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Counterfeit products affect many industries, including pharmaceuticals. Here is a home-grown alternative that can help weed out the menace of fakes in a number of sectors — ranging from automobiles to security services
Counterfeiting and piracy are generally perceived as victimless crimes with 'fakes' simply constituting a 'cheap, alternative' purchase. According to estimates by the World Customs Organisation (WCO) and the Organisation for Economic Co-operation and Development (OECD), about 7%-10% of global trade is derived from counterfeit products.
However, many companies are now coming up with new devices and technologies to fight the counterfeit menace. Pune-based Bilcare Ltd has come up with a non-clonable technology, which it believes can fight against counterfeit products.
Dr Praful Naik, chief scientific officer, Bilcare, told Moneylife that his company's product uses a non-clonable technology, which covers identification, authentication and track-and-trace from origin to point of sale with usage in myriad sectors like pharmaceuticals, security services and agrochemicals.
Bilcare uses material sciences technology. The random physics principle with metal molecules at micro- or nano-structured composites can be embedded in any substance. The randomised millions of molecules are difficult to replicate. Metals have nature that can emit magnetic and optical properties. The digitised image created can be hidden behind a bar code or tags. A specific reader can be connected to a backend computer wirelessly to read the digitised image and authenticate the bar code or tags within seconds.
Comparing this technology with a DNA marker that can stand in a court of law, Dr Naik said that the non-clonable nanotech fingerprints cannot be copied by anyone, including Bilcare. Another advantage is that the non-clonable technology can help manufacturers to track their products throughout the supply chain.
Dr Naik believes that the pharma industry can use the technology to help curb counterfeit and pirated drugs. In the first phase, the companies can use the technology to prove whether a medicine is manufactured by them or not. This will also assure customers that the drug they are buying is genuine.
However, speaking to Moneylife, Dr Naik conceded that it may not be a cake-walk to sell the technology to the pharma industry. The cost of each digitised image stored with a bar code is Rs1.50 and pharma companies are not too keen on spending such amounts of money on this technology. "The reason for apathy is that Indian pharma companies are doing extremely well and are not much bothered with some incidents of 'counterfeits,'" Dr Naik said. However, the National Pharmaceutical Pricing Authority (NPPA) has shown willingness to consider this cost while deciding the ceiling price for a drug, he said.
The technology can even help to make Indian currency notes fake-proof in the future. Indian currency notes are susceptible to counterfeits even after having 17 security features. Bilcare is providing 70,000 non-clonable ID cards for the Delhi police for the Commonwealth Games (CWG). Dr Naik talks highly about the Delhi police approving the product usage for the CWG in a record timeframe, unheard of in government circles.
He told Moneylife that Japanese auto parts manufacturers are using Bilcare technology with great success to prove that they support warranty for only genuine parts and also to have access to the history of the auto part with respect to warranty date and service.
Dr Naik shared with Moneylife information about the diverse nature of clients interested in the product. Some Europe-based museums are interested in using the technology. These museums want to ensure that the antique pieces they put on display at an exhibition are returned in the original. A wine producer in the US has accepted the non-clonable technology. Even the security department of one Asian country has been using this technology for identification.
High property prices and lack of completed housing units increase cost of home rentals; consumers are being forced to look for alternatives
You might receive a hike of more than double the usual appreciation in your monthly home rent bill when you lease comes up for renewal this time around.
Jit Nandi of Vashi, Navi Mumbai, received a 20% increase in his home rent bill this year compared to the usual 10% every year. But despite the high rent and a desire to move to cheaper accommodation, Mr Nandi says that he is unable to move to a new location. "At the back of my mind, I know that I need to shift as rent is on the higher side. But due to certain problems such as shifting, paying deposits and brokerage, getting adjusted to a new landlord and society, I'm not able to move to new accommodation. But sooner or later, I'll have to shift," he told Moneylife.
However, for some, getting a new apartment was an outright solution to the rising residential rentals in Mumbai. Rajat Kumar of Powai (central Mumbai) said that increasing rentals triggered the idea of opting for a house on ownership. His rent increased from Rs18,000 to Rs25,000 in three years - an increase of 40%. He will get the possession of his 2BHK next month.
