BS interview with GR Gopinath

An excellent interview in Business Standard with Air Deccan's chief GR Gopinath on what he wants the government to do.

He makes perfect sense. The government has to improve infrastructure in small towns so that people can fly across. The time wasted in travelling from one place to another place in India is atrocious. And the cost of flying is such that flights are beyond the reach of most businesspeople.

I would like to be in a position to fly from Chennai to Salem, Tanjavur, Nagarkovil and so on, all at a cost lower than or comparable to 2nd AC in trains. Perhaps at a level of 3rd AC?

The time I save will be extremely useful. Also, the time it takes me to travel to the airport and the delays in the airporty should be reasonable and not unduly high. I have travelled to the airports in Madurai, Trichy and Coimbatore (besides of course Chennai). There is nothing one can do now in moving these places around. However at least the airports proposed in other medium sized towns should be at a reasonable distance. Landing gear with thatched roof airports - good enough, provided they are safe from possible fire accidents.

Maybe all these things will happen within the next 5 years?

India Post seeks return to monopoly on letters

The Financial Express, in a shocking story titled India Post seeks return to monopoly on letters says that the Government is looking at giving the Indian Postal Service a monopoly in carrying letters, and restrict the courier companies from carrying anything below a certain weight.

This, if true, must be condemned. Though the postal charges are lower than what the courier companies charge, courier companies offer certain additional services. For example,

1. They come and pick up the letters and parcels from our office every day. Would the Indian postal service give a damn? You have to go and stand in a queue in front of their overcrowded counters and swallow abuses from irresponsible staff.
2. You get credit period ranging up to a month and consolidated billing. With the Indian Postal Service, you have to pay money upfront and in small changes too. If you do not have the right change, off you go, find the change required and come back and stand in the queue once again.
3. The courier company offers online tracking where required and even offers extended services such as stuffing the letters into the covers and sticking the address outside, if you are planning to send 20,000 letters. All you have to do is provide them 20,000 addresses in an electronic file.
4. Special safety precaution. Credit card companies and few others use designated courier companies whose staff carefully examine your identity proof before giving you the credit card package or PIN number covers. The Indian Postal Service has no such comparable service.

It would help if the Government stops messing around with the things that work well.

That said, my businesses still use the postal service where it is convenient. Let me decide what I want. Let the Government not tell me who I should or should not use.

The fight for the media space

Bennett, Coleman & Co Ltd. (BCCL) are the most dominant player in the print media space. With their spearhead The Times of India, the largest circulated English daily in the India (and the world as well), BCCL command massive readership and a good chunk of the advertising revenue. Besides the TOI, they also have in their stable The Economic Times, the largest circulated business daily, Navbharat Times - a Hindi daily, Maharashtra Times - a Marathi daily, Filmfare - a movie magazine and Femina - a woman's magazine.

BCCL forayed into television in the early 90s and then gave up. Perhaps, they never thought at that time that the television world will grow to become a monster. In the 90s, television groups such as Subash Chandra's Zee TV and Murdoch's Star established themselves strongly. The television commanded much larger viewerships and slowly larger and larger revenue than the print media.

Another print media player India Today Group, primarily into magazines (India Today, Business Today etc.) forayed into an afternoon newspaper in Delhi and set up news television channels Aaj Tak (Hindi) and Headline News (English).

BCCL in the meantime established a stronger presence on the Internet with its indiatimes.com. No other established media player has a comparable online presence. Further to that, BCCL forayed into mobile space and established a very strong brand in 8888 - an SMS short code through which mobile phone users query and get information.

BCCL were missing television and so recently have started a television company. The first channel from them is Zoom, an entertainment channel (and pretty boring at that, at least for me). Soon enough there will be news channels, business channels and so on. Mediaah!, a blog specialising in media related news hinted last week that Reuters are looking at taking a 26% stake in this television venture, and also that Sunil Lulla (of MTV and later Sony) will head the venture. Subsequent to that BCCL sent Mediaah! a lawyer notice. But the same story has today appeared in The Business Standard.

In the meantime Zee Group which tottered for a while is looking at launching an English language newspaper, in partnership with Dainik Bhaskar. [This news was also initially highlighted first in Mediaah!, so if you are a media watcher, you would do better to follow Mediaah! first!]

Murdoch, because of the foreign ownership laws in India, cannot easily launch newspapers or magazines. In fact, even a television news channel is difficult and he had to go through several rounds of creative law breaking in establishing Star News (in which Star only holds a minority 24%).

