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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.
More Net Specials

Business Today,  March 11, 2007

Play, Build, Outsource
Now, the global console gaming industry beckons.
Mohan Bhupatiraju: The game is on
It's another lucrative outsourcing market where the twin India advantage of quality resources and lower costs comes into play. Console gaming as an industry is estimated to be worth $42 billion (Rs 1,84,800 crore) globally, with game publishers accounting for roughly $12 billion (Rs 52,800 crore) of that. One game development services company attempting to address that market is the Hyderabad-based Gameshastra. "We are the only company in India with a clear focus to offer a full suite of services-from game development and programming to game art and animation and testing and quality assurance,'' says Prakash Ahuja, CEO, Gameshastra.

Gameshastra has set up facility to seat some 400 people on a two-shift basis. The company currently employs around 180 people and hopes to reach over 400 by the end of 2007 calendar year. "We have allocated $5 million (Rs 22 crore) for the first round of investment and will invest an additional $20 million (Rs 88 crore) by the middle of next year,'' says Ahuja. Gameshastra has a strategic relationship with the us-based Activision-which Mohan Bhupatiraju, Director and co-founder, describes as the second largest gaming company in the world (after Electronic Arts)-and is working with it on multiple projects.

One of the unique features in the company is its console gaming lounge which, according to Bhupatiraju, "has been created to check out the passion of new recruits for games." If you plan to build a game, make sure you play it well first!

Content is King (Kong)
The games have only just begun for FXLabs.

PC gaming: The local content is much in demand now
Want to play games with Hrithik Roshan or Aishwarya Rai? The Hyderabad-based FXLabs Studios, a provider of game development and outsourcing services, has signed an exclusive agreement with Yashraj Film Studios to develop a pc game based on the popular action thriller movie Dhoom 2. At the time of writing FXLabs was close to concluding a deal for another big Bollywood title.

The focus will typically be on action films/thrillers, and FXLabs hopes to get rights for five major films (three from Bollywood and two popular regional films).

The Dhoom 2 game will hit the market in October. "We want to be the top publisher of Indian content and be the first to make games from Indian studios for international markets,'' says Sashi Reddy, founder of FXLabs (he's also the promoter of independent software testing company Applabs).

Reddy has drawn inspiration from the Chinese gaming market, which is largely driven by local content. According to FXLabs CEO Tony Garcia, the Internet Society of China estimates that the country now has 78 million internet users. Of these, an estimated 40 million-more than half-play online games and bulk of these are driven by local content. Overall, 43 per cent of gamers in China play online. Taken as a whole, estimates are that the total video game revenues in China from all sources, including online games, totalled $350 million in 2005. Estimates also project this revenue to grow to $1.5 billion (Rs 6,600 crore) by 2008.

In India, where pc penetration in households is growing at 30 per cent year-on-year, the potential for entertainment software is yet to be exploited. Currently, product offerings in the country are limited to games from the US and other foreign markets with little localised content. This coupled with high prices has made the adoption curve somewhat slow. fxLabs intends to market the games at prices that would be at least 40 per cent lower than those of imported games. "With the Dhoom 2 game, we intend to be a first mover in this potentially huge market. Just like in China we believe that games based on local properties have the best chance of success,'' says Garcia. The promoters of the company have already invested $5 million (Rs 22 crore) in the company (including investments from Suresh Productions, a leading film production company); by March 2008 (at the end of the first year), FXLabs hopes to have revenues of $6 million (Rs 26.4 crore), with $4 million (Rs 17.6 crore) coming from games and the rest from outsourcing projects. The company currently employs 120 people in all and Garcia comes with 25 years experience in the video games business. He has worked with companies like Sega of America and LucasArts and was amongst the founding team of Microsoft's games division, where he spent six years.

After leaving Microsoft, Garcia joined Electronic Arts where he was involved in developing games such as Need For Speed and FIFA Soccer. To be sure, it's not just Bollywood that FXLabs will focus on. Before Dhoom 2, the company will launch its first game called Inferno by April and, by July, a game based on Archie's comics will hit the market. "We hope to release one game every quarter and tie up at least one big property every year for the global market," says Reddy. Surely, the game for him has just begun!

Hidden Treasure
General insurance firms get a shot in the arm.

