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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

It's Easier Abroad
Why Indian companies are heading to foreign shores in droves.
People protests: One of the reasons why it’s so tough to set up (industrial) units in India
India inc. has struck mega deals worth about $40 billion (Rs 1,76,000 crore) in the first two months of 2007. Outbound M&As (mergers & acquisitions) account for about half of this. But if India is the big story in global boardrooms, and the whole world is coming into India, then why are Indian companies going abroad? There are many answers: for access to new markets, larger manufacturing capacities to grow faster as well as to de-risk business models. But there's also another reason. It's ironic that it is now easier for Indian companies to make billion-dollar-plus acquisitions overseas than invest similar amounts in India to create greenfield capacities. This is because companies seeking to expand or set up new projects within the country are facing various hurdles (land acquisition is the biggest of them). Archaic labour laws, an indifferent bureaucracy, long-drawn and multiple procedures, red tape and the lack of infrastructure are merely some of the problems that companies face. "We are running a Ferrari on bumpy roads. We are growing, but not at the speed at which we should be growing," says R. Gopalakrishnan, Executive Director, Tata Sons, adding: "It's better than in the past, but it's still tough to set up units in this country. You can sign MoUs (memorandums of understanding), but there is little progress after that. Land, water, infrastructure, getting clearances... these are perennial problems that companies face when setting up units." And to top it all, SEZs have now been put on hold.

"We are here for the long term"
Veni, Vedi, Wiki
Is a Crisis Brewing in Wheat?
Bangaloring Bangalore

The Tatas are currently facing problems in Singur, the Salim Group in Nandigram and Hero Honda in Uttaranchal, all over land acquisition. posco, Arcelor-Mittal, Essar Steel and Jindal Steel & Power still haven't been able to start the process of setting up their units in Orissa even after signing MoUs with the state government. Says Nikhil Johari, CFO, Bhushan Steel, which is setting up a 2.2 million-tonne steel plant in the state: "Despite signing an MoU in 2002, we still have to be allocated iron ore mines. We are looking at alternatives like acquiring mines overseas." Time is running out; Bhushan Steel's plant is due to be commissioned in 2008.

Spentex Industries decided to head abroad in order to avoid uncertainty over government policies and to save time and money. Mukund Choudhary, Managing Director, Spentex Industries, says: "We plan to expand through acquisitions rather than through capacity expansions as the former is cheaper and easier." Last year, Spentex acquired Tashkent-To'yetpa Tekstil LLC, an Uzbek textile company. Raw materials, labour and power are cheaper in that country compared to India; this results in a 10 per cent saving. "Today, buying is cheaper than building," says Akhil Jindal, President, Welspun, adding that there's another reason why companies are heading abroad. Indian financiers and banks are reluctant to finance projects that are bigger than the company's balance sheet. "It takes ages to build capacity in India; given the economy's growth trajectory, we can't afford the time lag that comes with building capacity," says Jindal.

This is not to say that domestic capacities are not being added. They are, and several of them are big ticket plans even by global standards. But it's just that India Inc now has an alternative. In 2006, India Inc. made acquisitions worth $9.9 billion (Rs 43,560 crore), compared to $5.4 billion (Rs 23,760 crore) worth of FDI (foreign direct investment). That figure should serve as a wake-up call to the government.

The fortnight's burning question.


No. Gokul Patnaik, Chairman, Global AgriSystem

There will be no inflationary impact due to a further deregulation of the sugar industry. The demand-supply dynamics, which is a function of market forces, will take care of any possible spike in prices, even if some of the commodity is exported. Increased supplies will keep prices in check

No. Ravi Gupta, President (Sugar and Alcohol Business), Bajaj Hindusthan

The timing is just right for decontrolling the commodity. And no, it will definitely not be inflationary as the country has lots of surplus sugar stocks. The decision to decontrol sugar, however, should be based on a long-term policy of freeing the sugar sector from controls rather than on the basis of any short-term agenda.

No. S.L. Jain, Director General, Indian Sugar Mills Association

Prices are a function of demand and supply, which varies according to a variety of seasonal and other factors, not controls. Freeing the industry from levy sugar and free-sale quota will have no effect whatsover on price at which sugar is sold at the retail level.