Mahendra Ahuja (name changed on request) of Sanpada, Navi Mumbai, who recently purchased a 3BHK in Thane and will get possession next year, said he found it prudent to invest in property rather than paying monthly rent. He said, "My rent has more than doubled in five years. With my increase in income levels, I found it wiser to invest in an apartment as real estate prices are on the rise. Plus, I will get the much-needed tax benefits, whereas, the monthly rent doesn't accrue any benefit as it goes into the landlord's pockets."
According to real-estate dealer Abhay (who uses only one name), the number of persons opting for outright purchase has increased by 8% this year. But Mr Abhay maintained that these are mainly those who are looking to get settled in the financial capital of India. Others such as BPO or private firm employees usually take apartments on rent as they keep shifting from one city to another for better opportunities, he added. Such people don't hesitate to pay high rent and live in plush localities and apartments, according to Mr Abhay.
In the second quarter this year, residential rentals have risen alarmingly. According to a study by real estate portal 99acres.com, residential rentals have seen an escalation of more than 20% in Mumbai. Khar, a western suburb of Mumbai, has seen 47% appreciation in rentals in the second quarter this year compared to the same period last year. Mahalaxmi and Napean Sea Road saw 28% and 13% rise in rentals over the same period. Bandra (West) witnessed an 11% rise in residential rentals.
"Home rentals in Mumbai have always been on the higher side," said Sandeep Reddy, a former real-estate analyst with Kotak Institutional Equities and co-founder of GrOffr.com, a real estate website for group buying. According to a report, the city needs 84,000 houses every year additionally, but the combined effort of private housing companies and government housing authorities yields only 55,000 houses annually. The deficiency in supply of houses keeps on propelling the real estate prices to a new zenith every year.
According to Mr Reddy, lack of completed housing units has led to the rise in residential rentals. "In the last two years, many housing projects have been launched but as they take time for completion, the lack of completed units has led to rise in rentals as the demand for accommodation continues to rise due to various factors such as migration of work force."
According to Yashwant Dalal, president of the Estate Agents' Association of India, high property prices are responsible for the rise in rentals in the city. Mr Dalal told a tabloid recently, "Property prices have gone up beyond the 2008 peak and are consistently going up since the last three quarters. So people are waiting for the prices to correct and have postponed their purchasing plans for some time. As preference is more towards leased property, the rentals have gone up in the city."
It's the same story in other metropolitan cities. According to the study, Saket in South Delhi saw a 31% rise in rentals in the second quarter this year compared to the same period last year. South Extension, Safdarjung and Malviya Nagar followed at 24%, 22% and 21% respectively.
But according to Pankaj Kapoor, founder and managing director, Liases Foras, the rental market is stable and there has been only a slight increase. He said places where high appreciation is reported are mostly high-end locations and these places don't come under the rental market. "These (places mentioned in the study) are high-end locations. It all depends on the kind of property leased out. You can have a gamut of properties but there is something called high-end or exclusive properties and all of a sudden if it goes off at a certain premium, it will have an impact on the kind of rent," Mr Kapoor said.
In the case of Mr Nanda who is unable to shift to a new location due to logistical problems, Mr Kapoor said there is no solution other than to bear the high expenses or move to locations far off from the main business areas where rents are cheaper.
Intense competition, falling revenues and incremental expenditure have affected the balance sheets of all telecom operators. Post 3G and MNP, they will have to either consolidate or diversify in order to survive
With the imminent launch of third generation (3G) network services and mobile number portability (MNP), Indian telecom companies are now gearing up for the next big move. In the first part (http://www.moneylife.in/article/4/9386.html), we saw how the government and telecom industry are preparing for the merger and acquisition games under the exit route policy.
While it is said that some new entrants are easy prey for bigger, cash-rich players like Bharti Airtel, there are incumbents who may be ready to sell their part or complete business. In order to reduce its debt burden, Reliance Communications (RCom) is already talking about a stake sale. Although its tower sale deal with GTL did not materialise, RCom for sure needs to scout for other buyers at the earliest.
