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.

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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.

Interview: Raghuram Rajan - chief economist IMF

(RTR 20/04/2006) Mumbai - India's medium-term goal of growing its economy 10 percent a year is realistic if it can boost infrastructure and job creation, the International Monetary Fund's chief economist said on Wednesday.

In an interview with Reuters before the IMF's spring meeting, Raghuram Rajan said India excelled at high-skilled industries but needed to work on developing more labor-intensive sectors and also the infrastructure needed to accommodate them.

"I think it's feasible, very feasible to see 10 percent growth rates," Rajan said. "I don't think 10 percent is over-optimistic."

Rajan said a well-developed Indian financial system would be a boon in coping with risk, such high growth rates overheating the economy, creating asset bubbles or problems in resource allocation.

Earlier on Wednesday, the IMF forecast India's economy would grow 7.3 percent this year and 6.9 percent in 2007.

INDIA'S GREAT LEAP

"India, in its most advanced states, has the kinds of industries that you would see in advanced economies, not in an economy that has tremendous amounts of labor and should do low-skilled stuff," Rajan said.

"It has leaped beyond that -- but that doesn't create jobs," he added. "It creates value added, but you also need the job creation."

Rajan lauded what he called the "soft, creative, talented" industries that had mushroomed in India in recent years.

"Everybody knows about Indian software but people don't know as much about the Indian pharmaceutical companies which are growing tremendously fast," he said.

But the IMF economic counselor said there were two areas where India has faltered -- infrastructure and employment growth.

"If you have the will, infrastructure is not that difficult," he said, "and infrastructure spending can increase growth rates substantially."

"Where the government needs to work much harder is getting employment growth to pick up," he said, adding strict labor laws and poor infrastructure were preventing from India competing with the likes of China in labor-intensive businesses such as textiles and manufacturing.

Rajan said the development of India's nuclear power program also would be a benefit to both India and the global economy as its projected demand for energy soars.

"Nuclear power has to be a component for a country that is going to require so much energy going forward," he said.

"It's in the world's interests that India develop its nuclear power," Rajan said. "To the extent that nuclear power has become safer over time, it is in India's interests to use this source."

News: Indian shares hit 12,000 mark

(RTR 20/04/2006) Mumbai - India's benchmark share index topped 12,000 points for the first time on Thursday, buoyed by strong earnings and robust foreign fund inflows.

Shares in oil refiner and petrochemical producer Reliance Industries Ltd., which have a weight of about 10 percent in the main index, led the rally rising more than 7 percent to record 995 rupees.

The 30-share BSE index rose nearly 1 percent to 12,004.30 points.

"Reliance Industries has clearly led the rise today, and investors are confident because of the fund flows into the market," said Dipen Sanghavi at Pranav Securities.

The BSE index has gained more than 27 percent this year, helped by foreign fund investments of $3.5 billion.

News: Armani plans India entry with four stores

(RTR 20/04/2006) Mumbai - Fashion house Giorgio Armani plans to enter India within 18 months, a senior official said on Thursday.

Armani's interest in Asia's third largest economy comes amid an aggressive expansion that saw the Italian designer opening 41 new shops globally in 2005 alone, with a push into growing Asian markets.

The company would find a strong clientele ranging from "businessmen to Bollywood stars" who already bought its labels, Francesco Tombolini, marketing and sales director for the group's Emporio Armani brand, said.

Armani would initially open two boutiques in capital New Delhi and two in the financial hub of Mumbai, he said adding, these shops together would make annual revenue of about 10 million euros.

Armani, whose range includes fashion accessories, apparel, jewelry and cosmetics, has 25 outlets in China and 55 in Japan.

In February, India allowed foreign direct investment of up to 51 percent in single-brand retail ventures.

News: 'FDI to cross $10 bn in `06-07'

(BS 20/04/2006) New Delhi - Foreign direct investment in the country is expected to cross $10 billion during 2006-07, according to Commerce and Industry Minister Kamal Nath.

Releasing a compendium of the FDI policy today, Nath said FDI inflow during 2005-06 had touched $7.5 billion, of which $4.8 billion was the equity component and $2.7 billion comprised reinvested earnings.

This was 50 per cent higher than that in the previous year. India received $5.3 billion as FDI during 2004-05, of which $3.2 billion was as equity and $2.1 billion was in the form of reinvested earnings.

Expressing confidence that the growth trend in FDI inflow would continue in the current fiscal, the minister said, “They should cross $10 billion.”

According to the compendium, India has received a total of $37.05 billion as FDI in the form of equity capital from August 1991 to December 2005.

The highest inflow since August 1991 has been from Mauritius, which accounted for 37.25 per cent at $11.11 billion, followed by the United States with 15.80 per cent share worth $4.91 billion.

Other countries in the top five included Japan, the Netherlands and the United Kingdom.

News: Ratan Tata likely for Fiat board

(BS 20/04/2006) New Delhi - The Agnelli family wants to induct Tata Motors chairman as an independent director.

The Agnelli family, the biggest shareholder in Italian car maker Fiat Spa, wants to induct Tata Motors Chairman Ratan Tata on Fiat’s board as an independent director.

IFIL, an Agnelli company that owns 30 per cent of Fiat, said yesterday Tata’s name had been proposed as one of the eight independent directors on the 15-member board for 2006-08.

An IFIL statement from Turin said, “Having taken note of the views expressed by the Fiat board of directors, the stockholder, IFIL — given that the stockholders’ meeting will be held this May 3 — proposed to establish the number of members on the Fiat board of directors at 15, with the majority having the credentials for independence.”

A Tata Motors spokesperson declined to comment. It also could not be established if Tata Motors would offer IFIL or Fiat a position on its board.

If Tata is co-opted on the Fiat board, he will join a small band of Indian CEOs on the boards of large multinational corporations.

Naina Lal Kidwai, CEO of HSBC in India, recently joined the Nestle board, while Gautam Thapar, vice-chairman and managing director of Ballarpur Industries Ltd, serves on the Bata board.

Tata Motors and Fiat had in January this year announced the signing of an agreement to share dealer networks, which will encompass the sale of Fiat branded cars through selected Tata outlets throughout India. Tata Motors will manage the marketing and distribution of Fiat cars in India.

“This deal is the first result of the joint activity started after the signing of a memorandum of understanding between Fiat and Tata Motors in September 2005,” a Tata Motors release had said.

News: Mahindras set date for Logan rollout

(TT 20/04/2006) Calcutta - Mahindra Renault Limited, a 51:49 joint venture between Mahindra & Mahindra (M&M) and Renault SA of France, would launch the Logan sedan by October 2007.

M&M sources said the car would be positioned in the B/C segment, adding that the price was yet to be fixed. This would mark the entry of M&M in the passenger car segment. The company is a dominant player in utility and light commercial vehicles in the country.

Meanwhile, M&M today introduced a new version of the Scorpio targeting the upwardly mobile segment. M&M is offering the new Scorpio with 43 additional features at no extra cost for a limited period.

The company is expecting to log significant growth in sales through the All-new Scorpio, Vivek Nayer, vice-president (marketing) of M&M, said.

The company also plans to launch variants of the Bolero later this year. It had introduced the Bolero SLX a few months back.

“The Bolero is one of our more successful brands and we sold more than 35,000 vehicles last year. It has also been a success in South America where the Bolero Camper is used by the police,” said Nayer.

M&M was targeting foreign destinations like South Africa, Malaysia, West Asia and Italy for exports, he added.

There was no plan to set up manufacturing bases outside India, since the company has already tied up with leading tier-I component suppliers of the world which have set up bases in the country, he said.

The company planned to double its exports in the current financial year.

In the utility vehicle segment, the company enjoyed a market share of 12 per cent. Last year, M&M sold 1.5 lakh vehicles.

Column: Fewer shares mean higher valuations, too

(DNA 20/04/2006) Mumbai - The Indian stock market's stellar run up since the start of 2006 by some 20% (even after falling 3.6% in the last week) raises the question: Are we in a bubble or is there more left in the fuel tank to propel the market higher?

While there are many factors that influence the value of individual stocks and the market as a whole, liquidity is the most powerful. Brokers estimate that the BSE Sensex trades at a financial year 2007 earnings multiple of 17 times (current price divided by forecast earnings). This places India in pole position as the most expensive market in Asia followed closely by Hong Kong at 15.5 times the forward earnings, even though the corporate growth levels expected from Hong Kong are higher than India for the same period. Indian stocks are clearly expensive, but are they likely to get cheaper?

The Indian growth story is well known and certainly helps to underpin the growth of the Indian stock market, which is up some 200% over the past five years, compared with 65% in China and 11% in the US. But it is important to consider the structural issues that may create an environment in which Indian valuations are always likely to remain high when compared with its Asian peers.

A legacy of Indian stock markets is that the publicly traded shares continue to have substantial promoter (founding family and possibly management) shareholdings, which severely restrict the pool of freely traded shares (free float) available in the market. On an average, only 60% of the shares available from the constituents of the BSE Sensex are freely traded. As investment funds chase these stocks, share prices get squeezed, causing overvaluation of the scrips. This concern has already promoted some mutual fund managers to cap the investment they can accept.

Does this mean that an Indian stock which is in demand and has a limited free float is likely to be considered expensive? Or, should investors accept they have to pay a premium valuation for access in a small marketplace.

By way of example, Wipro has consistently traded at a PE (price-earnings ratio, which is the share price divided by earnings) premium versus Infosys whose free float is five times larger. The limited free float here ensures that larger institutional investors who are seeking to invest their ever growing pool of funds have to pay up to be able to acquire a stock holding which would be able to make a meaningful impact on their portfolio.

Recent estimates put the flow of international funds alone into emerging markets at more than Rs 108,252 crore, year to date ($24 billion) as compared with Rs 91,563 crore ($20.3 billion) for 2005, which itself was a record. Most of these funds went into Brazil, Russia, India and China.

It's not surprising that these markets are up significantly in 2006. India's risk is that these funds could be withdrawn just as quickly, as better opportunities are found elsewhere. Fortunately, the increased volume of Indian IPO's will help absorb some of these flows but even today promoters tend to offer small percentages of their companies to the public.

However, corporate India's strength remains the significant promoter ownership of companies. What better barometer of a company's health and prospects than the level of investment held by those responsible for building the business? Furthermore, where promoters continue to acquire their own shares even at current valuations, as was the case with Crompton Greaves recently, investors should regard this as the optimum sign of confidence.

In the West, investors in the stock market are finding it increasingly challenging to motivate their management teams who typically have little skin in the game. Managers manage but do not share the risk of financial pain if they fail to perform. Surely, the substantial ownership of Indian corporates by promoters aligns their interests with the investors and justifies a premium valuation for the stock.

Looking at India as a standalone investment opportunity, the bedrock of promoter shareholdings actually gives India an edge over other emerging and many Western markets. The smaller free float is likely to keep the share price high during periods of excess liquidity but in turn, these higher valuations may be justified by the comfort factor new investors should take from the fact that the promoter has as much to lose, if not more, should the share price fall. Corporate governance may be poor in situations where promoters still command a majority vote but this can be protected by regulation rather than actual ownership.

By Nish Kotecha, founder of Sphere Partners (www.spherepartners.com) and president of TiE, UK (www.tie.org)

News: Tatas' African ventures turning profitable

(BL 20/04/2006) Johannesburg - For the Tatas, their African safari is turning out to be, it would seem, quite a profitable one. Turnover of their various business ventures in Africa has grown more than five-fold in a span two years.

This was stated by Raman Dhawan, Managing Director of Tata Africa Holdings - the flagship company steering Group investments in South Africa and elsewhere in Africa.

Briefing a group of visiting journalists from India, Dhawan said the Tata Africa's turnover has touched $250 million in fiscal 2005-06 from a modest figure of $37 million in 2003-04.

Operations profitable

On the question of profits, while conceding that operations have been profitable, he said, he would prefer to look at it from an overall Group perspective. Tata Africa Holdings operations represented an opportunity for the group companies in India to showcase their products in a market that is full of promise, he pointed out.

Tata Africa has already invested over $100 million till date in various ventures.

With some big-ticket investments in telecommunication and ferro chrome smelting, hotel etc. on the anvil, the flagship company's investments would go up by a further $35 million in the next 2-3 years.

New projects

The above investment supplements that directly committed by VSNL (telecommunication), Tata Steel (ferro chrome) and Tata Coffee (instant coffee). These add up to a further sum of $150 million.

Also on the anvil are investments in a clutch of hotel projects and vehicle assembly plants, which would take the Group's cumulative investments to around $325 million, Dhawan added. Tata Africa Holdings' and various group companies' investments have been spearheaded by export of commercial vehicles to key African countries.

Such vehicle sales have led to opening up sales and service centres. The knowledge of local business environment gained from such operations appears to have provided the ideal springboard for more ambitious ventures in telecom, steel, hotels etc that Tata Africa is now piloting.

News: China woos India Inc to list on its bourses

(BL 20/04/2006) Beijing - Beijing Equity Exchange Market (BEEM) has invited Indian companies to get listed on its bourses, which would enable India Inc to participate in China's equity market.

BEEM is a Government entity that identifies and sells state-owned Chinese companies as well as trades in the equity market.

The suggestion was mooted by a senior BEEM member at a meeting organised by the Asian Capital Forum for the visiting CEO delegation led by the Federation of Indian Chambers of Commerce and Industry (FICCI) President, Saroj Kumar Poddar.

Common standards

This will not only allow Indian companies to participate in the Chinese equity market but also enable them to acquire Chinese companies put on the block. Earlier in a meeting the Assistant Commerce Minister, Chen Jian, told the Indian delegation to work out common standards in areas of software and radio frequency identification device.

He also pointed out the need to have common accounting standards. In an interaction with FICCI delegates, Shaeng Huaren, Vice-Chairman, National Peoples Congress, told Poddar that a visit by a group of Parliamentarians from India would help enhance understanding between political leadership.

Chinese desk

The chamber informed the Chinese leadership that it would set up a Chinese desk at FICCI office in Delhi. The chamber also added that it would present a paper on alternate energy sources with special emphasis on biofuels. Besides, Indian and Chinese companies will soon be participating in trade fairs being organised in the two countries.

On Tuesday, FICCI signed a memorandum of understanding (MoU) with China. The MoU was inked with Beijing Investment Bureau to explore ways for co-operation between companies of both the countries.

News: IMF urges India to reform labour laws

(RTR 20/04/2006) Washington - Stressing that India is not only growing rapidly but has also taken steps to improve its infrastructure, the International Monetary Fund (IMF) has urged for quick reform of labour laws if jobs are to be created in labour-intensive sectors.

"India, too, is growing rapidly and important steps are being taken to improve the infrastructure. Reform of the labour laws are urgently needed if jobs are to be created in labor-intensive sectors, and I note the Prime Minister supported this today," Economic Counsellor and Director of Research Department of the IMF, Raghuram Rajan, said yesterday.

Discussing the World Economic Outlook for the Spring meetings of the IMF and the World Bank, Rajan said India has to expand opportunities in higher education if it is to maintain competitiveness in the highly-skilled sectors.

The top IMF official called on China to move away from investment in net exports towards consumption. Various aspects of the Chinese economy are meriting a great deal of attention here as Chinese President Hu Jintao has arrived in the United States for his official visit.

China's trade surplus with the United States last year was nearly $202 billion.

News: 'India not targetting to overtake China'

(PTI 20/04/2006) Washington - India is not setting targets to overtake the growth rates of countries like China but is instead exploring the scope for accelerating its own economy, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia has said.

".... we are not setting a target in terms of overtaking growth rates. China's performance in the last two or three decades has really been quite remarkable and it has had a very good impact on India in terms of benchmarking our own performance," Ahluwalia told reporters yesterday at a media forum at The Energy Daily, a breakfast event cosponsored by BP America.

"The bottom line is that China has been growing at over nine per cent for about three decades; and this has led to a very strong perception in India that we ought to look in our own policy and see how can we get rid of the constraints on the assumption being that being broadly similar economies... we should be able to achieve these kinds of growth rates", he said.

Ahluwalia, who is on a three day visit here, said the economic performance of the People’s Republic of China has raised the bar of expectations as far as India was concerned.

"But what we are looking at is the scope for acceleration in India. The argument about overtaking China's growth rates... it is really based on the assumption that China is likely to slow down having done a fantastic three decade run at about 9.6 per cent. Quite honestly we are not targetting at 9.6 per cent growth," he told reporters at The Energy Daily.

"We are targetting an average which should be above 8 per cent. It is possible as some people say that China having reached a certain stage will now begin to slow down a little and if that slowdown happens then our growth rate may be higher than China's.

"But China's per capita income is much higher than India's and so nowhere in our targetting are we setting the objective either to overtake China growth rate or overtake China's per capita income...," Ahluwalia said.

At the interaction with journalists, Ahluwalia presented the broad economic and energy picture of India and in his assessment energy is going to play a pivotal role in the acceleration of Indian economy.

India, Ahluwalia pointed out, would need to concentrate on infrastructure, agriculture, health and education.

News: L&T to sell 20% in L&T Infrastructure

(RTR 20/04/2006) Mumbai - The country's largest construction and engineering firm, Larsen & Toubro Ltd, is close to selling a 20 per cent stake in a subsidiary to two private equity investors for Rs 500 crore, a business daily reported on Thursday.

JP Morgan will invest Rs 300 crore and India Development Fund will put in Rs 200 crore in L&T Infrastructure Holdings through a preferential allotment of shares, it said.

The deal would value L&T Infrastructure at Rs 2,500 crore and bring down L&T's holding to 80 per cent, the newspaper said, without citing sources.

A L&T spokesman declined to comment on the report, but Chief Financial Officer YM Deosthalee had told Reuters in February that it was in advanced talks with global financial players to sell 15 to 25 per cent in the unit. It also intends to float the unit later.

L&T Infrastructure, which builds roads, ports and bridges on a build-own-operate basis, had more than 20 projects on hand worth $500 million, he said.

Shares in L&T closed at Rs 2,645.05 on Wednesday, up 43 per cent since the start of January, outpacing a 27 per cent rise in the benchmark BSE index.

News: Global kids wear brand Whoopi to enter India

(BL 20/04/2006) Chennai - Whoopi, an international kids wear brand, will shortly be launched in India. Hucke AG of Germany, which owns the Whoopi brand, has tied up with the Hyderabad-based Novotex Exim (India) Pvt Ltd to launch the garments for children up to the age of 12 years.

Novotex Exim will commission in June a factory in Hyderabad where it will manufacture garments under the Whoopi brand. Novotex has an agreement with Hucke under which the German company will buy back a bulk of the garments produced by Novotex, according to its Executive Director, Venkat R.V.

He told a press conference here today that Novotex would invest Rs 4.5 crore on the plant, which would have a capacity of 50,000 pieces a month. In the second phase, Novotex would invest about Rs 8 crore on a dyeing and processing plant to ensure that the garments used anti-allergic dyes. Novotex would invest another Rs 4 crore in setting up retail stores across the country and in brand promotion.

Venkat said that about 45 per cent of the investment in the first phase would come from him and his family and the balance through debt. Novotex was the master franchisee for Hucke for South Asia for all its brands.

Apart from Whoopi, Hucke has brands like More & More, Steiff Collection, and Harry Potter Collection, he said.

He said that Novotex planned to set up 20 exclusive Whoopi stores this year across the country and 200 shop-in-shops in leading multi-brand outlets.

Venkat said another Novotex group company was supplying Hucke for men's wear for the last few years. This business was worth about Rs 10 crore. In the first year of operation of the kids wear business, Novotex hoped to achieve a turnover of Rs 25 crore, with Rs 15 crore coming from exports. Over the next three years, he hoped that sales would touch the Rs 100 crore market, with about Rs 30 crore coming from domestic sales.

Apart from apparels, which would be available in the price range of Rs 200 to Rs 1,500, Novotex would also sell other Hucke accessories such as belts, sandals and sun goggles.

Venkat said the size of the Indian kids wear market was estimated at Rs 8,700 crore, with branded apparels accounting for just 7 per cent. While the Indian kids wear market had about 300 designs, Hucke had close to 6,000 designs, which was a major advantage that Novotex would enjoy, he said.

News: Goldman may invest $100m in Pantaloon arm

(TNN 20/04/2006) Mumbai - Goldman Sachs’ private equity arm is understood to be in talks to invest around $100m as a strategic investor in Indivision Capital, a private equity fund managed by Future Capital Holdings, Pantaloon’s financial retail arm.

Indivision, which will invest primarily in small and regional consumer-related companies as a strategic investor and scale it up to a national level, is currently undertaking roadshows abroad as part of its fund-raising strategy.

The companies invested in will be provided hands-on mentoring capabilities by Indivision and a national distribution network through Pantaloon Retail.

Meanwhile, Pantaloon has roped in Atul Kapur, the managing director and principal strategist of Goldman Sachs’ private equity fund, to head Indivision Capital as MD and chief investment officer.

While Mr Kapur will handle the investment decisions for the fund, Coke India chief Sanjiv Gupta will spearhead the operational and mentoring capabilities in the companies invested.

Pantaloon Retail is trying to attract top talent from global organisations by offering a long-term wealth creation model on a partnership basis.

Mr Kapur, 42, has been with Goldman Sachs (London) for 12 years in the principal strategies group, which is responsible for investing Goldman Sachs’ proprietary capital.

Within that group, he headed the private equity business for Europe and India. The principal strategies group is one of the most profitable arms of Goldman Sachs and currently has over $14bn invested globally.

While Sameer Sain, CEO of Future Capital, refrained from commenting on Goldman Sachs’ investment in the group, he confirmed Mr Kapur’s move. “Mr Kapur is a very successful investor with significant experience in Europe and Asia, specifically India.

He will be the chief investment officer of Indivision Capital and will be responsible for all portfolio investments.” he said.

Mr Kapur will join other high-profile recent recruits in Pantaloon Retail like Sanjiv Gupta (former CEO of Coca Cola India), Dimple Sanghi (ex-AIG Private Equity), Roopa Purushothaman (former senior economist, Goldman Sachs) and Sanjoy Chatterjee (ex-McKinsey), among others.

News: Shop through the heart

(TNN 20/04/2006) Mumbai - Three months ago, Motorola India decided to initiate a shop-in-shop programme, where the idea was to move away from simply selling mobile phones over the counter to providing customers an experience. What it entailed was setting up a corner within stores, where consumers could touch and feel the latest offerings from Motorola.

In came Quetzel, a retail design outfit based in Bangalore, which is working closely with Motorola in developing a prototype. In Mumbai, FMCG major HLL has initiated a programme to connect with conventional channels like the grocery stores across India. As a pilot project, HLL is assisting a local kirana store transform into a modern store with all the necessary trappings like signages, merchandise and planograms.

Working closely with HLL is Mumbai-based Retailscape. The initiative, once tested in Mumbai, will eventually be rolled out to 6,000-odd key retail outlets across India.

Providing customers 'an experience' at the retail level is clearly a priority for marketers. But what's interesting is the manner in which they are roping in retail solution specialists -- men and women armed with ideas on store design, visual merchandising, signages and layouts, specialists who are teaching marketers the tricks of providing a meaningful and differentiated experience.

Brands like Retailscape, Idiom, Quetzel and Maximus, to name a few, are forming a pool of growing expertise across the country, fulfilling the gap that exists in the retailing ecosystem. Lloyd Mathias, head of marketing at Motorola India, says that the new shop-in-shop programme synchs with the Motorola design philosophy of getting customers to feel the products.

"Merely selling across the counter is not enough, nor is putting in a dangler or poster. Today, it's about visual ambience, where shoppers can come to our store, use the product and experience it," he explains. That's where Quetzel's expertise comes in -- designing signages and facades for the shop-in-shops.

Mathias is tightlipped about the look and feel of the shop-in-shop, saying that the prototype is still being worked upon. Likewise, Sandeep Tiwari, head of marketing at LG Electronics, says that at the regional level, the company has localised agencies working on aspects like in-shop demonstrations and signages.

"We are still at a conceptualisation stage, but the fact remains that brand experience is critical, and such specialists definitely bring in a lot of value to the table," he says. Players like Mumbai-based Retailscape are providing expertise in areas as diverse as design, implementation, MIS and feedback services.

Having worked with companies like Food Bazaar, Godrej Aadhar and HLL, Manish Shukla, founder-director, Retailscape, says that most of the work in this segment is driven by large corporates who want specialists to help them upgrade their channel and trade partners to offer a higher level of shopping experience.

It's not just the independent specialist outfits that are in the fray -- even ad agencies have woken up to the opportunity. Kislay Vora, director -- visual merchandising, Percept, is putting in place a team which will provide visual merchandising (VM) solutions.

VM, says Vora, has become an important inducement to drive shoppers towards the product. In fact, according to sources, many leading ad agencies are firming up plans to separate their design cells into independent outfits in order to service their clients better.

The trend of using retail specialist outfits is a corollary to the retail experience rapidly becoming an important driver of a brand's success. "Today, FMCG companies are competing for shelf space, while retailers from the ground level upwards are realising the need for value addition to draw more consumers," says Preeti Motwani, business head, Maximus, which boasts a clientele that includes HLL and Pantaloon.

Arvind Singhal, chairman, KSA Technopak, says that offering a retail experience is becoming as important to a Shoppers' Stop or a Pantaloon as it is to FMCG, consumer durables and even telecom companies. "Today, customers are more empowered, and therefore, the retail channels have become the first moment of truth for any brand," he explains.

Jacob Mathew, CEO of Idiom, another Bangalore-based design outfit, says that external consultants bring in a perspective, different from the thinking which exists inside companies. "We come in specifically as design consultants, and as a multiple design company, our forte lies in architecture, interiors and even product design.

This makes our offering a compelling package for clients," he says. Shukla of Retailscape believes that most companies have been late in realising the changes which have taken place, and hence, there is now a clamour to gain ground. "Trade marketing is new in India and the push for distribution is no longer possible today," he says.

Sameer Suneja, head -- marketing, Perfetti Van Melle, admits that there have been some blind spots, which specialists units are now taking care of. So although Perfetti works with its ad agencies for any design or trade marketing-related activity, there's room for any specialist agency to pitch in, should the need arise.

"These agencies definitely have positives as they are focused on retail. We have an open mind about working with them," says Suneja. The rush for last mile connectivity has also given the specialists a fresh lease of life. Singhal says that such outfits are not a recent phenomenon, but are only now coming into their own.

"Earlier, they were just focused on the textiles sector as VM played an important role. But with modern trade, and even companies beginning to ride on the retail bandwagon, their expertise is suddenly in demand," he says. Agrees Sandeep Mukherjee, founder of Quetzel: "Five years ago, convincing companies was difficult.

But today, more and more players are realising that for brands to move off the shelves faster, elements like design, VM and signages play a critical role." Even as the specialists are helping marketers devise strategies, marketers feel that such units are largely regional, which limits their ability to take on pan-India initiatives.

"If there are some initiatives that have been successful, I would expect them to be replicated across other centres. But the specialist outfits still lack the wherewithal to take it across the country," says Partha Dutta Gupta, CEO, Barista. LG's Tiwari agrees, saying most of the current activities take place at the local branch level.

"But synergies between one branch and another are missing," he adds. Mathias of Motorola feels that while such outfits have strong design and production experience, aspects like servicing are still lacking. The specialists, for their part, admit that they are still on a learning curve -- but so are the clients themselves.

"Today, there is no separate budget allocated for initiatives at the retail level, and what's there, is mostly from the outdoor budgets. Trade marketing is also new with the clients, and they are setting up structures within their organisation to service various conventional channels better. So it's a period of learning for both the parties," explains Mukherjee of Quetzel.

News: Pantaloon ties with Singapore firm to tap realty market

(PTI 20/04/2006)Mumbai - To tap the booming real estate sector of India, Singapore-based CapitaLand Ltd on Wednesday entered into a 50:50 joint venture with Indian retail major Pantaloon Retail India Ltd (PRIL).

The Singapore company, through its indirect wholly owned subsidiary CapitaLand Retail India plans to invest USD 75 million in Horizon Realty Fund, an international fund managed by Kshitij Investment Advisory Company Ltd (KIACL), the asset management arm of Pantaloon Retail.

Also, CapitaLand India has signed a heads of agreement with Pantaloon for a similar Joint Venture for a Retail Management Company and a Joint Venture Fund Management Company.

The Horizon Fund, aiming to invest predominantly in retail real estate, will be KIACL's second real estate fund after the Domestic Indian Rupee Fund. The new fund has an initial target fund size of USD 250 million with an estimate final closing of USD 350 million, a release here stated.

The Venture Fund Management Company formed by Pantaloon and Capitaland has ambitious plans to create a Development Fund, a retail income fund to tap retail opportunities. CapitaLand intends to invest about 20-40 per cent as sponsor, the release added.

The Joint Venture for the Retail Management Company will provide retail management services to the retail ventures and properties of Pantaloon.

News: Storyline's missing in luxury pitches

(DNA 19/04/2006) Mumbai - Champagne dreams and caviar lifestyles. Brands in the lap of luxury promise all that and heaven too. Their bubbly hedonism is hardly intoxicating Indian ad agencies, however, even though every opulent high-stepper from Gucci to Tag Heuer, Mercedes Benz and Mont Blanc have already swished in.

Global ad networks like Leo Burnett, JWT and Euro RSCG have dedicated ‘luxury communications’ cells worldwide. This velvety micro-niche is, however, still low on agencies’ priority list here and far out-weighed by big-dough areas like retail and consultancy.

Careless about caviar?

So, are Indian agencies missing out on the caviar in their quest for bread? The global luxury market stands at $134 billion globally.

Together with China and Russia, India has become part of the so-called Golden Triangle, attracting Europe’s biggest designer labels, runs findings from an in-depth Ogilvy Discovery report. KSA-Technopak estimates the Indian luxury market at Rs 2,000 crore and rising. And India had some 5 million luxury goods clients in 2004.

Question is, will procrastinating agencies ultimately lose this crème to fleet-footed consultancies and independent specialists, just as they’ve been pipped in speciality areas from design to film-making worldwide?

Whoa, it’s too early to get enthralled by silken epiphanies, say ad men. Luxury brands are still ahead of the clover curve here, with their elite (small) audiences. Agencies hence need to be sure of returns before investing, say ad men.

Listen to Santosh Desai, president, McCann Erickson: Luxury brands are entering one foot at a time and beach-heads are being established. India is still a nascent market and that’s the spirit everyone’s looking at it.

So, for ad agencies to invest now, they would be ahead of the curve; how would they maintain their investment in specialised luxury units? Besides, they would need something to service.

Lucent insights for ads

Pivotal poser: Are ad agencies even attempting to peer into the keyhole of this indulgence sanctum to garner consumer insights ahead of the curve? And if so, what are the diamond-tipped insights being gleaned?

Some Discovery nuggets underline that it’s time we find our own luxury ad quotient. International campaigns can work well for luxury here, but context cannot be ignored.

“While luxury communication (in ambient, as well as in intimate media) in the West, through our semiotic analysis, appears almost cold, distant, and aloof; here in India, it needs to be warm and smiling. Cultural differences aside, luxury still needs to speak in a manner that befits. It must retain the language of poetry. It needs to create stories, and not statements. Just a little nudge—from Shelley, to ‘shayri’ will do,’’ says Madhukar Sabnavis, board partner, Discovery & Strategy, Ogilvy & Mather.

Other lessons for creating ad pitches?

For one, the Indian luxury context, while evolving rapidly, still has its own meaning, and its own implications. India is deviating to embrace the West. If Western luxury brands deviate a little, albeit selectively, they will find rich Indian arms open far and wide.

Next, celebrity endorsements and ambassadorships (Shahrukh Khan and Tag Heuer, Aishwarya Rai and Longines, etc.), while making the brand prominent, create a risk of brand dilution, primarily because of their ‘mass’ appeal, say the Discovery team. New Luxury sits between Non and Uber Luxury.

Seeking the palladium of numbers, marketers of luxury brands are themselves massifying or attempting to percolate to audiences below the upper tip of the triangle which is too small. They’re hence broadbasing their ad appeals with celebrity endorsers.

“Everyone’s treading a very tightrope’, agrees Desai. A larger market is de rigeur for a brand to remain financially viable. But too much of availability can compromise a luxury brand or make it lose its lustre.

Still, it’s the under-the-upper layers themselves which are aspiring for slivers of luxury. “While a growing wealthy class is helpful, it is the middle class, which aspires to own luxury brands, that’s driving the luxury brand demand,’’ says Sabnavis.

“The New Luxury category ($350 billion globally) sits anywhere between non luxury and ‘uber premium’. New Luxury brands and products were born from both sides of the spectrum and today covers anything from a cappuccino to a Jaguar.’’

Their takeaway for creating brands and advertising: Luxury brands (and their ads) need to be ‘inclusive exclusive’. Discreet salience is extremely important to create that ‘irresistible-yet-unattainable’ image for brands that want to take India seriously.

News: Mercedes spots a good drive in Indian Tier-II cities

(DNA 19/04/2006) Hyderabad - The pin-up girl of the auto world is set to hit the lesser known country roads with DaimlerChrysler deciding to go into the interiors of the country to sell the Mercedes.

“We are very bullish on India,” said Wilfried Aulbur, managing director, DaimlerChrysler India, attributing the good demand for his cars to improving infrastructure and affluence in the country.

The company held a roadshow in Hyderabad for the first time, displaying all the hot rods including Maybach.

Aulbur acknowledged the increasing clientele in cities like Kochi, Coimbatore, Madurai and Hyderabad in the south, which accounts for almost 25% of the company’s sales in India. Over the next year, it will add up to 7 dealerships to the current 24, mostly in the Tier-II cities.

A company official said Hyderabad accounts for the maximum sales of Mercedes in the south, indicating the changing tastes and increasing propensity to spend on luxury cars.

Meanwhile, the company was also actively looking at the possibility of entering the commercial vehicle segment in India, said Aulbur.

News: Tata Motors export growth at peak

(PTI 19/04/2006) Kolkata - Backed by strong demand for Indian vehicles from markets such as South Africa, Tata Motors has exported more than 50,000 vehicles during 2005-06 showing a growth of over 65 per cent over the previous year.

The Indian auto major exported a total of 50,539 vehicles during the just-concluded fiscal as compared to 30,496 during 2004-05.

"Almost one-third of our entire export of vehicles was to South Africa, which is one of our focused markets," a spokesman of Tata Motors told the media on Tuesday commenting on the company's performance.

Responding to a query he indicated that the strong growth has been driven by the growing demand for passenger vehicles from Tata Motors which has been witnessed during the year.

He said out of total export around 30,000 were the commercial vehicles showing a growth of 50 per cent over the previous year's figure of around 20,000.

But the growth in export of passenger vehicles has been almost 80 per cent as it grew from around 11,000 in the previous year to 20,000 during the year, he said.

Tata Motors has been focusing on the export market in recent years and apart from South Africa it has been exporting to some other African countries, Europe, Middle East and in the Asian markets.

News: Corporate India radiates confidence

(TT 19/04/2006) Mumbai - The business confidence of India Inc has risen during the second quarter of 2006 compared with the previous period, according to the Business Optimism Index released by Dun and Bradstreet India today.

In its survey, Dun and Bradstreet (D&B) has reported a steady outlook for the Indian economy despite a sharp rise in global crude prices.

The D&B business expectation survey for the period was conducted in March.

The composite business optimism index has recorded an increase by 5.8 per cent to 177.5 from 167.7 in the first quarter. While the volume of sales, net profits and new orders recorded a decline, selling prices, inventory levels and employee strength have increased.

“The survey reflects high business optimism and demand conditions are expected to remain strong,” said Manoj Vaish, president and chief executive officer, Dun and Bradstreet India.

“Going forward, interest rate movements and inflation rates could affect the business optimism,” he added.

The index measures the pulse of the business community and is arrived at on the basis of a quarterly survey of their expectations. It surveys companies from several sectors, including basic, capital as well as intermediate goods, consumer durables, consumer non-durables and services.

The corporate sector has shown a greater optimism about future sales prospects with approximately 88 per cent respondents expecting sales volumes to increase during the quarter. However, about 3 per cent are expecting a decline. The index for volume of sales was at 85 per cent compared with 88 per cent in the previous quarter.

The optimism index for net profits for the quarter stood at 80 per cent, 3 percentage points down from the previous quarter. About 83 per cent of the respondents anticipate an increase in profitability, while 3 per cent expect a decline in profits.

Approximately 52 per cent of the respondents anticipate selling prices to go up, while 8 per cent expect prices to decline. Thus, the index for selling prices was at 44 per cent, an increase of 6 percentage points from the previous quarter.

The index for new orders is at 82 per cent, a decrease of two percentage points over the previous quarter with about 85 per cent respondents expecting their order book position to improve and 3 per cent anticipating a decline.

The index for employees stood at 53 per cent compared with 49 per cent in the previous quarter with about 57 per cent respondents anticipating an increase in the staff size and 4 per cent expecting a decline.

About 58 per cent of the respondents intend to increase their inventory levels, while about 7 per cent expect their stocks to decline during the quarter. The optimism index for inventory levels stood at 51 per cent, an increase of 9 percentage points over the previous quarter.

News: S&P upgrades India outlook to positive

(BS 19/04/2006) Mumbai - Standard & Poor's today revised the outlook on India to positive from stable. At the same time, the BB+/B ratings on the sovereign were affirmed.

"The outlook revision reflects improved prospects of a stabilising debt burden based on greater effort across all levels of governments to consolidate fiscal positions," said Standard & Poor's credit analyst Ping Chew.

An official release issued by S&P said the central and state governments (general government) have increased efforts to rein in their budget deficits. The central government's 2006/2007 Budget puts fiscal consolidation back on track, while the assessment on state governments' comes in the wake of better-than-expected fiscal outlook. The general government deficit is expected to fall below 8.0% of 2006 GDP from 10% in 2002.

"Going forward, tax measures - including expanding VAT and service tax - and tightening tax administration should result in more buoyant government revenues, especially as the highly taxed industrial sector grows more robustly and as the service sector is taxed," the release said.

India's incipient fiscal consolidation addresses its principal credit weakness. Public finances remain among the worst of rated sovereigns, leaving it vulnerable to any secular decline in growth rates or increase in real interest rates, the release added.

"India's economic prospects are stable and strong, and we project incremental structural reform will raise GDP trend growth over 7%," Chew said.

"Further liberalisation of the economy and infrastructure improvements will help India's trend growth. Such reforms coupled with continued fiscal consolidation will help India achieve investment grade over time. On the other hand, if the fiscal consolidation stalls or the reform agenda derails, the outlook could be revised to stable," he added.

News: India's 05/06 FDI inflows at $7.5 bln

(RTR 19/04/2006) New Delhi - Trade Minister Kamal Nath said on Wednesday foreign direct investment inflows into the country was $7.5 billion in the year ended March 2006.

It stood at $5.3 billion in the previous year, he said. Inflows during fiscal 2006/07 were expected to cross $10 billion, Nath added.

News: Piramyd Retail to rejig management structure

(BL 19/04/2006) Mumbai - Post the departure of Krish Iyer, erstwhile Managing Director & CEO, Piramyd Retail has decided to restructure its operations by having two separate CEOs for its Megastore and TruMart divisions.

While it has recently appointed Bipin Gurnani as the CEO of Piramyd Megastore, the retail company is now scouting for a new CEO for TruMart - the division for food, home and personal care.

Besides, Nandan Piramal is the Vice-Chairman and Executive Director of Piramyd Retail while his mother Urvi Piramal will continue as the non-executive Chairperson for the company.

Nandan Piramal told Business Line, "For the business to expand and grow aggressively there was a need to have separate divisions. I was already a Director on the board and will now become the Executive Director of the company and there will no longer be a Managing Director in the company."

Added, Gurnani "There will be special focus on both the divisions and each will be treated as a separate profit centre. Today, we are created verticals out of the business."

To focus on in-store labels

Meanwhile, Piramyd has decided to focus on its in-store labels with more brands planned in the footwear, kids and home décor segment. At present, in-store brands comprise names such as Venpiuno and Boston Club for men's wear, Rudra for women's wear and Peppermint for kid's wear. In-store labels contribute between 8 per cent and 9 per cent of Piramyd's Rs 200-crore turnover. "We have planned to add more private labels and expect this segment to contribute between 15-20 per cent of our total turnover," says Gurnani.

At the same time, Piramyd Retail is looking at new formats in retailing especially in the area of services. Having forged a tie up with L'Oreal for salons, it is now scouting for a partner in the area of travel services. "We are looking at setting up a travel shop to improve the quality of shopping experience of our consumers. A pilot test is soon expected at our stores," states Gurnani, who is constantly looking at creating sub categories as an extension to support the shopping experiences of consumers.

Meanwhile, Piramyd expects its non-apparel business to grow at 25-30 per cent rate compared to its apparel business, which is pegged to grow at 15 per cent. To give a boost to its apparel business especially men's wear, Piramyd is running a `men at work' promotion whereby it will be holding sessions from eminent corporate honchos about how to dress at work.

News: Retail frenzy sweeps Indore

(BS 19/04/2006) Indore/Mumbai - Indore is all set to experience a fresh dose of retail therapy, which promises to bring to the city a “never before combo of shop-eat-celebrate”. After the successful opening of Pantaloons Lifestyle and Big Bazaar, the company has a few novel plans for the city.

“We will introduce our lifestyle electronics format E-Zone and our lifestyle furniture chain Collection I in Indore by the end of this month. The stores would come up on 30,000 sq ft Treasure Island (the only mall in Indore) by the end of this month”, said Pantaloon Retail India head operations (North Zone), Mayur Toshniwal, while talking to the media here.

He added that both the stores would be standalone stores. “The electronics store would be first such store in Indore. Later this year, we plan open more stores in other cities as part of our expansion plans of the brand,” he informed. The company has already generated employment for about 300 local youngsters.

Indore is becoming a preferred destination for the big players of both Indian and foreign retail industry. Dubai-based Max Lifestyle decided to start operations in India from Indore with the recent launch of the Max Retail store just before a couple of weeks ago.

“We have found that the Indore consumer is quite modern and willing to welcome new trends. They do not mind spending for quality stuff. Our success with Big Bazaar and Pantaloon Lifestyle bears testimony to the fact,” Toshniwal said.

E-Zone will have three sections – Personal (dealing in mobile phones, iPods etc.), then Home (hawking domestic white goods) and Experience (objects of desire like plasma screens and home theatres), besides the latest upgrades in consumer electronics. ‘Collection I’ will be stocking home furniture stuff and it would be a combination of the branded and other sets of home furniture for all the classes of people. If the industry sources are to be believed, the Pantaloon group is keen to bring its combo ‘Depot” to Indore city in the State soon.

Pantaloon is also planning a chain of family entertainment centres in the town, called F123, which will cater to the corporate bashes as well as birthday parties as well as offering a host of gaming options.

News: Indian consumer durable cos to have it cool this summer

(TNN 19/04/2006) New Delhi - It’s their summer of contentment, once again. But unlike previous years, most consumer durable marketers aren’t really sweating for sales this time round, thanks to a buoyant economy, low prices and a consumer mood to splurge.

Though you may still find that odd free-gift, or a one-off promotion, by and large the Rs 20,000-crore industry is now playing on newer, sleeker and better technology products to build up their brand salience and sales. “Our advertising focus this summer will be on high end products such as frost-free refrigerators and split air-conditioners,” says Girish Rao, VP, sales & marketing, LG India.

LG claims to have almost done away with promotions as it leads to value erosion of the brand. LG would be spending around Rs 10-12 crore on its advertising and marketing during the summers. It expects a growth of around 30% driven by product categories such as ACs, refrigerators and PCs.

Whilst LG concentrates on massive advertising air-power this summer, the other Korean chaebol, Samsung India, apart from doing some promotions, is also pushing the variety of its product portfolio to win over consumers to its brand. “This year, we’re targeting growth of 30% in our home appliance business over last year,” says Ravinder Zutshi, deputy managing director, Samsung India.

So it is as much an advertising war as variety of the product portfolio. While LG has already launched 10 models of refrigerators this year, another 10 are on the anvil. Not to be outdone, Samsung plans to launch six new models of its frost-free fridges this month.

And if refrigerators are big on any white good marketers’ priority, can air conditioners, a must-have creature comfort for an increasing number of middle class consumers be far behind? Just between LG and Samsung, the two dominant players in the AC market, some 60-odd new models have been launched in the past month or so.

And other big players in the AC market, Voltas, promises to offer ‘true value’ to its customers instead of offering freebies. “We are extremely buoyant about summers. Voltas has never believed in giving gifts and scratch cards, though we may offer things like zero percent finance options and stabilisers rather than get into marketing gimmicks,” says KD Virmani, senior general manager, Voltas.

Voltas is banking on retail expansion, household distribution, in-shop branding and local activities to push sales besides its presence across media with its high-decibel ad campaign. Though consumers may be disappointed, price wars, are clearly a thing of the past. “Infact prices are likely to go up marginally, 1-2%,” adds Mr Virmani.

Such is the heady optimism in the sector, that marketer after marketer is almost rubbishing promotions. “Consumers should not be taken for granted.

We do not believe in giving freebies or other gifts. During summers we would be hugely present on the electronic media, press and below the line, with focus on showcasing our product range and innovative technology,” says TK Banerjee, president & CEO, Haier India.

The company has launched 14 new AC models to take on the chaebols’ dominance in the Rs 3,000-crore AC market. With price erosion a thing of the past, brand building seems to be back in fashion in the consumer durable market. “We’ll focus on our new tagline, ‘Thinking of You’ and display our products than go in for short term gains by offering freebies,” says Madhav Nene, head of marketing, Electrolux Kelvinator Appliances.

The company is planning to roll out a web-based contest, a brand building one and not promotion driven. “This summer we would concentrate on our technology and brand salience in our communication,” says Sanjay Motwani, VP marketing and exports, Godrej & Boyce.

Videocon, otherwise a price-warrior brand, is concentrating this year on spending a large part of its Rs 12-crore marketing budget for ACs and refrigerators on below-the-line activities, pushing zero percent finance in tie-up with Citibank.

News: VIP to open 12 more stores in north India

(BS 19/04/2006) New Delhi/Chandigarh - VIP Industries Ltd, the luggage manufacturer, will add about 12 exclusive stores in the northern region by the end of 2006-07. The stores will comprise both company-owned stores and franchisees. Currently, it has over 29 stores in the north, of which six are franchisees.

