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MARCH 25, 2007
 Cover Story
 BT Special
 Back of the Book

Mobile Security
Today, it is all about information and how the right information is sent to the right people at the right time and right place. Uncertainty about how to secure mobile phones in the face of increasing threats is slowing individual adoption of mobile applications. There are many facets of mobile security, including network intrusion, mobile viruses, spam and mobile phishing. Analysts expect big telecom companies to develop security solutions on various security platforms.

Rough Ride
These are competitive times for the Indian aviation industry. As salaries zoom, players are scrambling to find profits. Even the state-owned Indian is now seeking young airhostesses to take on the competition. It is planning to introduce a voluntary retirement scheme for airhostesses above 40 years. On an average, they draw a salary of Rs 5 lakh a year. The salaries of pilots, too, are soaring. According to industry estimates, the country needs over 3,000 pilots over the next five years.
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Business Today,  March 11, 2007

Low-Cost Anxiety
Delays and cancellations are inevitable.
GoAir’s Wadia: It isn’t a faux pas
One winter storm on Valentine's Day was enough to tarnish the reputation of us low-cost airline major JetBlue. It was forced to cancel a quarter of its flights, leaving thousands of flyers stranded for hours in parked aircraft that couldn't fly; founder and CEO, David Neeleman was quoted in us papers saying he was "humiliated and mortified." Last fortnight Jeh Wadia, Managing Director, GoAir, one of India's many discount airlines that have begun operations in the past couple of years, might have felt something similar. Due to adverse weather conditions, passengers on a GoAir Bangalore-New Delhi flight reached their destinations 18 hours later. The flight that was scheduled to take off at 9:30 p.m. on March 1 did so four hours later only to get back to Bangalore. Finally, the flight took off at 3:30 p.m. on March 2, and reached its destination at 6 p.m.

GoAir has landed with plenty of egg on its face-that a journalist from a news channel was on board didn't help-although its woes can in no way match those of JetBlue; the us discount airline had to cancel 250 flights. Yet, both incidents highlight the improbabilities that travellers take along with them on a low-cost flight. Jeh Wadia attributes the delay to "factors beyond his control," in the main a fog in New Delhi. "Passengers were not in the aircraft for more than four hours." Typically, a full-service airline in such a situation would have offered passengers hotel accommodation and food, thereby curbing their wrath. No-frills airlines don't provide such luxuries, although Wadia points out passengers were provided snacks and refreshments during the delay. Other low-cost service providers, too, are learning how to cope. "We have been in the business for two years and operate 80 flights a day. We ensure that passengers are taken care of if there is a delay," says Siddhanth Sharma, Chairman, SpiceJet.

Plenty At Stake
Indian promoters are shoring up their holdings.

Kumar Mangalam Birla: Raising stake
As the stock markets correct, it couldn't be a better time for Indian promoters to shore up their stakes in their group companies. With almost every domestic business conglomerate acquiring assets overseas, and with global majors eyeing Indian markets like never before, increasing shareholdings is necessary to ward off the threat of takeovers, hostile or otherwise. Recently, Kumar Manglam Birla, Chairman, Aditya Birla group, announced his intention to increase the promoter stake in Hindalco. Birla is expected to scale up his holding by 5 per cent. The company would be considering a preferential issue of equity and equity-linked instruments to hike its stake from the present 26.87 per cent. Before that Mukesh Ambani, Chairman, Reliance Industries (RIL), announced the company would make a preferential allotment to increase his stake in RIL to 55 per cent. In the past one year, the promoters of RIL have increased their stake from 46.67 per cent to 50.62 per cent, by mopping up shares from the secondary market. Last year, the Tatas raised their stake in Tata Steel by 3 per cent to 30 per cent. Sajjan Jindal, Vice Chairman and Managing Director, did the same with JSW Steel when he increased his stake to a comfortable 50 per cent from 45 per cent. Says Arun Kejriwal, a Mumbai-based equity investment analyst and consultant: "When a promoter is seen as consolidating his holding in his own company, it sends a strong signal that he is bullish in his own business or the promoters do so when they are worried about their own holding in their own companies."

Split of Convenience
Kampani and Morgan Stanley have reason to smile-finally.

Nimesh Kampani: Right exit
The sweetest of deals for an investment banker doesn't always involve bringing two partners together, and earning a fat commission on the transaction. Selling one's own stake in a business-when valuations are at peak levels-can prove sweeter. In December 2005, Hemendra Kothari showed the way when he sold 50 per cent in DSP Merrill Lynch for $500 million (Rs 2,250 crore). Last fortnight another veteran deal-maker, Nimesh Kampani snapped his seven-year joint venture with Morgan Stanley, and made a neat killing in the process. Kampani's JM Financial sold its 49 per cent stake in JM Morgan Stanley Securities, the institutional broking business, for an impressive $445 million (Rs 1,970 crore). It bought back Morgan Stanley's 49 per cent holding in investment banking together with other businesses like fixed income, equity broking, wealth management advisory and distribution for $20 million (Rs 88.5 crore). When the deal closes, Kampani will walk away with some $425 million, and a number of businesses for him and his son Vishal to run in the days ahead.

It's a sweet deal because when Kampani struck the JV, his contribution to it was just $20 million. What's more, JM Financial gets to retain 600 of the 700 employees, although the 100-odd who move on to Morgan Stanley will include Joint Managing Directors Ridham Desai and Sanjay Shah.

The institutional business sold to Morgan Stanley accounts for 55 per cent of the total revenues of the joint venture, with the total institutional securities business valued at over $900 million (Rs 3,960 crore). That would also mean Kampani gets $425 million for selling a little over half of the JM Morgan Stanley portfolio, and gets 45 per cent of it for just $20 million.

Those who've worked with Kampani in the past point out that he was open to cashing out since 2002; his plan was always to focus on fee-based income activities like venture capital, private equity and asset management. "Somehow the price was never right, so the deal never went through." Kampani, however, says that "the decision to separate was Morgan Stanley's and the investment bank had been talking of a split for two or three years." It's worked out well in the end for both: One gets a truckload of cash, the other a solo foothold into one of the world's most happening markets.