Therefore the ground is now open for BCCL and Zee to fight it out on who will be the largest and most important integrated media player in India. BCCL are ahead in new media - mobile and Internet. Zee have no presence whatsoever and fairly clueless in these two areas. Their earlier forays included starting an ISP, which flopped bigtime. Zee's online content is also abysmal. As with everyone Zee also have a four-digit short code (which I cannot even recall). But this is not sufficient to take on BCCL's Indiatimes and 8888. Zee's Chairman and majority shareholder Subash Chandra has been chopping and changing his chief executives. With that kind of attitude, you cannot build a business. However his latest hire is Pradeep Guha from The Times of India.

On the otherhand, BCCL has a massive task ahead in even making their presence known in the television world. A news channel is an obvious choice, but NDTV is way ahead here in English, while Aaj Tak is ruling the Hindi. In business news section CNBC TV18 is number 1, while even NDTV Profit is struggling to keep pace. So the next few months will be interesting to watch as these groups battle it out for supremacy.

Public Expenditure Round Table

Are you concerned about what our Government does with the money that we pay them as taxes? Do you want to understand how the Government functions in the areas of budget making, long term fiscal planning etc. and then sticking to the goals set during such process? Public Expenditure Round Table is a trust set up to look at some of these issues.

The web site we have set up is very preliminary. So bear with us while we work on this over time.

You are also invited to the Fourth Ambirajan Memorial Lecture slated for tomorrow (Wednesday, 16th February 2005) at Image auditorium in Chennai. The lecture will be given by Dr. Raja Chelliah, Chairman, Madras School of Economics on the topic: "The Malady of Fiscal Imbalance: The Impossible Quadrangle"

Aircel's 49% up for grabs

Russia's Sistema in deal to pick up 49% in Aircel- The Economic Times

Hutch had offered to buy Aircel for about Rs. 1,600 crores, but the deal got embroiled in regulatory mess. Informed sources say that Sivasankaran was too close to Jayalalitha (which I am not so sure about), and Dayanidhi Maran wanted to scuttle this deal. Such rumours always exist, but the reality may be something more complex.

Anyway, today's news items across multiple newspapers indicate that Russian company Sistema is offering to pick up 49% stake. Idea Cellular is also keen to buy Aircel. In case of Idea it will be a complete outright purchase as they have no footprint in Tamil Nadu. Hutch won't anymore get involved with Aircel.

The telecom consolidation in India cannot happen without smooth regulatory cooperation. With the FDI limit in telecom having been taken to 74% (with due security provisions, we are told), despite Left protesting vehemently, more investment from abroad is likely. But such investment will be wasted if the sector cannot be consolidated into 5 or so players. Tatas should exit Idea as soon as possible to facilitate Malaysian Telekom taking a lead in pushing Idea forward. I guess AV Birla group is unclear about whether to continue holding stakes in Idea or offload them.

Groups like Spice Telecom (Karnataka, Punjab), BPL (Tamil Nadu minus Chennai, Mumbai, Maharashtra minus Mumbai, Kerala) and a few other teeny weeny players should exit the market after getting a decent return on their investment. They cannot grow and cannot offer quality services on their own.

China's Lenovo - IBM PC deal

China's Lenovo announced that it was acquiring IBM's loss making PC unit on 8th December 2004.

The deal is far from complete as US Govt. is currently examining its national secutiry interests, before giving its permission to this deal. One of the key reasons is that China's Lenovo group is predominantly owned by the Chinese Government.

US Govt. has a few deals in place with IBM, and is hence worried about the involvement of Chinese Govt. in its deals. US is also worried about key hi-tech knowledge going to Chinese.

It is not clear whether the deal will be derailed because of these US concerns. IBM has a lot to gain as well from the deal, as the way the deal is structured allows IBM about 19% stake in the combined PC business of Lenovo-IBM. Lenovo has a 25% market share in the growing Chinese PC sales and with IBM's own market share, the combined market share will be at least 31% to start with.

Now, if for some reason, the IBM-Lenovo deal is scuppered by the US Govt., would any of the Indian companies Wipro or HCL be interested in stepping in acquiring the business? Wipro or HCL will not have the same stigma as a Chinese Govt. owned Lenovo, and may not attract the same regulatory worries.

Lenovo wanted to aggressively pursue a growth strategy which takes itself to North America and Europe. IBM, while a fairly well known brand, is however way behind market leaders such as Dell or HP. HP's position in PC market share was achieved post merger with Compaq. Dell is an aggressive direct-to-customer seller, eschewing all channel based sales. IBM, with a higher price tag for what is essentially a commodity couldn't sustain in such a cut-throat market. What can Lenovo hope to achieve from such a deal? For one thing, it can aggressively bring the price down and match the others. It can obtain access to good technology. It can achieve production scales by managing the production entirely out of China, while basing its sales and service operation headquartered out of USA.

Indian companies Wipro or HCL cannot simply match Lenovo at this stage in scales of production. However, the demands for PC in India will grow significantly. Today, the most significant market share is held by grey market operators put together - about 65%. HCL, Wipro and Zenith complete with HP, IBM and now Dell for the organized PC market share.