Citing RCom management, Ambit Capital Pvt Ltd, in a note said, "The company intends to offload stake in the tower company, which may be followed by strategic stake sale in RCom. Though we believe that the stake sale will result in deleveraging the balance sheet, we prefer to wait until further clarity emerges on the same."
RCom's effort to sell its towers was nothing but an attempt to diversify part of its non-core business. Towers, unless rented out to other companies are nothing but dead assets for any company - especially for mobile operators, it is a huge burden in terms of revenues. In case of RCom, the hiving off of the tower business to another company and then selling it to other parties should be seen in this context only.
The best example of diversification among telecom operators is Bharti Airtel. Long before other companies could wake up to the reality of the tariff war and subsequent intense competition, Bharti started spreading its wings in overseas markets. Once upon a time, both RCom and Bharti were in the race to acquire South African Mobile Telephone Networks SA (MTN), which did not materialise due to various reasons, including last minute changes in regulations in India and South Africa.
While RCom decided to stay away from any acquisition, Bharti continued its search and grabbed the African operations of Kuwait-based Zain for $10.7 billion. The deal, however, led to a huge debt burden of about Rs50,000 crore for Bharti. At present, the company is burdened with a debt of around Rs65,000 crore due to the Zain acquisition and auction and launch of 3G services in India.
Bharti Airtel is planning to sell mobile phone towers of its African operations to its unit Bharti Infratel, in order to raise badly needed cash and taking a big step towards replicating the outsourced business model that has underpinned its growth in India. The value of the towers is expected to be around Rs12,000 crore to Rs15,000 crore.
Kisan Ratilal Choksey Shares and Securities Pvt Ltd, in a research note said, "The move is positive for Bharti considering that it will improve the cash position of the company, significantly reducing net debt position of the company. Debt position of the company is expected to reduce to Rs50,000 crore after repayment of money borrowed for Zain's acquisition. At the same time, by handing over the operation of its phone network, towers and information technology services, the company will be able to focus on its core mobile phone service business in Africa."
While hiving off its non-core business, Bharti is also venturing into the mobile handset business. The business is crowded, with a new company entering the market almost every other day. A number of these companies procure handsets from China and sell it in India using their own label or brand. Despite the stiff competition there is growing demand, especially for handsets in the price range of Rs2,000 to Rs6,000. India's annual shipments for mobile handsets are about 130 million units.
Bharti's group company Beetel has launched eight mobile handsets in the price range of Rs1,750 to Rs7,000. In the first phase, the company is targeting select regions like Delhi, Haryana, UP and Uttaranchal, Rajasthan, Punjab and the seven north-eastern states through its 4,000 outlets.
The company plans to extend its services throughout India by FY11.
Consumer electronics giant Videocon has also entered mobile services as well as the handset business. Although the figures for its mobile handset volumes are not available, during August it added 3.7 million new subscribers.
Sistema Shyam, which operates under the brand name of MTS, has also come out with its own handsets in the CDMA category. Currently there are three operators, RCom, Tata Teleservices (Tata Indicom) and MTS, which offer CDMA mobile services in India. Often, CDMA handsets are sold in a 'locked' status; the same cannot be used with another operator. This may have prompted MTS to offer its own handsets.
Bharti and Videocon offer their direct-to-home (DTH) TV services under a similar brand as that of their mobile services, thus leveraging maximum brand value. RCom and Tata Indicom do not have that advantage as it's not their own brand but sister concerns that offer the DTH services, namely Reliance Big TV and Tata Sky. The DTH venture of Bharti also ratifies its diversification under one brand theory.
On the one hand, telecom players are seeking to de-leverage their balance sheet through sale of their non-core assets (evident from Idea and RCom seeking to sell stake in their tower business). On the other hand, looking at the intense competition in Indian markets, some players are also following the footsteps of Bharti Airtel in diversifying their presence in other regions outside India. Whether diversification of businesses would help the survival of telecom companies, only time can tell.