"We are here for the long term"

Bt's Deepti Khanna Bose conducted an e-mail interview with Francesco Trapani, CEO of Bvlgari, soon after it launched is first flagship store in Mumbai recently. Excerpts:

Why have you chosen to enter Mumbai with a store three years after the one in Delhi? Also, what will the store sell?

We will sell the complete collection of Bvlgari watches, jewellery and accessories. The Mumbai store is opening three years after the one in Delhi because Bvlgari's retail strategy requires very exclusive and distinctive locations. In India, this involves a time-consuming search as there is an absence of a premium retail environment outside five-star hotels.

Who is the Bvlgari woman?

The Bvlgari women have a taste for contemporary objects-with a special love for bold, distinctive designs, fine craftsmanship and the impeccable service that Bvlgari is well known for, regardless of age.

How important is India as a market to you?

We are here for the long term. The Asian market is generally experiencing a rising demand for luxury goods and India, in particular, is a fast-growing market that has responded very well to the international luxury brands that have recently entered. We do not disclose revenues by countries, but we expect India to be one of Bvlgari's key markets in the future.

Veni, Vedi, Wiki

Wikimania Camp in progress in Chennai: It’s all about increasing Wiki’s base
It's one of the world's most popular reference sites. Contributing to this popularity is the fact that Wikipedia is interactive, i.e., it is managed by ordinary netizens, who are at liberty to access material, or contribute write-ups and updates and even take up administrative jobs, all on a pro bono basis.

"I had started a previous net-cyclopedia venture called Newpedia in 1995 that depended on academic contributions and had a top-down approach; it failed," says Jimmy Wales, Founder and Chairman Emeritus of Wikimedia Foundations, a non-profit organisation that started Wikipedia. Wales was in Chennai to attend the Wikimania Camp on February 25. Then, he heard the name "Wiki"-which means quick and fast in Hawaiian-and liked it. In 2001, he launched Wikipedia.

At the camp, there are viewing mattresses, placed in front of the large screen, on which participants are invited to take a nap if they so desire. But, there's an associated danger-there are a good number of smiley balls (soft, yellow foam balls with a smile cartoon drawn in black) available that others can fling at the sleeper.

The camp is being organised to increase the participation base for Wiki, explain to dummies how it works, and explain to code writers the other uses of backend Wiki tools. This is the first time a Wikimania Camp is being held in India.

"The English Wikipedia has 1,656,239 articles (as on February 24, 2007), and about 609 million words-roughly 15 times the number in the next largest English language encyclopedia, Encyclopedia Britannica," says Wikipedian Arun Ramarathnam, who classifies his mission for Wikipedia as "food for his soul". "My day job at Satyam Computer in Bangalore provides food for my stomach," he adds. Wikipedia has 151,934 contributors in English. It is also available in 250 languages and has 5.3 million articles from 282,874 contributors. On a three-month average, 5.78 per cent of internet users visit the site and the percentage is increasing rapidly. The average number of page views per user for is five. Indian contribution to text is rather low, at 1.9 per cent, especially when compared to the traffic generated by way of visits (it ranks # 13). Ramarathnam wants more contributors from India, "as there is such a wealth of information available". A rising user base makes it a better self-propagating engine both for content generation, and for attracting donations.

Open it might be, but you can't make alterations to the text once a copy has been uploaded. You have to post changes on the notice board and these are effected by an "administrator"-who gets to this rank by virtue of his contributions to Wikipedia over a period of time. Nobody gets paid for his or her efforts. "We are contributing to free dissemination of knowledge in a structured manner," says S.N. Sudharsan, a former employee of Infosys Technologies.

"It is a totally democratic set- up," says Ramarathnam. Behind every article are self-governing rules that have been designed to protect the "ethicality" of content and promote credibility.

E-vandalism is kept in check by thousands of Wikipedians worldwide who monitor pages of interest to them. Not everyone wants to write; some people want to join the welcoming committee, welcoming new entrants through instant messaging on signing up. Some take up policing (one can't write, for instance, that Chennai is the best place on earth, though one may believe it is).

What's Wikipedia's business model? "It is a non-profit organisation that works on donations, though we could leverage its brand value better in the future," says Wales. Last year, it spent $1 million (Rs 4.4 crore) on bandwidth, hardware and seven employees. "This year, the expenses will rise to $2-3 million (Rs 8.8-13.2 crore) and we have four months cash in hand," he says, adding: "We have a good thing going." Veni, Vedi, Wiki.

