Legal battles loom large on telecom sector
Mahindra BT to nurse startups
Mantra dumps Leo Burnett, opts for Percept
Mid-Day to come out with Rs 50-cr maiden offer
KLG Systel inks pact for expansion in West Asia
Holograms: Fakes can’t flatter

 
 
LEGAL BATTLES LOOM LARGE ON TELECOM SECTOR 
 
 
FROM M RAJENDRAN
 
New Delhi, Dec 31: 
The slugfest is just about to begin in the telecom sector. There are two prizefights on the card — the first pits the consumers and the government and the second is a face-off between the cellular operators and the Bharat Sanchar Nigam Ltd (BSNL), the state-owned entity that covers telephone circles all over the country except Delhi and Mumbai.

The casus belli is over the guidelines for the issue of the fourth licence in basic telephony circles.Two consumer service organisations are planning to go to court to oppose the government’s move to permit the issue of a fourth basic service licence but without the right to offer limited mobility. Limited mobility has been a serious bone of contention between cellular operators, who have entered into a revenue-sharing arrangement with the government, and basic service providers who are not being asked to enter into a similar arrangement.

Cellular operators argue that this militates against the principle of fair play and have already drawn up papers to be filed before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT). Appeals against the orders of the appellate tribunal can be made only to the Supreme Court.

“We cannot allow the private companies to dictate the terms and service that we should get. Worldwide, it is the consumers who set the parameters and not the service providers. The government and the Telecom Regulatory Authority of India seem to have turned a blind eye to whatever the private operators offer to consumers.

If the TDSAT does not do justice to consumers, we will not hesitate to take the issue to the Supreme Court. We are examining the issue and we will finalise our stand by next week,” said Shanti Narayan, president of Telecom Watchdog. Another consumer service organisation plans to file a public interest litigation against the government in the Delhi high court. “We know that the issue has to be taken up at TDSAT.

But we have a issue which not only concerns the telecom sector but is entangled with other issues that do not fall within the preview of TDSAT,” said an official who did not wish to be named until the case was filed. Until now, not a single case has been filed at TDSAT.

Cellular operators have also prepared the necessary groundwork to seek arbitration if BSNL or any other fixed telecom licensee is allowed to offer mobile service using a wireless in local loop (WiLL) system without a cellular licence.

The threat by cellular operators could jeopardise BSNL and fixed telephone operator’s proposal to offer mobile services at Rs 1.20 paise per three minute call.

The consumer, it seems, will have to wait longer for a low-cost mobile service since BSNL and basic operators claim that mobility is an automatic part of their licence agreement — a contention that the cellular operators vehemently oppose.

The Telecom Regulatory Authority of India is expected to give its recommendations on the issue of limited mobility before January 5, the date set by Department of Telecommunications for the announcement of the guidelines for the fourth basic service operator.

Communications minister Ram Vilas Paswan has sought a few changes in the guidelines for the fourth basic service operator.

Sources in Telecom Commission said, “We have more or less finalised the guidelines, but the communications minister wants to make a few changes.

He has already pointed out the changes and we will have a meeting on Monday to finalise the details.”

   

 
 
MAHINDRA BT TO NURSE STARTUPS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 31: 
Mahindra British Telecom (MBT), the infotech joint venture between auto major Mahindra & Mahindra and UK-based British Telecom, will take on a new role as an incubator for start-ups. It will also hand-hold the entrepreneurial ventures of its employees.

MBT’s decision coincides with its public issue which is slated for the new year. The software major will finance such activities through a combination of equity and cash.

It plans to earmark funds for these ventures from internal resources and the proceeds from its public issue.

Analysts say, the strategy to don the garb of a venture capitalist is in line with the changing trend among global infotech majors to retain talent within the organisation.

Through this strategy, the company intends to gain access to new markets, customers and technologies through strategic alliances, joint ventures and acquisitions.

MBT is raising capital to partly cover the ongoing capital expenditure requirements and meet a portion of the incremental working capital requirements of the company.

The company’s expansion plans include the creation of additional seating capacity at its Sharda Centre facility at Pune, creation of additional capacity at an adjoining location at Pune, and the creation of additional seating capacity at Chandivali, Mumbai. The company also plans to set up a new software development centre at Bangalore.

The company proposes to acquire a building measuring 20,000 square feet to create facilities to seat approximately 200 people at Bangalore.

Historically, a significant part of the company’s business has been contributed by British Telecom (BT). This relationship with BT has enabled the company to develop expertise in the telecom software services domain.