To support its sales in the region, the company has recently commissioned a plant in Uttaranchal with an investment of about Rs 18 crore.

The company is looking to expand through entire gamut of retail formats including its own stores, departmental stores, speciality outlets and hyper markets to provide a new retail experience.

The company has acquired a UK-based luggage manufacturer - Carlton. The products will be in the super premium range and sold through the new exclusive outlets that the company would be opening in all the major cities in India like Delhi, Mumbai, Bangalore, Chennai, Kolkata, and Chandigarh in a couple of months.

The soft luggage would be imported from UK, whereas, the hard luggage would be manufactured in its Nasik plant.

Talking to Business Standard, Rajeev Malhotra, Zonal Manager (north), Blow Plast Limited, which is the marketing arm of the company, said, "We see a huge potential in the northern region. So far we have a very good presence in the region and our share in the organised market stands at 65 per cent across the country, whereas in the region, we have a higher share. We would also be expanding further in the region by opening more stores here. Very shortly, we would also be opening new stores in Jammu, Jalandhar, Mohali and Panchkula et al." Malhotra was present in the city to inaugurate its new store in Chandigarh.

“However, all the stores would not be company owned as before opening a store, we figure out whether to start a company owned store of a franchisee. Across India, we have about 126 stores comprising 47 franchisee stores. Our aim is to open about 60 new outlets every year for a period of next three years. Therefore, by the end of this fiscal, we would be having around 180 stores in the country. Each store requires an investment of about Rs 25-30 lakh. Besides that, we have multibrand stores that sell our product. In the northern region, there are 2500 such multibrand stores," he said

"As new malls are coming up in the region, we have also bought space for our stores. We would set up a store in all the major malls in the major cities of northern region. So far we have bought space in malls that are coming up in Ludhiana, Panchkula and Chandigarh," says Deepak Tiku, Branch Manager, Blow Plast Limited, Chandigarh Office.

To cater to the growing demand, the company has recently set up manufacturing unit in Haridwar in Uttaranchal with an investment of about Rs 18 crore. This would increase the total capacity to five million pieces per annum. Currently, it has a unit in Nasik that has a capacity of about 30 lakh units, inform company sources.

"The new unit will help the company to penetrate further into the market in the region. We are launching new products. As the marriage season is approaching, we would be devising new strategies to sell our product like tying up with dotcom companies for virtual marketing of our products," says Malhotra.

News: My Dollar to ramp up Indian retail presence

(BS 19/04/2006) Mumbai - Cashing in on the Indian consumer’s fancy for imported stuff, US retailer My Dollar Store is looking at ramping up its presence in India.

Pankaj Oza, manager -marketing, My Dollar Store, said the company planned to set up at least 70 more stores in addition to the existing 26 by August 2006.

“This time we are looking at the smaller cities like Surat and Baroda,” he said. Sankalp Retail Value Stores is the master franchisee for the brand in India.

Apart from the larger format stores of about 1,500 square feet, the company is also setting up smaller (about 700 square feet) Express stores in IT Parks which would cater to people who don’t have the time to go to malls/high streets.

The company has set up few of the Express outlets at HPCL petrol pumps as well, although the two haven’t entered into any sort of arrangement for future outlets.

Oza said that the newer outlets would be a mixa of company owned and franchisee stores. The stores have a mix of 20 product categories like home, food, toys etc and Oza said that all products have been imported, mainly from the United States and China.

Oza is not too worried about the competition from local retailers who also stock imported products as he believes that they have an edge in terms of pricing.

News: Reliance Retail hunts for talent

(BL 19/04/2006) Bangalore/Chennai - The tremendous talent shortage in the retail sector has forced retail giants who are taking their first step in the country to look towards the Gulf to headhunt for talent. According to market sources, the country's biggest and newest entrant, Reliance Retail, has asked its HR team to camp in Dubai and do a sort of `gate interviews' of sales, marketing, purchase, merchandising staff of huge hypermarkets such as Carrefour, Lulu and Lifestyle stores. Says one Mumbai-based headhunter, "There are no systems and processes in place at Reliance and perhaps the company is hoping that these professionals from the Gulf will be able to lay down the initial systems."

Sudhakar Balakrishnan, Director and COO, Adecco Peopleone Consulting, says that it is natural for any retail giant to look for talent from West Asia, "These are ready-for-camera guys. But once the first- and second-rung guys are done, they will have to turn to India for numbers."

On whether Indians living in the Gulf will be willing to return, Balakrishnan says that salaries in India are going up and at the same time, the cost of living there has gone up. "Rents have gone up by 60-80 per cent there in the last two years," he said.

Kris Lakshmikanth, Managing Director, The Headhunters India, says the Gulf has been the hub for organised retailing and for Indian retailers, this talent is cheaper than Europe or the US.

One of the senior level executives who has been headhunted by Reliance, says that it's not just the Gulf; Reliance in its thirst for talent would be hunting in all markets for potential talent. Sources say that the group is in talks too with a former top Wal Mart head honcho to head the retail venture.

No retailer has attempted anything like what Reliance is trying to do, says this source. Getting into multiple formats from malls and hypermarkets to convenience stores across over 800 towns, Reliance's retail rollout will need to be fine tuned along the way. The retail operations, says sources, will be headquartered across three cities: Mumbai, Delhi and Bangalore.

The company is in recruitment mode at the moment and has roped in several top guns from the retailing world. As one of them quipped, "They're all 800 pound gorillas whom Reliance is recruiting now, so a structure where people don't step on each other's toes will have to be worked out."

Reliance's recruitment juggernaut is having its fallout on other retail chains. As one HR consultant pointed out, Reliance, with not much of a track record in retailing, has nothing else to offer now but big bucks. "But, it will be suicidal for other retailers to try and match Reliance; they're doing a greenfield project and they have the money," he says. He points out that retail chains such as RPG and Metro have already effected selective salary hikes ranging from 40-60 per cent. "Retail has been a low-paying industry and salary hikes will have a spiralling effect on their costs," says this HR consultant.

RPG's Radhakrishnan to join: The Reliance recruitment bandwagon for its retail venture rolls on. The latest experienced retailing hand likely to join Reliance soon is K. Radhakrishnan, Vice-President (Merchandising), Spencer's Retail of the RPG group, and part of the original team that put FoodWorld operations in place. He has been roped in as CEO of Reliance's hypermarket vertical. The group has plans to set up hundreds of hypermarkets around the country and he will be responsible for its rollout.

Radhakrishnan, who had quit the RPG group after an over-seven-year stint, a couple of months ago, was to have spearheaded the retail business of diamond trading company Dimexon. However, he will now be a Reliance hand.

News: 'Salary growth highest in India'

(BL 19/04/2006) Hyderabad - Market trends point towards sector shifts, growing levels of attrition and variable salaries and India has emerged as one of the highest salary growth markets.

HR managers seem to seek innovative ways to harness and retain talent as the market is witness to demand-supply constraints.

Similar trend seems to provide a connecting link not just in the knowledge-based technology sector, but also in other verticals such as retail, marketing and BFSI too.

The Cluster Lead, IT & ITES, Hewitt Associates, Nitin Sethi, said a recent study has indicated that the salary growth was the highest in India during the last two years at 14.1 per cent followed by the Philippines (8.1 per cent), China (7.9 per cent), Korea (6.9 per cent), Thailand (6.4 per cent), Singapore and Taiwan (4.2 per cent).

This momentum is set to continue this year where the IT sector salary is set to grow by about 13.7 per cent, and ITES and BPO growth may be by 15.5-16 per cent.

Salary growth

Given the current forecast of India continuing to be the fastest growing economies in 2006-2007 and the potential to be third largest in terms of purchasing power parity (displacing Japan to the fourth position), this salary growth is likely to continue, he said. Speaking at a Nasscom event on HR best Practices: Talent Management & Rewards, Sethi said talent in 3 to 7 years has emerged as the hottest property.

This is one area that is witness to differential salary compensation, which is something new in the Indian context.

Interestingly, many professionals in this category are also shifting their career path as the industry has an appetite to acquire people with cross-functional capabilities.

The pressure on finding the right fit for an organisation is such that job shifts have become common, thereby subjecting HR managers to greater pressure, he said.

Talent retention

Sethi said the efforts lately have been directed towards retention of talent. This is not by merely hiking salaries but giving an ideal relational reward that balances work and family life. This is because salary alone cannot ensure retention and loyalty as others can match this.

The Head of Human Resources at HSBC Global Resourcing India, which employs about 11,000 people, Rajgopal Raghavan, said given the current attrition levels, which varies from sector to sector and city of operation, large corporations are faced with the task of developing a pipeline of talent, where a clear succession plan is drawn.

The Head of HR Offerings Group, Satyam, Ratnesh Sharma, said one of the things employers need to understand is to learn from associates what they have in mind.

News: Chinese steel cos exploring opportunities in India

(BL 18/04/2006) Beijing - Chinese steel majors such as Bau Steel and Capital Steel are now exploring business opportunities in India and are planning to make substantial investments in this sector. Interacting with a visiting delegation of Indian industrialists and a media group, industry sources here said besides IT software, hardware and pharmaceuticals, Chinese companies in the mineral and metals sectors were already undertaking feasibility study in India. They are looking at investment as high as those committed by the South Korean steel major POSCO and L.N. Mittal-promoted Mittal Steel.

Liu Zhengang, chief representative China Minmetals Corporation said, "Chinese steel companies can make use of Indian iron-ore reserves and many companies are exploring investment possibilities in India. But the Indian Government should make changes in its mines and minerals policy to allow freer movement of raw materials."

Keen on retail market

Taking advantage of the visit of the FICCI-organised Indian delegation here, Chinese authorities also sought more clarity on foreign direct investment (FDI) norms in the retail sector. Stating that the open door policy had helped China in achieving the present level of growth, Wang Jinzhen, Vice-Secretary General, China Council for Promotion of International Trade (CCPIT), said India too could attract investments in various sectors, including real estate, retail, telecom, mines and minerals, if it followed a similar policy.

Already, Gome, a Chinese electronics retail domestic major and real estate developers Guanghua Group have shown interest in tapping the Indian retail market in a big way.

"If the Indian Government brings in more clarity to the FDI norms, it will help such Chinese companies to do business in India," Wang said. Asked about the co-operation between the two countries in the energy sector, Wang said if India, China and Pakistan co-operate, a number of issues concerning energy security in the region could be addressed.

Energy security has been a crucial issue in the region and a combined India-China market will have tremendous strategic impact on energy access and control mechanism, he added.

On the possibilities of more India-China joint ventures to acquire oil and gas assets overseas, Wang said, "This would largely depend on the economic and strategic viability of the projects." About Chinese participation in the sixth round of New Exploration Licensing Policy (NELP), Wang said, "At present, I do not remember any such proposal from Chinese companies, but if it makes economic sense we may participate." Earlier, speaking at the FICCI-CCPIT CEO's summit, the FICCI Secretary-General, Dr Amit Mitra, highlighted the need for greater co-operation between India and China.

He pointed out that actual FDI in India by Chinese companies stood at $0.63 million against an approved investment of $231.6 million between January 1991 and March 2004.

In his inaugural address, Wan Jifei, Chairman and Minister CCPIT, urged entrepreneurs of the two countries to improve the two-way trade from existing $18.7 billion to $20 billion in 2006.

Saroj Kumar Poddar, FICCI President, said that efforts should be to raise the bilateral trade to $50 billion in three years and $100 billion in six years. He also said that attempts should be made to encourage investments in each other's countries to at least $1 billion each in next five years.

News: RIL likely to tie-up with Chevron

(PTI 18/04/2006) New Delhi - Reliance Industries Ltd, India's largest private oil firm, may tie-up with Chevron Corp of US to make joint bids for oil and gas blocks on offer in the latest round of New Exploration Licensing Policy (NELP).

"Chevron is keen to expand its presence in India. It has already agreed to spend $300 million to buy a 5 per cent stake in a refinery being built by Reliance. The company is now interested in exploration and production opportunities," a source familiar with the development said.

In the previous NELP rounds, Reliance had partnered Niko Resources of Canada and Hardy Oil of the UK. Niko had 10 per cent stake in blocks Reliance won in NELP-I while Hardy also took minority interest in the blocks Reliance won in subsequent four rounds. Reliance was the operator in all five rounds.

The California-based Chevron, which did not take part in the previous five rounds of NELP, had expressed keenness to participate in the latest tender at the road shows held in Houston last month to promote NELP-VI, the source said adding a partnership may result only after the firms are able to decide as to who would be the operator of the blocks.

Reliance officials were not available for comments.

Chevron, which currently has a lubricant blending and marketing operation in India, was also looking at partnering Reliance for marketing natural gas produced from the Indian firm's D-6 field in Krishna Godavari basin off the Andhra coast, sources said.

Last week, Chevron said it would spend about $300 million to purchase five per cent of Reliance Petroleum Ltd (RPL), a company formed by Reliance Industries Ltd (Reliance) to own and operate a new export refinery at Jamnagar, Gujarat. Sources said Reliance-Chevron may bid together for deep sea blocks on offer in NELP-VI. Off the 55 blocks on offer in NELP-VI, 24 are in deep sea.

RPL plans to invest $six billion in a 580,000 barrels per day refinery, which is expected to begin operation in December 2008.

As per its deal with Reliance, Chevron has future rights to purchase additional shares to increase its equity ownership to 29 per cent. The US firm would supply a third of crude oil that the new refinery needs from the spot market and help market high-octane fuel produced at the unit in the US and other western markets.

Reliance currently operates 660,000 barrels per day refinery in Jamnagar. The new refinery is designed to have a similar throughput capacity, but is expected to process heavier crude oil.

The new refinery would be the world's sixth largest refinery on a single site, and the two together would constitute the largest refinery complex in the world, based on current capacities.

News: Single Caribbean market likely to grow

(PL 18/04/2006) St John - Experts from the Caribbean Community (CARICOM) are analyzing here Tuesday whether another six regional countries are ready to enter the Caribbean Single Market established last January.

The Caribbean bloc, presided over by the Trinidad and Tobago Prime Minister and CARICOM chairman, Patrick Manning, is considering if St. Lucia, Antigua and Barbuda, St. Kitts and Nevis, Dominica, Grenada, and St. Vincent and the Grenadines meet the requirements for membership.

Were the requests accepted, the countries would join the partnership before June 30, the bloc spokesman Leonard Robertson indicated.

Barbados, Belize, Guyana, Jamaica, Surinam, and Trinidad and Tobago are the only members so far.

This mechanism will mainly facilitate the flow of goods and services, but will also deal with programs for the development of the industry and economic planning of the least advantaged countries.

News: Oracle predicts India's rise on software horizon

(PTI 18/04/2006) London - Silicon Valley is in danger of losing its crown as home of the technology start-up as India is on course to become the new hotbed of innovation, according to the Chairman of Oracle, Mr Jeff Henley.

America's strong track record as a developer of software would weaken in the next few years, amid burgeoning activity in Indian cities such as Mumbai, Bangalore and Chennai, he said.

"The US has been a big developer of software... but that's going to change over time. We're going to see more and more technology from Indian companies," the Oracle Chairman said.

He said the growing prominence of India would have an impact on where Oracle, which has made a string of multibillion-dollar acquisitions in recent years, would seek its new targets.

"We'll buy from wherever the product is. It doesn't have to be in the US," he said.

Last August Oracle bought a 41 per cent stake in I-flex, an Indian provider of software to the financial services industry.

In 2005, Oracle also took control of PeopleSoft, a rival business software group, for $10.5 billion. It also agreed to pay $5.8 billion for Siebel, another rival. Last week, it made a $220 million deal to buy Portal Software, which makes billing software.

News: L&FS raises $340 mn from realty fund

(PTI 18/04/2006) Mumbai - IL&FS Investment Managers Ltd on Monday said it has raised $340 million through its realty fund being offered to foreign investors.

With this, the company has achieved the initial closing for foreign investors to its realty fund and the total size of the fund stands at around $405 million.

The company would seek further commitments from international investors and expects to achieve a final closing in the next six months, IL&FS informed the Bombay Stock Exchange.

IL&FS has also declared a dividend of Rs 3.50 per share of Rs 10 each (35%), it added.

News: Northwest Venture plans $656-m fund for India

(TNN 18/04/2006) Mumbai - Northwest Venture Partners (NVP), promoted by US-based venture capitalist Pramod Haque, on Monday announced a $650m fund, targeted at technology firms in India and the US. This is the largest fund the firm has raised to date. ET had reported in its February 16 edition that NVP was close to announcing its new fund with a focus on cross-border firms in the consumer and Internet segments.

The fund — NVP X — is targeted at early, mid and late stage investments in the US, India and Israel, with focus on emerging growth opportunities in the global information technology sector, NVP said in a statement in Mumbai.

The fund will concentrate on emerging growth opportunities in the global information technology sector from India. Most of the existing investments by VC funds based in the US in the IT sector have a large Indian component, as the development centers for the startups are in India. This is the first time that a Silicon Valley fund of the size of NVP has raised a fund dedicated to the India opportunity.

This brings NVP’s total capital raised to more than $2.5 billion. The current fund follows a $400 m fund which the VC firm had closed in late 2001.

NVP has funded over 400 companies since its inception. According to Vab Goel, who has recently been promoted general partnerat NVP, “There is an enormous gap between early and mid-stage investors in India. Indian enterpreneurs need to leverage India’s strengths for a real global play. Which is where we can hope add value and capital with our new fund.”

“NVP X will focus on cross-border investments (companies that are headquartered in the US, but have a significant presence in India). The fund will continue to concentrate on the broad investment opportunities in the consumer, mobile and media sectors in India,” he added.

“The size of NVP X is a testament to our belief in the potential of emerging markets in the US and India,” said NVP managing partner Mr Haque.

NVP’s team is actively evaluating disruptive, game changing opportunities in the information technology sector. The firm has made two direct investments in India during the last five months and will be announcing additional investments in the first half of ‘06, the statement said. While broadband and wireless penetration has greatly increased in India in the past few years, the rate of adoption will still continue to rise significantly.

“The opportunity for additional penetration combined with a sizeable middle class that has tremendous spending power makes today investment landscape in India extremely promising,” said Mr Haque. NVP recently invested in Yatra Online, online travel services company, and Pune-based IT firm Persistent Systems.

News: Liberty may set up Indian JV with Nike

(TNN 18/04/2006) Chandigargh - Nike, the global shoe and sports accessories giant, is now eyeing India to source its products. The company is contemplating setting up a joint venture here to manufacture sports shoes as well as sandals for the global market.

A delegation from Nike, led by Ron Harfeil, director of footwear operations, Nike Beaverton, held discussions with Haryana’s Liberty Group earlier this week to set up the proposed joint venture which will involve an investment of Rs 400 crore for manufacturing 60,000 pairs of shoes and sandals per day.

Liberty, a major supplier to Wal-Mart, also plans to start manufacturing for Nike for sales in India at its Uttaranchal plant from June end. Initially, supplies to Nike will be 4,000 pairs a month which will be enhanced gradually to nearly 25,000 pairs a month in four to five months, said Liberty Shoes’ ED Shammi Bansal.

The group, having diversified into sanitary ware with a plant in Neemrana in Rajasthan, also has plans to inject funds into manufacturing auto component. Mr Bansal told ET that discussions with Nike were on and the plans would be formalised to set up a joint venture in the next two to three weeks.

He said Nike and Liberty group have expressed desire to enhance the technology to meet the increased domestic and global demand for shoes. The proposed venture may eventually be set up in Chennai or in Gujarat, he added. Mr Bansal said that for the proposed joint venture, a new company may be floated with equity participation from Nike as well.

The new unit may be set up as an export-oriented unit (EOU) or in an special economic zone (SEZ). Around 75-80% of the produce will be earmarked for exports and the rest will be sold in domestic market. He indicated that Jerry Hauth, director of footwear sourcing, India, Nike, expressed his keenness in joining hands with the Liberty Group for the proposed joint venture keeping in view of the huge infrastructure and potential available with the Indian company.

This venture, when set up, will create employment opportunity for thousands. Liberty Shoes expects to close ‘05-06 with a turnover of Rs 225 crore (net of excise and taxes) as against Rs 196 crore in the previous year (net of excise and taxes).

The group is now gearing up to inject Rs 160 crore in doubling its production capacity in the next three years. Currently, the installed capacity is 43,000 pairs per day.

News: DLF drafts prospectus for IPO

(TNN 18/04/2006) New Delhi - Real estate and construction major DLF will approach market regulator SEBI with a draft prospectus for its upcoming Initial Public Offer of over Rs 10,500 crore.

When contacted, company officials confirmed that the Draft Red Herring Prospectus with SEBI by April end may hit capital market in the first or second week of June.

The company has convened a pre-IPO meeting of shareholders to get their nod on issues like spliting the Rs 10-share into five shares of Rs 2 each and issuing a liberal bonus of seven shares for each share held to the existing shareholders.

The Extraordinary General Meeting would be held here on April 20, they said adding this would be followed by a pre-IPO survey to decide the price band for the shares.

Asked about the size of the IPO and money to be raised, officials declined to comment but said this would be the largest IPO in the history of India's capital market.

The company would be issuing 132,18,79,895 fully paid new equity shares as 7:1 bonus after spliting the shares.
The notice has been sent to all shareholders enlisting 10 resolutions.

The company has capitalised a sum of over Rs 264.37 crore from the standing to the credit of share premium account, general reserve account and credit of surplus as per profit and loss account as on March 31, 2005 for issuance of new shares as bonus.

DLF is planning to offer 20 crore shares to the public and 3.5 crore shares by way of private placement. K P Singh, promoter of the company holds 99.5 per cent stake in DLF and after the IPO the promoter's stake would come down to 88 per cent.

The company would also seek shareholders nod to place 3.5 crore shares of Rs 2 each at a price of not less than Rs 64 per share.

The EGM would also consider the increase in authorised share capital of the company to Rs 500 crore from the exisiting Rs 40 crore. The Rs 500 crore share capital would be divided into 249.75 crore equity shares of Rs 2 each and 50,000 redeemable preference shares of Rs 100 each

News: India could gain from rising Chinese imports

(TNN 18/04/2006) Beijing - When does a great sucking sound become music to your ears? When the noise is generated by the Chinese economy sucking in imports from around the world to feed its giant economy. Over the next five years, China will import $5trillion worth of goods and services — seven times India’s GDP in ‘05-06.

India can also benefit from this import frenzy, but would India kindly remove some irritants in the path to a joint commercial bliss, such as its present unwillingness to recognise China as a market economy and its ‘security’ reservations over Chinese MNCs like Huawei Technologies?

The issue was raised by the China Council for Promotion of International Trade vice-secretary general Wang Jinzhen at a joint CEO forum organised by CCPTI and Ficci on Monday.

A 17-member Ficci delegation of CEOs led by president Saroj Kumar Poddar is in Beijing to build the basis for substantial business linkages between the two economies. They are on the lookout not only to further their own immediate business, but also to pursue a larger game plan of exploiting the synergies of the two fastest-growing large economies for conquest in third countries.

Twenty-one large Chinese companies, apart from industry associations and state agencies for international trade cooperation, were present at the CEO meet. India’s ambassador to China, Nalin Surie, also spoke, lending the meet the state backing that the Chinese are comfortable with.

Ficci secretary general Amit Mitra identified five goals in this game plan: raise the volume of Sino-Indian trade, which has grown from next to nothing in the early nineties to $18.7bn last year and could well overtake India’s trade with the US soon, to $50bn in three years’ time and to $100bn in six years; boost investment by either country in the other; explore JV possibilities in third countries (like the recent bid for oil in Syria between India’s ONGC Videsh and China’s Sinopec); increase people-to-people contact between the two nations through tourism and close the knowledge gap between the two neighbours through the exchange of students, scholars and media personnel.

The frenetic pace of China’s growth (9.7% a year for the last 27 years) has produced giant companies that operate in many countries around the world, including India. The delegates at the CEO meet made it clear that they welcome the opportunity to cooperate with Indian companies, but would like to see the mutual cooperation in multilateral groupings like the G20 extended to bilateral relations.

India is the number one wielder of anti-dumping measures against Chinese imports and China’s status as a non-market economy in India’s books comes in handy to justify penal duties on imports from China. Around 50 countries, including G20 comrades Brazil and South Africa, have recognised China as a market economy. However, the Americans and the Europeans have not. With which group of countries should India align itself on China, Chinese officials want to know.

News: Caparo Group to invest Rs 400-600 cr in India

(TV18 18/04/2006) Mumbai - The Caparo Group has plans that go beyond body panels and small parts. It wants to set up a forging plant, an aluminium foundry and an R&D centre here. These will be in Southern India.

Besides it will build a sheet metal plant in Pune. Caparo may also set up another forging unit in North India and a grade iron foundry elsewhere.

Director & CEO at Caparo, Angad Paul says, "We want to deliver value. If I have to put a figure it will be between Rs 400-600 crore in the next 3-4 years."

Angad Paul says Caparo also wants to acquire companies in India. CNBC-TV18 learns that one of the acquisitions could be a firm, which is into advanced composites.

He says, "In India we are looking at a number of acquisitions. It's getting right in India but right now values are high."

Caparo's move into car-making is the most glamourous of its plans. It has acquired Freestream, a British firm that's developed this 500 HP two-seater supercar to be made available in India at the end of this year at a price of Rs 11.7 crore.

Caparo has got some aggressive plans. Angad Paul says there's a method to his madness. With the car components industry driving at high speed and a growing number of high networth individuals, it could be called a sane madness.

News: MobileNXT, India’s first mobile retail chain launched

(TV18 18/04/2006) Bangalore - MobileNXT Teleservices Pvt. Ltd, a Bangalore-based, India’s first mobile retail chain and a one-stop mobile store announced their intent to launch its first store in Gurgoan on April 20, 2006. This announcement was made at a press conference held at Bangalore today. MobileNXT aims to offer a world-class shopping experience to the telecom buyer offering a host of mobile products, services and value adds.

Speaking at the launch of MobileNXT, Vijay Menon, Founder & CEO, MobileNXT Teleservices Pvt. Ltd. Said, “With the boom in the mobile industry over the last two years in the country, there is a huge need to provide value based consumer experience to this growing market. Based on our research, we believe that this is the right time for a concept like MobileNXT to enter the Indian market and take on this unfulfilled need. We have studied similar formats internationally and hope to bring the same level of professionalism and service to our consumers in India.”

An innovative concept in the telecom retailing industry, MobileNXT will focus on providing consistent offerings to build consumer value be it the store experience, the products or the services offered.

Speaking about the business model, Romy Juneja Founder & COO, MobileNXT Teleservices PVT. Ltd, said, “Our primary focus is on creating an organized retail format in the under-served tier II and tier III cities whereas our presence in large metros will be through shop-in-shop formats and malls thereby establishing a presence in the leading, relatively saturated markets of the country. We plan to open close to 31 stores by the end of this year.”

One of the core differentiators of MobileNXT is that the store will offer the products categorized not by brands but by the value they add for the customer. This has been differentiated as follows:

StyleNXT: Aesthetically designed phones are offered under this category
MusicNXT: Phone with FM, Sony Walkman series etc would be available under this category
WorkNXT: PDA phones, phones offering Microsoft Office facilities etc. would be available under this category
ValueNXT: Phones that are economical would be under this category
GamesNXT: Phones with extensive gaming facilities would be under this category
ShareNXT: Phones with Bluetooth, infrared, camera etc. would be categorized under ShareNXT

Each of the MobileNXT stores, apart from being a one-stop shop offering mobile handsets, mobile accessories, choice of cellular service provider ,value adds, data transfer facilities, and an unique exchange programme “NXTChange” is also backed by a strong after sales service. In addition, MobileNXT provides an integrated call-centre facility where information related to any product category or service can be sought. The products on sale will include GSM and CDMA handsets from all the top manufacturers across the globe.

One of the most notable value-add offered by MobileNXT is the Interactive Kiosks, the first of its kind by any retail outlet in the country. Unveiling the interactive kiosks, Romy said, ”Our desire to create an unparalleled buying experience for the consumer led us to putting up the interactive kiosks at our stores. This unique concept is the first of its kind offered by any mobile retail store in the country. There is a huge demand for software downloads, be it music, videos, ringtones, caller tunes etc. especially among the youth who is always into experimentation. MobileNXT Kiosks is the best solution to address this audience.“

These interactive kiosks will let users download music, ring tones, wall papers, print photographs stored in their mobile etc. all with an inbuilt money system.

Speaking about the entire customer experience, Vijay added, “Each of the store has been designed keeping in mind our primary audience, the youth, young adults and the quality & brand conscious consumers. We believe that a long standing relationship be established with each of our customers, which doesn’t end with buying a product from our store but offer them an experience that gives the customer a reason to keep coming back to the store.”

The promoters of MobileNXT, Vijay Menon and Romy Juneja have over 35 years of corporate experience between them and have a deep understanding of the telecom business in India and have the added advantage of having experience in setting up businesses and successfully run them. Backed by a consortium of investors, MobileNXT will open its first 3 stores by early May 2006 in Gurgaon, Kolkata and Ahmedabad.

News: SKNL setup Brandhouse Retail to execute expansion plans

(BT 18/04/2006) Kolkata - A subsidiary Brandhouse Retail Limited has been setup by S Kumars Nationwide Limited (SKNL) to carry out expansion plans of opening 100 Reid & Taylor stores and 30 exclusive home textile outlets by the end of the year, Tarun Joshi, chief executive officer of Brand House Retail Limited said here on April 17.

The CEO further said that the company also plans to bring three international luxury or super premium brands in the country and is also set to launch a mid priced menswear brand in August.

Further in the next four months, the company aims to take the number of Reid & Taylor stores to 45 from 24 and by the end of the year, the brand targets to have 100 outlets, each with an area of 2000 sq ft and an investment between Rs 25 lakh and Rs 30 lakh.

The company recently launched home textile brand, Carmichael House to develop fabric for bed, bath and table linen with furnishings for the international market which would be present in 700 to 800 multi brand outlets by next month.

Further during 2005-06, SKNL has recorded a sales turnover of Rs 861.83 crore and expects it grow to Rs 1,081.40 in the current fiscal year 2006-07. However company expects to double its sales to Rs 1,802.20 crore by 2009-10.

News: Real estate exposure of Indianbanks rises 85%

(BS 18/04/2006) Mumbai - Commercial banks' exposure to the real estate sector almost doubled in the first 10 months of 2005-06 over the March 31, 2005 level.

The total outstanding loans to real estate rose by 84.4 per cent to Rs 24,527 crore as on January 20, 2006, from Rs 13,302 crore as on March 31, 2005, according to the Reserve Bank of India’s report on macroeconomic and monetary developments in 2005-06 released ahead of the announcement of 2006-07 credit policy tomorrow.

The sharp rise in loans to real estate made RBI to announce guidelines on exposure to real estate last month. The guidelines practically bans banks from lending to real estate developers for purchase of land.

Banks are allowed to lend only after developers obtain all the necessary approvals from the state and local authorities, which can happen only after the land is acquired.

Credit to real estate increased sharply, although it still constitutes only a small part — less than two per cent of outstanding non-food bank credit and around four per cent of incremental non-food credit.

The incremental growth in personal loans was 27.9 per cent, largely a contribution of housing loans, credit card loans and educational loans.

Housing loans outstanding as on January 20,2006 increased by 29.1 per cent (Rs 37,431 crore) to Rs 1,66,159 crore from Rs 1,28,728 crore as on March 31, 2005.

Loans outstanding on credit cards was up by 53.3 per cent or Rs 3,072 crore to Rs 8,832 crore during the period. Similarly, education loans outstanding rose by Rs 3,884 crore to Rs 9,003 crore.

The incremental growth in non-food gross bank credit up to January 20, 2006 was 25.7 per cent. The outstanding non-food credit increased by Rs 2,56,580 crore to Rs 12,56,368 crore.

RBI said disaggregated data shows that almost 26 per cent of incremental non-food credit during April-January 2005-06 went to the industrial sector, while almost 15 per cent of incremental non-food credit was on account of housing loans and another 11 per cent was absorbed by agricultural sector. Credit growth remained strong for the second successive year on account of acceleration to commercial sector.

Industrial sector availed of Rs 66,480 crore of loans from the banking system in the first 10 months of 2005-06 against Rs 35,485 crore a year earlier.

The increase in industrial credit in consonance with sustained growth in domestic industrial production was mainly on account of infrastructure, textiles, iron and steel, chemicals, vehicles, gems and jewellery, food processing and construction.

The infrastructure sector alone accounted for more than a third of incremental credit to the industry, while textiles and iron and steel industries absorbed another one-fourth.

News: KKR buys 85% in Flextronics for $900 million

(BS 18/04/2006) Mumbai - Deal marks India's largest technology investment ever.

In the country's largest technology investment till date, US-based private equity fund Kohlberg Kravis Roberts & Co (KKR) has bought 85 per cent in Flextronics Software System, the Indian software arm of Singapore-based Flextronics, for close to $900 million.

Flextronics, which will retain a 15 per cent stake in the company, will receive over $600 million in cash and hold a $250 million face value note with a 10.5 per cent paid-in-kind interest coupon which matures in eight years. Flextronics Software Systems (FSS) CEO Ash Bhardwaj said the company might be renamed in the future.

Flextronics, the world's largest contract electronics manufacturer, expects the after-tax gain from the sale of its software business to be $175 million.

The deal marks the entry of California-based KKR, which has invested over $193 billion in 140 transactions worldwide, in India. This is its second transaction in Asia ever since it entered the region in 2005.

KKR's financing is fully underwritten. Citigroup and Merrill Lynch are acting as joint bookrunners and joint lead arrangers for the acquisition financing. They also acted as financial advisers to KKR.

Flextronics Software System is also looking at a stock buy-back option from the money that it will earn. “The proceeds of the sale can be effectively used for the other side of our business (electronics manufacturing),” added Bhardwaj.

FSS, which has acquired seven entities over the last four years, including Future Soft, AvniSoft and Frog Design, will be grouped into one entity, which will be renamed and headed by the same management team.

FSS along with global software development company Frog Design will continue to focus on communication networks and product development services around the globe.

The transaction, expected to close in the summer, is subject to regulatory approvals and other customary closing conditions. The company, which has 6,100 employees worldwide, has about 85 per cent of its workforce in India.

News: Vertu Plans Growth in India

(ZDN 18/04/2006) Mumbai - Vertu, the worlds first luxury communications company, today announced that it has plans to grow the luxury mobile phone business in India. Vertus exclusive handsets are currently available in Delhi and Mumbai.

"We are in a strong position to grow our business in luxury mobile phones in India. By the end of this year, we aim to sell Vertu handsets in Bangalore, Calcutta, Chandigarh and Chennai," announced Mr Alberto Torres, President for Vertu."We are in discussions with several interested parties and hope to make more announcements shortly," he added.

In recent years, India has experienced a turnaround in terms of affluence and success. As a result there has been a surge in demand for finely crafted, high value goods. Vertu took the decision to launch and expand in India to provide the clientele in this market with the superior service and dedication to craft that Vertu offers throughout the world.

Vertu is available across 40 countries in more than 300 retail doors worldwide.

Vertu challenged people's expectations and perceptions of mobile communications when it launched its first phone - Vertu Signature - in January 2002. Vertu Signature comprises over 400 parts and is available in stainless steel, 18 carat white gold, 18 carat yellow gold and platinum. The creation and manufacture of Vertu Signature has resulted in Vertu filing 74 patents.

Inspired by the design aesthetic and material of luxury sports cars, Vertu Ascent contrasts the feel of soft hand-stitched leather with hard precision-engineered Liquidmetal alloy- a new material selected for its robust and flexible structure. Vertu Ascent is as tough as it is elegant. As a result, it is so robust that it can even withstand being run over by a Porsche.

Vertu also offers clients a unique service, designed specifically for Vertus owners who by pressing the discretely positioned Concierge key on their phones will gain access to a dedicated team of lifestyle managers, capable of helping them get the most out of their valuable free time. The Vertu Concierge is complimentary to all Vertu clients for the first year and it is available 24 hours a day, 7 days a week, in English. Whilst the English service is available 24/7, additional languages such as French, Italian, German, Russian and Chinese are available with varying days and times of operation.

Vertu phones are manufactured in the United Kingdom. Craftsman use only the highest quality materials, including a scratch-resistant sapphire crystal face, ultra-strong highly polished ceramic, fine leather for better grip and jewelled bearings that are fitted under each key, providing a reassuring click each time the key is pressed. Vertu phones are built to last a minimum of 10 years. Each key is tested with over two million pushes a total of over 36 million pushes across the entire keypad, or the equivalent of making 20 calls a day, everyday for 25 years.

News: Bharti says retail plan in 3-4 months

(RTR 18/04/2006) New Delhi - Bharti Enterprises will start insurance operations in June and firm up plans for retail within three or four months, chairman Sunil Mittal said on Tuesday.

Last year, Bharti set up a 74:26 life insurance joint venture with Axa Asia Pacific Holdings Ltd., a unit of France's Axa SA. Bharti and Axa will jointly invest about $115 million over four years in Bharti Axa Life Insurance Co. Ltd.

"The insurance JV... we hope to start it by June," Mittal told reporters on the sidelines of a news conference. Mittal also said Bharti's retail plans would be finalized soon, but declined to name a potential partner.

Local media reports have said Bharti is in talks with global retailers including Wal-Mart Stores and Tesco Plc for a venture in food and grocery retail.

India's branded retail market is estimated at about $6 billion. This forms only 3 percent of the overall market, of which more than 65 percent is in food and grocery.

Bharti Enterprises -- which partly owns India's top mobile services firm Bharti Tele-Ventures -- has a presence in fresh produce with Fieldfresh Foods, a joint venture with the Rothschild group.

Tesco has a support centre and non-food sourcing operations based in Bangalore.

Media reports have speculated that a joint venture with Bharti would entail an initial investment of about $100 million, rising to about $1 billion.

The government in January allowed single-brand foreign firms to own 51 percent of retail joint ventures. But multiple-brand firms like Wal-Mart and Tesco are still barred at the retail level, though they can set up wholesale operations. Meanwhile, Reliance Industries Ltd. is investing $750 million in retail foray.

Analysts said retail sector investment norms could be eased in a year or two.

News: '10 pc Indian growth target realistic'

(DNA 18/04/2006) New Delhi - A day after the Supreme Court's verdict on rehabilitation in the controversial Narmada Dam project, Prime Minister Manmohan Singh on Tuesday asked the industry to pay more attention to people displaced by industrialisation and urbanisation to avoid confrontation.

“We need to quickly evolve a credible mechanism whereby these issues do not generate into confrontations between sections of our society...development is not pursued as threat to people's lives and habitats," Singh said after inaugurating Confederation of Indian Industry's annual session.

Asking Indian industry to pay closer attention to environmental consequences of industrial development, he said: “You must pay more attention to the rehabilitation of people displaced by the spread of industrial activity and by urbanisation.”

However, he said that the government was committed to pave the way for 12 per cent growth in the manufacturing sector, which is a must for attaining a 10 per cent economic growth.

“As I look ahead, I feel that we can not only sustain the current rate of economic growth of around 8 percent but can realistically hope to target a rate of 10 percent,” he said.

Addressing the annual conference of Confederation of Indian Industry, Singh said: “Our endeavour will be to create a policy framework that can deliver an annual rate of growth of manufacturing output of at least 12 percent.”

He said the government was committed to address problems being faced by the Indian industry to make it globally competitive and achieve a higher economic growth rate.

"Only manufacturing sector can provide enough jobs required to absorb the vast number of people who move out of agriculture," he said.

The country needed a credible macro-economic environment, better infrastructure and supportive political and social conditions to achieve higher industrial growth, he added.

Singh said the government would pursue labour sector reforms for greater flexibility in the labour market in the times to come even as he urged the captains of industry to diversify employee profile to bridge the socio-economic gaps.

“I urge you to give more attention to questions of social and economic discrimination and deprivation," he said adding that ‘affirmative’ action on the part of industry could play a crucial role in building up of an inclusive society.

News: Indian travel buck gives visible lift to invisibles

(DNA 18/04/2006) New Delhi - In a clear sign that more people are travelling to India for business and pleasure, receipts from travel brought in $5.3 billion in April-December 2005. That’s a rise of 19% over the same period of 2004, data from the Reserve Bank of India shows.

Outbound travel is also increasing, though not at the same pace. Payments under the travel head rose only 8% during the same period. And the net of receipts over payments rose an awesome 129% (see table).

“This shows that India is a favoured destination. A little improvement in our infrastructure will go a long way,” says Jibon Mukhopadhyay of the S P Jain Institute of Management and former economic advisor, Tata Services.

Tourism is clearly the new star driving growth in India’s invisibles earnings (earnings from abroad from transactions involving services). The invisibles account has been bailing out India on the external sector.

Net invisibles (receipts over payments) rose 36% in April-December 2005 over the same period in 2004. The $28 billion surplus on the invisibles account helped contain the current account deficit at $13.4 billion in the first nine months of 2005-06.

This figure would otherwise have been higher thanks to the huge trade deficit (the gap between merchandise exports and imports) of $41.5 billion.

“If the invisibles account is an index of globalisation,” says Mukhopadhyay, “then India is clearly doing well.” The break up of the invisibles account proves that.

Take the case of transportation, where the net has actually seen a 200% decline because of a $1.5 billion rise in payments. That, the RBI itself explains, is not only due to the increase in international shipping freight rates because of rising oil prices but also indicates the surge in India’s volume of foreign trade.

Services continued to be the mainstay of the invisibles account, with a 65% share. Within that, software held on to its predominant position, logging a 28% rise in net receipts.

Software imports seemed to have grown higher than exports in April-December 2005, but Mukhopadhyay doesn’t feel this is a cause for concern. In a particular phase, imports may be more but they may be inputs which will help in improving the receipts position in later years, he explains.

Private transfers are the next biggest chunk of the invisibles account. Indeed, though the redemption of the India Millenium Deposit bonds led to a huge outflow of investment income, a bulk of this was ploughed back in the form of private transfers, which accounts for 97% of all transfers.

With no significant narrowing of the trade deficit expected in 2006-07, hopes will be pinned on higher invisibles receipts to contain the current account deficit.

News: Indian economy to grow by 7.5-8% in 2006-07

(IANS 18/04/2006) Mumbai - India's economy is likely to expand between 7.5 and 8 per cent in the current fiscal year on a sustained growth in farm and industrial production, the Reserve Bank of India (RBI) said on Tuesday.

India's economy grew by a robust 8.1 per cent in the fiscal year ended March 31, up from 7.5 per cent the previous year.

The central bank said in its annual policy statement for 2006-07 that inflation would be contained within 5-5.5 per cent in the current fiscal ending March 2007.

"The recovery in agriculture, alongside the sustained momentum of growth in industry and services, augurs well for the Indian economy," said RBI governor YV Reddy while unveiling the policy.

"There is a gathering confidence that the economy is possibly poised on the threshold of a structural step up in the growth trajectory.

"The containment of inflation and particularly inflation expectations has boosted growth prospects in an environment of stability and confidence."

On downside risks to the economic outlook, the central bank said sustaining the growth of manufacturing, the key driver of industrial recovery, would depend critically on bridging large gaps in the physical infrastructure.

Getting infrastructure right will hold the key to achieve the growth targets in fiscal 2006-07 and 2007-08, assuming that the global economic environment remains conducive, said the policy statement.

"Fiscal policy will obviously have to play a key role in improving the delivery of infrastructure services, in fostering public-private partnerships and in crowding in private investment," it said.

Progress in fiscal consolidation will also be a key factor in achieving higher growth, said the RBI.

The larger market-borrowing programme of the government envisaged for the current fiscal year will have to be managed in the context of the overall liquidity situation and, particularly, the conditions in the debt market.

News: Pantaloon set to ink JV for mall development

(TNN 18/04/2006) Mumbai - No longer content with just building retail chains, mall development and management is the next big ticket item on Pantaloon group's shopping list.

In a move aimed at staying ahead of the pack, as the mall mania hits the country, Kishore Biyani-led Pantaloon group is close to sealing a 50:50 joint venture with a leading foreign mall management company, to set up its own professional mall management company.

While the foreign partner will bring mall management expertise to the table including event management, promotion, attracting footfalls, leasing, marketing and public relations, the Pantaloon group will provide the hardware for the venture - malls and its expertise in developing and leasing retail space.

The group has ambitious plans of rolling out 70 odd malls spread across 40 million square feet of retailing space in 29 cities and 19 states over the next five years, under a common brand umbrella of Kshitij Retail Destinations (KRDs).

The Kshitij Mall Management Company, as the group proposes to call it, will manage the proposed KRD chains that will straddle the group's mall business set up by Pantaloon Retail India Ltd, domestic fund Kshitij and foreign fund Horizon, that it has established in a tie-up with former Coca-Cola CEO Sanjeev Gupta.

Admitting that the venture was close to being firmed up, Pantaloon officials said, the deal was expected to be signed by month-end.

"We are in advance talks with some foreign mall management companies. Once we sign up, the company will be able to get going within a couple of months,"Shishir Baijal, MD & CEO, PFH Investment Advisory Co.

"We plan to take retail experience a step further by adding a heart and soul to our malls in terms of ambience and maintenance,"he said.

News: Reliance starts negotiations with FMCG majors

(TNN 18/04/2006) Mumbai - The Mukesh Ambani-led retail juggernaut is moving ahead. In fact, the Reliance group has now begun hectic negotiations with a host of FMCG companies as part of its ambitious retail foray. Promising huge volumes on an outlet strength of about 1,400 stores, the group has begun negotiating for a 40% discount on the MRP across categories like home & personal care as well as processed foods, industry sources further said.

Currently, Pantaloon Retail gets almost a 20-25% discount on the MRP while the other larger distributors get an average 10-12% discount. Hectic work has also begun on setting up outsourcing hubs for a host of consumer products like textiles, lifestyle and grocery products which are to be procured from markets like China and Thailand, it is learnt.

The only company that can compete with the scale of Pantaloons Retail formats like Big Bazaar and Food Bazaar head on will be the Reliance group, sources said. Pantaloon is understood to have begun scaling up its back-end supply chain to enhance its competitiveness, they added said.