More than Wipro or HCL, would IBM be interested in a deal with either of these Indian companies?

TV companies in the news

Videocon to buy Thomson's CPT manufacturing unit in Italy while Mirc Electronics may get to sell TVs through Wal-mart, if all goes well with the testing.

Both Videocon and Mirc (makers of Onida) are homegrown Indian companies. With the failure of BPL in managing their finances properly, it will be left to these two to handle the onslaught of the Korean Chaebols - LG and Samsung.

Bandwidth as a competitor to Microsoft

Mike via Rajesh Jain

Interesting idea about how with the increasing bandwidth availability to the end user, one needn't have a desktop at all, but a remote terminal - either completely dumb peripheral, ie., just a screen, keyboard, mouse and network connectivity or all of that with a bit of local processing power and local storage - running an OS from a remote machine, running applications from remote machines and storing data either remotely or locally or in both the places.

I use Windows XP. Over the last week, I was affected by some virus despite XP service pack 2, Norton Anti-virus with uptodate patches, a firewall, Firefox & Thunderbird (and not IE and other dirty mail clients) etc. I had to completely reinstall everything and preserve my data. Cut & paste did not work, copy or move across folders did not work. Safe mode didn't work. Even if I had a CD writer in my laptop (which I do not have) it wouldn't have helped.

Linux came to my rescue. I could boot my machine with my Linux partition, mount the windows NTFS as a drive, transfer the data over the network to another machine with a DVD write, then recover my laptop. Atleast the IBM laptops come up with a one button factory recovery module. Thereafter, I had to upgrade the system from service patches, anti-virus updates, hundreds of utilities that I use (from Murasu Anjal Pro onwards) and what not. Then restore my mail folders.

I could do most of this in a single day. Very few can.

Mike's model could work very well for such folks.

I was also thinking about another model. The problem with the current Microsoft OS is that the OS kernel, the application programs and a darn thing called registry, along with user data resides in the same disk with complete read/write access. This is how virus spreads. Trojans galore.

Instead, if the OS and application along with startup parameters (aka registry) are stored in a read-only CD which is created in a carefully maintained machine and booting is always from this CD, viruses can be controlled considerably. Any user data affected by the viruses can at best only destroy the user data. It cannot affect the OS, the applications etc. It may quite be possible to manage the integrity of the user data. At least one can have multiple backups and cleanup will be possible.

This user data could be a in the form of proper hard drive or a flash memory (which are fast going towards 1 GB in a USB), or a CD/DVD RW. Then, I can walk around with just two CDs, or one CD-R (or DVD-R) and another CD-RW/DVD-RW and use anybody's computer (if the cybercafe' wallah allows me) and convert that into my desktop temporarily.

I will boot with my CD/DVD, get my desktop environment and my set of applications, my own data and do the necessary computing and move on.

The need for the above is because in a place like India, affordable, high bandwidth is still years away.

Anil or Mukesh? Tehelka-TNS poll

The latest issue of Tehelka (subscription required) has an opinion poll conducted by TNS on who the stockbrokers trust more - Anil or Mukesh Ambani.

Contrary to my own feelings, most stockbrokers have chosen Mukesh Ambani on a whole range of questions. The gist of the poll is

• Mukesh is more trustworthy
• Mukesh is more competent
• Mother Kokilaben cannot resolve the problems between the brothers
• If the assets have to be split between the brothers, Mukesh should get more than Anil
• Both the brothers are still professionally ethical (now, how is this possible?)
• Anil is to be entirely blamed for the current fiasco
• Anil is personally motivated rather than his supposed concern for professional ethics
• Anil's company (Samajwadi party folks like Amar Singh, Amitabh Bachchan?) is bad
• Ego, rather than money driving the rift
• Board of directors of the RIL are clean
• This shouldn't be happening now - too soon after father's death

I have sold my Reliance stocks completely. I have lots of worries on the manner in which Reliance Infocomm was created and even the business practices of Infocomm. The sad thing is, institutional investors and the board of directors do not seem to have any worries whatsoever in this regard. Now stockbrokers indicate they find no problems either.

Roadblock TV Program - first of its kind for India

When Doordarshan was the only television channel in India, programs like Chitrahar and Mahabharat or Ramayan attracted every television watching audience in one channel. I can also remember 'World This Week' by Prannoy Roy.

Then Cable TV happened, channels multiplied and audience fragmented.

TV channels unite as one for Tsunami cause

On 6th and 12th February, news channels and Hindi entertainment channels (respectively) are coming together to broadcast a single program, with same ads across all, to generate money for the Prime Minister's National Relief Fund.

It would be an interesting experience for the mainstream Indian television viewer. The Tamil viewer still has his Sun TV to Win TV showing local fare.