2 COMPANIES MUMBAI | MONDAY, 10 JUNE 2013 1

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IN BRIEF
Jet Airways raises pilots salaries
Private carrier Jet Airways has raised the
salaries of its pilots, acceding to their long-
pending demand, even as its 24 per cent
stake-sale deal with Etihad Airways awaits
regulatory approvals. The airline has hiked
its pilots wages by up to 18 per cent in a
staggered manner with retrospective effect
from 2010-11, sources told PTI in Mumbai.
The highest rise is six per cent a year, based
on the pay scales. PTI <
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SAIL consortium prunes Afghan plan
Scaling down their original plan by around 75
per cent, members of a Steel Authority of India
Ltd-led consortium, Afghan Iron and Steel
Consortium, have decided to set up a mini-steel
plant of 1.25 million tonnes in Hajigak in
Afghanistan with a $2.9-billion investment. The
decision to cut the original project from $10.8
billion was taken at a meeting on May 23-24
between the members and the project
consultants, a source said. PTI <
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Additional role for Johri at Discovery
Discovery Networks International, on Thursday,
said Rahul Johri, senior vice-president and
general manager (South Asia), will now also be
the head of revenue, pan-regional ad sales and
Southeast Asia. The company has also named
Arjan Hoekstra as the new head of Asia-Pacific,
effective September 1. BS REPORTER<
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ICVL hopes for coal block deal by FY14
International Coal Ventures, a consortium of
public sector units for coal block acquisition, is
aiming to set up its first coking coal block
acquisition in the current financial year. We
have shortlisted four to five assets from Australia
to Mozambique, Chairman C S Verma said. PTI<
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Tata Motors trademark copied
Tata Motors has filed a complaint before a Delhi
court, alleging infringement of its trademark
and copyright by unknown persons. The
complaint sought direction to DCP (District
Investigation Unit) Central District to take in
custody and produce any person privy to
production, storage or sale of any such
objectionable articles. PTI<
Y
ou dont always need an
original idea for a start-up.
Canadian residents Rahul
Simha and Vishnu
Chapalamadugu, along with
California-based Mohit Aggarwal,
spotted a wheel and concluded
they didnt need to reinvent it; all
they needed to do was modify it to
fit their vehicle.
Last year, the three friends
startediDreamBooks. Thewebsite,
www.idreambooks.com, aggregates
book reviews from major publica-
tions such as The NewYorkTimes,
theWall Street Journal and a num-
ber of other media platforms
around the world, and assigns rat-
ings tobooks basedonthereviews.
The service is modelled on
www.rottentomatoes.com, a well
knownwebsitethat providesasim-
ilar service to moviegoers, aggre-
gating film reviews. The founders
of iDreamBooks are open about
their source of inspiration, even
billing their website as a Rotten
Tomatoes for books. Infact, oneof
thefounders of RottenTomatoes is
an investor in iDreamBooks.
Theidea
In an interview, Simha recalled the
three founders were big fans of
Rotten Tomatoes. Being avid read-
ers, they sought a similar website
for books. When they couldnt find
one, they decided it was a good
service to offer.
iDreamBooks, with its casually
chatty slogan Never read a
crappy book again! features
between half a dozen and three
dozen, sometimes more, critics
reviewsfor abook, alongwithread-
ers comments. The website also
assigns a rating for each book. A
rating of 70 per cent or more
means the book is recommended,
and the score is accompanied by a
smiling face within a blue cloud,
thewebsites logo. Lower scores are
given a sulky-face-within-a-grey-
cloud treatment.
Simhasays the ratingis derived
throughacombinationof automat-
ed sentiment analysis and manual
curation of professional critics
reviews. Headds thesoftwareused
for sentiment analysis was partly
developed by an in-house team;
some of it was secured fromavail-
able Open Source software and
tweakedtothe websites needs.
The project started with a cou-
ple of thousand titles; now, it cov-
ers about 100,000titles. Whilecrit-
ics reviews are displayed for most
books, ratings are available only
for about 2,000. A search for Dan
Browns long-awaited thriller
Inferno, for instance, reveals only
one review and no critic rating,
though it was widely reviewed and
oneof thebiggest publications this
year. Scaling up data is our main
challenge, ever since we launched.