One of the first retail outlets from Reliance is expected to come up at Ahmedabad, sources said. Reliance Industries has officially announced its plans to invest $750m to grab a share of the growing retail market in the country, though industry sources said the amount being pumped in is much higher.

Reliance Retail will involve various retail outlets like hypermarkets, supermarkets, convenience stores and speciality stores.

Sources said the company has begun initiating tie-ups for the back-end supply chain with commodity suppliers and wholesale traders for the business. It is also working on a complex model where it will draw on its expertise in logistics, transportation and warehousing as well as its ability to offer a large basket of products to consumers from which they can pick and choose.

India has an estimated 4.3m retail outlets, but the organised retail industry accounts for less than 5-7% of this.

Reliance Industries is reportedly eyeing revenues of close to Rs 90,000 crore from its retail foray by the end of the fifth year.

Column: Going wild in the aisles for supermarkets

(DT 18/04/2006) New Delhi - An excellent special report in this week’s Economist on the future of the emerging Indian retail sector. Sounds dull but it goes to the heart of where India is heading right now.

India really is a ‘nation of shopkeepers’ – 96 per cent of all things sold in India are sold in bazaars and small, family-owned shops staffed by unpaid family members. However the big boys – Walmart, Tesco etc – are fighting hard to roll back some old, Commie-era rules long since past their economic sell-by date that currently stop them from investing in Indian retail.

These giants are hungry for a super-size slice of middle-India’s newfound disposable income. And apparently they aren’t to be put off by the hopeless roads, the absurd over-regulation of business, internecine taxation system and the near-impossibility of buying land legally in the big cities.

But does India want ‘big retail’? Predictably the Left (who also happen to prop up India’s Congress-led coalition government) think not, but my guess is that the punters may well say different.

Recently our residential colony in South Delhi got a ‘supermarket’ called ‘Daily Needs’. By UK standards this establishment hardly rates above a ‘corner shop’ – a bit like a branch British branch of Co-Op circa 1976 (it only has three aisles of about 20ft each) but compared to anything else around, it’s a retail paradise: air-conditioning, little trolleys to push and imported chocolate bars from Saudi Arabia that aren’t full of the anti-melting agents which makes all Indian chocolate taste like tarmac.

Like a lot of middle-class Brits, I was an inveterate supermarket snob before I came to India. I would always try to use a proper butcher, baker etc when at all possible – not least because ersatz supermarket butchers and bakers were selling the same rubbish (flabby, water-filled bacon, over-risen tasteless bread, etc.) as the ready-packed counter. It was just that some bloke had to unpack it, weigh it and re-pack to give the illusion of ‘freshness’. Anyway, all is forgiven.

The problem with shopping in India is that it takes so long – which is why anyone with money employs a housekeeper to do it for them. Otherwise you spend half your life trumping from stall to stall haggling in the bazaar - which is great on a weekend (and for Hindi practice) but is impracticable when you need something quick for supper on a busy day.

With the arrival of ‘Daily Needs’ – like some shiny UFO that just landed from Mars - I now realise how exciting supermarkets must have been when they first arrived in Britain sometime after 1945. How convenient and shiny they must have appeared to the post-War housewife (my mother might correct me here) – such a far cry from their current role as the epitome of the greedy, over-bearing, homogenising force that sums up all that is dreary and soulless about life in 21st century Europe.

But for India those days of over-sated ennui are years away. From a few casual conversations, I reckon Indians will be going ‘wild in the aisles’ when the supermarkets finally arrive here in force – as, in this global world, they surely must. The Lefties go hang – this is FUN!

This enthusiasm also appears to extend to those portions of society who could never, in their wildest dreams, afford to use one. Or like a lot of Indians, will be too canny to pay for all the air-conditioning, convenience and anti-septic packaging. For one, the ciggy-wallah who used to sell me my illicit ‘single’ fags from his stall outside “Daily Needs” thinks the new arrival is “bahut achcha” (“excellent”) – not least because it has doubled his customer base overnight. Just don’t come blubbing to me in 2056 when the Taj Mahal gets demolished to make way for a car park expansion plan for the local Tesco.

By Peter Foster, the Daily Telegraph's South Asia correspondent

News: UK's real estate service provider plans India fora

(TNN 17/04/2006) Mumbai - The burgeoning domestic real estate market has started to attract yet another section of the global real estate industry — real estate service providers (RSPs).

The UK-based MoneyWise group, which provides advice on financial planning, mortgage broking and investment property sourcing, has entered India. It will invest £100,000 (approx Rs 80 lakh) here to expand its presence by setting up new offices.

“We will invest £100,000 in the next one year in India to create infrastructure,” MoneyWise Property Consultants India head, real estate business, Vikram Goyal, told ET. MoneyWise will offer property sourcing and finance services in such a way that a person based anywhere in the world can buy and rent property.

The company, which had set up a call centre in Mumbai, plans to hike headcount across the country. “We have opened a 24-hour real estate consultancy call centre in Mumbai to cater to NRIs and HNIs in the UK, US and Dubai,” Mr Goyal said.

The realty share in India’s GDP has gone up to 7% from 5.2% in ’02-03, but it still compares poorly to 15% share of realty in developed economies. Hence, the potential for growth is enormous, which is luring foreign companies.

MoneyWise has tied up with 20 realty developers like Bangalore’s Prestige and Sterling group, Pune’s Kumar and Gera Developers, Delhi’s Vipul and Unitech and Mumbai’s Keystone group to offer properties to 1,000 odd clients.

Soon after the company began its operation in April ’06, it managed to strike deals to the tune of Rs 2 crore, Mr Goyal said. MoneyWise also plans to launch a subsidiary company shortly and create funds for dedicated investment in Indian markets, he said.

The residential property market price index has gone up considerably and transparency in the real estate sector has improved too. As a result, global property developers are looking at India as a parking place for their investments. India offers a big opportunity, given that real estate yields are zooming.

News: Taiwan now chooses India over China

(TNN 17/04/2006) Mumbai - The complex relationship between China, Taiwan and the US may have a positive impact on India. The issue at stake is the large electronic manufacturing capacity that has made Taiwan the 14th-largest economy in the world.

Politically, Taiwan has been trying to distance itself from China; economically, the country’s fortunes are closely intertwined with China.

Taiwanese companies have invested close to $200bn in China, and are realising they have put too many eggs in one basket. So, they want to diversify their risks away from China.

In some cases, customers of the electronic manufacturing industry of Taiwan want vendors to diversify its risks. Taiwan also wants to move away from hard-core manufacturing to the next level of software-centric-growth and partner with countries like India.

According to Jamestown Foundation, a think-tank focused on Geopolitics of a global world and its impact on US, “There is a perception in Beijing, Washington, and in the region that President Chen Shui-bian is determined to attain de jure independence.

Talk of using Taiwan identity as a basis for re-engineering — as opposed to amending — the Constitution and eventually establishing processes for amendment by referendum intensifies this perception and provokes Beijing.

This, in turn, raises concerns about instability or conflict. Mr Chen and his predecessor, Lee Teng-hui, have successfully altered the terms of the cross-strait discourse.

Until Mr Lee’s accession, most assumed that Beijing and Taipei would eventually agree to some form of reunification. This was a lesson of the initial Koo-Wang talks held in Singapore in 1993.

However, after Mr Lee’s election as president, the concept of the ‘Special State-to State Relationship’ emerged. Beijing viewed this as an explicit renunciation of the ‘one country two systems’ formulation.

President Lee’s ‘flexible diplomacy’, his ‘golfing vacations’, and his visit to the US seemed to substantiate these concerns.”aiwanese MNCs have been investing in various countries over the past two decades. This diversification is based on the individual company’s globalisation and liberalisation policy. They are well-equipped at de-risking strategies and expansions for positive growth.

Taiwanese MNCs do not believe in putting all their eggs in a single basket, thus they are setting up branches in India to make better use of the resources,” Thomas Chang, director, Taipei World Trade Centre, says.

One side affect of this is that think-tanks like Institute for Information Industry (III) are advising Taiwanese companies to move manufacturing to India.

GJ Huang, executive VP, III, says, “India is an important partner of Taiwan for industrial development. There is going to be paradigm shift in foreign investments made by Taiwan.”

Currently, trade between India and Taiwan is $2.5bn, which means India accounts for only 0.67% of Taiwan’s external trade and Taiwan accounts for 0.87% of India’s external trade.

China accounts for more than 30% of Taiwan’s external trade. Taiwan has invested $200bn in China and only $200m in India till date. Mr Huang says, “This wide gap shows there is a huge opportunity for Taiwan to explore investment options in India.

Taiwan and India complement each other because Taiwan has the expertise in hardware and manufacturing, while India is known for software and system designs.

The partnership between India and Taiwan is important for both countries. In future, India will receive huge investments from Taiwan. The cost of manufacturing in India is lower than China and the quality is better.”

Some Taiwanese companies have already started exploring India for manufacturing. Taiwan-based Foxconn is a listed company with an m-cap of over $6bn.

It has set up a manufacturing base for mobile phones in Chennai with an investment of $110m. Even III has opened an offshore development centre in Chennai.

While the logic is right, the bigger challenge to the seismic shift is the cultural issue. Taiwan and China share a common cultural heritage, which Taiwanese companies are unable to get in India.

But there is a solution in terms of JVs and co-investment evolving. Taiwanese distribution company Synnex picked up 34% in India’s Redington last year.

Taiwan has set up a trade promotion council in Mumbai, and every month, Taiwanese delegations visit India for investment. Chennai & the National Capital Region attract maximum attention.

News: India - A world of real estate opportunity

(TNN 17/04/2006) Mumbai - With the Indian economy clocking eight per cent annual GDP growth in 2005, government opening up FDI in sectors like Retail, and the booming IT, ITES and BPO sectors, the real challenge to growth lies in bridging the demand- supply gap in the field of quality infrastructure and housing demands. In such a situation, growth drivers for the real estate industry will not only be metros but also non-metros.

In recent times, developers from Pune have recognised the opportunities in other cities, and their new agenda seems to be to create a presence for themselves, not just on home turf, but elsewhere as well. Many developers are now launching projects in places as farflung as Mumbai, Goa, Hyderabad, Chennai and even New Jersey, USA and Melbourne.

There are several reasons for this emerging trend; among them are availability of land, easy funds, a growing demand for retail and IT development and quality residential or commercial projects and private investors also investing in land and other real estate developments.

“We started looking at Goa some years ago and waited until it became a booming market for real estate, with NRI demand high for posh residential property and the boost in tourism helping open a good real estate market,” said Rohit Gera, Managing Director, Gera Developments (P) Ltd. “Today Goa is essentially an economy driven by its IT policy and IT Parks.”

In such as market, Gera is confident that a combination of innovativeness, access to modern technology and know-how will help them cater to evolving demands of both current and future markets, as well as alter the perception of property purchase. “Goa has tremendous opportunity for there is an element of acceptance for the kind of product that we do - intelligent buildings,” he explains.

Gera’s entry into Goa also means that for the first time, a real estate developer is bringing in the international practice of offering a warranty in the real estate sector. Gera’s Imperium, like all other Gera projects, will have a five-year warranty to ensure that it stays in premium condition. This five-year warranty covers two areas: preventive maintenance in areas of carpentry, electrical diagnostic works, plumbing and bathroom tiles, and repairs as a result of improper installation or supply of any of the building’s fixtures or fittings.

Another reason that contributes to this growth is the boom in property values provided by highway and expressway development. D S Kulkarni Developers too are busy spreading their business in Mumbai, Bangalore and New Jersey (USA), for they believe that it works as a good expansion strategy, as Hemanti D. Kulkarni, President, DSK Group, explains.

“Our group, as part of our expansion strategy, has taken up projects in other cities. The migration rate to some cities in India is very high due to the availability of job opportunities there; in such cities there is good potential for our business. A multi-city presence enhances the corporate image of the company; it also provides us with growth opportunities. Any business house keeps exploring different markets for growth, in the same way are trying to explore different markets. The company also carries its brand equity, when it expands to other cities. Thus the customers can be assured of getting the same quality product anywhere he goes, which also helps him in making his buying decision.”

Bangalore, Hyderabad and other cities that are competing with each other for investment also offer new growth areas in real estate development. Kumar Builders, for instance, are looking at Hyderabad and Chennai as the next cities for future growth.

Lalit Kumar Jain says: “We started projects in Mumbai and Bangalore for our brand is established and there is no need for us to market in any different way. Besides the profit margins are low in Pune, and there is a slow pace of sale; the appreciation is also less. In Bangalore, we have got a tremendous response; even a top builder from there booked with us. We decided a long time ago to move ahead as a multi-city developer.”

Atul Goel, MD, Goel Ganga feels that if one wants to be corporatised, then one should be a multicity developer, as most would have an IPO.

Goel Ganga is developing projects in Mumbai, Bangalore and in Nagpur, which would boast of what is being touted as the biggest mall. “Today the roles are distinctly defined - people who put the funds in the property, or the landowners or the realty funds. When these roles are clear, the developer’s role is solely to promote a project or develop one. The ideal real estate would be a combination of land at the right location with excellent planning which is implemented in a good quality construction and utilised by the owner.” When most IT professionals are multi-city workers, he asks, why can developers not go the same way and create better projects for them?

As cities develop, so will the opportunities for expansion , and for developers, this can only spell good news.

Quick bytes

In recent times, developers from Pune have recognised the opportunities in other cities. They are launching projects in cities like Mumbai, Pune, Goa, Hyderabad and even abroad. Growing demand, and an availability of land are among the reasons for this trend.

News: 'India witnesses consumer boom'

(UNI 17/04/2006) New Delhi - India, historically a nation of savers, has now become a nation of spenders, a report of India Brand Equity Foundation (IBEF) has said.Globally, India takes the second place in the retail development index, according to a report by global consulting firm at Kearney.

Other international reports, like the Knight Frank Survey, say India ranks fifth amongst the 30 retail markets in the developing countries.

One of the key reasons for the boom in consumer spending is the impressive growth of the middle class. At the start of 1999, the size of the middle class was unofficially estimated at 300 million people, larger than the entire population of the US. This figure is expected to grow to 445 million by this year.

In the past years, there has been a change in the retailing space, which was dominated by the unorganised sector largely by small-sized shops clustered together in a market, with the rise of organised retailing.

The size of the organised retail industry was estimated at $ 4.2 billion during 2003 with an annual growth rate of 8.5 per cent, according to the IBEF report.

This space is expected to log a ten-fold growth from the present 2 per cent of the total retail industry to a significant 20 per cent by the end of the decade.

At present, the organised retail activity is concentrated mainly in the apparel, food and beverages and entertainment segments.

Globally, it is observed that as the income levels rise, the share spent on food and grocery in the total household income declines and the proportion of income spent on lifestyle-related activities increases.

The rising number of retail-cum-entertainment centres or shopping malls, in the metros and their suburbs, is another notable trend in this context. Gurgaon, adjoining the capital, has the highest concentration of malls in the country at present.

Retailers, now, focus on malls, as opposed to standalone developments, in providing leisure activities such as multiplexes, facilities for kids’ entertainment and eateries.

The most popular Indian outlets include shoppers’ shop, globus, pantaloon, lifestyle and big bazaar.

Worldwide, the direct selling industry grosses around 83 billion business annually and employs about 40 million sales force.

India is the fastest growing direct selling market in the world with cumulative sales of about $0.343 billion. Direct selling does away with the need for a retailing intermediary and reaches out to the consumer at his house through a sales agent.

News: Anil Ambani enters wind power

(TNN 17/04/2006) Mumbai - Ambanis never misses an opportunity be it energy, telecom, financial services or retail. The latest sector on their radar now is wind power and that, too when Suzlon, the pioneer player in the sector enjoys a market cap of Rs 30,000 crore.

Anil Ambani, after lying low for quite a while, has struck again. His Company Reliance Capital Ltd (RCL), along with a clutch of private investors, has acquired close to 68% controlling stake in Southern Wind Farms Ltd, a sister company of the South-based NEPC group.

RCL paid Rs 92 crore to acquire 51%, while ace-broker Nimesh Shah acquired 13% for Rs 15 crore and Sterlite chief financial officer Tarun Jain acquired 4% in the company. Reliance Capital officials refused to comment on the deal.

The remaining stake will be held by public shareholders of NEPC Micon with a share swap ratio of 19 shares for every 100 shares held in NEPC Micon. The deal has given a valuation of Rs 180 crore for Souther Wind Farms Ltd.

Khemkas will utilise Rs 180 crore to clear their debts to lenders like IFCI and IDBI and make it a zero debt company with a domestic airline operator's licence, sources familiar with the development said.

If you go by Suzlon's track record, Reliance Capital will not be limiting its business to just set up wind power farms.

It has to break from being a wind mill player to an integrated player with presence in both turbines and gensets which would bring down power costs to as low as Rs 1.2 per unit (kilo watt) from Rs 1.8.

Suzlon, last month completed its integration plan, by acquiring the world's largest genset maker Hansen Transmission International in Sweden for $565 million (Rs 2514 crore). The gensets triple the power capacity received from the wind mill.

Anil had acquired a habit of snapping up companies which has a huge upside. A 51% stake in Adlabs and 44% stake in the Delhi-based courier firm DTDC was in this direction.

Considering global demand for wind energy and carbon credits, Reliance Capital's buyout may pay off once it transforms itself to an integrated player.

As per projection made by the Ministry of Non-conventional Energy Sources, 10% of the 240,000 MW installed capacity requirement by 2012 will come from renewables.

It is envisaged that 50% of this capacity or 12,000 MW may come from windfarms and the total installed capacity is around 1000 MW.

Global demand for wind power will be driven by that in China and India. Share of wind energy in the global energy market is expected to rise to 3% from 0.2% by 2030.

News: Indian garment cos line up e-tailing plans

(TNN 17/04/2006) Mumbai - India’s burgeoning garment retail sector is now entering cyberspace. Prominent retail stores including, Pantaloon, Shoppers‘ Stop and Globus are looking at setting up e-retailing portals. High-end garment brands like Zodiac have already set up online stores.

Analysts point out that while the growth of online sales is still largely in single-digits even in the mature markets, the Indian retailers want to tap consumers through all avenues.

The total internet business in India is worth over Rs 2,200 crore. The Internet and Online Association of India (IOAI) has projected that online shopping will increase to Rs 2,300 crore by FY07.

According to the Internet and Mobile Association of India (IAMAI) forecast, there are 38.5m Indians online today and it is expected that the users will grow to 100m by ’07-08. The past two years have seen a rise in the number of companies entering into the e-retailing or “e-tailing” market.

Kishore Biyani, managing director, Pantaloon Retail, said that the company would be launching its first e-retail portal, futurebazaar.com in the next three weeks.

“Besides garments, the store will also merchandise goods ranging from mobile phones and other electronic goods to crockery. We aim to earn Rs 300 crore from this venture in the next year,” he said.

Premium brand, Zodiac Clothing Company has recently launched a webstore, zodiaconline.com. Salman Noorani, MD, Zodiac Clothing Company said that the company has adopted an aggressive retail strategy and plans to open 30 (physical) stores in the next year. “In line with this, the company has also decided to use the e-commerce route to tap customers.”

While many companies are upbeat on online retailing, some are still sceptical. ITC’s Wills Lifestyle is biding time before going online, as the look, feel and experience of purchasing clothes in stores is essential.

Raghav Gupta, vice-president, Technopak Advisors, pointed out that while Indian companies are bound to look at all delivery formats to reach the consumers in the country, one of the largest global apparel brands, GAP does only 5-7% of its sales through e-tailing.

While the base is expected to be small, through online portals, stores are looking at reaching out to consumers in smaller towns and centres where physical outlets have not yet been set up.

News: South Korea bullish on India

(PTI 17/04/2006) New Delhi - Following in the footsteps of steel major Posco, South Korean companies have evinced a keen interest in the Indian market, proposing a plethora of investment proposals worth $2.8 billion in steel, mines and the power sector.

"We have been flooded with investment proposals from South Korean companies. Besides, Posco's proposed $12- billion investment in a steel project in Orissa, major industrial houses have committed an investment to the tune of $2.8 billion," Indian Ambassador to South Korea, N Parthasarathi told a media team from Orissa last week.

Of $2.8 billion, around $750-million investment had come to the country, he said.

According to Parthasarathi, "Six to eight Korean companies have approached us and inquired about the business prospects in Orissa."

The industries mainly belonged to ancillary sector of steel and mines, he said.

The Ambassador said while some reputed companies were planning expansion in India, a few companies were getting ready to take take part in various bidding process.

"Korea Electricity power company has already hinted that it would take part in bidding for seven mega power projects planned by India government. Electronic majors such as LG and Samsung are also planning to increase their capacity in the country," he said.

The Indian embassy has been receiving enquiries from companies such as construction firm Doosan and retail chain Walmart and Lottemart.

"As soon as Indian government take a decision on foreign direct investment in retail sector, some Korean companies would enter the Indian market," an embassy official said.

Sources said while car manufacturer Hyundai was going to double its capacity in India, Samsung engineering was also interested to be part of the construction boom in the country.

At present, bilateral trade between two countries was $6 billion which is expected to touch $10 billion by 2008 and targetted to reach $15 billion by 2010.

Referring to Posco project, Parthasarathi said, "The project will strengthen bilateral relations between two countries. A cell in Prime Minister's Office at New Delhi is following the development and support project."

He said the project, which was Korea's biggest ever overseas investment, would benefit the whole region.

"It is mindboggling to imagine how Posco will help in the region's development. Besides this investment, a whole lot of auxilliary activities will follow. That amounts to around $12- to $15-billion investment," he said.

The state government must demarcate areas for setting up small and medium enterprises and this area should be given special economic zone status, he said.

Dismissing apprehension that the company was interested in only iron ore, he said, "nobody is taking away nothing. An equal amount of iron ore is being exported against same quantity of import."

Parthasarathi said the Haryana government was interested in attracting investment by South Korean companies in the state.

"Haryana Chief Minister was here two months ago. He said iron ore reserve was traced from the state and his government would woo investors in steel sector shortly."

He said Posco had the technology to make optimum use of resources and they were doing it at their Pohang facility. Posco, he added, had already invested $1 million and the project would be completed as scheduled.

"It is a win-win situation for both countries. South Korea could become India's major trading partner in the next 10 years," the Indian ambassador said while pointing out that Posco's investment was crucial to move forward in this direction.

News: Kunchals to open four new outlets in NCR

(TNN 16/04/2006) New Delhi - Aficionados of fragrance in the national Capital have a reason to rejoice as Delhi's perfumery chain 'Kunchals' plans to open four more outlets in the NCR by this year-end.

"We already have two outlets in Delhi and plan to have four more in NCR by this year-end. Our perfumery outlets offer a wide array of choices from Gucci, Nina Ricci and Escada to Cartier, Trussadi, Boss and new entrant Art Deco from Germany," Director Kunchals Hemant Gupta said.

On the possible locations of its retail outlets, Gupta said: "one would be Gurgaon and one in central Delhi and the other two would be decided soon."

When asked about the investment, he said: "it would be about eight crore. Two crore on each project."

For these projects, we will manage funds internally... We will, however, go public next year when the chain grows beyond NCR," he said.

Having opened outlets in NCR, "we plan to go beyond Delhi and open outlets in Ludhiana, Chandigarh, Ahmedabad, Bangalore and Mumbai", he said.

All the upcoming outlets would be on the pattern the perfumery chain has been following, he added.

News: German cosmetics brand eyes Indian market

(TNN 16/04/2006) New Delhi - German cosmetics major Art Deco is eyeing the fashion conscious in India to widen its consumer base here and is in talks with retail chains such as Shoppers Stop, Westside and Lifestyle to strengthen the brand.

"We have about 10 sales point in cites like Mumbai, Delhi, Bangalore and Hyderabad and plan to add 20 more by the year end. Art Deco will tap the middle and the premium segment through the outlets and introduce the complete range of cosmetic products in the country," Benny R, Brand Manager of MKP Distributors, which markets Art Deco products here, said.

The company, currently, has 10 points of sales in the country, four of which is in Delhi, four in Mumbai and one each in Bangalore and in Hyderabad. It also has plans to set up 20 more points by this year-end, he said.

"We are in talks with retail chains like Shoppers Stop, Lifestyle, Westside, Kunchals and others to market our products. The company will market its range of products through such stores in metros and Tier II cities," he said.

On company's exclusive retail outlets, he said, "We have one such outlet 'Parfum Boutique' in Mumbai and plan to have one each in Delhi and in Bangalore by this year-end".

In two years time, Art Deco would have 10 such exclusive outlets across the country, he said, without divulging company's investments on those projects.

When asked about having a manufacturing unit in the country, Benny R said, "all our products are currently being imported... we have no immediate plans to have a manufacturing unit here".

Art Deco's product range comprised perfumes, skin, nail and body care products and the company had plans to introduce a complete range for foot care in three months' time, Payal Manghnani, also an MKP Distributors Brand Manager, said.

Products include over 60 nail polishes, 72 lipsticks and over 80 eye shadows in the latest colours, she said.

The highlight of products being launched was that "they could be refilled according to one's choice. We have beauty boxes with magnetic base and one could pick colours of one's taste," she added.

News: 'ONGC is India's most valuable corp'

New Delhi: Stamping its authority as the 'most valuable corporate', the ONGC group on Sunday announced a net profit of Rs 15485 crore during 2005-06, reflecting a six per cent growth over previous year, even after absorbing a subsidy burden of nearly Rs 12,000 crore.

Announcing provisional financial results of the group, its Chairman Subir Raha told reporters that the flagship company Oil and Natural Gas Corporation was "India's most valuable corporate in terms of market capitalisation, net worth and net profit".

The group turnover on a gross basis was put at Rs 86,414 crore, which is 21 per cent higher than Rs 71,627 crore recorded in 2004-05 while the ONGC Ltd clocked a revenue of Rs 50,900 crore and its profits rose by nine per cent to Rs 14,175 crore.

Reflecting the confidence of the investors in the flagship company, which ranks 15th among world's integration oil and gas companies, the market capitalisation of the ONGC crossed Rs 190,000 crore on March 30 this year, Raha said.

On the physcial performance front, ONGC fell short of the target of 26.6 million tonnes of crude by eight per cent as production was limited to 24.4 million tonnes, Raha admitted, but added that a floating production system was scheduled to be put in place in the next two months to augment production.

Targeting to restore the production to 270,000 barrels a day by August, the level it was operating at prior to the accident at Mumbai High in one of its platform on July 27 last year, Raha said the production would then be stepped up to 300,000 barrels of oil per day on sustained basis in 2006-07.

Gas production by the ONGC at 22.6 billion cubic metres during 2005-06 outperformed target of 21.4 BCM by 106 per cent, Raha said, adding gas sales at 18.2 BCM also kept pace by surpassing the target of 17.1 BCM by 107 per cent.

Value-added product production stood at 3,240 kilo tonnes, 120 per cent of the target of 2,840 KT, he said.

Raha said ONGC's wholly owned subsidiary ONGC Videsh Ltd, which has total 21 properties in 12 countries, recorded a 22 per cent rise in net profit of Rs 930 crore during last fiscal on a turnover of Rs 7,600 crore, up 26 per cent over Rs 6,026 crore during 2004-05.

The subsidary committed cumulative investment of $4.9 bn, of which $3.97 bn have been invested.

OVL made 10 acquisitions overseas, comprising two each in Vietnam and Cuba, and one each in Libya, Egypt, Qatar, Myanmar, Nigeria and Syria.

OVL, in the first one-to-one joint venture with CNPC, acquired Petro Canada's share in 36 producing fields in Syria.

The subsidiary produced 48 million barrels of oil during the period, up 31 per cent year-on-year.

Raha said OVL was India's biggest multinational by investments abroad and had paid its maiden dividend of Rs 105 crore to parent ONGC.

OVL today is the sole operator and 100 per cent partner in block 8 in Iraq, block 34 and 35 in Cuba, block 127 and 128 in Vietnam, block 81-1 in Libya, Najwet Najim in Qatar and 40 per cent partner and operator in Farsi offshore block in Iran.

However, ONGC's another subsidiary MRPL's net profit reduced by more than a half at Rs 380 crore during last fiscal against Rs 880 crore during 2004-05.

Raha attributed the fall in profit to decision by IOC, BPCL and HPCL to deviate from agreed Refinery Gate Price Formula, forcing discounts on invoiced prices of LPG, MS, SKO and HSD.

Withdrawal of target plus benefit scheme on exports during the current year also impacted the profits.

The listed company MRPL, whose earning per share stood at Rs 2.17, has recorded a 36.3 per cent rise in turnover at Rs 28,214 during 2005-06.

The revenue from direct sales rose by 227 per cent to Rs 1,419 crore compared to the previous year. Export sales almost doubled to Rs 11,920 crore against Rs 6,185 crore in previous year.

MRPL's distillate yield improved inspite of higher processing of sour crude, Raha said.

News: DiamlerChrysler bullish on Indian market

(BL 16/04/2006) Hyderabad - DaimlerChrysler is bullish on India with a slew of launches in the S and M-Class series and is at an advanced stage of evaluating the option of a commercial vehicle plant.

This could potentially be a completely built unit. But no decision has been taken as yet, the Managing Director and CEO of DaimlerChrysler India, Wilfried Aulber, said.

The company is buoyed by sales in India in 2005 and is now working towards a stronger growth this year not just from traditional metros and cities, but also tier II centres such as Coimbatore, Madurai, Mysore, Vizag and Vijayawada.

The C and S-Class have been a hit with young, successful professionals particularly in the IT sector, followed by entrepreneurs. About 25 per cent of the sales come from Andhra Pradesh, Karnataka and Tamil Nadu.

M and S-Class

Speaking to newspersons here at Mercedes-Benz Brand Showcase held at Hitex Exposition where the company announced the launch of a new M and S-Class range, Dr Aulber said these vehicles got a lot more powerful. While the M-Class launched in 1997 has become 150 mm longer and 70 mm wider and its engine has become 38 per cent more powerful, the S-Class with V-6 engine has added about 11 per cent power.

Its SUV (sports utility vehicle) M-Class, despite its huge size, returns about 100 km for 9 litres of gasoline.

Debutante featured

The brand show featured the debutante S-Class, the E-Class and the ever popular C-Class, as well as the completely built imported range of the SLK-Class, CLS-Class and the M-Class, and the Maybach, which bears on the road a price tag of about Rs 6 crore. The company sold six of them in India.

Asked whether the company was evaluating the option of bringing in A-Class into India, Aulber said currently the company does not have any plans to bring it into the country. The show aims to get closer to customers with latest Mercs. This launch is parallel to the US market and demonstrates the seriousness about the India market.

It would not be fair to compare the global market with the current sales in India. Within five years, the Indian market would almost be the size of that of China.

News: LG to turn Pune base as export hub

(PTI 16/04/2006) Mumbai - In line with its target of exporting 10 per cent of its total production, Korean based electronic goods manufacturer LG Electronics has ramped up production capacity at its Pune plant and plans to turn it into an export hub for the South Asian market.

"We have ehanced our production capacity in Pune plant to the fullest and would make it an export hub. Currently, out of the total production, 6-7 per cent is exported and our aim is to take it to export 10 per cent of production by this year end," LG, Marketing- Head, Sandeep Tiwari said.

The main products in focus for this year would be mobile handsets and laptops with the company aiming to tap the entry-level market in tier II and tier III cities, and the Higher version models in the metros, added Tiwari.

Currently, LG laptops are priced at Rs 30,000 and the company aims to bring down the prices to the Rs 20,000 range in the next two years and also aims to bring down the rates of its entry level colour handsets to Rs 2,000, said Tiwari.

The company also expects to sell one million GSM handsets and 3-5 million CDMA based handsets this year.

The company is in its second phase in the Indian market and aims to become an integrated brand, selling home appliances, mobiles, IT products and consumer electronics, Tiwari added.

LG is also conducting a business feasibility study for setting up a mobile manufacturing plant in India and also plans to set up an SEZ in the near future.

News: Dutch HR Randstad to tap Indian mkt

(PTI 16/04/2006) New Delhi - After acquiring majority stakes in Indian HR firms EmmayHR and Team4U, the E6.6-bn recruitment and staffing company Randstad Holding nv plans to consolidate its position by targeting sectors like retail, IT, BPO, telecom and banking and insurance.

"Sectors like IT, BPO, retail, banking and finance hold huge potential and we are looking to further develop the local market here," Managing Director, Business Development India, Randstad, Theo Van Den Berg said.

India, China and Japan were the main markets in Asia that offered immense possibilities, with India poised to develop at a very fast pace, he said, adding that a large young population, good educational standards and internationally-oriented people were factors working in India's favour.

The HR staffing and recruitment segment in India is currently around Rs 2,000 crore and Randstad's acquisitions of two Indian firms had given it a market share of 10 per cent in the high revenue staffing market, where the company was looking at doubling numbers every year.

"We are aiming at doubling our figures annually, be it the growth rate, revenues or the number of people we recruit," he said, adding that the company would concentrate on long-term growth and stability and not look at mere short-term gains.

Revenues for Team4U, in which the Dutch major acquired a 57 per cent stake for an undisclosed amount, stood at 15 million euro in 2005, which Randstad hoped to double in the next year.

Berg estimated that the Indian HR market would double to a billion dollars in the coming 2-3 years and hoped that Randstad would emerge as the market leader in India in as many years.

"The position we are looking for ourselves in the billion dollar HR industry is that of a market leader. We want to achieve profitable growth but in a sensible way," he added.

Before acquiring stake in the staffing company Team4U, Randstad had bought a 51 per cent share in EmmayHR, that focuses on permanent recruitment. The company did not rule out the possibility of creating synergies between the two.

"The two companies focus on different areas but we are looking at synergies. We can work with mutual clients and provide our services to them," he said.

News: Indian Boots-Piramal JV gets a relook

(TNN 16/04/2006) Mumbai - Boots-Piramal Healthcare, the 51:49 joint venture between UK-based Boots and Nicholas Piramal, is being reconsidered.

Boots-Piramal markets and distributes over-the-counter brands like Strepsils, Saridon, Clearasil, Polycrol and Lacto Calamine.

Swati Piramal, director-strategic alliances of Nicholas Piramal said,"We are in talks with Reckitt Benckiser on the future of the JV company."

A source stated that the Piramals will be buying out Boots' (now Reckitt) stake in the joint venture with the brands going to their respective owners.

"A change as expected,"said an analyst. This is because, Britain's household goods major Reckitt Benckiser, famous for its antiseptic brand Dettol, has taken over Boots Healthcare in a worldwide deal for pound 1.926 billion.

Boots owns well-known brands like Clearasil skin products, Sweetex (artificial sweetener), Strepsils and Icy throat lozenges while Piramal's brand include Lacto Calamine (a skincare lotion), Saridon (a pain killer) and Polycrol (an antacid).

In early 2000, Nicholas Piramal and Reckitt Benckiser dissolved a similar joint venture company citing high operational costs. So, in a way, history is being repeated.

Boots Piramal, over the last couple of years, has seen its profits and turnover dipping. A source said,"Ever since talks of Reckitt taking over Boots has been on, the latter was disinterested in the JV.

Also, following this, many executives started leaving Boots Piramal."Adding that, there was reduction in inflow of money from Boots' side.

The OTC business is run on economies of scale and it requires a large product portfolio while approaching chemists and other suppliers. This is one of the reasons why we both got together, Piramal added.

News: Mahindras in tie-up talks with Proton

(BS 15/04/2006) Mumbai - Mahindra & Mahindra is believed to have initiated talks with Malaysia’s national car maker Proton for a possible manufacturing and marketing of alliance. The Malaysian government’s investment arm, Khazanah Nasional, controls 43 per cent in Proton.

The alliance may also lead to M&M picking up a strategic stake in the barely profitable and state-owned Proton. When contacted, an M&M spokesperson refused to comment on the development.

Sources in the automobile industry said the proposed alliance would work towards the assembly of M&M models like the Scorpio and the Bolero in the Malaysian market.

“In addition, in India, M&M can look at the possibility of a joint venture with Proton on lines similar to Mahindra Renault, the company’s existing joint venture with French car maker Renault to manufacture and market the latter’s Logan cars in the country,” said automobile analysts in Mumbai.

Proton has been losing market share due to limited market penetration, competition in the domestic and global markets, and a lack of new models.

In a recent interview to Financial Times, Proton’s Chairman Azlan Hashim had said the company was looking for partners in multiple areas: new products, components, and market access or other activities.

In another interview, the company’s Managing Director, Syed Zainal Abidin Syed Mohamed Tahir, said Proton was considering selling stake to a strategic foreign partner.

Following substantial reduction in import duty to 20 per cent in 2005, the Malaysian car market is seeing a flood of new models from Japanese, Chinese and South Korean car companies.

This has pulled down Proton’s market share to 40 per cent now from 60 per cent in 2002. The import duty is likely to touch 5 per cent by 2008.

News: Mukesh's great SEZ gamble

(BS 15/04/2006) New Delhi/Mumbai - Reliance's model for developing special economic zones will face the litmus test in Navi Mumbai.

Take 14,000 hectares of land, put in Rs 25,000 crore into the same basket, stir in some leisure and business districts, shake some architectural blueprints and what do you have? Dubai? Singapore? Shanghai? Or New Bombay?

Eat your hearts out, Mumbaikars. For, coming up across India’s commercial capital, on as-yet fallow land in what is just another squalid suburban slum, is India’s first 21st century megapolis. With its own dedicated airport, a rapid transit sea-link connecting it with Mumbai, and living conditions on par with the swankiest, most sophisticated cities of the world.

A whole new city? Is it possible? If Mukesh Ambani has his way — and why wouldn’t he? — then yes, work on Navi Mumbai will begin in September this year, a new city, one third the size of existing Mumbai, and a probable rival to some of the swankiest cities in the world by the time it is completed a decade or so from now.

In what is the country’s — even the subcontinent’s — most ambitious infrastructure project to date, Mukesh Ambani’s Reliance Group and the Maharashtra government (through PSUs) are out to create two sprawling special economic zones (SEZs) across 14,000 hectares in Navi Mumbai and Maha Mumbai.

The Reliance Group’s whopping Rs 25,000 crore investment will be dwarfed by the estimated Rs 2,50,000 crore to be invested by other developers who will put up factories, residential complexes, hospitals, hotels and shopping malls across the SEZs.

In a few years from now, the farmlands will begin to give way to a soaring skyline with hi-tech buildings, interspersed with amusement parks, shopping malls and an 18-hole international golf course; residents will walk (hopefully) from their highrise condominiums to their workplaces.

And in case you still want to visit Mumbai (for the culture, presumably, or to visit friends and relatives), a new 22.5 km long, six-lane highway will arc across the sea to get you to central Mumbai in just 30 minutes. Sceptical? The government has already pre-qualified bidders for the Rs 4,000 crore Mumbai trans- harbour sea-link; work should begin soon enough — now just imagine the ride over the sea!

What’s more interesting, Navi Mumbai’s jet-setters may not have to use the sea-link as often as they imagine; with an airport mooted as part of the essential infrastructure in the SEZs, they won’t need to come to the existing Mumbai airport to take a flight out.

Also, the SEZs will be connected to Jawaharlal Nehru Port with a high-speed railway, plans of which are (still) on the drawingboard. As for corporates in the IT, gems and jewellery, pharma, auto-components, apparel and garment businesses, here’s an opportunity to lease out space and transform it into an export hub for the world.

Too much of a good thing? Ajit Warty, director with the Mumbai Integrated SEZ — which is overseeing the Maha Mumbai SEZ project — says otherwise: “Our aim is to create an SEZ which is world standard and will be able to rival global locations like Dubai’s Jebel Ali, or Malaysia’s Bandar Nusajaya Industrial Park, or even SEZs in China.”

And the challenge is to build it at a lower cost by leveraging the company’s project management skills and taking advantage of scale.

Still, the group is first testing the waters. It will take up the Navi Mumbai project (a joint venture with CIDCO) through a “cluster” approach. In simple terms, the company plans to develop infrastructure in individual clusters of 5,000-7,000 acres each, including land development, sewage, road, landscaping and telecom, to house between six and 12 industries each.

Within the next six months, it will bring in private developers to build hotels, shopping plazas, schools and residential complexes. The time frame for completing the first cluster? Let’s say it should be completed by the end of this decade.

Reliance isn’t ready to discuss the specifics of the financing pattern yet, but it does share some ballpark figures. If the development cost for each acre in an SEZ is around Rs 1 crore, then the investment required for the first phase will be around Rs 5,000-7,000 crore.

The company hopes to only lease out the infrastructure to companies and then use the cash to finance and replicate similar clusters. Points out Sanjay Punkhia, director of Navi Mumbai Special Economic Zone Company (which is developing the Navi Mumbai SEZ): “We will create one self-sufficient cluster and then replicate the same model.”

Accordingly, the plan is to locate a gems and jewellery hub around Ulwe (where the proposed airport will be located) to facilitate the rapid export of both people and products.

The Kalomboli zone near the Mumbai-Pune highway will be used to set up a hub for food processing and textiles. The bigger ambition is to create an international financial services centre where global banks, insurance companies and merchant banks can function just as though they were in London or New York.

That’s by way of starters. The magnitude of the project is reflected in its various parameters. The completed SEZ will require a power plant to generate over 1,000 MW of electricity and about 300 million litres of water will be required every day.

The new city will house over a million people, virtually the same number as currently live in Navi Mumbai. And the Jawaharlal Nehru Port will form another exit point for the SEZ, and with a third berth of over 80 million tonne units added, it should be sufficient for now to support the project.

So, okay, the Ambani SEZ is a large project, perhaps a mammoth one by Indian standards, but hardly unusual given global SEZs. It’s only half the size of the Suzhou Industrial Park or even Shantou SEZ, both in China. And compared to Shenzhen (33,000 hectares; China’s largest SEZ), it is much smaller. Sure, it’s bigger than Malaysia’s Bandar (10,000 hectares) and virtually similar in size to Iran’s Chabahar Free Zone, but does that justify the hype? Yes, because it’s six times the size of any existing SEZ in India, and at least thrice the size of any of its competitors.

But there’s a huge gap between perception and reality. The Chinese SEZ experience, Reliance admits, has shown that a project of this magnitude is a long haul.

For starters, SEZs in Dubai or China have had the advantage of being undertaken by the government, where costs of setting up have been much lower.

Experts point out that land constitutes over 10-15 per cent of the investment in the Ambani project, but in China, where land is owned by the government, the cost of acquisition is minimal.

Says Vivek Mehra, executive director, PricewaterhouseCoopers: “In most countries, SEZs have been built by governments and have been focused in one area, like manufacturing in China. The Indian model is different; it is built on private-public participation.”

But then, there are advantages that can be leveraged too, such as a skilled labour force (not available in Dubai), and a large domestic market you can feed on.

“Our advantage is lower costs of labour than Malaysia, or the growing increase in cost of labour in China,” says Mehra. “And products that do not attract import duty, or attract only a nominal one, like handset manufacturers, could ideally enjoy the advantage of a large local market as well as exports.”

But before the spin-off, the problems.

One, land acquisition for the Maha Mumbai Special Economic Zone has still not taken off. The government notification to take over land from the farmers under the Land Acquisition Act might be a long while.

Says B Y Wankhede, district collector of Raigad, where the SEZ is coming up, “We have received the plans from Reliance. If every thing goes smoothly then we expect to complete the process within 40-42 weeks time.”

Two, the proposed airport is far away in the horizon. Civil aviation ministry officials point out that, while they will clear the proposed airport, it will only come up after 2015, when Mumbai airport has exhausted all capacity to handle more traffic. That long wait could put a spanner in the SEZ’s attempts to woo companies for exports.

Three, the trans-harbour line for which global tenders were floated in 2004 has been delayed considerably, and questions are being raised about the government’s capability of funding the project.

MSRDC managing director Ramanth Jha, who is overseeing the project, points out : “We have sent the draft Memorandum of Understanding to the state government for its co-operation and are expecting approvals any time now. After this, we will ask the shortlisted bidders to submit their financial bids.” Any further delay could make the SEZ less attractive.

Four, the proposal to set up a financial services centre might take years. It will need a complicated regulatory framework that simply does not exist currently (these companies cannot be regulated by SEBI, or RBI, for instance, and can offer loans or take deposits in dollars).

Any wonder Mukesh Ambani is treading cautiously and, in the first phase, concentrating on selling facilities and infrastructure to companies in India rather than to global giants. Reliance executives say the logic is simple: they must feel confident that we can offer international standard infrastructure, and that could take 3-5 years.

But as in its telecom foray, Reliance is looking at playing the pricing game: offer infrastructure at prices companies could never have imagined getting in and around Mumbai.

For instance, it has identified IT, ITES and KPO as a hot area, to constitute at least 30 per cent of the companies in the SEZ. The plan? To offer lease rates at par with those available in Hyderabad or Banaglore.

Realty experts say Mumbai real estate rates are twice, even thrice, those in Bangalore. And that has kept IT companies away, despite the large readymade talent pool. Now, Reliance hopes to make an offer these companies cannot refuse — offering infrastructure at the same rates as Bangalore, for instance. (Insiders say that is possible because real estate prices in Mumbai are artificially kept up and do not reflect real rates, so that when the government offers land, it is far less expensive.)

Similarly, the gems and jewellery business is spread across too many cities. Take the case of Surat, for instance, the centre for cutting and polishing diamonds, while Mumbai has the majority diamond traders and a large market for the stones.

Dilip Chaware, president of the Navi Mumbai SEZ points out: “The gems and jewellery trade has moved from Antwerp to Tel Aviv and now to Dubai. There is no reason why India cannot be a hub too. What has been missing is a 100 hectare hub where diamond merchants, financiers and polishing and cutting companies and jewellers can do business.”

It will also woo companies in Mumbai to shift to Navi/Maha Mumbai, and this includes textile units, garment exporters, pharma companies, and engineering and auto component manufacturers, to name a few. The other attraction it’s hoping to capitalise on is one that will appeal most to people — that the SEZs will have an infrastructure where people can “walk to work” within 15-20 minutes.

But like Rome, Reliances’s SEZ will not be built in a day. And while many are critical of the plethora of incentives that are being offered to the Reliance SEZs, the success of the mega-project could be a litmus test about India’s capability of replicating the SEZ model that has played a key role in China’s amazing growth story.

