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APRIL 8, 2007
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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 25, 2007

Hydrocarbon Friction
Did the DGH go easy on defaulting explorers?

The oil & gas exploration business is akin to dining out. Regardless of what you tuck in, you pay for the a la carte order. This philosophy underlines the government's exploration policy-if an explorer does not deliver his committed Minimum Work Programme (MWP) to find oil and gas, the penalty is the cost of the unfinished programme. However, the government's technical arm that oversees implementation of the exploration contracts, the Directorate General of Hydrocarbons (DGH), appears to have adopted a rather generous interpretation of the penalty clause over the last few months, say government officials. The potential loss to the government: $150 million (Rs 660 crore). The gainers: Reliance Industries (RIL) and ONGC, in equal proportion. And, this is just the beginning, for the government has signed as many as 190 contracts, most of them inked after 2001.

On its part, the DGH has stood by its revised claim on the two companies. In the case of RIL, the original claim was for $96 million, when the petroleum major relinquished four blocks without completing its MWP. This was whittled down to $19.5 million, following negotiations between RIL and the DGH. The sharp reduction in the bill was mainly on three counts: First, the cost of drilling a well did not include several costs associated with the operation; second, the drilling depth was less (the deeper the well, the higher the cost); and third, the market rate of the drilling operation was well below the prevailing costs. Around the same time, ONGC relinquished six blocks, for which the DGH had raised a claim of $107 million. The final bill, however, came to a mere $24.5 million, but not before ONGC officials pointed to the practice adopted in the case of RIL.

Interestingly, ONGC, far from rejoicing because of the reduced penalty, shot off a letter to the government early this month, stating discriminatory practices being adopted by the DHG. Its claim: Had all the allowances granted to RIL been allowed, the penalty would have been lower. The lament, however, was part of a larger grouse-the DGH had disallowed a hydrocarbon discovery made by ONGC. In the letter, Chairman and Managing Director R.S. Sharma said that ONGC stock-and thereby its shareholders-took a severe drubbing because of this. The company's market value eroded by Rs 23,527 crore in a span of 11 days. Sharma refused to comment on the issue to BT. The Director General Hydrocarbons V.K. Sibal remains convinced of his actions. "The DGH goes by the production sharing contract, which is sacrosanct for all operators," says Sibal.

The controversy between the DGH and ONGC brings to the fore a larger regulatory issue-the role of the DGH and the government in appraising the exploration programme. Since the government allows cost recovery in cases where the explorer finds commercially extractable hydrocarbons, its technical arm needs to vet the costs, a key role delegated by the government to the DGH. In the instant case, industry experts argue that the DGH has jumped the gun by commenting on the discovery even before the field development and production plan (which follows several test procedures) is put in place; it is only after this is done that the explorer seeks recovery of costs from the field, before finally sharing the hydrocarbon production with the government. The DGH's justification: Such unsubstantiated discoveries lead to speculation.

Clearly, the DGH's role is up for scrutiny-the government (petroleum ministry) is already reviewing the powers that it delegated to the DGH to approve the penalty charges in cases where the MWP remained incomplete. On its part, the government has hardly improved the production sharing contract document over the last decade to ensure clarity in implementing contract issues.

Perhaps, the controversial developments over the last few months could have been avoided had the government agreed to set up a regulator for the exploration business last year. Instead, it chose to have one for only the refining and marketing sector.

Tag and Track
India's first RFID tags maker sniffs out a lucrative opportunity.

Gemini’s Venkat: Rolling out tags
Business opportunity knocks pretty frequently these days on the doors of eager Indian entrepreneurs. One such prospect identified by an Indian company is to make radio frequency identification (RFID) tags, which are popular overseas and are used to track everything from shipping containers to railroad cars to animals. These tags are, however, prohibitively expensive in India, which limits its off-take. One reason for that is that there has been no local manufacturer of RFID tags in India until recently when a company called Gemini TRAZE RFID set up a manufacturing centre to make 100 million RFID tags off Chennai, with an investment of Rs 30 crore.

Even as the first indigenous tags have started rolling out, ceo Pradhyumna T. Venkat is quick to point that the company already has 150 installations to its credit. With the price of the tag coming down from Rs 50 to Rs 10 or even less, this would be poised to replace bar coding in retail outlets, in libraries (to ensure that books don't get stolen), used for document mapping in insurance and banks, government offices (where it is difficult to trace the right document/file), tracking lost assets in companies and in many other applications such as RFID embedded cards and passports with biometric information.

Of course, an RFID tag needs a reader and the investment in this infrastructure ranges from Rs 2 lakh to Rs 40 lakh (depending on the requirement). Venkat feels the tags are worth every rupee. "There will be a visible return on investment in a year," avers Venkat. Will somebody track that statement?