News: Tata offers to raise Bangladesh investment

(RTR 30/04/2006) Mumbai - The Tata group offered on Sunday to increase a proposed investment in Bangladesh to $3 billion and to set aside a 10 percent stake in its Bangladeshi business for the government, a senior official in Dhaka said.

Tata also has offered to buy natural gas in Bangladesh at $3.10 per thousand cubic feet, more than double the previous offer, and to list its Bangladeshi business on the country's stock exchanges, Mahmudur Rahman, executive chairman of Bangladesh's Board of Investment, told reporters.

"They have offered a joint venture in which Bangladesh will own 10 percent of Tata projects in the country," said Mahmudur, who is also the government's energy adviser. "They have also expressed wishes to raise funds from the (Bangladesh) capital markets.

"We consider the proposals as the most positive developments," he added.

One of Bangladesh's top economists, Professor Wahiduddin Mahmud, said the latest offers demonstrated goodwill by both Tata and the Bangladesh government.

"It will have a long-term impact on Bangladesh's foreign direct investment," he told Reuters.

Tata's proposed projects in power, steel, fertiliser and coal would constitute the largest single foreign investment ever made in Bangladesh, equal to the total the country has received since 1972, BOI officials said.

"If the investment plan is executed, Bangladesh's GDP (gross domestic product) will increase by 1.9 percent annually and the balance of payments will have a positive impact to the tune of $18 billion," Alan Rosling, executive director of Tata Sons, said at a news conference.

"The projects will create employment opportunity for 24,000 people," he added.

MORE FOR GAS

Tata wants to set up a steel plant with annual production capacity of 2.4 million tonnes, a urea factory with 1 million tonnes capacity, a 500 megawatt coal-fired power station and a 1,000 mw gas-fired power plant.

Rosling said Petro-Bangla (the government's energy exploration arm) had agreed to a joint venture in coal mining for the 6 million-tonne Barapukuria project.

Tata will require 200 million cubic feet of gas per day (mmcfd), officials said. The country has 14 trillion cubic feet of proven and recoverable gas reserves, according to energy ministry estimates.

In October 2004 Tata proposed to invest $2 billion in Bangladesh, but it made no headway over a dispute on the price of gas. Later the investment offer was raised to $2.5 billion, Mahmudur said, before reaching $3 billion on Sunday.

"They offered to pay $3.10 for per thousand cubic feet of gas (mcf), instead of $1.50 offered earlier," Mahmudur said. Bangladesh energy officials said the domestic price for natural gas is currently more than $2 for per thousand cubic feet.

Mahmudur said Tata's price went up while the required guarantee period came down to 10 years.

"They have requested us to say yes or no by end of May and want to sign a final agreement by July," Mahmudur said. "Negotiations are over, and now it is time to take decision."

Tata also plans to set up two hospitals and two training centres for employees in Bangladesh as a part of its welfare programme, he added.

Tata has asked Bangladesh to give it a 10-year tax holiday for its steel and coal projects and strong infrastructural support, Mahmudur said.

The company says the current five-year tax holiday for foreign investors is too short for such large-scale projects.

Rosling said, "If you want to industrialise your country, you have to take decisions without the lapse of valuable time."

The Tata Group includes 80 business entities in services, materials, engineering, energy, consumer products, chemicals, and telecommunications.

It also runs India's largest hotel chain and is the country's biggest software services exporter and truckmaker.

News: Everyone's eyeing the Indian realty pie

(BS 30/04/2006) Mumbai - It is raining investments in the Indian real estate sector. From foreign and domestic funds, banks and HNIs, everyone is queuing up for a piece of the expanding Indian real estate pie.

The foreign direct investment in the sector alone is expected to be nearly $16 billion over the next five to six years. The newest entrants into the sector are the ultra-conservative pension funds from the US that have been eyeing the steadily rising returns the sector has been offering.

On the other side, real estate developers all over the country are gung-ho about new projects. From Special Economic Zones and townships with high-class luxury apartments priced at Rs 1 lakh\sq ft and swanky commercial office spaces to IT parks and mega malls, the Indian realtor's sweetest dreams are coming true.

Says the chief investment officer of a private bank's realty fund, "Even the short term investors are looking at stability over the next 24 months, while pension funds are betting on the Indian real estate market over the long term. Typically, these funds look at markets that are expected to remain stable over a 10-12-year period. That they are investing in India is a good indicator for international investors. After all, whether it is Emaar or Capitalands, it is money of foreign governments that is coming into India."

Adds Anthony Ryan, head of real estate investment banking for Asia Pacific at JP Morgan, "The outlook for India is very positive. The rapid GDP growth is very favourable for the housing sector and the outsourcing boom is creating huge demands for the commercial and office assets. The growth in organised retail ushers continuous demand for malls."

According to a 2005 survey by Merrill Lynch, organised retail, which accounts for just two per cent of the $200 billion sector, will grow from $4 billion to $15 billion by 2010.

Real estate in the same time frame is expected to grow from $12 billion to $50 billion. "Change in demographics, being more affordable and a rise in consumption are common factors driving growth in both these sectors," the report says.

US-based Warburg Pincus, Blackstone Group, Broadstreet, Morgan Stanley Real Estate Fund (MSREF), California Public Employees' Retirement System (CalPERS), Hines, Tishman Speyer and JP Morgan Partners are keen to invest in India.

Warren Buffet's Berkshire Hathway is also said to be interested. A group of NRIs has raised $150 million under the Indian Real Estate Opportunities Fund for projects in India. Nearly $3 billion will be available for investment in Indian real estate over the next 15-month period with a slew of joint ventures with internationals funds and developers on the anvil.

Says Mridul Upreti, head, corporate finance and investment, Jones Lang Lasalle, "From entity level buyouts to joint venture funds and partnerships in developing properties, we see a range of funds coming into India."

Adds Akshaya Kumar, CEO of Colliers International, "Already half a billion dollars worth of approvals are in place. In the next 24 to 36 months, the funds coming into India could touch anything between $3-5 billion."

Early bird investors include the Singapore-based Lee Kim Tah and Ascendas, Dubai-based Emaar, Australia's Macquarie Bank and Keppel Land, and Farallon and GE from the US.

Farallon has invested in a JV with the Mumbai-based India Bulls, while GE has invested in the IT park fund floated by Ascendas. Others who have committed funds to the Indian market are the Malaysian IJM group, Indonesia's Universal Success Enterprises and Ciputra Salim Group.

Most investible funds are expected to come from North American investors, European real estate funds and multinational developers from the Asia Pacific region who have been seeking opportunities in India.

Those eyeing the Indian market include dedicated real estate funds like Tishman Speyers which has tied up ICICI to raise $6 million for a joint VC fund, developers like the Dubai-based Emaar which has just tied up with the Delhi-based developer MGF for half a billion dollars for projects with a capital outlay of $4 billion. Keppleland has tied up with the Bangalore-based Purvankara developers to develop an IT Park.

Singapore based Ascendas has floated a dedicated IT park fund where other funds like GE have invested. GIC of Singapore is developing a residential complex near Chennai. The Indian Real Estate Opportunities fund has invested an undisclosed amount of Michael Dell's of Dell Computers private wealth in Pune recently.

All this, of course, in addition to funds being raised by the Indian financial institutions like HDFC, ICICI and IDFC abroad. Says Kumar, "The money could be used to develop business and IT parks, townships with a majority of the funds going into the top seven or eight cities." Adds Upreti, "Tier two cities could get a chunk of the funds if a tier one developer were to bring in a really big project."

The booming Indian real estate sector is reported to be growing at 30 per cent annually. What makes it even more attractive are the returns - compared to other destinations in Asia-Pacific, yields in India are in the range of 10 per cent with RoIs in the range of 20 per cent. Elsewhere, it is around 7 per cent with returns around 10 per cent.

India's real estate market has come a long way according to Upreti. "Three years ago the business consisted of leveraging debt for a high net worth individual who wanted to invest in property here, today the market has matured to a point where a city like Hyderabad can absorb two Rs 200 crore (Rs 2 billion) deals within a month."

News: Reid & Taylor to launch jeans line R&T Leisures

(F2F 30/04/2006) Mumbai - Reid & Taylor, the premium fabric tag of S Kumars Nationwide (SKNL), will launch a jeans line in a month to be marketed under R&T Leisures, the brand’s casuals range.

The jeans will either be made of denim or cotton bottom base. The brand is planning to reposition itself to cater male executives in 25 to 45 year age group, said Govind Mirchandani, Chief Executive Officer, worsted suiting, SKNL.

Almost half of the new outlets to be launched will be run by company. Reid & Taylor is number two player in country’s premium fabric market. S Kumars is expecting a Rs500 crore revenue from its apparel business in next few years.

R&T’s current fabric business is around Rs200 crore with another Rs100 crore expected to be generated from its apparel section within three years, added Mirchandani.

Retail network of its R&T will be expanded to add another 170 exclusive outlets to the present 20.

R&T’s fabric and apparel lines will be available in large format stores like Central, Pyramid and Shoppers Stop and multi-brand stores, said Mirchandani.

News: ICICI Bank bottomline rises 29%

(TT 30/04/2006) Mumbai - ICICI Bank, the country’s largest private sector bank, has posted a 29 per cent growth in net profit for the fourth quarter of the year ended March 31, 2006, boosted by a strong rise in its non-interest income apart from core operations. Net profit for the period grew to Rs 790 crore against Rs 615 crore in the same period last year.

The bank’s net interest income (NII), which captures revenues from core operations, rose 54 per cent to Rs 1,216 crore from Rs 790 crore in the last fiscal.

However, its non-interest income gained 72 per cent to Rs 1,266 crore from Rs 736 crore. While a large part of this non-interest income was accounted by fee income at Rs 1,050 crore against Rs 585 crore in the previous fiscal, the sale of its stake in Federal Bank and South Indian Bank also contributed to the strong growth in bottomline.

One of the key highlights of the year was the robust growth in loans across businesses. ICICI Bank said during the year, rural and agricultural portfolio increased to Rs 16,279 crore from Rs 7,495 crore. This apart, loan portfolio of international branches increased to Rs 12,524 crore and the retail portfolio shot up to Rs 92,198 crore from Rs 56,134 crore during 2004-05.

After declaring the annual results, K.V. Kamath, managing director and CEO of ICICI Bank, said though the bank has identified rural banking as the next growth horizon, there has been a strong revival on the corporate front. Consumer banking has not slowed down either. “We are looking for growth in a balanced way,” he added.

For the year ended March 31, ICICI Bank saw its net profit rising 27 per cent to Rs 2,540 crore from Rs 2,005 crore a year ago. Its net interest income gained 48 per cent to Rs 4,187 crore from Rs 2,839 crore. Total assets of the bank during the year increased by 50 per cent to Rs 2,51,389 crore from Rs 1,67,659 crore in the previous year.

Total advances were placed at Rs 1,46,163 crore, a 60 per cent rise. The bank’s total retail disbursements were to the tune of Rs 62,700 crore, including home loan disbursements of around Rs 25,700 crore. Retail assets constituted about 63 per cent of the advances.

At its meeting held today, the bank’s board of directors elevated Kalpana Morparia from deputy managing director to joint managing director.

Chanda Kochhar and Nachiket Mor have been promoted from executive directors to deputy managing directors.

The board also recommended a dividend of 85 per cent (Rs 8.50 per share) for the year.

News: 'Indian economic growth looks good this year'

(RTR 30/04/2006) Mumbai - Finance Minister Palaniappan Chidambaram said on Sunday he was bullish about the country's economic growth in the fiscal year ending March 2007.

"This year looks good to me. If investments pour in, there will be growth," Chidambaram told Indian television channel Headlines Today when asked about the economic growth prospect.

"We have to ensure that there are no financial imbalances, there are no surprises for investors. We have recently managed our finances well," he added.

India's economy, Asia's third-largest, is estimated to have expanded at 8.1 percent in the fiscal year which ended on March 31 and the government wants to accelerate the growth rate.

The central bank forecasts economic growth of 7.5-8 percent for the fiscal year ending in March 2007.

News: easyJet firm will set up 8 Indian budget hotels

(DNA 30/04/2006) Mumbai - London-based easyGroup’s Stelios Haji-loannou, who was one of the first few to enter in the low-cost airline space globally with his easyJet, is steering clear of the aviation sector in India.

"It’s already very crowded," he says. The ‘serial entrepreneur’ — as Haji-loannou likes to call himself — prefers to bet on the Indian hospitality sector instead.

He has drawn up plans to bring his easyHotel brand to India through a master franchise agreement with Dubai’s Istithmar Hotels.

easyHotel will set up eight budget hotels across metros in the next four years. The project would be funded and managed by Isithmar, which will invest Rs 1,800 crore in the Middle East and India. Istithmar CEO Muneef Tarmoom said the alternative investment company would spend a quarter of this — or about Rs 450 crore — in Indian properties.

easyHotel would roll out no-frills properties with 12-square-metre rooms.

"These would be 80-120-room properties with no food and beverage service. An ideal site for them would in the centre of the city as that’s where the competitive advantage is maximised," said Haji-loannou.

Haji-loannou also wants to spark off competition in this segment; "Our tariff would be 15% lower than other international hotel brands. We want to undercut competition."

Having entered into the hospitality less than a year back, easyHotels currently runs two hotels under its brand - one owned by itself in London (August 2005) and the other franchised in Switzerland (September 2005).

Both have an occupancy rate of around 85%.

Outside Europe, India is the first Asian market that easyHotel is entering. Next it is also planning to foray into the Middle East market along with Istithmar.

"Since our agreement with Istithmar for India is non-exclusive in India, we will have the freedom to partner with other players for other projects that will plan here," said Haji-loannou.

Meanwhile, its investment partner, Istithmar PJSC, is all set to enter the real estate.

"We will be entering the Indian market in a few months with a real estate fund of $500 million," said Faiz Mayalakkara, associate director of Istithmar.

The proposed eight-year close-ended fund will invest in projects ranging from residential townships, commercial space, IT parks, shopping, leisure and entertainment across the country.

Mayalakkara said as in any emerging market the company would be long at returns ranging between 20% and 25%.

It is also planning to foray into luxury segment of Indian hospitality sector, and looking at bringing in the US-based five-star brand One & Only Resorts - a listed company on the New York stock Exchange (NYSE).

"We have a significant stake in the company and will be keenly considering setting up a five-star luxury property under the One & Only Resorts brand here," Mayalakkara told DNA Money.

News: Anil Ambani to float new firm for film distribution

(BS 30/04/2006) Mumbai - Months after acquiring Adlabs Films, the Reliance-Anil Dhirubhai Ambani Group (R-ADAG) is floating a new flim distribution company, Reliance Films. While Adlabs Films is into overseas distribution of films, the new company will tap the domestic market distribution as well.

The group is planning to invest Rs 400 crore in this business in 2006-07. The rationale for beefing up its presence in film distribution, according to sources close to the development, is to streamline the business.

Reliance Films will not only deal with theatrical distribution but also buy all other rights – ranging from television, DVD, DTH, broadband, IPTV and overseas distribution rights.

“There is great potential in the business of trading films. The group is in the process of structuring a business model around various rights of a film. The proposed company is a part of this,” the sources said.

When contacted, R-ADAG executives declined to comment. The company plans to distribute 24 films in the current financial year and raise the number to 40 next year.

Reliance Films will get into exclusive contracts with distributors, making the film a solely Reliance Films release worldwide.

Reliance Films will try to capture the entire value chain of filmmaking and will provide an exploitation platform for the producer. This means, Reliance Films will pay the producer the cost of production of a film and an additional 10 per cent as miniumum gurantee.

Under this arrangement, once the company recovers the guarantee amount from the market, profits will be distributed in a 50:50 ratio between Reliance Films and the producer.

News: AT Kearney ranks India top and attractive

(BL 28/04/2006) New Delhi - India has emerged as the most attractive destination for mass merchant and food retailers, outperforming China for the second year in a row, according to global consulting firm A T Kearney.

A T Kearney's Global Retail Development Index (GRDI), which ranks 30 emerging countries based on a set of 25 variables including economic and political risk, retail market attractiveness and retail saturation levels, has retained India's position at the top.

"The Indian retail market is gradually but surely opening up, while China's market becomes increasingly saturated," said Fadi Farra, a Principal in A T Kearney's Consumer Industries and Retail Practice and leader of the Global Retail Development Index study.

The report said that the Indian Government had been tentative in its moves to open up the retail sector to Foreign Direct Investment (FDI). On the permission to allow FDI up to 51 per cent in single-brand retail, the report said: "This has triggered market-entry announcements from some retailers and has signalled to international retailers that India is serious about opening up the sector."

"India is at the peak of attractiveness for retailers right now, with a $350-billion retail market expected to grow 13 per cent this year," said Raman Mangalorkar, Head of Consumer and Retail Practice in India for A T Kearney.

Commenting on the opportunities in this sector, he added that the organised retailers together account for less than three per cent of the modern retail market. On new entrants, the report mentioned Wal-Mart's intentions of opening an Indian office for market research, and noted Tesco's entry into the market through a partnership with Home Care Retail Mart Pvt Ltd, by launching a hypermarket format called Magnet.

China, by contrast, was showing signs of saturation, fuelled by the growth of international retailers, the report pointed out.

AT Kearney said Asia had dislodged Eastern Europe as the most attractive region. "The learning is that timing is the most important source of competitive advantage for global and regional retailers in the globalisation race," it said.

News: AIG to invest in Indian real estate mkt

(RTR 28/04/2006) Mumbai - American International Group Inc. has joined the growing list of multinational companies eager to invest in the booming Indian real estate market.

AIG Global Real Estate Investment Corporation which manages about $10 billion in equity assets said on Thursday it had appointed Rajesh Agarwal as head of its real estate division in India.

AIG follows in the footsteps of institutions such as Morgan Stanley, which last month invested $68 million to be a minority partner with Bangalore-based Mantri Developers Private Ltd., and Singapore's Capitaland, which formed a joint venture with the Mumbai-based Runwal group in February.

"The Indian economy, particularly the infrastructure and real estate markets, have exhibited remarkable growth over the last few years," Sunil Mehta, AIG country head, said in a statement.

"The appointment of Agarwal is a strategic move that will establish AIG's presence in the Indian real estate market."

Agarwal joins from Reliance Capital Asset Management, where he was vice president, private equity, AIG said.

News: Pantaloon buys 51 % stake in CIG Infrastructure

(RTR 28/04/2006) Mumbai - Pantaloon Retail India Ltd, said on Friday its board had approved buying a 51-per cent stake in CIG Infrastructure Pvt Ltd. No financial details were immediately available.

The board also approved setting up a property division comprising 19 malls to be managed by a joint venture with CapitaLand Ltd, Singapore.

News: OVL inks deal with Shell for Brazil foray

(TT 28/04/2006) New Delhi - ONGC-Videsh (OVL) has signed an agreement with Shell to pick up a 15 per cent stake in an offshore oilfield in Brazil for around $170 million.

The BC-10 block in the deep waters off the Brazilian coast is operated by Shell. OVL will have to invest up to $410 million before oil starts flowing in the last quarter of 2009.

OVL chairman R.S. Butola said the oilfield is expected to yield 1,00,000 barrels per day.

OVL picked up the share after Exxon-Mobil, which had a 30 per cent stake in the block, decided to pull out. While OVL had struck a deal with Exxon for the 30 per cent stake, its acquisition depended on Shell and Petrobras exercising their pre-emptive right.

While Shell chose to increase its share to 50 per cent, Petrobras agreed to waive its right and allow OVL to acquire a 15 per cent stake.

ONGC chairman Subir Raha said Petrobras, the Brazilian national company, had accommodated ONGC by giving up its right of pre-emption.

Guy Outen, Shell vice- president for exploration and production, said: “We believe that an increased interest in BC-10 is an attractive opportunity and re-confirms our commitment to growth in Brazil.”

Column: India is where micro finance action is

(BS 28/04/2006) New Delhi - For the whole of last month all those connected with the micro finance industry have been very concerned about developments in Andhra Pradesh (detailed in my column in the edition of March 26, 2006) and how the state government and the RBI would respond to them. While a lot of effort by MFIs working in that region and banks lending to them has got the situation somewhat under control, there is no doubt that a lot more will be heard on this debate.

To analysts looking at developments in this sector, happenings in AP are of concern. For, it will certainly cause a blip in the rapid progress that the MF industry is making.

Ironically, it was in the same month that SKS, an MFI headquartered in Hyderabad, received what is probably the largest-ever investment in any MFI in India. Unitus Equity Fund, along with the borrowers of SKS, SIDBI and Vinod Khosla and other social venture capitalists, on March 28, made a Rs 11 crore investment in SKS Microfinance. The money would be used to access commercial debt and scale outreach from SKS’s current 200,000 clients to 700,000 clients by 2006-7.

In fact, both these incidents epitomise the current state of the MF industry today. On the one hand, the industry is trying to grapple with problems of sudden growth, while, on the other, global social venture funds think that impact needs to be maximised and that institutions with the right professional leadership, governance, and systems need to be supported.

Unitus is a case in point. Started in early 2000 by a group of friends with a common mission of poverty alleviation, it is based in Redmond, Washington, with an office in Bangalore. Unitus works in Latin America and Southern Africa, but with 1/3 of the world’s population in India, focus has naturally turned to India. Sandeep Farias, who set up India operations for Unitus, sits in Bangalore and works with four MFI partners, besides SKS. These are Trichy-based ASA-GV, Kolkata- based Bandhan, Bangalore-based BSS, and Grameen Koota.

In its engagement with these partners, the structure that Unitus is using is based on what it calls its “accelerator” model, which basically implies acceleration of outreach. Farias explains that the key gaps in the MF industry in India are capacity or skill and capital. To address these gaps, Unitus uses three different capital instruments, namely grant, debt and finally equity.

Working typically with MFIs which are NGOs or have originally been NGOs, Unitus first uses grant funds to build the infrastructure in the MFI. “Grant money is not to be on-lent,” explains Farias. Once the MFI attains a certain level of skill of employees, internal structures, and MIS, Unitus is willing to help the MFI to increase their capacity to lend as well as obtain more leverage through appropriate debt resources.

Lastly, as in the case of SKS, Unitus will put in equity—its first equity investment. In SKS, Unitus has invested a little over Rs 2 crore. Through its interventions, Unitus wishes to increase the outreach of its partners mani-fold. The number of clients served by its Indian partners stood at a little over 400,000 as at the end of calendar 2005. By fiscal 2009, which is the time that most the current partnerships are likely to end, Unitus expects that this number will go up to almost 30,00,000. In addition, Farias expects about a dozen new partnerships to be added over the next two years. Even accepting the fact that there is many a gap between projections and reality, there is little doubt that Unitus’s efforts are going to help its partners aim much higher than they had.

While Unitus is excited about possibilities in India and is willing to innovate to maximise impact, the fact is that it is a young organisation. Probably, that’s the reason why it has announced a tie-up with ACCION International in India. ACCION, a 35-year- old US-based non-profit organisation has the same mission as Unitus—that of poverty reduction through micro finance. But ACCION’s strategy is to work with banks and finance companies (while Unitus works primarily with NGOs) and help them downstream to do micro loans for individuals.

Unlike in other markets, in India, banks and finance companies (thanks to their chit fund origins) have a fairly good grasp about individual lending, though ACCION would look to specifically provide inputs with respect to microfinance. The work of banks in microfinance has been primarily through the SHG-bank linkage programme and through wholesale lending to microfinance. It will be interesting to see what value addition ACCION can make in its partnerships with commercial institutions and develop programmes for them to directly serve the micro enterprise client on an individual basis.

What is unmistakable, however, is that as far as micro finance is concerned, India is where the action is and funds are now there for the asking. For the sake of India’s poor, hopefully all stakeholders will behave responsibly to seize the opportunity of global attention.

By Keya Sarkar

News: India's gold shops gear up for big buying rush

(RTR 28/04/2006) Mumbai - Princeson Jose, director of Chennai-based Prince Jewellery, is certain that this Sunday, his customers won't step on each other to buy gold.

The three-store jewellery chain is gearing up for the Akshaya Trithiai festival with ample parking space, planned customer segmentation and extra business hours to manage the rush.

Across southern cities on April 30, thousands are expected to disregard skyhigh prices and queue up from early hours to buy at least a drop of gold, after a belief that valuables bought on that day would bring lasting prosperity.

"We have started taking orders in advance so that we can manage the rush better," Jose told Reuters over the telephone.

"There will be a special counter for those who come to collect their orders, so that they don't mingle with other customers and cram the shops."

Other vendors are offering home delivery and sending out vans to sell coins to ease crowds in the shops.

The ancient Hindu festival has become popular in southern India only in the last few years, after being promoted by the trade and World Gold Council seeking to boost India's annual consumption of 700-800 tonnes.

"Because of the awareness and hype generated, it has snowballed into a big event in the south," said Sanjeev Agarwal, managing director - Indian subcontinent of World Gold Council in Mumbai.

The promotion kept consumer money going away to buy mobile phones or vacations and helped sell 40 tonnes worth of gold and jewellery in southern India alone during the festival week last year, he said.

Agarwal expected this year's sales to be even more, given that the festival fell on a holiday.

HIGH PRICES MAY EAT AWAY SALES

But Consumers and retail traders are unsure this year, given prices hover around record highs. "The rise in gold prices doesn't correspond to the rise in incomes... This year, Akshaya Trithiai demand is going to be substantially down," said Daman Prakash, convenor of the Tamil Nadu Bullion Forum.

Some echo that concern. "This year prices are so high that I don't feel like buying," said Shanti Mahadevan, a 38-year-old woman in Chennai.

But, the temptation of gold lingers in others. "I would want to buy at least one gram or even half a gram," said P. Meenakshi, a 54-year-old woman in Chennai.

Gold prices reached their all-time highs in the local market last week with the 0.999 purity gold quoted at 9,560 rupees for 10 grams on April 20, a jump of nearly 54 percent over the year.

On Thursday, it sold at 9,450 rupees in the Mumbai spot market, up 125 rupees over the previous day.

Meanwhile, the industry continues its vigorous promotion of Akshaya Trithiai to take it to other parts of the country. A Mumbai jeweller said he expected strong sales on April 30.

"Coins of all denominations ranging from 1 to 100 grams would be in demand," said Trimurti Zaveri, partner in Tribhovandas Bhimji Zaveri.

News: Bharti in talks With Wal-Mart, Tesco

(Bloomberg 28/04/2006) Mumbai - Bharti Tele-Ventures Ltd., India's biggest mobile-phone company, is in talks with Wal-Mart Stores Inc., Tesco Plc and Carrefour SA about starting a retail venture.

The Indian company is in initial talks with the retailers and plans to make a decision in two to three months, Sunil Mittal, New Delhi-based Bharti's chairman, told reporters in the city today.

The venture will focus on food and groceries, Mittal said.