News: Indian window shopping

(BS 15/04/2006) New Delhi - Retailers are sprucing up their store window displays in a bid to stand out from the crowd.

Springtime windows at Knightbridge’s luxury retail giant Harvey Nichols cuurently feature unlikely industrial shapes — tall ladders, ropes, pulleys, and mannequins in whimsical attire amid construction site clutter.

At the other end of the retail spectrum, a small family-run bakery in Notting Hill showcases its latest tasties in mini versions on, what else but a Mini Cooper, sitting in their window.

In cities like London and New York, people brave the weather to trudge to the theatrical Christmas tableaus at the windows of Selfridges, Saks and Lord and Taylor. Shop windows haven’t become quite an item of fascination in India yet, but retailers are recognising that store layouts and window merchandising influence consumer behaviour.

Window decorator Yamini Namjoshi balances on a stool trailing ribbon after colourful ribbon off of the ceiling at the window of a furnishing design store. “We’re so used to cheesy thermacol cut-outs, shoddy mannequins and set-wallah designs in our windows,” she says. “I try and colour-coordinate props with the product, so it’s easy on the eye.”

For Christmas, Namjoshi wanted a non-typical display, so the colours were non-typical black, white and red, put together with a cluster of white paper stars, and a backdrop of red and black striped hologram paper for 3-D effect.

Other retailers spotted Yamini’s windows and invited her to do theirs. So now, her days are pretty full. “I think with so many international brands and retailers entering the country, local retailers are beginning to think ‘why should we look the worse for it?’,” she adds.

“Windows take up shop space, so when we started retailing we took a very conscious decision to make constructive use of that space,” says Kevin Nigli, designer, and window dresser by default, at Abraham and Thakore. And cheap can be chic.

Nigli reveals, “A window once cost us under Rs 1,000; we had a clothes line, some patterns cut from paper, measuring tape, fake grass and a tin tub, but that window created such a buzz with customers.” They never use mannequins in their windows, it’s “too explicit”!

Okay, so granted a design led store will be ahead of the rest, but a suburban kids’ store? For Scram, an emerging childrens’ clothing brand in Mumbai, the cost of changing their window diplays every 30 days is not an inexpensive proposition.

But as owner Manoj Jain explains, “In a mall environment where you’re one among 10 other kids shops, you have to grab eyeballs; an attractive window always creates excitement.” Scram’s windows use different arts-and-crafts (cuts outs, origami, cut-and-paste shapes) props to court their target audience.

The Raymond’s flagship windows — conventional but engaging — have been an attraction for 20 years now. “We realised early on that a smartly executed display is an important parameter by which a brand is perceived,” says Aniruddha Deshmukh, president, Raymond Retail.

With Raymond’s expanding heavily into branded outlets and with 310 exclusive Raymond’s stores Deshmukh indicates there just aren’t enough specialised visual merchandisers. “It’s a great wave to ride on,” says Namjoshi who indicates freelance window dressers pocket five-figure incomes per window.

Some stores, like fashion store Amara, look to a combination of creative forces, for decorating their store front windows that look over one of the busiest thoroughfares in Mumbai.

Says Amit Dholakia, partner at Amara, “Savio Jon (Goa-based designer) did the visual design for us the first time round, but now we enlist the creativity of different people for our windows, from an architect one time, to an artist the next... we prefer changing perspectives.”

Pantaloon, on the other hand, has over 30 merchandisers. For large-format departmental stores selling similar product categories, the need to stand out is crucial.

Bina Mirchandani, head-category management, Pantaloon Retail says, “As soon as our design team starts creating the product, our visual merchandising team starts planning the store design and the window design; the process is aligned through the workforce.”

Sonia Manchanda, a director at Bangalore-based Idiom Design that executes Pantaloon’s retail design, believes that earlier, when choices were limited, people had a long-term relationship with stores, they knew exactly what to expect from them, what the store stood for.

“Today, the shop window has to be like a magazine ad or a billboard that you drive past, it has to clearly and quickly communicate brand essence.

Nigli says window-spotting can be great escapism, “When you’re in a rush to get somewhere and you spot an unusally attractive shop window, you will have to stop for a minute and for those few seconds you can’t help but be taken in by the fun and fantasy of it all. And it will either shock you, or make you smile.” Maybe that’s what window shopping is all about.

News: India Inc queues up for foray into insurance

(TNN 15/04/2006) Mumbai - Five years after liberalisation, there is a second wave among corporates planning to enter the insurance business.

One of the groups exploring the possibility is the Pune-based Kirloskar Brothers who are in talks with a few foreign players. Others looking at the space are Hindujas and Ruias of the Essar group. Sources confirmed that a few public sector banks are also interested in insurance.

At the other end of the spectrum are MNCs trying to take a foothold in India. These include Generali of Italy, Dutch insurer Aegon, Samsung Life of Korea, and Millea Holdings — the parent company of the Japanese insurer, Tokio Marine.

According to industry sources, the retail group Pantaloon is also interested in insurance and is talking to a few players.

Life as well as non-life market will see some action this year because of the number of new entrants. Besides aspiring entrants, there are partnerships that have already been finalised.

These include the IDBI Bank-Fortis joint venture and the Bharti-Axa tie up for life insurance. On the non-life side, Sompo of Japan has recently tied up with Allahabad Bank and Axa is looking at this business as well.

Sahara Life and Shriram Life Insurance have received licence to sell insurance, but are yet to launch their business in a big way.

The impact is already being felt on the job market with the new entrants targeting the limited talent pool. This would soon spread to customer acquisition as well.

The insurance market in India is expected to grow several fold as the market penetration is nearly half that of industrialised countries.

For most of the foreign multinationals present here, India has already emerged as the largest market in Asia in terms of new business premium.

News: Swarovski to operate new stores in India

(BL 15/04/2006) New Delhi - Austrian luxury goods major, Swarovski has charted out plans to further expand its business in the country. The company is looking to open another 16 exclusive outlets in 12 to 15 Indian cities by 2008.

"We have been present in the Indian market for five-and-a-half years and our experience has prompted us to further expand," Shiv Kumar, Country Manager, Swarovski India, said. "Our plans, however, will depend on how the retail and real estate market in the country develop,'' he added.

New stores

The company is looking to open stores across cities such as Mysore, Mangalore, Coimbatore, Ludhiana and Chandigarh, among others. Currently, it operates around 12 exclusive stores and around 23 points of sale in various shopping malls.

With regard to the company's growth in India, Kumar said: "We have been growing at around 50-55 per cent year on year and are aiming to double our turnover in the next three years."

"Swarovski is very choosy about the location of its shops, as it wants to give the same look and feel across the world," Kumar said.

It has been undertaking below-the-line marketing activities to increase brand awareness in India. "We are investing in visual merchandising, shop events and other seasonal events in the country."

The company, however, would continue following the franchisee model in India till the Government allows 100 per cent FDI in retail.

"Though we welcome the Government's decision to allow 51 per cent FDI in single brand retail, we would not be investing in the Indian markets directly," Kumar said.

Swarovski, which has group sales of about $1.83 billion with a total of approximately 16,000 employees, opened its fourth store in Delhi on Friday offering international crystal products.

News: Biyani turns to vendors for mega deals

(TNN 15/04/2006) Ahmedabad - He created retail history in the country by selling goods worth Rs 50 crore in Big Bazaar’s three-day nationwide ‘Sabse Sasta Din’ offer on Republic Day this year.

Now, Kishore Biyani wants Pantaloon Retail (India) to notch up deals worth a whopping Rs 100 crore in a vendor mela in Ahmedabad — all in two days flat.

Pantaloon has signed memoranda of understanding (MoU) with leading vendors like Amul, Rasna, Ankur Salts, Bharat Vijay Mills and others. Over 3,000 vendor partners from across the states of Gujarat and Rajasthan responded to this new initiative and after the initial screening over 500 will participate in the ‘Saathi’ fair in the city being held on Friday and Saturday.

“This vendor fair was held for the first time in Ahmedabad and will be held in Delhi, Bangalore and Kolkata in the coming weeks,” said Biyani, managing director of the company.

The aim of Saathi is to help small and mid-sized vendors to sell to the consumers directly by dealing with Pantaloon, thus removing various middlemen and ensuring a better price realisation. Pantaloon expects to do business worth Rs 100 crore during the two days of this fair in the city.

“The way Amul brought the white revolution into India, Pantaloon is bringing the modern retailing revolution to the country,” said BM Vyas, managing director of GCMMF. This strategic alliance will simplify the supply chain with Amul supplying to Food Bazaar directly.

Food Bazaar will be the launch pad for all new Amul products across India and the company will extensively stock their current products. Amul will launch Amul parlours and kiosks within all the stores and mall properties of Pantaloon Retail (India) across the country. The first pilot of the Amul parlours is to be launched in less than a month in Ahmedabad.

P Khambatta, MD of Pioma Industries which makes ‘Rasna’, expects his company’s sales through Pantaloon’s outlets to double after this new initiative. A strategic alliance with Rasna for the launch of Rasna’s innovative beverage products across all the Food Bazaar’s in the country.

Joint category and product development initiatives with Pantaloon Retail sharing the customer side insights and expertise with Rasna, while Rasna will with the company its knowledge and experience in the beverages sector. Food Bazaar will stock and prominently display leading Rasna products.

The products varied from fabrics, ready-made apparels, whole spices, processed foods, plastics and utensils, fashion jewellery and accessories to inner-wear, ethnic handicrafts and gift articles.

“We have small and mid-sized vendors from the deep interior regions of the state like Kutch coming to this fair and being able to sell their wares nationally by being our partners,” said Biyani.

News: India, Inc. faces serious dearth of talented CEOs

(TNN 15/04/2006) Mumbai - The huge demand for talent means that functional heads can now aspire for a place in the CXO (which stands for CEO, CFO, CTO) suite. Companies are increasingly willing to take a chance on functional experts as future heads due to the dearth of experience.

It is now entirely possible for a person in the accounting and audit department with some functional expertise to aspire to become CFO. Lead analysts, for instance, can aspire to a fund managers position. Marketing heads in FMCG companies can become CEOs in retail or internet companies. Even journalists can aspire to be fund managers or the head of research teams at analytical BPO firms.

Even if you don’t have functional expertise and have been a jack of all trades, you still can aspire high as companies are willing to reward versatility!

Says Vikram Bhardwaj of Redileon, “Earlier we thought that the head of HR or CTO were difficult positions to fill. But we did a dip stick survey of the positions in the market lying unfulfilled and found that the whole level C-suite positions are going empty for a long period of time.”

Companies and board of directors are realising that it is not longer easy or even possible in the Indian economy to poach a CEO, CFO, CTO or head of HR from a rival company in the same industry. They need to look at other industries and even functional heads for candidates, Mr Bhardwaj adds.

“Companies have to start looking at lateral displacements and be a little more creative in filling up position. If they can’t get a CFO, maybe they should stop looking for CFOs of other companies, but start offering the position to people who have the skill sets but may not have the designation currently,” says Sandeep Surana at Executive Access.

Some companies are willing to adapt to this lateral placement concept. “This change or flexibility does not come easily and is on its own. After companies try potential candidates in rival companies or even other industries and candidates refuse to move, as the new job is the same as their current one, companies realise the futility of the exercise and start looking for alternatives,” says another head hunter.

“It is much easier to displace a person who does not have the designation of a CFO but has the experience of managing internal and external audit. The only problem is that functional heads sometimes do not have the softer skills and at the C-level they become the ‘face’ of the company as they have to deal with investors and fund managers now,” says Mr Surana.

There are several problems in lateral placements, the most important being the person chosen not possessing a ‘boardroom presence’. The euphemism implies that the candidate should have the communication skills and personality to influence board level decisions.

Lateral displacement is also happening from other sectors like the civil services, defence services and public sector to the private sector. Even startup firms in Bangalore are hiring senior defence officials at lateral levels like CEOs and CTO.

For instance, the Santa Clara-based telecom solution company Quantaz has hired a whole team of former Air Force officers with experience in telecommunication for its Indian arm.

Some financial institutions have also started looking at senior bureaucrats for infrastructure and other funding options where mere financial expertise is not sufficient for the success of a project.

While some companies are willing to support a lateral displacement, there are some hindrances as incumbents at lower levels feel that they have been looked over. Which is why many established companies with a deep and entrenched hierarchy are unable to attract fresh talent at the lateral level, while young companies are able to do this faster.

News: Indian theme malls gear up to woo foreign tourists

(TNN 15/04/2006) New Delhi - After specialised malls on jewellery, wedding and consumer durables, a new theme takes birth — targeting foreign tourists. The first two malls of this kind are slated to come up at tourist hotspots — Goa and Udaipur — with the cost projected at around Rs 100 crore apiece.

The malls are to be developed by Delhi-based promoter Advance India Projects, the Royal Celebration Mall in Udaipur, will be spread over 4 lakh sq feet of space, designed as a palace and surrounded by artificially created water bodies.

Replicating the Rajasthan theme will be multiple levels of atriums with eight different themes drawn from the history of Mewar, using local architecture and materials. Apart from showcasing local art and crafts of the state, adding to the ambience will be local folk music, dances, light and sound shows, and food courts.

“We have conceptualised this mall aimed at the tourist and holiday makers visiting this 3city of lakes and palaces,” said Daljeet Singh, executive director, Advance India Projects. Over 30% of the total space will be devoted to ethnic and local brands, apart from showcasing a host of international brands, not to mention the ubiquitous multiplex and food court.

In Goa it will be a Portuguese-style mall with old colonial European architecture, the theme will be based on the holiday-maker celebrating life in the relaxed environs of Goa. As in case of the Udaipur mall, apart from a host of ethnic and local brands on display, the mall will showcase several international and premium brands.

According to Sanjay Sachdeva, vice president, marketing, Advance India Projects, market research indicates that apart from their interest in ethnic stuff, foreign tourists also look out for good bargains in international brands.

“Lot of international brands can be 20-30% cheaper in India as compared to that in US and Europe. That generates a lot of interest among foreign tourists,” he added.

Mr Singh feels that adding local flavour is very important for the success of any mall. This will be reflected in the seven-odd mall projects that the company has in pipeline over the next two years. Projects will be spread across Punjab, Rajasthan, Haryana and Goa.

With more than 100 malls expected to come up across the country over the next one year, analysts note that the differentiation may well be the key to their long-term sustainability.

News: Burberry to tap Indian luxury market

(F2F 14/04/2006) Mumbai - Luxury fashion brand Burberry has opened shop in India. Burberry has the two major reasons to celebrate, one is this year company has completed 150 years of production of fine clothing and another is it is going to enter world’s most exciting and emerging market for luxury goods.

In 1980s and 1990s, the brand was not as popular as it is today, there were series of complaints about repetitive and traditional designs.

By 2001 company started functioning smoothly and became famous from staid to hip, bordering on cult themes introduced by new President Rose Marie Bravo (now Vice-Chaiman) and head designer Christopher Bailey.

Bravo and her new management team have identified opportunities in high margin accessories, fragrance and kidswear categories.

Burberry is a luxury brand with a distinctive British sensibility, strong international recognition and differentiating brand values that resonate across a multi-generational and dual-gender audience.

The Company designs and sources apparel and accessories distributing through a diversified network of retail, wholesale and licensing channels worldwide.

Since its founding in England in 1856, Burberry has been synonymous with quality, innovation and style.

News: Modern India no longer fears riches

(TA 14/04/2006) Mumbai - Luxury goods makers are descending on India, and the nation's wealthy are enjoying indulgence not seen since the maharajahs, writes Amrit Dhillon.

One of Mahatma Gandhi's many legacies to Indians was not just independence from the British, but a chronic guilt complex. They felt uneasy about consumption and luxury. Now, almost 60 years later, Indians are flinging off Gandhi's notion that a frugal life is the best life.

Instead, they are embracing a tradition that precedes Gandhi - the love of luxury exemplified by the maharajahs, a byword for extravagance. There are now an estimated 1 million Indians willing to splurge on designer brands.

The world's luxury goods makers are thrilled about this new emerging market. They are either already here - such as Louis Vuitton, Patek Philippe and Rolls-Royce - or are coming soon, such as Jimmy Choo, Gucci, and Aston Martin.

Rich Indians want to flaunt their wealth. Forbes magazine's rich list last year ranked India eighth in terms of the number of billionaires and ninth in terms of the total wealth of the super-rich. The number of Indian millionaires is trebling every three years.

The old rich have, of course, always been rich. But something in Indian culture has inhibited ostentatious displays of wealth - the result of the Hindu tradition of asceticism as personified by half-naked holy men and of Mahatma Gandhi's message of austerity.

It also felt a touch unseemly to get retail therapy from buying a Patek Philippe watch when 500 million Indians lived on less than $US1 a day.

That coyness has vanished. The rich are shopping with abandon. Where they once used to buy exclusive goods when they went to Paris, Rome or London on holiday, they can now enjoy the same shopping experience at home.

"I always shopped with my parents when we went to London. Now we can shop here and devote our holidays to relaxing," said Nandita Gupta, fresh from buying a $US3300 bag at the Chanel store in the Imperial Hotel in New Delhi.

Retail consultancy firm KSA Technopak estimates that India's luxury market is growing at 20 per cent a year. The market for high-end clothing and accessories alone is estimated to be worth $US445 million ($A610 million).

When luxury brands first came to India, some predicted their early demise. They were wrong. Louis Vuitton handbags sold out in minutes. "We are seeing annual growth of 60 per cent to 70 per cent," said brand adviser Tikka Shatrujit Singh.

Mr Singh believes India is reconnecting with an earlier tradition of luxury personified by the maharajahs - during visits to Rome or Paris they patronised the very luxury goods makers now trying to seduce the Indian nouveau riche. In the 1920s, the maharajah of Alwar used his fleet of Rolls-Royces to remove rubbish. Louis Vuitton made trunks for maharajahs with special compartments for turbans and saris.

"Our challenge today is to make ourselves as relevant to today's consumers as we were to the maharajahs," said Patrick Normand, the managing director of Cartier for the Middle East and South Asia.

Oddly enough, India has not developed any names that are synonymous with luxury, with the exception of the hospitality sector. Hotel chains such as the Oberoi and the Taj represent quality throughout India.

Arvind Singhal, chairman of KSA Technopak, is not surprised at the absence of top-end domestic brands. "Do rich countries like Australia, Canada or Japan have a luxury brand? It's only a few countries - Britain, France and Italy and lately the United States with designers like Ralph Lauren - who have developed global luxury brands."

One thing the world's luxury brands need not fear is competition from India. Their problems lie elsewhere - import duties of 35 per cent and more that push up prices and spur the rampant proliferation of fakes. Some counterfeit items in the street markets are so well finished that experts have to be flown in to verify if they are fake.

But the single biggest impediment in the growth of the luxury market is the lack of any swanky retail space outside the five-star hotels. India has no Fifth Avenue, Bond Street or Rue de Rivoli. Shopping malls lack the required ambience.

"You have to provide a luxury environment to display our goods," said Robert Polet, president and chief executive of the Gucci Group. "The only appropriate space is in luxury hotels and that's limited. We need stand-alone stores but we can't have them next to a McDonald's or Pizza Hut."

There is hope on this front, too. In New Delhi two super-luxurious shopping complexes are being built. The mood has changed so much that few customers will feel guilty.

"The watch I've bought my husband is what my Dad used to earn in a year," said Ratika Chopra, wife of a garment exporter as she walked out of a Mont Blanc shop in New Delhi.

"But we can afford it. My parents were obsessed with saving up for a rainy day. We're not worried about rainy days."

News: India Inc looks beyond local listings

(TNN 14/04/2006) Mumbai - As the ‘India story’ continues to resonate in international markets, scores of freshly-listed local corporates are now looking at foreign listings. The second round of equity raising in international markets primarily aims to fund foreign forays and equity investments in international JVs. What’s more, it also gives FIIs, already owning Indian stock, enhanced comfort levels in these companies.

“At least two dozen recently-floated Indian companies are looking at listing their shares/convertible bonds on foreign stock exchanges. The new trend will pick up momentum in another two months,” sources explained.

While some corporates such as IL&FS Investsmart, 3i Infotech, Punj Lloyd (all listed on the Singapore Stock Exchange), KRBL (on the Luxembourg Stock Exchange) and IVRCL Infrastructures & Projects have already floated their shares or convertible bonds abroad, many others have queued up raise equity abroad, according to market sources. Jet Airways, Power Trading Corporation, Uttam Sugar Mills, Kalpataru Power Transmission and ABG Shipyard are among the prominent names that are expected to go in for foreign listings.

A majority of the foreign listings is done through GDRs and FCCBs. Market sources said many are opting to list them in Singapore and Dubai, apart from the traditional markets of Luxembourg and London.

According to a recent report by E&Y, Indian companies are showing a strong appetite for alternative funding sources like GDRs and ADRs, thanks to aggressive expansion plans. Recent rules on GDR and ADR issues, wherein companies not listed in India were barred from raising foreign equity, including convertibles, is expected to aid the new trend — hit the domestic market and then head to foreign pastures.

An analyst said Indian paper has continued to be in great demand abroad, and local companies are just cashing in on the boom. “Many construction, engineering and EPC companies have floated shares or bonds on foreign stock markets.

Primarily, these companies need to invest equity funds in BOT (build-operate-transfer) concessions or such joint ventures,” he said. With FIIs increasingly ruling the Indian markets, raising funds abroad and a subsequent foreign listing is only a natural corollary, says another analyst.

A senior official from IL&FS Investsmart said the Singapore Stock Exchange has become the most convenient and the preferred destination to raise money, since most international fund managers who invest in India have investment desks in south-east Asia.

ABG Shipyard is also believed to be looking at raising funds from foreign markets, and aims to list shares/bonds abroad. Its directors’ board is slated to meet on April 15 to consider raising of long-term financial resources. The company has managed to garner a huge order book, and is sitting pretty with its future earnings.

News: 'Economic convergence vital' - FM

(TT 14/04/2006) Nagpur - Union finance minister P. Chidambaram has called for convergence among political parties on economic issues in the interest of overall development. “We can have all the politicking on other issues like caste, religion etc., but when it comes to economic issues there must be a convergence,” he said here on Wednesday.

Delivering a lecture here, at an interactive session hosted by the Lokmat Group of Newspapers, the finance minister said, “ I am concerned about the hardening of interest rates. I feel that there should be a balance between the interest rate that you earn on your savings, and the rate at which the investors borrow from the banks,” he said. In an interesting reference to Mr Vijay Darda, Rajya Sabha member and chairman and managing director of the Lokmat Group of newspapers, that sent ripples of laughter in the audience, Mr Chidambaram quipped, “Wise men like me save and wiser men like Vijay borrow.” In equally simple terms, he explained that FDI is in fact a result of tapping into the savings of other countries.

“When I explain it in this way, it sounds simple, but when I call it FDI, then some people get uneasy,” he observed. The Union finance minister said that India is the only country that would reap the demographic dividend over the next 25 years as its working population would grow at a higher rate.

News: US-based Gant enters Indian retail segment

(PTI 14/04/2006) Mumbai - US-based lifestyle apparel brand Gant on Friday entered the premium Indian retail market through Arvind Brands Ltd, with its first 2,000-sq ft exclusive outlet in Mumbai.

"Gant will be a great brand to be brought into the country. The Mumbai outlet will be the first in the offing, with the second one to be opened in Delhi in the month of September, and another in two years," Arvind Brands Ltd, President, Darshan Mehta told reporters.

"We have invested in the range of Rs 7-7.5 crore into this," he added.

The price range for shirts would be from Rs 3,400 - 7,000, knits in the range of Rs 1,300- 3,000, jeans in Rs 4,500-7,000 range and blazars tagged between Rs 10,000 and Rs 25,0000, said Mehta.

Other accessories like handbags, belts, caps, socks, eyewear and fragrances will also be available at the Gant outlets.

News: EU delegation to visit India

(PTI 14/04/2006) New Delhi - A delegation of European lawmakers will visit Amritsar, Chandigarh, Delhi and Ludhiana to study farm sector reforms and trade among other areas.

The purpose of the visit is to grasp India's diversity and understand how states interact with the Centre, very much as Europe deals with the relationship between EU and its member states, an official statement said.

The nine-member delegation would visit Amritsar, Chandigarh and Ludhiana from April 15-19 before rounding up talks in Delhi on April 20-21.

"Apart from holding dialogues with the executive and legislative branch, it is important to increase the cultural awareness of contemporary India in Europe," Chair of the delegation, Neena Gill said.

During the visit, members of the European Parliament would deliberate on India's plans for reforms in agriculture sector and draw comparisons with EU's reforms of its Common Agricultural Policy.

Gender, manufacturing and trade issues would also be part of the delegation's agenda, besides focussing on democracy at the local levels.

The members are also expected to hold meetings with Chief Ministers of the states they are visiting, MPs, EU-India Parliamentary Forums, NGOs and industrialists.

News: KLM launches fourth flight between Amsterdam and Hyderabad

(PTI 14/04/2006) New Delhi - KLM Royal Dutch Airlines has launched its fourth weekly flight between Amsterdam and Hyderabad.

"We are happy with the response we have received for our thrice-weekly service on this sector and the positive load factors have encouraged us to launch this additional frequency," KLM Northwest General Manager India (and SAARC) General Manager Warner Rootliep said in a statement.

With the new flight, KLM, in cooperation with Northwest Airlines, now has 18 weekly roundtrip flights between India and Amsterdam.

News: FIIs sell over Rs 8000 cr in 5 days

(BS 14/04/2006) Mumbai - Foreign institutional investors' (FIIs) net sales in derivatives and cash markets surpassed over Rs 8,000 crore in the last five trading days.

They have been net sellers in futures and options (F&O) segment for five consecutive days, while in the cash market they have turned net sellers for three successive days.

Index and stock futures accounted for Rs 6,622 crore of the total sales of Rs 8,205 crore, while net sales in cash market aggregated Rs 1,584 crore.

FIIs’ net selling on F&O topped Rs 2,092 crore on Wednesday with net sales of 839 crore worth index futures and Rs 1,326 crore worth stocks futures.

Their net sales was worth Rs 1,959 crore on April 10; Rs 1,190 crore on April 7; Rs 824 crore on April 5; and Rs 556 crore on April 4.

FIIs’ net sell in cash segment topped Rs 735 crore on Wednesday. They bought shares worth Rs 2,637 crore and sold securities worth Rs 3,372 crore. The net sold shares were worth Rs 427 crore on April 10 and Rs 427 crore on April 7.

Local mutual funds, which turned net sellers with Rs 200 crore worth sales on April 10, were net buyers at Rs 71 crore on Wednesday.

Last time, FIIs were net sellers in F&O segment was in the first week of March. They were net sellers of Rs 4,571 crore for five consecutive trading days between March 3 and March 9.

They had sold index futures worth Rs 10 crore on March 3 and Rs 84 crore on March 6. They stepped up their net selling in F&O to Rs 1,599 crore on March 7 and Rs 2,709 crore on March 8. During that period, the FIIs were net seller in cash segment only once for Rs 287 crore on March 9.

FIIs net sales on F&O have created panic in the first week of March with Sensex going down over 200 points on March 8. However, the Nifty had rallied by over 300 points from 3116 on March 8 to 3419 on March 30 - the last day of the expiry of March contract.

This time, FIIs net sales of Rs 8,200 crore worth shares on F&O and cash segment has created panic. The Sensex is already down by over 400 points and Nifty down by over 130 points in the last two days.

News: 'India needs $550 bn in 5 yrs'

(BS 14/04/2006) New Delhi - Ratan Tata presents report to PM who has asked nine ministries for inputs within a month.

The high-profile Investment Commission, headed by Ratan Tata, has said that India needs to attract investments of up to $550 billion in the next five years if it wants to become an economic powerhouse.

Tata had presented the report to Prime Minister Manmohan Singh last month. The prime minister has now asked nine central ministries, including petroleum, power, civil aviation, telecommunications, textiles, tourism and food processing, for inputs within a month on what they intend to do about this.

A government official told Business Standard that the ministries would have to suggest measures to overcome impediments like poor infrastructure and labour inflexibility among others. Once this exercise is over, the Prime Minister’s Office will finalise the investment road map.

The commission has identified sectors like roads and highways, energy, civil aviation, textiles and garments, automobile components, real estate, construction, tourism and food processing as high priority areas.

In its report, the commission pointed out that the roads sector alone required investments of $30 billion by 2010. Given that road projects in the country are too small to attract big international players, the report has recommended that contracts be awarded on a build-own-transfer basis for projects of 300-500 km in length to attract international firms. The commission has also mooted the idea of private maintenance of highways.

Similarly, the report says that the power sector needs investments of $140 billion in five years to generate 90,000 Mw of electricity. At present, investment in this sector stands at $54 billion.

Highlighting the importance of the coal sector, the commission has said the sector needs investments of around $30-40 billion over the next decade to double production from 240 million tonnes at present.

Until now, the sector has attracted investments worth only $2.5 billion. The report also calls for major policy measures like doing away with Coal India’s monopoly on mining and sales.

The telecommunications sector needs investments of around $22 billion by 2010. For this, the report calls for putting the 74 per cent foreign direct investment norm on the automatic route.

News: India invites Chinese cos to invest in power

(PTI 14/04/2006) Beijing - Aiming to provide 'power to all' by adding 100,000 Megawatt capacity by 2012, India today invited Chinese power industry majors to invest in the country.

The Government of India has envisaged capacity addition of 100,000 MW by 2012 to meet its mission of power to all, Secretary, Ministry of Power, R V Shahi said during a road show in the Chinese capital.

Shahi, leading a nine-member delegation, told senior Chinese power industry leaders that India needed huge capacity addition during 10th & 11th Five-Year Plan periods, which is not feasible from the ongoing and proposed new projects already identified.

As such, there is need to develop large capacity projects at the national level to meet the requirements of a number of states under the competitive bidding guidelines dispensation, he said.

He assured Chinese investors that they could actively participate in the global bidding process.

Explaining the government's seven 'Ultra Mega Power Projects', Shahi said these projects, when commissioned, will substantially reduce power shortage in the country.

The Ultra Mega Power Projects with each having a capacity of minimum 4,000 MW, would have scope for expansion in future as well.

The size of these projects being large, they will meet the power needs of a number of states through transmission of power on regional and national grids.

News: Plan panel suggests 49% FDI in Indian retail

(FE 14/04/2006) New Delhi - The government has drawn up a gradual approach to open retail to greater foreign direct investment (FDI). As per a strategy paper prepared by the Planning Commission in consultation with the PMO, an attempt should be made to allow 49% FDI in retail as a first step.

However, keeping in mind the strident opposition from the Left parties, the paper has noted that in case there is sharp resistance to such a move, the government should try for an alternative proposal, allowing 100% FDI in foreign branded, specialised retail chains, which include luxury brands, consumer durables and semi-durables.

The move would advance the present structure, where the government has allowed FDI upto 51% with its prior approval in retail trade of single brand products.

Ideally, the government wants to allow 100% FDI in retail, but the Left is opposed to such a move, arguing it would adversely affect homegrown stores leading to loss of jobs.

Bowing to such pressures, and to make a beginning in the direction, the government, late last year, allowed 51% FDI in retail trade of single brand products. However, it has been subjected to certain conditionalities like such products should be sold under the same brand internationally and single brand product-retailing would cover only products, which are branded during manufacturing.

Any addition to the product categories to be sold under this route would require a fresh approval from the government.

News: Maruti buys Suzuki out of JV

(DNA 14/04/2006) Mumbai - Its Suzuki Motor Corporation (SMC) wary of bringing in fresh investments into India? In a surprise development, Maruti Udyog Ltd (MUL) on Thursday announced its decision to buy out SMC’s 30% stake in the manufacturing joint venture Maruti Suzuki Automobile India (MSAIL) and later merge its operations.

MSAIL is the company that houses the new car manufacturing plant and is scheduled to commence production by the end of this year.

“It’s good news and a big relief,” Dipen Sanghavi, an analyst at Pranav Securities Ltd in Mumbai, told Bloomberg. He has a `buy’ rating on the stock.

“Earlier, there was confusion on what model will come from which unit and how that will affect profit. With this decision, those concerns have been erased,” Sanghavi said.

MUL managing director Jagdish Khattar said the buyout of SMC’s stake and subsequent merger of MSAIL within MUL was being done to achieve better operational synergies and value for all stakeholders and eliminate all potential issues relating to inter-company transactions.

The entire process is expected to be completed by September this year. How will the buyout and the subsequent merger within MUL happen?

MUL has constituted a five-member committee - comprising two independent directors - to determine the price of this buyout and other modalities.

The merger will be effective from April 1, 2006, and should be completed by September this year.

Khattar did not elaborate on how much MUL will have to shell out to buy Suzuki in the joint venture, but he said the paid-up capital of MSAIL is Rs 40 crore.

On being asked whether the bulk of the Rs 1,524 crore investment envisaged in this project has been pumped into MSAIL, he said that only Rs 250-300 crore has come in.

Meaning, the bulk of the investment will now come from MUL’s coffers. “But this transaction will neither alter the shareholding pattern of MUL nor will it have any major impact on the financials of the company. MUL will be using its cash reserves to buy out MSAIL,” Khattar asserted.

The new manufacturing plant, which is coming up at Manesar in Gurgaon, will initially have installed capacity of one lakh cars per annum but this would be scaled up to 2.5 lakh over the next three years.

Asked whether Maruti had plans to have a similar merger of its second joint venture with SMC, Suzuki Powertrain India Ltd (in which SMC holds majority 51%, while MUL has the remaining 49%), he said there was no such proposal.

Maruti’s share price, which opened at Rs 841 at the Bombay Stock Exchange, dipped to Rs 814 in a weak market before the merger news propped it up to an intra-day high of Rs 881.85. The share closed the day at Rs 870.05, up 3.41%.

News: 'Delhi to get a second airport soon'

(TOI 14/04/2006) New Delhi - There will be a second airport soon in every metro city which will dramatically ease the growing congestion.

The policy for this, the civil aviation ministry hopes, will be cleared within a month. Disclosing the plan to TOI , civil aviation minister Praful Patel said the second airport will only be a domestic airport. He said, "The condition is that the second airport won’t be international airport. Only domestic flights will operate from there. This is part of the new civil aviation policy which will be placed before the Cabinet within a month for approval."

He added that the second airport would be built through the private participation route as AAI would focus on non-metro airports. Once cleared, the first moves are likely in Delhi and Mumbai.

News: Indian scholarships for 100 diaspora students

(TOI 14/04/2006) New Delhi - The ministry of overseas Indian affairs (MOIA) is introducing scholarships for diaspora children to study in higher technical and non-technical institutes in India in the academic session 2006-07.

A senior official of the ministry said that the scholarship programme was open to 100 students from a list of select countries. Educational Consultants Indian Ltd. (Ed.CIL) will act as the nodal agency.

The programme is open to students from Bahrain, Fiji, Guyana, Hong Kong, Indonesia, Jamaica, Kenya, Kuwait, Malaysia, Myanmar, Oman, Qatar, Reunion Island, Saudi Arabia, Singapore, South Africa, Surinam, Tanzania, Thailand, Trinidad and Tobago, the United Arab Emirates and Yemen.

The scholarships will be offered in only those institutes with which Ed.CIL has a memorandum of understanding.

The official said a budget of Rs.1 crore (Rs.10 million) had been earmarked in the first year for the programme. The number of scholarships will be increased annually till it reaches 350.

The scholarships will be applicable for professional and general courses (except medical and other related courses).

Applicants will have to pay processing charges to Ed.Cil - $200 per student for non-technical courses (humanities streams) and $350 per student for technical courses (which includes engineering, management and hospitality).

The applicants should be from the age group of 17-21 years and should have passed senior secondary (10+2) or equivalent from any educational system recognised by the Association of Indian Universities with the requisite subjects.

They should have secured at least 60 percent aggregate marks or 6.75 cumulative grade point average (CGPA) on a scale of 10.

Selection will be based on a common written examination to be held April 30, the venues and timings of which will be announced by the Indian missions in the respective countries.

News: Telecoms firm enjoys days in Caribbean sun

(IE 14/04/2006) Port of Spain - Mobile phone company Digicel is thriving in the Caribbean and is eyeing further expansion, reports Ian Guider in Port of Spain.

The excitement had been building for months. Extra police were drafted in for the event, while in the city of Port of Spain as many hundreds, and maybe even thousands, queued from the early hours to ensure they did not miss a thing.

It was not a political moment, or even a visit by a rock star or actor, but the launch of a new mobile phone network.

Over the past week, tens of thousands of ‘Trinnys’ have been flocking to more than 200 new phone stores across Trinidad & Tobago to sign up to Digicel - the pan-Caribbean network owned by Denis O’Brien.

On Independence Square in downtown Port of Spain, businesspeople queued alongside housewives and teenagers.

The launch of Digicel in Trinidad & Tobago comes nearly seven years after Mr O’Brien first turned his attention to the country. As the battle for control of Esat Telecom raged in late 1999, part of Denis O’Brien’s mind had shifted to a new venture.

Several countries in the Caribbean were about to open their mobile phone markets to new competition. While Digicel had won a licence as far back as 1999, delays meant that Jamaica was the first country of call. Since then it has become the largest mobile network on the island and in many other parts of the Caribbean.

The success of Digicel has been extraordinary. It now runs mobile services in 16 Caribbean countries and along the way has become the largest operator in the region. Everywhere Digicel has gone, Mr O’Brien says, it has “rolled over the opposition”. He says its business plan is very simple: a €1.2 billion investment in its network to deliver full coverage across the islands, cheaper prices and good services. The opposition, British company Cable & Wireless, which had a monopoly dating back to colonial times, simply couldn’t compete, Mr O’Brien added.

New figures provided by Digicel this week reveal that as of the end of March this year, the company had more than two million subscribers, which generated revenues of around €495 million.

While the income of many in the Caribbean is quite low, Mr O’Brien said the average revenue per user (ARPU) is quite high, rising to €22.38 per month, which is on a par with many European countries.

Later this month, Digicel will launch in Haiti. The country has a population of 10 million, but is desperately poor, so the investment is a risk. And a further 10 Caribbean countries will also get the Digicel experience.

But it does not end there. A scouting team from Digicel has been in the Pacific Rim region. A licence to run in Samoa has been secured, and it is waiting to hear in the next few days if the licence in Fiji will come through.

Mr O’Brien was coy about what he intends to do with the company. Asked if a stock market flotation of Digicel is on the cards, Mr O’Brien said nothing has been ruled out.

But, Mr O’Brien, who famously netted nearly €300m from the sale of his stake in Esat to British Telecom in 2000, was adamant that Digicel was “the best investment I have ever made”.

News: Caricom mulls US free trade pact

(TTG 14/04/2006) Washington — A visiting trade delegation from the 15-member Caribbean Community Wednesday began exploring the possibility of holding free trade talks with the US government, Caricom officials said.

The Caricom bloc already enjoys preferential access to the US market through the Caribbean Basin Initiative. But key textile concessions are set to expire in 2008, and the region has been losing ground to competitors in Central and South America as those countries sign free trade deals with Washington.

Caricom officials said the slow progress of the hemisphere-wide Free Trade Area of the Americas (FTAA) also has spurred the group to begin exploring alternatives. Caricom “has been reassessing its position with respect to some future arrangement to ensure...access to the US market is on a very sure and certain footing,” Jamaican Trade and Foreign Minister Anthony Hylton said after meeting with US Trade Representative Bob Portman.

Caricom’s bilateral trade with the United States totaled almost $10 billion in 2004.

The group has traditionally viewed free trade skeptically, concerned that the small size of its 15 member states would make them vulnerable before bigger hemispheric neighbours. But more recently Caricom has sided with Washington when free trade divided the hemisphere at a summit in Argentina in November.

Caricom officials said Wednesday’s discussions were preliminary, something echoed by Portman’s agency.

“Our discussion today was at a very general level,” spokeswoman Neena Moorjani said in an e-mail. “We are happy to continue our trade dialogue.”

The US government and Caricom will use the dormant Trade and Investment Council, made up of senior officials from both sides, as a venue to hold trade talks. The council may meet as soon as this summer, Caricom officials said, for its first discussion since 1999.

But Caricom continues to harbor some reservations over a free trade agreement with the US government, which would not only deal with trade in goods but also complex issues like intellectual property protection and financial services.

T&T’s Trade Minister Ken said Caricom had “to think through very carefully the obligations that would be undertaken” under a free trade agreement.

One of T&T’s key issues at the meeting is having the waiver on CBERA extended to September 2008. Under CBERA, the Caribbean Basin Economic Recovery Act, Caribbean countries currently enjoy preferential market access for a majority of their exports to the US.

For T&T, with the most diversified economy in the English-speaking Caribbean, the CBERA has served to expand foreign and domestic investment in non-traditional sectors.

News: Ratan Tata - New engines of Growth

(EB 14/04/2006) Mumbai - The Tata Group has taken a number of big bets in recent years. Whether it is pioneering budget hotels across India, or the proposed Rs 1 lakh car, Ratan Tata, chairman of the $22-billion group (market capitalisation of about $50 billion), has gone where few CEOs would. Significantly, the aggression isn´t limited to India alone. Tata Group companies have surprised corporate watchers by some of their overseas acquisitions.

These successes seem to have whetted Tata´s appetite for growth even further. Now, the group has identified three new areas. Tata is looking to create several ´mini Jamshedpurs´ across the country under the special economic zones (SEZs) umbrella. As other high profile business groups identify retail as a major opportunity, the group is also preparing to roll out its consumer durables stores this year in collaboration with Woolworth´s of Australia. It is also exploring opportunities in the Indian food processing industry.

The group´s real estate initiative of setting up townships may be flagged off by its property development arm and Tata Sons subsidiary, THDC (formerly Tata Housing Development Company). THDC was among the early Indian corporate entrants into real estate development. The group´s urban development services arm, too, may vie for the SEZ and township development business.

It is not yet clear whether the Tata Group has identified locations for these townships. The overall idea, though, will be to maximise tax benefits available throughout these zones. So far, the group has received approval for a 3,500 acre SEZ in Gopalpur (Orissa), where Tata Steel had initially proposed to set up a 10-million-tonne steel plant. The proposal was subsequently scrapped. However, this approval was obtained more than two years ago, and the current plan is separate from this one.

Besides real estate, the Tata Group has also identified food processing as a major opportunity area, where other corporate majors such as ITC have made rather quick progress. However, it is learnt that this plan is in its early stages and may take a while to fructify.

Instead, in the short-term, the group is focussing on a major retail push and putting its muscle behind existing businesses in the food and beverages space, such as tea and salt. In retail, it is collaborating with Australian major Woolworth´s for setting up a consumer durables chain that will stock everything from mobile phones to LCD televisions, and plans to roll out a few stores this year itself. It will also revamp its food and groceries retail format.

Other new avenues identified by the group include leather goods, where the group has some previous experience. Textiles, home furnishings and pharmacies have also caught its interest. The group is already engaged in a pilot project for bio fuels, and will decide on taking this forward once the project is complete. It is reportedly also interested in nuclear energy, provided the government permits it.

Also, riding on its international acquisitions worth around $1.5 billion, it has chalked out an extensive strategy to take its existing businesses overseas. Till then, it has its hands full with major plans for the Indian subcontinent.

News: Landmark crosses sword with Crossword

MUMBAI: The books and music retailing sector is, well, making some good music. As a business, it still is a speck compared with the gargantuan proportions of the west, but the potential - personified by India’s 300-million-plus young and upwardly mobile population - is compelling.

Currently, the segment constitutes just 5% of the Rs 35,000 crore retail sector, but estimates say of this, the books industry alone is growing at a fastish clip of 12-14% and music at 2-5% annually. That being the case, can the bees be far behind?

Naturally, competition for Crossword, the sector’s leader in the western region, is heating up. The Rs 100 crore Landmark chain is taking itself national, banking on its USP of housing over 100,000 titles in both, books and music.

On April 26 its first store in western India opens in the Infiniti mall at Andheri, suburban Mumbai. This will be followed by Vadodara, Delhi and Pune in the coming months.

“In all, we intend to launch 5 to 6 Landmark stores this year. We are primarily targeting the western and northern regions as we do not have a presence in these markets yet,” said Hemu Ramaiah, CEO, Landmark Ltd.

The company started in the south - it has three stores in Chennai alone, one in Bangalore and another one in Kolkata (in joint venture with Emami Group).

Landmark will set up at least another half a dozen in the coming years. So what is driving the business? First and foremost, incredible margins, particularly on books.

“They are in the range of 30% to 40% for non-academic or general interest books. So it is certainly a promising business,” says Himanshu Chakrawarti, chief operating officer of Landmark.

However, what is crucial for growing the market, he says, is variety and availability that is not restricted to just the bestsellers or the top 10s. Secondly, with an average footfall of 3000 during the weekdays and 6,000 over the weekends, and a conversion rate ranging between 25% and 50% depending on the location of the stores, expanding business makes eminent sense.

Though national expansion was on Landmark’s agenda for quite some time, the momentum picked up further after the Tata Group’s retail division Trent Ltd acquired a majority stake to the extent of 76% in the company.

Landmark also has a distributions subsidiary called Westland, which sells books wholesale to all chains including rival Crossword. Westland will open a beachhead in western India this week.

On an average, the large-format Landmark stores are spread across a minimum of 13,000 sq ft going up to 45,000 sq ft. The Infiniti mall store is about 18,500 square feet. The investment per outlet varies from Rs 4 crore to Rs 7 crore depending on the size of the store.

Landmark expects to pump in around Rs 25 crore for the new stores being launched this year. The money will come from internal accruals and debt financing.

The company also pioneered the concept of integrated online retail store chain in India for books from across the world.

News: India Inc in attrition mode

(TNN 14/04/2006) New Delhi - It is the talent attrition season of the year and HR managers are scratching their heads like never before. With bonus and increments being paid across sectors and management cadres, movement of talent has caught on big-time. While, last year, aviation and media were the flavours of the season, this year financial services, telecom, consumer goods and retail followed by real estate and media are expected to clock the biggest employee churn.

HR managers say February-June is the period when there is maximum employee movement. While, the prime reason is the payment of bonuses and increments during this time there are also other factors. For instance, many executives wait for their kids’ school session to end (during March-April), if they are planning to change jobs as it may need a change in location as well.

The biggest churn this year is expected in the banking & financial services sector. Sources say people are waiting for lakhs, and in some cases even crores in bonuses and other compensations to be paid before signing on the dotted line.