On the business side, we see it as a
functionof data. So, as wegenerate
more data and it is cleaner and of
better quality, everything on the
business side becomes easier,
Simha says.
Shotinthearm
The initial investment for the ven-
turecamefromfamilyandfriends.
Soon, they attracted funding from
500 Startups, a Silicon Valley incu-
bator that invests in early-stage
start-ups, providing up to
$250,000. iDreamBooks is head-
quartered on its investors campus
in Mountain View, California.
Simhadeclines tospecifythefund-
ing his venture has secured so far.
He says the company is in talks
with other investors for more
financing. Currently, the start-up
has a staff of five, including the
three founders.
In April, the company received
a shot in the arm through a deal
with Sony ReaderStore. Through
an iDreamBooks icon on the Sony
e-bookstore page, users can now
access critics reviews and the
iDreamBooks ratingfor thebookof
their choice. Sony approached us
because they liked what we were
doing. Its unique, says Simha.
He adds the partnership would
provide the start-upwitharevenue
streamintheformof anannual fee.
It alsointroducesiDreamBookstoa
much larger audience the uni-
verse of Sony e-bookstore users.
While this wouldincrease visibility
for iDreamBooks, experts caution
Sony Reader isnt as popular as the
market leader Amazons Kindle.
The device is quite good, but they
keepalowprofileanddont seemto
innovate anymore. They seem to
update long after everyone, says
Calvin Reid, senior news editor at
Publishers Weekly, a leading trade
magazine for the US book publish-
ingindustry.
Simha admits Sonys market
shareissmaller thanAmazons. He,
however, points out his companys
partnership with Sony isnt an
exclusive deal. He says
iDreamBooks is also in talks with
other book-related sites that could
useitsservice, pointingtoAmazon
as a potential partner. The start-up
sees licensing its data as a major
part of its revenue stream, with
publishers, retailers, libraries and
others into book discovery or book
selling as potential clients. On the
consumer side, onceweget toscale
and have a lot of traffic, we can
monetiseit throughbooksalesand,
maybe, through ads, Simha says.
For now, the founders want to
focus on scaling up content and
building traffic on their site. Ten
to fifteen thousand books are
reviewed by major publications
everyyear. Our goal is tobecurrent
with those. Right now, were cur-
rent with the best sellers from May
2011 and the Big Six publishing
books, says Simha.
Challenges
Building up content is the biggest
challenge, as the company cant
rely solely on automation for sen-
timent analysis; the need for man-
ual curation makes the process
slow. For instance, the presence of
a word such as disappointed in a
review may push the book towards
a negative rating, which would be
misleading if the critic had actual-
ly written the reader would not be
disappointed. Weve done some
work on it, come up with some
algorithms to separate that and to
come up with accurate sentiment.
But were not satisfied with what
we have right now, admits Simha.
To aggregate reviews fromvari-
ous publications more efficiently,
thecompanyalsowantstobuildits
owncrawler. Right now, wehaveto
queryasitewithacertainbookand
if it exists, it gives us a yes or no.
But if we have a crawler, it informs
us of all the books being talked
about on that site. So, that would
solve all our problems, he says.
Opportunities
The bookmarket inthe US, includ-
ing educational and professional
publications, is estimated at
$27 billion; e-books account for a
fifth of this. Theres a lot of shift
and turmoil in publishing, but
theres a big move to e-books from
physical books. Itsactuallygoodfor
us, becauseeverythingismovingto
digital and there are more e-books
beingdownloaded, Simhasays.
Amazons recent acquisition of
Goodreads, a site that allows book
lovers to share opinions and rat-
ings of various titles, has provided
aboost toSimhas morale. Amazon
was reported to have paid about
$120 million for Goodreads.
Publishers Weeklys Reid
believes demand could grow for
sites such as iDreamBooks, which
aiddiscoverability. Thisistheholy
grail of booksellinginthedigital era.