The company’s revenues from BT represented 75 per cent of its income in financial year 2000. In addition to BT, the company has approximately 32 customers in the US and Europe, of which 15 are telecom service providers and telecom technology providers and others include internet and e-business system companies. Initially, the Mahindras and BT held 60 per cent and 40 per cent respectively of the issued and paid-up equity share capital of the company.

However, subsequent to an agreement dated August 24, 2000 with BT, the company issued and allotted 50,52,635 fresh equity shares of Rs 2 each to BT on a preferential basis. Thus, after the allotment of such shares, MITS and BT presently hold 57 per cent and 43 per cent respectively of the issued and paid up equity share capital of the company.

Telecom software is a key business segment for the company and accounted for 95 per cent of its income in financial year 2000. The company believes that telecom software will continue to be its key business segment in the future.

   

 
 
MANTRA DUMPS LEO BURNETT, OPTS FOR PERCEPT 
 
 
FROM ELLA DATTA
 
New Delhi, Dec 31: 
Mantra Online is parking its entire Rs 20 crore advertising account with Percept.

The move comes three months after the internet service provider split its account between Leo Burnett and Percept.

However, the internet service provider has now dumped Leo Burnett, an agency that ranks 12th in India, and opted for Percept which is a much smaller agency.

Leo Burnett used to handle the account dealing with the access side of the business while Percept was entrusted with the portal account and the corporate identity.

The access side of the business deals with individual connections, corporate servicing and network solutions.

A spokesperson for Mantra Online said Percept seemed to be geared up to the special challenges posed by internet in creating campaigns.

It needs a different perspective and Percept appears to have equipped its team with the right orientation.

The spokesperson did not divulge the details of campaigns on the anvil. However, he said an innovative campaign for the portal will be launched. soon

The internet service provider has also tied up with Archie’s for a novel promotional campaign.

An internet connection can be gifted through Archie’s retail stores for values ranging from Rs 150 upwards.

   

 
 
MID-DAY TO COME OUT WITH RS 50-CR MAIDEN OFFER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 31: 
Mid-Day Multimedia Limited (MML) is poised to tap the primary market with a maiden Rs 50 crore equity issue shortly, which will be the first for a newspaper group.

The newspaper group which publishes the city’s leading eveninger Mid-Day has recently filed a draft prospectus with the Securities and Exchange Board of India (Sebi). According to the draft prospectus, a portion of the funds will be invested to set a call centre and also kick start its Marathi edition of Mid-Day.

The issue is being made through the 90 per cent book building scheme. Not more than 60 per cent of the issue size (Rs 30 crore) shall be available for allocation on a discretionary basis to institutional investors and not less than 15 per cent of the issue size (Rs 7.50 crore) shall be available for allocation on a proportionate basis to non-institutional investors.

The remaining 15 per cent (Rs 7.50 crore) of the issue shall be available for allocation on a proportionate basis to retail investors.

To facilitate the public issue, the board of directors of MML have increased the authorised capital of the company from Rs 32 crore to Rs 40 crore divided into four crore equity shares of Rs 10 each, based on the authority granted by the shareholders of the company.

MML also plans to use a part of the proceeds to expand its city-based portal Chalo Mumbai and enter newer areas.

The lead managers to the issue are Triumph international and ILFS Ltd.

According to the draft prospectus filed with apex markets regulator, MML will also use the proceeds to expand its internet business and invest in enabling and support services.

The proposed Marathi edition will entail an investment of Rs 4 crore. MML’s plans to develop and expand Chalo Mumbai for which a budget of Rs 6.20 crore has been earmarked, the prospectus revealed.

“The internet offers Mid-Day an opportunity to take its multimedia agenda forward as well as leverage existing competencies and strengths,” the draft prospectus said.

The recently launched, Chalomumbai.com is a city portal that delivers news and information about Mumbai with a high degree of interactivity.

While news and city information will come from the group’s already existing information archives and daily content generation activity, revenue will accrue by leveraging the existing relationship with advertisers in Mumbai (who use the group’s other products extensively) and e-commerce.

   

 
 
KLG SYSTEL INKS PACT FOR EXPANSION IN WEST ASIA 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Dec 31: 
KLG Systel has signed a memorandum of understanding with Emirates Technology Company (EMITAC).

As part of the understanding, the two companies will pursue project opportunities in the areas of CAD, CAM, CAE, ERP, project management and e-commerce.