Kill two birds with one stone. That seems to be the intention behind the government's proposal to insert an enabling provision in the GIBNA (General Insurance Business Nationalisation Act 1972) that will allow the four state-owned general insurance companies to dilute their equity holdings in the market. If this proposal translates into action, these companies, which were nationalised in 1973, get a chance to gain some muscle by roping in public sector banks (PSBs) as strategic partners. At the same time they would have eliminated the possibility of new competition from such PSBs, many of whom are mulling solo forays into the general insurance space. "The new provisions will allow us to go in for a strategic partner or invite public participation through the IPO route," says M.K. Garg , Chairman & Managing Director, United India Insurance Company.

A foothold into the state-owned general insurance sector is clearly attractive for PSBs, what with the four companies-New India Assurance, National Insurance Co, United India Insurance Co, and Oriental Insurance Co-raking in an annual premium of almost Rs 15,000 crore (see A Peek Into the Goldmine). The insurance companies for their part will get an opportunity to leverage the banks' pan-India networks. "We will get access to branch infrastructure of banks and they will get an entry into the fastest growing non-life insurance business," says Garg.

According to market estimates, the value of each state-owned general insurance company is well over Rs 10,000 crore if you take a multiple of three over the gross annual premium underwritten. However, these companies are slowly but surely losing share to new private sector players. In the last six years, the nine-odd private sector players have cornered close to a fourth of the market.

Different Roads
When there's Maharashtra and TN, why go to Singur?

Anand Mahindra: Heading south
Mahindra & Mahindra (M&M) clearly loves Chennai. The group first came to Chennai with Ford (the joint venture is now defunct) in 1995, many years later it set up India's first special economic zone (SEZ) just off the state capital, its time share resorts business is headquartered in Chennai, and a development centre of Tech Mahindra is located here. So, perhaps it wasn't surprising when last fortnight the troika of M&M, Nissan and Renault announced that their Rs 4,000 crore car factory would be located in Chennai. Before the M&M-Nissan-Renault venture, a number of other auto majors had zeroed in on Tamil Nadu. These include BMW (investment committed: Rs 180 crore), Hindustan Motors in a technical collaboration with Mitsubishi (Rs 320 crore), and Hyundai (Rs 4,300 crore), while Ford's investments are set to touch Rs 3,000 crore. Yet, Maharashtra has been more successful in attracting auto makers. A Tata-Fiat JV (with Rs 4,000 crore of investment), General Motors (Rs 1,400 crore), Volkswagen (Rs 1,400 crore), Skoda (Rs 250 crore) and Mahindra's commercial vehicle venture with International Truck & Engine Corp (Rs 2,500 crore) are all coming up in the western state.

So with Maharashtra and Chennai attracting most auto makers, you have to wonder why are the Tatas hell-bent on putting up their Rs 1,500 crore mini-car project in Singur in West Bengal, where land acquisition is proving to be a nightmare? Says Debasis Ray, Head, Corporate Communications, Tata Motors: "Like other states where we could have set up the plant, the West Bengal government too decided to provide land to be acquired by the government and match the incentives. The state government was keen on the project because of the rapid industrialisation effect it would bring about." But wouldn't building a plant in a proven auto hub be more hassle-free?

Pulp Traction
Coke is set to roll out its orange juice drink, Minute Maid.

Driven by the growth of modern trade and proximity to its manufacturing base, Coca-Cola picked Hyderabad recently to launch its popular orange juice drink "Minute Maid'' in India. It begins its national rollout with the south. Coke is currently busy targeting 13 million young adults in the three southern states of Andhra Pradesh, Karnataka and Tamil Nadu to whom it plans to give away 5.5 lakh bottles. The drink is to be bottled at the company's plant at Chittoor in Andhra Pradesh. For Coca-Cola, Andhra Pradesh is among the top three states in the country in terms of revenues. The other two are Punjab and Delhi, perhaps not in that order. The fruit pulp is being imported from Florida and the juice concentrate from Brazil (though there are plans to locally source the fruit). The plan now is to make the juice available through 25,000 outlets in the three states in the first two months. Minute Maid will be available in pet packs of 400 ml and 1 litre, priced at Rs 25 and Rs 60 respectively.

Packaged juices market is valued at Rs 1,000 crore and forms 10 per cent of the total juice market in India. Minute Maid would have to take on brands like Tropicana, and Real Activ in the Indian market. Globally, the brand is well established, having been launched in 1945 before Coke acquired it in 1960. Says Venkatesh Kini, Vice President (Marketing), Coca-Cola India: "The USP is that it is the first juice drink (to be launched in India) with a real orange pulp. So, unlike most juices the taste is that of both the juice and the pulp.'' And that's no pulp fiction.