How, in this sea of content, do you
come up with something youd be
interestedinreadingor, onthebusi-
ness side, how do you make your
book stand out from somebody
elses?Thesekindsof entitieswould
bevaluabletobothconsumers and
the publishingside, he says.
iDreamBookss traffic isnt any-
where close to that of Goodreads.
But if it succeeds in making itself
valuable to book readers, it may be
equallyvaluabletobooksellers, too.
iDreamBooks: Reading between the lines
The Silicon Valley start-up spotted an opportunity in aggregating book reviews, but accurate sentiment analysis remains a challenge, writes Indira Kannan
Its a good idea because they are following
the trend of consumption of books in a
digital format. Other types of media are
well reviewed by different types of
sources, whether its Netflix or Rotten
Tomatoes for movies or iTunes for music
downloads. For e-books, there really
wasnt a similar way to judge a book.
Being part of 500 Startups, they have
access to all the mentors. They also have
the profile that comes from being part of
that programme. They have a big market
that doesnt really have many
competitors; there arent a lot of rating
services for books that have received any
sort of widespread adoption.
But they need to have partnerships with
books, digital publishers or platforms.
Its a bit of a fragmented market. There
are different types of e-book readers
theres Kindle, theres Kobo, theres
Nook from Barnes & Noble. So, it might
be a good idea to work with one of the
big e-book publishers or with traditional
retailers still focusing on in-store
experience. Another idea is they could
start working with a very large platform
for people to read the writings of
unpublished authors. Its called Wattpad,
a Toronto-based company that has
several million users around the world.
This is where people can discover the
writing of other people who arent
published, mostly fiction. I recommend
they try to work with a company such as
Wattpad as a way to build awareness.
Their business model can be applied in
many countries; the focus is to build the
worlds leading review brand for
published work. Theyre not trying to
dilute it by focusing on other areas. The
model of books is a steadily growing and
truly international business one.
SunilSharma, ManagingDirector,
ExtremeStartups, Toronto
>
EXPERT TAKE
START-UP CORNER
VishnuChapalamadugu
(foreground, inwhiteshirt) and
Rahul Simha, co-foundersof
idreambooks
Product: Aggregate book reviews from
major publications; assign book
ratings based on reviews; ready
reference guide for readers and
book buyers.
Investors: Dave McClure, Paul Singh
Partners at 500 Startups; Daniel Hoffer
Mentor at 500 Startups; Patrick Lee Founder, Rotten Tomatoes; Joshua
Greenough.
Revenue strategy: Annual fee from partnership
deal with SonyReader e-bookstore; similar deals
with other e-booksellers; licensing data to
publishers, retailers, libraries, and others with
book discovery or book selling functions; monetise
user traffic through book sales and advertisements.
Challenges: Visibility and user traffic are still low; scaling up data proving
slow because manual curation of reviews is needed alongside
automated sentiment analysis; team still working on building a crawler
to aggregate reviews more efficiently; need partnerships with services
more popular than SonyReader; two founders have to travel frequently to
SiliconValley from Canada as they dont have suitable work visas for the US.
www.idreambooks.com:
RATING BOOKS WITH REVIEWS
Thefirmshomepage&logo(bottom)
Nod unlikely for stake increase in HZL, Balco
INDIVJAL DHASMANA&
SURAJEET DAS GUPTA
New Delhi, 9 June
A
nil Agarwals Sterlite
Industries might not gain
in the dispute with the
government over its exercise of a
call option in Bharat Aluminium
Company (Balco) and Hindustan
Zinc (HZL) in the light of the pro-
posed move to allow call and put
options in listed companies out-
side the stock exchanges.
Attorney-General G E Vahanvati
has told the finance ministry the
move should come with a clause
that it would be prospective and
wouldnt affect ongoing court dis-
putes, said those in the know of
the development.