Says Shiv Agrawal, CEO of head-hunting firm ABC Consultants, “The top sectors in terms of degree of churn this year would be retail, telecom and financial services.”

Adds Vineet Kaul, head of HR at Philips (India), which is engaged in both consumer goods as well as IT-ITeS business in India, ”If I compare the current period with the past year, movement of people has increased in the consumer goods sector. Comparatively the movement in case of the IT sector is relatively lower.”

Head-hunters say the activity in the financial services industry has been propped up by the entry of new players in insurance, private equity, hedge funds, real estate funds along with ambitious expansion plans of foreign banks.

Besides hefty salary jumps the new players are also showing huge bonus payouts as a carrot. The favourite poaching grounds are banks such as ICICI, HDFC, UTI and IDBI. The increments for the top performers in these institutions are expected to be much higher than industry average.

Many of the foreign banks operating in India have announced their intentions to start their private banking services — essentially wealth management services, which are very remunerative rather than limiting themselves to the plain vanilla loan business. These banks are also on the lookout for experienced professionals to run these services and are reportedly offering dream packages to the ‘suitable boys’.

News: Landmark plans Mumbai foray

(TNN 14/04/2006) Mumbai - Hemu Ramaiah, CEO, Landmark, knows a whole bunch of people across the country who keep their book and music lists ready when they are travelling to Chennai, and visit one of three stores in the city or even the 45,000 sq ft store in the Forum mall in Bangalore to get those books.

In the eight months since Ms Ramaiah sold 76per cent of her company to the Tata retail arm, Trent, she has been planning to make a foray with her music and books into Mumbai.

“It was the price of the project here which was the only hurdle for not having entered the city and till last year, we were a family-run business and were necessarily conservative in our outlook,” says Ms Ramaiah as she and Himanshu Chakrawarti, COO, Landmark, spoke about the 18,500 sq ft rollout in Mumbai’s Infini Mall at Andheri.

The Mumbai store also marks a foray for the company (Landmark ceased to be a partnership firm on March 31 and became a company, Landmark, a private limited company) in the western region. Ahmedabad, Pune, Baroda are set to follow, as well as another 12-13,000 sq ft store in south Mumbai.

Along with the western region foray, Landmark will also be in Gurgoan and look at another store in the central business district of Bangalore.

“It has become impossible to travel within our metros with the traffic and infrastructure problems. So there is definitely a market for another store in Bangalore,” says Ms Ramaiah, explaining that is true of most other cities too.

Currently, Landmark has five stores and it is looking at adding five more in ’06. With each store investment at approximately Rs 5 crore, the company is looking at a total investment of Rs 25 crore this year. The money will be raised through internal accruals and debt.

Both Mumbai and Delhi are acid tests, said Mr Chakrawarti, as they are paying rentals which are at least two-three times that of Chennai and Bangalore. For Trent, which had paid Rs 103 crore for its majority stake in Landmark, looking into synergies with its other two brands — Westside and Star India — is very much on the agenda.

The Trent-DLF tie-up for 12 properties will help leverage real estate. Mr Chakrawarti is looking at more stores within stores of each brand.

Column: India is now open to real estate investors

(DH 14/04/2006) New Delhi - The real estate market in India is on a high growth curve. A booming economy and favourable demographics have provided the necessary impetus for sustained growth. Further, recent policy measures have opened up foreign investment in the real estate sector, which for a long time lacked institutional funding support. This is part one of the two-part PWC report.

With the liberalisation of the economy and the consequent increase in business opportunities, India’s real estate sector has assumed growing importance. Indian real estate has huge potential demand in almost every sector, but especially commercial, residential, retail, industrial, hospitality, healthcare etc.

The demand for commercial and housing space, in particular rental housing, has grown tremendously since 2002.

Property development has surged in India since 2002, helped by an annual doubling in demand for office space as foreign firms invested into the country’s information technology (IT) sector and call-centres in Mumbai, the National Capital Region (Delhi and satellite towns), Bangalore and Hyderabad.

Land prices have increased rapidly in these markets — the extent of the rise, however, varies from city to city and even within cities. Gurgaon, a satellite city of Delhi for instance, has registered a 40 to 50 per cent increase in property prices over the past 18 months. According to estimates, demand from the IT/ITES (IT enabled services) sector alone is expected to be 14 million sq m. (150 million sqft) of space across the major cities by 2010.

According to the 2001 Census, 27.8 per cent of India’s over one billion population lives in cities. According to the Vision 2020 document released by India’s planning commission, the country’s urban population is expected to rise from 28 per cent to 40 per cent of the total population by 2020. Future growth is likely to be concentrated in and around 60 to 70 large cities with a population of one million or more.

The Indian cities of Mumbai, Bangalore and New Delhi have emerged as the top three investors’ choices for real estate investment in 2005, according to Jones Lang LaSalle’s annual Investor Sentiment Survey - Asia. The survey also noted that investment interest in the region would continue to be robust this year with more confidence towards the retail and office property markets across the region. This can be attributed to India’s strong economic performance and its established position as an offshoring destination for many multinational corporations, which has translated into a more robust real estate market environment.

Regulations

Until February 2005, the real estate sector in India was tightly regulated. Foreign Direct Investment (FDI) was allowed in only four sectors: development of integrated townships, technology parks, industrial parks and special economic zones. FDI in these permitted real estate sectors also had high threshold requirements.

For example, to develop integrated townships, investors had to develop a minimum of 100 contiguous acres with a minimum of 2,000 dwelling units.

This deterred foreign investment in real estate development and foreign investment in the sector remained minimal.

Traditionally, Non Resident Indians (NRIs) have been allowed to invest in the following real estate activities:

• Development of serviced plots and construction of residential premises
• Construction of commercial premises including business centres and offices
• Development of townships
• City and regional level urban infrastructure facilities, including both roads and bridges

In March 2005, the Indian government announced liberalised guidelines allowing FDI up to 100 per cent in townships, housing, built-up infrastructure and construction-development projects (including but not restricted to – housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure).

As per the guidelines, for the automatic route to apply, the following conditions would have to be complied with:

Minimum area

• In case of development of serviced housing plots, 10 hectares (25 acres)
• In case of construction-development projects, built-up area of 50,000 sq m.
• In case of a combination project, any of the above two conditions

Investment
Minimum capitalisation of :

• US$ 10 million for wholly owned subsidiaries
• US$ 5 million for JV with Indian partners – brought in within 6 months of commencement of business
• Original investment cannot be repatriated before a period of three years from completion of capitalisation.
• The investor may exit earlier with prior approval from Foreign Investment Promotion Board (FIPB).

Others

• At least 50 per cent of the project to be developed within five years from the date of obtaining all statutory clearances.
• Investor not permitted to sell undeveloped plots (where roads, water supply, street lighting, drainage, sewerage and other conveniences are not available).

The intention of the government by way of this liberalisation was to clear the path for foreign investment into development of the commercial and housing sectors so as to meet the demand. NRI investments continue to enjoy special dispensation from the above prescribed conditions.

Although the government has not undertaken capital market level deregulation measures, such as allowing REITs (whether domestic or foreign owned) to operate in India, in 2004 it did allow international and domestic companies to operate real estate funds/pooled vehicles through the private equity fund route. This, combined with the boom in the real estate market in India has opened the doors for a host of realty funds.

While most funds were initially floated by financial institutions/banks such as HDFC, ICICI Bank and Kotak Mahindra Bank, real estate developers like DLF Universal and even retailers like Pantaloon have now entered the arena for creating more retail facilities. Most of the funds floated in the recent past have received a strong response from investors. Reports suggest that over the past six months, about US$ 500 million has already/flowed into the real estate sector.

Over the next 18-30 months, the flow may rise to a massive $ seven to eight billion. These real estate funds have been established as venture capital funds (VCFs) with specific approval from the Securities Exchange Board of India (SEBI). VCFs are allowed to invest in domestic companies whose shares are not listed on a recognised stock exchange in India and are engaged in businesses as permitted under SEBI guidelines require a minimum investment of INR 500,000 (approximately. US$ 110,000) per investor subject to a commitment of INR 50 million (approximately US$ 1.11 million) from all investors before the start of operations by the VCF. The VCF cannot invest more than 25 per cent of its corpus in one undertaking, at least two thirds of investible funds of the VCF have to be invested in unlisted equity shares/equity linked instruments and not more than one third of the investible funds can be invested in debt.

Opportunities

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, thanks to easy availability of finance, but also the average age for ownership of new homes is declining drastically. Younger customers and nuclear families are creating fundamentally different customer segments.

Similarly, in the retail segment, as the market grows exponentially, newer and larger formats along with the likely entry of global retail giants in the Indian market (subject to impending government policy revisions with respect to FDI in retailing) will necessitate greater variety and maturity in the retail real estate market. Mall developers are already adapting to local cultures and traditional preferences. Some new genres of malls are the automobile mall, the Gold Souk and the wedding mall, which are one-stop shopping destinations for what their name describes.

By Vivek Mehra, Executive Director, and Akash Gupt, Senior Manager, PricewaterhouseCoopers, New Delhi

News: BMW to set up car unit at Chennai

(UNI 14/04/2006) New Delhi - Leading German car maker BMW is setting up its manufacturing base in Chennai with a production capacity of about 1,700 cars annually on one-shift.

India is the second country after Thailand where BMW is setting up its own subsidiary.

"The German companies have reaffirmed their faith in the Indian market and are investing money in setting up their manufacturing bases, enhancing their presence and opening new ventures in India," Ajay Singha, Deputy Director General, Indo German Chamber of Commerce said.

The German auto ancillary giant, Bosch, is also keen on enhancing its presence and planning an investment close to Rs 1,000 crore in India, he added.

Clutches of German companies are evaluating West Bengal as a business destination for ship and shipyard builders, Singha said.

Even the Indo-German companies in India have fared very well. Infact, some of them have out-performed their German parent companies.

There are about 24 Indo-German companies listed in the Indian stock market.

News: Indian Pharma sector to grow by 11% next yr

(UNI 14/04/2006) New Delhi - The Indian Pharmaceutical industry is expected to grow by 11 per cent to enhance its size to Rs 60,000 crore by 2007-08, according to an Associated Chambers of Commerce and Industry of India (ASSOCHAM) study.

The industry will enlarge its pharmaceutical exports to regulated markets of US and Europe in generic drugs markets in which 65 billion dollars worth of drugs will go off Patent, the industry Chamber said.

Indian pharmaceutical exports have a potential to grow at around 18 per cent to take its total export to about Rs 30,000 crore in 2007-08 as against Rs 18,290 crore in 2004-05.

News: Indian industry still rocking, on course for 9% growth

(DNA 13/04/2006) New Delhi - The industrial engine seems to be truly back in form, after giving some worrying moments in the last two months of calendar 2005. Industrial production grew a healthy 8.8% in February, 2006, against 5.9% in February, 2005.

Industrial production (measured by the index of industrial production) grew 8% in April-February, 2005-06. Though it’s a tad lower than the 8% growth in April-February, 2004-05, there doesn’t seem to be much cause for worry. “The growth momentum has been maintained. The suspicion of deceleration has been set aside,” says Pyaralal Raghavan, economist with Ficci.

He’s also confident that the 9% growth in industry expected in 2005-06, as given in the advance estimates of gross domestic product, would be achieved. The advance estimates are based on 1999-2000 prices, while the IIP is still based on 1993-94 prices.

There certainly seems to be recovery all around (see table). And it’s not just over last year. Month-wise performance has also been improving. That fact is most evident in the mining sector, where growth had been in the negative zone since July following the fire at the Bombay High North facility of the ONGC in June. Growth in the mining sector turned positive (0.2%) in January.

There’s been further improvement in February, with growth inching up to 0.9%, but that could also be because of the 1.6% decline in production in February, 2005.

Electricity production has also registered a sharp turnaround, not just over last year but also over January. That could be because the coal stock position has improved, with stocks almost double the level of what was available at the same period last year.

Another noteworthy feature of this month’s industrial production figures is the huge growth in the basic goods sector, which covers coal, petroleum, steel, and cement, among other things.

Part of it, though, is because of the base effect. But the basic metal and alloy industries, which is part of the basic goods sector, has also registered 13.9% growth. That industry has been clocking over 10% growth since September.

The consumer non-durables segment has effected a sharp turnaround, growing 10.6% in February after single-digit growth in December and January. Analysts’ explanation at that time - that this was because of closing of inventories - appear to have been right, after all.

News: Not just the Indian biggies, SMEs too make it big

(DNA 13/04/2006) Mumbai - It’s not just the likes of Mittals, Tatas, Ambanis, Murthys and Birlas who are writing the big Indian growth story. Entrepreneurs leading the small and medium enterprises (SMEs) are also contributing in good measure.

The second annual survey of UPS Asia Business Monitor on changing opinions, attitudes and habits of business leaders from SMEs in the Asia Pacific region has revealed that Indian firms are not only the most optimistic on their growth prospects, but also likely to expand employee strength and business to other parts of the globe.

While the lithe and agile dragon (China) still remains a force to reckon with, India is fast catching up. In the outlook for future growth, India leads.

Around 35% of the Indian companies interviewed in 2005 see themselves doing ‘much better’ in the next 12 months as against 31% in 2004. When it comes to just doing ‘better’, though, the Indian votes slip a bit this year to 51% from last year’s 56%. However, the polls again swing in its favour, when asked on consistency of performance. Not one of the Indian SMEs thinks its performance will dip this year. Last year, a small 2% thought they would do much worse.

Now compare this with China. As per survey, Chinese firms are not betting big this year. In fact, the percentage of companies expecting ‘much better’ results has fallen from 47% in 2004 to 34% in 2005. There is marginal rise in the number of companies that see themselves doing ‘better’, from 32% to 34%. The votes for consistent performance have moved up from 17% to 29%.

The major distinguisher, which gives Indian firms several brownie points, is that more Chinese firms see performance ‘worse(n)’ in 2005 compared to 2004. This has gone up from 3% in 2004 to 5% in 2005.

The survey reveals that the biggest surge in trade volume for the Indian SMEs will come from the US, followed by Europe and Middle East. Almost 76% cast their vote for the US, followed by 65% for Europe and 57% for the Middle East.

Chinese firms’ preference is more tilted towards Europe (73%), US (63%) comes second for them, followed by Canada (58%) and Middle East (53%).

Survey says Indian SMEs would also be going on a hiring binge in the next one year. Over 71% of them claim they will recruit more people in the coming year, while only 1% say they will retrench.

News: Indian retailer Landmark plans 5 new stores

(RTR 13/04/2006) Mumbai - Book and music retailer Landmark Ltd., a unit of Trent Ltd. will spend Rs 200-250 to expand into western and northern India in 2006/07, a company official said on Thursday.

Trent, a part of India's Tata group, bought 76 percent in the Chennai-based chain for about 1 billion rupees in August last year. The rest is held by Hemu Ramiah, the chief executive officer of the company.

Ramiah said in a news conference the investment for the expansion would come from part debt and part internal accruals from Landmark. The company plans to open 5-6 stores under the plan.

“I've resisted entering Mumbai for so many years because of space. The price of the project went haywire. Till last year as a family-run business we were conservative in our outlook,” said Ramaiah.

Landmark has a presence in south India with three stores in Chennai, one in Bangalore and another in Kolkata in the east.

The company had retail revenues of Rs 1 billion last year and plans to add 60-70 percent growth in its top line this financial year, Ramiah said.

The firm was started as a mom-and-pop store by Ramiah and her brother in 1987. It has developed into a large format retailer requiring an average of 13,000-45,000 square feet space to house its collection of books, music, stationary, magazines, gifts, toys and home products, she said.

The ideal size for a store is a large format. Every store I do below that is a compromise, Ramaiah told Reuters.

Landmark will kick off its expansion plan with a 18,500 square-feet store in Mumbai, and another in the next 7-8 months.

News: FIIs see hi-rise in Indian realty

(HT 13/04/2006) New Delhi - The opening up of the real estate sector has shot India into prominence as an investment haven for foreign institutional investors, with the industry expecting foreign funds worth up to $2 billion to flow into India in the next couple of years.

While players like IREO and GE Ascendas have already frozen deals, others like Morgan Stanley, Merrill Lynch, Hynes, and Tishman Speyer are out on the prowl.

The office space alone is expected to touch between 100 million sq ft to 120 million sq ft, from the existing 80 million sq ft. While the office space is a tangible indication of the buoyancy in the real estate space, the much-fragmented housing and the nascent retail formats say the same story.

Says CB Richard Ellis, MD South Asia Anshuman Magazine, “We expect more than 25-30 million sq ft to be added to office space every year, taking it from the existing capacity of 80 million sq ft to over 120 million sq ft in the next couple of years.” This will be a quantum shift from the total 30-35 million sq ft of office space in India three to four years ago. The space added in the past couple of years is almost equivalent to that added in the past 50 years.

CBRE has signed JVs with many FIIs for channelising investments into India. They have already aided in struc- turing a New York-based real estate fund worth $150 million for 8.5 million sq ft space for mixed use in Pune - the first fund to come to India after the opening up of the sector.

International interest apart, the space has gained traction even in the domestic investment community, including various governments. “We have facilitated West Bengal government to partner with DLF to set up a 1 million sq ft IT park in Kolkata,” he said. According to Magazine, India has arrived at the real estate cusp where more office space means more jobs, which, in turn, means more disposable income for buying house and spending at the new format retails.

News: Globus to quadruple Indian retail presence in 2-3 years

(PTI 13/04/2006)Mumbai - Seemingly bullish about the growth of organised retail in the country, Rajan Raheja-promoted retail chain Globus on Wednesday said it plans to quadruple its retail space in two to three years.

"We have 2.25 lakh sq.ft of retail space spread over 12 stores in right cities and plan to increase it to 10 lakh sq.ft over the next two to three years through a pan India presence," Globus CEO Vinay Nadkarni told reporters here.

The company plans to add 13 new outlets during the year in addition to the already existing 12 stores, he said, adding the expansion would be funded mainly through their promoters.

According to a report, organised retail in India is expected to touch 1.10 lakh crore by 2010 with apparel retailing contributing worth Rs 16,000 crore or 45 per cent of it.

Meanwhile, the company has signed Soha Ali Khan as Face of Globus 2006-07. Globus will launch its first campaign with her in mid-April this year and it would include outdoors and print.

News: Your footfall in the mall's worth a packet

(TNN 13/04/2006) Mumbai - Ever felt guilty about taking a casual stroll inside a big shopping mall or a supermarket? You don’t have to. Your likely worth to the retailer could be well in excess of Rs 250. The likely sales per footfall in the departmental store format ranges from Rs 250 in a Pantaloon Lifestyle store to Rs 400 in a Shopper’s Stop or a Piramyd Megastore.

Even in a supermarket format, a single customer entry means a probable sale of Rs 250 in a Piramyd Trumart to Rs 320 in a Food Bazaar. The same figure goes up to Rs 350 to Rs 400 for a mass merchandise store like Central or Crossroads.

These figures are calculated by taking the product of conversion rate and customer spend. There are three basic drivers behind sales in any retail format (customer traffic, conversion rate and customer spend).

Customer traffic is simply the number of footfalls a retail store is able to attract. Conversion rate is the ratio of customers actually purchasing something to customers entering the store and customer spend is the average amount a customer spends on purchases. All three are equally critical in determining the success or failure of a particular retail format.

The average transaction size (or ticket size) in supermarkets is much lower at Rs 250 to Rs 400 in a supermarket format compared to Rs 1,000 to Rs 1,500 in a department store or mass merchandise store format. However, the conversion rate in supermarkets is around 75-80% against 25-35% in a department store.

Pantaloon, which operates in the supermarket format under the Food Bazaar brand, enjoys a conversion rate as high as 80% with an average ticket size of Rs 400. Trumart stores, operated by Piramyd retail, also report a similar conversion rate, with a ticket size of Rs 280. In the department store format, Pantaloon Lifestyle stores operate with conversion rates of around 25% and average ticket size of Rs 1,000.

Shopper’s Stop, the leading department store chain, reports a conversion ratio of 27% with average ticket size of Rs 1,400. However, the stand-alone stores have a conversion rate as high as 40%. This is impressive compared to European department store majors which operate with 25-30% conversion ratios.

But a lot of catching up remains to be done with the US majors as leading department stores there, like JC Penney and Kohl’s, have conversion ratios of 80-85%. Big Bazaar, a small-sized hypermarket, has a conversion ratio of 35% with an average ticket size of Rs 850.

Considering that the conversion ratios of global giants like Wal-Mart and K-Mart, which operate largely in the discount store format, hover around the 85-90% range, there is still a lot of scope for refining the art of turning casual strollers into potential buyers.

News: 'Shampoos biggest growth segment in rural India'

(BL 13/04/2006) Mumbai - Studying the changing consumption patterns across rural India, Hansa Research, has identified shampoos as the biggest growth segment with high penetration levels.

According to its report on rural consumerism, shampoos have probably seen the most "astounding" growth rates compared with other categories in rural India. From a penetration level of 13 per cent in 2000, now almost a third of the country's rural population uses shampoo with penetration levels zooming at 31.9 per cent in 2005. While the north and west zones have tripled in penetration, the south and east zones have doubled during the period between the years 2000 to 2005.

From just one state that had 25 per cent of its rural population using shampoo in 2000, there are about 13 states that demonstrate this.

Of these, Andhra Pradesh and Tamil Nadu now have more than half their population using shampoos. Shampoo penetration has gone up remarkably in states such as Orissa, Madhya Pradesh and Gujarat, These States are showing an increase in product usage by over three times in just five years.

Skin care products

In the skin/face creams category, the overall penetration has risen to 18 per cent. The east zone not only continues to lead but, has increased its lead over the other three zones. Orissa shows a notable increase in user base (14 per cent to 25 per cent). The other States that show significant growth are Assam (32 per cent to 39 per cent) and Goa (22 per cent to 27 per cent).

Food and beverages

In the food and beverages category, packaged oils and packaged biscuits have depicted an increase of 5 per cent and 15 per cent respectively in penetration levels. The preferences in rural India are shifting from loose to packaged products. Besides, there has been a 25 per cent increase in soft drink penetration in rural India and a 35 per cent increase in the case of Chocolates. The north zone leads with a 68 per cent increase in the growth of soft drink consumers while the east zone leads in chocolate penetration at 73 per cent.

In the Household products category, the overall penetration of utensil cleaners has gone up by 40 per cent in the last five years. Rural India is now buying specialised, branded utensil cleaners and moving away from the typical ash/soil usage in the past. Also households that use toothpaste or tooth powder have seen an increase of close to 5 per cent in penetration.

The rise is more marked in the south zone, which continues to be the zone with the highest penetration in this category.

While the penetration of consumer durables is low in rural India, colour TV penetration has risen by 200 per cent, followed by motor cycles at 77 per cent, refrigerators at 31 per cent, tractors by 28 per cent and Bicycles by 17 per cent.

News: Indian car sales in March up 23.68%

(PTI 13/04/2006) New Delhi - Domestic passenger car sales in March 2006 grew by 23.68 per cent at 1,10,978 units as against 89,724 units in the same month last year.

According to figures released by the Society of Indian Automobile Manufacturers, bike sales were also up 22.77 per cent at 5,36,220 units during the period as against 4,36,737 units in the same month last year.

Commercial vehicle sales were up 20.60 per cent at 43,537 units as against 36,100 units in the corresponding month a year ago.

For the fiscal ended March, passenger car sales in the domestic market was up at 7.55 per cent at 8,82,094 units as against 8,20,179 units in the previous fiscal.

Bike sales were also up 17.1 per cent at 58,15,417 units as against 49,64,753 units in the previous fiscal.

Commercial vehicle sales for the fiscal stood at 3,50,683 units up 10.1 per cent from 3,18,430 units in the previous fiscal.

News: Randstad acquires 57% in India's Team4U

(RTR 13/04/2006) Amsterdam - Dutch temporary employment company Randstad NV said on Thursday that it has acquired 57 per cent of Indian staffing company Team4U.

"The transaction is expected to have no material effect on Randstad's earnings per share", the company said in a statement.

Team4U provides staffing and services such as payroll management, Randstad said. In 2005 Team4U had revenues of 15 million euros.

Randstad is the world's fourth largest staffing agency in terms of sales.

Column: Of 'dahi bhalla' and organised retail

(HBL 12/04/2006) Mumbai - How transferable are Western ideas, products, and business models to emerging markets like India?

Ravi Poonen, Chennai

Ravi, at the very beginning, I do believe markets are about consumers and money. Both these aspects largely hold the same dimensions in most markets. Consumers are essentially mavericks and their minds and moods change dramatically. Money, however, is limited, and the splurge of money is dictated by an approach that is reasonably rational. Marketers vie for the attention of the consumer and her money. Having said that, this does not mean that all markets are level.

Markets in developed countries depict a pattern that is different from what we see in developing or emerging markets. Developed markets speak of an ability to absorb anything and everything international that has succeeded in a market quite like it.

Developing markets, however, have a habit of rejecting clonal marketing strategies that have worked elsewhere. They demand a unique and individual understanding of local reality, desire, aspiration and passion.

India, for one, is a very different kettle of pomfret altogether. It is as `aclonal' a market as it comes. Our diversity patterns are huge. This market demands customisation. Acute customisation! The Western idea is welcome, but it needs to adopt an avatar that is completely acceptable to the local mind and mood of the consumer. Early MNC entrants in the category of footwear realised this to their utter surprise. What worked beautifully in Singapore and Kuala Lumpur was not working as well in India.

There is an exception, though. The premium category. In categories such as a Swarovski, premium cars and high-end perfumes, the market is entirely different and more accepting of the global thought, the global marketing campaign and even the blonde model who will ask you to own a Gucci! The mass market is different. It is more about customisation and local tweaking.

Can you think of some Indian brands that are poised to make a mark globally?

Swati Menon, Mumbai

Swati, let me think. Take yoga. It is doing well. I can't think of too many brands from the manufacturing sector though.

For the past 60 years, we have flogged the `Made in India' line that has not delivered at all. I believe we need to focus on the `Served out of India' line and most certainly the `Grown out of India' line in the future. We are great at service, and our agri-practices are ancient and time-enduring. We need to package these for the future.

India and BPO is a brand that is clicking well. The services sector can offer hospitality and Indian holistic healing systems that will make a truly global Indian brand.

I believe we can create a truly Indian offering in aviation space. Jet Airways can surely compete in this space. And so can Kingfisher in the future.

I am just about to join a savoury snacks major which has big ambitions for India. Can I have some inputs this market?

Rajeev Reddy, Hyderabad.

The savoury snacks market has evolved over the years. Every new MNC entrant is actually upgrading from local taste profiles. The bhujia market is largely sewn in by Haldirams and Bikanerwala and a host of local players much smaller than these two.

Some insights:

Snack food upgrades need to largely keep in tune with the existing market and its taste. Even a Lay's chip has to have the profile of chaat as a taste variant if it is to attempt to be relevant to the local consumer.

There is a generic possibility of upgrading from wet snacks in the market like chaat, dahi bhalla and even medium-wet snacks such as kachoris and samosas in the market to dry. packaged versions.

These snacks will need to keep taste intact but can offer product variants that are different. For instance, hard dough items that taste like chaat, but last longer. The USP of this category is all about hygiene and consistency in taste delivery.

There is a possible market for a baked savoury, just as long as it is not advertised to be baked. The moment you do that, there is alienation in the market.

Health is an issue and a non-issue in the market at the same time. Consumers know a low fat crispy is good for the heart, but really don't prefer it, unless advised by the doctor with a threat.

Retail is a growing industry. What's real and what's hype?

Shiny George, Mumbai

Shiny, good question and good timing. We are just about going through the birth pangs of organised retail in this county. This is really the nascent stage. At this stage, every player is out to create all the hype that is necessary. Organised retail has a larger-than-life image in the country as of now.

The media is engrossed in this category as well. The reality is that the size of retail needs to be defined before we get excited about it or put off by it.

The secret lies in the numbers. India is a big retail market. The world churns out a business of $6.8 trillion in the retail segment. India is a $2.8-billion retail market. However, the important point is that in India, trade is largely disaggregated. Of all trade in this country, 98.3 per cent is handled by the small shopkeeper. Only 1.7 per cent of businesses are with the large chains.

The prognosis for this industry is as varied as the vested interests in the category touting the growth percentage. There are numbers that are pessimistic and put organised segment retail growth at 4 per cent per annum. And then there are numbers that predict an 18 per cent growth per annum!

Whatever happens, the fact of the matter lies in the reality that small retail will not get swept out of this country in the next 25 years for sure. The `small is beautiful' model works well for this country.

By Harish Bijoor, branddomain specialist and CEO, Harish Bijoor Consults Inc.

News: Box office hits bring high returns for Indian multiplexes

(TNN 12/04/2006) Mumbai - Multiplexes are not just about providing quality entertainment. They also offered considerable money-making opportunities to investors on the Indian bourses thanks to a sharp rally in the stocks of the country’s largest film exhibition firms.

Investors have earned handsome returns on their investments in shares of listed companies like PVR, Inox Leisure, Shringar Cinemas and Adlabs Films. Most of these stocks, except Shringar Cinemas, are currently quoting at new highs. Of these companies, PVR and Inox Leisure were listed only in recent months.

PVR is currently quoting at Rs 316, a 40% premium to the offer price of Rs 225 per share. Inox Leisure gained significantly in less than two months of its listing. At Monday’s closing of Rs 215, the share price has jumped 80% over the offer price of Rs 120 per share.

Adlabs Films is currently trading at Rs 405 against the offer price of Rs 120 per share, while Shringar Cinemas at Rs 73 against Rs 53. Analysts say the film exhibition business has a tremendous growth potential with the country’s cinema-viewing people becoming more conscious about quality of entertainment.

A lot of opportunities exist in the entertainment segment, which is also reflected in the fact that large corporates like the ADAG have entered the field with big investments. In ’05, ADAG acquired a 50.2% stake in Adlabs Films. ADAG plans to expand its presence across the entertainment value-chain.

“The film exhibition segment is growing leaps and bounds due to the high demand for quality family entertainment, as watching movies is one of the foremost entertainment options in India. With the corporatisation of film production, better movies targeted at a specific audience are increasing in number, attracting more movie buffs,” said India Infoline in its report on the prospects of film exhibition companies.

Factors like retail boom, changing demographic profile, rising disposable income and entertainment tax exemptions will drive the future growth of companies running multiplexes, it said. Though prospects look promising, the quality of cinemas and their box office collection will play a major role in performance of multiplexes.

There are also concerns that the industry may face an overcapacity. “With operators eyeing the same catchment areas, it could lead to fragmentation of the viewers and may lead to low occupancy and price wars,” the report stated.

“All the good news has been factored in as of now for the multiplex industry, but future growth will be seen only if there is a blockbuster film with an occupancy rate of 5.5 shows a day for a few months. Also, the expansion plans will be on full steam in FY09 when capacity will triple,” says Phani Sekhar, analyst, Angel Broking.

News: Indian retail chains eye strategic investors

(TNN 12/04/2006) Mumbai - City-specific durables retail chains like Vijay Sales and Vivek’s are understood to be in negotiations with investment bankers and retail majors like Pantaloon and Reliance, which may result in the latter picking up equity stake as strategic investors in these chains.

Vivek’s is also considering an IPO to fund its national expansion plans. This will enable the smaller firms to either go national to scale up volumes, or eventually be a part of a larger retail format.

BA Kodanarama Shetty, chairman and managing director of the Chennai-based Vivek’s, said the company is considering equity partnerships or an IPO.

“We will finalise things by the month-end,” he said. The retail chains are worried that unless they go national, their business could be badly hit by the new formats.

Heavyweights like Reliance, Godrej, Shopper’s Stop, Big Bazaar and specialised national durables retail formats like E-Mart will operate on high-volume business models. Durables majors LG, Samsung, Onida, Videocon, Philips and others are considering new formats to shore up business volumes.

Global durables retail chains like Best Buy, Circuit City, Radio Shack and others are also eyeing a slice of the Indian market. However, the Indian players are also ramping up operations aggressively to get a lead on competition.

“A couple of investment bankers have approached us. But we are closely watching developments before taking any decision,” said Nilesh Gupta of Mumbai-based Vijay Sales.

Durables manufacturers, which have had issues with the city chains for extracting higher business margins, may land up losing further margins to the new formats in return for higher volumes.

The new crop of retail chains is expected to not only offer multi-branding formats, but also larger shelf space for individual brands with better MRPs to consumers, information kiosks and area-specific models.

Retail sales (in real terms) are predicted to rise more rapidly than total consumer expenditure in ’03-08. The forecast growth in real retail sales during ’03-08 is 8.3% per year (compared with 7.1% for consumer expenditure).

Inevitably, modernisation of the Indian retail sector will be reflected in rapid growth in sales from supermarkets, department stores and hypermarkets.

News: India's Century textiles to open 70 stores

(PTI 12/04/2006) Chennai - 108-year-old Century Textile mills announced on Wednesday that it would open 70 more exclusive showrooms of its garment unit Cotton, to sell branded garments.

Of the proposed stores, 20 would be in South India, Business Head Cottons Subrata Siddhanta told a press conference here after launching the company's retail brand in Tamil Nadu.

Each of the new outlets would cost the company Rs 15 to 20 lakh, he said. The company has fixed a sales target of Rs 60 crore during the current year, he said. Fifty per cent of sales came from shirts, 20 per cent from trousers, nine per cent from Pyjama-kurtas and 10 per cent from T-shirts, he said.

News: Indian retail success triggers bazaar for fixtures

(NDTV 12/04/2006) Mumbai - The secret behind any retail success is an attractive shop window and dressing up stores is turning out to be big business in India.

Every square feet of retail space requires investment worth at least Rs 2,000 on shop interiors, which works out to about $2 billion of shop display business across India.

The business of window dressing is attracting big foreign players as well and Chinese companies are taking the lead here.

Companies like Wuxi Risheng, Shenzhem Lucky, Shanghai Yonglan Buying Office and Xin Jiang Glass Manufacture Factory are hoping to bag a big chunk of business from India's retail industry.

• Europe's spotlight is also on light fittings inside the mega malls and stores. The big light fitting firms from Europe hope to clock 5-6 per cent growth in India.
  
  
• Danish lighting major Louis Poulsen is opening retail stores in key metros.
  
  
• And the Japanese are gunning for air conditioning and refrigeration orders, especially from Indian food retailers.

With most of the big stores by Reliance, Bharti and other foreign brands expected to open by end of this year, brisk sourcing has already started.

Going by the scale and size of the supply chain each is targetting, one could expect more and more foreign names to make it to Indian malls.

News: International retail majors eye India

(NDTV 12/04/2006) Mumbai - As foreign investors get ready to climb the retail ladder, they are depending on global property consultants to find the right plots for them to set up their mega malls.

For realty consultant Cushman & Wakefield, scouting out real estate for retail players promises to be big business.

Cushman says retail majors will invest $3-4 billion on real estate in India over the next three to five years.

"Our experience from rest of the world is that retail real estate development tends to deliver higher returns. We see India as no exception," said John Strachan, Global Head of Retail Services, Cushman & Wakefield.

Real estate boom

Cushman says despite the real estate boom, land prices in India are still not too high compared to other international destinations, which is why even Indian retail players will be able to compete with the global giants in the retail space.

"There is always a blend of dominant local format with some international entrants. There's absolutely no doubt that players like Shopper's Stop, Pantaloon, Westside are capable of competing with new entrants. But they have to get logistics right, it is a critical issue," added Strachan.

Apart from Walmart and Tesco, there are other retail big guns like AS Watson of Hong Kong or Zara of Spain looking to India for a retail foothold.

Experts say the government's continued revision of regulations and pro-FDI policy will certainly attract a sizeable chunk of investments from the international business community.

News: India's Guardian Lifecare plans 150 stores by next year

(BS 12/04/2006) New Delhi/ Chandigarh - Healthcare and pharma company Guardian Lifecare Pvt Ltd has plans to expand its chain of retail stores to 150 by March next year. In Punjab alone, the company has plans to invest Rs 15 crore in expansion over the next two years.

The growing organised retail pharmacy chain with a strong presence in north India feels the Punjab, Chandigarh and National Capital Region markets have a huge potential.

Speaking to Business Standard, Guardian Lifecare Chairman and Managing Director Ashutosh Garg said the company would like to expand to newer cities in Punjab and Chandigarh by the year-end. “In Punjab we will make our presence in upcoming malls in Jalandhar and Ludhiana,” he said.

He added, “We require a minimum 1,500 square feet area with an investment of anywhere between Rs 75 lakh to Rs 1 crore to start a store.”

Guardian Lifecare currently operates in seven cities in north India: Gurgaon, Delhi, Noida, Meerut, Faridabad, Ghaziabad and Jaipur. The 51 retail stores offer a range of prescription and over-the-counter medicines, food supplements, self diagnostic equipment etc.

Garg was confident that following a recent exclusive association with the largest global speciality retailer of nutritional supplements, General Nutrition Centre, which had revenue in excess of $1.3 billion in 2005, in two years’ time Guardian Lifecare would have a national presence.

“Currently, 250 products from the wide range of 6,000 that are available at General Nutrition Centre will be available in India,” informed Garg.

The company also plans to increase its headcount to 775 employees this fiscal from the present 275. The company closed this financial year with a turnover of Rs 25 crore and is targeting Rs 75 crore by 2006-07.

News: Indian govt looking to revitalise 400 airfields

(TV18 12/04/2006) New Delhi - Anil Ambani doesn't have to lose heart. The proposed civil aviation policy is asking for private participation for modernising more airports.

The Government wants to revive 400 airfields in the country under the ownership of the Airports Authority of India (AAI), Ministry of Defence and various state governments. Currently, no greenfield airport is allowed within an aerial distance of 150 kms of an existing airport.

The policy proposes to relax this restriction to encourage development of more airports. The Ministry also wants multiple airports in metropolitan regions to meet requirements of different areas. The policy also proposes restructuring the activities of AAI.

AAI will be hived off into five subsidiaries separately handling consultancy, architectural, construction, cargo and ground handling services. These subsidiaries will be fully owned by AAI or through joint ventures with international partners. To generate funds for modernisation, the government will tap the capital markets through an IPO.

Airport modernisation will be put on the fast track. To remove air congestion, the ministry has also proposed that air traffic management services be set up as a seperate entity. Passenger, air traffic and transport services could also be thrown open to private sector in non-metro airports.

DGCA will exercise regulatory control over air navigation services and would conduct safety audits for air traffic controllers. Ground handling services at all airports including the greenfield ones will become more competitive.

Private participation will be allowed through competitive bidding on revenue sharing basis by the aiport operator subject to security clearance. Foreign airlines would also be allowed self handling at international airports provided it has a minimum of 14 services per week.

There will be a minimum of two authorized ground handling service providers in airports in metro's in addition to the subsidiaries of Air India and Indian.

News: Indian carmakers eyeing Malaysia

(TV18 12/04/2006) New Delhi - The National Auto Policy announced last month in Malaysia has eased taxation norms to attract foreign manufacturers. And Indian carmakers like Tata Motors and Mahindra & Mahindra are making a beeline for Malaysia.

Tata Motors is likely to set up an assembly line in Malaysia, as a means to get its passenger cars on Malaysian roads, thanks to Malaysia's new auto policy.

Tata Motors might soon start assembling its Indica family of passenger cars in Malaysia. The company is in talks with Scott & English, a business arm of the $2 billion DIB Hicom group for collaboration. Tata Motors already has a tie-up with DIB Hicom to assemble commercial vehicles. But now Malaysia's new auto policy has cut imports from non-ASEAN countries like India by 10-30 per cent, which makes Malaysia attractive.

Alan Rosling, Executive Director at Tata Sons says, "We keep looking at various markets. Particularly in Malaysia, the tariff structure would make sense for us to have assembly operations."

Apart from Tata Motors, Mahindra & Mahindra also plans to start an assembly unit in Malaysia. Malaysia would then become an export base for these companies to other ASEAN countries.

This would help them to obtain a manufacturing licence in Malaysia. According to a Frost & Sullivan analyst, companies using Malaysia as an export hub may get them concessions while importing fully built models.

Malaysia is the biggest car market in Southeast Asia. The National Auto Policy announced last month has eased taxation norms to attract foreign manufacturers. But the challenge for carmakers like Tata Motors and Mahindra & Mahindra will be to compete against imports from ASEAN countries because under the new Auto Policy, ASEAN vehicles will attract lower duties in Malaysia than those imported from non-ASEAN countries like India.

News: India no-risk zone for foreign investors

(IBN 12/04/2006) New York - Global consultancy firm Price Waterhouse Coopers has formed an alliance with Eurasia Group, a leading risk advisory company, to offer a Political Risk Assessment Service.

In an era of growing globalisation, the new tool will help clients integrate political risk management into their business strategy. India will figure prominently in this analysis.

Director, Research, Eurasia Group, Preston Keat, says, "We're going to be focusing on the largest 200-300 PWC global clients. And our sense is that at least 90 per cent of them, will have some fairly significant operations in India. So, India will be front and centre in terms of our analysis in this relationship."

A study by Eurasia Group has ranked the top political risks in 2006 in this order -

• Iran
• China
• Avian Influenza
• Latin America
• Iraq
• Nigeria
• Terrorism

(Source: Eurasia Group)

With Indo-US relations on an upswing and tensions with Pakistan subsiding, India is no longer considered a major political risk for multinationals. Instead, companies are worried about regulatory risks and ironically, competition from other investors.

"Everybody is going to India. As a result, you find that the cost implication in India is not as attractive as it used to be. So, it's a risk that we have to address. So, at least when our clients are moving to India, they have to go in with their eyes open," said an official from Price Waterhouse Coopers.

"This could be an issue, the cost of training is very high and you don't want the turnover that comes with that. So, as a result you have to factor in the turnover rates," he added.

Even as political risk recedes in India, multinational firms are increasingly concerned about the prospect of intermediate term instability in China. India could benefit from their desire to diversify their exposure beyond China.

News: India no-risk zone for foreign investors

(IBN 12/04/2006) New York - Global consultancy firm Price Waterhouse Coopers has formed an alliance with Eurasia Group, a leading risk advisory company, to offer a Political Risk Assessment Service.

In an era of growing globalisation, the new tool will help clients integrate political risk management into their business strategy. India will figure prominently in this analysis.

Director, Research, Eurasia Group, Preston Keat, says, "We're going to be focusing on the largest 200-300 PWC global clients. And our sense is that at least 90 per cent of them, will have some fairly significant operations in India. So, India will be front and centre in terms of our analysis in this relationship."

A study by Eurasia Group has ranked the top political risks in 2006 in this order -

• Iran
• China
• Avian Influenza
• Latin America
• Iraq
• Nigeria
• Terrorism

(Source: Eurasia Group)

With Indo-US relations on an upswing and tensions with Pakistan subsiding, India is no longer considered a major political risk for multinationals. Instead, companies are worried about regulatory risks and ironically, competition from other investors.

"Everybody is going to India. As a result, you find that the cost implication in India is not as attractive as it used to be. So, it's a risk that we have to address. So, at least when our clients are moving to India, they have to go in with their eyes open," said an official from Price Waterhouse Coopers.

"This could be an issue, the cost of training is very high and you don't want the turnover that comes with that. So, as a result you have to factor in the turnover rates," he added.

Even as political risk recedes in India, multinational firms are increasingly concerned about the prospect of intermediate term instability in China. India could benefit from their desire to diversify their exposure beyond China.

News: Indian chemical Inc to fight WMD

(PTI 12/04/2006) Mumbai - In view of threats posed by Weapons of Mass Destruction (WMD), country's chemical industry is making efforts to adhere to Chemical Weapons Convention (CWC) act to prevent proliferation of chemicals that could be used to make such weapons.

"The government of India has formed the National Authority for Chemical Weapons convention (NACWC). It is taking measures to educate the industry to help us act according to the law," Indian Chemical Manufacturers' Association (ICMA) Director General, D P Misra said.

India is one of the 176 countries which became signatory to the Chemical Weapons Convention (CWC) in the year 2000 and the CWC act, passed by Parliament in August 2000, came into force on July 1, 2005.

"The government is trying to create awareness amongst the industry members.

We have been holding seminars and workshops for this purpose," joint industrial advisor, ministry of chemicals and fertilisers, P N Maji said.

Based on CWC guidelines, a signatory country has to comply with the set regulations. This requires periodic declaration pertaining to toxic chemicals as listed in the CWC Act 2000.

Each industry producing such chemical, which fall under the act has to file returns with the government, which will submit it on behalf of the companies to the Organisation of Chemical Weapons (OPCW), Hague, Germany.

Gvernment could arrest or penalise companies that manufacture toxic chemicals, identified under the CWC act which fail to submit the required information.

Chemicals containing elements of phosphorus, sulphur or fluorine come under the CWC act.

According to the act, no person shall produce, acquire, retain or use toxic chemicals identified and shall not transfer such chemicals outside the territory.

"Under section 40 of the act, punishment for contravention in relation to development and production of chemical weapons include imprisonment up to one year, which may extend to life, and also fine up to Rs. 1 lakh," misra said.

The ICMA dg said that there are around 5000 small and large units manufacturing these chemicals.

"If we strictly calculate, the chemical industry falling under the CWC act is at least worth Rs. 1,50,000 crore or US dollar 32 billion," he said.

Ater the enforcement of the act last year, around 300 companies have already submitted their returns with the NACWC.

"This year we expect the number of companies submitting the returns to increase up to 2000. We are all aware that misuse of these chemicals can lead to producing weapons of mass destruction. We have allowed inspections and are trying to adhere to the CWC act," he said.

So far 20 inspections have been already undertaken. There have been no cases of violation yet.

News: India is world No. 10 in services

(PTI 12/04/2006) New Delhi - India has moved one place up to emerge as the world's 29th largest exporter of goods but jumped seven ranks to become the 17th largest importer in global trade during 2005, according to statistics released by World Trade Organisation.

In services, however, India's rank is far up in the list. The country is now the world's tenth largest importer and exporter of commercial services, compared to 15th and 16th largest respectively in 2004, as per the WTO's World Trade Report 2005 released in Geneva.

The country's merchandise exports last year grew 19 per cent to 89.8 billion dollars while market share rose by 0.1 per cent to 0.9 per cent of global exports.

