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MARCH 25, 2007
 Cover Story
 BT Special
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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

When Three's Company
Mahindra, Renault and Nissan will share one plant.
Renault’s Ghosn: A win-win deal
Pawan Goenka, president, Automotive Sector, Mahindra & Mahindra (M&M), is a busy man. In addition to developing a successor to the Scorpio, an all-new people carrier called the Ingenio as well as helping the creation of the Mahindra-Renault partnership, he now has to look after the building of an all-new Rs 4,000 crore plant near Chennai. The plant, a direct result of the deal signed by Anand Mahindra, Managing Director, M&M and Carlos Ghosn, CEO, Renault-Nissan in Paris a couple of months ago, will have a capacity of 400,000 units per annum and is expected to produce new Mahindra products, extensions of the Logan product line for Mahindra-Renault as well as Nissan products which could well be aimed at the export markets.

But what about Nissan's deal with Maruti Udyog (MUL)? When Osamu Suzuki, Chairman, Suzuki Motor Corporation, had come down to India recently for the inauguration of MUL's new Manesar plant, he said that the deal to manufacture 50,000 small cars a year from the Manesar plant for Nissan remained intact since that agreement has been signed. But discussions between MUL and Nissan for the Indian company to contract manufacture an additional 250,000 cars a year at a dedicated facility for Nissan fell through. Win some, lose some.

Rock of (All) Ages
They're laughing to the bank after they get old.

DNA’s Vardhan: The show must go on…and on
They say if you remember the sixties, you probably weren't there. Indian audiences are now getting a chance to relive the psychedelic sixties (and seventies)-even those who weren't born then-albeit in less picaresque environs. Over the past couple of years, a rash of geriatric rockers has begun to discover India, the Rolling Stones, Buddy Guy, Mark Knofler (of Dire Straits fame), Deep Purple and Roger Waters (the former muse of Pink Floyd) being just a smattering of names that are riding on the nostalgia wave by belting out hits that were first heard on scratched LP vinyl 35-40 years ago. That's good news for the Indian live events industry, which is currently worth Rs 800 crore, according to a report jointly put out by the Federation of Indian Chambers of Commerce & Industry (FICCI) and PricewaterhouseCoopers (PWC). However, roughly 70 per cent of these revenues accrue from corporate gigs such as product launches, promotions and award ceremonies; only 30 per cent come from ticketed shows. As more rockers line up to prove their matured mettle-an apparently not-yet-rusted Iron Maiden is set to do the honours this month-event managers are counting on more action on the ticketed shows front.

"Entertainment has become an alternative media for brand association today. New technologies, sophisticated lighting systems, elaborate sets and growing awareness amongst the audiences to buy tickets have helped a lot in promoting international events here. All this holds good for the live ticketing events industry which is only expanding for the future," says T. Venkat Vardhan, Managing Director, DNA Networks, which has been responsible for bringing acts like The Rolling Stones, Deep Purple and Roger Waters to India. Adds V. Jairam, a partner with another live events company, OranJuice: "The live events ticketing business in the country is a highly untapped business. Currently, there are four or five live shows that take place in an entire year. For the industry to grow and the for people to get into the habit of buying tickets, there need to be at least 30 shows a year like it is internationally. But unfortunately, we are the only two companies (DNA is the other) today who are seriously promoting live shows. We need more companies to come in and expand the business."

According to Jairam, a lack of knowledge of legalities involved in paying artists and of the international entertainment business coupled with tax implications are some of the reasons for the dearth of players in this sector. Event management (non-ticketed events) seems a less risky option. "We drifted away from ticketed shows and got into brand activation and built our own brands such as the IIFA (Film awards) and F (Fashion) awards. The ticketed show business is still at a very nascent stage. The international ticketing companies are looking to set up shop in India and once this happens we might think about getting back to ticketed shows," says Andre Timmins, Director, Wizcraft, an event management company.

A high entertainment tax that prevails in many states (25 per cent in Mumbai), lack of infrastructure and the inability to get a single-window clearance are the other obstacles to hosting ticketed events. Organisers typically depend on sponsors to bring in 70 per cent of the moolah; ticket sales account for just 30 per cent. As long as the trend of rockers not retiring-or coming out of it-persists, there's hope for the ticketed events sector.

M&A Buzz In Banking
Is Canara Bank wooing Dena Bank?

Six months ago, the public sector Canara Bank unsuccessfully bid for the beleaguered United Western Bank (UWB).

The Bangalore-headquartered bank's interest in the Maharashtra-based UWB was a conscious strategy to expand through the inorganic route in the western region where it has a limited presence. However, it was IDBI Bank that eventually bagged UWB. Within days of that deal, according to banking industry observers, Canara Bank began informal talks with another public sector bank (PSB), the profit-making, Maharashtra-based Dena Bank. Both banks, though, have denied that any such negotiations took place. But that doesn't mean Canara Bank is ruling out the possibility of mergers & acquisitions (M&A). "We would look for synergy-based M&A, with market segments and geographical spread in mind," says M.B.N. Rao, Chairman & Managing Director, Canara Bank. He refuses to elaborate on the regional game plan, and whether the merger candidate will be from either the western or the northern region.

Rao, for his part, has the blessings of Finance Minister P. Chidambaram, who, has been advocating mergers of PSBs to create a clutch of larger banking entities. Two years ago, Bank of India and Union Bank were aggressively exploring merger talks, but opposition from trade unions stalled the merger. With full-blown M&A looking difficult today, alliances appear a more pragmatic way to go about things. For instance, Corporation Bank, Indian Bank and Oriental Bank of Commerce have agreed to jointly work in the areas of products as well as marketing; observers see this as a first step towards a mega-merger in the PSU space.

As for Dena Bank, it fits the part of a likely candidate for merger with a larger bank. The government holding in the bank has already plunged to 51 per cent, leaving no further scope for equity dilution. There are now funding constrains as the capital adequacy ratio is on the border line at 10.62 per cent as against the statutory 9 per cent. Deposit growth has also been sluggish at 13.05 per cent as against credit growth of 25 per cent in the year ended March 2006. Dena's quality of assets also lags behind with net non-performing assets (NPAs) at 3.04 per cent, as against the industry norm of less than a per cent. Shareholders have had little to cheer. Return on capital employed (ROCE) is at rock bottom at 5.98 per cent. Even the once loss-making UCO Bank has a ROCE of 8.65 per cent, while the big boys like hdfc Bank, SBI and ICICI Bank have ROCEs of 17.74 per cent, 16.52 per cent and 14.33 per cent, respectively. On the return on assets (ROA) front, the bank is also languishing, with an ROA of 0.27 per cent. HDFC Bank has an ROA of 1.18 per cent and for Canara Bank it is 1.01 per cent. A merger into a stronger bank might just be what the doctor ordered for Dena, but the stumbling block to a merger would be the unions, as well as the Left parties, which are partners to the UPA government that's in power.