The government has decided
to allow put and call options in
share purchase agreements to
permit listed companies to buy
or sell equity at a predetermined
price in future. The proposal was
cleared by Telecom Minister
Kapil Sibal within a day of his
assuming additional charge of
the law ministry. It will come into
force after approval by the
finance ministry and the
Securities and Exchange Board
of India (Sebi). It will be imple-
mented through a Sebi notifica-
tion. Under the Securities
Contracts (Regulations) Act, put
and call options are treated as
derivatives and are not permit-
ted in listed companies outside
stock exchanges. Unlisted com-
panies, however, can go for put
and call options. When the
finance ministry sought the
attorney generals opinion on the
proposal, he said a notification
allowing the option could be
issued by invoking the powers
conferred under section 16 and
28 (2) of the Securities Contracts
(Regulation) Act, 1956. He also
said the notification didnt suffer
from any infirmity under the
Companies Act, 1956, and the
Indian Contract Act, 1872.
However, he said a suitable
provisionmight beinsertedinthe
notification that it wouldnt affect
or validate past contracts or those
which were in courts due to dis-
putes. This specificopinionwas to
address the concerns of the min-
istry of mines about the litigation
pending with regard to Balco and
HZL. Call and put options were
one of the major clauses in the
agreement with Sterlite
Industries, an arm of London-
basedVedantaResources, whenit
bought majority stakes in HZL
and Balco. Sterlite had bought 51
per cent stake in Balco for ~551.50
crore in 2000-01 and 26 per cent
in HZL for ~445 crore in 2002-03,
when the Bharatiya Janata Party-
led National Democratic Alliance
was in power at the Centre.
Sterlite later invoked the call
option to acquire another 18.92
per cent in HZL for ~323.8 crore.
Subsequently, it increased its
stake to 64.92 per cent.
However, the government
held Sterlites call option was
invalid and could not be used to
acquire further stake in HZL.
Then Attorney General Milon
Banerji had said the countrys
laws didnt allow for call and put
options to be included in share-
holders agreements.
WhenSterlitechosetoexercise
this option in the case of HZL in
2004, the Congress-led United
Progressive Alliance government
didnt reciprocate with a put
option. The company moved
court against the governments
decision in 2007; the court held
since the dispute arose out of the
shareholder agreement, it should
be resolved through arbitration
prescribed in the agreement.
While rejecting Sterlites plea in
early 2011, the arbitration panel
said the law of the land should be
considered first, followed by the
articles of association of a com-
pany and then the mutual con-
tract between two partners.
Later, the government and
Sterlite decided to approach the
Delhi High Court. Subsequently,
Vedanta Resources offered to the
government to buy the residual
stakes in HZL and Balco for about
~17,000 crore.
Jet-Etihad decision on Tuesday
The finance ministry will on Tuesday take a
call on the ~2,000-crore Jet-Etihad deal and
the FDI proposal of Norways Telenor. The
Foreign Investment Promotion Board,
headed by Economic Affairs Secretary Arvind
Mayaram, will also take up the foreign direct
investment proposal of Multi Commodity
Exchange. While Jet Airways plans to sell 24
per cent stake to Abu Dhabi-based Etihad
for about ~2,058 crore, Telenor is seeking to
raise stake by 25 per cent in its domestic
subsidiary Telewings to 74 per cent. PTI <
HowisthediscoveryofLipaglyna
breakthroughforCadilaHealthcare?
ThisisauniqueachievementbyanyIndian
pharmaceutical company. For the first
time, a lot of firsts have happened. It is a
firstIndianNCE(newchemical entity), itis
also the first drug to treat dia-
betic dyslipidemia and this is
the first drug which has
appeared in the glitazar class
across the world. It gives us the
confidenceIndiaandIndiansci-
entistscandoit. Ourbasicobjec-
tive is once we launch in India,
wewill takeit toglobal markets.
So, wewill launchinIndiainthe
third quarter of this year and
thentakethis totheglobal market. Weare
registering into some emerging markets.
Whicharethemarkets?
About 15 emerging markets and, among
developedmarkets, wearetakingit tothe
US, Europe and Japan.
Whatwill beyourstrategy?
Thefirst approvedindicationfor thisdrug
is diabetic dyslipidemia but we also have
plansandstudiesundergoing, whichhave
completed phase-II and are moving to
phase-III, for someadditional indications.
Some of these indications are unique.
Then, we want to take this drug to devel-
oped markets with additional
indications, which can hasten
the process of approval. This is
a patented product.
Howmanypatentsdoyou
haveforitandinwhich
countries?