News: Hindustan Lever Q1 net jumps 77 pct

(RTR 28/04/2006) Mumbai - India's top consumer goods maker, Hindustan Lever Ltd., on Friday posted a 77 percent jump in quarterly profit, boosted by a one-time gain, but its shares fell as the underlying result missed forecasts.

Lever, maker of Lux soap and Surf detergent, is expected to benefit from recent tax cuts on ice cream and processed foods. But high oil prices could raise the cost of packaging and making detergents, while competition will force higher spending on advertising, analysts say.

"We will continue to judiciously use the levers of pricing, cost management and brand investment to sustain profitable growth," Chairman Harish Manwani said.

Lever, 52-percent owned by Anglo-Dutch Unilever Plc, said net profit rose to 4.43 billion rupees ($98 million) in the first quarter to March from 2.5 billion rupees a year earlier. Net sales rose 12 percent to 27.98 billion rupees.

The profit included a one-time gain of 2 billion rupees from the sale of its Nihar hair oil to Marico.

A Reuters poll of 10 brokerages had forecast an average net profit of 3.24 billion rupees and sales of 28.45 billion rupees.

Lever's full-year profit is forecast to rise 14 percent to 16.1 billion rupees, according to Reuters Estimates.

Its shares fell nearly 6 percent to 271 rupees before recovering in a weak Mumbai market. At 0839 GMT, they were down 2 percent at 281.50 rupees.

"There are some concerns about raw-material prices in the medium-term, but if underlying volume growth is good, much of it will be offset," said Hemant Patel at Enam Securities.

"The overall market also appears to be growing, so we are unlikely to see much competitive pressure," he said.

Shares in Hindustan Lever, valued at nearly $14 billion, had risen 38 percent during the January-March quarter, beating a 34.2 percent gain for the sector index and a 20 percent rise for the BSE index.

CORE FOCUS

Lever reported its first profit rise in more than a year in the April-June quarter of 2005, after a bruising price war with Procter & Gamble in detergents and shampoos.

Since then, Lever has raised product prices, relaunched brands, hived off some non-core businesses, and benefited from tax changes that have prevented smaller firms from undercutting and fiscal incentives for manufacturing plants in poor states.

Lever's first-quarter revenues from home and personal care -- which make up nearly two-thirds of its sales -- rose 20 percent from a year ago, and revenues from foods rose 11 percent.

Its advertising and promotion costs, pushed higher by competition, rose 45 percent on the year.

"The overall product mix was richer, in favour of higher-margin personal care products," Finance Director D. Sundaram told reporters.

"But cost pressure from high crude oil prices remains. There is a clear upward revision in transportation costs and we will continue to invest in our brands by way of advertising," he said.

Lever's "portfolio rationalisation" is complete, he said, except for a leather unit the company has said it will sell.

Besides competition from Colgate-Palmolive (India), Dabur, Godrej Consumer Products and Marico, tobacco heavyweight ITC Ltd. has also entered food and personal care, and will soon make home care products.

Meanwhile Lever, which expects the consumer goods market to expand 2.5 times over the next 10 years from $9.2 billion, is testing a water purifier in south India, a chain of ayurvedic spas and direct selling networks in rural and urban areas.

News: Kotaks buy NCPA flat at Rs40,000 per sq ft

(DNA 28/04/2006) Mumbai - In what realtors characterise as perhaps the biggest transaction recorded till date at Nariman Point, finance company Kotak Mahindra has bought a sprawling flat in the NCPA Apartments for over Rs40,000 per square foot. This makes the property worth more than Rs13 crore.

Spread over 3,500 square feet, the duplex four-bedroom flat adjoins the one in which the Kotaks currently reside — a 2,885 sq ft duplex three-bedroom flat on the sixth floor.

While sources declined to divulge the seller’s name (said to be a company), realtors believe the price paid by Kotak is consistent with current real-estate values.

“The last sale in NCPA some nine months ago was at a rate of about Rs32,000 per sq ft on a mid-level floor,” said Raj Kumar, head of the residential department, Trammell Crow Meghraj, an international property consulting firm. “Property prices have since appreciated, so the rate of about Rs40,000 psf seems reasonable.”

None of the realtors DNA spoke to believed a report of a flat at the NCPA being sold for Rs62,000 psf. During the property boom of 1995-96, the value of flats in this exclusive building had touched Rs28,000 psf, a rise of about Rs7,000-10,000 since the early 1990s.

Uday Kotak, executive vice-chairman and managing director of Kotak Mahindra, refused to comment on the deal. “It’s a personal matter,” he said. A large proportion of flats in NCPA are owned by companies. Realtors say deals here are not registered because a condition in the original sale deed makes it mandatory to pay 50 per cent of the profit to the state government, from whom the land has been leased. So, shares of the flats are merely transferred in the buyer’s name, usually a private limited company.

Interestingly, Indiabulls is said to have bought a large flat in Maker Chambers at Cuffe Parade at Rs40,000 psf some few months ago.

“But unlike at the NCPA, the rate there is calculated on carpet area,” said a consultant. “So, on built-up area, the rate would work out to about Rs30,000 psf.”

News: ONGC Videsh Ltd will bid for Russian firm

(DNA 28/04/2006) New Delhi - ONGC Videsh Ltd will on Friday bid for Russian firm Udmurtneft, which has licences to develop 26 fields in the country.

OVL has tied up with Russian oil company Itera for the purpose and will put in a bid on Friday, after the empowered group of secretaries gave its clearance.

Udmurtneft is 96.9% owned by TNK-BP, a major Russian vertically integrated oil company.

TNK-BP was formed in September 2003 after the mergers of Russian companies Tyumen Oil Co and Sidanco with the majority of British Petroleum’s Russian oil assets.

Today, TNK-BP is half-owned by British Petroleum, while the other half is owned by a group of Russian investors including the Alfa Group, Access Industries, and Renova (AAR).

The current production from the oilfields owned by Udmurtneft is about 1.15 lakh barrels per day. And oil output from ONGC’s foreign assets is expected to rise to 8.5-9 million tonne by 2010.

OVL managing director R S Butola said the Sakhalin-1 field in Russia would start exporting crude from June, and that ONGC would bring oil from this operation to India in early 2007.

ONGC holds a 20% in Sakhalin-1. “Sakhalin is currently producing 40,000-45,000 barrels per day, which is being locally consumed. Exports will begin in the second half of the year,” he said. He said crude oil from Sakhalin-1, operated by US oil major ExxonMobil, would command a premium over Brent crude due to it being of higher quality with low sulphur grade.

News: RIL - Mukesh's mission accomplished

(TNN 28/04/2006) Mumbai - Beating expectations on the street, India’s largest private sector company, Reliance Industries (RIL), posted a 9% increase in net profit, primarily on the strength of record refining margins. Net profit for the quarter ended March 31, ’06 grew to Rs 2,831 crore compared to Rs 2,348 crore in the same period last year. These profits grew on a 33% higher turnover of Rs 26,356 crore for the quarter compared to Rs 18,386 crore in the quarter ended March 31, ’05.

The full year results showed similar growth with net profit growing to Rs 9,398 crore for the year ended ‘05-06 compared with Rs 7,628 for ‘04-05. Interest expenditure for the company during the year fell sharply by 40% from Rs 1,469 crore to Rs 877 crore mainly because of lower interest rates and higher interest capitalisation.

Interest capitalised during the year was Rs 637 crore compared to Rs 294 crore in the last fiscal. Meanwhile, employee cost increased 16% from Rs 846 crore to Rs 978 crore, mainly on account of higher salaries. Other income fell from Rs 1,450 crore to Rs 683 crore because of non-receipt of dividends on preference shares of Reliance Infocomm. These shares have been demerged as part of the scheme.

In the fourth quarter, refining margins for RIL were its highest ever level at $10.3 a barrel, compared to $9.1 a barrel in October-December ’05 quarter. After the results, shares in Reliance scaled a new high of Rs 1,013. The share finally closed shy of the Rs 1,000 mark at Rs 996.5, up almost 2% from Wednesday’s closing price.

Analysts said they had estimated Reliance’s refining margins would be $7.5 to $8 a barrel in the quarter. The company had suffered a 6% drop in its October-December net profit with the shut down of its 33m tonne refinery for about 50 days. Oil refining now brings in about 56% of Reliance’s revenue, with petrochemicals and oil production bringing in the rest. The company’s retailing operations have grown to 1,218 petrol pumps during the year.The RIL board has declared a 100% dividend, resulting in a payout of Rs 1,394 crore.

News: Canada may invest in Indian power sector

(PTI 28/04/2006) Toronto - India is keen to see a growing Canadian participation in its power sector, especially for developing and harnessing the country's hydropower potential.

"India is looking forward to an increased Canadian participation in developing and harnessing the hydropower potential and development of transmission and distribution infrastructure," Union Minister for Power Minister Sushil Kumar Shinde said here in a speech.

He invited Canadian investments and technology in hydropower generation, modernization of existing power generation units and modernizing power transmission and distribution networks.

The minister's speech was read in his absence by Arvind Jadhav, Joint Secretary in the Ministry of Power at a meeting of Canadian business leaders organized by the Canada-India Business Council (C-IBC), as he was "indisposed" and could not attend the meeting.

Canada could also help India by providing a variety of tools and solutions pertaining to energy audit, energy conservation, demand side management, communication and renewable energy sources, he said.

He said the Ministry was in the process of setting up eight Ultra Mega Power Projects of 4,000 MW. India needed $100 billion investment in next five years for expansion of generation, transmission and distribution and rural electrification facilities.

Speaking on the occasion, Satish Mehta, Consul General of India said India now has the right climate for foreign investments as it has developed institutional mechanisms and was ready to address barriers to trade and investment.

News: Louis Vuitton set for India foray

(TNN 28/04/2006) New Delhi - Global luxury brands have begun their march into the red hot Indian retail sector. Louis Vuitton Malletier (LVM), the world’s largest brand in fashion and leather goods, is acquiring zn existing Indian company which has a distribution arrangement with LVM to sell its products through two stores in India.

This would be the first case of FDI in retail after the government relaxed norms where a multiple branded group is entering through a new venture for retailing luxury products under a single brand.

LVM is part of the world’s largest luxury goods group Louis Vuitton Moet Hennessey (LVMH). While LVMH is present in India through a number of brands including Tag Heuer and Christian Dior, LVM would operate only Louis Vuitton branded products, through this India venture. The other brands would continue to be sold separately here.

LVM is picking 51% in Mumbai’s LV Trading (LVT India), which has two stores in the country’s financial capital and Delhi. It had entered into a distribution agreement with LVM to sell Louis Vuitton branded products in India.

LVM is picking the majority stake through an investment of Rs 1.5 crore. In addition it is purchasing 2.5 lakh zero coupon redeemable non convertible preference shares at a premium for Rs 2.87 crore.

LVM is also subscribing to fresh zero coupon redeemable non convertible preference shares in LVT India with an investment of upto Rs 1.3 crore. LVM also plans to invest Rs 26.5 crore over a period of five years in India through this venture for expansion.

The remaining 49% in the venture would continue with two resident Indians including BS Trivedi a chartered accountant by profession.

LVM specialises in manufacturing and marketing luxury products in leather goods, ready to wear, shoes, watches, jewellery, textiles, writing instruments, luggage, bags, sunglasses and accessories. LVT is already selling these products through its two stores in India.

The price positioning of Louis Vuitton is at a premium segment. For instance majority of its leather products retail at Rs 25,000 upwards and most of its shoes sell at upwards of Rs 20,000 a pair. LVMH ended the year ’05 with global revenues of $17bn.

largely boosted by growth coming for Louis Vuitton brand which clocked double digit growth. Louis Vuitton, which started as a luggage goods maker in mid 19 century, later diversified into other fashion and luxury products.

News: Cos finance consumers to boost growth

(TNN 28/04/2006) Mumbai - India Inc has learnt its ABCD — ayah, bai, carpenter and driver. It’s this segment that has turned out to be the bread winner, literally, for the big daddies of corporate India. “Companies will have to read the consumer purchasing trends closely.

Nothing can be termed black and white as far as consumption patterns are concerned. The richest may not necessarily be the biggest spenders,” pointed out a top company official.

Although average income levels have shot up sharply among this set of consumers, there are no non-banking financial institutions willing to fund their purchases for lack of official documents such as salary certificates, bank account statements etc.

But, now companies stepping in to bridge this gap. LG, for instance, is tying up several local financiers to customise finance packages to tap the urban and rural poor. Bajaj Auto has in fact managed to tap a large section of the bottom of the pyramid in the last few months through its finance arm, Bajaj Auto Finance.

“Instead of looking at a single source of income, we have started looking at the ‘family income,’ making it easier to finance the vehicle,” says S Sridhar, VP of Bajaj Auto. Earlier, these consumers would buy a second hand two-wheeler or a moped. With two-wheelers getting more affordable, consumers increasingly want to own a new model, Mr Sridhar adds.

The retailers are tying up with the manufacturers to develop products in areas such as food, grocery, fashion, furniture, electronics and communication products that specifically cater to their needs. These consumers who constitute a massive 50% of the consuming class seem to be far more willing to spend and are getting more status conscious.

Retailers such as Pantaloon are talking about creating a capacity to spend. Mr Biyani says Pantaloon recruits about 500-600 people every month and only one-third of them have college education. “Aspirations are not reserved for only the ‘haves’ of a country. In fact, some of the richest are the biggest bargain seekers.

And there are consumers in the low-end of the market who are willing to splurge. That’s an attitude difference,” said Piruz Kambhatta, CMD of Rasna.

Retailers are now planning to push growth rates in the segment where consumers have stepped away from a self-denial mode with better purchasing power and finance options, not denying themselves immediate gratification unlike their predecessors.

Companies are willing to look at the larger picture and rely on absolute market and consumer intelligence to chalk out more reality-based strategies to drive growth. Hero Honda, for instance, has begun tracking monthly household incomes in the bottom-end of the market to get more consumers into their entry-level segment.

News: Reliance seen raising VC fund for retail, realty foray

(TNN 28/04/2006) Mumbai - The Reliance group is believed to be putting together a venture capital fund which will support its foray into the retail and real estate sectors. The fund, which sources indicate may be called, Skill, may have an initial corpus of around Rs 500 crore, which may be scaled up later.

“It will be in the nature of an urban infrastructure fund to support the RIL group’s initiatives,” industry sources said. These sources said that the team working with Anand Jain, a close friend and business associate of RIL chairman Mukesh Ambani, will be in charge of the fund.

Mr Jain is handling RIL’s foray into building special economic zones (SEZ). He also handles RIL’s real estate activities. Informed sources said Reliance is working aggressively on having a sound back-end support system which includes sourcing and manufacturing for its retail foray, providing financing and also focuses heavily on real estate.

“It is a huge back-end strategy which is being put into place. They have also sought the help of a couple of foreign retail consultants to frame the plan. The focus is on being a big enable to a host of businesses, encourage enterpreneurship and small businesses and eventually consumption,” said a top industry official.

Sources said Reliance is trying to take a huge number of kirana-owners and small traders across the country under their wings and reach some sort of understanding on mutually profitable partnerships.

The Reliance fund may be used to support entrepreneurs who may interested in setting up shops in malls and multiplexes where RIL has a major presence or is an anchor tenant. Similarly it may fund businesses by new entrepreneurs in RIL’s own SEZs.

The fund is likely to be open for investments by outside investors as well as RIL promoters and associates. However details on the exact structure of the fund and the number of investors were not available.

On conditions of anonymity, senior Pantaloon officials said Reliance have structured their retail foray largely on the Pantaloon model.

The size of the Reliance foray is of course much larger with the company even looking at building small townships around their retail malls as a complete set-up. Industry sources said retail majors are extremely keen to also cash in on the real estate value in and around the malls.

News: German bank eyes stake in Indian bank

(PTI 27/04/2006) Frankfurt - KfW, the German publicly-owned development bank, is negotiating to buy a stake in a bank in India, the head of the KfW's DEG subsidiary told the Financial Times Deutschland today's edition.

"We're currently holding talks with a regional bank in India that provides credit to small and medium-sized companies, particularly in the area of agriculture," DEG chief, Winfried Polte, told FT Deutschland.

He declined to name the bank or say what stake size was being negotiated, saying the details would be made public in mid-2006.

News: Prozone in JV with Omaxe to develop shopping mall

(TNN 27/04/2006) Mumbai - Prozone Enterprises, a wholly owned subsidiary of Provogue (India), on Wednesday announced a joint venture agreement with real estate developer Omaxe Group to develop their Prozone Shopping Mall concept on land banks owned by Omaxe across the country.

The venture will function as a special purpose vehicle.

Nikhil Chaturvedi, MD, Provogue said the tie-up with Omaxe would help the company become one of India’s leading retail infrastructure development houses. As part of the project, 10 malls will be developed in phase one at an investment of around Rs 1,500 crore.

Omaxe, one of the largest real estate developers in North India, is building 14 malls and 30 townships in projects worth Rs 12,000 crore. Prozone is now developing over 12m sq feet of retail space.

Recognising that 70% of mall footfalls are driven by food courts and entertainment, Prozone has engaged the executives of the Dubai-based Paul Merrifield, a leading food court franchise, to head the dedicated entertainment division.

Other officials are Kapel Vahi, who has joined from Trammel Crow Meghraj to head tenant relations, and Ritesh Munshi, earlier with Inorbit Malls and Kshitij, who will head mall management.

News: DLF, Indiabulls strike JV to develop properties

(TNN 27/04/2006) Mumbai - It could be the coming together of two big players in the Indian real-estate sector. The Delhi-based real estate major DLF Universal has tied up with Indiabulls Financial Services to form a 50:50 joint venture (JV) called Kenneth Builders & Developers to develop residential and commercial properties across India.

To start with, Kenneth Builders & Developers has acquired 35.8 acres of land from Delhi Development Authority (DDA) through a competitive bidding process for Rs 450 crore. DDA had called for bids to develop residential projects under its public-private partnership project.

The JV company would develop high-end residential properties in the NCR, sources close to the development said. Emaar-MGF and Agarwal group were the other bidders for the DDA plot. Indiabulls shares ended 12% higher than its previous closing at an all time high of Rs 279.

The Indiabulls-DLF JV has floated a special purpose vehicle (SPV) to acquire the DDA property. The newly formed JV will be used to buy commercial and residential properties across India in the future. “Currently, the JV is bidding for more than four properties in Delhi and the NCR.

Depending upon projects, the scope of the JV will be expanded to various parts of India,” sources said. Real estate prices in Gurgaon, Delhi’s fastest-growing suburb, has zoomed 100% in just last one year and virtually every conceivable neighbourhood in the NCR has seen capital values appreciate in excess of 80%.

Sources have indicated that the residential development on the Kalkaji plot will feature high-end residential apartments in private landscaped surroundings and the public-private project will involve the construction of housing units for the economically weaker section of the society with all civic amenities.

The acquired plot is in a prime location at south Delhi between Anand Mai Marg and Delhi-Mehrauli Road. Indiabulls and DLF have between them (separately) acquired three textile mills like Elphinstone Mills, Jupiter Mills and Mumbai Textile Mills from National Textile Mills(NTC) for Rs 441.8 crore, Rs 276 crore and Rs 700 crore respectively in Mumbai.

Indiabulls has also bought 150 acres of land near Sonepat, near the Delhi-Haryana border, for Rs 50 crore. It plans to develop a mixed-use township with residential, commercial and recreational developments.

So far, DLF has completed and has under development projects of over 207m sq ft across its residential, commercial and retail businesses with a spread of 54m sq ft under commercial, 19m sq ft under retail and 134m sq ft under residential projects.

The real estate major is in the process of mobilising around Rs5,000-10,000 crore though a public issue to spread its wing across India. DLF is also aggressively pursuing the developments of SEZs across the country with over half a dozen projects secured or identified in northern India, including Punjab and Haryana.

All real-estate sectors — residential, commercial and retail — are currently witnessing huge growth in demand. New customer segments are emerging. The residential market is not only witnessing huge growth but also the average age for ownership of new homes is declining drastically.

News: Reliance plans rural business hubs in Punjab

(TNN 27/04/2006) New Delhi - In a trend-setting move, Reliance Industries (RIL) has negotiated ‘universal land use’ licences with the Punjab government for setting up more than a dozen rural business hubs. The retail-cum-agri business plan would entail acquisition of 1,000 acres in Punjab.

While the cost of land is undecided, investment in infrastructure at the hubs is estimated at Rs 4,000 crore in the long run. To start with, the Mukesh Ambani-owned company is expected to pump in Rs 1,000 crore to kickstart the rural business hub project in Punjab.

The speciality of the pact between the Punjab government and RIL is the seamless nature of the land use permitted for the company, sources close to the development said.

RIL would be allowed to carry out procurement of agricultural goods, value addition in terms of sorting and grading; set up cold storage and warehouses; and carry out processing & packaging in the land that is to be procured for the rural agri business hubs.

Setting up of retail outlets is also permitted, the sources said. RIL is also likely to procure milk from the hubs and process it at some of hubs.

News: Indians buy more phones, talk less

(BS 27/04/2006) Mumbai - The long-held suspicion of telecom-CFOs has been confirmed - while Indians may be buying more and more cell-phones, they spend less and less time talking on them, according to the latest mobile-user survey by market research firm IDC in India.

The survey, which covered 3,140 GSM and CDMA users, found that the average time spent on voice-calls by them has dropped below the one-hour-a-day mark this year. This has, however, been compensated by increased use of non-voice services such as SMS.

The survey was carried out across all the four metros and 10 other major cities in India.

"On an average, a handset is used for less than one hour in a day for voice - including both incoming and outgoing," Shailendra Gupta, User Research Manager at IDC India, said. "This is probably due to the fact that this year, a higher number of users are from low spending market segments such as workers and students," he added.

The survey also threw up interesting information about the aspiration
levels of mobile customers with integrated digital camera proving to be
the most sought-after feature for most users. Nearly 62% users expressed a desire to upgrade to a camera-enabled phone. High on the list of must-haves for their next phone, besides the camera, are FM-radio and surprisingly, speaker-phone.

News: Indore may house three more SEZs

(BS 27/04/2006) Indore - Indore could soon be home to three more Special Economic Zones (SEZs). The Audyogik Kendriya Vikas Nigam (AKVN) is scouting for land near the city for the proposed SEZs.

The land at Diamond Park is under consideration for the SEZ, said Ashish Shrivastava, managing director, AKVN.

Speaking at a meeting convened by BJP MP Sumitra Mahajan, Shrivastava said that many sites in and around the city were being considered for the SEZ.

The ministers' committee is also looking at a 25-acre plot of land near Khandwa Road, where construction of IT Park is already underway, as a potential venue for the SEZ. The privatisation of the SEZ being developed in Pithampur would also be finalised in due course. Till now, around seven companies have evinced interest in buying into the SEZ.

Shrivastava said although there was sufficient water for construction work at the moment, water from the Narmada Water Supply System and the Sanjay Water Reservoir would be have to be sourced for the third phase of construction. Also, availability of gas for a CNG-based power plant will have to be ensured, he said.

On the infrastructure front, it was proposed at the meeting that flights to Hyderabad and Bangalore be started from the city, to cater to rising number of business travellers.

Better road and rail link between Indore and other key cities was also mooted. The roads that connect airport and Pithampur SEZ as well as the rest of the city must be widened for better service, the Mahajan said.

Railway track between Indore and Mumbai via Pithampur, Dhar, Chhota Udaipur and Vadodara was necessary. Similarly broad gauge railway connectivity from Indore to Khandwa is essential to make an easy way to reach Mumbai and Kolkata.

News: Study says Indians have 'yes' problem

(BS 27/04/2006) Hannover - Despite widespread use of English, India and Europe have significant cultural differences that are showing up as concrete obstacles to offshore work.

In a study on European small and medium IT companies in India by Value Leadership Group Inc, all the companies surveyed specifically mentioned the tendency of Indian workers to ‘‘over commit’’ (say yes to every request) as a significant cultural issue.

“We saw several examples of missed deadlines and project failures that the companies attributed to this trait,” it states.

The study has been authored by Peter Schumacher and Eric Olsson. It says the the cultural differences work both ways, with many Indians uncomfortable with the bluntness of Germans.

Speaking to Business Standard at the ongoing Hannover Fair, Peter Schumacher, president & CEO, Value Leadership Group Inc, said India’s proposition of value for money, top talent and tremendous flexibility was not going unnoticed by small and medium European enterprises that had exhausted their options in Europe.

While the study mentions a number of factors that contribute to the India advantage, it also lists some other challenges faced during companies’ off-shoring work in India. One of these is that unlike in most Western countries, salaries and incomes tend to be public information in India.

This fact alone can create salary pressures for companies operating in India. The study quotes Jens Borchers of Case Consult as saying: “Never expect that a secret agreement you share with one employee will stay a secret — he or she will tell the first person in the hall after leaving your office.”

However, on one issue Indians in the IT industry score over others. This is because many of them deal only with foreign customers and tend to have substantially more experience dealing with a wide variety of people and cultures than many Europeans do.

Indian IT also has an advantage because most of the companies have always worked on a “global delivery model”, while many European companies face an uphill struggle switching to this model from their current “proximity to customer based” model.

News: VW eyes Punjab for manufacturing Golf

(BS 27/04/2006) Mumbai - With its Andhra Pradesh car project mired in controversy, German car maker Volkswagen has set its sights on Punjab to manufacture the Golf, its entry level hatchback.

Punjab Chief Minister Amarinder Singh told Business Standard Volkwagen had held three rounds of discussions with the state government on the issue.

“We have shown the car maker the land that will be made available for its manufacturing site. The company said it will get back in two months time,” he said. Industry sources added Volkswagen might manufacture the Golf in Punjab.

As the Volkswagen representative was present at Prime Minister Manmohan Singh's recent meeting with 13 top German CEOs where they pledged large investments in the country, industry sources said this time the possibility of Volkswagen investing in India looked bright.

Volkswagen was earlier planning to invest in Andhra Pradesh. But the project ran into a controversy when it came to light that Rs 10 crore invested by the Andhra Pradesh government had been transferred to a private account.

“The car company representatives had met the Andhra Pradesh government last December but neither the state government nor Volkswagen have been talking on the issue. It may mean that its plan to set up a manufacturing facility in Andhra Pradesh may not materialise,” said industry sources.

It was expected that Volkswagen would set up a Rs 5,000 crore car project in Andhra Pradesh three years ago when the state government sent a team to Germany.

Volkswagen, an automobile manufacturer based in Wolfsburg, Germany, forms the core of Volkswagen AG, one of the world's four largest car producers.

News: India Inc stoops to conquer

(TNN 27/04/2006) Mumbai - Management guru CK Prahalad should be pleased. Retailers and consumer goods makers are heading for the ‘bottom of the pyramid’, (a phrase he helped make famous) where disposable income has moved up sharply in recent times. Two-wheeler major, Bajaj Auto for instance, sold 2.5 lakh bikes in the last two years to these consumers.