But imports soared by 35 per cent - largely on the back of rising oil import Bill - to 131.6 billion dollars and the country's share in global imports stood at 1.2 per cent.

In services, while exports stood at 67.6 billion dollars, imports were marginally lower at 67.4 billion dollar. The country's share in global services exports and imports was almost equal at 2.8 per cent and 2.9 per cent respectively.

In merchandise goods, Germany has retained its place as the largest exporter with 970.7 billion dollars, followed by the US at 904.3 billion dollars, China at 762 billion dollars, Japan at 595.8 billion dollars and France at 459.2 billion dollars.

In imports, US is on top of the list with 1,732.7 billion dollars, followed by Germany at 774.1 billion dollars, China at 660.1 billion dollars, Japan at 516.1 billion dollars and UK at 501.2 billion dollars.

World's merchandise exports and imports rose by 13 per cent each to 10,393.1 billion dollars and 10,753.1 billion dollars respectively.

In services, the United States, UK, Germany, France and Japan have retained their places in top five importers and exporters.

The US exported services worth 353.3 billion dollars and imported 288.7 billion dollars; UK exported 183.4 billion dollars and imported 150.1 billion dollars; Germany exported 198.6 billion dollars and imported 142.9 billion dollars; France exported 113.7 billion dollars and imported 102.9 billion dollars and Japan exported 135.9 billion dollars worth of services and imported 106.6 billion dollars.

World's total services exports and imports shot up by 11 per cent to 2,415 billion dollars and 2,360 billion dollars.

News: Wagonwheel whirls at Mukesh flagship

(DNA 12/04/2006) Mumbai - A tectonic shift in the shareholding pattern of Reliance Industries Ltd has seen a drastic downsizing of promoter entities in India’s largest private sector company.

The overhaul cut the number of entities acting in concert with the promoters to one-sixth of the original size of 92 to 16 firms during the quarter under review ending March 31, 2006.

However, the individuals and bodies corporate among the promoters that make a separate list reveals that the number hasn’t changed except for a few new names appearing in the list replacing the older names. The number under that category is unchanged at 32.

Reliance Industries has been traditionally controlled by a web of investment companies, that includes a long list of persons and firms acting in concert with the promoters.

That the drastic restructuring of the ownership pattern by shovelling much of the promoter shareholding into fewer firms reveals that complex overhauling initiated early this year has been completed. The lesser number of investment firms reveal that it’s a more transparent form of owning shares by the promoter.

Not surprisingly, the March-end shareholding pattern reveals that the Anil Ambani family shareholding is no longer counted among the promoter holdings. Mukesh Ambani, chairman and managing director who holds the reins of RIL, has pared his personal holding during the period. The shares held under his name have seen 50,000 shares less for the quarter ended March 31, 2006.

It comes around the same time when the largest private sector company is completely under his control, as the division of assets of RIL group has finally seen the light of the day.

Family matriarch Kokilaben continues to hold the same number of shares in the company, while Nita Ambani, Mukesh’s wife, Isha his daughter and Akash, his son hold the same percentage of shares each, i.e, 0.12% of RIL’s equity. Simultaneously, his youngest son Hari Anant M Ambani is the new name that’s appearing among the list of promoter individual shareholders.

The rest of the individual promoters have more or less retained their shares in the company.

Along with Anil and Tina Ambani and their two sons, the Ambani sisters -Dipti Salgaokar and Nina Kothari and their spouses disappeared from the current list of individual promoter shareholders.

However, several new names figure in the bodies/corporate counted as promoters and they include Sanatan Textrade, Anumati Mercantile, Pam Investments Rajlaxmi Securities and Fiely Investments.

Not surprisingly, some names that don’t figure in the list are Reliance Capital Ltd which is now firmly controlled by Anil Ambani’s Reliance-ADAG group.

It may still be that the promoter family members whose names do not appear in the list still own shares in the company, but do not feature in the promoters category anymore.

News: Foreign realty funds face Indian regulatory bump

(BS 12/04/2006) Mumbai - The Reserve Bank of India’s view that the foreign realty funds would create a bubble in the sector has resulted in blocking of $ 4 billion worth of proposals.

Close to 20 foreign venture capital investors (FVCI) have applied to the Securities and Exchange Board of India (Sebi) but no permission has been granted to any of them. Over a dozen Indian entities have incorporated companies in Mauritius and Cyprus to float these funds.

While giving a nod to such investors, Sebi consults the RBI as it involves inflow of foreign funds but the latter has informally expressed its reservations on the issue.

“Since regulatory approval is not forthcoming for floating a FVCI, we may have to take the FDI (foreign direct investment) route to invest in the real estate sector,” said one of the entities which filed an application to float such a fund last year.

The government has allowed FDI in real estate sector with certain caveats. These venture capital funds focus on real estate and real estate intensive businesses.

They invest in urban infrastructure like hotels, shopping malls, large-scale residential complexes in new townships, infotech parks and special economic zones.

Over a half a dozen domestic realty funds have been set up so far with a corpus of over Rs 3,500 crore. The existing players include Housing Development Finance Corporation, Kotak Mahindra, Pantoloon, and Anand Wrath among others.

Banks and financial institutions, domestic corporates and high net worth individuals invest in these closed-ended funds that have lives between five and seven years.

“None of the proposed overseas funds which have explicitly stated that they would play in the real estate sector has got the regulator’s nod. However, some of the foreign funds floated by domestic institutional which have not used the word `realty’ to describe the nature of the funds have got the permission. These funds are heavily investing in real estates,” said an industry source. Investment in real estates is a permissible activity under the venture capital regulations.

The RBI has recently directed banks not to lend money to any real estate project unless all permission from all relevant regulatory authorities are in place.

This has slowed down the flow of bank credit into the sector. The banking regulator has done this to stymie speculation in the “sensitive” sector.

However, its reservation about the FVCI has not gone down well with the industry. “If funds flow both in terms of debt (bank loan) and equity (venture capital) is choked, it will sent the supply and fuel further price hike of real estates,” said an analyst.

News: India's IVR Prime to develop integrated townships

(BS 12/04/2006) Chennai/Hyderabad - Land identified in Karnataka, Maharashtra, TN and Delhi.

IVR Prime Urban Developers Limited, a wholly-owned subsidiary of the Rs 1,000-crore IVRCL Infrastructures & Projects Limited, is planning to develop integrated townships in major cities across India. The company has identified lands in Karnataka, Maharashtra, Tamil Nadu and Delhi for this purpose.

“The proposals for these projects are at the drawing board stage,” IVR Prime managing director, E Sunil Reddy, told Business Standard. The company, which had been set up with the intent of taking up mega urban infrastructure projects, is also planning to come out with a public issue to fund its future growth plans.

Reddy said IVR Prime would now be able to get back its Rs 200-crore investment “struck up in its Hill Ridge project for the past five years”.

Following fulfillment of its contractual obligations with the Sports Authority of Andhra Pradesh (SAAP), the state government had permitted SAAP to register the flats and individual villas built by the company at Gachibowli.

In 2001, IVR Prime purchased 50 acres of land carved out of the University of Hyderabad campus at a cost of Rs 14.5 crore and had built an integrated township called “Hill Ridge” as a private-public partnership initiative. The company had entered into a memorandum of understanding with SAAP and AP Industrial Infrastructure Corporation in this regard.

As per the terms and conditions of the MoU, the township had been initially handed over to SAAP for accommodating the participants in the national games held here four years back.

Subsequently, the company had sold the 600 apartments and 125 independent villas constructed at the site. However, as the land was purchased from the state government, registration had to be done by the government.

Due to various reasons, there had been a delay in the registration of the flats and independent houses. Consequently, the purchasers had made only partial payment to IVR Prime. Now, with the government permitting SAAP to register the built-up premises, the company would be able to realise the full amount.

According to IVRCL vice-chairman and managing director, E Sudhir Reddy, the company had initially invested Rs 140 crore for accommodating the 10,000 athletes who participated in the national games. Due to delay in registration of the constructed area, the company had to bear an additional interest burden of about Rs 78 crore.

IVR Prime is now building a 12-lakh square feet shopping mall and an IT park on the Hill Ridge premises at a cost of Rs 250 crore. It is also exploring the possibility of constructing a five-star hotel at the place. “The shopping mall and the IT park will be ready in two-and-a-half years,” Sunil Reddy said.

News: India, emerging markets sizzle

(BS 12/04/2006) Mumbai - In Q1 of CY06, India stands 4th with 20 per cent returns.

India, along with three other emerging markets, grabbed the honours in the first quarter of calendar 2006 with an average 20 per cent returns.

During the quarter, Moscow Times of Russia topped the chart with 22.35 per cent returns, followed by OSE All Share of Norway at 20.81 per cent and Karachi 100 of Pakistan at 20.19 per cent. In comparison, the benchmark BSE Sensex stood at the fourth spot with 20.03 per cent returns.

Among the other major markets, while Japan’s Nikkei rose 5.89 per cent, Hong Kong’s Hang Seng, Nasdaq composite, FTSE 100, and NYSE composite all gained over 6 per cent each. Australia’s S&P/ASX 200, Straits Times of Singapore, ISE National-100 of Turkey and AEX General of the Netherlands gained over 7 per cent each.

The only Asian index to lose ground was South Korea’s KOSPI, which fell around 1.4 per cent. Though the Sensex has hit record highs in the recent weeks, market players do not expect its sizzling run to continue. On April 10, the index closed at 11662.55 after a day of extreme volatility.

Sandip Sabharwal, chief investment officer (equities), Lotus India AMC, feels India would underperform other emerging markets over the next couple of months since it is already overvalued.

“At a forward P/E of 17, the Indian equity market is commanding a higher valuation compared with the average P/E of 10-13 for other emerging markets. So, in that sense, we might see some cool-off,” Sabharwal said.

The view finds favour with Robin Griffiths, head of asset allocation at Rathbones, the UK-based firm that provides discretionary fund management and wealth management services to private clients and trustees.

According to Griffiths, the Indian equity market is now not cheap but the most highly rated on earnings of any so-called emerging market.

“It is worth a premium but not quite the one it has now. The extra strength really is foreign money flooding in and pushing prices up too far too soon,” he said.

Griffiths added, “In round numbers, about 12,000 is a top for the Sensex now and actually, there is an outside day reversal pattern there now.” Outside day reversal is a two-period chart pattern that suggests a potential reversal or deceleration of the current trend.

According to Sabharwal, rotational rallies will be the order of the day as sectors, which were not part of the rally, find favour among market players.

“Information technology has underperformed the broader indices by 30 per cent or so in the past year. In fact, too many negatives have been factored into the sector overlooking the positives. So, we can expect the sector to catch up with the market,” he added.

“But a fallback to 9,000, roughly, is expected. We would then be buyers again on that weakness, but there does need to be a dip,” feels Griffiths said. HOW THEY FARED Exchange Name Country 30-Dec-05 31-Mar-06 % change Moscow Times Russia 14723.18 18014.22 22.35 OSE All Share Norway 376.78 455.20 20.81 Karachi 100 Pakistan 9556.61 11485.90 20.19 Sensex India 9397.93 11279.96 20.03 All shares Sri Lanka 1922.21 2264.36 17.80 MerVal Argentina 1543.31 1800.58 16.67 Jakarta Composite Indonesia 1162.64 1322.97 13.79 Bovespa Brazil 33456.00 37952.00 13.44 ATX Austria 3667.03 4139.83 12.89 Shanghai Composite China 1161.06 1298.30 11.82

News: Indian FMCG sector net increases by 32%

(BS 12/04/2006) Mumbai - While the fast moving consumer goods (FMCG) sector has been back on the growth path for the last few years, the past year saw it come back with a boom.

On a year-on-year basis, the sales for the October-December quarter increased 11.42 per cent (personal care products) and net profit by 31.96 per cent as compared with the negative growth seen in the previous few years.

Milind Sarwate, CFO, Marico Industries said," India has had a GDP growth of over 7 per cent for three years now, but it is only now that the effect is being seen in the largely defensive FMCG sector."

He added that urban demand had increased on two counts, the growth of modern retail and the increase in incomes in the services sector, which had resulted in increased spending.

The best example of this is consumer goods major Hindustan Lever returning to double digit sales growth last year after a six year gap.

At the time of the results, Harish Manwani, chairman, HLL had said," Mass markets are growing and at the same time, there has been an increase in consumer spending and a decline in trade spends."

Nikhil Vora, vice-president research, SSKI Securities pointed out that what has also changed is that companies are starting to look outside their existing business ambit.

"Be it the Keyline acquisition by Godrej or Dabur's takeover of Balsara, most companies are becoming increasingly aggressive."

The other factor which has resulted in an increase in discretionary spending is the current boom where equity, real estate and bullion are all doing well. The ambient effect of this feel-good factor, which although untenable in the long run has led to increased consumer spending.

Shantanu Khosla, managing director, Proctor & Gamble, India said that the improvement has been a result of companies better meeting consumer needs.

"There has been more innovation in the sector and companies have also improved their reach via the distribution and marketing set up, all of which has resulted in increased sales."

What analysts are happy about, is that the growth has been both volume and value driven. Vora added, "The growth has been substantially volume driven. Also the price hikes that have happened have not been across the board but only in a few categories and products."

Also, almost all companies have set up factories in tax-free zones, which has had a positive impact on margins.

Column: From runway to retail

(TNN 12/04/2006) New Delhi - You made my week” said Hilary Alexander of The Daily Telegraph. ”You have put the colors together with great bravado and the result is very convincing,” said Suzy Menkes of the International Herald Tribune. These were reactions to Manish Arora’s debut collection at the London Fashion Week.

After an appearance at two fashion weeks, Manish Arora is the new sensation on the fashion stage in London. Suzy Menkes, Lisa Armstrong, Hilary Alexander and Anna Wintour — the Czarinas of the international fashion media — have all been seduced by his latest collection.

Defying the predictions of all trend forecasters, Arora’s collection featuring his own original palette of colour, embellishments, fabric and design is now on sale in leading department stores like Harrods, Le Bon Marche, Saks 5th Avenue, and 80 other premium destinations.

Everything seems in place for this fashion phenomenon to be converted into a global brand, but a sceptical voice might ask —what needs to be done now? The Indian design industry has in the past boasted of talented designers such as Asha Sarabhai, whose creations inhabited museum spaces around the world, and were lauded for impeccable craftsmanship and fine aesthetics.

But none of this talent was institutionalised as a brand. Our fashion designers have mastered the art of getting exquisite embroidery done by a not-very-organised labour, and created products that inspire designers worldwide. But of the 150 FDCI members, the jury’s still out on how many will truly become brands, whether domestic or global.

Branding today requires huge investments — in showrooms, advertising, PR, brand ambassadors and in this business, fashion shows. The sporadic participation by designers in various internationals Fashion Weeks is in some ways detrimental to brand creation, as “one show wonders” are never taken too seriously by the media and business houses.

Manish Arora has been fortunate enough to be supported by the Centre for Fashion Enterprises, a body that promotes young talent from around the world to help make London the centre of fashion.

So access to public relations consultants, styling and business services are provided by the CFE. Could not the FDCI, which is supported by the government give a boost to the careers of young design professionals by forming a committee that identifies and supports them?

There are already several designers selling in reputed department stores and boutiques around the world. Some of these include Monisha Jaisingh, Varun Bahl, Rajesh Pratap, Ranna Gill and Anamika Khanna.

The recent domestic tie-ups between Suneet Varma and Tuscan Verve and Manish Arora and Reebok are steps in the right direction. They may be small compared to the 120 million Euro fragrance deal signed by P&G and Dolce & Gabbana, or the Tom Ford-Estee Lauder deal, but they will smooth the growth path of the overall industry a bit. Future licensing agreements in other product categories will further help spread the designer brand names.

15 years working with designers like these has led me to believe that most of them are wary of tying up with larger companies. They fear that they will be taken for a ride or lose their identity — despite the success stories from Chanel, Gucci, YSL, and Louis Vuitton and designers like Karl Lagerfeld, Tom Ford, Stella McCartney and Marc Jacobs.

A 2003 study by Goldman Sachs projects that over the next 50 years, India’s economy will grow faster than that of other major economies due to its young and increasing workforce.

This will result in a paradigm shift in what the consumer wants; with increasing disposable incomes, tomorrow’s buyers will have more spending power. That should be the cue for designers to develop a deeper understanding of consumers, and put specially designed offerings on the market.

Retail initiatives like the tie-up between H&M and Stella McCartney created history. The specially designed merchandise was priced between $39.99 and $200, and had customers lining up outside shops to buy the range.

They were sold out within hours, with the first racks getting emptied in three minutes. The mass market bought its aspirational designer label at affordable prices, the designer got branding through nationwide advertising and the store clocked up huge sales.

I think we should now move up the value chain from running GPOs (garment processing organisations) to becoming DPOs: design processing organisations, which can offer our design potential to for brands across the world.

We are truly a reservoir of creative talent, rich crafts, opulent fabrics and a fine heritage — all the essential ingredients that define fashion.

By Harmeet Bajaj, former professor of marketing and communication at NIFT.

News: Indian developers consolidate hospitality arena

(BS 12/04/2006) New Delhi - The major realty players are consolidating their hold in the hospitality industry.

It was inevitable, really, that realty developers should get into the hospitality business. Already, they were part of luxury developments, were buying up or owned land, and had the technical excellence when it came to construction.

As for the nitty-gritties of the service sector, why, that could be sewn up through strategic tie-ups with the majors in the hotel industry.

And no, it isn’t an isolated trend, with real estate developers Emaar-MGF, DLF Universal, Ansals, Vatika, Ambience and Parsvnath all venturing into the hospitality biz.

Typically, the ownership of these hotels will be retained by the developers, while large (mostly multinational) hotel chains will ally with them for management and marketing functions.

Earlier, real estate developers had capitalised on the retail boom and had diversified from building only residential properties and offices to malls.

The unprecedented boom in inbound tourism and the IT sector has led to an unprecedented shortage of rooms, with hotels all over the country witnessing their highest-ever occupancy rates.

Sanjay Verma, joint managing director, Cushman & Wakefield says he’s hardly surprised by real estate developers’ foray into hospitality since they “bring value to the table”.

“They have large existing land banks and also the ability to acquire more land,” he says. And since one of the major deterrents to building new hotels is the availability of land, it is logical that the major realtors should foray into hospitality.

Take the case of Emaar-MGF that, last month, paid Rs 400 crore for 15 acres in New Delhi and Hyderabad. And last week, the real estate company won the bid for a six acre hotel site in Kolkata for Rs 209 crore. This property will be managed by the Inter Continental group.

Emaar-MGF has decided to enter the hospitality sector with an initial investment of $1 billion. This funding will be a mixture of equity and debt, according Shravan Gupta, managing director. Aiming at a pan-India presence in the hospitality business, Gupta is planning five luxury hotels and 25 budget hotels by the end of this decade.

The Delhi-based Vatika group has 3,000 acres in Sohna in its kitty and it will be using 33 acres from this land bank for developing a Westin (a Starwood brand) with an investment of Rs 100 crore.

Gaurav Bhalla, executive director, Vatika Group, says he will “invest Rs 100 crore for this project, which would be raised through accruals and negligible bank loans of Rs 2-3 crore”. Vatika has also signed up Westin Hotels for its projects in Bangalore, Jaipur and Gurgaon.

DLF had bid Rs 97 crore for a property in Rohini, New Delhi. In all probability, DLF’s hoteliering foray will be with Hilton International. But with its upcoming initial public offering, DLF is not sharing its plans for the hospitality sector just yet.

However, with special economic zones planned by DLF across the country (such as in Amritsar, Gurgaon, Pune and Kolkata), it is obvious that the company will require hotels and other related facilities. That need dovetails with the company’s expansion into the hospitality sector.

In tier two and three cities in north India, Ansals will be rolling out 15 mixed mall formats that will comprise service apartments and three-star hotels. Kunal Banerji, vice president, marketing, Ansal Properties and Infrastructure, says the company will be tying up with international as well as Indian hotel chains for the management of these properties. An announcement is expected shortly.

The Ambience Group had started purchasing land along National Highway 8 in Gurgaon in 1993.Having purchased 150 acres over the years, it is now developing a mall and a hotel on 16 acres of this land.

The company has made an investment of Rs 150 crore for the construction of the hotel that will be managed by Mumbai’s Leela group. The hotel should be operational by mid-2007.

Parsvnath Developers is hoping to build six luxury hotels and resorts in Delhi, Mohali, Jodhpur, Mysore, Kochi and Shirdi by end-2007. The estimated investment for this is approximately Rs 800-1,000 crore.

At a time when there is such a huge squeeze on rooms and tourism in India is booming, all this can only be good news for travellers.

News: FIIs look at Indian mid and small caps

(TV18 12/04/2006) Mumbai - In the last quarter, from January to March, foreign institutional investors, FIIs, have increased their stakes by more than 10% in 29 CNX 500 companies. In the same period, the total FII inflows into Indian equity markets stood at Rs 17,324 crore.

Data compiled by Moneycontrol clearly indicates that FIIs are slowly and surely showing a keen interest in the second and third rung mid cap and small cap companies in the Indian markets.

These companies belong to banking, finance, engineering, pharmaceuticals, sugar, fertilizers, telecommunications and auto components sectors - a sure indicator that the Indian growth story is a product of trickle down effect, analysts say.

In some companies like Bajaj Auto Finance, South Indian Bank, Prism Cement and Dishman Pharmaceuticals, the increase in FII stake has been over a 100% during Q4FY06.

For instance, in Bajaj Auto Finance, FII holding has gone up by 280% from 6.29% on December 31, 2005 to almost 24% on March 31, 2006. In South Indian Bank, FII stake jumped from 9.95% to 23% in the same period.

In Prism Cements though the absolute increase is minimal from 1.02% to 2.35%, the increase is a stupendous 130% over a period of three months. For Dishman Pharmaceuticals, FIIs increased their shareholding from 5.91% to 12.11% over January-March quarter, an increase of 105%.

Sumeet Rohra of Antique Stock Broking believes that with the benchmark indices trading at very rich valuations, FIIs are turning their attention towards the mid cap and small cap universe to diversify their risks and thereby optimize returns for their shareholders.

Rohra, however, advises cautions that an increase in FII holdings should not be the only criteria for retail investors to put their money in these stocks. "Investors should do their homework first about these companies and only then make an informed decision."

Nevertheless, an increase in FII holdings in these second and third tier companies indicate the faith of foreign investor community in the depth and solidity of the Indian stock markets, feel analysts.

News: Visa power pushes up tourist spending in India

(DNA 12/04/2006) Kolkata - Electronic payments have been stimulating international tourist spending in India big time. Visa International, the world’s leading payment card for international travel and an important channel in delivering tourism revenue into India, has seen its international card holders spending Rs 5,400 crore in 2005, a rise of 31% over 2004.

Tourists from the US, the UK, France, UAE and Australia, using Visa cards, contributed 64% to the total spend. The Japanese tourist visiting India, however, recorded the highest average spend per person.

The maximum usage of Visa cards in India by international tourists was for buying retail goods like jewellery, watches and crystals, followed by accommodation and transport.

While retail goods represented a 34% share among categories, accommodation and transport represented a 27% and a 9% share respectively.

Interestingly, almost 21% of India’s total foreign exchange earnings from tourism in the fourth quarter of 2005 were spends using Visa cards.

According to the Ministry of Tourism data, India’s total foreign exchange earnings from tourism for the fourth quarter amounted to $1762.46 million. Of this $372 million was spent through Visa cards.

“The contribution of electronic payment to overall tourist spending in the country and its impact on foreign exchange earnings is significant. As the tourism industry in the country evolves with development in infrastructure, a robust payment system will also pay a key role in enhancing attractiveness of Indian tourism,” Santanu Mukherjee, country manager, South Asia, Visa International Asia Pacific, said. “Inbound international visitors spent Rs 1,680 crore on their Visa cards during the fourth quarter of 2005, which represented a growth of 25% over the same period the previous year,” Mr Mukherjee said.

A Visa study indicates that cards are not only used at traditional travel and entertainment outlets, such as hotels and restaurants, but also at supermarkets, handicraft shops, and medical service providers. There is a clear trend that merchants in India are accepting cards for payment, though a vast majority of merchants around the country still remain cash-based. A further expansion of infrastructure for card acceptance across the country will give a boost to tourist spendings.

Visa International recently introduced the Incredible India Visa Great Breaks programme in partnership with the ministry of tourism.

The programme will target domestic, regional and international tourists and promote tourism in India among other countries in Asia.

Tourists will be provided with direct access to merchants across categories, thereby helping them to plan their visit more effectively.

News: Pharmacies gear-up to ride the Indian retail boom

(DB 12/04/2006) Mumbai - Pharma retailers gear-up for a boom with the opening of the retail sector to FDI, reports N Rao.

The retail revolution sweeping across the country has brought in changes to the way average urban Indians shop for a host of products and services — from routine groceries to attractive apparels, and from petrol and lubricants to books and magazines.

But a majority of Indians still visit the crowded neighbourhood pharmaceutical store to buy a vitamin pill or a painkiller, and in some of the smaller cities have to double-check to ensure that the medicines are according to the doctor's prescription, cosmetics like shampoos and creams are genuine, and the chocolates are not past the 'best before' date.

The $5-billion pharmaceutical retail market in India is, however, priming itself for major changes. Says Viraj Gandhi, CEO, Medicine Shoppe India: "Nine out of 10 blockbuster drugs in the future will be bio-tech based, requiring special storage facilities and transportation. Most of the existing pharmacies in India would be unable to meet the stringent requirements."

Gandhi's firm is the master franchisee in India of US-based Medicine Shoppe International, the largest franchisor of independent community pharmacies in America, and part of Cardinal Health Inc (ranked 16th on the Fortune 500 list in 2005), with group annual sales topping $75 billion.

Medicine Shoppe set up a presence in India in 1999, but faced stiff opposition from the well-entrenched domestic retailers of pharmaceutical drugs. Five years later, it had appointed 50 franchise stores in the country, and this month has reached the 100 mark.

"From here, we aim to become a 200-plus pharmacy chain by the end of this year, and cross the 700-mark in 2010, by expanding our operations in urban as well as rural India," says Gandhi.

There are over 800,000 chemists in India, dispensing about $5 billion worth of pharmaceutical products every year. International pharmacy chains have still not established a major presence in the country, but with the Indian government eager to open up retailing to foreign direct investment (FDI), many are expected to enter India.

The Indian government recently took tentative steps towards achieving the ultimate goal of allowing 100 per cent FDI in retailing, by permitting single-brand stores to set up shop here. Bruce Burnett, vice-president and international business head, Medicine Shoppe International, believes that over the next five years, "there will be a very strong boom in organised pharmacy retailing, where the pharmacy models will start following the western world."

International pharma retailers are expected to take advantage of the liberalised FDI rules relating to single-brand stores, and enter the country. Organised retailing today accounts for a negligible share of the overall market. But an increasing number of organised players have entered the business of late.

Healthcare giant Apollo Hospitals has established a formidable network of 300 stores under the Apollo Pharmacy brand, but mostly in south India. Another healthcare major, Bangalore-based Himalaya Drugs, is also on a major expansion spree in the retail sector. The herbal healthcare giant, has nearly 100 stores, and is planning an aggressive expansion.

It has just signed up with Reliance Retail – the ambitious retail foray of the Mukesh Ambani controlled Reliance Industries – to set up its Himalaya Herbal Healthcare stores at the new malls, hypermarkets and supermarkets that Reliance plans to set up shortly.

According to Subrata Dutta, business head, consumer division, Himalaya Drug Company, "consumers today are far more discerning. Along with quality products they are also looking for ambience and convenience in shopping. Our outlets have been designed keeping this in mind."

Shoppers at its stores can browse through the vast range of its products at the stores, while executives at the 'information centres,' reply their queries. Importantly, the stores are also electronically linked to a CRM cell, and aided by a team of doctors they are able to answer specific health queries of customers.

Himalaya has tied up with several other retail majors including Big Bazaar, Spencers, Nilgiris, Shoprite, D'Mart, Giant, Vishal Mega Mart, Lifestyle and Big Shopper. It has also gone in for tie-ups with other organised retailers of pharma products, including Apollo Pharmacies, Medicine Shoppe, Pill & Powder, CRS Health, Health & Glow, Guardian Lifecare and Global Healthline, with its chain of '98.4 degrees' stores.

In the north, Guardian Lifecare has set up a chain of about 50 stores, and is one of the fastest growing organised retail chains in the region. Its stores, under the Guardian Pharmacy brand, offers a range of prescription and OTC medicines, food supplements, toiletries, skincare, mother and baby care products, and self-diagnostic equipment.

According to Ashutosh Garg, chairman and managing director, Guardian Pharmacy, the group plans to have 500 stores in just about two years time. The company has also joined hands with the DCM Shriram and set up its 'Aushadhi' chain of rural pharma retail stores.

Garg believes that the initiative would ensure that rural folk, who face the problem of spurious medicines, would get genuine products.

'Aushadhi' outlets are located within the 'Haryali Kisan Bazaars,' the rural initiative of DCM Shriram. Ajay Shriram, managing director of the company, wants to add about 50 more rural utility marts (as the bazaars are known) over the next one year. The company operates 25 such marts mainly in north and central India. It would be investing about Rs75 crore into this business.

Companies like Guardian Lifecare and Medicine Shoppe see huge opportunities in the rural areas, where healthcare facilities are minimal. While the rural poor would obviously go to the public healthcare facilities, the affluent are woefully under serviced at present.

Organised pharmaceutical retailers are also focusing on the higher-end of the urban market. Says Gandhi of Medicine Shoppe, "Most companies today sell super specialty drugs directly as storage conditions, high costs of the drugs and returns policy are big blocks for ordinary retailers. And since these drugs are expensive, there is a high incentive for counterfeiters."

Medicine Shoppe has set up 'super specialty stores,' which acquire specialised products from the manufacturer, transport them to its warehouse in temperature-controlled conditions, and store them at the pharmacies in refrigerators. Importantly, they also ensure free home deliveries to registered patients anywhere in Mumbai.

Medicine Shoppe has also launched a special loyalty card. The smart cards carry details of the customer's medication, and even the patient's medical history can be accessed. The loyalty card also entitles customers to points – 10 points for every Rs100 spent at the store – and there are prizes, including free holidays abroad.

Guardian too has introduced a programme of privilege cards and vouchers. Others are planning free medical insurance to frequent buyers.

According to Burnett of Medicine Shoppe International, India and China are the two most promising markets for pharmaceutical retailers. "India is a very unique market," he explains. "It has the largest middle income consuming population, many of whom send this article to a friendsuffer from chronic ailments. Over the next five years as baby boomers start ageing, consumption of chronic as well as preventive medications is going to increase."

Pharma retailers hope to expand their market share significantly, and are going all out to woo this segment of the market.

News: Indian property cos jostle for SEZ pie

(TNN 12/04/2006) New Delhi - There is growing investor interest in the 100-odd special economic zones proposed to come up across the country. Landmark Holdings of the Dalmia Group, along with US-based affiliate Banyan Real Estate, is picking up a 16.5% stake in Vipul’s Rs 1,200-crore IT SEZ in Gurgaon for Rs 75 crore.

Gaurav Dalmia, director, Landmark Holding, told ET that his group would be keen to invest in other SEZ projects. Banyan Real Estate is a SPV floated by US-based institutional investors, targeting Indian real estate market.

Several real estate developers who have announced SEZ projects have received positive feelers from domestic and international investors over the last one month and similar such deals are currently in the pipeline, industry players said.

In the last one month, corporates like Reliance and developers like DLF, Mahindra Gesco, Ansals have evinced interest in setting up SEZ projects across the country.

As per industry estimates, the government has received around 180-odd proposals for setting up multi-product and industry-specific SEZs across the country over the last two months. Mr Dalmia said Vipul’s SEZ, which received in-principle clearance from ministry of commerce last month, will cater to IT and BPO companies.

The construction will be spread over three to four years. Landmark Holding has investments in real estate projects in cities like Delhi, Mumbai, Calcutta and other metros and towns, in projects worth around Rs 5,000 crore.

News: Pantaloon, Reliance set to foray into wholesale trade

(TNN 12/04/2006) Mumbai - Pantaloon Retail and Reliance are chalking out a massive foray into the wholesale agri-commodities business trade in India, with a business-to-business (B2B) model similar to that of Wal-Mart’s Sam’s Club across smaller towns and cities. The move is part of a strategy to strengthen their back-end supply-chain and sourcing capabilities to reduce costs and sharply scale up business volumes. The wholesale business will be a separate business model akin to that of Metro’s Cash N Carry, which sells primarily to the large distributors, kiranas and other mom & pop stores. Pantaloon’s wholesale retail venture, currently called KB’s Wholesale, has already set up shop in smaller markets like Mathura.

Modern retail formats are trying to build up efficiencies in the sourcing system to cut costs drastically by eliminating the distributor in the system. Analysts said the savings will help to lift profit margins for retailers. It is learnt that Reliance has already tied up with farmers and has even bought out several wholesale suppliers for its retail venture. Currently, most of the kiranas source their regular requirements from the APC or the large distributors who claim a margin of 5-6%. Industry sources said the wholesale distribution market is set for a big change with the entry of the big retailers.

Both the retailers have tied up with farmers in a big way to source commodities like dals and pulses and other food grains, apart from fresh vegetables, fruits and processed foods directly from the growers and suppliers, sources said. When contacted, Kishore Biyani, MD of Pantaloon Retail, said he did not want to divulge details. “It is a massive B2B model that will target retailers,” he said.

Retailers are scaling up volumes to ensure manufacturers sell to them. “For instance, abroad, if manufacturers do not sell to Wal-Mart, they are in deep trouble. That is what the industry calls the big-volume effect,” said an industry official. There are several indications that Wal-Mart is considering a JV-wholesale model in India, first with Sam’s Clubs that caters only to a business clientele. Already, the Rs 40,000-crore organised retail industry is providing large volumes to FMCG manufacturers. Industry majors like HLL, P&G, Colgate, Marico and Cadbury have stepped up discounts to retailers.

News: Archies to open 120 stores in India

(PTI 12/04/2006) Kochi - Gift and greetings major Archies Ltd is on an aggressive expansion mode with plans to open 120 company-owned stores across the country in the next two years with a total investment of Rs 30 crore.

The stores, which are in addition to the existing 65, would be opened in prime retail spaces across the country, Archies Ltd executive director, Vijayant Chhabra, told a press meet on Tuesday. Archies also has over 410 franchise stores across 139 cities and six countries, he added.

The new exclusive store in Kochi, being opened today, would have a relatively larger set up and stocking levels with wider range of cards and gifts giving the company greater access to its core target audience, he said.

Archies second retail brand 'Stupid Cupid', which focuses on fashion accessories was doing well, and already six stores had been opened -- five in Delhi and one at Mumbai and the target was to open 25 such stores this fiscal, he said.

With the retail boom now being witnessed in the non-metro cities with upcoming malls and changing lifestyle trends, Archies saw great potential in these new markets, he said.

The company was focussing on expanding its reach and presence in 18 new cities for opening up Company Owned Stores and Exclusive stores.

In terms of business, the highest growing segment was the Valentine Day cards. The business had not been affected by the protests in Maharastra, Chhabra said. "We are not doing anything illegal," he said.

The recently introduced big-sized 'sound cards', priced at Rs 300 a piece was receiving good response from customers, Chhabra said.

News: Pantaloon Retail March sales up 69%

(RTR 12/04/2006) Mumbai - Pantaloon Retail (India) Ltd said on Wednesday its limited retail sales for March rose 69 per cent to Rs 1.44 billion from the year earlier.

For March, the value retailing segment rose 91 per cent to Rs 1.05 billion, while life style retailing grew 29 per cent to Rs 391.2 million from the year ago, the company said.

Pantaloon was up 0.8 per cent at Rs 2000.10 in a weak Mumbai market.

News: Reliance Retail eyes retail deal with HK giant

(TNN 12/04/2006) Bangalore - Mukesh Ambani’s big-ticket retailing venture is scouting for a global sourcing partner. Reliance Retail is seen in talks with the $10bn Hong Kong giant Li & Fung for a mega sourcing deal for its private label business.

Informed sources said negotiations were based on the premise that Reliance Retail needs a partner with global competencies for sourcing requirements which would surge from ‘07-08 onwards as expansion plans gather momentum. The retail venture is expected to hit the market in the latter half of the current fiscal, ’06-07.

Reliance’s potential sourcing deal with Li & Fung could cover mostly soft goods like apparel, furnishings and household products, which anyway account for nearly 70% of the latter’s revenues.

The 90-year-old Li & Fung, which has diversified into shipping and property, is ranked as the world’s largest export corporation and is a reputed trading company dealing in ‘high-volume time-sensitive goods’.

Currently managed by the Fung brothers, Victor and William, the trading giant’s clientele include leading retailers in the US and Europe. Levis Strauss turned to Li & Fung when it launched the mass market initiative under the Signature brand through Wal-Mart stores.

The soft goods business is expected to form a sizeable chunk of Reliance Retail’s sales turnover projected at about Rs 90,000 crore in four to five years, added sources. Apparel alone is likely to account for about 20% of the revenue targets.

Incidentally, Li & Fung is on record baring its plans to strengthen its manufacturing vendor base in countries such as India and Bangladesh as it looks to reduce its dependence on China. If the deal with Reliance falls in place, Li & Fung could swiftly create competencies in the local market even though a sourcing pact would look at a vast vendor base spread across multiple markets.

News: MNC arms ride bulls to Indian $1 bn club

(TNN 12/04/2006) New Delhi - The bull run in the Indian stock market has not just catapulted barons of India Inc into the billionaires club, it has also pushed up valuations of Indian subsidiaries of MNCs.

In total, there are 14 multinationals whose value of investment in their Indian-listed subsidiaries are more than $1 billion, given their total beneficial stake and the current market cap of the Indian companies , as against just four who were in the billion dollar bracket in India last year.

The top MNCs by valuation as of this day include Unilever, BAT, SingTel, Holcim, Suzuki, Siemens, Vodafone, Nestle, ABB, GlaxoSmithKline, Robert Bosch, Oracle, Honda and P&G. At the end of the FY’05, only four multinationals had equity valuation of more than a billion dollars. These were Unilever, British American Tobacco (BAT), SingTel and Suzuki. Riding on the old horse HLL, Anglo Dutch consumer goods giant Unilever continues to lead the valuation game in India.

Unilever’s 51.5% stake in HLL put the value of its stake at Rs 31,766 crore or about $7.1 billion. It is followed by BAT and SingTel through their holdings in diversified giant ITC and the largest domestic mobile operator Bharti Tele-Ventures.

Incidentally, BAT and SingTel have been close contenders for the second spot in the valuation charts. Despite increasing its equity stake in Bharti from about 28.1% to 30.8% during the period, SingTel dropped down to number three behind BAT, which is a reflection of the relative performance of ITC and Bharti scrips over the last one year.

There are some MNCs who entered the chart by virtue of M&As. While Vodafone picked 10% beneficial stake in Bharti, Holcim’s open offer for ACC through Ambuja Cement India and its subsequent acquisition of 14.8% in Gujarat Ambuja Cement (GACL) and additional stake in Ambuja Cement Eastern pushed it up the charts. If the upcoming open offer of Holcim for GACL is factored in, its valuation would shoot up further.

In fact, assuming current market valuations of all companies to remain the same and if the Holcim open offer is fully successful in garnering the 20%-odd stake in Gujarat Ambuja Cement, then Holcim’s investment would be valued more than Rs 10,600 crore which would push it among the top three in the valuation charts.

Suzuki part of billion brigade

This apart,Oracle’s i-flex buy and the merger of P&G and Gillette were the other M&As which impacted the valuations of MNC investments in India.

The other MNCs who were part of the $1 billion-plus valuation group included Suzuki through its equity in automobile manufacturer Maruti, Siemens, GlaxoSmithKline through its two subsidiaries GlaxoSmithKline Consumer and GlaxoSmithKline Pharmaceuticals, Robert Bosch through Mico, Nestle, ABB, Honda through its stakes in Hero Honda and Honda Siel Power Products apart from P&G who ineffect now controls both P&G and Gillette operations in India.

Some of the other MNCs who had valuations of more than Rs 2,000 crore included Colgate, Mitsui(Sesa Goa), Cummins, Aventis and British Petroleum(Castrol). The ET study kept out the beneficial holding of financial institutions in the Indian market, wherein a number of asset management companies, private equity players as well as FIIs could have $ 1 billion plus exposure to the Indian market.

The charts could change dramatically during the course of this year given the open offer for GACL by Holcim as also the upcoming IPO of Hutchison Essar. If the internal valuations of the telecom operator is factored in Hutchison and Orascom would also figure among those with $1 billion-plus valuations. In fact, Hong Kong based Hutchison’s beneficial stake in Hutchison Essar would be valued at about $3 billion.

News: Indian industrial growth at 8.8% in February

(TNN 12/04/2006) New Delhi - Industry grew by 8.8 per cent in the month of February powered by growth in manufacturing and electricity sectors.

The index of industrial production (IIP) for the month of February showed that as many as 13 of the 17 industry groups had positive growth as compared to the same month a year ago.

During the cumulative period of April-Feb, 2005-06, IIP registered a growth of 8 per cent as compared to the same period in the corresponding period the previous fiscal.

News: Indian gold rush - Demand shifting from realty, shares

(TNN 12/04/2006) New Delhi - In short to medium term, gold prices are likely to rise further and the gold producers across the world have cancelled all the future contracts.

Most of the gold refineries have done away with all forward contracts as the outlook on gold prices is very bullish. Traditionally, 30-40% of refining capacities are sold in forward deals.

The main reason for rise in the prices is increased demand in the last couple of years. According to a World Bank report, demand rose to a record level of 4000 tonnes per annum, while the mine production remained static at 2250 tonnes per annum.

New discoveries in the major gold producing countries have become difficult, expensive and time consuming, it added.

The demands for gold, which is otherwise considered to be unproductive assets, come from large investors who want to hedge their investments in other assets.

Globally, present demand is due to rise in the prices of other assets like real estate and shares of companies, said Subir Gokarn, ED, Crisil.

He said to hedge the risk, investors are diversifying portfolios to gold and silver. This has led to an increase in demand.

Since US government's decision to disassociate dollar's value from gold in August 1971, prices of yellow metal rose sharply from $35 per ounce to all time high of $873 per ounce in January 1980. Later it fell to around $600 per ounce in December 1980.

But, in 1990s as other central banks started divesting gold reserves in the international market, gold prices fell
to an all time low of $251 per ounce in August 1999.

Worried by the fall in the gold prices sharply, which affected their reserves, 15 European central banks arrived at an agreement to limit their gold sales. This turned around the sentiments and gold prices started rising since then.

Terrorist attacks and counter moves by US also led to rise in demand for gold as a safe investment option. The Iraq war further contributed to the bull run as many investors turned towards gold to hedge the depreciation of dollar during war. In February 2003, gold touched $ 400 per ounce.

News: India Inc sweats as rates get harder

(TNN 12/04/2006) Mumbai - It came as a nasty surprise to many bankers. Amid a crunch in the money market, they stumbled upon a clever game that many corporates, even PSUs, have played. As banks scrambled for funds, corporates took pre-sanctioned working capital loans to park them at higher rates with other banks. It was like borrowing at 8% from bank A to park money at 8.5% or even 9% with bank B.

The arbitrage game lasted for weeks, as many banks were desperate to get funds. They didn’t know from where the corporates got the money. With large banks and mortgage institutions willing to borrow 46-day money at over 9%, corporates with a little extra cash in their treasury made quick money.

But such games don’t last for long. Today, corporates know that they will have to survive a rising interest rate regime. An analysis of over 1,000 companies in the manufacturing sector reveals that the impact of a 50 basis points (bps) rise in interest rates on a company’s margin is not yet substantial. This is so because debt exposure of corporates on an aggregate basis is still not very significant and interest cost as percentage of sales is 1-2%, barring a few groups analysed.

This analysis is based on FY05 results, and may vary if there are significant changes in the corporate debt structure going forward. The impact of a hike on PBT margin, on an aggregate basis for 1,044 companies, would be a 11.2 bps decline. The impact on net margin would be even lower, depending upon the tax obligation.

While it looks tolerable at this stage, the going could get tough in the days to come. First, there are all indications that rates would further harden; second, with most corporates lining up ambitious expansion plans, they would borrow more.

On sectoral basis, the impact is most pronounced in textiles and mineral product such as cement. The aggregate impact on textile firms is 25.5-30.4 bps whereas for the mineral products sector, it is 21-30.1 bps. The chemicals sector is least affected with only 7.2-14.8 bps impact. This sector also has least interest cost/sales ratio of 0.88-2.15%.

The data is divided into two classes: first, with sales between Rs 100-1,000 crore, and the second group with sales over Rs 1,000 crore. The impact of a hike in interest rates is more pronounced on 884 companies in the first group, with PBT margin going down by 18.6 bps. In comparison, the margin for 160 companies in the second category is down by only 9.2 bps.

The impact on companies, in the first group, is greater as these companies have greater debt exposure. Also, these companies do not have adequate bargaining power to fish for better finer loan rates. For instance, the average interest rate was 7.60% for companies in the first group, while it was 6.81% for those in the second group, about 80 bps advantage.

News: Indian merchandise exports rise 24.71%

(BL 12/04/2006) New Delhi - The country's merchandise exports rose more than 24.71 per cent in dollar terms at $100.6 billion during April-March 2005-06 against the same period during the previous year.

During March this year, exports were up more than 20.6 per cent at $10.90 billion against the same period in the previous year.

The imports, during April-March 2005-06, were valued at $140.23 billion, which is 31.52 per cent higher than imports valued at $106.63 billion during April-March 2004-05.

Oil imports

Oil imports during April-March 2005-06 were valued at $43.84 billion which is 46.84 per cent higher than oil imports valued at $29.85 billion in the corresponding period last year.

Non-oil imports are estimated at $96.39 billion which is 25.56 per cent higher than the level of imports valued at $76.77 billion during April-March 2004-05.

The trade deficit for April-March 2005-06, is estimated at $39.63 billion against $25.95 billion.