Our chemical structure is
patented. Once this is patent-
ed, you do clinical studies.
Based on that, we have received
approval for one indication and then
we might get approval for additional
indications. So, we will get multiple use
patents for different indications.
Currently, we have one product patent.
We have patents in the world wherever
we have approval. For additional indi-
cations, we have filed additional patent
applications.
Whataretheadditional indications
underevaluation?
We would not like to disclose these now.
We would do that at an appropriate time.
Whatisuniqueaboutthisdrug?
We have done studies of this drug
with pioglitazone, fenofibrate
and atorvastatin and we have
seen it is comparable to piogli-
tazone with its anti-diabetic
effect without the usual side-
effect of pioglitazone such as
weight gain. Similarly, it doesnot
have the side-effect of fenofi-
brate. Third, when it is adminis-
tered along with atorvas-
tatin, additional
reduction in choles-
terol level happens to
the extent of around
20 per cent. All
thesethings make
the drug differ-
ent.
Whenother
companiesshy
awayfrom
researchdueto
financial riskand
regulatoryhurdles, how
didyoumanagesucha
discovery?
I want to go back to my
strategy. When we decided we wanted to
bearesearch-basedpharmaceutical com-
pany, we evaluated how we can do
research within our resources.
What you read and hear is that one
requires a billion dollar-plus to discover a
molecule. The obvious question to
my mind was, where do we get a
billion dollars to do so? We
decided we do not want to get
disheartened by this number.
So, we decided to do it in a
cost-optimisedway. Wefocused
our energy in developing
inhousecapability. Wearethe
only company with a
dedicated research
centre only
focused on doing
discovery
research. We are
the only company
with capacity to do
large animal stud-
ies, includingonpri-
mates. From concept
to pre-clinical stud-
ies, we have complete
capacity to do it.
Whatarethe
investmentsmade
byCadila
onthisdrug?
This drug discov-
ery took us a total of 12 years, commis-
sioned in 2000-01. The first five years
were spent on discovery and pre-clinical
studies and the next seven years on clin-
ical studies. Our strategy was very clear
that wewant todiscover andownthedrug
and not license out. Till now, we have
spent around $250 million. We plan to
spend another $150-200 million for addi-
tional indications and also approvals in
other markets.
Doyouplantomarketthedrugonyour
ownorjoinhandswithotherplayers?
We have no marketing capabilities in
some developed markets. So, ultimately,
we will need marketing partners in those
countries. (We have) not yet started talk-
ing to prospective partners as we are wa-
iting for the launch in India. We are exp-
ecting approvals in various countries in
three to five years. In India and some em-
erging markets, we will market on our
own.
Areyoulookingformultinationalsto
partnerindevelopedmarkets?
We will be looking for somebody who has
the capability to market this product.
None of the Indian companies has the
capabilitytomarket productsintheUSor
Europe.
Forfull interview, visit
www.business-standard.com
Our strategy was to discover and own the drug and not license out
While most domestic as well as multinational companies shy away from making investments
in drug discovery because of high financial risks and regulatory hurdles, Cadila Healthcare
says it is the first Indian pharmaceutical company to develop a drug from its own discovery
pipeline. The research-based firm now plans to partner MNCs for marketing its new drug,
Lipaglyn, in developed markets such as the US, Europe and Japan, Cadila Healthcares
Chairman and Managing Director PANKAJ R PATEL told Sushmi Dey. Patel also said that current
challenges will help Indian pharma industry evolve to become better. Excerpts:
PANKAJ R PATEL
Chairman and
Managing Director,
Cadila Health
Attorney-General Vahanvati has advised govt to only prospectively allow listed firms to buy or sell stake through contracts, say sources
NO OPTION FOR STERLITE
| The government might not allow listed companies to buy or sell equity
through options; past contracts or those in courts might also not be
allowed
| Options were one of the major clauses in the agreement with Sterlite
Industries, an arm of London-based Vedanta Resources, when it
bought majority stakes in Hindustan Zinc (HZL) and Balco
| The government had held Sterlites move in 2004 to increase its stake
in the companies through options invalid
STERLITES SHARE PURCHASE THROUGH DERIVATIVES