A massive shift by the second generation of domestic helps, drivers, carpenters, cleaners, supervisors, sales persons, housekeeping and maintenance staff, car park attendants and security services from unorganised to the booming organised employment in urban and rural India has completely changed the market dynamics, sources said.

Retailers such as Pantaloon, Reliance and companies such as Bajaj Auto, LG, Videocon and even handset makers are chalking out strategies to offer micro-finance and tailor-made products for this emerging set of consumers.

“We are working on a prototype which will be out in the next 18 months to tap this growing breed of consumers. These formats will be structured in a way that will make these consumers more comfortable to make purchases unlike the current ones.

We will offer microfinance and specific products tailor-made to suit their budget and needs,” said Kishore Biyani, managing director, Pantaloon Retail. Cadbury officials say that areas such as Dharavi in Mumbai throw up some of the highest chocolate volumes for the company.

“Companies will have to read the consumer purchasing trends closely. Nothing can be termed black and white as far as consumption patterns are concerned. The richest may not necessarily be the biggest spenders,” pointed out a top company official.

Although average income levels have shot up sharply among this set of consumers, there are no non-banking financial institutions willing to fund their purchases for lack of official documents such as salary certificates, bank account statements etc. But, now companies stepping in to bridge this gap.

LG, for instance, is tying up several local financiers to customise finance packages to tap the urban and rural poor. Bajaj Auto has in fact managed to tap a large section of the bottom of the pyramid in the last few months through its finance arm, Bajaj Auto Finance.

“Instead of looking at a single source of income, we have started looking at the ‘family income,’ making it easier to finance the vehicle,” says S Sridhar, VP of Bajaj Auto.

Earlier, these consumers would buy a second hand two-wheeler or a moped. With two-wheelers getting more affordable, consumers increasingly want to own a new model, Mr Sridhar adds. The retailers are tying up with the manufacturers to develop products in areas such as food, grocery, fashion, furniture, electronics and communication products that specifically cater to their needs.

These consumers who constitute a massive 50% of the consuming class seem to be far more willing to spend and are getting more status conscious. Retailers such as Pantaloon are talking about creating a capacity to spend. Mr Biyani says Pantaloon recruits about 500-600 people every month and only one-third of them have college education.

“Aspirations are not reserved for only the ‘haves’ of a country. In fact, some of the richest are the biggest bargain seekers. And there are consumers in the low-end of the market who are willing to splurge. That’s an attitude difference,” said Piruz Kambhatta, CMD of Rasna.

Retailers are now planning to push growth rates in the segment where consumers have stepped away from a self-denial mode with better purchasing power and finance options, not denying themselves immediate gratification unlike their predecessors.

Companies are willing to look at the larger picture and rely on absolute market and consumer intelligence to chalk out more reality-based strategies to drive growth. Hero Honda, for instance, has begun tracking monthly household incomes in the bottom-end of the market to get more consumers into their entry-level segment.

News: ADB expects Indian economy to grow 7.5%

(RTR 27/04/2006) New Delhi - The Asian Development Bank said on Thursday it expects India's economy to grow 7.5 percent in the year to March 2007 and anticipates further monetary policy tightening by the central bank to contain inflation.

ADB Chief Economist Ifzal Ali, in India ahead of next week's annual meeting in the southern city of Hyderabad, said high oil prices were a matter of concern for a number of emerging economies including India, Indonesia and Thailand.

India imports 70 percent of the crude oil it consumes, so any rise in oil prices raises fears of a spike in inflation in Asia's third-largest economy. Though the government caps retail fuel prices, pricey crude feeds into many other costs.

"We also see monetary tightening from RBI (Reserve Bank of India). That balances it off," Ali told reporters, when asked whether high oil prices will adversely affect domestic inflation.

India's central bank opted to leave its key short-term interest rate steady at 5.5 percent in its monetary policy last week, when many in the market had expected it to raise rates.

The RBI said price pressures and inflation expectations had been contained, but warned it would respond if domestic or international conditions changed.

Government-controlled fuel prices in India have not risen this year despite an increase of nearly 20 percent in U.S. crude prices, which are now trading around $72 a barrel due to geopolitical risks, and hit record highs above $75 last week.

News: Emporio Armani will be a winner in India

(F2F 27/04/2006) Mumbai - Francesco Tombolini, a model of Italian descent is exposed by the relaxed grace with which he flings his jacket over the puffy armchair and settles in and not because of the black, unlined jacket, the red pin-striped shirt or even his stylish, black shoes.

Tombolini also work in second shift with the Italian fashion house, as a commercial director, of Emporio Armani.

After five year stint with Gucci ended in 2004 as according to him, "Armani is a real fashion company while Gucci is a fashion product."

Tombolini airs, "They are two companies with two different philosophies about industry and life, Armani is just more Italian."

In spite of a long list of luxury brands that have existence in India, the ‘ Italian brand’ has created a buzz in the Indian luxury market.

Tombolini says he is not in a hurry, but the company will certainly establish its presence — he sees a period of a year or two as feasible and is not worried about being a late competitor.

"We do not see India as a cash cow. The market is fresh and there is space for everyone. It is a market we have been exploring for a long time and thinking whether we want to enter directly, or as a third party or through the franchisee route. It should happen within a year," says Tombolini.

The retail strategy entails opening of four stores in two cities like Mumbai and Delhi.

Besides the flagship, Giorgio Armani brand, Tombolini expects Emporio Armani will end up a winner in India, just as in China.

In China, the company has 40 stores but 25 belong to Emporio Armani. China contributes 10 percent to the group’s earnings, and there are plans to double the stores over the next five years. More business is also expected to come in from East as markets in Europe and America has dropped from 80 percent to 56 percent.

Armani tends to look east for a market as well as a cheaper production base. Tombolini believes that the entire luxury world is competing for the same consumer, the Armani group, has an appeal, which will last much longer than its competition.

“Armani is a world. Quality and consistency is our culture. We believe in an elegance, which comes from the person wearing the garment not from the garment itself, and this is a timeless appeal,” he said.

Armani says, ‘Fashion is a democratic event, everybody deserves to be fashionable at any pocket level’. It is this image which is timeless.”

News: Stage set for big FDI reform

(TNN 26/04/2006) New Delhi - It’s time to fasten your seat belts for some big-ticket reforms expected to roll out in a month’s time. The reform initiatives include permitting 100% foreign direct investment (FDI) in insurance companies serving rural India, 49% FDI in all retail trade, incorporation of companies providing any kind of contract labour and allowing free entry of A-grade global universities.

The government is likely to further liberalise the insurance sector by raising the FDI cap to 49%. Alternatively, it is also planning to allow 100% foreign equity in specialised insurance companies limiting their activities to rural and agricultural areas. FDI in insurance sector is at present capped at 26%.

These recommendations form part of the XIth Plan reform agenda expected to be announced once the state elections are over.

The government intends to introduce some radical reforms to achieve a sustained double-digit growth in the Eleventh Five-Year Plan (‘07-12) period. An approach paper to the XIth Plan is being finalised for getting the National Development Council’s approval. It is expected to be announced soon after Assembly elections, sources said.

On FDI in retail, it is being deliberated that 49% foreign equity should be allowed in all retail trade. Considering the impending political resistance to the move, an alternative of allowing 100% FDI in foreign branded and specialised retail chains is also suggested. Commerce minister Kamal Nath has hinted at some major policy level changes in retail FDI.

In order to give the manufacturing sector a boost, a change in contract labour regulations is also expected. It is proposed that companies providing contract labour should be held responsible for abiding by labour laws instead of companies using the labour. Lifting all restrictions on setting up of companies to provide contract labour also forms the part of the proposed reforms. There is also a proposal to allow ‘A’ grade global universities into India without any restriction to further enhance the country’s knowledge economy.

Government sources said the issues will be put forth in the approach paper to the XIth Plan, which is expected to be tabled at the full Planning Commission meeting in May. The approach paper, which was to be tabled in December ‘05, has already been delayed by four months due to political reasons.

News: Indian cos feed investor optimism with bonus shares

(RTR 26/04/2006) Mumbai - Indian companies have started rewarding their shareholders with bonus shares on expectation of sustained earnings growth and to improve liquidity in their shares, analysts said on Wednesday.

They said peer pressure within the sector and high absolute value of share prices, leading to lower investor interest, were also reasons for bonus announcements by companies.

In April alone 10 companies, including leading software stars like Infosys Technologies Ltd., Satyam Computer Services Ltd. and Tata Consultancy Services Ltd., have announced plans to issue or consider bonus shares.

"Announcing of bonus issues by large companies can be said to be validation of sustainability of their earnings", said Sandeep Shenoy, strategist, Pioneer Intermediaries Ltd.

Infosys expects its earnings per share to rise 26-28 percent in the April-June quarter from a year earlier, a growth rate it expects to sustain through the year.

Similarly, Satyam expects earnings per share growth of 18-20 percent, to 36-36.6 rupees, for the year to March 2007.

Higher earnings accretion leading to bloated book value has also forced companies to announce bonus shares, Shenoy said.

But some analysts said the higher priced shares was one of the main factors for the issue of bonus shares.

"Investors feel more comfortable dealing with the stocks that have lower absolute value," said V.K. Sharma, head of research, Anagram Stock Broking Ltd.

"After a bonus issue the stock price falls and liquidity increases as the number of shares increase".

Some market participants also said companies were under peer pressure to use bonus issues to reward shareholders.

"After Infosys announced the bonus, TCS followed it immediately without having it on the agenda of its board meeting," said Rakesh Choudhari, chief operating officer, Keynote Capitals Ltd. "For software companies it is just a peer pressure."

"I think the bonus issue was nothing driven by any outside influence other than making sure our shareholders were happy with the returns we gave them," S. Ramadorai, chief executive officer of TCS had said in an interview after TCS made its results public.

News: Merger bell rings for Reliance Cap

(TT 26/04/2006) Mumbai - Shareholders of Reliance Capital (RCL) today approved the merger of Reliance Capital Ventures (RCVL) with the company.

The shareholders’ affirmation came through at an extra-ordinary general meeting of RCL held today in Jamnagar where the company has its registered office. A statement released by RCL after the meeting said the approval was unanimous.

The Reliance-Anil Dhirubhai Ambani group will seek approval from the shareholders of RCVL in Mumbai tomorrow.

Under the terms of the settlement reached between the two Ambani brothers, four entities were demerged from Reliance based on the area of operations — telecommunications, coal-based energy, financial services and gas-based energy.

RCVL is the holding company for Reliance’s shareholding in RCL.

The amalgamation envisages an exchange ratio of five shares of RCL for every 100 of RCVL. The ratio is based on the recommendation made by leading international consultants KPMG.

Under the scheme of amalgamation, the shares of RCL that are held by RCVL will be cancelled and the fully diluted equity capital of RCL will remain at Rs 245 crore.

Anil Ambani has justified the amalgamation on the ground that it would directly enhance the value for 23 lakh RIL shareholders who will now be direct shareholders of RCL. It will also eliminate dual listing of RCL and RCVL on the bourses.

Moreover, it will result in increased liquidity for all Reliance Capital shareholders and yield wider domestic and international shareholder base for RCL.

On the BSE today, shares of RCVL ended at Rs 25.35 after opening at Rs 26.25 and rising to an intra-day high of Rs 26.40. RCL closed at Rs 534.25 after opening at Rs 550.

News: JMD to build shopping mall in Ludhiana

(TNN 26/04/2006) New Delhi - Real estate firm JMD Promoters Ltd on Tuesday announced its foray in Punjab with an investment of Rs 100 crore to build a shopping mall in Ludhiana.

The mall - JMD Govardhan City Centre - which is scheduled to be completed in next 12-15 months will offer 2.5 lakh square feet of area for retail, entertainment and food court.

"We are making a foray into Punjab in a big way. To start with, we are building a shopping mall in Ludhiana with an investment of Rs 100 crore," the company's Vice President- Marketing Rameet Trehan said.

Besides this mall, the NCR-based company is also planning to develop two more projects in Ludhiana.

"Plans are under consideration for developing one commercial and one group housing project in Ludhiana. We already have 13 acres of land for this purpose," he said.

The company is also conceptualising to have its presence in other cities of the state, which includes Mohali, Amritsar, Chandigarh and Zirakpur.

On the expected footfalls in the shoppping mall, he said: "The mall is located at the heart of the city and moreover, we are targeting youth. So, we are expecting good footfalls."

News: Reliance plans retail expansion

(IANS 25/04/2006) New Delhi - From a fleet of aircraft to ferry farm fresh produce to cities, to cold storage chains, speciality stores, mega malls and convenience stores, Mukesh Ambani's vision for Reliance Retail encompasses a wide variety of business models to reach the consumers.

The attempt is to be the best and the largest in the country by ensuring a presence in all districts, and in all major towns and cities, industry sources say.

The multimillion-dollar retail venture is set to take off with the first of the many malls slated to open in Ahmedabad in October. It is expected to see an investment of $700 million in the first phase.

Along with Wal-Mart, Reliance Retail has drawn inspiration from several successful business models in India like Big Bazaar, Spencer's, Shoppers' Stop and the Gujarat Cooperative Milk Marketing Federation (GCMMF) among others.

Even the traditional village marts where farmers sell their produce once a week are being developed for creating rural hubs.

"The village hub or market place will be the aggregation and segregation point for farm fresh goods. These rural business hubs would also serve as the retail point where farmers would be able to buy seeds, fertiliser, equipment and even take loans in tie-ups with banking institutions," said an industry insider who keenly follows the developments.

It is from these aggregation points that Reliance Retail would take on a high-tech shape with plans afoot for not only setting up warehouses and cold storage facilities but also food processing units and even operation of cargo planes for delivering farm fresh produce, he added.

"Reliance is in the process of seeking clearance from the civil aviation authorities to operate a fleet of 30-40 small and medium aircraft of 30-60 tonnes. The idea is to reduce wastage and provide the best quality produce to consumers," said a senior company official, who however hastened to add that company rules did not permit his talking to the media.

Work is on at all levels to create the infrastructure and to tie up supplies - be it vegetables and fruits from farmers or electronic and other products from global sourcing majors such as Hong Kong's Li & Fung that supply to large chain stores like Wal-Mart.

Delhi, Kolkata, Bangalore, Chandigarh, Baroda, Pune and Hyderabad are among cities earmarked for front-end operations like malls speciality stores, hypermarkets, supermarkets and convenience stores. The major focus will however be on smaller cities, towns and districts.

Reliance Retail has already acquired large tracts of land in Haryana and a similar exercise is on in states like Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Punjab, Tamil Nadu and Uttar Pradesh.

Negotiations are soon set to conclude for about 900 acres of land in Punjab, which is set to become the hub of dairy processing activities of Reliance Retail. To execute these mammoth projects, Reliance has been on a major talent hunt that has led to immense churning in the top and middle rungs of several companies, headhunting firms said.

So far about 2,000 people have been recruited for Reliance Retail and another 5,000 will be added over the next few months.

News: More Indian Wal-Mart offices soon

(TT 25/04/2006) Mumbai - Global retail chain Wal-Mart will set up two more sourcing offices in India by the middle of this year.

“We are planning to set up one office in Mumbai and the other in Delhi by the middle of this year,” says S. Ramesh, GM (India & Sri Lanka) global procurement of Wal-Mart.

The offices will do quality assurance work for Wal-Mart’s global procurement and sourcing business.

“The Mumbai office will look after sourcing of textiles, apparel, gems and jewellery, while the Delhi office will concentrate on stainless steel and home decoration products and apparel,” he added.

It also plans to hire close to 10 associates for its Mumbai and Delhi offices. “We plan to have close to 126 people in India by the end of this year,” says Ramesh.

Wal-Mart’s office in Bangalore serves as the company’s global procurement hub for sourcing of merchandise from India, Nepal and Sri Lanka. There are close to 80 employees in the Bangalore office.

In 2005, Wal-Mart purchased approximately $1.5 billion in goods from factories and third-party suppliers in India for its retail stores globally compared with $1.2 billion worth of products in 2004.

About one-third of this amount was purchased directly by Wal-Mart’s global procurement office in Bangalore. Major categories sourced from India include home textiles, apparel, fine jewellery and house wares.

Although the company does not source food products at this point, it has carried out test shipment of black pepper from the country.

Regarding its tieup with the Sunil Mittal-promoted Bharti Group, Ramesh said, “We do not have any direct sourcing from Bharti at this time.”

News: Mumbai's realty set for revamp

(NDTV 24/04/2006) Mumbai - Mumbai's housing problems could ease dramatically very soon and the reason for that can be found far away from the swanky new housing complexes in old rundown buildings in the city, some of which can now be redeveloped.

That's thanks to an interim order from the Supreme Court which says:

* Wherever a builder already has permission to redevelop an old building they can go ahead and do it
* All pending applications for redevelopment can also be processed
* But new applications will have to wait till the Apex Court gives its final order in July.

That gives a new lease of life to builders like Lokhandwala, who had been stopped in their tracks by the Bombay High Court in October last year.

The High Court had ruled that only buildings, which are in danger of collapsing, can be redeveloped and that too only after a special committee judges it to be beyond repair.

Developing buildings

Builders hope the Supreme Court's final order will remove all hurdles to redeveloping old cess buildings and they claim it will increase the supply of housing in Mumbai by at least 20 per cent.

"This will not only benefit builders. It will benefit tenants and consumers add to supply, there is no supply in the island city" Ali Lokhandwalla, Lokhandwalla Builders.

The Supreme Court has fixed a ceiling on the floor space that a builder can construct when they redevelop these buildings.

But environmentalists fear builders will fudge data to build huge tall buildings, adding more pressure on Mumbai's strained civic resources.

"There are problems of water shortage, electricity and approvals are rigged," said Debi Goenka, Environmentalist.

With the interim order, several redevelopment projects that were stalled can now be reopened, and these old buildings might be replaced by skyscrapers.

Builders say they welcome this as supply of housing is really choked in Mumbai. But the big question remains on whether Mumbai's infrastructure can really support the additional development.

News: Bharti-Tesco tie up with Freshtrop

(NDTV 24/04/2006) Mumbai - The country's top retailers are hunting for small companies that will fill the missing link between their mega brands and connect with the real farmer or producer.

The Bharti and Tesco combine have narrowed in on Freshtrop Fruits for sourcing grapes and pomegranates for their domestic foray.

Freshtrop is a small fruit exporting company that's been supplying fresh fruit to global retail majors.

Now Freshtrop is looking inward by riding on one of its foreign clients Tesco which has tied-up with Bharti to setup stores across the country.

Freshtrop will set up the distribution backbone for supplying fresh fruits to Tesco-Bharti. The tie-up will also be aimed at the export market.

Sweet deal

The sweet deal will help build the Freshtrop brand which is already a trusted name among big European chains.

Tesco is a big buyer, accounting for about seven per cent of Freshtrop's exports. Freshtrop also exports to Wal-Mart, St Morrissons and Marks & Spencer.

The company's exports have been growing at about 33 per cent every year and it hopes to increase that to Rs 35 crore in this fiscal.

"There are a lot of players in this market, not just the Mittals. We think even the Reliance lot would be interested. Anyone in retail will drift into the fruit business as it's upcoming," said Jayant Manglik, RR Equity Broker.

Right now most of Freshtrop's revenues come from exporting grapes.

But in the days ahead, as the domestic market picks up and more and more big buyers enter the market Freshtrop expects to start selling a much larger variety of fruits.

Imported fruits have flooded urban India in the past few years as people with cash to spare look to buy better quality fruits.

This is where big retailers and food giants are hoping to make their money and smaller food processing firms are likely to make the most of this.

News: New Kolkata fashion store flagged off

(BS 24/04/2006) Kolkata - Kolkata's latest high fashion retail store has been named 85 Lansdowne, and that's both its name and its address.

Promoted by Shalini Nopany and Pooja Goenka, it is a retail venture of the New India Sugar Mills Ltd, a part of the KK Birla Group of Companies.

The store brings under one roof as many as 24 fashion designers.

Besides local luminaries Anamika Khanna and Sabyasachi Mukherjee, 85 Lansdowne stocks the wares of Raghuvendra Rathore, Manish Arora, Rina Dhaka, as also upcoming designers like Gauri Bajoria and Kavita Banerjee and Lolita Mukherjee of the label, "Bon bibi".

Besides clothes -- both menswear and women's wear -- the store also stocks designer jewellery by Priya Todi and Suhani Pitte, bags by Meera Mahadevia and designer accessories from the Stoffa label. The promoters feel 85 Landsdowne's USP is its location -- a 70-year-old villa style mansion that has been lovingly and painstakingly refurbished for its present use.

None of the rooms have been demolished, instead each designer has a room to herself.

According to Nopany, the project has needed an investment of around Rs 3 crore.

When asked is Kolkata can sustain so many high-fashion stores, Nopany's reply is, "Consumer buying behaviour has changed a lot in Kolkata these days. There is a strong upward trend in spending, look at the retail and housing sectors".

News: Pantaloon eyes Rs 700 cr revenue via vendor fairs

(BS 24/04/2006) Mumbai - After doing business worth Rs 100 crore in the first round of its 'Saathi' initiative at a fair in Ahmedabad, Pantaloon Retail is hoping to achieve deals worth over Rs 700 crore in phase one of this initiative targeted towards mid-sized vendors.

After Ahmedabad, the company is planning a similar two-day fair in Delhi towards May end followed by Kolkata and Hyderabad.

Kishore Biyani, managing director, Pantaloon Retail, said, "We are eyeing a large number of Delhi firms for such a deal. In terms of business, we expect to do transactions worth Rs 200-300 crore during the two-day fair there."

However, there is a possibility that this figure could be far higher, possibly Rs 500 crore or more, going by the number of companies that are located there and their business potential.

Damodar Mall, president - foods, Pantaloon Retail, said that the company was looking at product sourcing deals (from such categories as apparel, food and general merchandise) for all its formats - Pantaloon, Big Bazaar and Food Bazaar.

"We would help these companies in terms of cost saving and product development," he said.

For instance, as part of its alliance with Amul, Food Bazaar would become a distributor of the company and set up parlours within its stores and aid product development. In Ahmedabad, the company has signed such deals with Rasna, Bharat Vijay Mills and Ankur Salts.

News: Now, one-stop mobile shops to occupy Indian mall space

(TNN 24/04/2006) New Delhi - Telecom boom is meeting the retail revolution and mobile phones are finally finding a space of their own. One-stop mobile shops — handsets, accessories and service of any brand — are infiltrating the mall space and players like Pantaloon are taking the bait. The Essar Group, also reportedly in the fray, would join Bangalore-based MobileNXT Teleservices that has taken off with its first store in Gurgaon.

With the arrival of specialty mobile stores, the monopoly enjoyed by the unorganised multi-brand stores, the only ones offering such services, may soon be a thing of the past.

Having already launched in Gurgaon, MobileNXT will be following up with stores at Kolkata and Ahmedabad. “In the first year of operation, we plan to roll out 31 stores all over the country,” says Romy Juneja, founder COO, MobileNXT Teleservices, a multi-brand store offering handsets of all brands, mobile accessories, value-added services, data transfer facilities, an exchange programme and interactive kiosks.

The company has made an initial investment of $5 million and is targeting sales of Rs 45 crore by April 2007. The focus of the retail chain will be Tier II and Tier III towns. “We want to primarily target the smaller towns as these markets are underserved unlike the metros where customers do have the option of some multi-brand stores, albeit unorganised,” Juneja adds.

Leveraging its already-established presence in the retail space, Pantaloon Retail recently launched its telecom outfit Convergem Retail India Ltd, a wholly owned subsidiary of Pantaloon Retail India Ltd.

“Convergem Retail plans to follow a three-pronged strategy. Shop in shop with their Big Bazaar stores, independent brand stores, and kiosks in malls, multiplexes and the metro catering to impulse buying, under three brand names M Bazaar, M Port and Gen M respectively,” says Neeran Chibber, president and CEO, Convergem Retail.

By June, it plans to launch 40 stores across cities such as Gurgaon, Kolkata, Nagpur and Mumbai. Along with mobile phone services, the retail outfit would also cater to landline solutions, IT products and other communication needs of a consumer. Investments of around Rs 100 crore has been earmarked for the venture. Retail bigwigs are not the only ones to cash in on mobile retail. Also showing interest is the Essar Group. When contacted by ET, company sources said that it was planning to launch its new initiative soon. They, however, did not indicate any date.

“We are observing the huge untapped market for organised telecom retail and trying to evaluate our project accordingly. Since the size is huge, it takes time for something like this to take shape,” sources said. The Essar group is said to have earmarked around Rs 1,500 crore for the new multi-branded telecom retail chain initiative over the next five years.

News: Metro AG to expand India ops

(FE 24/04/2006) Hannover - German trading major Metro AG — which has two Metro Cash & Carry wholesale outlets in Karnataka — has lined up Euro 300 million investment in India with plans to open new outlets in Hyderabad, Chennai and Kolkata. Metro chief executive Hans-Joachim Korber told FE the new stores may be opened in the next few months to scale up the company’s operations in India.

Metro AG’s plans to pump in more funds into India comes on the back of an announcement by commerce and industry minister Kamal Nath who said the government planned to liberalise the investment norms in the retail sector in the next 45 days. He was speaking to mediapersons on the opening day of the Hanover fair.

“Our ministry is working out a proposal in this regard (opening the retail further),” he said. At present, India allows up to 51% FDI in single brand retail and has been under pressure from foreign investors to broadbase the investment norms.

The opening day of the fair, where India is a partner country, also saw as many as four memoranda of understanding (including a $1-billion deal between Vijay Mallya’s Kingfisher Airlines and Airbus Industrie) being signed between Indian and German companies.

In the largest of the deals, Kingfisher plans to buy five A 340-500 long-haul aircraft for non-stop service between Mumbai and two US cities, New York and San Francisco.

The Abhay Firodia-promoted Force Motors entered into a 70:30 JV with Munich-based Man Nutzfahrzeuge to set up a Euro 100 million facility in MP to produce buses, chassis and coaches for domestic as well as Asian and African markets. He said another Euro 300 million would be invested after the initial expansion.

The third MoU was signed between Indian Railways and Deutsche Bahn (German Railways) for technical cooperation and development of equipment. The fourth MoU was between ICMR and Helmholtz Association for R&D collaboration in new generation technologies.

News: New window in Indian retail trade expected

(BS 24/04/2006) Hannover - India would soon open a new window in retail trade aimed at wooing new investors, Commerce and Industry Minister Kamal Nath said on the sidelines of the ongoing Hannover Messe trade fair.

“We will open another window in a month’s time for retail trade to further open up the sector,” he said.

Though the minister did not give any details, it is believed that the opening up of another window will be a step towards eventually more liberal retail trade norms.