News: 'Quality of life in Indian cities set to improve'

(BL 12/04/2006) New Delhi - Increased investments from multinationals and foreign institutional investors could lead to further improvement in the quality of living standards in Indian cities over the next four to five years, according to a survey conducted by HR consultancy firm, Mercer.

Mercer's annual `Worldwide Quality of Living Survey' states that though cities in India generally rank lower than their Chinese counterparts, they are showing signs of development in the Asia-Pacific region.

"Significant investments from multinationals setting up operations in India may lead to improvements, boost economic growth and contribute to economic stability.

"In turn, this will encourage the local authorities to focus on improving quality of living standards.

"The real impact of these investments, however, will be felt in the coming 4-5 years," said Gangapriya Chakraverti, Business Leader of Human Capital Product Solutions at Mercer, India.

Covers 350 cities

Mercer's survey covers more than 350 cities across the globe. Each city is based on an evaluation of 39 criteria, including political, social, economic and environmental factors, personal safety and health, education, transport and other public services.

While Zurich and Geneva in Switzerland, Vancouver in Canada and Vienna in Austria lead the pack, Delhi and Mumbai are ranked at 150 in the survey and Bangalore and Chennai have been ranked 153 and 160, respectively.

The Indian cities have, however, been able to improve their rankings from last year. While Delhi (61 index points) moved up from 153 last year to 150 this time around, Mumbai (61 index points) moved up a notch from 151 last year.

News: Foreign cos enter Indian wholesaling domain

(BL 12/04/2006) New Delhi - Wholesale trading in India is changing in character. Since pre-Independence, it has been dominated by the traditional caste-specific trading community. However, today, foreign investors seem to be making a beeline for this traditional trade. The first three months of the year (January- March) has seen one-third of foreign direct investment (FDI) proposals approved by the Government in this sector.

Though in terms of investment it is less than 17 per cent (Rs 256.79 crore) of the total investments approved (Rs 1,542.57 crore) in the period, the socio-economic shift of the sector is significant.

Between January and March this year, the Foreign Investment Promotion Board (FIPB) had approved 100 FDI proposals, out of which 33 are proposals to undertake wholesale trading in India by foreign companies. These are in a wide range of product categories - from shoes to animal feed, from colour TVs and electrical equipments to hardware for doors and windows, to name a few.

A senior law consultant, who assists foreign companies setting up shop here, points out that the trend assumes significance because earlier foreign companies looking at wholesale trading in India were mainly interested in importing products to sell in the Indian market. "But now these companies are coming in purely as trading firms and sourcing and selling domestically only. This may pose strong competition to the local trading population," he said.

The single largest investor in wholesale trading to have got Government approval is Cargill Holding BV of Holland, which is poised to invest Rs 238 crore for trading in commodities including food grains and animal feed, and other industrial commodities.

Similarly, Sharp Corporation of Japan, which already has a manufacturing base in India, will now start trading in colour TVs, VCRs and similar items from other manufacturers as well.

The UK-based Randox Laboratories, whose products were earlier imported by domestic importers, will now be setting up its own subsidiary with an investment of Rs 15.5 crore for importing its own products and undertaking wholesale trading in them.

News: Digicel boss upbeat on T&T

(TTG 12/04/2006) Port of Spain - A mobile phone for $49 had customers in droves at the Digicel stores yesterday. And customers can expect to get more, as the company announced the promotion was the first in its marketing strategy to capture a greater share of the local mobile market.

Denis O’Brien, Digicel’s Irish chairman, said last Thursday’s opening was a soft launch as the company was just testing the market.

But the response has exceeded Digicel’s expectations by about 50 per cent, he said at a press conference at Digicel’s head office at Ansa Centre, Maraval Road.

“This is a long game and it’s going to be very competitive. We said we’d take four or five days and see how it goes and now we’re fully on. They (TSTT) are going to try to stop us from gaining customers and they will have initiatives and we will come back with initiatives,” he said.

“From our point of view, we’ve reduced handset prices to rock bottom prices so people can enjoy our networks. But once they go on the network the experience is completely different. Down the line there will be a whole number of different products and services we’ll be rolling out,” promised O’Brien.

He said TSTT had tried to bury the competition instead of fixing the issues with their own network.

“There is so much misinformation coming out of TSTT. For example, when they advertise, they don’t put in VAT (value added tax)—we put in VAT. But they are stripping out VAT to compare prices. It’s no point in us going there,” he said.

“For so long, the people of this country have paid rip-off prices for cellular phones, for fixed line services, and that day has now come to an end,” he said.

But O’Brien remained unphased by what he called “panic” marketing by TSTT to maintain its stronghold on the local market.

He said a similar strategy was employed by Cable and Wireless in Jamaica prior to Digicel’s launch in 2001, but it did not stop Digicel from capturing more than 70 per cent of the market.

O’Brien advised that TSTT should be more focused on securing its fixed market customer base as liberalisation often spelt the death of that business.

“We think out of 1.2-1.3 million population, mobile penetration can go to 1.1 million people. So that is 85-90 per cent of the population of the country. And we’ve seen that in other markets fixed lines dropping dramatically. Now that is bad news for our competitor but that is great news for us. We think that people want to be in the mobile world,” he said.

News: 'India scores in biotech' - E&Y

(BD 11/04/2006) Mumbai - India is well poised to become a hub for processing and managing clinical data in the biotechnology arena and stem cell research will help it to create a niche for itself, an Ernst & Young report on biotechnology said on Tuesday.

Utkarsh Palnitkar, industry leader (Health Sciences), Ernst & Young India, said, “India’s generics firms are positioning themselves to play a big role in the evolving biogenerics market. With our advantage in information technology and access to well-trained and relatively less expensive human capital, India is also well poised to become a hub for processing and managing clinical data. Further, stem cell research will also help us create a niche.”

The report — Beyond Borders: The Global Biotechnology Report 2006 — indicates the revenues of publicly-traded biotechnology companies surpassed $60 billion for the first time in the sector’s 30-year history. According to the report the biotechnology sector’s growth in the Asia-Pacific region outpaces its performance in other parts of the world with a scorching 46 per cent increase in revenues.

In 2005, Asia-Pacific became the first region to reach aggregate profitability in biotech. Asian governments see biotech as a natural fit and the next big thing because it is a technology based industry with tremendous growth potential in the decades ahead. Mr Palnitkar said, “Deals were a key driver in the Asia-Pacific region, where companies formed partnerships to position themselves in an environment characterised by brisk growth, increasing competition and sweeping regulatory changes.”

China and India continued to attract attention and deals, motivated by the desire to increase access to these large and growing drug markets, and by the need to lower the costs of drug development. The report noted: “With India becoming a signatory to the Patents Law, the rule of the game has changed for Indian companies and they are repositioning themselves for increased competition and new niches. With the patent regime coming into force, domestic and international companies are eagerly conducting research and development activities in India.”

It says that finding suitable valuation benchmarks in the Indian biotech sector is often a challenge, and a changing regulatory and policy structure adds to the complexity of valuing companies. “Seed capital to fund start-ups will be critical for the growth of India’s biotech sector,” Mr Palnitkar stressed.

News: ‘China still preferred over India’

(BD 11/04/2006) Mumbai - Grant Thornton’s latest International Business Owners Survey on China and India shows China is still preferred over India on various parametres. Another revelation was that 36 per cent of the Indian business owners export to United States followed by 34 per cent to the UK. But 25 per cent of the US exports happen to China and only 7 per cent to India.

The survey shows:

* India lags behind China in almost every respect.

* Europe lags the rest of the world in doing business with Mainland China.

* Nearly one in five medium-sized businesses in the survey now import from Mainland China.

* India and China lead rest of the world by some distance as preferred outsourcing destination

The results of the first independent survey of business owners in Mainland China show that they come fourth among the most confident in the world about the local economy out of thirty surveyed. India, Ireland and South Africa were the first three.

On outsourcing, one in ten of mid-sized businesses worldwide had outsourced operations to another country/territory. Hong Kong topped the outsourcing table (26 per cent of businesses) followed by the US (18 per cent).

The leading destination for outsourcing anywhere in the world was Mainland China — with 31 per cent of respondents already transferring or planning to transfer operations. India was next (27 per cent) followed at a distance by Mexico (8 per cent) and Malaysia (5 per cent).

When the respondents in the thirty countries surveyed were asked for the top three countries that they exported to, United States topped the chart at 20 per cent followed by Germany at 18 and UK at 16 per cent; China was at 12 and India at 5.

News: India hopes for $7B from oil investments

(AP 11/04/2006) New Delhi - India expects to earn more than $7 billion when it awards 55 new oil and natural gas exploration fields to successful bidders over the next two years, a top Indian official said Tuesday.

"We hope that all 55 blocks will be snapped up. We expect over $7 billion dollars investment within 24 months," Murli Deora, India's petroleum minister, told reporters.

Meanwhile, India is on schedule to start production of coal-bed methane gas by 2007, petroleum ministry officials said.

"We expect to produce 20 million cubic meters a day of coal-bed methane gas beginning next year," said M.S. Srinivasan, petroleum secretary.

In the latest round of bidding, onshore oil exploratory blocks are being offered in 11 states, mostly in central and northeastern India.

The offshore blocks being offered are located off the country's western and eastern coasts and the Andaman islands in the Indian Ocean.

Ten coal-bed methane fields are being offered for exploration in the states of Andhra Pradesh, Chattisgarh, Madhya Pradesh, Rajasthan, Jharkhand and West Bengal.

India has so far awarded 110 fields through an international competitive bidding process to boost the country's oil and gas production.

India, one of the world's most energy-intensive economies, imports more than 70 percent of the crude oil it consumes.

India consumes about 90 million cubic meters of natural gas per day, which is only sufficient to meet around 60 percent of local demand. The demand for natural gas is expected to increase as many industries are increasingly willing to switch over to the cleaner fuel. The country also aims to build more power plants that use gas instead of coal, which is limited.

A series of gas discoveries along the Indian coast in recent years, combined with the opening of the Indian market to supplies from outside, have fueled prospects for increasing gas consumption in the country.

Natural gas also costs less than traditional fuels, such as imported petrol and diesel, and Indian policy makers feel it would make the country less vulnerable to volatility in international oil prices.

India's energy demands are expected to soar in the coming years as its economy grows. The country's annual consumption of petroleum products is estimated to be close to 127 tons this year, while domestic output has remained flat for years at around 36 tons a year.

News: Second time lucky for BenQ in India?

(BS 11/04/2006) Mumbai - Does BenQ's second attempt at the Indian market improve its odds of success?

BenQ, the Taiwanese gizmo major, is in no mood to waste time. Not anymore. A powerful brand on its hometurf, it came to India some years ago, ran some commercials on TV, retreated into hibernation, and then made a comeback to kick itself off to a new start.

It happens. Remember LG? After a disastrous start, it was the third swipe at the Indian market — and what a USP-focused swipe it was — that eventually struck lucky for it.

BenQ expects this, though, its second attempt to be its big break. And the beehive of activity that its local office in Delhi has become is proof enough that the corporate adrenalin is in spate.

Task one, as the company has decided, is to get brand salience — best done in the bustling mobile phone market. For this challenge, BenQ’s managing director of India, Middle East and Africa operations Robert Dung, has decided to shift base camp from Dubai to Delhi.

“Dung will move from his current base as early as May, and will head operations from the Delhi office. This indicates BenQ’s vision to take its Indian operations to a higher platform, but Dung continues to manage the Middle East and Africa region too,” confirms Ish Bawa, spokesperson for BenQ.

Even though West Asia remains a larger market for BenQ than does India, the potential here is bigger. Strengthening the sales and marketing network is among the first things to do.

Aiming products appropriately is the other task. The corporate customer is to be wooed with its high-end image projectors and display panels, while the young consumer would have snazzy new mobile devices dangled before him/her.

As many as 15 BenQ-Siemens mobile phones, designed for India, are ready for launch — most of them music-enabled and every second of them with at least a 1.3-megapixel camera. The prices, Rs 3,000 upwards, would be quite affordable too.

This effort is the result of BenQ’s acquisition of Siemens’s mobile phone division, which has vowed to turn profitable by the end of 2006, with the Indian market making a significant contribution.

At the retail level, the brand building effort takes the shape of BenQ Zones, as many as 50 exclusive outlets across India that would showcase all the exciting new gizmos available (digital cameras and scanners too, by the way).

The product range is indeed impressive in comparison with BenQ’s Korean rivals. The only thing is: while LG, and now Samsung, have done a marvellous job of engaging the Indian consumer, BenQ’s efforts have been dismal.

So, is there a plan? “We will go for a two-pronged approach wherein the focus would rest on distribution, and delivering an innovative product range,” says Bawa.

But would that be nearly enough in a handset market where the leader Nokia has been “connecting people” with some fairly memorable advertising advice on the relevance of modern technology to everlasting relationships.

News: Nagpur to be India's first national air cargo hub

(PTI 11/04/2006) New Delhi - Nagpur airport will soon be declared India's first national air cargo hub with attractive tax holidays for those ready to boost the long untapped sector.

"A policy is being prepared that will promote Nagpur. It is likely to be ready by June," Civil Aviation Minister Praful Patel said on the margins of a business conference here on growing air cargo traffic in India.

"Business sops and tax holidays will be given to attract freight companies, national and international courier companies, airlines and allied sectors to set up business there," Patel said.

"Operators will have access to air fuel at cheaper rates along with land infrastructure support, tax holidays and other sops to help them consolidate their business."

Nagpur airport is already linked to the Middle East and Southeast Asia besides several stations in India. It will support 365 days of all weather cargo operations with facilities like cold storages.

"Indian Airlines has already chosen Nagpur to make it its national freight operation hub," said Patel, whose constituency Gondia is 170 km from Nagpur.

"The airport will have modern facilities and serve as a national cargo grid with warehouses and cold storages in a complex spread over 5,000 hectres.

"Considering the urgency for at least one national cargo hub, we will extend incentives for concessional landing and parking rates and navigational charges for about five years," Patel said.

"Cargo movements can significantly contribute to economic growth."

Stating that India has just five cargo freighter aircraft, Patel said there was an urgent need to increase their number. He asked private firms to take more interest in the sector.

News: 'India among top-10 service exporters'

(BS 11/04/2006) New Delhi - India joined the ranks of the top-ten service exporters securing the 10th place up from the 16th rank in 2004. The country's share in service exports was 2.4% while its ranking among service importers also was 10, with a share of 2.9% of the total.

India's ranking among the top merchandise exporters also improved one notch to 29 in 2005 from 30 in the previous year. The country's share in world exports was 0.9%, while its ranking among importers jumped to 17 in 2005 from 24 in 2004, trade statistics released by the World Trade Organisation revealed.

'For India the outstanding increases seem also to be affected by an improved coverage of transactions. Nevertheless, it is certain that India considerably improved its position in the ranking of service traders,' the WTO said.

Germany was the largest merchandise exporter while United States was the largest importer. Global merchandise exports during 2005 grew by 13% to $ 10.1 trillion, compared with 21% in 2004 while commercial services increased by 11% in 2005 to $ 2.4 trillion against 19% in 2004. United States topped both service exports and imports followed by UK and Germany.

News: Tesco to up sourcing from India by 66%

(BS 11/04/2006) hyderabad - UK-based retailer Tesco plans to increase sourcing from India by about 66% this year. It intends to source products worth pound 100 million from India this year as against pound 60 million last year.

Meena Ganesh, chief executive officer of Tesco Hindustan Service Centre (HSC), said: "Tesco is looking at sourcing household utensils and garden instruments from India, apart from garments, in this financial year. Ahmedabad, therefore, is on Tesco’s radar as a potential base for suppliers this year. A majority of the current suppliers are from Bangalore, Tirupur and Delhi."

Tesco HSC has been working on various applications that help in space management, continuous replenishment, queue management and so on. It is also working on radio frequency identification (RFID) technology. The company is setting up its third building in Bangalore that will be operational in the next few months.

Tesco HSC is planning to increase headcount to 2,000 by the end of this year. Tesco has invested "upwards of pound 25 million" in India so far.

HSC is the global services arm of Tesco focussed on IT and business services. It is the central hub for the development and implementation of Tesco in a Box, which is typically an integration of a set of enterprise applications. "We have deployed it in Turkey and will be rolling it out in China and Japan this year. We are also closely working with the US counterparts as Tesco plans to start trading in the US by the middle of next year," Ganesh said.

News: Suriname to launch domestic industry

(PL 11/04/2006) Paramaribo - Suriname will try new strategies to improve industrial production with a four million dollar loan from the Inter-American Development Bank.

At a meeting Tuesday with IDB officials, Finance Minister Humphrey Hildenberg voiced concerns of President Ronald Venetiaan over the poor industrial development.

The program enables the Ministry for Commerce and Industry to conduct, coordinate and support a commercial strategy, and establish efficient state-run and private consultation mechanisms.

Efforts will be also directed toward developing natural resources and communications, with high hopes for the Caribbean Community Unique Market and the project of common economy for 2008.

"Suriname could be the bridge between the Caribbean and South America, so we must develop an infrastructure that facilitates the traffic of humans, products and services", added Hildenberg.

News: Mirae Asset says to invest $52 mln in India

(RTR 11/04/2006) Seoul - A South Korean investment firm, Mirae Asset Investment Management Group, said on Tuesday it would invest 50 billion won ($52.36 million) to set up an asset management company in India.

Mirae Asset Investment, a unit of Mirae Asset Group, a financial services firm that also owns Mirae Asset Securities Co., would focus on the Indian stock market at first and then expand to other asset classes, an official from the company said.

"We can get better information on the Indian markets if we set up a unit that will have a research centre there," the official, who asked not to be named, told Reuters by telephone.

The official said the company has submitted application forms to the Indian authorities recently and added it usually takes about three months to obtain approval.

Mirae Asset Investment Management has invested about a combined 800 billion won in the India stock markets through two funds, with the money managed by a Singapore subsidiary.

The funds have earned about 20 percent respectively so far this year, the official said, while India's benchmark 30-issue BSE index has risen some 24 percent.

News: UK's Absolute agrees India hedge fund jv

(RTR 11/04/2006) London - UK-listed Absolute Capital Management Holdings Limited said on Tuesday it has agreed a joint venture to launch an equity hedge fund in July to take advantage of strong growth opportunities in India.

The Absolute India Fund Limited will use the stock picking skills of ASK Raymond James Securities India Private Limited, which currently manages more than $480 million, to trade Indian equities.

Absolute Capital has 800 million euros under management.

"In our opinion, India is poised to embark on a long period of sustained economic growth," Florian Homm, chief investment officer at Absolute Capital Management, said in a statement.

"Fundamental economic reforms and major investment are producing fantastic investment opportunities."

Absolute said India is the world's fourth largest economy, it has 15 percent of the world's population and 30 percent of the world's youth - under 25s.

India also has an expanding middle class, an improving infrastructure and gross domestic product growth of 7 percent for 4 consecutive years, it added.

"Having managed money in India for a number of years, I am convinced that India will add more wealth in the next ten years than it has added in the last fifty," said Bharat Shah, chief executive at ASK Raymond Securities.

"It is now perfectly placed to provide robust market growth for the next few years."

News: Versace, Gucci, Valentino queue up for India entry

(TNN 11/04/2006) New Delhi - Is India the next China for global luxury brands such as Gucci, Prada or Versace? Though it’s still early, the rush of luxury brands seems to suggest that India is the new flavour for high priests of luxury from Paris, Milan to New York.

Be it a Kenzo, Fendi, Ferragamo, Versace, Gucci or Valentino, everyone is making a beeline to hang their brand shingles in India. A comparatively older player in the fray, the French luxury goods conglomerate, LVMH — with brands such as Louis Vuitton, Tag Heuer and the just-launched in India, Christian Dior — is one of the few luxury groups with a fairly large India presence, courtesy its 100 multi-brand outlets across the country. Other global luxury groups, such as Swatch, with brands like Longines and Omega, and Richemont, with Piaget and Cartier, have also been around for some time now, again mainly through multi-brand outlets.

New entrants seem to be on an overdrive to ramp up their presence in India. Chanel India, which opened its only boutique in March ’05 in Delhi, is looking to open a second exclusive store in Mumbai soon. The brand, which is also present through Chanel counters, intends to add 10-12 more counters in Mumbai, Delhi and Bangalore this year. Dior, which recently opened its first store in New Delhi, is actively looking at Mumbai. Everyone is eager to please the Indian tastes, even while maintaining global oneness of brand merchandise.

“The collections available at the Chanel boutique in New Delhi are exactly the same as the other boutiques around the world. We also display what the customers appreciate. Besides leather bags, we also have fabric bags that take into account the Indian weather and we have introduced a collection of small evening bags to compliment saris,” says a Chanel India spokesperson.

While a Chanel nail-colour costs Rs 1,050, a leather bag goes up all the way to Rs 51,000. The Chanel boutique in New Delhi offers ready-to-wear fashion accessories, such as leather bags and shoes, eyewears, watches, fragrances and make-up products, as well as the precision skincare line. In a new market with highly-regulated retail environment, almost all global luxury brands need an Indian partner to hand-hold them.

There is Entrack International India, which manages the Mont Blanc, Canali and Girard-Perregaux stores in India. Other Indian partners in the market are: the Jashnmai group, Dubai, which manages the sole Burberry store in Mumbai, Bin Hendi, Dubai, associated with Hugo Boss, Sports Station, which is associating with Aigner and Moschino being handled by Charu Sachdeva in Mumbai.

Gucci, too, has a franchisee tie-up with the Murjanis to bring the luxury brand into India. They will open their outlets by the end of the year or early next year. The Murjani group hopes to make its presence stronger by getting other brands such as Jimmy Choo, Fcuk, Calvin Klein, Tumi & Build-a-Bear. The Murjani group was also behind getting Tommy Hilfiger to the Indian shores in ’04.

News: Shopper's Stop on expansion drive

(NDTV 11/04/2006) Mumbai - Shopper's Stop is on an expansion drive to take on the inevitable invasion of foreign retailers. The company has partnered with overseas brand Mothercare to start 40 to 60 exclusive stores across India, beginning with Mumbai.

"We have entered India at the right time and we want to expand very quickly," said Neil Postance, International Franchise Manager, Mothercare.

Shopper's Stop wants to leverage international brands to differentiate itself in a crowded retail market and it's trying to expand.

Growth plans

It is planning 200 outlets up from the current 50 odd in three to five years. Each store will cost Rs 15 crore. It has about Rs 90 crore cash in its balance sheet which can be used for expansion.

"We have new initiatives. The role is to look for futuristic brands and products that add value to the customer basket," said BS Nagesh, MD, Shopper's Stop.

With big players like Reliance entering retail, players like Shopper's Stop are rapidly expanding so that when competition heats up they have a safe foothold in the retail pie.

News: LG India initiates Fone and Fun outlets

(CT 11/04/2006) New Delhi - LG Electronics India plans to set up 25 convergence retail outlets across the country, titled 'Fone and Fun', in association with its partners this year.

The company recently opened the first of these concept outlets at Nehru Place, New Delhi in association with its partner Elcom Trading.

R. Manikandan, GM-sales & marketing, IT products, LG India, said, "We are looking to promote the concept of convergence by showcasing our IT range as well as GSM range. These outlets will be opened in association with select partners."

"We are open to align with our existing partners as well as the retail channel with existing retail infrastructure. It depends on the willingness of the partner to promote the concept, along with the availability of office space and strategic location," Manikandan added.

These outlets, which will be essentially targeted towards the home segment, will display LCD monitors, notebooks, desktop PCs, high-end CRT monitors, high-end optical drives like DVD drives, combo drives, etc, along with GSM handsets.

The outlets will also serve as off-the-shelf service points for mobile phones. It will also be a download center for ringtones.

News: Hakoba goes in to Indian retail overdrive

(F2F 11/04/2006) Pune - In a move to expand its product range, Hakoba Lifestyle has ventured into home furnishings, gift articles and accessories.

Opening the first store in Pune and 39th in the country, Sharda Bhatia, President, Hakoba Lifestyle said the company has allotted Rs20 crore for this expansion drive.

Hoping to cross the 100 stores milestone, this company would open about 60 stores in India by the end of current FY.

At present, Hakoba has offers coordinated salwar kameez material, kurtis, shirts for men and women, lace, accessories and cotton pastels embroidered sarees on its racks and exclusive men’s label, Born Rich will take space soon.

Hakoba Sarees Inc is a New York based company. It is the only company in the USA that specializes in the complete process of ‘Design, Creation, Manufacturing and Marketing’ in bringing HAKOBA SAREES to the world.

Each outstanding design and color combination of HAKOBA SAREES is originally created by a team of highly talented design team.

News: Starwood signs three new Indian properties

(PTI 11/04/2006) New Delhi - Global hotel and leisure company Starwood Hotels and Resorts, whose brands include Sheraton and Four Points, has said it would jointly develop three more properties at Rs 750 crore with Vatika Hospitality Pvt Ltd and introduce the Westin brand in India.

Vatika Group's subsidiary, Vatika Hospitality would manage two new Westin properties, Westin Resorts, Sohna to be launched in December this year followed by another in Gurgaon by 2007, Executive Director, Vatika Group, Gaurav Bhalla said.

The Starwood group has also signed up another property in Bangalore, which has taken the total number of properties of the group which is already present in India under the brand names Sheraton and Le Meridien, to 21.

Commenting on the venture, President, Starwood Hotels and Resorts, Asia Pacific, Miguel Ko said: "There are definitely tremendous growth opportunities for us in the gateway cities and relatively underdeveloped resort market."

Citing recent research, Ko said India is the fastest growing market in the Asia-Pacific for international tourist spending, which has grown to 25 per cent in the last quarter of 2005. This growth is expected to accelerate significantly over the next few years.

Westin Hotel, Bangalore, would open in 2009 and will have 300 rooms, five dining outlets, 20,000 sq ft of meeting and function space and around 10,000 sq ft for health and spa centre and retail outlets.

Westin Resort, Sohna would be spread across a 35 acre site with 100 rooms, 36 one and two bedroom villas and 12,400 sq ft for health and spa centre.

News: These are India's most valuable brands

(Rediff 11/04/2006) Mumbai - The 25 brands in the Brand Finance league table are ranked on brand value: the value of the asset at a point in time assessed using the relief royalty method.

A prerequisite of the top Indian brands was that they were listed in the top 500 on the Bombay Stock Exchange - which is why brands like Hutch, Sahara India Pariwar and Kingfisher Airlines were not included. The top 500 by market capitalisation were shortlisted to 50, of which the top 25 made the final ranking.

In some cases, the lack of information on the Indian businesses of certain major international brands (Coca-Cola, Pepsi and so on) meant they had to be left out. Holding companies that own a portfolio of branded businesses (Hindustan Lever, for instance) were excluded, since it isn't possible to identify revenue streams for individual brands from publicly available sources.

Not surprisingly, Indian Oil Corporation emerges as the most valuable brand with a trademark value of $5.6 billion.

This value accounts for 40 per cent of IOC's market value, representing the amount by which the brand is likely to enhance the company's future cash flows. But despite its high value IOC is at risk of losing the brand revenues it currently enjoys to more powerful brands like Bharat Petroleum in the future.

HOW THEY STACK UP
Brand	Trademark value (Rs m)
Indian Oil Corporation	250,636
State Bank Of India	137,965
Bharat Petroleum Corp Ltd	134,673
Tata Consultancy Services	123,485
Reliance Industries	122,240
Hindustan Petroleum Corp Ltd	116,271
Oil & Natural Gas Corp	88,822
Tata Motors	84,652
ICICI Bank	76,777
Wipro	67,681
ITC	64,406
Infosys Technologies	63,534
Gail India	58,178
Bharti Televentures	54,018
Tata Steel	44,059
Larsen & Toubro	39,658
Ranbaxy Laboratories	29,038
Bajaj Auto	27,186
Satyam Computer Services	24,302
Hero Honda Motors	20,580
Industrial Development Bank of India	18,830
Housing Development Finance Corp	14,665
HDFC Bank	11,992
Jet Airways India	10,410
Grasim Industries	8,003

State Bank of India and Bharat Petroleum Corp follow in second and third place respectively, with brand values of just over $3 billion each. SBI has improved its brand power by engaging with consumers and developing products and services that are differentiated.

However, the bank still has enormous value potential and has only scratched the surface as of now. If SBI continues to invest in marketing and pushing up its service delivery, it will give other banks a run for their money.

Meanwhile, BPCL's pioneering efforts in retail marketing, including branded petrol, petrocards, fleet cards, convenience stores, one-stop shops and its "Pure for sure" logo still give it the edge over other oil PSUs. It is aggressively looking at increasing non-fuel revenues by leveraging its brand.

The first set of private sector brands, Tata Consultancy Services and Reliance Industries, follow, both worth over $2.7 billion each.

It will be interesting to see how the two brothers extract value from the Reliance brand in future, given that Reliance Communication Ventures is now listed and Mukesh Ambani's retail plans are in overdrive. There are also some strategic issues that remain unresolved, including how the corporate brands of the two groups will be separated and yet at the same time keep the Reliance brand robust.

The top echelons have some diversity in terms of Tata Motors, demonstrating the company's focused strategy of cross-border acquisitions, strategic alliances and a steady stream of new product launches - Ace, Dicor, Starbus and Globus and its commitment to build the Rs 1 lakh car. This brand is ready to make a global mark.

Smaller banks, such as ICICI Bank, are rapidly boosting their brand power by offering customers holistic financial services and a certain level of functional and service delivery.

While SBI and Bank of Baroda are waking up to the role of the brands inside their businesses, ICICI Bank is now trying to forge an emotional connection with its customers with its Hum hai na communication.

The benefits of ICICI leveraging its brand are visible - it has registered 95.61 per cent five-year CAGR growth of fee income. Fee income is a good barometer to gauge a bank's efficiency in using its brand and customer capital through cross selling. All other Indian banks - including HDFC Bank - have a lot of catching up to do.

Despite the fact that TCS is smaller in terms of brand value than IOC, it is India's most powerful brand in terms of its ability to sustain earnings into the future with the least risk. If TCS continues build up intellectual property, create strategic alliances and extend its footprint into new services where it can extract volume and premium, its rise in the value table will not be surprising.

Wipro emerges as the second most valuable and powerful IT brand. This comes after a year of acquiring firms, giving Wipro access to new skills and intellectual property, upping marketing spends and ramping up to scale the consultancy target.

Wipro's product engineering and design services are especially pushing hard to deliver on innovation to create and sustain revenue streams for the future. The evidence towards a more IP and marketing driven model lies in the number of patent applications that have been made by TCS and Wipro over the past three to four years.

For an industry caught between run-of-the-mill software services and high-end products, IP licensing and sales will not only boost financial returns but also build long-term competitive advantage.

Infosys has made some inroads into high end consulting. However, it needs to urgently review its IP and marketing investments and come out victorious in the battle to protect its well-known trademark.

Despite the fact that Indian IT companies have created some salience in the global IT market, they trail when it comes to intellectual property and brand building skills. As labour arbitrage slips away, it is only the exponential value created by intangibles like the brand and IP that will propel them into the +$10 billion league of global players.

Ranbaxy is the only pharmaceutical brand to make the cut in terms of brand value. While Ranbaxy leads the pack in terms of IP development and filings, it is worth noting that Indian pharmaceutical companies are way ahead in IP development compared to their software peers.

Clearly, patents and brands will drive their business models in the medium term as their mainstay generics business is getting increasingly crowded and margins come under acute pressure. The only way forward is to develop a pipeline of new products backed by marketing and intellectual capital muscle.

There is an interesting story unfolding in the motorcycle industry and brands are at the centre of it. Hero Honda Motors has a spectacular track record; however, there is a tricky question facing the company.

Is it Honda that is making it a Hero? Bajaj has evolved into a mature stand-alone brand post its divorce from Kawasaki and has even gone on to develop proprietary technology.

As Honda Motorcycle and Scooter India aggressively invests in production capacity and sub brands like Unicorn and Shine, Hero Honda's future brand earnings are far more at risk than Bajaj's.

The key takeawaysBrand power is in your hands: As the constraints on capital, technology and regulatory environment lifts, the heavy bias towards companies who enjoyed monopolistic markets is shifting to high octane, customer savvy companies.

Who will customers turn to? Who will they award their loyalty to over time? The Brand Finance index of India's most powerful brands is peppered with a set of diverse companies across various sectors, including airlines, steel, automotives, telecommunications, banking and FMCG.

Clearly the economic role of the brand is not limited by the industry type or size; if leveraged it can be a great leveller.

Brand power matters: Brands with the ability to cut through this highly competitive and maturing marketplace will determine who can secure the lucrative cash flows in the future.

This is partly about scale and technology; however, it is also about investing in and building brands that work - brands that matter more to customers and employees, and which effectively innovate to sustain relationships that ensure value creation.

Importantly, there is a mind shift required to delegate the supervision of tangible assets (land, buildings and factories, laying lines and towers) to operational managers and redirect top management attention and time to building value in intangible assets.

To unlock this huge reservoir of value, boards and CEOs have to insist on a governance framework that analyses the impact of brand and other intangible assets on shareholder value.

(David Haigh is group CEO, Brand Finance; Unni Krishnan is MD, Brand Finance, India)

Methodology: How we did it

The list of most valuable brands was calculated using the royalty relief approach. This intuitively simple approach assumes a company does not own its own brand and calculates how much it would need to pay to license the brand from a third party. The present value of that stream of (hypothetical) royalty payments represents the brand value.

The royalty relief methodology was chosen for two reasons. Firstly, tax authorities and courts favour this methodology because it calculates brand values by reference to documented, third-party transactions; and secondly, because it can be performed on the basis of publicly available financial information. This method also ensures these results are directly comparable year on year.

Only public data was used to calculate the value of the top Indian brands - the data that the brand owning companies publish about themselves (in annual reports, analysts briefings, press articles, syndicated market research and so on). There was no access to private data or to senior management interviews as there would be in a formal valuation.

Moreover, the brands were looked at without further segmentation: TCS, for instance, was assessed as a whole, whereas valuing it formally would have entailed aggregating it from a series of perhaps 30 segments separated by verticals and by geography.

The brand value is the value of the asset at a certain point of time. This, in fact, is the value that the brand is creating for its owners today from its current economic use. It is not an attempt to estimate the cost of replacing it, nor does it represent what has been expended to create it.

A four-step process was applied to arrive at the brand value. Obtain brand-specific financial and revenue data; establish royalty rate for each brand, calculate brand strength score and determine royalty rate range; calculate future royalty income stream; and lastly, discount future royalty stream to a net present value, which is the value of the brand.

News: Boon quarter for Pantaloon Retail

(F2F 11/04/2006) Mumbai - Retail space expansion and various schemes enables India’s largest apparel retailer Pantaloon Retail to aspire for 100 percent growth in this quarter itself.

Marketing President, Sanjeev Agrawal said “Our company is very aggressive in this quarter, and this will be led by the Big Bazaar format, along with new store openings.

Last year in March quarter, company reported net sales of Rs 274.95 crore with net profit of Rs 10.69 crore. He added that this time they are starting stand alone format stores including E-Zone, the lifestyle electronics store and Collection-I, the furniture store both of which will come up in Indore.

Company is also planning to build more Big Bazaar, Pantaloons and Fashion station stores in this quarter. Company has 25 Big Bazaar stores across India and plans to open 6-7 within the quarter.

News: PN most preferred route for Indian FII investments

(BL 11/04/2006) Mumbai - Foreign portfolio investments through participatory notes (PNs) are on the increase. Investments through the PN route now account for more than 52 per cent of the total outstanding FII investments against 40 per cent a year ago.

This means beneficiaries to more than half of the $45-billion FII investments in the country's stock markets are unknown entities. The origin of these investments and the credentials of the investors are anybody's guess, according to SEBI sources.

PNs are instruments similar to contract notes issued by registered FIIs in India to their overseas clients who are not eligible to invest directly in the Indian capital market.

The instruments are issued against underlying securities and the holder will benefit from appreciation of capital or income from these securities.

FII investments in the Indian markets have been steadily increasing in the past few years. The net FII investments in this calendar year up to April 3 stood at $4.225 billion and the total flows in 2005 exceeded $10.7 billion.

RBI, SEBI concern

The Reserve Bank of India and the SEBI are increasingly concerned about the increasing fund flows into the bourses from unknown sources.

In fact, in its order against UBS Securities last year, the SEBI had highlighted the risk in allowing FII investments through the PN route.

"The findings in this case have highlighted serious regulatory concerns that the participatory notes or offshore derivative instruments and its cover of anonymity is being used by certain entities without there being any real-time check, control, and due diligence on their credentials."

The High Level Committee on Capital Market had suggested making it mandatory for FIIs to issue PNs only to entities that are regulated by a financial regulator in a country.

However, last year the Lahiri Committee on `Encouraging FII inflows and checking the vulnerability of capital markets to speculative flows' had favoured continuation of the PN system but suggested that the SEBI should have full powers to obtain information on the holder of the PN or the final beneficiaries of the securities bought or sold at any time in case of investigations.

News: Pantaloon Retail bid to expand talent pool

(BL 11/04/2006) Bangalore - Netting talent early is not the prerogative of the IT industry alone. The retail industry, faced with a similar talent crunch, is thinking up newer ways of expanding its talent pool. In a proactive step, the country's retail giant, Pantaloon Retail India Ltd, has decided to go ahead and create `its own resources'.

In a tie-up with four management schools across the country - Welingkar Institute of Management Development, K.J. Somaiya Institute, IILM, Delhi and Chennai Business School - Pantaloon Retail will make offer letters to all students enrolling for the MBA programme. At the end of the programme, students can take a call on whether they want to join the company. In 2005, Pantaloon snapped up 62 management trainees from this pool.

Pantaloon Retail, currently has 14,000 employees and is adding about 600 frontline and 60 managerial employees every month. In a departure from the industry trend, the retail giant has not opted for the temping route. Sanjay Jog, Head-HR, Pantaloon Retail India (Ltd), says, "We do not believe in temp staffing because employees need the assurance of a career growth and do not like to be treated differently." Is the result, a better attrition rate? Industry estimates put retail sector attrition anywhere between 40-50 per cent per annum and Jog says Pantaloon has managed to put the lid at 8.3 per cent.

Chennai Business School

A press release from Chennai Business School says that admission letters from the school and job placement letters from Pantaloon Retail are to be awarded simultaneously to 30 CBS students at the time of selection. The appointments will be in the areas of retail, marketing communications and HR.

The company will also sponsor five of its employees as students in the Retail Programme, says the release. The MoU was signed on April 8 by Kripesh Hariharan, GM, HR, Pantaloon and Minnie Menon, Associate Dean, and Prof A.S. Srinivasan, Dean, CBS.

News: Pizza Corner to add 40 Indian outlets

(BL 11/04/2006) Chennai - Geneva-based Global Franchise Architects (the parent company of Pizza Corner and Coffee World) plans to open 40 more Pizza Corner outlets in the country in a year.

It will also open 10 more Coffee World outlets in India by March 2007. Talks are on to launch The Cream and Fudge Factory - the ice cream restaurant of Global Franchise Architects (GFA) - in Chennai or Bangalore, post-July.

Inaugurating Pizza Corner's 45-seater dine-in outlet on C.P. Ramaswamy Road in Chennai (the 46th outlet in the country), Anoop Sequeira, CEO, GFA India, said the target is to have 60 GFA outlets (53 pizza and seven Coffee World outlets) in the country by the end of April.

Thirty would be company-owned and the remaining would be franchisee outlets.

Seven new pizza outlets are planned in Bangalore, Chennai, Coimbatore, Mangalore and Noida in April.

Two Coffee World outlets will come up in Chennai and Bangalore by the end of this month. (Currently, there are five Coffee World outlets in India - three in Bangalore, and one each in Mumbai and Delhi.)

Bangalore-headquartered Pizza Corner has a strong presence in South India. Added Sequeira: "We also have a good presence in Delhi and NCR. We have just made in-roads into the West with an outlet in Pune and are in the process of getting commitment for two more here."

Over the next one year, outlets are planned in Kolkata and Gujarat too.

It has also moved into smaller cities such as Manipal, Vizag, Hisar, Agra and Trivandrum, "considering that the retail market has matured in smaller towns too", said Sequeira.

News: India oil import bill at record $43.8bn

(TNN 10/04/2006) New Delhi - India’s oil import bill has hit a record high of $43.8bn during ’05-06, registering an increase of 46.8% due to high global prices. The previous year’s oil import bill was far lower at $29.8bn.

According to official data, oil imports accounted for the largest chunk of India’s merchandise imports of $140bn. While overall growth in imports was 31.5%, growth in oil imports was far higher. The increase in oil import bill during ’05-06 was only on account of high prices, barring a marginal increase in domestic demand.

In comparison, non-oil imports grew by only 25.5% during ’05-06 to touch $96.3bn. According to an official statement issued here on Monday, non-oil imports during the previous year totalled $76.7bn.

Commerce & industry minister Kamal Nath has been emphasising that steep growth in oil imports were the primary reason for India’s trade deficit. The trade deficit for ’05-06 is estimated at $39.6bn as compared to $25.9bn in the previous year. In March ’06 alone, imports stood at $13.8bn, 20.8% higher than $11.6bn in the previous year.

As of now, growing imports and expanding trade deficit are not seen as a cause for concern since the country’s foreign exchange reserves stand at $150bn. Trade deficit is considered usual for an emerging economy with a huge appetite for imported inputs to fuel export production.

As of now, India is doing fine on the export front, crossing the $100-bn mark at the end of ’05-06. In March ’06, exports stood at $10.9bn, registering a growth of $20.6%. As compared to this, exports during March ’05 totalled $9bn. Official data indicates exports of $100.6bn in ’05-06 as compared to $80.6bn the previous year. The growth during ’05-06 was 24.7%, leading to addition of $20bn to the country’s merchandise exports.

In terms of merchandise imports, India touched the $100-bn mark during ’04-05, totalling $106bn. During ’05-06, the import bill expanded to $140bn with a strong growth of 31.5%. Since India’s services trade is estimated at around $100bn, total foreign trade volume now stands at $340bn.

News: Post IPO, DLF’s Singh to enter the Super Rich club

(TNN 10/04/2006) New Delhi - Wipro’s Azim Premji dominated the global list of the Indian Richie Rich for a while before steel tycoon LN Mittal not only replaced him, but came tantalisingly close to the No. 1 billionaire, Microsoft’s Bill Gates. Founder and chairman of DLF group KP Singh may well end-up becoming one of the richest Indians on the planet, and that’s after his company’s proposed mega IPO.

According to sources, investment bankers have valued the DLF group between $20-25 bn. The size of the DLF float will be in the vicinity of $2 bn, it is reliably learnt. Currently, the holding of KP Singh and family in the flagship company, DLF Universal, is at 99.5 % which after the expansion of equity post-IPO would come down to around 90%.

This will value KP Singh’s stake in the company at anywhere between $18-22.5 bn depending on market conditions, making him one of the richest Indians. At present, steel tycoon LN Mittal is the richest Indian in the Forbes list with an estimated net worth of $20 bn.

Depending on market conditions, Mr Singh could come very close to or even surpass this figure. According to the Forbes listing, the richest resident Indian is Wipro’s Azim Premji, with a net worth of $11 bn. KP Singh was ranked fifth among the Indian billionaires list in the Forbes ranking.

With this valuation, DLF is also likely to be one of the largest companies on the Indian stock exchanges in terms of market capitalisation.

At these levels, DLF market cap post-listing could be close to Rs 90,000 crore, which would be 77 % of Reliance Industries’ market cap and almost equal to that of TCS’. It will trounce Infosys Technologies and Bharti Tele-Ventures — which are ranked number five and six in the market cap sweepstakes — very comfortably.

DLF has already developed 3,500 acres of land in Gurgaon in North India and is now going national. Industry sources say that the group wants to be the largest construction and real estate company in India with plans to develop 100,000 acres of land in the next five years.

News: Delhi to beat Mumbai, soon

(FE 10/04/2006) New Delhi - While Delhi, Mumbai, Bangalore and Chennai hovered around the 150-mark, Zurich emerged as the top city in Mercer’s annual World-wide Quality of Living Survey, scoring 108.2 points, ahead of Geneva and Vancouver. Iraq’s capital city Baghdad was ranked the lowest in the survey.

This survey by Mercer, covering more than 350 cities helps governments and multinational companies place employees on international assignments. Each city is evaluated based on 39 criteria, which include political, social, economic and environmental factors, personal safety and health, education, transport and other public services. Cities are ranked against New York, seen as the base city, having an index score of 100.

Though cities in India generally rank lower than their Chinese counterparts, they are showing signs of development. “The rankings for some Indian cities have improved from last year, primarily due to India’s improved political relationships with neighbouring countries. Significant investments from multinationals setting up operations in India may prompt further improvements, boost economic growth and contribute to economic stability,” Gangapriya Chakraverti, business leader, human capital product solutions at Mercer India said.

In Asia, Singapore ranks 34th (score 102.5) followed by Tokyo(102.3). Hong Kong’s modern and efficient infrastructure, including its airport, which is considered one of the best in the world, has pushed it’s ranking up from the 70th to the 68th position with a score of 95.4. In China, Shanghai emerged the top-ranking city at 103rd place.

Although Mumbai remains India's most livable city at 150 (151 in 2005), the North Indian bastion of Delhi has equalled it with a similar rank of 150 (153 in 2006) indicating that the capital city is becoming both a business and political hub of the country as well as offering a great gateway to India for those coming from abroad.

Bangalore is at 153 and Chennai at 160.

According to the survey, almost half of the top 30 scoring cities were in Western Europe. In this region, Vienna follows Zurich and Geneva in the 4th position with a score of 107.5. Other highly-rated cities include Dusseldorf (107.2), Frankfurt (107.0) and Munich (106.8) in positions 6th, 7th and 8th respectively. Athens remains the lowest scoring city in Western Europe, scoring 86.8 points.

London is UK’s highest-ranking city and is stable at position 39 (score 101.2). Two other UK cities covered in the survey are Birmingham and Glasgow both scoring 98.3.

News: Indian banks in pursuit of dollar dreams

(TT 10/04/2006) New Delhi - Domestic banks are looking to aggressively expand their overseas presence as they chase dollar dreams and a large Indian diaspora.

On Monday, Punjab National Bank (PNB) said it had obtained the necessary approvals from the regulatory authorities to set up a full-fledged subsidiary in London. It will be established on Thursday (April 13) as a private limited company and bear the name Punjab National Bank International Ltd, the bank informed the Bombay Stock Exchange (BSE).