Detailing the focus areas for the joint venture with EMITAC, Kumud Goel, managing director KLG Systel said, “The pact with EMITAC is a significant development as it provides KLG Systel with an established partner to assist it in its expansion drive into the West Asian market.”

He added, “The market is growing at a fast pace and we are confident that we will be able to combine EMITAC’s existing network in West Asia with our domain expertise and core capabilities in the areas of plant design, project management, process optimisation and supply chain logistics to capture a dominant share of the IT market in countries such as Saudi Arabia, Qatar, Kuwait, Oman, Yemen and the UAE.”

Under the agreement, both companies will leverage core capabilities and domain expertise of KLG Systel and EMITAC’s on-the-ground expertise in West Asia and its large re-seller network for computer hardware, software and medical and test measuring products and services.

KLG Systel has undertaken several projects in countries such as the UAE, Oman and Qatar, Commenting on the pact with KLG Systel, N. Ram Mohan, group general manager, Emirates Technology Co said, “We are confident that the strategic alliance will enable us to capture a dominant share of the growing IT software market in the UAE, which is estimated to be in the region of $ 350-400 million.”

Internal estimates at KLG indicate that the company has an 80 per cent market share of the Indian organisation design market, with leading domestic companies such as Bhel, NTPC, L&T and Tisco as customers.

The software solutions offered by KLG for design and engineering analysis include process and organisation simulation, piping, vessels and heat exchanges, structural steel electricals and instrumentation.

   

 
 
HOLOGRAMS: FAKES CAN’T FLATTER 
 
 
FROM RAJA GHOSHAL
 
New Delhi, Dec 31: 
Laser locks for brand busters. That just about sums up holograms. Imitation may be the best form of flattery, but there are too many of them around for firms and customers to feel safe.

For those challenged by fakes, holograms are genuine answers. They help companies outwit brand bandits who pillage their way to wealth, but cheat customers and deprive world trade millions of dollars that should have been added to the tally.

A product of the ‘laser optics’ technology, a hologram is a visual medium of providing a high-potential image in three-dimensional (3-D) format. The image is recognised instantly, but one cannot have it photographed or photocopied.

In India though, the manufacturing and marketing of holograms is a nascent business. Uday Gupta, managing director of Holostik India, the largest local player, says there was hardly a market when he started off eight years ago. But, it has evolved with time, more so in the past year. Pharmaceutical firms have now made holograms mandatory.

Industry sources put the size of the hologram market at Rs 40-50 crore. Holostik, with a turnover of over Rs 12 crore, is the leader. Alpha Lasertek, Laser Securities and Shri Ram Holographics, all based in Delhi, also have their fingers in the pie. Parmacel Private operates out of Mumbai.

According to Rajinder Singh Dhurji, head of production and product development at Alpha Lasertek, the demand for holograms outstrips supply because the high cost of technology limits the business to the handful of companies which can afford it.

A mastering lab where customised holographic solutions and designs are created costs Rs 2 crore. G.S Dhillon, managing director of Lasertek, says the smaller players are converting shops at best, replicating holograms made in mastering labs.

In terms of process, there are broadly two ways of imprinting holograms. In the ‘continuous’ process, it is imprinted along with production, for instance on medicine strips or photo reels, as they roll out during production. In the ‘manual’ system, holograms pasted like stickers on products.

In art holograms, the artwork is imposed on plates and shot with a laser. In case of paper documents, holograms are hot-stamped onto paper. Dhillon, who boasts of a Rs 1.6-crore turnover, counts Escorts, Yamaha, Coats India and Rajasthan Transport as his major clients.

Last year, Holostik bagged an order for 1 billion holograms from Tamil Nadu’s excise department. It has another order for 90 million, worth Rs 6 crore, this year. The department is using the holograms in strip forms for labelling liquor bottles which are being manufactured by the distilleries. This helps the department monitor excise collections.

State governments, government institutes and departments also buy Holostik’s holograms. Hindustan Lever, Philips, National Panasonic , Eicher Motors, Hawkins, ITC, VIP (hosiery), Jockey and Hindustan Sanitary are key private buyers. The company has a technical collaboration with French Hologram major, Hologram Industries.

A few years ago, the Election Commissioner had made it mandatory for all voter identity cards to carry holograms. Identity cards, passports and visas, currency notes, traveller’s cheque, credit cards and degrees can be made fool-proof with laser-optics holograms.

   
 

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