Nath’s remarks came even as German Federal Chancellor Angela Merkel told business leaders: “I request the Indian government that any attempt towards protectionism should be staved off, be it the European Union or other countries... Isolation is not the right path to pursue. We must face the challenges of change. Indian companies are more than welcome to come to Germany.”

Merkel made the remark during her address at the Indo-German Business Forum at the fair. Prime Minister Manmohan Singh was also present on the occasion where he used the opportunity to invite German companies to invest in India.

Seen in the context of the Mittal-Arcelor controversy, which has seen France raise protectionist barriers to a cross-border investment proposal, Merkel’s remarks were interpreted by many as an indication to the openness of a country that is Europe’s largest economy.

Merkel will visit India next year with a large delegation of German business leaders, especially from the small and medium enterprise segment. Singh said his government would create an enabling environment conducive to such a step.

Meanwhile, Indian officials said talks between Germany and India had progressed well.

“This (the German visit) has been one of the best meetings. India can partner Germany in many areas, especially the crucial energy sector,” an official said.

Indian officials are also enthused by the positive signals emerging from the German side on the path to civil nuclear cooperation. With Germany looking at the nuclear option in the light of sky-high oil prices, India has received feelers from German companies like Siemens for supplying nuclear equipment.

Doha deadline will be missed, says Nath

The April 30 deadline for completing modalities in agriculture and industrial tariffs are unlikely to be met. A new deadline in the on-going Doha round of WTO negotiations would be set, Commerce Minister Kamal Nath said.

“The April 30 deadline is not happening. We will have to set a new work programme,” he told reporters here.

The minister added that trade negotiators are struggling with difficult issues. The deadline for agriculture and industrial tariffs (non-agricultural market access) was set at the Hong Kong WTO Ministerial conference in December last year.

Nath added that the failure to meet the April 30 deadline would not derail the Doha Round of talks. “These are not simple matters,” he said. Nath is leaving Hannover on Monday night for Geneva to attend a meeting relating to trade talks and the deadline.

News: Pantaloon arm buys 33% in Capital Foods

(TNN 24/04/2006) Mumbai - Indivision Capital, a private equity fund belonging to Pantaloon Retail’s arm, Future Capital — the latter is the holding company for Pantaloon’s private equity funds — has picked up 33% stake in processed foods company, Capital Foods, makers of brands like Smith & Jones and Ching’s Secret and a leading private label supplier to several big retailers abroad like Target, Tesco.

The company is also a major supplier to traditional formats although most of the growth is driven by organised retail. Ajay Gupta, the managing director, confirmed the move. “It will help us grow faster. Currently, we are growing at more than 40% every year and want to reach the Rs 100 crore mark in a few months time,” he said.

The promoters of the company will hold 67% after the transaction and the remaining 33% will be owned by Indivision. Currently, the company has a turnover of around Rs 40 crore. The company has a manufacturing facility to make ready to eat meals plant at Kandla for products like ketchup, chutney and cooking pastes.

Mumbai-based Capital Foods focuses primarily on the convenience and impulse foods market. The convenience foods market is growing at a hefty 35-40%, both in the urban markets and smaller cities.

The strategy of Indivision is to pick up stake in small and medium sized companies as a strategic investor and help them scale up to a national level. “We are the first food processing company in Asia and the ninth in the world to get an ISO 22,000 certification and also have a British Retail Consortium (BRC) audit. Apart from the technology, quality is a critical aspect to cater to global consumers in the exports market,” Mr Gupta said.

News: Ludhiana traffic chaos an adverse spinoff of multiplexes

(BS 24/04/2006) Ludhiana - The construction of more than 25 malls and multiplexes in Ludhiana has brought in its wake traffic chaos, which is expected to increase in the future.

Experts feel only the malls that provide easy access and exit points can survive, apart from ample parking area.

“It’s not that only parking is important; it should be systematic,” said Vivek Srivastava, vice-president (marketing), Aeren R Enterprises, which is coming up with Ludhiana Festival City on the Jalandhar Bypass, GT Road.

“Our Ludhiana Festival City is located a few metres from the main GT Road, which will not lead to traffic chaos on roads,” Srivastava said.

In Ludhiana, a majority of shopping malls and multiplexes like Omaxe Shopping Mall, Westend Mall, Ansal Plaza-2 and Ansal Plaza, Subhi Mall, Arean’s, and MBD Neopolis are located on the Ludhiana-Ferozepur Road, which is one of the busiest roads of the city.

More than 15 marriage palaces of the city are located on this road, and so during weekends, traffic congestion is heavy. Ludhiana, whose population increases by 800,000-900,000 people every five years, has a population density of 824 per square km—the highest in the state.

Its annual per capita income growth is 6 per cent, while retail spending is expected to increase by Rs 2,077 crore to Rs 5,950 crore by 2010. The retail floor area demand is expected to rise by 3.1 million square feet by 2010.

The city’s income to expenditure ratio is expected to increase from 40 per cent to 50 per cent in 2020. 46,031 vehicles were registered in Ludhiana till October last year, of which 71 per cent are two-wheelers, 22 per cent cars and jeeps, 6 per cent light commercial vehicles and 1 per cent heavy commercial vehicles.

Tej Pratap Singh Sandhu, who owns Sandhu Studio on Ferozepur Road, opposite a big shopping mall, says almost everyday evening, a huge rush of cars can be seen opposite the shopping mall.

“Sometimes it’s not just the mall owners who are responsible for traffic problem outside their malls, but the people themselves. People should be aware of traffic rules; only then the traffic menace can be checked.”

News: Future Capital to foray into retail of financial products

(TNN 24/04/2006) Mumbai - Future Capital, a majority-owned company of Pantaloon Retail, is chalking out a massive foray in the next few months into the manufacture and retailing of financial products, based roughly on a Latin American model.

Termed ‘Project Moneybazaar’, the format will focus on tapping the middle and mass end of the consumption market with a retail credit plan that will offer everything from credit cards, auto and consumer durable finance, mutual funds, insurance, money transfer, financial planning, microfinance and mortgages.

The company is now in the process of getting an NBFC licence and is also negotiating with a couple of leading Indian financial services companies for a strategic equity partnership in the manufacture and distribution of the products. Future Capital is also likely to buy a small stake in the partner.

A huge back-end process is being set in place and a CEO for the project is being short-listed. The company is planning four delivery models for the financial retailing: stores, malls, online and resellers (microfinance network to tap urban poor).

The research for the project is being undertaken by Rupa Purushottaman who will combine anthropology and economics by mapping cultural consumption trends and behaviour and suggest different strategies for different cities. For instance, the company is planning specialised kiosks to tap the urban poor, in places such as Dharavi, Asia’s largest slum.

“Our focus is on creating a capacity to consume and will be based on the proprietary data derived from our daily interaction with the consumer. Offering bundled pricing for consumers who should be extremely comfortable walking into our formats should not be intimidated by any purchase plan. It is a progressive model and will be consumer-oriented and not product-oriented like the current range of financial products available,” said Samir Sain, CEO of Future Capital.

The company is looking at partnership at two levels, at a manufacturing level for all credit products like auto finance mortgage and distribution partnership at the delivery model for mutual fund products where the company will distribute all products in the market.

Future Capital is drawing heavily on global talent that’s come in from Goldman Sachs, Coke and McKinsey. “Having worked with the world’s best investment bank for 11 years, I hope I can replicate some of that culture and success into Future Capital,” said Mr Sain.

Future Capital will primarily be an incubator for new lines of businesses and will offer shared services and capital to all the ventures under it. HR , technology and investor relations will be separate divisions in the company.

News: Biyani Vs Ambani

(BT 24/04/2006) Mumbai - Over seven days in January, Kishore Biyani, the 44-year-old maverick Chairman of the Pantaloon Group of companies, was closeted in meetings with Mukesh Ambani, Chairman of Reliance Industries. No, they weren't thrashing out a joint venture or an acquisition. Rather, the agenda was how Pantaloon and Reliance could carve out their own huge spaces in the retail sector, avoid head-on competition, and thereby jointly take on the multinational retail giants once they get the green signal to set up shop in India. Whilst Biyani was the sole Pantaloon representative in the discussions, Ambani had in tow his point man for the retail business, Manoj Modi. A week down the line, however, sources in the know reveal the dialogue broke down abruptly, and the proposed non-compete clauses never saw the light of day. The sources also reveal this cessation of discussions didn't upset either of the concerned parties. For, each was apparently content to walk out with some particulars about the other's game plan for the retail business.

Ever since that meeting, rumours have been flying thick and fast in the retail industry circles that Biyani, perhaps overawed by the size and scale of Ambani's retail blueprint, might have been looking to sell out to Ambani. After all, he and his family own a little over 44 per cent in flagship Pantaloon Retail, valued just under Rs 2,000 crore at current market prices. Biyani rubbishes such stories. Mukesh Ambani is a good friend, he maintains. "We are confident enough to lead the business," he says bravely. "Right now we don't know the face of the competition. The competition is only on paper."

Ambani Thinks Big

Make that reams of paper. To be sure, the sheer size and scale of the Reliance retail blueprint-in typical Ambani style-make the existing industry players, including Pantaloon, which is the leader by far, appear puny. Consider the investment outlay: By March 2008, Ambani would have sunk all of Rs 15,000 crore into his retail business, 30 times the Rs 500 crore Biyani has earmarked for 2006-07. Big investments equal big sales-Reliance is aiming at a mind-boggling turnover of Rs 90,000 crore by 2010, 10 times Biyani's projection for the same year. By 2007, Ambani hopes to have 1,575 stores all over the country as against Biyani's current total of 99 Big Bazaars, Food Bazaars, malls, Fashion Stations and sundry outlets. The employee strength of Reliance Retail will be five times Pantaloon's in four years (5 lakh as against 1 lakh). And for good measure Ambani also poached retail veteran Raghu Pillai, who Biyani had recruited (from RPG) to spearhead the retail business.

"One person out of 12,000 doesn't matter," says Biyani, with reference to Pillai's exit. Getting the right people is going to be a big challenge for everybody. "Today, our attrition rate at 8 per cent is the lowest; the industry attrition rate is 25 per cent-plus," adds the entrepreneur who's seeking to professionalise the business he's built with a burst of high profile recruiting (see: No More A One Man Show?). Some more top-level appointments are expected in the coming days, including some who will be relocating from overseas. As bt went to press, headhunters also revealed, N. Shridhar, Chief Financial Officer, Britannia, was set to join the group's financial services arm.

Yet, the projections coming out of Reliance are enough to give most entrepreneurs sleepless nights-and perhaps putting out such huge figures may just be a prong of a psychological battle that's being fought in the marketplace even before the first Reliance store is flagged off. But true to type, Biyani isn't rattled-if he is, he's doing a superb job of hiding it-and he's still talking about size and scale. No, he isn't attempting to match Ambani on the retail front. Rather than take on the Reliance might head on, Biyani is seeking to build size and scale beyond conventional retail, across the entire consumer space. This involves forays into an assortment of formats and businesses, right from mobile phones and storage products to health, beauty and fitness products, from pharmacies and salons to furniture and furnishings, consumer durables and electronics, and from gold and jewellery and footwear to the entire gamut of financial products. The objective is clear: To capture not just a share of the consumer's wallet, but virtually the entire wallet, not just in terms of consumption, but even savings (which is why Biyani has even bagged a licence for a non-banking finance company). The plan: To meet the entire family's need under one roof. The group objective these days is: "We will provide Everything, Everywhere, Every time to every Indian customer in the most profitable manner."

New Identity

"That's my new card, with the new group identity," says Biyani as he whips out a visiting card from the pocket of his blue-checked shirt. On it is a logo of a flying bird-a sone ki chidiya (gold bird), as Biyani puts it-with the words "Future Group, India tomorrow," embossed below it. "We never created a group identity in the past...We cannot be known as Pantaloon. It was originally a trouser brand," says the entrepreneur who started up Pantaloon Retail (India) in October 1987, then incorporated as Manz Wear Private Ltd. The company went public in September 1991 and later changed its name to Pantaloon Retail (India) in July 1999.

Biyani, who can be often spotted on Sundays outside his own hypermarkets and food bazaars observing consumer behaviour, has restructured his businesses into six loose verticals: Future Retail, Future Space, Future Logistics, Future Capital, Future Brands and Future Media. Whilst Future Retail will continue to be the core, the other verticals will directly or indirectly serve it: For instance, Future Logistics will drive efficiency across the businesses, Future Brands will be the custodian of all present and future brands (developed or acquired), Future Capital is the financial arm that will tap consumer savings as well as serve as a medium for customers to pay, Future Space will manage properties and malls (and not just those of the group), and Future Media will capitalise on media opportunities within retail and attempt to shape consumer preferences.

As an animated Biyani blitzes through a 24-slide presentation on the Future Group on his Acer laptop, one gets a peek into the man's mind, and his vision for tomorrow. He divides India into three separate zones or countries within country. For Biyani, India I is the urban class (where the target consumers are men and women), India II is the suburban class (target: Youth) and India III is the semi-urban (target: Kids). And Biyani wants to capture that all. "It's not just a name, but a new way of thinking," quips Biyani.

Follow The Leader

If Biyani's thinking like a visionary, he's only following in the footsteps of Mukesh Ambani, who has, over the decades, known to have conceptualised integrated blueprints for Reliance, encompassing the entire textiles value chain. Ambani is also known for his faultless project execution skills, amply reflected in the petrochemical units and the refinery he's put up, as well as, to a lesser extent, the nationwide rollout of the CDMA-based telecom services for Reliance Infocomm (now a part of Anil Ambani's empire). And in retail too, the Reliance Chairman is going about the task in a systematic manner, with economies of scale, integration and value-addition being the underlying themes once again. Be it lifestyle retail or agri-retail or consumer electronics or apparel or foods and groceries, as well as the procurement, supply chain, quality control and integration prongs of the strategy, Ambani is putting in place a grand game plan that also seeks to grab the consumer's wallet. Just like Biyani is planning to do. The only difference, of course, is one of resources, which is apparent in the investment outlays of both the entrepreneurs.

Yet, it's not as if Pantaloon-and in fact all the other players, including Globus, Shoppers' Stop and Trent-are going to be wiped away once the Reliance retail juggernaut begins to roll. As Alok Agarwal, Senior Analyst at Motilal Oswal Securities, points out: "Today it's too early to talk about who will survive or perish. A shakeout will happen six-seven years down the line." Vinay Nadkarni, CEO, Globus Stores, adds that competition will be healthy, as it will expand the organised retail business pie. "India's growing economy and the rising income levels augur well for the nascent modern retail industry," believes Nadkarni.

It's this huge potential being presented by the Indian middle class that Biyani is seeking to tap. And he isn't wasting too much time, experimenting with scores of formats, some of which will work and some which won't. He will hawk communication products through multiple formats like mBazaar (small outlets), mPorts (independent stores) and mPod (touch-screen interactive kiosks). He's going to put up a 1 lakh-sq. ft mother store to sell furniture, furnishings and everything else connected with a home (plumbing, paints, masonry). Other formats include Tulsi (pharmacies), Star & Sitara (salons), Ginger (health cafe), Lotus (Yoga centres), Health Village (all under a single roof), Shoe Factory and futurebazaar.com, an online marketplace. "All these businesses are scalable," says Biyani. "Wherever the consumer spends, we more or less have a concept ready. Our portfolio is almost complete," says Biyani, hastening to add: "These are at the prototype stage right now. Let's see how they shape up."

Inevitably, though, Biyani and Ambani will have to compete head-on, specifically in areas like clothing and textiles; food & grocery; books, music and gifts; and health & beauty, as these are clearly some of the areas with huge potential in modern retail. Till a few years ago, Biyani's flurry of joint and new ventures may have been prompted by the threat of the entry of foreign retail, but this value-creation will now doubtless hold him in good stead when facing off with Reliance. For instance, Pantaloon's recent joint ventures with Liberty Shoes, Planet Sports, Galaxy Entertainment, Capital Foods, Gini & Jony Apparel and Lee Cooper give him a foot into an entire gamut of retail services, right from footwear to apparel to restaurants to foods. "In the next two years, we want to build a formidable size and scale," says Biyani in his typical understated manner. "Business is all about forecasting. We do make mistakes, but we don't treat them as mistakes. It's a learning process," he philosophises.

Fight To Finish

There are those out there who feel he can take the battle to the competition. Krish N. Iyer, former Managing Director, Pyramids & Crossroads, says: "Entrepreneur-driven Pantaloon is well poised to grow even if the competition comes. I'm very bullish on Pantaloon's business model." It's this entrepreneurial drive coupled with the rapid consumer-driven growth in the retail sector that's enabled Biyani to grow revenues at a compounded annual rate of a massive 70 per cent over the past five years, with the topline expected to hit Rs 2,000 crore in 2005-06. Funding compulsions of the next two-three years-of Rs 400-500 crore-will be taken care of via internal accruals and borrowings.

Of course, a topline of Rs 2,000 crore could soon look like small change once Biyani's other plans take off. Consider, for instance, what Future Capital, the financial services arm, is up to. Its two real estate funds, Kshitij (the domestic fund) and Horizon (the international one) have a combined corpus of $430 million or Rs 1,935 crore (Indivision, a consumer fund, is looking to raise $400-500 million or Rs 1,800-2,250 crore). The money raised through Kshitij and Horizon has been committed (almost Rs 1,900 crore) in the development of 20 malls, covering 27 million sq. ft (these malls have been developed for third-party retailers). Says Shishir Baijal, MD & CEO, PHF Investment Advisory: "We will soon close our $350-million (Rs 1,575-crore) international fund, which will solely finance large market city formats in big cities like Mumbai, Delhi, Bangalore and Ahmedabad."

Clearly, Biyani is attempting to make sure he's able to finance future growth in businesses that will guzzle cash big-time. Observers wonder whether-despite his well known anti-FDI (foreign direct investment) stance-Biyani might have few options, but to hop into bed with an international retailer. Biyani can't see such an eventuality-"We are not here to sell," he maintains-and the mega plans he has up his sleeve are proof that he means business over the long term. By creating six verticals, the founder of Pantaloon has opened the doors to infinite options for value creation, including bringing in partners (strategic or financial) in any of the business groups, and even listing a couple of them on the markets. As for the competition from Reliance, here's a small piece of Biyani's game plan that indicates his seriousness to take the fight to the Ambani camp: By May, Biyani should have 28 Big Bazaars up and running and, as BT went to press, he was scouting for land to put up at least one more such format-in Jamnagar.

BOX 1

BIYANI'S CONGLOMERATE IN THE MAKING

He's calling it the Future Group, which will have six business pillars.

Future Retail

All the retail lines of business like food, fashion and home will come under this vertical

Future Brand

Custodian of all the present and future brands that are either developed or acquired by the group

Future Space

Will have a presence in property and mall management

Future Capital

Will provide consumer credit and micro finance services, including marketing of MFs and insurance policies, and management of real estate and consumer fund

Future Media

Will focus on revenue generation through effective selling of retail media spaces

Future Logistic

To drive efficiencies across businesses via better storage and distribution

(Source: Company)

BOX 2

THE SCALE OF THINGS TO COME

PANTALOON RETAIL

INVESTMENT PLANNED

Rs 500 crore by 2006-07

SALES TURNOVER

Rs 10,000 crore by 2010

RETAIL SPACE

10 million sq. ft by 2008

STORES

99 stores in 2005-06

EMPLOYEE STRENGTH

100,000 by 2010

RELIANCE RETAIL

INVESTMENT PLANNED

Initial investment of Rs 3,375 crore, scale up to Rs 15,000 crore by 2007-08

SALES TURNOVER

Rs 90,000 crore by 2010

RETAIL SPACE

Not available

STORES

1,575 by March 2007

EMPLOYEE STRENGTH

500,000 by March 2007

Source: Company and market estimates

BOX 3

PANTALOON VS THE REST

Biyani has raced ahead of the current competition.

PANTALOON RETAIL

Total outlets: 99

Number of cities covered: 25

Retail space under use: 3 million sq. ft

Footfalls: 12 crore per year

Conversion rate: 45 per cent

Average bill per customer: Rs 700

Employee strength: 12,000

(Source: Company)

SHOPPERS' STOP

Number of large department stores: 20 now/39 by 2007-08

Retail space covered: 7.50 lakh sq. ft now/25.02 lakh sq. ft by 2007-08

Number of cities covered: 10

Footfalls: 30,000 every day

Conversion rate: 27 per cent

Employee strength: 2,400

(Source: Company)

TRENT (TATA GROUP)

Number of stores: 27 now/100 by 2010

Number of cities: 14

Retail space covered: 4.5 lakh sq. ft

Number of employees: 1,200

(Source: Market)

GLOBUS STORES

Number of stores: 12 now/22 by 2008

Number of cities: 8

Area covered: 2.5 lakh sq. ft

Footfalls: 1 lakh per week

(Source: Company)

BOX 4

NO MORE A ONE-MAN SHOW?

He lost Raghu Pillai (left) to Reliance, but Biyani has lately brought on board a host of professionals.

NEW HIRES/ PORTFOLIO

Sameer Sain, ex-Goldman Sachs CEO, Future Capital

Sanjeev Gupta, ex-Coca-Cola India CEO, Indivision

Neeran Chibber, ex-Bharti President & CEO, Communication Products

Roopa Purushothaman ex-Goldman Sachs Chief Economist & Strategist

Shishir Baijal, ex-Inox Leisure MD & CEO, PHF Investment Advisory

News: Suriname opens new bauxite mines

(CNN 24/04/2006) Paramaribo - Multinationals BHP-Billiton and Alcoa/Suralco began mining bauxite at a new production site in Suriname last week.

The new mining operations were formally launched by President Ronald Venetiaan with the inauguration of a bridge over the Suriname River.

Nearby roads and the cross-river connection leading to the so-called successor mines, Kaaimangrasie and Klaverblad will be handed over to the government once the mining operations stop.

Both companies made a joint investment of US$300 million to develop the successor mines. State of the art mining equipment is used at both mines and the investors apply high environmental standards at these operations.

In his address, the Head of State expressed hopes for the bauxite industry to continue contributing to the Surinamese economy and good cooperation between the government and multinationals should also continue.

Minister of Natural Resources, Gregory Rusland, looks forward to a greater role for Surinamese bauxite in the international market. Currently, Suriname’s share of worldwide bauxite production accounts for 2.5 to 3 percent of the world’s annual production.

“We certainly would like to see Suriname becoming a more substantial player in the future,” said the cabinet minister.

Jerome Maxwell, Alcoa’s president for the Caribbean, assured that the multinationals will continue operations in Suriname. “We have chosen to invest here and we will continue to invest here,” said the Alcoa official.

According to Frank Plantenberg, his colleague at BHP-Billiton, the new mines will enable both companies to continue production towards exploitation of the enormous bauxite deposits in the Bakhuys Mountains in the western part of the country.

Production will last about 4 years in the new Kaaimangrasie and Klaverbad mines, as the deposit is estimated to contain 15 million tons of bauxite.

Explorations continue in the Bakhuys Mountains and the companies will soon begin negotiating with the government for a mining contract. The investors and government signed a Memorandum of Understanding regarding this issue in 2003.

The export of alumina makes up for more than 60 percent of the exports of Suriname and contributes 10 to 15 percent of the government’s income. In 2005, the bauxite industry contributed US$46.7 million to the state coffers.

In 2005, bauxite production in Suriname totaled 4,780 million tons while the refinery produced 1,940 millions tons of alumina.

News: 12K: Is the Indian market overvalued?

(FE 23/04/2006) Mumbai - The Sensex has touched the 12,000-mark in 15 trading sessions or 24 days. Investors are not in a mood to wait for a healthy correction or a fall as the market is not showing any signs of slowing down. FIIs, domestic mutual funds and retail investors are all betting high on the Indian growth story. They are overlooking the negative factors like interest rates and global crude oil prices that can pose a few threats in near future.

Considering the fact that the Sensex has surged 28% since January 2006, with most of the gains coming over the past month, the markets look overvalued now. “Retail investors need to be more vigilant now as FII inflow have reduced in April in comparison to the month of March,” says Deepak Jasani of HDFC Securities.

Valuations

The BSE Sensex is trading at a P/E of 21.4x for FY07F and 17.9x (excluding ONGC and Reliance) for FY08F against the earnings growth of 23% and 19% respectively. This makes the markets appear overvalued.

Moreover, the RBI clampdown on personal loans, high value home loans, venture capital financing and commercial real estate loans by raising the requirement of general provisioning on standard assets as well as risk weight is expected to increase interest rates in the future.

Other concerns include increasing global crude oil prices. It is expected that after the state elections, prices of oil products will rise in the country. On the FII front, the US Federal Reserve has hinted at a stoppage in its series of rate hikes. This could lead to funds moving back from the emerging markets like India to the US.

Results

Results for FY06 are out and so far, they are in line with market expectations as big IT boys - Infosys, TCS, Wipro, Satyam - have posted good numbers giving unprecedented height to the Sensex. Top IT companies saw sales move up by 33% and net profits by 36% over the last year. The sector is poised for growth as global software vendor demand is expected to grow by 8% for the next few years. “Indian companies can grow at the present growth rate of 30% for another two-three years. But margins might be affected,” says an analyst from a leading broking firm.

Many companies have signed multi-year multimillion dollar deals and it is estimated that over Rs 81,000 crore of more such deals are coming up for negotiations. Infosys, Tata and Wipro together plan to hire about 85,000 software engineers in the next financial year and upgrade software operations by a huge 50%.

There is no news of bad results as yet. But it may prove to be a litmus test for the benchmark index.

Strategy

Presently, it’s good to play safe and defensive in the market as most of the stocks have run-up to their value. Auto stocks like Maruti Udyog and Tata Motors have already discounted on the positive news of cut in excise duties and ban on overloading of trucks. Moreover, a possible hike in oil prices may further put the pressure on the auto industry.

Pharmaceutical industry is a new growth story. Intensifying generic competition and major patent challenge losses for the pharmaceutical industry marked the current financial year. Unlike the last financial year, FY06 is expected to end on a healthier note. For the nine months ended December 2005, net sales of 50 large pharma companies went up by 23.1%, while their net profit moved up 38%. MNC companies like Aventis and GSK Pharma are expected to perform better this year on account of focus on strategic products coupled with new launches.

Analysts feel that ONGC is another promising stock. For the third quarter, operating profit margins for ONGC have improved considerably by 14 basis points to touch 63%.

However, a higher subsidy share in terms of discounts on crude oil and natural gas to oil marketing companies resulted in a relatively subdued bottomline growth.

The company is expected to improve its margins further as ONGC Videsh Ltd (OVL) has emerged as the key growth driver for ONGC. It has also acquired eight E&P blocks over the last 10 months and some of the E&P acquisitions over the last few years (Sakhalin, Sudan 5A and Syria) are set to commence production. Expected increase in oil prices will also bring good news to oil marketing companies like HPCL.

