Royal Classic's Sivaram: On the prowl

Think men's branded apparel wear, and the first names that come to mind would be brands like Van Heusen, Arrow and Park Avenue. Royal Classic Mills wouldn't ring a bell. It soon may, though. Based in Tirupur-the town in Tamil Nadu famous for its knitwear exports-the Rs 225- crore Royal Classic Mills is trying to emerge as a national player through its brands Classic Polo and Smash. Says Executive Director R. Sivaram: "Like most players based out of Tirupur we started out in 1991 as knitwear exporters to international players like Hanes, gap, Grigio, and Kitaro. Exports contribute around Rs 125 crore to our turnover."

To improve margins, Royal Classic decided to venture into branded apparel retailing in 2001. In February 2001, the company launched Classic Polo initially in the tee-shirt segment. Today, it has expanded its portfolio of offerings to include shirts and trousers; sports apparel has just been launched under the same brand, and denim wear is on the anvil. Classic Polo alone is a Rs 35 crore brand at ex-factory prices. The company currently has 23 exclusive outlets and sells through another 1,200 multi-brand outlets across the country.

In July 2004, Royal Classic acquired innerwear brand Smash for an undisclosed price. Now the company is on the prowl again looking to acquire brands in the "Rs 15-20 crore range," says Sivaram. "Our intention is to emerge as a major player in the branded apparel wear segment across the country," he adds.

-Venkatesha Babu

High Cost of the Magic Pill
Big R&D spends of pharma firms may not be enough.

In 2005, the world's 15 big pharma giants-including names such as Pfizer, GSK, Merck, Roche and Novartis-spent a little under $57 billion (Rs 2,56,500 crore) on research & development (R&D), a marginal rise over 2004's $55.65 billion. Back home, for the year ended March 2006, the R&D expenditure of India's top 15 drug majors shot up by 28 per cent. The absolute numbers are, of course, modest: Rs 1,936.5 crore in 2005-06 as against Rs 1,509 crore in the previous year.

In value terms, Ranbaxy and Dr Reddy's Labs lead the way. Ranbaxy topped the list with an R&D expenditure of around Rs 639.4 crore for the year ended December 2005 against the previous year's figure of Rs 400 crore. As a percentage of sales, Ranbaxy's research spend almost doubled from 9.3 in 2004 to 17.8 per cent last year. Other leading R&D spenders include Dr Reddy's (Rs 254 crore last year, though lower than the pervious year's Rs 298 crore), Sun Pharma (Rs 161.5 crore), Cipla (Rs 155.4 crore), Cadila Healthcare (Rs 119 crore), Lupin (Rs 108 crore) and Nicholas Piramal (Rs 91 crore). In terms of R&D spend as a percentage of sales, Dishman Pharma was the most impressive, with that figure leaping from 2.5 to 11.2.

"It's a high risk high return game, which can make or break a company. A failure of a molecule has huge impact on the bottomline, and thereby on the stock price of a company," says Kashyap Pujara, Associate Vice President, Sushil Finance Consultants. That's why a few research-driven companies are hiving off their R&D activities into a separate unit. Recently Sun Pharmaceutical announced such a demerger of its drug discovery and novel drug delivery unit. Dr Reddy's Labs has also roped in ICICI Venture to support risk and litigation-ridden drug research initiatives. The market grapevine also suggests that Ranbaxy could go in for an arrangement on similar lines. Indian pharma firms may lack the financial muscle power of a Pfizer or a Merck (Pfizer spent $7.44 billion, Rs 334.8 crore on R&D last year), but they still need to spend much more on R&D, the low-cost India advantage notwithstanding. The top 15 global pharma behemoths spend 14-15 per cent of sales on R&D every year-on total sales of roughly $300 billion!

-Mahesh Nayak

Desi Diesel
Coming, a small car from an AP machine tool maker.

Lokesh Machine's Rao: Fast gear

A local machine tool-maker rather than the much-touted Volkswagen and bmw could end up giving Andhra its first locally made car-an entry-level diesel car. "In size it will be between the Indica and Santro and will be priced a little less than Indica," says M. Lokeswara Rao, Managing Director, Lokesh Machines. For the project, he has incorporated a separate company, MLR Motors (MLR stands for Mullapudi Lokeswara Rao) with former Hyundai Motor India president B.V.R. Subbu as its Chairman. "Subbu knows about cars, is a marketing wizard and will build his team; I will focus on Lokesh Machines, which will be the ancillary to this company," adds Rao. The total project cost is estimated at Rs 1,200-1,400 crore (equally divided between MLR and Lokesh Machines) and is to be located close to Hyderabad. Rao says 50 per cent of the project cost has been tied up. Funding will be via a mix of contributions from promoters, loans. MLR has the IPR rights to make the car from a "reputed European car-maker." Rao, who along with Subbu is just back from Germany, says the company is now in talks with design houses.

Incorporated in 1983 with 10 employees, Lokesh Machines is a listed company that in the last fiscal posted a net profit of Rs 8 crore on net sales of close to Rs 80 crore. The reason for opting for the auto project now, according to Rao, is that in the last five years, not only has the Hyderabad-based Lokesh Machines increased its machine tool supplies to auto-makers in the country, it has also cemented relationships with auto ancillary units (it supplies CNC or Computer Numerical Control machines to them). Today, 40 per cent of its turnover comes from the Mahindra group and Ashok Leyland. "With this project I am creating a new and major customer for Lokesh," says the 60-year-old Rao, a former HMT employee (he had joined HMT in 1967 and left it in 1975).

State government officials say they are in discussions with the company. Rao says a project like this would take two years to get to production once construction work begins. For a state that couldn't make headway with the much-hyped Volkswagen car project-it got derailed following an alleged financial scandal involving Volkswagen's India representative-Rao might just be able to show how it's done.

-E. Kumar Sharma

Rudra's Killer App
Software claims to slay the virus before it gets into your PC.

Imagine a virus that locks up the files on your pc and then demands a ransom for unlocking them. You're better off just imagining-many users in the West actually woke up one fine day with their PCs flashing ransom notes of a few hundred dollars. Players like Symantec, McAfee, AVG and Sophos, who make up the global $8 billion (Rs 36,800 crore) anti-virus market, have been pulling out all stops to deal with such attacks. But success has been limited. That's because "the anti-virus software available today is reactive rather than proactive,'' says N.S. Basker, Managing Director, Rudra Technologies, a Chennai-based maker of anti-virus software. This means there is always a lag between the time a virus is identified and before an anti-virus software patch can be designed; in between millions of PCs are disabled.

All anti-virus technologies are either signature based or heuristic-and generally a combination of both. The signature-based works by identifying the binary string unique to each virus. The heuristic one locates the programming code typical for certain types of virus propagation. Both have their drawbacks. The heuristic one sometimes does not understand a genuine file. "We have devised a breakthrough technology that kills the malware at the intention level itself,'' explains Basker. A patent is pending for this. This means an intruder with an AK 47 gun (bad intention) is killed at the door before he even gets in. This principle is followed by the Rudra anti-virus software, which straddles the hard disc and the ram and just eliminates/destroys the malware before it gets embedded inside. Therefore, it needs no upgrades and is not concerned about virus identifications.

Just in case you think it is too good to be true, company officials reveal the software, priced around Rs 1,800, has been widely received in Malaysia and adjacent countries and global it majors like Microsoft and hp are in talks for bundling arrangements.

-Nitya Varadarajan