Is a Crisis Brewing in Wheat?

Keep off wheat mandis: Corporates warned
What exactly is the government up to? After banning wheat exports, and then futures trading in the commodity, it has reportedly "warned" corporates to keep off the wheat market. Reason: it ostensibly wants to curb prices and give itself sufficient leeway to meet its procurement target of 15 million tonnes without having to import wheat. BT learns that initially, some companies did resist the "unofficial diktat", but media reports now suggest that some of the bigger players like Adani, AWB, Noble Grain, Glencore and ITC (which buys wheat for its foods division) have decided to remain off wheat mandis this year.

Traders and analysts, alike, feel that the immediate provocation behind the volte-face by corporate procurers is a veiled threat by the government to bring wheat under the Essential Commodities Act. "If this happens, the state will have the right to confiscate wheat from these companies," says Rajni Panicker, Head (Research), Man Financial. Last year, out of a total production of 69.48 million tonnes, corporates had procured only around 2 million tonnes. "Though the actual amount of wheat procured was insignificant, these private players were offering Rs 12-15 more than the government-stipulated minimum support price," says another Delhi-based analyst.

This means the only real losers will be the farmers. So much for the government's concern for their plight.

Bangaloring Bangalore

The cabin of Gaurav Gupta, the recently appointed Special Commissioner for the newly created Bruhat Bangalore Municipal Palike (BBMP), has a retrofitted feel to it-it's made of hardboard and the floor tiles are mismatched-much like the city he has been mandated to manage. Faced with mushrooming growth and an influx of global and domestic corporate majors-and their employees-Bangalore has struggled, vainly, to keep pace with its own growth.

But the administration has, at last, woken up to its sheer size and the challenges of managing this emerging megapolis. The creation of Greater Bangalore may help bring about uniformity in governance across the city and its newly added boroughs, but it is unlikely to improve its infrastructure.

Making available water and power are only two of Gupta's biggest organisational challenges. The Bangalore Water Supply and Sewerage Board will spend Rs 350 crore to expand its network to the new extensions, but according to officials, will be hard-pressed to find enough supply to meet burgeoning demand. The city is also saddled with a power shortage of around 1,500-2,000 mw and the expansion will only further burden the strained grid of the Bangalore Electric Supply Company, the local electricity distribution utility.

"Bangalore has grown much beyond its original limits; this has resulted in several gaps in its civic administration," says Gupta. He points to specific areas such as the collection of property tax in outlying city municipal councils, which was a paltry Rs 40 crore during the last financial year. "This will rise 'three-to-four fold' under the new set-up," he says, adding: "Bangalore's infrastructure is in terrible shape, but we have mapped out a Rs 22,000-crore upgrade plan to fix these problems over the next six years."

The city's road infrastructure, too, needs an urgent fix. Its vehicle population has grown three-fold from nine lakh vehicles in 1996 to over 28 lakh vehicles now, but its road length has increased only 20 per cent during this period, he informs. Now you know why the roads are always clogged.

Some of the finances needed to patch up Bangalore will come from the Jawaharlal Nehru Urban Renewal Mission; the rest will be raised via loans and from other external sources. "We will go to the market to raise money; and will get ourselves credit-rated for this purpose," says Gupta.

Others, however, aren't so bullish, arguing that Bangalore has many other leaks to plug before it can even consider such a move. "The city has grown enormously over the last few years and the municipality has to be able to manage this larger scale of operations," says Kiran Mazumdar-Shaw, Chairperson of Biocon, one of the many iconic knowledge economy majors that call the city their home.

Gupta points out that the management of BBMP will eventually be split into four layers; this decentralisation, he feels, will hasten decision-making. But not everyone is convinced. "The municipal body should be made autonomous so that it can chart, fund and execute its own development programmes," says T.V. Mohandas Pai, Director (HR) at Infosys Technologies, and a bitter critic of Bangalore's administration.

The city, meanwhile, continues, by turn, to hope and despair.


111 villages, one town municipal council and seven city municipal councils integrated into the city.

The size of the city increases from 225 sq. km to 800 sq. km.

The new Bangalore now has 6.8 million inhabitants compared to about 5 million earlier.

The new municipality will have 140 wards compared to 100 wards earlier.

Four-tier governance structure to manage the larger city.

Greater devolution of powers to sub-zones.