The market is generally giving the feelers that stocks are getting overvalued. Though the economy is on a growth track, market experts are advising that investors need to be sector-specific and more importantly stock-specific and stick to index or index-related stocks.

Column: The demographic dividend

(BS 23/04/2006) Mumbai - The constant argument between Delhi and Mumbai played out ad nauseam on TV channels—which is the better city, which has the better fashion week, which is safer for women, which has a superior professional culture, which has a more interesting night life — is symptomatic of how most of us still think: small.

Delhi vs. Mumbai is the argument of the defeatist. The real argument should be Mumbai and Delhi vs. Shanghai and Beijing. For any Indian visitor who has been to China’s capital and commercial megapolis, the comparison with India’s two major cities is an embarrassment.

While earnest intellectuals and fashionistas in Delhi and Mumbai compare their respective cities’ lounge bars (but not slums), Beijing and Shanghai have built cities that rival anything you will find in North America, Europe or Japan. The Chinese have done this by thinking big and powering FDI into infrastructure.

While India dithers at allowing FDI into realty, retail and other infrastructure projects, the Chinese have used a large chunk of the $60 billion they receive annually to build superhighways, townships, special economic zones and retail complexes on a scale perhaps only the Ambanis in the private sector in India have even envisaged.

China has a 12-year lead over India. It began economic reforms in 1979 under the visionary Deng Xiao Ping. India’s economic reforms began in 1991 under the compulsion of bankruptcy. So can India catch up with China over the next decade or so?

Crunch some hard numbers. China has nearly 100 million Internet users and 450 million cellphone subscribers. India, despite signing up 2.25 million new cellphone subscribers every month, has only 50 million Internet users and 90 million cellphone users. Over the next five years, nearly 40 per cent of all PCs and a significant share of all cellphones sold worldwide will be in India and China. According to data computed by the US-based Computer Industry Almanac Inc., the number of Indians using the Internet is around 50.6 million. India had a meagre 1.40 million Internet users in 1998, which rose to 39.20 million in 2004. This has now shot up to over 50 million. And yet, Internet penetration in India is just 4.5 per cent of our total population. Compare this to China, where the penetration level is 8.5 per cent of the estimated population of 1.31 billion.

Last week, a major new international study predicted that India’s “demographic dividend” will allow its economy to grow at 7-8 per cent a year till 2025 even as growth in ageing China slows. In the coming two decades, India, already a young country, will get demographically still younger with 700 million of its 1.20 billion people in 2025 under 35. India will also have the lowest percentage of elderly people compared with Europe, North America and Japan. Ironically, despite this, the political leadership in the West and Japan is getting younger. The current opposition leader in Britain, David Cameron, is 39 while India’s leader of the opposition, LK Advani, is 79. Across ageing Europe, the US and Japan, those in charge are in their 40s and 50s. At 60, most active political careers are deemed over. In India, the current average age of the prime minister and the president is over 75.

Wisdom is a virtue of age but energy, freshness of ideas, enthusiasm for change and the ability to absorb new technology are not. Old, wise men guiding a thriving, young India into the second quarter of the 21st century while the West and Japan have ever-younger leaderships grappling with their ageing, unproductive populations is a global irony and not a pleasant prospect.

The stray Rahul Gandhi, Sachin Pilot, Jay Panda, Akhilesh Yadav, Jyotiraditya Scindia and Milind Deora will not solve the problem. These young men have not been thrown up by a dynamic, meritocratic political system that rewards young people but by sycophancy of the surname.

The key thus is political reform so that the culture of feudalism that remains embedded in our politics is gradually weaned away to be replaced by a technocratic meritocracy. In short, good governance. Then imagine: a demographically virile India led by a young, talented political leadership. The result: the world’s second largest economy and the world’s largest, most dynamic, multi-cultural nation. In 2006, that might appear fantasy. Twenty years from now, if we get our governance right, it will be reality.

By Minaz Merchant

News: Gloria Jeans plans first outlet in Delhi by July

(BS 23/04/2006) Mumbai - Gloria Jeans Coffee's, one of the largest coffee chains in the world, will be opening its first outlet in Delhi by July this year.

Speaking on the sidelines of the Franchise and Retail Expo, Gaurav Marya, president, Franchise India Holdings, which is also the main consultant to the group in India, said the chain was planning a total of 750 outlets in the country over the next five to seven years. Of these, 150 would be set up within the next two years.

Marya said that there would be a couple of factors which would differentiate a Gloria Jeans outlet from the other coffee chains, notably the quality of the coffee (the company uses the top two per cent of the coffee produced in the world) and the service standards and ambience.

“The idea is to offer a five-star coffee shop experience, but at affordable rates. The chain would recognise the customers and their preferences,” he said.

He however was tightlipped about the investment that would go into these outlets.

Elaborating on the formats, Marya said that they would operate across four formats. The Lounge would be the plush upmarket offering which would be positioned as a place where one can unwind.

The others would be the regular cafes as well as kiosks set up at strategic locations. In addition to this, a new format, coffee carts, the chain would bring in to be temporarily put up at certain locations.

He added that they were looking at both traditional locations such as high streets and malls, as well as other areas such as airports, railway stations and IT parks to set up smaller outlets.

“We will also be tapping locations such as highways and have a few drive-in outlets,” said Marya.

Some of the other international brands which are planning an India-entry include Barnies and Starbucks.

News: PM pegs for 49% FDI in insurance

(BS 23/04/2006) Hannover - Inviting investment to help meet India’s infrastructure and energy needs, Prime Minister Manmohan Singh has said his government intended to raise the cap on foreign investment in insurance to 49 per cent and give foreign banks a “greater role” step by step.

He acknowledged that the Left parties, extending crucial support to the ruling UPA, “limit” his government’s options in the short term and it takes “a lot of time to convince our coalition partners”.

“We will enable a greater role of foreign banks, step by step,” Singh said in an interview to German newspaper “Die Handelsblatt” ahead of his three-day visit to Germany which began yesterday.

Noting that foreign insurance companies are now permitted to hold 26 per cent in Indian companies, the prime minister said, “We intend to increase this to 49 per cent.” He, however, said it would require consensus within the ruling coalition “and this is not in sight at present”.

In the long term, liberalisation of the banking and insurance systems would continue, said Singh. On allowing foreign investment in retail, the prime minister said his government had “begun a cautious opening in this area. We will learn from this experience... There is something such as the fear of the unknown. But with time, we should be able to enable greater presence of foreign firms in this sector as well.”

The prime minister said small traders had “great influence on all parties in our country”. Singh, whose government has been facing repeated attacks from the Left over reforms in certain sectors, said the UPA had “differences” with the Communists on the pace of liberalisation, “but even the Communists do not question the general direction.”

He said the Left parties were “more cautious than I would like” but added that “they were learning fast”. In this context, Singh cited the case of West Bengal, which is ruled by “a very progressive Communist government, which is doing everything in order to attract investors, especially from abroad. And they are successful in this.”

The prime minister said, “We need huge investments if we are to remove the infrastructure bottlenecks and at the same time overcome the great challenges in sectors such as energy and water.”

He said foreign companies can play an important role here. Singh, however, noted that a lot was happening already and said regulators had been established in all important areas. “Our highway system is growing, ports are being constructed and airports modernised, now the railway network is also being modernased,” he said, adding, “As we keep up this momentum, the country will soon look different.”

The economist prime minister said the investment rate in the country had increased to 31 per cent which has made it possible for India to achieve eight per cent economic growth.

“The investment rate will soon grow to 35 or 36 per cent,” he said, adding as a result the country is headed for a growth rate of 10 per cent.

The country needs such growth to be able to create sufficient number of jobs and generate resources for investing in infrastructure, health, education and protection of the environment, Singh said.

On improving framework conditions for participation of the private sector in infrastructure, he said, “We need a good regulatory framework and we are creating this. We have established regulators in all important sectors, from roads to petroleum.”

Citing the case of telecom where the regulator has been functioning for some years, he said this sector had seen explosive growth. “We are using this model now in the electricity sector as well.”

To a question about India becoming the “second factory for the world” after China, Singh said the conditions in this sector are improving and Indian manufacturing companies have become efficient and globally competitive in many areas.

“If the world trade system does not become more protectionist, our industry will continue to grow rapidly.”

Singh said the world trade system continues to damage emerging countries, pointing out that agricultural protectionism, especially in the EU and the US, deprives India of export opportunities.

“But we are realistic. We know that developing countries cannot shape the world trade system freely in accordance with their needs,” singh said, adding india should therefore use all available opportunities.

Referring to the Doha round of WTO talks, he said it should become a real development round as promised. “This is a litmus test of whether old protectionism will raise its head. This will hinder our progress. But this will also adversely affect the rest of the world.”

News: 'Foreign firms can play role in removing Indian economy bottlenecks'

(NK 23/04/2006) Hannover - Foreign firms can play an important role in helping the Indian economy to overcome its existing bottlenecks, and attract more investments to facilitate growth as per global expectations, said visiting Indian Prime Minister Dr. Manmohan Singh in an interview with to the Die Handelsblatt.

Giving an overview of the Indian economy and India's strategic partnership with Germany, Dr. Singh said that economic reforms in his country had clearly accelerated the pace of growth, and it was realistic to presume that the rate of growth would increase to 10 percent by 2011.

"India's savings rate has increased to 29 percent of GDP. The investment rate has increased to 31 percent. This has made it possible for us to have an eight percent economic growth. The savings rate will increase further in the coming years. The investment rate will soon grow to 35 or 36 percent. Thus, our society is headed towards a growth rate of 10 percent," said Dr. Singh.

"We need huge investments if we are to remove the bottlenecks and at the same time overcome the great challenges in sectors such as energy and water. Foreign companies can play a role here. We have established regulators in all important areas. Our highway system is growing, ports are being constructed and airports modernised. Now, the railway network is also being modernised. If we keep up this momentum, the country will soon look different," he added.

Emphasizing the need for a good regulatory framework, Dr. Singh told the Die Handelsblatt that a dispute settlement mechanism was also being put in place to facilitate growth in various sectors, such as banking and insurance.

Commenting on India's retail sector, he said New Delhi has begun a cautious opening of the same, and was willing to learn and pick up from this experience.

"Small traders have a great influence on all parties in our country. There is something such as the fear of the unknown, but with time, we should be able to enable greater presence of foreign firms in this sector (retail) as well.

When asked to explain the role of the Left in his government, Dr. Singh said: "They limit our options in the short term. It takes a lot of time to convince our coalition partners. There are differences about the pace of liberalisation. They are more cautious than I would like, but they are learning fast. West Bengal is being ruled by a very progressive Communist Government, which is doing everything in order to attract investors, especially from abroad. And, they are successful in this."

Dr. Singh also calimed that India's manufacturing sector was becoming lean, efficient and globally competitive in many areas, and therefore advocated the need for less global protectionism to facilitate sectoral growth.

He believed that India maintaining a growth of eight to ten percent, would help to stimulate the world economy.

"The more we export, the more we will import as well. Unlike other countries, we are no mercantilists. We don not want to horde unlimited currency reserves and we also have a large trade deficit. If Europe and USA help India in achieving its growth targets, they are doing themselves a favour as well," Dr. Singh said, adding that India and China complement each other and were not rivals.

"Cooperation between the two most populous and fast growing economies is important for peace in the region and the world. This is also of decisive importance for Asia to become the political and economic epicentre of a new world order," the Prime Minister said.

On India's ties with the US, Dr. Singh said relations were not limited to one issue (civilian nuclear energy), but a strategic partnership was in the process of evolving, and its significance would only be known if it is broadened and addresses India's requirements in the energy sector.

The Prime Minister said that he was looking forward to the support for the July 18, 2005 Indo-US deal from Germany, just as Britain, France and Russia had supported it. The availability of nuclear energy, he said, would provide greater possibilities for meeting India's energy requirements.

India, he said, also wanted to diversify the sources for its defence equipment, and was looking forward to discussions with the German Government on this score.

Asked about his expectations from his visit to Germany, Dr. Singh said: "I hope that it will sharpen awareness about India. The German economy should take a better look at our country than it does now. I am looking forward to meeting Chancellor Merkel. We have the same background".

News: 40 aircraft for Mukesh Ambani's retail supply chain

(DNA 23/04/2006) New Delhi - Legend has it that in the early nineties, when Reliance Industries Ltd (RIL) was setting up its Hazira petrochemicals complex - in double-quick time as usual - some critical equipment were urgently needed to complete the project. Importing them through the normal channels would have taken "aeons," from booking space on a ship, going through the import procedures, and, finally, waiting for the vessel to arrive after weeks.

Time was not a luxury the late Dhirubhai Ambani had. So what did he do? He just airlifted the bulky paraphernalia.

The logistics lesson was not lost on elder son Mukesh, whose retail giga-project is slowly rolling out across the country. Logistics remains the fulcrum of global retailing - and more so if it is of the magnitude that Mukesh has envisioned.

Now the doyen's son is taking the lesson forward. He plans to buy planes - 40 of them — to cart cargo hither and thither, creating in the process a high-speed supply chain in the air, if you please.

The Reliance Retail air fleet, it is said, will comprise 35-40-tonner cargo aircraft, which would be used to transport fruits, flowers and other perishables from warehouses to retail outlets criss-crossing the country. That dovetails with what Mukesh had dreamt about at the drawing board level itself - set up a pan-India "farm to fork" chain. The air-based supply chain, therefore, is crucial and will form the backbone of the food and beverage part of the business.

We're not done yet. At the ground level, the company is planning something unusual, too. It will import pre-fabricated building blocks from China. These blocks, which snap into large 1.5-2 lakh square feet warehouse units, will be used to establish a nationwide storage network.

A source said about 5,000 such blocks will be set up in small towns and villages from where the farm produce will be airlifted to retail outlets.

The ultimate aim of buying aircraft and importing pre-cast warehouses is simple, said the source: offer compelling choice to the consumer and re-script India's retail story.

Column: The sad reality of realty funds in India

(DNA 23/04/2006) Mumbai - The mutual fund industry has seen many new product innovations in the last few years. The industry is growing and to sustain the interest of the investing public, product innovations should continue. Though real estate funds have a huge potential, they have not caught investor fancy yet. These funds are structured just like mutual fund schemes.

Typically, these funds own large properties, commercial office spaces, hotels etc, and earn rental income as well as gain from capital appreciation. They buy, develop and sell property and share profits with investors as in any other mutual fund scheme. Thus, they have the potential of being very popular with small investors. But sadly, real estate funds are yet to take off in India in a big way.

The real estate market in India is currently on a high growth curve, and several factors such as a booming economy, favourable demographics and a liberalised FDI regime, have helped it even further.

There are certain issues though, such as land reforms and absence of substantial tax incentive for real estate development which need to be addressed.

Indians, traditionally, have an affinity for fixed asset investments such as land and gold, and property has always been looked up to as an investment area that only the large ticket investors can afford. Due to the local nature of real estate and complexity of transactions, it is not easy for investors to identify good investment opportunities on their own, in different cities and locations.

Real estate funds thus serve the most basic purpose, which an equity-oriented mutual fund scheme does - making the investments relatively risk-free and convenient, compared with direct investment in underlying securities.

Today, real estate funds are available only to high net-worth individuals (HNIs) and institutional and global investors with a high minimum investment criteria. Therefore, funds operating in India are more like real estate venture capital funds than mutual funds with no or negligible retail participation.

The issue plaguing the sector is low liquidity, which is not very good. There is very little transparency on the valuations front. Regulatory issues like waiving of stamp duty and annual property taxes to reduce the high cost involved are also important.

Real estate funds are good for the industry as they help in bringing organised money in this fragmented market. India is one of the few markets, along with China, where the growth in real estate looks sustainable in the near future.

Some of the Industry players who have taken the initiative are Kotak, HDFC, Anand Rathi, IL&FS, ICICI Ventures, among others.

Kotak Realty Fund, established in May 2005, is one of the first private equity funds with a focus on real estate and real estate intensive businesses. It operates as a venture capital fund.

The fund’s corpus has been contributed by leading banks, domestic corporate, family offices and HNIs. The fund is closed-ended and has a life of seven years. It has raised around $ 100 million from domestic investors. The strategy of the fund is to make investment at project level with developers as well as at an enterprise level in realty development companies. The fund has the mandate to make investments in retail, hotels, healthcare, education etc.

HDFC India Real Estate Fund is a seven year closed-ended real estate venture fund. The fund has been launched in association with State Bank of India. HDFC holds close to 80% and SBI the remaining stake while the fund is managed by HDFC Venture Capital Ltd. The scheme had a minimum contribution of Rs 5 crore per investor.

AnandRathi Real Estate Opportunities Fund (AR REOF) is a closed-ended fund, for domestic and overseas investors. The fund focuses on growing markets such as Pune, Bangalore, Chennai, Hyderabad and other cities that are witnessing substantial urban development. The fund’s investment strategy is to focus on acquiring secured rental income producing real estate assets with quality blue chip tenants and picking up equity stakes in specified real estate projects, developed by reputed developers.

IL&FS Realty Fund is a private equity fund. The fund seeks to achieve a gross investment-level leveraged annual internal rate of return in excess of 25%. In addition, the fund will target a cash-on-cash stabilised yield on equity exceeding 8% per annum for income-generating projects.

ICICI Ventures has also launched a property fund, the funds seeks to invest in the commercial, residential, retail and other world-class real estate assets, both in developed and developing projects, in the potentially growing cities of India. The fund seeks to deliver a compounded annual rate of return in excess of 20-25% per annum over seven years.

The progress has been very slow so far, and as of now there is a lot of ambiguity on this subject. Increasing awareness about these kinds of funds operating in India and the advantages and convenience that they offer are sure to catch investor fancy sooner or later, and we feel it is just a matter of time before market regulators introduce investor friendly norms in this sector, too.

By Aditya Agarwal, joint MD of mutualfundsindia.com, a unit of Icra Online. The views expressed by the author are personal.

News: Mittal Britain's richest person, again

(HT 23/04/2006) London - Steel tycoon Lakshmi Mittal is again listed as Britain's richest person, with a fortune of more than 14.8 billion pounds ($26.5 billion).

The Sunday Times newspaper profiled the richest 1,000 people in the country in a 104-page supplement. It was the Times' 18th annual listing of the country's wealthiest people.

The top five remained unchanged from last year, but their fortunes did not: Four of the top five were even wealthier than they had been in 2005, the newspaper reported.

The Indian-born Mittal, whose Mittal Steel is the world's largest steelmaker, was again followed by Roman Abramovich, another foreign-born tycoon.

The paper says Abramovich's wealth has rocketed from 7.5 billion pounds ($13.4 billion) to 10.8 billion pounds ($19.2 billion) because of the sale of Sibneft, a Russian oil business. Abramovich is best-known in Britain as the free-spending owner of the Chelsea Football Club.

The Duke of Westminster, who owns huge swaths of land in central London and other parts of the country, remains in third position, with a fortune of 6.6 billion pounds ($11.8 billion). His bank balance rose by more than a billion pounds ($1.8 billion) over last year, the newspaper said.

Queen Elizabeth II, who celebrated her 80th birthday on Friday, is 192nd on the Times' list, with a 300 million pound ($535 million) fortune.

News: Brand India is the flavour at Hannover Fair

(FE 23/04/2006) Hannover - Indian participation is sought after more by the exhibitors at Hannover Fair over China. While the organisers of the event continue to do business with China, when it comes to Hannover, China is yet to become a partner country at the world’s largest fair of industrial products as compared to India which is becoming a partner country the second time this year after a gap of nearly 22 years.

“There is no demand from exhibitors at Hannover Fair to have China as a partner country. China has not even applied for this status and with the kind of enquiries we have at hand it is not becoming a partner in near future,” Wolfgang Pech, senior vice-president, Deutsche Messe Ag, Hannover, said before the formal opening of the event.

He said the problems companies face on account of a weak intellectual property rights (IPR) regime in China were some of the reasons why China has failed to make a strong mark at the fair. There have been instances where even during the show Chinese companies have been found displaying copied products.

Pech said that India on the other hand had good IPR regime and the climate for investment was also favourable with an effective legal system to prevent any violation. “As a partner country, we have reimposed the faith exhibitors here have about a country that is emerging as an important economic player globally.”

At this year’s fair (held from April 24-28), there would be particpation from 370 companies from both private and public sectors, government ministries and other organisations.

“Hannover Fair is a good ground to build export markets for companies. We expect business would be generated at the fair site itself as over 1,50,000 business visitors are expected this year,” said Pech.

It will also be the first time when India would project its abilities on the manufacturing front doing away from the tag of basic back-office suppliers.

Apart from the India, the event would see participation from over 5,200 organisations representing 70 countries. The ‘India Everywhere’ campaign at the fair has ensured that awareness about the country is created well before the fair.

Hannover has lots of hoardings displaying the potential of vibrant Indian economy. Moreover, fashion shows, cultural evenigs and food melas are being organised to give delegates a flavour of India.

News: Iran-India gas link deal close despite U.S. ire

(RTR 23/04/2006) Doha - Iran, India and Pakistan are close to signing a gas pipeline deal, the Iranian and Pakistani oil ministers told Reuters on Saturday, defying U.S. opposition to the project.

The plan to pump Iranian gas to India through Pakistan was first proposed more than a decade ago, but progress has been slow because of hostility between India and Pakistan and, more recently, U.S. opposition to Iran because of its nuclear programme.

Iranian Oil Minister Kazem Vaziri said he had an understanding with India and Pakistan and was unconcerned by U.S. opposition.

"We have a very good understanding," Iranian Oil Minister Kazem Vaziri told Reuters. "They are willing and Iran is ready."

Asked when the deal would be signed, he said only: "I hope we are going to have a ministerial meeting in Tehran in June," adding it would be attended by the same three ministers.

Speaking after talks with his Iranian and Indian counterparts on the sidelines of the International Energy Forum in Doha, Pakistan's oil minister Amanullah Khan Jadoon told Reuters only technical issues had to be resolved.

The $7 billion pipeline through Pakistan would link Iran's abundant gas reserves, the world's second biggest, to India's booming economy.

It would carry 150 million cubic metres per day of gas for 25 years, Vaziri said.

Although Pakistan is a key ally in the U.S.-led war on terror, it has said the pipeline would aid economic growth and foster better ties with India after years of brinkmanship between the nuclear-armed rivals.

Iran had said it would go ahead without India if it did not agree to join the pipeline by May.

Indian oil minister Murli Deora declined to comment following Saturday's talks.

News: 'Word ‘Scotch’ not for Indian whisky'

(PTI 23/04/2006) New Delhi - In a development that could jolt the burgeoning liquor industry, the Delhi High Court has held that the Indian whisky manufacturer cannot use the word ‘Scot’ or ‘Scotch’ in compliance with the WTO agreement.

In the first ruling in India relating to the protection of Geographical Indications (GIs) under the WTO-TRIPS Agreement, Justice Madan B Lokur agreed that the words ‘Scot’ or ‘Scotch’ identify whisky produced in Scotland and no domestic manufacturer can use them to market its liquor.

The judgment was delivered on a lawsuit filed by the Scotch Whisky Association of United Kingdom seeking to restrain permanently an Indian whisky manufacturer from using the name ‘Red Scot’ or any other name containing the word ‘Scot’ to sell its product.

While decreeing the suit ex-parte, the court directed Golden Bottling Ltd, operating from Delhi and Alwar in Rajasthan, to pay damages of Rs five lakh to the UK-based Scotch Association and its members for passing off its whisky as Scotch whisky.

The court accepted the arguments of advocate Pravin Anand, an IPR expert, that under the WTO-TRIPS agreement, protection was provided for GIs, which identifies the good originating in the territory of a member or the goods which are essentially attributable to its geographical origin.

“I am satisfied that the domestic manufacturer is liable to be restrained from passing off its 'Red Scot' whisky as a produce of Scotland. This can only be done by injuncting it from using the word 'Scot' or any other word similar thereto in the whisky manufactured by it,” the judge said.

The court said since the domestic manufacturers did not prefer to contest the lawsuit it appears that “it is not averse to dropping the word 'Scot' from its whisky.”

The suit was filed under the Geographical Indications of Goods (Registration and Protection) Act, 1999, which was enacted as a result of the WTO-TRIPS Agreement.

Advocate Anand had alleged that Golden Bottling Ltd was using the word Scot to pass off its whisky by giving an impression that it originates in Scotland or that it was Scotch whisky.

The association had claimed damages contending that the reputation of Scotch whisky has been irreparably damaged by the use of word "Scot" in whisky manufactured by the domestic company.

Accepting arguments that the sale and manufacture of the whisky were in violation of the new law, Justice Lokur said, “in view of the well settled law laid down by this court and reiterating the necessity of preventing a violation of the IPR of parties, I think it would be appropriate if the damages as prayed by the Association to the extent of Rs five lakh are granted.”

The court also directed Golden Bottling Ltd to pay Rs 3.1 lakh as litigation cost to the Scotch Whisky Association.

News: 'Create opportunities for profit-making'

(BS 23/04/2006) New Delhi - Finance Minister P Chidambaram today favoured greater freedom for market forces to facilitate capital inflows.

Participating in a panel discussion on "Creating a Conducive Ecosystem for building world-class institutions" at a leadership round-table organised by Satyam Computer Services today, Chidambaram said capital flow would be decided by the opportunity for profit-making.

"We have to create such opportunities and allow them to work and markets themselves would lead investments to profitable sectors," he said.

Giving an example of three recent infrastructure projects in Gujarat, the Finance Minister said there had been a shift from seeking securities/viability gap funding for public and private partnership (PPP) projects to paying sums to the government. "We are now entering a phase of negative grants," he added.

News: Foreign funds differ on Indian stock valuations

Mumbai: Foreign funds appear to be a divided lot on the Indian equity markets. But at 12-K levels, the bears among the FIIs outweigh the bulls by a fair margin.

Citigroup, Merrill Lynch, Morgan Stanley and Soceite Generale are among those who have gone underweight on India, cautioning investors to play safe "as bubble arrives".

Small in number

The bulls, however, are small in number. Still, they too strongly articulate their point of view that the Indian stock market valuations are still reasonable. This group includes the likes of Credit Suisse, Aberdeen Asset Management and the newly launched India-specific funds from Japan.

Optimistic about India

In a recent report, Credit Suisse argued that it was more optimistic about India than markets in general, given that it did not share market fears about constraints on growth. "The concerns of overheating seem to be overdone," it wrote in a report last week.

Credit Suisse, unlike other foreign funds, does not also see the country's current account deficit to be worrisome. "We judge India's current account deficit to be sustainable and not a constraint on growth.

"The most recent trade data suggest that the rapid deterioration in the trade deficit since first half of 2004 is stabilising," it wrote.

