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NOVEMBER 5, 2006
 Cover Story
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The Building Boom
Is an asset price bubble building up in the real estate market? Flats in posh Mumbai areas sell at the rate of Rs 50,000-70,000 a sq. ft. and housing plots in Gurgaon are going for Rs 1 lakh a sq. yard. This may sound like music to those who have been clinging on to their assets, it portends danger to buyers. The high real estate prices keep the majority out of the housing market and make the dream of owning a house more distant.


The Learning Curve
India's investment in education-as a percentage of GDP-is lower than not just of countries in the West but also some of the emerging economies, including China. The percentage of population in the relevant age group enrolled in higher education too is the lowest among countries with which it must compete. Clearly, there is a need to scale up substantially the physical infrastructure and attract better faculty by offering market wages.
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Business Today,  October 22, 2006
 
 
A Phone For Rs 1.45 Crore
 
Vertu's Torres: A happy man, indeed

This is yet more proof that India is blipping furiously on the radars of global companies. Vertu, the high-end lifestyle arm of Nokia, chose India for the global launch of its Signature Diamond II Series Collection. The range starts at Rs 2.5 lakh for the most "basic" handset (though it is debatable whether any Vertu phone can be called "basic") and goes right up to Rs 1.45 crore for the über exclusive Boucheron for Vertu, Signature Cobra. The company will only make eight such phones. Says Alberto Torres, President, Vertu, of the limited series phone: "It's unfortunate, but then, you don't want to have products that are easily available."

Premium Bikes Zoom
Google vs Guruji
Sun Shines Again?
Doing It Themselves

Though Vertu is available in about 40 countries worldwide, so far, it only has 18 exclusive Vertu branded stores. "We are planning to open one in India. And three years from now, I'm sure we'll have more than just one store here," he says. Though its India sales are miniscule now, Torres is convinced that the country is, potentially, a very important market. "Things will be very different a few years from now; India will be a very important market for us. It's hard to put a precise number, but I think it will certainly be one of our top-10 markets," he says.

Incidentally, English footballer David Beckham and his wife Victoria also use Vertus. Says Torres: "I feel extremely happy about that. Motorola is also paying David Beckham $10 million (Rs 46 crore) a year; and he and his wife use Vertus, too!"


Premium Bikes Zoom

A leather jacket-clad Pawan K. Munjal was showing off his company's new CBZ Xtreme a few days ago and was promising unmatched performance from this new product. He must have also been hoping that this 150 cc bike will revive his company's fortunes at the higher-end of the market, which is growing faster than the rest of the motorcycle market (see Big Boys Are Growing Bigger). This segment has contributed heavily to Bajaj Auto's revival (the Pulsar is the runaway market leader in this segment; see Bajaj Pulsar Rules This Market) and its fatter profit margins. In fact, motorcycles king Hero Honda is a laggard in this segment.


GOOGLE VS GURUJI

When you type "cracker" on Google, you can expect to get 19,300,000 results in 0.12 seconds on everything from the music band of the same name to computer sites run by geeks who illegally enter networks. At Guruji.com, the search company backed by $7 million (Rs 32.2 crore) in funding from Sequoia Capital (yes, the same guys who funded Google), this search will, instead, give more locally relevant results (414,972 of them) on fire crackers for the upcoming Diwali festival, cracks in the ruling coalition and articles on how to crack the IIT entrance exams (it does not disclose the time taken). "What sets us apart is our focus on the Indian market and the Indian consumer. We have worked very hard to build the best local search product in the market," says Anurag Dod, one of the two founders of the company.


Sun Shines Again?
Server company back on growth path.

Sun's Heraud: Glad to be back on the growth path

It incurred a loss of $864 million (Rs 3,802 crore) on sales of $13.06 billion (Rs 57,464 crore) last year; yet Dennis Heraud, President (Asia Pacific), Sun Microsystems, remains unperturbed. After being hemmed in by Linux at the top end and a Dell-Intel combination in the entry-level server market, Sun is back on the growth path again. Heraud makes it clear that Sun will never be a distribution or a systems integration kind of company. "That is why we invested in R&D. We are now getting the pay-off. Our new products, like Solaris 10, Niagara range of

T 1000 and T 2000 servers as well as X64 architecture-based ones with AMD chips, called the Galaxy range of servers, have been very well received by the market. And we have expanded our share of the server market in the Asia Pacific region," says Heraud. He also points out that IDC ranks Sun #3 in the global server market (after IBM and HP).

There's good news on the Indian front, as well. The Rs 1,400-crore Sun Microsystems India (the company refuses to share revenues by geography) has designated India as a gem (Geographically Established Market). The implication: more top management attention and higher investments. Says Heraud: "With the telecom, banking, retail, financial services and insurance sectors booming, India was a fast growing market for us last year and I expect it to do even better this year." To dispel the notion that Sun servers are for the top end of the market only, the company is devoting attention to the SME market.


Doing It Themselves
Large firms are setting up their own ports.

The resurgence of the manufacturing sector in the Indian economy is mirroring the trend on the exports front, which is growing at 30 per cent annum. In this backdrop, the prevailing congestion at ports is throwing up an opportunity that the private sector is seizing-Mitsubishi is planning to set up a car terminal in Gujarat from where it aims to ship 400,000 cars per annum; Reliance is in the process of identifying a port in Gujarat for bulk shipments; other companies, too, are exploring similar opportunities.

Evidently, the present evacuation capacity at 12 major ports and 187 minor ones are strained at the seams. Also, the productivity at the ports lags global benchmarks. Another constraint in the ports sector is the low draft in the approach channels to Indian ports, owing to which several large vessels bypass Indian ports.

On its part, the government is working on a new model concessionaire agreement to facilitate public private partnership (PPP) in the ports services sector. "We are in the process of consulting various experts," says Secretary (Ports), A.K. Mohapatra. The government expects the current port capacity of 660 million tonnes per annum to more than double to 1.5 billion tonnes by 2013.

With foreign direct investment (FDI) galloping in the first quarter of the fiscal to $2.9 billion (Rs 13,340 crore), more than double the figure recorded during the corresponding period last year, augmenting port capacity has become critical to economic growth.

 

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