on FMCGs rises significantly," says Hoshedar Press, Executive Director and President, Godrej Consumer Products, adding that input costs are unlikely to be a cause for concern. Analysts concur. "Volume growth is coupled with value growth as companies have managed to increase prices," adds Nikhil Vohra, Vice President, Research, SSKI.

CONSTRUCTION, ENGINEERING & INFRASTRUCTURE
Occasionally. Infrastructure, or the creation of that, may be this government's theme (as indeed, it was of its predecessor's) and that could explain why companies are as bullish as they are about this sector. "Over the next year, both revenues and profits will grow in the range of 15-20 per cent," says R.N. Mukhija, President, L&T. "There is, however, not too much clarity on most projects with respect to the execution," cautions Jigar Shah, Director, KR Choksey Shares & Securities, referring to the government's one-step-forward-two-half-step-back approach.

STEEL
Yes & No. High prices, and high input costs, remain an area of concern, although a surge in demand, on the back of the boom in construction and infrastructure, could help offset that. "From April this year, demand has grown by 16 per cent and the sector seems poised for take off," says Vikram Amin, Director (Sales & Marketing), Essar Steel. "Integrated players could see their prices falling and only those companies in the processing sector could do well", on account of rising prices of raw materials and an imminent dip in steel prices, counters Rajeev Thakkar, Head (Research), Parag Parikh Financial Advisory Services.

CEMENT
No. The booming construction and infrastructure sectors bode well for cement companies. A report put out by IL&FS Investmart predicts that demand growth for cement will remain steady at over 8 per cent over the next few years. "The demand (growth) in excess of 12 per cent clocked in the 12 months ending June 2005 indicates a strong growth momentum," it adds. Not surprisingly, companies echo this view, although they admit that the spiralling price of crude and its consequent impact on costs is a niggling worry. "Demand will remain robust," says A.K. Jain, Executive Director, ACC. "Profits will be a function of cost and inflation."

ENERGY
Yes. Spiralling oil prices and the future of power sector reforms in India could well decide the prospects of this sector, which is key to a country's economic well-being. "The challenges include fuel supply, power purchase agreements and the overall pace of the restructuring of electricity boards," says S. Ramakrishnan, Executive Director, Tata Power. And the government seems caught in a bind over increasing costs of oil. If it keeps prices of petrol, diesel, and other products at the same level, its energy subsidies will soar (and the profits of oil companies such as IOC, BPCL and HPCL will plummet). If it countenances a rise in prices to reduce subsidies, that could "threaten consumer sentiment", according to a report from research and investment banking outfit, CLSA.

-Kushan Mitra and Krishna Gopalan

Branding The Tea Story
India remains on the fringes of the global branded tea market. But that is changing.

Commodity play: India is still a baby in the branded tea market

India is the biggest tea producer in the world. That's old hat. Darjeeling teas are considered the Koh-i-noor among teas. That's also well known. But we still haven't been able to leverage such strong geographical indicator (GI) patents as Darjeeling, Assam or Nilgiri teas. Result: India remains a commodity nation; branded teas-that's where the real moolah lies-are still largely the monopoly of Western multinationals.

But that is slowly changing. First, it was Tata Tea's £270-million (Rs 1,890-crore then) takeover of UK's Tetley four years ago (it remains the largest global acquisition by an Indian company). Now, Apeejay is set to pluck UK's third biggest tea brand, Premier Foods' Typhoo, in a £90-million (Rs 711-crore) deal. And Tata Tea is again on the prowl, this time in the US. Its target: a ready to drink (RTD) beverage brand.

Once the Typhoo acquisition comes through (an announcement is expected any time), Indian companies will control two of the four biggest tea brands in the UK. Tetley and Typhoo are ranked #3 and #4, respectively. The top two are Unilever's PG Tips and ABF's (Associated British Foods) Twinings. "The continued consolidation of tea enterprises (from plantations upwards) within and outside India means that everyone is now looking at value-adds in this business," says Harish Bijoor, a beverage industry veteran and independent consultant. This means: tea bags, RTD hot & cold teas, specialty teas and, ultimately, tea bars. And all these need strong brands to ride on.

"But we're still nowhere when it comes to value addition in the global tea market," says Percy Siganporia, MD, Tata Tea. He's right. Tata Tea-Tetley and Apeejay (assuming it bags Typhoo) will together control just over 5 per cent of UK's branded tea market. Unilever leads the market with a 15 per cent share, followed by ABF with 4.5 per cent.

So, let's have no illusions-India is not about to overturn the global tea order, not for quite sometime at least. But importantly, we are at least on the road to reclaiming a heritage, which should have been ours to start with.

-Shailesh Dobhal