Citigroup is among the most vocal funds to caution investors against a sharp meltdown from the current high levels. "Relentless flows from foreign as well as local sources appear to have decisively put the Indian market valuations into a bubble zone now," Citigroup cautioned, in a recent note to investors. "Valuations - The Bubble arrives. Caveat emptor!" Citigroup said.

Morgan Stanley, in its report this week, goes further.

"The Indian market's resilience has little to do with fundamentals. Valuations look rich, earnings growth has declined, the macro is less attractive than before and interest rates are higher," it points out. "The acceleration in the market's performance may be due to the fact that several technical indicators we track are only now approaching the 'sell zone'," it said.

Re-look on allocations

After seeing the run up on the stock markets, Societe Generale asked its clients to re-look their equity allocations: "Stock prices of most large caps are running ahead of fundamentals," it warned. "Liquidity is ruling over common sense."

It also advised investors to keep booking profits at every rise, and increase cash levels.

"Although we remain bullish on the long-term, we are not comfortable with the valuations in the short-term," the report said, adding that it expects a "decent correction of around 15 per cent on the market on a medium term perspective."

Andrew Holland, Merrill Lynch's Head of Strategic Risk Group in India, admitted that foreign funds are divided on the Indian stock market valuations. Merrill Lynch, which also sees a correction in the short-term, however, is bullish on the longer term.

"There could be stock-specific stories. But overall, we are cautious," he said.

News: Foreign banks in India reduce gross, net NPAs

(BL 23/04/2006) New Delhi - Foreign banks operating in India outperformed domestic banks in non-performing assets (NPAs), both in gross and net terms in the financial year 2004-05, says a study carried out by industry chamber Assocham.

After witnessing rise in NPAs for two consecutive years, foreign banks cut down their gross NPAs by 32 per cent on a year-to-year basis during 2004-05 compared to 30 per cent reduction by private sector banks and eight per cent by public sector banks for the same period, according to the study.

In addition to gross NPAs, the foreign banks have also shown a reduction of 38 per cent in their net NPAs in 2004-05, according to the study.

News: FICCI seeks capital market reform

(PTI 23/04/2006) New Delhi - With the Sensex scaling new highs, industry body FICCI has sought wide-ranging reforms in securities market like streamlining of Sebi Act, insider trading and role of independent directors.

A research paper prepared by FICCI and Society of Indian Law Firms has also suggested changes in regulation of buy-back of shares, take over code and public deposits.

It said there is a need to avoid duplication of work relating to investors fund between the Ministry of Company Affairs and market regulator Sebi's fund.

Sebi and MCA should make a distinction in terms of defaults as penal provisions can not be uniform for all defaults and the penalty must be reasonable and commensurate with the gravity of defaults.

The research paper pointed out that there is a need to review the takeover code regulations and insider trading particularly with respect to creeping acquisitions, denegation of promoters and norms prescribed for preferential allotment.

On independent directors, it said their functions can not be of investigative nature.

When legal compliance report is submitted to Independent Directors, they should rely on representations made by the company's officers.

News: CII demands strategy for domestic industry

(PTI 23/04/2006) New Delhi - Concerned at the spate of Free Trade Agreements being signed by Government, CII on Sunday demanded a comprehensive strategy to ensure a level playing field for the domestic industry including small and medium enterprises.

"The government needs to have a strategy. A strategy that is consistent with our internal reforms to ensure level playing field. Government should also evaluate how the FTAs would help us in signing multilaterals," said newly elected CII President R Seshasayee.

Asked if the industry felt it was being pushed into a FTA regime, Seshasayee said, "We had a premonition about an approaching FTA regime. We were surprised at the number of FTAs and the speed, particularly the speed with which FTAs were signed with couple of countries".

Seshasayee, however, advocated FTAs with countries, which had capital, technology and huge markets and had offered certain complementarities.

For the success of FTAs, Seshasayee, who is the managing director of Ashok Leyland said reforms should be managed carefully besides taking ample precautions of necessary safeguards like stringent Rules of Origin.

"We should have an organised way and look at the complimentary competencies between the countries, then the FTAs will work better and will be more sustainable," he said.

Seshasayee also wanted Government to evolve a mechanism for Rules of Origin (ROO) and have it same with all the countries with whom FTAs were entered into. He said different ROOs will complicate the situation more.

News: Will Pantaloon bring big business to its knees?

(TV18 22/04/2006) Mumbai - There is a battle for power brewing between modern retail chains and fast moving consumer goods, FMCG companies. Pantaloon has fired the first salvo and is demanding higher margins from top FMCG companies. It's even threatened to take some brands off its shelves, if demands are not met.

As retail evolves, the Indian retailer is flexing his muscles and how. A case in point is Pantaloon Retail, which has written to nearly 20 leading FMCG companies like HLL, P&G and Marico for an additional 5% margin in certain product categories like personal care. Retailers normally earn margins of between 8 and 15%.

The letter also highlights the high-points of modern trade, which is greater consumption, a better shopping experience and better profitability, by selling larger pack sizes and premium brands.

Managing Director, Pantaloon Retail, Kishore Biyani told CNBC-TV18, "I deserve it, as my cost of operations has gone up." But Executive Director, Marketing, Pepsi Foods, Punita Lal says that modern trade is important, but traditional trade continues to be the most important channel for them.

In its letter, Pantaloon has hinted at taking some brands off its shelves if FMCG companies fail to give them more margins.

When contacted, most of the FMCG companies chose to stay mum on the issue. Off-the-record though, some senior officials admitted that margin negotiation with modern trade is an ongoing issue. They felt that Pantaloon is trying to do a Walmart, ie. use its big volumes to demand higher margins. But in reality, none of the modern retailers is in a position yet, to hold manufacturers to ransom.

News: Videocon bids for Daewoo arm

(TNN 22/04/2006) Mumbai - The Indian MNC is walking tall. After having bought French consumer electronics Thomson's colour picture tube facilities in Italy, Spain, Poland and China, as well as Swedish firm Electrolux's India business, Videocon Industries has bid for South Korea's Daewoo Electronics.

Dhoots of Videocon have been the most aggressive in terms of consolidating their business empire in the consumer durable industry as compared to peers - the Mirchandanis of Mirc Electronics or the Nambiars of BPL.

Apart from Daewoo, Dhoots have also set their sights on Polaroid's liquid crystal display (LCDs) television business in US.

Videocon is not the only one eyeing the Korean electronic company, there are about 18 other appliance makers and financial groups that have submitted bids.

Names of LG and Samsung seems to be missing from the participatory list for takeover of country cousin - Daewoo.

In India, Daewoo is represented by the Mumbai-based Anchor Group, makers of Anchor electricals and toothpastes.

Videocon confirmed its interest in both Daewoo and Polaroid and the Dhoots believe that their aggressive bidding should work in their favour as was in the case of Thomson's display systems. Videocon has a cash flow of about $22.5 million and will be able to fund the Daewoo deal.

So why is Videocon on an acquisition spree? Venugopal Dhoot, chairman of Videocon group, is clear that his strategy is to go global. One, he could become an original-equipment manufacturer to the world's best brands in the consumer durable space as well as to retail chains.

Second, the group gets access to global markets, where he could build the flagship brand. "Videocon, as an integrated consumer electronics and appliances company via these acquisitions can have better pricing for its products,"an analyst said.

In India, Videocon's brand stable includes Akai, Sansui, Toshiba, Hyundai, Electrolux and Kelvinator.

"The Dhoots are deploying a good strategy but the key issue is managing and integrating the business,"an industry expert said.

Creditors own 97% stake of unlisted Daewoo and according to reports, the sale price could be in the region of $1 billion. The Korean group went bankrupt in the late 90s and has been restructuring itself.

Interview: Anuj Puri - MD Trammell Crow Meghraj

speaks to (NDTV 22/04/2006) Mumbai - Over the past five years, the Indian real estate market witnessed supernormal appreciation. But there is still some room for further appreciation. Anuj Puri, MD, Trammell Crow MeghrajPuneet Wadhwa on the likely appreciation in the times to come.

What has been the average rate of capital appreciation in residential, properties in the last six-eight months?

The average capital appreciation in the residential segment has been around 5-7 per cent across the country. However, the National Capital Region (NCR) witnessed the maximum appreciation of 7-9 per cent in the last few months. Cities like Pune, Chennai and Bangalore witnessed the least appreciation of around 4-6 per cent.

Going forward, I expect the appreciation to be maximum in NCR and Kolkata at around 6-9 per cent. Residential properties in Chennai and Bangalore are expected to surge around 5-6 per cent.

Yields, for residential properties, typically range between 5-7 per cent.

The capital values in the residential property market have nearly doubled in some cases over the past one-two years on a pan India basis. Do you foresee a correction going forward?

With most properties going at between Rs 7,000-8,000 per sq ft FSI value, are prices too high for the property. Land has been going at between Rs 5,000 to 6,000 per sq ft FSI until last year.

Development authorities have been stingy with releasing land. They have created an artificial scarcity of land and by releasing limited land in the market, they are actually playing the market for profit.

From the point of view of an investor who booked the property seeking capital appreciation, is it the right time to sell the property?

The real estate prices will rise for some more time before they peak out. The ideal time span that an investor should hold the property is two-three years. Going forward, an average of 10-15 percent appreciation can be expected.

With the prices of the residential properties on an upswing and an indication of increase in the interest rates on home loans, does investment in residential property make sense right now?

The majority of the people who buy real estate do not buy it as an asset class. For most of them, it is a necessity.
However, real estate investment market is maturing quickly in India, with more and more large investors started investing in real estate rather than bonds and other funds.

Return or income from real estate is much higher than other investment options in absolute terms and if we combine the return with the appreciation rate, real estate provides almost double that of the other investments options.

As far as prices are concerned, we are currently passing through the second property cycle of the country.

The first property cycle in any property market is always a bubble and Indian market was no exception and it crashed after 1995 – 96.

From 2003 onwards we are observing the second property cycle of the country. This cycle is more matured than the earlier one and based on the serious business. The earlier cycle was an impact of expectations out of the liberalization in India and Japanese investment in various countries.

We feel the growth in Indian property market is going to continue for some more years. However, it has to limit itself at some point of time where the property prices would be stabilized and firmed up.

Are there any reasons/factors that may affect the growth projections in the residential property segment?

Some challenges faced by the sector are high stamp duties, rigid zoning laws, strong pro-tenancy laws, ownership titles, bureaucracy, and inadequate infrastructure. Government needs to make these rules simpler.

What are the upcoming areas in Tier-II cities?

North: Chandigarh, Jaipur and Ludhiana.
West: Ahmedabad, Pune, Surat and Nasik.

East: Bhubaneshwar and Siliguri.
South: Cochin, Visakhapatnam, Coimbatore and Trivandrum

Do you advocate investment in Tier-II cities?

Tier II cities are growing at an alarming rate. Tier-I cities are already saturated and reached to a good appreciation point.

Also, there is a dearth of quality real estate available in the country. Moreover, the cost of setting up an enterprise, in a small town is low.

The aspiration for brands from cities exists and can be cashed on. The consumer also has more time on his hands, as travel time in small towns is less.

What is the capital appreciation you expect in these cities?

I expect an investment in these cities to yield around 10-12 percent capital appreciation.

What are the things that an investor needs to keep in mind while investing in Tier-II cities?

Ascertain the capacity of the surrounding infrastructure to sustain the needs of the future population. You need to look at the existing and proposed infrastructure at various locations.

The capacity of infrastructure in general and road and access in particular brings change in any area. Primarily the access and other facilities and amenities that make a property prime.

Always keep abreast of trends in metropolitan property markets. Look out for movements of prominent corporates to a particular business destination, for example, the gradual shifting of corporates to Suburban Business Districts (SBD) from the original Central Business Districts (CBD) in most of the Indian metros has given rise to the increasing demand for residential properties in the vicinity.

News: Volvo looks to zoom on Indian growth highway

(TNN 22/04/2006) Ahmedabad/New Delhi - Is Swedish truck major Volvo looking at increasing its Indian footprint with a stake in India’s second largest commercial vehicle manufacturer Ashok Leyland?

According to sources in the financial circuit, Volvo, whose Indian subsidiary is called Volvo India, is reportedly negotiating the deal, though no concrete decision has emerged yet. However, when contacted, Dheeraj Hinduja, vice-chairman, Ashok Leyland, denied the development. “To my knowledge this is not correct,” he told ET. Ashok Leyland’s MD, R Seshasayee, refused to comment as did Volvo officials. AB Volvo’s vice-president of media relations, Marten Wikforss, told ET, “We do not comment on speculation.”

If the story is indeed true and if Volvo does manage to push this deal through, it would tie in with its new strategy of aggressive organic and inorganic growth in India and China. The company has indicated in the recent past that it is open to the idea of M&As in both markets. In an earlier interview with ET, worldwide group CEO, Leif Johansson, had said, “We don’t have any regulatory limits in India; it’s a matter of finding the right set of circumstances, the right context and the right kind of financial structure to make (an acquisition) happen. If yes, we would be interested.”

The reasoning, he had explained, was simply because there are still opportunities for inorganic growth in India and China. “We are number one in trucks in Europe and number two in the US,” Mr Johansson had said. “We cannot make acquisitions on heavy duty trucks in these markets due to regulatory reasons. Elsewhere, especially in Asia, there are no such barriers to growth, organically or otherwise.”

The Hinduja group has also been on the look out for inorganic growth in the auto industry. In an earlier interview with ET, Mr Hinduja had indicated his interest in acquisition opportunities in commercial vehicles, components and engineering design. “The CV industry has consolidated significantly so there are limited acquisition opportunities,” he had said.

Currently, the promoters who comprise primarily the non-resident Hindujas, hold 49.59% stake in Ashok Leyland. It remains to be ascertained how much stake Volvo would acquire in the company. At Rs 42.35, the price at which the Ashok Leyland stock closed on Thursday, the promoters’ holding (owned through LRLHI) is valued at around Rs 2,500 crore.

As per the company’s documents, the entire promoter holding is in the form of foreign investment (NRI investment). Among the other big shareholders in the company is Life Insurance Company (LIC) of India with 9.8%. The public holding is 11.36%. Volvo currently makes trucks, tippers, tractor-trailors, bus chassis and construction equipment in its Indian subsidiary based out of Bangalore.

As the current manufacturing line is focused on premium products — which have a low offtake in India — production is limited to 1,200 vehicles a year on a single-shift basis. The demand for these products, however, is growing.

The Indian economy is currently riding a domestic demand-led boom. That is also bringing along good road infrastructure and the need for better-equipped vehicles. However, if Volvo wants to grab a bigger pie of the ongoing bustling activities in India, a stake in Ashok Leyland, which is the second biggest CV maker after the Tatas, would come in handy. Ashok Leyland’s annual turnover exceeds $1bn. It has a production capacity of 77,000 vehicles and 87,000 engines per annum.

News: Finally, Desi admen get past colonial hangover

(TNN 22/04/2006) New Delhi - Move over multinational advertiser. For the Indian admen, working on an Indian client is becoming just as hot, challenging and prestigious as any other globally-aligned foreign brand. Not too long back, there was a virtual caste-system in the Indian ad world.

The ‘arrived’ lot across the advertising discipline—client servicing, account planning and creative—would usurp the MNC client for themselves, with the also-rans saddled with the unglamorous, and often ‘boring’ Indian ad accounts. Why, you even had agencies (well, some still do) being identified by their one marquee MNC client. Not any more.

“The very idea amongst lot of advertising professionals on MNC clients being a cut above the local is dying fast,” says Santosh Desai, president, McCann Erickson. There are three things that has brought about this perception change. One, a host of Indian advertisers have now adopted the rigorous processes orientation in their marketing & communication, something only MNC advertisers were known for earlier.

In fact, it was this grounding in processes, something only an MNC account provided not to long back, that made lot of ad professionals hanker after these jobs. “In terms of career planning, young ad professionals in the industry used to prefer MNC clients, and some do even today. But by and large, the MNC versus Indian client caste system is fading,” says Nakul Chopra, managing director, Publicis India.

Also, with Indian advertisers becoming big spenders on media, the opportunity for ad professionals to get exposure and get noticed is equally good compared to MNC brands. Last, and more importantly, most large and professionally run Indian companies have started attracting the same talent from IITs and IIMs, and ad agencies people see little quality difference in client-agency interactions. “Our Indian clients, such as Marico, compare if not exceed MNC clients in every respect,” adds Chopra of Publicis.

This is not to say that MNC assignments are not prized any longer. “The only caste system in agencies is on good clients—those who believe in advertising—and bad clients,” says R. Balakrishnan, executive creative director, Lowe India. Well, only that perceptually all this while it was the MNC advertiser which was considered to be the ‘Good’ one.

Interestingly, there is a contrary force at play against MNC advertisers as far as ad agencies are concerned. “With their strict, globally dictated communications templates, there is little room for original work. And increasingly, ad professionals are realising its’ better with big Indian advertisers, who now offer all the pluses of MNCs without the restrictions of global conformity,” says one senior ad professional.

News: Viceroy Hotels on Rs 800-cr expansion spree

(TNN 22/04/2006) Hyderabad - Hyderabad-based Viceroy Hotels has embarked on a Rs 800-crore expansion plan to set up hotels in Chennai, Bangalore, Vizag and add one more hotel in Hyderabad. The total investment for the expansion plan will be raised through a combination of debt and equity.

“About one-third of the funds would be raised through equity and the rest via debt,” Viceroy Hotels vice-president Ravi Krishnan told ET. The Anil Dhirubhai Ambani Enterprise (ADAE) has recently picked up about 6% stake in the company while investor Rakesh Jhunjhunwala has picked up about 13.5%. Mr Jhunjhunwala is also on the company’s board of directors. A couple of London-based firms have also picked up stake in the company, he said.

On April 10 , Viceroy Hotels had approved a proposal to offer 40,25,000 equity shares of Rs 10 each at a premium of Rs 90 per share to promoters and other strategic investors. It had also cleared the issue of 74,75,000 warrants convertible into equivalent equity shares of Rs 10 each at a premium of Rs 90 per share within 18 months from the date of allotment to promoters and other strategic investors, according to information with the BSE.

Viceroy would soon be known as Marriott Hyderabad as a result of its management tie-up with the latter. Marriott has been managing the Viceroy Hotel since January 15. “Philip Spencer has taken over as the general manager and has been running the hotel with his team,” says Mr Krishnan.

Viceroy has been in a tie-up with Marriott since 2002 and its first project was the renovation of Viceroy Hotel in Hyderabad. The hotel has invested Rs 80 crore on renovation and is also setting up a budget category hotel called Courtyard, a Marriot Group brand. The hotel group has also taken up five and half acres in Chennai.

News: Aeren Group plans Indian theme malls

(TNN 22/04/2006) Delhi - The Aeren group has chalked out plans to put in place a dozen odd theme malls across the country over the next three years with an investment of around Rs 2,500 crore. The first of the malls is coming up at Ludhiana.

The Festival City project at Ludhiana is spread over 2m sq feet with an investment of Rs 250 crore. Based on “mall within a mall’ concept, the destination mall at Ludhiana, situated on a highway, is positioned as family outing centre for shopping, entertainment and leisure.

Apart from showrooms of leading domestic and international brands, the mall will house six-screen multiplex and an IMAX screen, including a ice-skating ring, gaming zone, bowling alley, and a video arcade.

“This will be the first experience of mall-in-a-mall concept for Ludhiana, with special focus on kids, lifestyle, fashion, hospitality, entertainment and leisure,” Sujit Kumar, CEO, Aeren R Enterprises told ET. Mr Kumar said around 50% of total commercial space has already been leased out.

The Festival City is spread across seven floors and is expected to be completed by April 2008. The catchment area of the mall will be Phagwara, Jalandhar, Moga, Khanna, Amritsar, Chandigarh and Ambala.

According to Mr Kumar, the group is looking at around a dozen-odd theme malls over the next three to five years across north India with an investment of around 2,500 crore.

The Aeren group already runs several mall projects including Gold Souk, a speciality mall for jewellery and wedding, Crown Interiorz at Faridabad, and another at Vikaspuri at Delhi. The group is also developing high end residential projects at Gurgaon and Rishikesh.

News: Pantaloon's Electronic Bazaar to have in-house brands

(TNN 22/04/2006) Mumbai - After giving FMCG majors cause for worry through in-house brands in its Big Bazar and Food Bazaar outlets, Pantaloon Retail is now gearing to shake the consumer durables and appliances categories by introducing private label brands here as well. The private labels will shortly be introduced through Electronic Bazaar (its shop-in-shop within Big Bazaar) and its newest format, e zone.

The products being initially launched include small appliances, kitchen appliances and home theatre systems, which are expected to hit its stores in about two weeks time. These will be followed by other appliances soon. Confirming this, Manoj Kumar, chief, consumer durables and electronics, Pantaloon Retail, said that consumer prices for private label products are expected to be 15-25% lower than comparable products from big name brands. “From the value side we'll try to explode the market at bottom of the pyramid,” he said.

So far the biggest stumbling block to the introduction of private labels in this category has been the absence of a retail chain at the national level, with only a handful of regional chains like Viveks and Vijay Sales operating with limited reach. After-sales service support is an-other critical factor and, to begin with, the company claims to have in place a service network in 25 locations, along with a toll-free number to address service and other customer enquiries.

However, the success of Pantaloon's private label ambitions in durables will hinge mostly on its two-pronged retail strategy. At one end of the spectrum will be the existing Electronic Bazaars, which will continue to cater to the value-driven consumer, and stock a host of regional brands in addition to the popular range from manufacturer brands.

At the premium end, it plans to open larger stores of 10,000 to 20,000 sq ft, within malls and as standalone outlets, under the e zone banner. Each e zone will be Wi-fi enabled and will allow consumers to experience every product before they make a purchase. The first of these is scheduled to open shortly in Indore, and will be followed by 8-10 more such stores in Banaglore, Hyderabad, Delhi and Mumbai, over the next four months.

News: Retailers hitch ride on pilgrim’s progress

(TNN 22/04/2006) Mumbai - Devotees are big consumers too. That’s the latest realisation dawning on fast food retailers, who have started betting big on temple towns as areas with higher footfall catchment to push business volumes.

Retailers such as Cafe Coffee Day (CCD), Baskin Robbins and Barista are recording 30-50per cent higher sales from these areas vis-à-vis regular outlets. Most of them have moved into temple towns with a range of products customised to suit the needs of the travellers.

Companies are seeing major growth drivers in these avenues as the consumer profiles do not vary much from the regular cities and towns where they are already present. Cafe Coffee Day, for instance, has eight outlets, which are 100per cent vegetarian en route to temple towns.

For instance, it has two outlets in Katra, which is on the way to Vaishno Devi, three in Bhubhaneshwar on the way to the Jagannath Temple in Puri, and one each on the way to the Golden Temple in Amritsar, the birthplace of Lord Krishna and the Meenakshi Temple in Madurai.

The average size of these outlets is 950 sq ft. The company has immediate plans to open more such outlets in Tirupati, Varanasi and Allahabad.

“Places of domestic tourism and religious pilgrimage are high-traffic areas and most of the time, the only option for a traveller is street food,” says Sudipta Sengupta, senior general manager marketing, CCD.

“We have been tracking results and have seen about 500 walk-ins per day. Also, our average daily sales at these outlets are 30-50per cent higher than our regular outlets, not counting our flagship ones.

Also, dry, take-away foods like cookies sell more at these outlets,” she adds. To drive the brand, CCD has introduced promotional material in the cafes in Katra like ‘Jai Mata Di’ T-shirts and devotee headbands.

Barista is expected to soon follow suit with an outlet in Vaishno Devi in the next six months. “Vaishno Devi is one area we are looking at since people do look for breaks on their way to the temple,” says Partha Dutta Gupta, CEO, Barista.

“But the offerings at these outlets will have to be tweaked. For example, these outlets will have to be 100per cent vegetarian. Also, it would make sense to have light bites and more beverages like fresh juices, as tourists would want to have something that is energising,” he explains.

Since business in these areas will be seasonal, Barista will focus on working out a rent agreement, he adds. This is also based on its leanings from Barista outlets at hill stations like Shimla and Missouri.

The hill station outlets give the company a whole year’s business and the focus is on hot beverages and desserts as these sell more.

Pankaj Chaturvedi, CEO, Baskin Robbins, South Asia, had seen the potential at such places while visiting Vaishno Devi two years ago. But the plans did not work out as there were concerns pertaining to logistics and cold storage.

“We have outsourced our service and logistics and are hoping to have a presence in all the pilgrimage places in another two years by which time the logistics support will be better,” says Chaturvedi.

News: Indian retailers to invest $20b, cut prices

(TNN 22/04/2006) Mumbai - Look no further for the next big story in India. Retailing is here. Entry of big business houses like Reliance, the Bharti Group and the Tatas and a flurry of high-profile appointments is only the precursor. Investments, jobs and consumer bonanza should follow soon.

According to consultancy firm Technopak, the industry will see $20 billion of fresh investments (excluding investments in real estate), at least 6.5 million new direct and indirect jobs and 2,000 hyper markets coming up in the next five years. But the biggest news is for the consumers who will see a 3-5% dip in food and grocery prices over the next five years.

“Big buyers with bulk orders will invest in supply-chain, eliminate middlemen, remove inefficiencies and make it a win-win situation for the producers as well as the consumers,” says Arvind K Singhal, chairman, Technopak. Considering that 40% of a consumer’s shopping basket comprise of fresh fruits and vegetables this will lower their conventional grocery bills and increase their disposable income.

Wastage in the vegetable and fruit supply chain in India is estimated at Rs 50,000 crore annually. “So far farmers and consumers both have been losers — the former got little money for his produce and the latter paid far higher price for it due to middle men. That will change,” Singhal says. The entry of big players, MNCs included, will mean that retailers will enter into direct contract farming with farmers and lift produce directly from the fields.

This will also dramatically change the face of the $230-billion retailing industry in India. So far, fragmented and small scale, the sector has primarily been dominated by 6 million kirana stores. At $7 billion, organised retailing is barely 3% of the total market. In the next five years, Singhal expects it to grow to around $80 billion. “But this will in no way mean the end of kirana stores — as is being discussed and feared today,” he says.

News: Mukesh may get Armani to India

(HT 22/04/2006) Mumbai - Mukesh Ambani’s Reliance Industries Ltd (RIL) is in an advanced stage of negotiations to bring Armani stores to India. The world’s leading luxury brand is contemplating a license agreement by which it will have exclusive outlets at RIL’s retail stores.

RIL is foraying into retail in a major way and the deal would redefine corporate dressing in India. Armani, noted for its unstructured yet refined approach to formal wear, has been studying the Indian market and industry sources say it may debut through the RIL alliance early next year. The RIL-Armani license agreement would initially result in stores in major metros. An RIL spokesperson declined to comment.

Armani, which is becoming increasingly popular with Indian corporate high flyers, may not price its products too high. While a typical Armani shirt costs $400 to $500, sunglasses are priced at $300 to $330. “I’ve been buying Armani from Europe and the US. It’s good news that the brand is finally coming to India. If prices are lower, I’ll buy the products from India,” said Rahul Mehta, director of Mumbai-based exporter Creative Garments.

Global market research agency AC Nielsen had selected Armani and Gucci as the world’s most coveted designer brands through a global survey in February.

“Giorgio Armani knew the importance of building and maintaining a strong brand when he started his business 35 years ago. When consumers in Italy, China or UAE purchase a Gucci bag or an Armani suit, they are prepared to pay a premium because they are buying the image the brand represents,” said the survey.

Artikel: Wat is hedging?

(DWT 22/04/2006) Paramaribo - Producenten en handelaren in goederen lopen doorgaans beiden een prijsrisico. Zowel voor producenten als afnemers blijven de toekomstige prijzen onbekend en moeilijk voorspelbaar. De techniek om zich in te dekken tegen dergelijke risico's heet 'hedging'.

De producenten weten niet tegen welke prijs ze in de toekomst hun goederen kwijt zullen kunnen; de handelaren weten niet of ze er goed aan doen hun voorraden tegen de huidige prijzen te gelde te maken, dan wel voorraden aan te leggen om van toekomstige hogere prijzen te kunnen profiteren. Niemand heeft een glazen bol, toekomstige prijzen blijven dus onbekend en moeilijk voorspelbaar.

De afnemers van goederen staan voor hetzelfde probleem. Tegen welke prijs zullen zij straks hun grondstoffen of halffabrikaten moeten aankopen? Daarnaast zien we overal waar prijsbewegingen zijn speculanten opduiken, die trachten voordeel te halen uit de prijsschommelingen.

Al deze marktpartijen kunnen terecht op de futuresmarkt, maar in de eerste plaats zijn dit mensen die zich willen indekken, de 'hedgers'. Ze hebben op de fysieke markt een bepaalde positie, en ze dekken zich op de futuresmarkt in.

Speculatie

Ook speculanten kunnen een positie innemen op de termijnmarkt. Zij doen dat op basis van hun eigen prijsverwachtingen. Hun rol is niet onbelangrijk in de futuresmarkten. Aan de ene kant dragen ze bij tot een efficiëntere prijszetting; aan de andere kant bezorgen ze de markten extra liquiditeit. Speculanten verhandelen futures enkel en alleen met de koerswinst voor ogen die bij bepaalde ontwikkelingen opgestreken kan worden. Ze zijn de olie van de markt: ze 'smeren' de handel.

Arbitrage

De arbitrageanten vormen de derde groep van actoren op de futuresbeurzen. Het gaat om professionele partijen die van tijdelijke inefficiënties in de markten gebruik trachten te maken om zonder risico winst te realiseren. De waarde van een futurecontract is onlosmakelijk verbonden met de prijs van het onderliggend goed. Indien de koers van het onderliggend goed stijgt, zal ook de waarde van de future stijgen. Vaak zal de koers van de future niet precies op hetzelfde moment met de waardestijging meestijgen. Een arbitrageant zal van die tijdelijke afwijking gebruik maken door futures te kopen. Door zijn handeling zal de koers van de future stijgen, zodat de arbitrageant winst boekt. Tegelijk zorgt de arbitrageant voor een efficiënte marktontwikkeling: tijdelijke afwijkingen worden snel weggewerkt. Indien financiële contracten op meerder markten of via meerdere kanalen kunnen worden verhandeld, zullen arbitrageanten er tevens voor zorgen dat de prijs voor de contracten overal dezelfde is.

Hedging is echter niet alleen beperkt tot de goederen termijnmarkt of aandelenbeurs. Men kan zich ook indekken tegen bijvoorbeeld valutaschommelingen of stijgende en dalende rentes.

© Drs. Benjamin R.H. Bremmer, InCar Trust (bremmer@incartrust.com)
InCar Trust is het aanspreekpunt voor Sares Invest in Suriname en het Caribische gebied.

News: Indian banks ride on growing aspirations of students

(DNA 22/04/2006) Ahmedabad - Rahul Raushan is doing his second year post-graduate diploma in business management at the Indian Institute of Management, Ahmedabad (IIM-A). He joined the elite course after two years working with Sahara Samay, which helped him save enough to partly finance the Rs 5 lakh course.

But Amol Nimkar, a first-year student at Jamnalal Bajaj Institute of Management Studies in Mumbai, did not have the luxury of even partial self-financing. However, there is one similarity between Rahul and Amol, both are part of the 6.5 lakh student customers of the Indian banking industry, a clientele that's growing at a furious gallop.

Education loans given by nationalised banks have more than doubled from Rs 4,550 crore during 2003-04 to over Rs 10,000 crore during 2005-06. The rush began about a couple of years ago, when the industry made it easy for students to avail of student loans.

Consider this: As of March 31, 2002, banks had lent just Rs 1,658 crore through education loans, one-sixth of the current size.

"I could have managed to pay the fees from my savings or got my family's support, but the simple education loan procedure was an attractive option instead of burdening my family. Today, banks are equally enthusiastic about offering education loans for an under graduate course or for a professional degree," said Rahul.

As an attempt to tap the emerging education loan market, SBI has joined hands with a number of premier institutes like IIM-A and National Institute of Designing, while Dena Bank is conducting road shows at various institutes to draw students from the campuses.

At the same time the procedures to avail education loan has also been simplified," said R K Gupta, assistant general manager, retail banking, Dena Bank. The interest rate on education loan is as low as 9% on certain promotional offers. Gupta expects the bank's education loan outstanding to rose to over Rs 150 crore by the fiscal end from Rs 105 crore as on March 31, 2006.

News: Indian banks queue up to fund SEZs, airport projects

(DNA 22/04/2006) Mumbai - With the government sanctioning 148 proposals for special economic zones (SEZ) across India last month, this sector is emerging as a potential gold mine for banks.

Standing in queue to lend to SEZs is a clutch of Indian banks and funding institutions. Negotiations are currently underway to shape a consortium between IDBI Bank, State Bank of India, UTI Bank, HDFC Bank and ICICI Bank.

Even as the government's SEZ proposals cover 40,000 hectares of land with a fund inflow of over Rs 100,000 crore, the banks' focus primarily is on the country's largest proposed SEZ. Together they plan to lend around Rs 4,000 crore to the 35,000 acre Navi Mumbai-Maha Mumbai project promoted by Reliance Industries. The cumulative cost of the proposal is said to be around $1.1 billion.

In fact, IDBI Bank is understood to be at the forefront of this initiative, according to industry experts. Three years ago, IDBI had sanctioned, but not disbursed, almost Rs 2,000 crore for the Navi Mumbai project, which was then being promoted by Nikhil Gandhi's Sea King Infrastructure Ltd. Reliance Industries has since bought out Gandhi. In fact, infrastructure lending is the new flavour in bank lending. Already a host of banks including UTI and IDBI are said to be flying high on airport modernisation and privatisation projects. Then there are huge funding requirements of roads and ports.

Once again, it is being done through a consortium which includes three more banks. They are understood to have agreed in principle to lend to the south-based GVK group which has bagged the Rs 5,000 crore contract for the modernisation of the Mumbai airport, along with a South African consortium, including ACSA and the Bidvest group.

News: Indian forex reserves up $987mn

(BS 22/04/2006) Mumbai - Foreign exchange reserves increased $987 million to $155.196 billion for the week ended April 14, 2006, according to the weekly supplement released by the RBI on Friday.

Foreign currency assets moved up $989 million to $148.681 billion. Gold reserves and SDRs were steady at $5.755 billion and $3 million, respectively.

The Reserve Tranche Position in the IMF dropped $2 million to $757 million.

News: 'Indian VAT is price-neutral exercise'

(BL 22/04/2006) New Delhi - State-level value added tax (VAT) introduction has been largely price-neutral on an overall basis if one went by the findings of a PricewaterhouseCoopers' (PwC) survey on VAT implementation.

As many as 57 per cent of the respondents did not perceive any change in prices due to VAT. Only 25 per cent of the respondents felt that the VAT has had a significant impact on their business models. The PwC survey covered more than 100 companies with all India operations.

'Smooth transition'

The overall experience of transitioning from the sales tax regime to the VAT regime was a smooth one for 84 per cent of the respondents, according to the survey.

However, 76 per cent of the respondents felt that the States have not been successful in bringing about uniformity in the structure of VAT, which was one of the key objectives of VAT implementation.

Only 18 per cent of the respondents felt that the State Governments were fully prepared for the switch over to VAT.

"Non uniformity in the VAT rates across the States has adversely impacted companies with all India operations as they have to reckon with varying rates in different States," S. Madhavan, leader of the indirect tax practice of PwC, said.

The PwC VAT survey 2006 has assessed the experience of businesses and identifies their continuing concerns, on the completion of one year under the VAT regime.

It documents the perception of businesses across various industrial sectors, on both the policy and operational aspects of the VAT.

News: Proline eyes tier II cities

(BL 22/04/2006) Bangalore - Sports and leisurewear brand Proline is taking up space in leading malls and highstreet shops across the country, particularly in Tier II cities.

Rajesh Batra, Chairman, Batra Group, said that the company is eyeing a 60-70 per cent growth in the next two years. Proline India Ltd is a part of the Batra Group of companies and operates through 30 exclusive stores and 500 multi-brand outlets in the country. "We want to add 20 more stores in two years, nine of which would be in cities such as Pune, Hyderabad, Nagpur and Mysore."

Proline, a Rs 45-crore company, is launching a range of womenswear by Autumn-Sept this year and is looking at a turnover of Rs 65-70 crore in the next two years, according to Batra. Speaking on the shift in their promotion and marketing activities, Batra said that during the early years, Proline used celebrity endorsements (by cricketers such as Sandeep Patil), but "now cricketers are expensive and we prefer to spend on below-the-line activities."

Commenting on Bombay Dyeing picking up 51 per cent stake in the company, Batra said this has brought in about 50 more outlets for the brand.

Apart from a foray into womenswear, Proline may also consider entering the high-end and the kidswear segment in the near future. "This will be a natural extension of our brands," Batra said.

News: MNC insurers hold talks for foray into India

(BL 22/04/2006) Hyderabad - The insurance industry is likely to attract three or four new multi-national companies to start activities in India this fiscal, the Insurance Regulatory and Development Authority (IRDA) Chairman, CS Rao, has said.

Talking to newspersons on the sidelines of a seminar at the Administrative Staff College of India (ASCI) here on Friday, he said, "three-four global majors are currently negotiating with their prospective Indian partners to begin operations mostly during 2006-07."

These companies include European insurance giant Axa, American major Principal and Japanese insurer Sompo. While Axa is currently in talks with the Bharti group, Principal is negotiating with the Punjab National Bank (PNB).

Earlier, delivering the KLN Prasad Memorial Lecture on "Indian Insurance Industry - Post-liberalisation Landscape', the IRDA Chairman said India was being viewed by many multi-national insurance companies as a vast market waiting to be tapped. According to Rao, the global players were interested in this market since there is vast untapped potential with a major portion of household savings parked in the banking sector. Stating that the Indian insurance market was on a threshold of a free market where the players themselves decide the prices, Rao said the free tariff regime would come into effect from January 1 next year. Apart from providing sufficient time to the insurers towards de-tariffing regime, the regulator was conducting review programmes at various stages for ensuring a smooth transition, he said.

Roadmap for de-tariffing

According to the IRDA Chairman, the General Insurance Council, which comprises all the general insurers, has considered the roadmap for de-tariffing. Stating that there was some apprehension about motor tariff, he said that all the insurers had stressed the need for de-tariffing motor premium along with the rest.

"We see no difficulty in agreeing to this suggestion. However, we would like to ensure that no vehicle, which has a valid registration and permission to ply on the road, goes without a proper insurance cover. We have, therefore, suggested creation of a Declined Motor Insurance Pool," Rao said.

"We are planning to bring the Pool into operation at least 2-3 months before the industry goes into de-tariffing," the IRDA Chairman said.

News: 'Indian economy on accelerated trend'

(PTI 22/04/2006) Washington - The Indian economy continues to be on an accelerated trend with an upsurge in investments, low inflation rate and ample foreign exchange, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia has said.

"There is the upsurge in investments, inflation below four per cent and a surfeit of foreign exchange reserves, in the neighbourhood of $150 billion," Ahluwalia said at a United States India Business Council-CII event here sponsored by The Tata Group.

He, however, added that the government was not satisfied with the present growth rate and seen in the context of China, there had been a rise in public expectations. "The bar has been raised," the economist said yesterday.

Ahluwalia maintained that there could be a gradual acceleration to a ten per cent growth rate over the next five years with the average growth being between eight and nine per cent.

"India can get to a ten per cent growth rate but the questions that are to be posed are over what period and the kind of policies that are needed to be put in place to achieve this objective. We are quite clear that this acceleration will not come from simply business as usual," he said.

During the interactive session, Ahluwalia made the point that while there had been good growth of the economy, the feeling in the country was that it had not been "sufficiently inclusive", like that for people involved in agriculture.

"The perception has been of a failure to put in place a set of policies that will generate good agricultural growth. That in turn is very much linked to modernising Indian agriculture," Ahluwalia said.

He said that if economic growth was to be inclusive, it had to factor in agriculture, including the critical issue of how to get the Indian farmer to diversify.

The Deputy Chairman also raised the issue of regional disparities, saying the reason for it was the lack of infrastructure.

"It is true that some states are doing very, very well, while others have not experienced the same benefits. One of the major reasons for this is the lack of infrastructure."

He said the priorities of the government as it looked to the next generation reforms were in the areas of health and education with the public sector playing a major role and the development of infrastructure, including irrigation. Referring to demands for better infrastructural facilities, the economist said major investments totaling around $200 billion was in the pipeline over the next five years in airports, roads, rail, irrigation.

The government was determined to create an environment that would bring in the private and the public sectors, he said.

Ahluwalia also pointed to India’s need for energy to achieve high growth, referring to the civilian nuclear energy agreement between America and India.

"The argument was that civilian nuclear energy may be a small but it is nevertheless a significant part of the overall energy mix and expectations," he said.

News: RBI raises foreign fund limits in cos

(RTR 22/04/2006) Mumbai - The Reserve Bank of India on Friday approved raising the investment ceiling for foreign portfolio investors in Wockhardt Ltd, Vimta Labs Ltd and Rico Auto Industries Ltd. In Wockhardt and Vimta, foreign funds can now buy up to 49 per cent.In Rico, the limit is now 40 per cent.

Foreign portfolio investors currently hold a 20.06-per cent stake in Vimta, 4.85 per cent in Wockhardt and 22.05 per cent in Rico.

News: CII projects 8.3% GDP growth

(ACERC 22/04/2006) New Delhi - The Confederation of Indian Industry (CII), has forecast marginally higher GDP growth rate of 8.3 per cent in the current fiscal.

The bullishness of India Inc is not just restricted to the macro level. The industry body has also set a target of building more than a hundred Indian companies with $ 1 billion-plus revenues over the next three years.

The targets and roadmap for the future were unveiled on April 20 by the industry body's new president R Seshasayee.

The CII theme for the current year is ‘Competitiveness for Sustainable & Inclusive Growth,’ to take into account issues such as overuse of natural resources and income disparities.

According to the projections on which the GDP growth rates are forecast, the industry body has assumed growth rates of 3 per cent for agriculture, 9.1 per cent for industry and 9.9 per cent for services for 2006-07.

News: India to develop more industrial clusters

(BL 22/04/2006) Hyderabad - The Government would provide funds for setting up more industrial clusters on the lines of a textile cluster with an aim to boost manufacturing sector and generate more employment.

"We will focus on developing industrial clusters and technological upgrade to cut down on sick units," Kumar said here today.

On the lines of Coimbatore textile cluster, more such ventures would be encouraged and the Government would play the role of a facilitator and provide funds only for technological upgrade but would not take over the units, he said.

The move would provide employment to rural artisans and improve the growth rate in the industry from nine to 12 per cent, he said, adding that the North East cluster would have a tie-up with the Southern one for better management.

Projected hike of the industry's share in GDP would be about 17 to 25 years in the coming five years, he said, adding that jobs in the industrial sector were on the slide between 2000 and 2002 but have picked up now.

After setting up the trademark tribunal at Chennai, now that the city would also have a patent registry soon, Kumar expressed hope that patenting culture would soon catch up in the country.

"In the US there are about seven lakh patents while we have only 25,000 which shows that the culture is yet to catch up in our country", he said.

News: Foreign funds stay glued to India

(NDTV 21/04/2006) Mumbai - A day after the Sensex danced to the 12,000 tune, foreign funds are still not turning their face away from the Indian markets.

There is no shortage of money, and a lack of choice in other emerging markets is keeping foreigners clued on to India despite the strong rise.

"We have had a very strong run in most of the markets from mid-March, so a bit of consolidation will not be a bad thing. We will remain invested till we get sell signals on our indicators, and we are certainly not getting them at the moment," said Julian Reid, CEO, 3a Funds.

The 12,000 surge was supported by a small amount of buying by the foreign institutions as well as domestic mutual funds on Thursday. But going ahead, several European and Australian funds are now getting ready to pump in fresh money into India.

The question now is how sharply can the markets react, and will it be large enough to end the bull run.

With the Sensex gaining more than 7 per cent this week, all eyes are on an important result week starting Monday, and the role of foreign money is likely to continue as an important driving factor.

News: Brazil to set up ethanol plants in India

(NDTV 21/04/2006) Mumbai - If India takes it cues from Brazil, the solution to high oil prices might come from the farm sector. In the green sugarcane fields hides a sweet way to cut India's fuel import bill.

It comes out from the sugar mills as ethanol that's produced from the by-product, molasses. And the ethanol can be mixed with the fuel that's pumped into your car, reducing its price.

In fact the government plans to allow about 10 per cent ethanol mix in petrol and diesel, and estimates suggest that will save India about 200,000 barrels of crude everyday.

And India's ethanol business is likely to grow to a size of $10-$12 billion in the next three years.

That's what has brought a group of Brazilian ethanol makers to Mumbai and they have tied up with a local partner Gill and company to set up ethanol plants in India.

They will set up 15 plants in next two years across the country with an investment of Rs 60 to Rs 85 lakhs each.

"India has the largest potential for ethanol production after Brazil being the largest producer of sugarcane. We are here to bring technology for ethanol dehydration," said Marco Fattore, Interunion Comercio Internacional.

"This technology is not only for the sugar produce, but can also be used to produce ethanol from wheat corn etc and has an unlimited market," said Kantilal V Shah, MD, Gill & Co.

Ethanol production costs only one fourth per litre of what you pay at retail gas stations.

And if the government does go ahead and allow a 10 per cent blend of ethanol in fuel, it could very well save the government a lot of money that it otherwise pays to import crude at such inflationary prices.

News: IMF wants India to speed up reforms

(IBN 20/04/2006) Washington DC - In its biannual report, called the World Economic Outlook, the IMF has revised India's 2006 growth rate estimate by a percentage point. But along with the thumbs up also came some warnings from the global body.

India along with China and Russia have emerged as the big winners in the World Economic Outlook, the IMF's global projection report. In the report, the world body has upgraded growth projections for the three countries. India's growth rate for 2006 has being revised from last year's estimate of 6.3 per cent to 7.3 per cent, thanks to strong performance in the manufacturing and service sectors.

Raghuram Rajan, Economic Counselor, Director of Research, IMF says, “There has been broad growth in not only agriculture, in ESP industry but also in services. In addition the affect of oil prices, which we thought would be higher hasn't been as much not just in India but across the world. So I think those two features made us raise the forecast.”

But there were also words of caution. The IMF wants India to speed up the reform process, particularly in the labour, infrastructure and power sectors to sustain growth rates of more than seven per cent. It also warned India to aggressively reduce its current fiscal deficit level of eight per cent.

“The problem comes from two areas. One investment is picking up has picked up substantially and now this competition for resources is going on. And so now if the government is also in the market trying to finance itself, you are going to have higher interest rates and that's a concern. Equally imp is government is talking about full capital account convertibility. If you have such a large fiscal deficit it's an important vulnerability," says Rajan.

The report also warns against the adverse affect of high and volatile oil prices on growing economies like India. It says such an impact is more certain as prices are being driven by supply rather than growing demand.

Apart from Asia, other global economies like Africa have also emerged as winners with a projected growth of 5.8 per cent-it's highest in 30-years. Figures for India are promising too but the IMF cautions against complacency and says labor and education reform are a must to sustain long-term economic growth.

News: 'Foreign airways can buy into Indian cos'

(PTI 21/04/2006) New Delhi - Government is open to the idea of changing its present policy and allowing foreign airlines to pick stake in domestic carriers, but not rightaway.

"As of now, foreign airlines cannot pick up stake in domestic airlines. But government policies evolve with the changing scenario and this could happen when the government feels the necessity. At this stage, the present policy is sufficient to take care of the needs of the Indian airlines," civil Aviation Minister Praful Patel said here today.

Foreign investment up to 49 per cent is now allowed in the aviation sector and in domestic carriers, though not by foreign airlines.

Official sources said this policy could be revisited once Indian carriers together acquired over 1,000 aircraft in another five years when they would acquire a critical financial strength. At that time, the participation of even foreign airlines could be looked into, they added.

To questions on the proposed merger of Air-India and Indian, Patel told reporters that the government would soon take a decision on whether the national carriers would go in for initial public offers (IPOs) separately or do it after merger.

"Our advisors are on the job ... Working on various options. One suggestion is that may be a better value can be arrived at (on the IPO) after merger.

We will take a decision on the basis of good advice", he said.

Asked about employees of the two national airlines in the aftermath of the merger, the minister said: "I do not foresee any HR problem. All the staff will remain as both the airlines are growing and acquiring more aircraft".

He said the aircraft-employee ratio, which was high now, would be cut down "drastically" once the new fleet was inducted by Air-India and Indian. "We will definitely optimise manpower with the new aircraft coming in".

On the merger and acquisition guidelines, Patel said the aircraft acquisition committee has sent its recommendations. "We will go by them and I don't see any major obstacles" in mergers and acquisition in the Indian aviation industry, which is growing by leaps and bounds.

To a question on the imposition of over 12 per cent service tax on first class and business class international travel, he said he would take up the matter with Finance Minister P Chidambaram. "We will express our viewpoints as well as those expressed by foreign airlines, the ICAO and IATA. We hope to find a solution".

Regarding the ageing fleet of Air-India and the recent instances of emergency landings, the minister said such landings were undertaken "as precautionary measures" and as part of the laid down procedures.

"The fleet may be old but technically they are 100 per cent safe and sound", Patel asserted.

News: Anil Ambani group loses airport rejig case

(PTI 21/04/2006) New Delhi - Anil Ambani-owned Reliance Airport Developers suffered a setback today with the Delhi High Court upholding the government’s decision to allot Delhi and Mumbai airports' modernisation work to rival bidders - GMR and GVK led consortia, respectively.

Dismissing the Reliance petition, a Bench, comprising Justice Tirath Singh Thakur and Justice B N Chaturvedi, held that the government’s action was in no way "discriminatory, illogical or illegal".

However, the Bench at the request of the Reliance counsel ordered that the two consortia would not claim any equity or implement the contract during the next two weeks to enable the petitioner to file an appeal in the Supreme Court.

News: Indian vehicle makers see mostly higher Q4 earnings

(RTR 21/04/2006) Mumbai - Indian vehicle makers are set to report mostly higher quarterly profits on stable raw material costs and modest sales growth, but high oil prices and firm interest rates could squeeze margins in coming quarters.

Bajaj Auto Ltd., India's number-two motorcycle maker, and top truck producer Tata Motors Ltd. could report earnings grew 51 and 30 percent respectively on new launches and sales of premium products, a Reuters poll showed.

Low vehicle ownership, rising incomes and affordable loans have helped Indian vehicle makers post rapid growth in the last three years.

But a cyclical slowdown, stricter emission standards and higher prices of oil and raw materials like steel and rubber slowed the pace of growth in India's $15 billion vehicles market in the fiscal year to March 2006.

"The long-term growth prospects are strong, given the low penetration, increased affordability and changing demographics," said Dipen Sanghavi, auto analyst at Pranav Securities.

Small cars make up more than three-fourths of car sales in India, and a tax cut to 16 percent from 24 percent in February is expected to boost sales of top car maker Maruti Udyog Ltd. -- 54.2-percent owned by Japan's Suzuki Motor Corp. -- and Tata Motors in the coming quarters.

Maruti, which cut prices of five of its models in March, is expected to report a 32 percent rise in quarterly earnings on April 26. Tata Motors, which makes cars too, had also cut prices on its hatchback models.

India's passenger vehicle sales are forecast to more than double to 2 million units by 2010.

Tata Motors is also expected to gain from a rule banning overloading of trucks, which will also boost revenues of Ashok Leyland Ltd., the second-biggest bus and truck maker.

"The tax cut on small cars and the overloading rule will help sales of cars and commercial vehicles this year," Sanghavi said.

Continued development of India's highways network and higher freight rates will also encourage higher truck sales.

Utility vehicle maker Mahindra & Mahindra Ltd. is also forecast to report higher profits, a Reuters poll showed.

BIKES BOOM

India's top two motorcycle makers are expected to report strong earnings growth on the back of new launches that spurred sales in the world's largest market for motorcycles after China.

Motorbike makers roll out about 6 million units a year in India. More than half of India's billion-plus population is below the age of 25 years, and a motorbike is usually the first vehicle of purchase by young Indians.

Leader Hero Honda Motors Ltd., 26-percent owned by Japan's Honda Motor Co., is expected to post a 22 percent earnings growth, but number-three TVS Motor Co. could see a 28 percent decline, the poll showed.

But intense competition from new entrants including Honda Motorcycle Scooters, Suzuki Motor and rejuvenated Yamaha Motor will pose an increasingly big challenge.

Still, interest rates on vehicle loans -- which have firmed by about 100 basis points in the last three months and are expected to rise further -- will encourage higher motorcycle sales.

"Despite the tax cut (on small cars), the price differential is still quite big, with the cheapest car still four times as expensive as the average motorcycle," said Sanghavi. "So we are not going to see a huge movement to cars from motorcycles yet."

News: 'Oil prices risk "body blow" to growing nations'

(RTR 21/04/2006) Doha - The world's top oil producers must pump more to ease record prices or risk dealing a body blow to fast-growing developing nations, India's oil minister told Reuters on Friday.

Booming demand in India and China has been a prime driver in oil's four-year rally, but the onus is now on major producers to ease prices, Murli Deora said in an interview.

"They must realize that such high prices should not give a body blow to the developing nations," he said ahead of producer-consumer talks in Doha.

"It all depends on the producing countries. They should produce more and there should be some pressure on prices."

Oil has risen from $20 a barrel in 2002 to over $70 this week on unchecked demand in the United States and Asia and fears of supply outages in OPEC members Iran and Nigeria.

India's oil demand is set to grow higher still.

"If our GDP (gross domestic product) is to grow and development take place, then demand has to grow," Deora said "I'm not against growing demand. Demand should go up. Prices should not be so high."

India's growing appetite for energy has sent it scouring the world for more supplies -- even in league with China -- putting Asia's top consumers in competition with Western oil majors.

India is looking to deepen its ties with China, Deora said.

It is a relationship causing some concern with Western oil executives who see the tie-up making their hunt for energy more difficult.

"We are very happy to work with them...It's a very friendly atmosphere. We have very good cooperation with them," Deora said.

"China and India both have such high demand and we all hope there is some control on prices."

Another of India's top priorities in Doha is to boost imports of liquefied natural gas (LNG) from Qatar, Deora said.

The country, the world's sixth largest oil consumer, is also looking within its own borders to boost production and has been actively seeking foreign investment.

Though no American company has bid in India's previous oil exploration licensing rounds, Deora said he expects U.S. oil majors such as Chevron and Exxon Mobil to participate in an upcoming round later this year.

News: Suzuki CEO says Tata's cheap-car plan not feasible

(RTR 21/04/2006) Tokyo - The head of Suzuki Motor Corp. said on Friday a plan by Tata Motors Ltd. to launch a $2,000 car in India was not feasible in light of the planned advent of stricter safety and environmental regulations.

Japan's Suzuki Motor, through its majority ownership of national brand Maruti Udyog Ltd., dominates the burgeoning Indian car market through compact cars like the 800cc Alto and Maruti 800, which cost upwards of 200,000 Indian rupees ($4,500).

Tata Motors, India's top bus and truck maker, is looking to launch a car in the next few years that will cost less than 100,000 rupees ($2,200), targeting a potential market between motorcycles and Maruti/Suzuki's low-end cars.

"If you think about the direction that safety and environmental standards are going in India, you can't sell a car for that kind of price," said Osamu Suzuki, the auto maker's outspoken chief executive, who engineered the company's successful foray into India 24 years ago.

Suzuki noted that India had plans to adopt stricter EURO IV emissions regulations from 2010, while safety standards were also tightening for three-wheeled taxis in big cities.

"Unless the (government) made exceptions for certain cars, it's not feasible," Suzuki said, answering reporters' questions after a speech in Tokyo. "In this day and age, such exceptions are highly unlikely."

Suzuki said his company had no plans to follow suit, but added that Tata was a formidable rival that could become "the General Motors of India" over time. GM, the world's biggest auto maker, owns 3 percent of Suzuki Motor.

While no-frills, compact cars remain popular in India, the market is shifting up to bigger models as income levels rise and more foreign car makers join the fray.

News: Sensex at 12,000 is a purely domestic conquest

(DNA 21/04/2006) Mumbai - Hitendra Pandey is kicking himself. A south Mumbai resident, Pandey (not his real name) sold all his stocks nine months ago in the belief that the boom was about to go kaput. “I had invested in the top 10 Nifty stocks two-and-a-half years ago, but cashed out when the Sensex was ruling at 7,000-8,000 levels,” he said.

On Thursday, when the BSE Sensex closed above 12,000 for the first time, Pandey would have been about 40% richer had he hung on. Not that he didn’t make money. He gained around 40% on his original investment, but “fear got the better of my greed”.

Vikas Kumar, a Mumbai-based lawyer with Khaitan & Co, has no such regrets. “I do a lot of speculative trading and have made returns of close to 35% in the last two months,” he said.

“I have a lot of leveraged positions in stock futures and could take a huge hit if the market tanks by 400-500 points. Though I’m scared of these levels, I am a firm believer in India’s capital market story.”

On Thursday, when the Sensex closed at 12,039.55 points, all investors would have faced a tinge of fear or greed.

The cautious Pandeys of the world may be happy with the smaller gains they made on an earlier leg of this bull run, but most retail investors are in the thick of action precisely at this precarious index perch, when all the mavens are talking of a decline.

“The risk is on the downside and I expect the index to go down by around 20 per cent (to sub-10,000 levels),” said Andrew Holland, head of DSP Merrill Lynch’s strategic risk group.

Between Sensex 11,000 and 12,000, it is domestic money that has fuelled the markets, with cash-flush mutual funds doing most of the buying. Most of the previous Sensex peaks were conquered with the help of foreign institutional funds.

But between March 27, 2006, when the index closed above 11,000 for the first time, and Thursday, the FIIs were net sellers to the tune of Rs829 crore. Domestic funds bought Rs2,343 crore. So peak 12K belongs to domestic retail investors.

News: Tata favours opening up of retail sector

(PTI 21/04/2006) New York - Strongly favouring opening up of retail sector to FDI, Tata Group chairman Ratan Tata on Friday said any apprehension that multinational retailers will kill domestic ones was ‘not true’.

Asking Indian business leaders to overcome their fears of foreign competition, Tata said: “There is fear that if retail is opened up to the world, the Wal-Marts and Costcos will overrun us, and Indian retail industry will die. But its not true.”

Competition was the most exhilarating force one could have, Tata, who heads the leading retail chain Trent Ltd with its Westside stores all over the country, said.

“If you succeed, you know you have succeeded against your competitor in a fair and just manner, he said pointing out that protectionist polices like licensing of businesses, which kept foreign investors out resulted in limited economic growth and encouraged corruption.”

Indian Government has opened only single-brand retail to 51 per cent of FDI with prior approval even as the debate on opening up the multi-brand retail is hotting up. Tata was delivering the 2006 Robert Hatfeild Fellow lecture at Cornell University. The fellowship is the highest honour that the Cornell University grants to business leaders.

News: CII targets 100 new billion-dollar firms

(DNA 21/04/2006) New Delhi - The Confederation of Indian Industry (CII) on Thursday said it will build 100 new companies worth $1 billion each in the next three years.

"By mentoring Indian companies from the million dollar club, we are targeting to create 100 new billion-dollar companies over the next three years,” newly-appointed CII president R Seshasayee said here.

He emphasised that there was enormous headroom to scale up the economy that was getting increasingly externalised as reflected in the growth in trade and net external capital flows.

While outlining four key missions that will retain the central theme of 'Competitiveness for Sustainable and Inclusive growth', Seshasayee said: "Keeping in mind the high growth rates registered in the country so far, India needs to re-position itself from a low-cost manufacturer/service provider to a creative and innovative product developer."

Manufacturing innovation, knowledge and skills development, 'Inclusiveness and sustainability would be the areas of key concern by the apex chamber for its forthcoming term.

The CII president announced the setting up of the Innovation Cell, in partnership with National Manufacturing Competitiveness Council, to develop future technologies across the manufacturing sector, specially among the SMEs.

Seshasayee also announced that he has constituted a task force on affirmative action headed by Tata Steel director J J Irani to prepare an action plan that will focus on education, skill development, employability, entrepreneurship and social development.

The action plan will be ready in eight weeks.

News: On Indian hypermart aisles, franchisee in tow

(DNA 21/04/2006) Mumbai - When the big retailers come, expect most of them to walk down the hypermarket aisle on a franchisee's arm. That's what the Great Indian Retail Story is about, an Ernst & Young report says.

In most emerging retail markets, such as Eastern Europe, Latin America and China, hypermarkets have been the major high growth format.

Hypermarkets provide consumers with a combination of good prices, overall shopping convenience and experience, product range and quality.

Currently there are less than 50 hypermarkets in India, operated by about five big retailers. The report says that India's 67 cities with a population of half a million or more have the potential to absorb many more hypermarkets in the next 4-5 years.

The report draws parallels between consumer behaviour in India and China. It says that the neighbouring consumers have similar buying patterns.

In China, most hypermarkets are located within city limits as consumers shop more than once a week, have low passenger car penetration and limited refrigeration space at home.

Also, the number of malls across the country will increase as retailers firm up plans to enter smaller cities.

The report lists issues like paucity of talented professionals, agile and adaptive supply chains, fraud and theft, and poor infrastructure as some of the challenges. The retail sector in India is highly fragmented and organised retail in the country is at a very nascent stage.

Of the 12 million retail outlets, more than 80% are run by small family businesses which rely on household labour. China and Brazil, took 10-15 years to raise the share of their organised retail sectors from 5% to 20% and 38%, respectively.

"India, too, is moving towards growth and maturity in the retail sector at a fast pace," says Ranjan Biswas, partner, Ernst & Young India.

About 220 malls are expected to come up till 2007. Of these, 81 will be in smaller cities. Increasing awareness levels in Tier II cities are eroding the ‘urban aspirations' lead of the metros and the international brands are considering these pockets to increase their market penetration.

Footwear and clothing emerge as the categories with the highest organised retail penetration (ORP). Footwear has a 22% ORP driven by high levels of franchising activity. It is dominated by multinational Bata.

Increased branding activity has seen clothing apparel retailers and merchandising spread across formats with a 12% penetration. While food & grocery contributes about 41% of the private consumption expenditure and about 77% of total retail sales, it is largely controlled by the unorganised small outlet sector.

Segments like books & music, jewellery, consumer durables, home furnishings, medical care and health & beauty have seen limited penetration of organised retail and will require innovative and aggressive plans on the part of Indian and international retailers to fully exploit their potential.

"Companies have to understand and retain customers. A 5% reduction in customer defection can treble profits," says Biswas.

News: 'India Inc needs to be socially responsible'

(PTI 21/04/2006) New York - Observing that Indian industry needs to be socially responsible, industrialist Ratan Tata has urged business leaders to create livelihood opportunities in rural areas as well as ensure jobs in the future for the country's growing young population.

"In addition to creating value for shareholders, industry has a responsibility to the 60 per cent of (India's)population that is not industrialised and is living in rural areas," Tata said while delivering the 2006 Robert S Hatfield fellow lecture at Cornell University.

"We (businesses) need to operate with principles and values," he said adding that in a country like India with a large disadvantaged population, one "cannot create great wealth without making an effort to spread the wealth."

But whenever there was talk about social responsibility, "we've been told we're depriving our shareholders of something that belongs to them," he said.

According to Tata, while that might be true in the short term, the goodwill gained by bringing mobile medical units to rural communities in India and offering job training in South Africa has paid off for the Tata group in the long term.

Asserting that India has tremendous human capital, he noted that one-fifth of India's billion-plus people is below 20 years of age and by 2040, the country will have the world's largest working-age population, surpassing even China's.

"These young Indians want a place in the sun, education, a job, the kind of life they know exists from television. Will there be jobs for them?" he asked.

If not, the country may see "the makings of a revolution," Tata added.

Tata pointed out that in the last few years, other countries have started to look at India with a great deal of interest, particularly in the IT industry.

As a result, India's economy is growing at a rate of 7 to 8 per cent a year, he said asserting that "it is not a bubble but is sustainable."

"We haven't had labour strife in 40 to 50 years," he said and new Tata enterprises are welcomed because of the group's reputation as a community builder. I go home at night thinking, 'we've done the right thing,'" Tata said adding that he wants others to share that approach.

He also asked India's business leaders to overcome their fears of foreign competition, break with tradition and abandon protectionist policies like licensing of businesses, which he said kept foreign investors out, resulted in limited economic growth and encouraged corruption.

"There is the fear that if retail is opened up to the world, the wal-marts and costcos will overrun us, and Indian retail industry will die. But it's not true," the chairman of Tata sons, the holding company of the Tata group, said.

Tata cited the example of the country's first India-made car, launched by Tata Motors under his leadership. It prospered by competing effectively against the world's best automakers, he said.

"Competition is the most exhilarating force you can have. If you succeed, you know you have succeeded against your competitor in a fair and just manner," he said.

The Hatfield fellowship is the highest honour that the Cornell University grants to business leaders.

News: DLF plans IPO worth over $2 b

(BL 21/04/06) New Delhi - Top Indian real estate firm DLF Universal Ltd. is planning an initial public offer in June that should easily set an Indian market record, chief financial officer Ramesh Sanka said on Thursday.

The New Delhi-based company is selling 200 million new shares, or a 10 per cent stake, which it expects will raise well over $2 billion.

That would make DLF's issue comfortably larger than the IPOs of Tata Consultancy Services Ltd. and NTPC Ltd., India's largest software services exporter and electricity generator, which each raised $1.17 billion in 2004.

"This should be the largest ever IPO in India," Sanka told reporters at a news conference.

"We plan to file the prospectus by end of this month or first week of May. So that means we plan to hit the market in the month of June."

Sanka said DLF, which has begun the legal process of changing its name to DLF Ltd., would use the IPO money to finance current and future projects.

"The company has grown substantially and wants to (continue to) grow substantially. We need access to funds," he said. "And public equity has more advantages."

On top of the 200 million shares, the firm has set aside another 35 million shares for sale to a private equity investor.

The DLF public issue will dwarf the year's most keenly awaited IPO to date, from Reliance Petroleum Ltd., which is raising $620 million and closed on Thursday. A source said it had been oversubscribed by 45 times.

Companies are rushing to raise cash on a red-hot Indian stock market, which has gained 28 per cent this year, helped by net foreign fund inflows of $3.5 billion and a good economic outlook.

Sanka said growth in the Indian economy translated into a strong growth story in real estate, making even sky-high prices for Indian real estate look realistic.

"We believe it is at the correct level as it is driven by demand. We do not expect any correction in the short term," he said.

DSP Merrill Lynch and Kotak Mahindra Capital are global coordinators for the IPO, while the lead managers are UBS, JM Morgan Stanley, Enam Securities, ICICI Securities and Citigroup.

DLF had raised its authorised capital to Rs 500 crore from Rs 40 crore ahead of the offer. The group had unaudited sales of Rs 2,000 crore for the year to March 31, Sanka said, estimating profit before tax would be about Rs 700 crore.

India eased rules on foreign finance of construction in early 2005, and firms have been keen to raise money or rope in foreign partners to expand their business in a largely fragmented market.

DLF, or Delhi Land & Finance, was set up about 60 years ago by Chaudhary Raghvendra Singh and has developed townships, shopping malls, hotels, special economic zones and infrastructure projects. About 95 per cent of its revenue comes from real estate.

Sanka said DLF planned to extend its presence to 35 Indian cities in the next two years from 18 now and was already working with hotel chains to build business and budget hotels, though DLF would not manage them.

The company is perhaps best known for developing Gurgaon, near New Delhi, transforming it from a quiet, laid-back village to a bustling hub for industry, back offices and homes.

The personal fortune of DLF chairman Kushal Pal Singh, the son-in-law of Raghavendra, is estimated at $20 billion, according to local news reports.

News: 'India on way to becoming tech superpower'

(BL 21/04/2006) Jerusalem - Describing the Indo-Israel cooperation in the field of IT as 'complementary', a senior executive of a leading Israeli firm has said that India is on its way to becoming a superpower in technology.

"I have no doubt that India is on the way to becoming a superpower in technology and we in Israel must take notice of this," Raviv Zoller, President and CEO of NESS Technologies told the Channel 10 'Money Speaks' programme.

Zoller said that India had already become a 'powerhouse' in IT, gaining international acceptance. "India has grown to be a powerhouse in IT, handling business in excess of $20 billion. Their services in IT are internationally accepted," he said.

"They have an English-speaking workforce and are therefore able to carry out projects for English speaking countries", Zoller added, explaining the reason for choosing India to do business. Rejecting claims that India's growing prominence in the field can pose a threat to Israel, he said, "Our services are complementary. We can work together very well."

When asked about the reasons for his company performing well in India, the Israeli executive said, "We have grown organically in India." Providing valuable tips to others looking to do business there, Zoller said, "We must adopt a policy of listening and learning in India".

"Our Indian managers have guided us very well through our initial stages there, because they have proved to be sensitive to requirements, curious and have shown a desire to grow", he noted, adding his companies had a policy of employing local managers, as they best understand the professionals they work with, he said.

News: MFs bigger buyers, not FIIs

(BL 21/04/2006) Mumbai - Foreign institutional investors are no longer the big buyers on the Indian bourses. They have been net sellers for seven trading sessions this month, and their scorecard for April 2006 currently stands at a negative Rs 1,796.9 crore.

Domestic buyers, led by mutual fund houses, are the new leaders in the market. On the back of record collections through new fund offers, mutual funds have been big buyers of equities. So far, this month they have netted purchases of Rs 1,364.99 crore.

When the Sensex moved from 10,000 to 12,000, FIIs were net buyers of equities worth Rs 10,366.2 crore. Mutual funds, on the other hand, bought roughly a fifth of that at Rs 2,470.15 crore.

However, the run between 11,000 and 12,000 has been mostly fuelled by mutual funds. FIIs bought a total of Rs 397.7 crore and mutual funds beat that by over Rs 2,700 crore at Rs 3,160.04.

News: 'Retailers to move beyond Indian metros'

(BL 21/04/2006) Bangalore - Value retailing and tier II cities will have the country's retail cash registers ringing in the coming years. The Great Indian Retail Story, an Ernst & Young report on the retail sector says that with increasing awareness levels in tier II cities, retailers will move beyond metros.

The hypermarket route will emerge as the most preferred format for international retailers stepping into the country. At present, there are 50 hypermarkets operated by four to five large retailers and the country's 67 cities with populations of half-a-million or more have the potential to absorb many more hypermarkets in the next four to five years, says the report.

Highest penetration

The organised retail penetration (ORP) is highest in footwear (22 per cent) and clothing categories (12 per cent). Though food and grocery contributes 41 per cent of private consumption expenditure and about 77 per cent of total retail sales, the ORP here is just about one per cent.

Foreign retailers planning to enter the country are firming up more and more franchisee relationships. The report forecasts a number of strategic partnership opportunities between Indian and international retailers. Ranjan Biswas, Partner, Ernst & Young India, says, "Global retailers are gradually realising the potential of the retail sector and they are now looking to achieve breakthrough growth here."

Though the environment seems to be inviting for MNC retailers gaining an entry into the country, shortage of talent remains a challenge here. The industry is expected to create two million jobs by 2010. Talented professionals will put increased pressure on wage costs, which in turn may impact operating margins for mid-sized retailers, says the report.

News: Strong demand for Reliance Petroleum sale

(BBC 21/04/2006) Mumbai - Indian oil firm Reliance Petroleum's share sale has been oversubscribed, with investors offering to buy 46 times the amount of stock on offer.

The oil company, a unit of Reliance Industries, is selling 450 million shares in what will be India's largest initial public offering this year.

Boosting demand was US firm Chevron's purchase of a 5% stake in Reliance, with an option to lift it to 29%. Reliance Petroleum stands to earn about $620m (£349m) from the sale. The company plans to use the money from the sale to boost its refining capacity.

Reliance Petroleum plans to build a refinery and polypropylene plant in Jamnagar, western India.

News: Caribbean to analyze regional future

(PL 20/04/2006) Saint Georges - The future of the Caribbean, especially in the commercial area, will be analyzed by regional foreign ministers in a meeting next week on the island of Grenada.

This April 24-26 meeting will prioritize debates on the recent conversations between leaders of the Caribbean Community and US Secretary of State Condoleezza Rice.

The FM agenda also includes analysis of the situation of Haiti since the presidential elections, which gave the victory to Rene Preval in February.

The CARICOM leadership refused to recognize the former government, imposed after the ouster of Jean Bertrand Aristide in February 2004.

After the 2006 elections, CARICOM leaders agreed to debate reincorporation of Haiti to CARICOM, and the final decision will be taken in July during the summit.

At the end of the meeting, the Caribbean ministers will go to Barbados, where they will have conversations with British Foreign Minister Jack Straw on topics related to security during the World Cricket Cup, to be held in several Caribbean cities, and the reforms applied by EU in the sugar exchange.

News: Barbados sugar industry to stay

(TN 20/04/2006) Bridgetown -Barbados will not be following T&T and St Kitts and Nevis in abandoning its 300-year-old sugar industry.

And Minister of Agriculture and Rural Development Senator Erskine Griffith has sent a message to all detractors that Barbados’ transformed sugar cane industry will be a viable one.

“That closing the sugar industry is not our mandate. Our mandate is to transform the industry through diversifying it into a viable operation, maintain as many jobs as we can, and add some new jobs because there will be new skills required,” he told the press following the opening Tuesday of a regional sugar seminar organised by the Caribbean Renewable Energy Development Programme and the Barbados Agricultural Management Company.

“The exogenous risk element will always be there, but the evidence suggests that the overall returns from the transformed industry will more than compensate for associated risk,” Griffith had said in his feature address at the three-day Combined Heath and Power for the Caribbean Sugar Cane Industry seminar.

“The sugar cane project is often cited by those who would wish to see us do nothing as an ambitious project; and some even question whether it can be successfully accomplished.

“The lack of experience with the production of electricity from biomass, or the production of ethanol, is often cited as severe limitations, but in my view, if we do not grasp this opportunity to transform the industry into a viable and profitable one, we will lose it forever,” he said to farmers, renewable energy experts, and sugar technologists at Savannah Hotel, Hastings, Christ Church.

The minister said the transformed industry would be sustainable because the projected biofuels and specialty sugars would be for domestic consumption and already established niche markets.

Griffith expressed confidence Government would secure the Bds$400 million needed to transform the industry and construct the multi-purpose production plant in Bulkeley, St George, by the end of 2008.

“In terms of funding, we’ve had preliminary discussions so far with the Caribbean Development Bank and the response has been very favourable. We’ve had discussions with the European Investment Bank, and Citibank, and also there’s a private investor that has put together a group to provide the entire amount that we need as bridging finance.

“So we’ve looked at a number of sources already,” he said.

News: Samsonite to focus on Indian retail expansion

(TNN 20/04/2006) Chandigargh - Global travel solutions provider, Samsonite on Wednesday announced its decision to focus on retail expansion and introduced a new delux brand, 'Black Label'.

"Samsonite has already gained a dominant market share of 70 per cent plus in the premium segment it operates in, within seven years of starting its operation. The company have these two focus areas in 2006 to grow by 40 per cent," Samsonite's Vice President E P Suresh Menon told reporters here.

Samsonite plans to expand to 160 stores and 1.7 lakh square feet area from its current 132 store and 1.2 lakh square feet retail space, he said.

As a part of the expansion plan, the company has also launched "black label" that is priced between Rs 15,000 to Rs 32,000 and has opened an exclusive brand store in the city.

"Black label" is a designer luggage designed and developed at Samsonite's Nasik factory," Menon said, adding the company plans to add this product in its stores in Delhi, Mumbai, Bangalore, Hyderabad and Chennai soon.

News: Mumbai flat sold for Rs 21 crore

(TNN 20/04/2006) Mumbai - On Wednesday morning, the head of a leading property consultancy firm brushed off as “rumour’ ’ the reported sale of an apartment in south Mumbai for more han Rs 60,000 a sq ft. “Anyone who pays that kind of money should be given a certificate of idiocy,’’ he said, unwilling to believe such an over-the-top price.

By afternoon his jaw had dropped—his subordinates told him it was indeed true. Independent inquiries by TOI within the close-knit property market revealed that a sprawling apartment on one of the upper floors of the NCPA building at Nariman Point recently changed hands for a mind-numbing Rs 63,000 a sq ft or over Rs 21 crore. The flat is about 3,475 sq ft in size. The city has never before witnessed the transaction of a residential property at such an astronomical price.

Sources residing in the building said they were aware that a four-bedroom apartment somewhere between the 18th and 20th floors had been sold about three weeks ago. These sources refused to divulge the name of the buyer or the seller, but it’s learnt that it was a ‘company transfer’ . Flats in NCPA are owned by various companies and not individuals. The National Centre for the Performing Arts is the promoter of the property.
Interestingly and unknown to most, the last sale in NCPA, which took place about three months ago, was at a whopping Rs 46,000 a sq ft for a four-bedroom apartment on one of the mid-level floors.

When bookings for the upmarket building began in the early 1990s, the rate was just about Rs 7,000 a sq ft. But at the peak of the property boom in 1995- ’96, NCPA was one of the premium apartment blocks with prices touching Rs 30,000 a sq ft. Sources say a clause in the NCPA sale agreement stipulates that if a flat is resold, 50% of the profit should go to NCPA, of which half will be given to the government of Maharashtra. It’s alleged that many sale transactions in this building are not registered because of this clause.

Experts warned that these were freak sales and were not a true indication of Mumbai’s residential property market.

News: Writing on the Wal-Mart - No bulge, go vertical

(TNN 20/04/2006) Bangalore - Call it Wal-Mart ‘storeys’ in India. In a marked shift from its single-storey sprawling supercentres globally, the retail behemoth is likely to explore multi-storeyed vertical stores as it waits to swoop down on urban India. Informed sources said soaring real estate cost and infrastructure woes could prompt Wal-Mart to improvise on store structure and look at going vertical for its supercentres in India.

The $285-bn Wal-Mart redefined retailing with large single-storey centres in the suburbs in the US market even though vertical shopping malls have been gaining popularity in many new markets. Wal-Mart was forced to experiment with multi-storeyed centres when it entered Japan.

Real estate could be a concern for Wal-Mart in India too, and setting up stores in the suburbs would be risky, given the inadequate infrastructure and traffic jams. “There can be two kinds of anchor tenants in a mall — a brand anchor and a space anchor.

A retailer the size of Wal-mart can leverage reasonable brand value by doing both,” says Vivek Kaul, Retail & Leisure Advisory Head, Jones Lang LaSalle. For the record, Wal-Mart is awaiting the Centre’s nod for FDI in general merchandise retailing, which is expected to pave way for the entry of global biggies like Wal-Mart, Carrefour and Tesco into the top metros.

Sources said Wal-Mart would toy with an initial burst of 16-18 stores to showcase its commitment to the local market. It is believed that Wal-Mart could rely on its experience in China and Japan as it researches store merchandising and firms up real estate strategies. Industry experts say Wal-Mart’s store strategy and location may depend on whether it opts to buy real estate or lease.

“Floor plate areas of 25,000- 100,000 sq ft are available in the market but companies eyeing a bigger area need to go vertical,” says Shubhranshu Pani, Head (Retail), Trammellcrow Meghraj.

News: German trade with India soars

(RTR 20/04/2006) Berlin - German trade with India rose significantly in 2005, with exports from Germany soaring 27.7 percent from the previous year to 4.2 billion euros ($5.18 billion), the Federal Statistics Office said on Thursday.

Germany's trade surplus with India was 806 million euros last year, up from 332 million euros in 2004, the statistics office said in a statement.

Since 2000, German exports to the Indian subcontinent have doubled, the statement said.

In 2005, machinery and chemical products accounted for 33.8 percent and 15.4 percent of all German exports to India respectively.

Imports from India rose 14.8 percent to 3.4 billion euros. Clothing and chemical products were the most heavily imported goods from India to Germany.

Globally, India is in 36th place as a German export target and 31st place as an importer to the world's third largest economy, the statistics office said.