PNB already has a representative office in London which was set up in 2003. “This is our first overseas subsidiary and much more than a branch,” a senior executive of PNB told The Telegraph.

PNB has also received RBI clearances to set up full-fledged branches in Vancouver and Hong Kong and an offshore banking unit in Singapore. A subsidiary, unlike a branch, operates as a separate business entity that enables the company to grow in overseas locations and compete with local banks.

But PNB isn’t the only one with overseas expansion plans: State Bank of India (SBI), ICICI, Bank of India and Bank of Baroda are also looking to establish branches and subsidiaries abroad.

SBI has mapped out major overseas plans — both through the acquisition as well as the inorganic route. The bank is planning to enter Pakistan and is expecting to set up over 20 additional branches in other countries of South Asia in the next three years.

The bank, which has recently taken over mid-sized banks in Mauritius and Indonesia, is eyeing other buyouts as well.

SBI chairman A K Purwar has gone on record saying that the bank has “infinite appetite for more acquisitions”.

SBI has been looking to establish a full-scale retail banking operation in Singapore but has been denied approvals by the Monetary Authority of Singapore. It has also identified other countries in South Asia as a potential market to expand operations beyond the shores of the country. It is aiming to increase the number of branches from seven at present to 27 in the Saarc region over the next three years.

He said SBI was also looking at entering into alliances and joint ventures with local institutions in other countries to expand its non-banking services such as credit cards, mutual funds, merchant banking and insurance.

Bank of India and Bank of Baroda are also aggressively looking to spread their wings abroad.

India’s largest private sector bank, ICICI Bank, is present in 11 countries through branches, representative offices and wholly-owned subsidiaries. It has three subsidiaries in the UK, Canada and Russia; branches in Singapore and Bahrain, an offshore banking unit in Mumbai and representative offices in the US, China, the UAE, Bangladesh and South Africa. Its UK subsidiary has four branches and the Canada subsidiary five branches.

Analysts said one of the primary reasons for Indian banks seeking overseas locations is to augment their capital base in run up to the Basel II norms that come into effect from March 31, 2007.

Under Basel II, the capital requirements are more risk sensitive and requires banks to hold capital not only for credit and market risk but also for operational risks. Moreover, they are required to hold capital for concentration risks and liquidity risks.

Besides, overseas presence offers banks to scale up their operations. In terms of sheer size, SBI, India’s largest bank, is the only bank to be ranked in the top hundred (87) among the top banks globally.

Analysts said with consolidation in the domestic market not coming through because of political reasons, banks are now increasingly looking towards overseas markets to scale up their operations.

News: Big guns of India Inc harvest farm business

(TT 10/04/2006) New Delhi - Agri-business seems to be the next big thing for corporate India. Top conglomerates such as Reliance, Bharti and Dabur are planning to enter the fruits, vegetables and dairy segments.

Bharti Enterprises’ Field Fresh Foods, a 50:50 joint venture with the Rothschild Group-controlled ELRo Holdings India Ltd, has started contract farming in fruits and vegetables. The company is working with the farmers of Punjab, Jammu & Kashmir, Himachal Pradesh, Uttaranchal, Haryana and West Uttar Pradesh.

The venture, which started with an investment of Rs 250 crore, could ultimately become the back-end hub of Bharti’s retail business.

The Punjab government has allotted land to the company for a horticulture venture , sources said.The products to be covered include apples, kinnows, litchis, cherries, tomatoes, baby corn, okra and lettuce. In the second stage, the company would expanded to other parts of the country. It is keen to set up base in the horticulture belt of Maharashtra, Karnataka and Andhra Pradesh for products such as grapes, mangoes and bananas.

Mukesh Ambani-promoted Reliance Industries is also thinking big in the fruits and vegetables segment. Sources said the company was planning to set up “neighbourhood convenience stores”, selling fresh fruits and vegetables.

The company, which also has major plans for the dairy segment, is planning to set up stores across the country over the next 12 months. Sources said RIL is working out the modalities of these stores and is in the process of creating a brand architecture for the purpose. While Bharti’s horticulture area is primarily aimed at the export segment besides supplementing its future food retail foray, RIL’s venture will be in the direct business-to-consumer domain.

News: Wills lifestyle to double Indian stores by 2008

(PTI 10/04/2006) New Delhi - Embarking on a mega expansion plan, ITC's fashion brand Wills Lifestyle today said it would increase its presence across India and double its number of outlets to 80 by 2008.

"India's retail scenario is fast changing. We have to keep pace and our plans are to double our stores in the next two years," General Manager, Marketing and Retail of ITC's retailing business, Atul Chand told PTI.

Pointing at the retail boom in the country and the mushrooming of malls and shopping centres across the country, Chand said consumerism is growing and ITC has drawn up plans to reach out to customers even in three tier and two tier cities.

The Wills Lifestyle would also leverage from the India Fashion Week, the sponsors of the event, he said adding the Wills stores would retail the line designed by Rohit Gandhi, Rahul Khanna and Monisha Jaising for the grand finale of the fashion week within a month.

He said the company was also working to build Wills Lifestyle as a global brand.

News: Fujitsu India plans aggressive agenda

(CT 10/04/2006) New Delhi - Ramanjeet Singh, the new head of Fujitsu India's PC division, is in the process of formulating a comprehensive plan to give a major push to its business in the Indian market.

Apart from expanding its channel presence in the country and launching new products, the new plan will also focus on improving its service support infrastructure.

Giving details, Singh said, "We are looking to expand our presence in 16 cities this year. Currently, we have 54 partners and this year we intend to increase this number to 200. Along with this, we will also offer our channel partners a lot of rebate and incentive schemes this year, to keep them motivated."

On the service center front, the company, which, at present, has eight centers, intends to open one each in Lucknow, Chandigarh and Kochi by month-end.

The company is primarily into corporate and retail market, which is another segment it will be focusing on for the Indian market. It plans to open 'concept zones' and 'tablet zones'. The company will be introducing new TFT monitors, PCs for both consumer and corporate, accessories for notebooks and PCs and also carry-cases this year.

On its market share, Singh said, "We have negligible market share in India. According to IDC, we had 1.3 percent of the market in Q3 of 2005 in the commercial notebook segment. We have recently entered into the consumer notebook segment and this year our target is to garner 2 percent of the notebook market."

Fujisan Technologies is the national distributor for Fujitsu India.

News: India Inc earnings slowing down?

(BS 10/04/2006) Mumbai - Motilal Oswal is expecting the growth momentum in corporate performance to remain strong. Their forecast is for sales growth of 25 per cent YoY and net profit growth of 42 per cent. Merrill Lynch analysts expect Q4 sales growth of over 20 per cent and profit to grow by over 15 per cent. Prabhudas Lilladhar expects double-digit growth in sales and profits.

Analysts' expectations are that the Q4 results will primarily be driven by oil and gas companies, and supported by auto, FMCG, cement and pharma. The key highlight of the quarter is the expected bounce of the oil and gas sector - especially the marketing companies. The oil and gas companies are expected to report sales growth of 25 per cent.

Retail will be the fastest growing sector with 52 per cent sales growth. Infrastructure and telecom are also expected to maintain their growth momentum. IT will continue its momentum, and YoY sales growth will be a high 36 per cent.

Textile sales growth would be lower, pharma sales growth would be over 25 per cent, auto sales growth will be 15-25 per cent, and revenues for banks will go up by 10-15 per cent. FMCG growth will improve to over 15 per cent with volumes picking up and price hikes of some products. Cement sales will also pick up post-monsoon with a growth of 20 per cent. Engineering will continue its strong momentum with 33 per cent YoY jump in revenue.

Oil and gas companies are expected to show profit growth of over 100 per cent, pharma over 50 per cent and infrastructure over 40 per cent. While banks are expected to show 20 per cent increase in profits, the profit growth of cement companies will be a little over 10 per cent.

Engineering sector is expected to report 35 per cent jump in profit, IT by over 35 per cent, auto 21 per cent and FMCG over 40 per cent. Non-ferrous metal companies, too, will report higher profits, but steel companies will show a decline in bottomline.

Take away: Is there a SLOWDOWN in India Inc earnings? Watch the numbers carefully!

News: StanChart to expand in smaller Indian cities

(RTR 10/04/2006) Mumbai - The Standard Chartered Plc., plans to expand into smaller cities to lend to the growing Indian middle class, a senior bank official, said on Monday.

Many banks are expanding their highly profitable retail portfolios, fulfilling middle-class aspirations to own homes and cars.

"The penetration of retail banking in the smaller cities is very low and there's big opportunity out there," Neeraj Swaroop, Chief Executive Officer of the bank's Indian operations, told reporters on the sidelines of a conference.

Swaroop said Standard Chartered had submitted an expansion plan to RBI. He did not elaborate.

He said the bank had 81 branches, nearly a third of all branches of foreign banks in the country.

Standard Chartered was also keen to acquire banks, but the RBI’s regulations restricted its choice to just weak banks, Swaroop said.

"We, always as a strategy, are looking at inorganic growth," Swaroop said. "Within the central bank guidelines, there are opportunities," Swaroop said.

News: India emerging as engineering hot spot

(BL 10/04/2006) New Delhi - The growing shortage of core-sector engineers across the globe has international firms flocking to tap Indian civil and mechanical engineering skills.

India, which had nearly four lakh engineers graduate in 2005 as against just 70,000 passing put in the US, is seeing jobs of transactional engineers coming in, especially in the core infrastructure sectors. While engineering work currently being executed by India-based vendors is estimated to be around $500 million, analysts estimate the market potential for outsourced engineering services is estimated to be around $10 billion-$12 billion.

Overseas consultancy

Besides the engineering outsourcing pioneers such as L&T, Thermax, Mahindra and Hero Global Design, firms such as NTPC Ltd and Power Grid Corporation India Ltd (PGCIL) are now betting big on overseas consultancy assignments.

NTPC is offering training to power engineers of Aluminium Bahrain and technical personnel of Oman Refinery Company at its facilities here and has deputed shift engineers to power stations in Nigeria in lieu of sizeable consultancy charges. PGCIL is in the process of roping in retired engineers on a contractual basis to execute projects at home as it is putting several of its regular engineers on overseas consultancy assignments due to the huge demand for heavy engineering skills abroad.

The India subsidiary of the US-based Quality Engineering and Software Technologies (QuEST), which employs around 700 engineers in Bangalore, is executing direct engineering work packages and sub-contracting projects from India for clients abroad, including several Fortune 500 firms.

The company offers concept design to drafting and modelling, to analysis and product realisation solutions in sectors such as aerospace, automotive engineering, energy, industrial products and the petroleum domain.

Among the global firms that have set up base here, UK's Rolls-Royce Group Plc has already established a wholly owned subsidiary in the country to manage the growing volume of engineering work that it is sub-contracting to India.

Based in Bangalore, Rolls-Royce Operations India Pvt Ltd would tap domestic engineering analysis and design capability skills in developing aero-engineering solutions. Analysts predict that the country is also set to get a bigger piece of the auto offshoring business.

According to an AT Kearney online survey of American Automotive Executives, India leads the outsourcing market when it comes to auto-outsourcing with 24 per cent of auto manufacturers giving it the thumbs-up for outsourcing, much higher than those favouring China, Mexico and the Philippines.

Eicher Motors has also forayed into engineering services outsourcing with the acquisition of the US-based company Design Intent Engineering (DIE) and the company expects new business to contribute revenue to the tune of $100 million in the next four years.

News: Indian FII figure may set the tone

(BL 10/04/2006) Mumbai - Overseas and domestic fund flow trend till Thursday has been positive and the general concern over valuation did not really affect the liquidity in the market. Sudden panic on Friday, allegedly engineered by a band of manipulators, cast a deep shadow over the sentiment and integrity of market.

It may sound odd, but reality is that stock markets everywhere have been living with rumours; at times this primitive tool proved much stronger than the information technology-based efficient surveillance systems.

Efficient system?

It appears players, who have been shorting the Nifty futures recently, may have in a desperate bid to save their interest attempted to manipulate the sentiment of a bull market on Friday through this tool. Their strategy may also have been to pass it off as a "profit booking spree" or a "technical correction".

The assumption may have been that even an efficient market surveillance system or a pro-active regulator would find it difficult link rumour to trading deals.

The timing of the rumour generation was crucial. The time lag for obtaining FII trading figures on Friday is highest - three days. Also super-sensitivity of the market at its all time high level to the so-called unconfirmed reports regarding the market drivers seem to have been used to the hilt.

This week may prove to be a test for the market regulation as the manipulators threw a challenge to the systemic strength of the market.

The market outlook on Monday would to a great extend depend on the FII investment figure on last Friday. The action of the regulator in reassuring the broad investor community would go a long way to bring back normality in the market.

There is no reason to believe that the one of the most attractive equity market of the world would crumble because of some aberration. But the dent in the market psychology has to be repaired fast before it overwhelms all the positives that are still intact.

As a matter of fact, there was no let up in flow of money to Dalal Street. Some of the long-term overseas investors, with whom this writer talked to on the weekend, appeared unfazed by the volatility and fall in the benchmark index on Friday.

At the worst, their might be a tactical retreat or staying on sidelines. But the current level of maturity of the Indian stock market may not allow a crash, caused by a few manipulators.

News: Five mln new Indian mobile subscribers in March

(BL 10/04/2006) New Delhi - Riding on the success of the lifetime validity prepaid scheme and the One India tariffs, mobile subscription growth has gone through the roof, with more than five million new subscribers in March.

While the GSM-based cellular operators added close to four million new users, the CDMA-based operators added over one million mobile subscribers during the month. This takes the total mobile user base in the country to nearly 90 million.

"We are delighted to report a subscriber growth of 3.9 million during March '06 - the highest subscriber additions since the inception of service. The cumulative all India GSM subscriber base has now grown to 69.06 million in March 2006, up from 65.18 million in February 2006, a growth of 5.95 per cent for the month under review," said T. V. Ramachandran, Director General, Cellular Operators Association of India (COAI).

Target within reach

"The growth in March was despite the many constraints faced by the CDMA operators including delays in provision of points of interconnection, lack of spectrum, high taxes and levies and delayed SACFA clearances. We expect subscriber additions in the coming months to be more, if adequate spectrum is released to our members and there is no delay in SACFA Clearance and provision of points of interconnection. The growth in the last few months shows that the achievement of the Government's target of 250 million telephones by 2007 is possible, and we will make full efforts for the achievement of the target," said S. C. Khanna, Secretary General, Association of Unified Services Providers of India.

The largest mobile operator continues to be Bharti with 19.6 million subscribers, followed by Reliance Communications Venture Ltd with 17.4 million mobile users. State-owned Bharat Sanchar Nigam Ltd has 17.2 million subscribers and is third in the race at the end of March.

News: India takes big step in small cars

(TNN 09/04/2006) New Delhi - The FM has good reason to root for India’s small car credentials. In terms of sheer volumes, India is already right up among the top small car producers. Only Japan, with 1.77m units and Brazil with 0.85m make more small cars than India’s present tally of around 0.78m a year.

India’s tally is higher than western Europe’s 0.55m units. India’s small car segment has also seen decent growth this year. In ’05-06, small car sales — domestic and exports — hit 7.85 lakh units, up from 7.42 lakh in ’04-05, a growth of 6%. The figure includes B-segment models like Santro, Indica, Alto, Swift, Zen, WagonR etc and the A segment M800. India’s small car duty differential is similar to what Japan, Korea and Brazil have done. Japan’s government extended fiscal incentives to promote fuel-efficient mini cars to hike their market share from 9% in 1989 to 30% now.

Korea exempts small cars from taxes like acquisition, registration and rural development surcharge. Brazil allows lower industrial products tax on engines of less than 1 litre capacity. Its local market share has jumped from 4.3% (1990) to 60% (’04). Thailand is mulling similar incentives under its eco-car project and China hiked taxes on vehicles with more than 2-litre engine capacity from 8% to 20%.

News: AAI kicks off revamp of small airports

(TNN 09/04/2006) Tiruchirapalli - The Airports Authority of India (AAI) has commissioned two consultancy firms, including a US-based company, to draw up a technical and economic feasibility report for development airports that are located in non-metro cities.

Washington-based Louis Beger Group and Delhi-headquartered Intercontinental Consultancy and Technocrats have already submitted their reports on Goa, Lucknow, Madurai, Mangalore and Thiruvananthapuram airports, AAI advisor (airport operations and management) AV Anand said.

They would now prepare preliminary reports for Tiruchirapalli, Indore, Bhopal, Nagpur, and Visakhapatnam and submit them in the next 45 days. The final report would be prepared by incorporating corrections and suggestions of AAI.

The reports covered areas of airport operations, facilities at the airport and connectivity for both domestic and international. The recommendations, comprising a development plan taking into consideration requirements for the next 25 years, would form the basis for future investments by AAI.

The AAI would go for commercial development of airport land with private participation, he said. Guillermo Alvarez of Berger Group, senior airport engineer and planner said the accent of modernisation would be on creating basic facilities and not a “fun fare” as in Singapore and Kuala Lumpur airports.

Capital Fortune, another consultant, would study the economic feasibility, including cargo and passenger potential, and development of cities. A discussion on this was held here with the local CII members, he said.

News: Tata arm on oil & gas hunt abroad

(BS 09/04/2006) Mumbai - Australian, Aasian oil blocks on the radar.

Tata Petrodyne (TPL), a fully-owned subsidiary of Tata Sons, is drawing up plans to join the race for acquiring oil and gas blocks abroad.

The company, having marginal presence in domestic sector, is likely to announce its overseas ventures next month.

V K Sharma, executive director, TPL said the company would participate in NELP VI bid and the evaluation of assets were going on.

“We have marginal interest in coal bed methane (CBM) III bid. For oil and gas block acquisitions the company is planning big investments, “ he said.

The company is in talks with global and domestic oil majors for a combined bid under new exploration and licensing policy (NELP) VI in India. It is the consortium partner of three blocks in the country.

Sources close to the development said TPL was eyeing the oil blocks in Australia and Asia. Industry sources said the company was interested in some of the blocks in Australia and West Asia. Sharma refused to divulge more details.

“TPL cannot bid in NELP VI as the operator because of the lack of experience in the sector. But the company will join the race with global and domestic majors having experience as operator,” industry analysts said.

TPL has marginal presence in the sector when compared to the other major groups such as Reliance Industries, Essar and Videocon.

Since its inception in 1994, the company had participated in a few rounds of bidding in the country. But its interests in this sector is limited to three oil and gas blocks, where they are non-operators.

The operators for the three blocks are Hardy Exploration and Production, Cairn Energy and Oil and Natural Gas Corporation (ONGC).

TPL was initially promoted by Tata Industries with the objective of spearheading the group’s foray into the upstream sector.

Ownership of TPL later changed hands in line with the group’s strategy to consolidate all its energy businesses into a single corporate entity, and it was acquired by Tata Power Company.

Looking at the very nature of the oil and gas business which requires focus and large investments, the parent company Tata Sons bought 100 per cent stake in TPL.

News: Pantaloon aims at 100% growth this quarter

(BS 09/04/2006) Mumbai - Pantaloon Retail is aiming at 100 per cent growth in this quarter on the back of expansion in retail space and new schemes to attract customers.

Sanjeev Agrawal, president- marketing, Pantaloon Retail said, “We are very aggressive about this quarter, and this will be led by the Big Bazaar format, along with new store openings.”

The company had ended the March quarter last year with net sales of Rs 274.95 crore and a net profit of Rs 10.69 crore.

This quarter will see a spate of store opening across different formats.

“We will be opening a number of standalone format stores for the first time this quarter,” shares Agrawal.

This includes E-Zone, the lifestyle electronics store and Collection-I, the furniture store both of which will come up in Indore.

Other new formats coming up this quarter are Depot, the bookstore in Mangalore and about three Shoe Factory outlets which will be set up through the JV with Liberty Footwear.

The company will also set up more Big Bazaar, Pantaloons and Fashion Station outlets in this quarter. At present the company has 25 Big Bazaars across the country and plans to add another 6-7 within the quarter depending upon how soon the respective properties are ready.

At present across formats, Pantaloon Retail covers 3.5 million square feet of space. Apart from this, starting this week, the value retailing store is launching another of their ‘price challenges’, this time even more competitive that the previous offers.

“We are offering a personal computer for less than Rs 10,000 and sarees for Rs 149,” said Agrawal, adding that if the customer can find the same brand and quality for a lesser price, the store would pay back double the amount to the customer.

News: DLF SEZ proposals shot down

(BS 09/04/2006) New Delhi - The plans of India's largest real estate developer company DLF to set up special economic zones in Haryana and Andhra Pradesh have been rejected by the inter-ministerial board of approvals that approves SEZs in the country.

DLF Universal had proposed setting up a multi-product SEZ in Panchkula over 1,012 hectares. The company had also proposed to set up a 101-acre infotech and IT-enabled services zone in Hyderabad. The Haryana government has not supported the Panchkula plan on environmental grounds.

The Andhra Pradesh government has rejected the proposal because it cannot provide the company land in the area proposed.

The Haryana state government has written to the commerce and industry ministry stating that the exact location of the Panchkula zone has not been mentioned and that "the region is ecologically sensitive".

A company executive confirmed the Haryana government decision and added that DLF would pursue its existing two SEZs in the state. On the Hyderabad SEZ, he said they were yet to hear from the state government regarding the issue.

And while the SEZ gold rush continues, a number of other proposals have other been deferred on account of various issues, including land availability or doubts raised by the state governments. There have been some withdrawals too—a plan for a 80 hectare IT zone at Gurgaon has been withdrawn by the promoters.

Another proposal, by Sweet Home Estate Pvt Ltd, to set up an IT zone in Bamnouli village in Vasant Vihar, Delhi, has not been considered as yet as the state government neither sent any recommendation to the board nor made any representations for the proposal.

The proposal filed by Business Park Town Planners Ltd, Faridabad was also not cleared and the company has been asked to file an application with the state government as the plan was for a “large” SEZ.

A proposal for a 11 hectare SEZ in Siruseri near Chennai was deferred because some buildings have already been constructed on the identified land under the Software Technology Park of India scheme. The board will now decide whether the structures can be included in a SEZ.

News: VSNL may not get to develop real estate

(BS 09/04/2006) New Delhi - The department of telecommunications has rejected VSNL’s proposal to jointly undertake commercial development of 773 acres of land owned by the company and share the revenues.

Instead, the DoT has decided to stick to the original agreement at the time of VSNL’s disinvestment to demerge the land into a separate company.

In addition, the DoT wants to explore the option of selling this land subsequently in order to gain from the unprecedented appreciation in land prices in the country.

If the demerger happens, VSNL should not be made to bear the stamp duty as it would derive no benefits from it, sources in the company told Business Standard.

The company has also raised concerns about the interests of its ADR holders as the de-merged entity is unlikely to be listed on the stock markets.

A Cabinet note on the de-merger is slated to be circulated to various ministries during the week. “The note is currently being finalised by an internal committee of the DoT, which was set up last year to work out the modalities of the de-merger. Following this, the issue would be taken up by the Cabinet,” government sources added.

The sources also added the decision to move the Cabinet was designed to ensure that the process of demerger was completed at the earliest, especially since the call option period had already begun—according to the shareholder's agreement, the Tatas can buy the government's 26 per cent stake between February 13, 2006 and February 12, 2007.

This implies that if the Tatas were to exercise this option at present, the government will have to sell its residual 26 per cent stake. In such a scenario, the government will also lose control of the 773 acres of prime land across various cities.

At the time of VSNL's divestment in 2002, its land was estimated to be worth Rs Rs 1,000 crore. Benchmarked against recent land deals in Mumbai, Delhi and elsewhere, VSNL's realty assets may well be worth well over Rs 3,000 crore now.

News: Realty, retail new Tata thrust areas

(BS 09/04/2006) Mumbai - Infrastructure, bio-fuels, wind power to push growth.

The Rs 80,000-crore Tata Group has identified infrastructure, real estate, bio-fuels, wind power, retail, food, groceries and home improvement as new growth areas.

Tata group Chairman Ratan Tata is believed to have outlined the blueprint of the transformation of the group to its senior executives at the Annual Group Managers' Meeting (AGMM) last week in Mumbai.

AGMM is an annual exercise where Tata focuses on future plans and reviews the group's performance in the last one year. Tata is learnt to have made a detailed presentation on how these sectors would be the focus areas of the group in the future.

A Tata group spokesperson declined to comment.

According to sources close to the development, the group will attach more importance to retail housing with greater focus on townships.

Through THDC (formerly known as Tata Housing Development Corporation), the group has been developing premium residential complexes, lifestyle housing buildings and holiday homes.

As a part of its globalisation process, the group will also explore opportunities in Vietnam, Russia, Ukraine, Kazakhstan, Indonesia, Latin America and West Asia.

Tata is learnt to have told group executives that the electronics chain Woolworths would start operation this year, with four stores of 20,000 sq feet each. It will be Woolworths' first venture outside Australia.

Industry sources said the Tata group would introduce Woolworths' Dick Smith Powerhouse electronics store in India. However, it is not known which Tata company will form a joint venture with the Australian retail behemoth. Dick Smith contributed less than 4 per cent of annual sales to the Woolworths group.

Tata is learnt to have explained to senior executives of the group how this annual event had, over the years, dwelled on areas like enhancing group shareholding and common identity, domestic leadership across companies, world-class products and services.

This year, the theme of the annual ritual was innovation and growth in new areas The two-and-a-half hour event took place at a hotel in south Mumbai and was attended by the top management of all Tata group companies.

News: India Inc may face cost pressure

(BS 09/04/2006) Mumbai - Analysts expect operating, net profit to be lower than sales growth in Q4.

All eyes are now on the fourth- quarter results of Indian companies, which will start flowing in this week. The Sensex is near its all-time high and corporate performance this quarter will decide whether stock prices are too high.

As far as market expectations are concerned, analysts estimate this quarter to be better than the previous two quarters for India Inc in terms of top line growth due to robust demand.

But cost pressures could result in lower growth in operating and net profit, both of which are expected to be lower than net sales growth.

For the March 2006 quarter, analysts—taking the average projections by Merril Lynch, ICICI Securities and Motilal Oswal Securities—expect net sales to grow at 21.7 per cent for the 30 stocks comprising the Sensex, to Rs 1,16,455 crore in the fourth quarter of 2005-06, as compared with the March 2005 quarter.

Operating profit is expected to grow at 17.35 per cent to Rs 31,486 crore. With these estimates, analysts expect fourth-quarter growth to be much better than growth in the previous two quarters.

In the December 2005 quarter, the Sensex stocks had reported a mere 10.66 per cent growth year-on-year in operating profit to Rs 28,795.44 crore, with net sales expanding 13.7 per cent to Rs 99,401 crore. In the September quarter, net sales had increased by 17.71 per cent with operating profit growing by 10.89 per cent.

Higher sales growth forecast in the March 2006 quarter as compared with the December 2005 quarter is due to an improved performance from diverse industries.

For instance, sectors such as IT, metals, telecom, banking and financial services are expected to do well. TCS, Wipro and Infosys are expected to see 40 per cent plus growth in their top line.

With strong aluminium prices this year, Hindalco's sales are expected to grow at 55-60 per cent. Dr Reddy's is also likely to grow revenues at over 40 per cent. Upstream player ONGC is expected to be a key beneficiary of higher crude oil prices in the March 2006 quarter.

The major improvement in operating profit is expected from companies in sectors such as engineering, cement, automobiles and IT. The net profit growth is expected to be 15.05 per cent.

However, these figures exclude NTPC and Tata Power, both of which had seen net profits go up last year due to extraordinary income last March. This quarter, however, analysts expect their net profits to fall over 30 per cent.

Reliance Industries and SBI are expected to see a flattish trend in net profit. Meanwhile, IT (TCS, Wipro, Infosys and Satyam), telecom (Bharti) and engineering (BHEL and L&T) are expected to see an impressive growth in their net profits.

Of course, the growth anticipated in the March 2006 quarter, pales in comparison to the sizzling performance recorded by Sensex stocks in the June 2005 quarter, when the 30 stocks' operating profit grew 31.5 per cent y-o-y along with a 23.2 per cent growth in sales.

In the March 2005 quarter, net sales for the Sensex stocks, excluding TCS, had increased by 24.72 per cent y-o-y, with an operating profit growth of 36.45 per cent and a rise of 51.11 per cent in net profit.

News: Dell sees growth in printers, eyes India, China

(RTR 09/04/2006) San Fransisco - Dell Inc., the computer maker that stumbled last year with slower-than-forecast growth, says its rapid expansion will resume as it seizes opportunities and in emerging markets.

The company that seven years ago used its direct-sales business model to capture the No. 1 spot among U.S. computer makers hopes to do the same in India, China, Eastern Europe and Russia.

"If we had the same geographic market share outside the U.S. as we have in the U.S., our company would be twice as big," Ro Parra, senior vice president for Dell's Americas business, said in a recent interview at the company's headquarters in Round Rock, Texas.

"The geographic focus to further growth is very important to us," added Parra.

Chief Executive Kevin Rollins told Reuters on Wednesday the company could reach $100 billion in annual revenue from $55.9 billion last year if it continues on its current growth path. He declined to say when the company could reach that goal.

Rollins, 53, said Dell can expand outside the United States by first targeting large, multinational companies with which it already has relationships, followed by domestic businesses, government agencies, small businesses and finally consumers.

"It's essentially the same way we've done it in every country in the world," he said.

But that approach may be easier said than done, said Roger Kay, president of the research firm Endpoint Technologies Associates.

"They actually face challenges in the developing world that they never faced before," Kay said. "In other markets, you have a low level of business trust" that leads people to prefer buying computers from retailers, usually with cash. "That kind of environment disadvantages the direct business model."

Dell last year twice lowered revenue forecasts, disappointing some investors, who were accustomed to double-digit percentage growth as the company trumped competitors like Hewlett-Packard Co. and Gateway Inc.

Dell, begun by Michael Dell in his dorm room at the University of Texas at Austin in 1984, grew in 20 years to become the world's No. 1 personal computer maker by selling directly to customers on the phone and over the Internet, thereby circumventing retailers and undercutting competitors' prices.

But the company cut prices on entry-level consumer computers too aggressively last year, slowing sales growth. Now, it is looking at new products and services and emerging markets to revive the brisk acceleration for which it became known.

Sales in Brazil, for example, almost doubled in Dell's 2006 fiscal year ended Feb. 3, Parra said. Michael Dell, 41, last month announced plans to double the company's Indian staff to about 20,000 in the next three years.

Dell also added a second plant in Xiamen, China, doubling capacity in the world's fastest-growing economy and helping boost computer shipments there by 37 percent. China now is Dell's fourth-largest market outside the United States.

Those efforts contributed to a 21 percent surge in revenue in the Asia-Pacific region last year, pushing the region's share of Dell's total revenue to 12 percent. Dell's revenue outside the United States reached 43 percent of the total last year.

Meanwhile, Dell has high hopes for myriad new product initiatives, including pushing its three-year-old printer business.

"The value proposition for customers is easy," Parra said. "If you're using a Dell printer and you're about to run out of ink, with three clicks you can order the print cartridge you need."

But Dell faces tough competition from HP, which is the biggest printer maker.

"HP offers more value and convenience than Dell when purchasing printer supplies, and potentially many more products," wrote Moors & Cabot Capital Markets analyst Cindy Shaw, who has a "hold" rating on Dell stock and a "buy" on HP in an April 7 note to clients.

News: Pantaloon buys Crossroads

(TNN 09/04/2006) Mumbai - The country's largest retailer, Pantaloon, is buying Crossroads, the 1,20,000 square feet shopping mall at Haji Ali in central Mumbai.

Confirming the acquisition, a source told TOI, "The deal is already done. A few regulatory clearances remain, which are expected shortly."

Pantaloon has reportedly paid Rs 250-260 crore to the Ashok Piramal group for what is arguably the country's first shopping mall that opened in 1999. This shall now house Mumbai's first Central: The seamless malls Pantaloon has already set up in Bangalore, Pune and Hyderabad.

It is ironical that Pantaloon, which was once one of the mall's biggest tenants before it left during a tenancy reshuffle, will now be the landlord.

Contrary to recent media reports, the investment is being made by Pantaloon, most likely through a yet-to-be floated SPV and not through its real estate investment arm, Kshitij, which currently holds the mandate to invest only in greenfield retail projects.

When contacted, Pantaloon CEO Kishore Biyani declined to comment.

The Crossroads acquisition comes at a time when Pantaloon on its own or through its JV - Planet Sports - is building up a portfolio of premium international brand like Marks & Spencer, Guess, Debenhams, Lee Cooper and Body Shop.

Planet Sport holds licensing rights for Wilson, Puma, Speedo and Converse. Concerns remain on whether Biyani and his team will be able to turn around the fortunes of a property which despite an excellent location has had a jinxed past.

News: India Inc growth bandwagon rumbles on

(FE 09/04/2006) Mumbai - The defining moment for both stock markets and India Inc has finally arrived. With the fourth quarter number crunching about to kick off, investors, analysts and even corporate honchos are keeping their fingers crossed. Will Corporate India be able to justify the spectacular bull run on Dalal Street that took the Sensex almost near the 12,000 level?

If initial signals are any indication, the growth mantra of the corporate sector is expected to continue in the quarter ended March 2006. Though the previous quarter (Q3) witnessed a slump in profit growth — 7 per cent as against 21 per cent in Q2 — due to the dismal show by the oil & gas sector, the Q4 growth is expected to continue at a steady pace.

Most of the key sectors — from infotech, textiles, pharma, cement and steel — are expected to churn out better profits for Q4. However, oil & gas and automobile sectors are likely to show some turbulence. In fact, oil companies have already warned of huge losses due to the cap on fuel prices. Here’s a look at some key sectors:

FMCG BACK IN BUSINESS

It’s thumbs up for the FMCG sector in the Q4 of last fiscal. After a prolonged slump in the first two quarters of FY 2005-06, FMCG companies are riding on higher in volumes and earnings. The trigger, say analysts, is stupendous economic growth, increase in consumer income and higher rural spending.

Says an analyst from Motilal Oswal: ‘‘Despite the price hike initiated by the FMCG firms in the early last year and increase in major categories in the first quarter of present fiscal, the volumes have not been impacted. In fact, volume growth is excellent in last two quarters and the Q4 results will be very good’’.

‘‘Volume growth will be pretty good. For instance, HLL had a bad Q1 in FY 06. But this year, it will be pretty good. If FMCG firms perform well continuously, then the economy will benefit immensely,’’ says another FMCG analyst.

CEMENTING TIES

Though the 160-million tonne Indian cement industry did not have a good December quarter due to unseasonal rains in South India, thanks to the pent-up demand, the volumes have shot up by 8-10 per cent in the fourth quarter of fiscal 2005. Cement prices are ruling at record high and expected to remain high in the near future. This means another good quarter for cement companies.

‘‘The top four cement companies have recorded a 13 per cent growth in their despatches,’’ says Sitesh Sinha, a cement analyst. “This trend will continue for the next couple of months and we do not expect even the monsoon to dampen the sales momentum,” he adds. Thanks to an unprecedented boom in the construction and infrastructure sector, the demand for cement has shot up by an average 15 per cent to 20 per cent in the last fiscal.

STEEL TO STEAL THE SHOW

It has been ‘‘so far, so good’’ story for the steel sector this year. Steel companies are preparing to come out with better results in Q4. ‘‘Steel companies had a wonderful fiscal 2006. This is likely to spill over to next six months as infrastructure activites in India have just started perking up. However, companies have to tackle rising raw material prices,’’ says Darmesh Bhatia of Angel Commodities.

Steel prices have already started rising globally in line with the increase in raw material costs. It will be interesting to see how companies keep the prices steady and protect their bottomline amidst rising raw material cost, international competition and aggresive expansion plans.

Anticipating better results, steel shares have already gone up along with other sectors. Leaders like SAIL, Tata Steel, Jindal, Ispat and Essar are unlikely to disappoint their investors.

News: Indian business houses see wealth surge

(DNA 09/04/2006) Mumbai - India Inc’s big five business houses - including the one called the public sector - are on a roll. In the third successive year of robust stockmarket growth ended March 31, 2006, these business houses have succeeded in creating enormous paper wealth, with the house of Tatas crossing the $ 50 billion mark for the first time ever.

The highlight of the year, though, was the spectacular growth in the market capitalisation of the two post-split Reliance groups, which collectively saw a 97% spike. The combined valuations of the Anil and Mukesh Ambani companies grew from Rs 97,980 crore in March, 2005, to Rs 1,92,785 crore the following year, indicating that family splits have a positive impact on investor wealth, as long as the separating parties retain their entrepreneurial drives.

Between Mukesh and Anil, though, the growth rates show sharp divergence - with Mukesh registering 42% and Anil over 500%. This is largely due to the fact that Anil Ambani’s group was demerged from a unified Reliance group. With assets being spun out of the undivided Reliance, it was to be expected that the rump Reliance group of Mukesh Ambani would show market-cap growth.

The Tata group’s 27 companies, which are indirectly or directly owned by a clutch of charitable trusts, saw market-cap grow by 56% to Rs 2,19,834 crore, from the Rs 1,41,025 crore clocked on March 31, 2005. The surge was aided by major acquisitions in the telecom, steel and automobiles space.

The Aditya V Birla group (AVB), led by Kumar Mangalam Birla, was represented by 10 companies. The group efficiently absorbed the upcycle in commodity prices, especially non-ferrous metals and cement, to crank up a 74% increase in shareholder wealth from Rs 31,676 crore in 2005 to Rs 55,111 crore as on March 31, 2006.

The Aditya Birla group will see two companies - Birla Global Finance and Indo Gulf Fertilisers - get folded into Aditya Birla Nuvo in the current year, 2006-07. The year might also see some reorganisation in Century Textiles, which may be spun off from his grandfather BK Birla’s group and integrated with AVB.

As for the public sector, it didn’t do too badly even though the government did its best by suppressing oil price increases. Thanks to the market surge, listed public sector companies have been able to deliver a 44% increase in investor wealth from 65 companies. Market-cap rose to Rs 7,68,043 crore from Rs 5,34,207 crore in 2005-06.

The 44% gain is all the more creditable as the oil marketing companies - Indian Oil, HPCL and BPCL - were being bled white by having to subsidise kerosene and cooking gas prices. The gains came from ONGC, GAIL, Bhel and BEL, which are the new crown jewels of the public sector.

In the new fiscal, with the bull run showing no signs of a let-up, the market-caps of India Inc’s big business groups may see higher life-time peaks as Mukesh Ambani unveils his petroleum and retailing initiatives, while Anil Ambani enlists strategic investors for Reliance Infocomm.

There’s no stopping the Tatas, too, as they continue to exhibit a voracious appetite for acquisitions. A big ticket IPO is planned for Tata Autocomp, an auto ancillary outfit with a clutch of companies under its belt. Auto ancillaries remain hot favourites in the markets and the Tatas may not lose an opportunity here.

What’s more, the surge in equity prices will help India Inc grow market-cap even faster, as higher valuations will help it pay for acquisition with share swaps. Success could breed more success.

Column: T&T - Are we overheating?

(TTG 09/04/2006) Port of Spain - T&T is experiencing another wave of strong economic growth that has built up high expectations about the future.

Its transformation into the regional financial centre and growing strategic integration into the global economy are likely to prove landmark events. But, as is typical, there are many storm clouds on the horizon. One such risk is that of overheating, which if not corrected, could lead to a hard landing for the economy.

The following are some signs that the T&T economy might be approaching the overheating zone:

Strong pick up in inflationary pressures

Headline inflation is running at around seven per cent on an annual basis, well outside the Central Bank’s informal target range of four to five per cent. Even core inflation, which gives a better gauge of underlying inflationary pressures, has also jumped from two per cent at the end of 2004 to 2.5 per cent at end-February 2006.

Looking ahead, the proposed hike in electricity rates will have a significant impact upon prices across the board. The Regulated Industries Commission (RIC) has proposed electricity rate hikes of 45 per cent for residential customers and more than 50 per cent for commercial users.

Substantial tightening in the labour market

The official unemployment rate has steadily declined from its peak of 25 per cent in the late 1980s to about seven per cent in 2005, the lowest level in four decades. Labour participation rates are at historical highs, especially as more women enter the job market.

The demand for labour has grown across most industries and nearly all skill levels, suggesting that even higher wages and salaries are needed to attract and retain talent. The possibility of importing labour from Caricom has been raised to ease shortages in the construction sector.

Expansionary fiscal policy

The non-energy fiscal deficit (the overall balance less energy revenues) has been widening substantially due to higher government spending, and is the main culprit behind the liquidity overhang in the banking system.

The 2005/2006 budget envisages a non-energy deficit at an estimated 25 per cent of non-energy GDP, more than twice the 12 per cent of non-energy GDP in 2003.

Housing boom

House prices have risen dramatically over the past few years. The boom was initially evident in the western peninsula but has since spread to other parts of the island. The sheer magnitude of the house price boom has prompted the natural question of its sustainability and whether house prices are significantly overvalued.

The longer house prices keep on rising the greater the chance of a disruptive adjustment in the housing market and on the balance sheets of more exposed banks and insurance companies.

Real GDP is likely to average ten per cent in 2006, reflecting a full year’s production of Atlantic LNG Train IV and the M5000 mega methanol plant as well as strong momentum in the construction sector.

Indeed, 2006 will represent T&T’s 13th consecutive year of economic growth but prospects over the next few years depend on the ability of the authorities to engineer a soft landing, that is, a slowing of growth to a more sustainable pace.

Fiscal policy has the key role to play in cooling down the economy. In the current circumstances of record oil prices, there is a compelling reason to keep public spending under tight control and within budget and to transfer additional revenues into the revenue stabilisation fund.

The Central Bank is already attempting to tighten monetary conditions, and further tightening (even higher interest rates) is necessary to make sure that inflation slows at least in line with its informal target.

Translating good intentions into sound and decisive policy intentions now remains the challenge. And there is much at stake.

By Jwala Rambarran - Chief Economist CMMB

News T&T investment schemes increase to $34b

(TTG 09/04/2006) Port of Spain - Funds under management in collective investment schemes at the Securities and Exchange Commission (SEC) increased to $34 billion by the end of 2005, SEC chairman Osborne Nurse revealed on Thursday, during the formal opening of the new headquarters on Dundonald Street.

“Much of the Commission’s regular work involves the registration of new securities issues,” he explained. “In the financial year ended September 2005, we registered 21 new market participants and 100 new securities issues including 10 new collective investment schemes.

“Of these new issues, 45 were equity issues, including management and employee stock ownership plans, accounting for 130 million shares valued at $837 million.”

He said there were also 45 issues of debt and debt derivative securities accounting for $13.8 billion.

“All this signifies a very active and expanding capital market notwithstanding the fact that activity on the stock exchange has been very slow during the year with the level of trading, prices and values and the Composite Index all showing declines during the year,” said Nurse, whose three-year term of office expires soon.

He said it was this expansion and activity in the capital market that caused the need for expanded facilities consisting of several additional meeting rooms, including one to accommodate 40 persons.

“These are important resources that enable us to maintain proper contact and dialogue with our stakeholders and to provide the level of customer service that is expected of us in the future,” said Nurse.

He said the Commission had been active in ensuring that registrants were complying with their continuous reporting obligations under the ACT by filing statements and Annual Reports.

“In 2004 the Commission initiated enforcement action that was completed in 2005 that led to the imposition of penalties totaling $1.2 million on 62 obligations,” he said. “We continue to monitor the level of compliance with filing obligations and continue to be concerned that the level of compliance is still unsatisfactory.”

He said the Commission had begun action in three or four cases where notices of material changes or facts were filed late or not at all.

“We have just concluded the formal investigation into matters related to the trading of Trinidad Cement Limited shares in 2002, the report having been delivered to the general manager (Terrence Clarke) today,” said Nurse. “It is left now for determination to be made as to what, if any, further action may be required. At the same time we embarked in 2005 on two additional investigations and are awaiting the final reports on these two.”

A new draft for a new Securities Act 2006, which includes the recommendation for the appointment of temporary commissioners, had already been submitted to the Minister of Finance, he said.

News: Indian MBA hiring - Realtors top the cos

(TNN 09/04/2006) New Delhi - Guess who’s hiring MBAs. It’s none other than India’s insatiable real estate developers. While on one hand, the nationwide hiring spree by biggies such as DLF, Unitech, Hiranandani and Omaxe is an across the board exercise, the property sector has also become the latest to go to top-of-the-line B-schools in its search for talent.

In fact, India’s top B-school ISB, which had its best ever placements this year, also had real estate players scouting for talent among the graduating class of 2006.

“Real estate was among the sectors that made a mark for the first time at ISB. Apart from record offers that some of our students have got, the fact that such new sectors are becoming recruiters on campus is also big news. In fact, one of our students, a shipping industry professional moved to real estate consulting, which is actually a career shift within the infrastructure sector. With new players coming into real estate development and the huge growth story in the sector, there will be more interest in hiring MBAs from campuses in coming years. Foreign consultancies who are setting up shop in India will also hunt for talent,” says Ajit Rangnekar, deputy dean at ISB.

As even as MBAs are willing to shift gears and consider careers in the emerging sectors like real estate, companies too are wooing them big time. “We are considering candidates with MBA qualifications for various positions and for this we approach business schools. Salaries offered to such candidates usually depends on the school and the previous experience of the candidate,” says Sanjay Chandra, MD Unitech Group.

For a sector growing at a scorching pace, the skills that MBAs from top B-schools bring to the table are often very important. “The industry is looking for analytical and strategic skill sets but more importantly the future growth potential is attracting more and more young MBAs. We, for example, have successfully participated in campus placement this year and have received a great response from students from all B-schools.

From the feedback we have received, students foresee this sector as a challenging and exciting career filled with excellent growth opportunities coupled with competitive remuneration levels. We have already committed to increase the number of young graduates we hire from good business schools every year for the next few years,” says Rothas Goel, CMD, Omaxe Group.

Specialised MNC players and real estate consultancies who have set up shop in India will definitely lead the talent hunt as Sanjay Verma, joint managing director, Cushman & Wakefield India, points out. “The spurt of activity has resulted in a huge demand for skilled professionals across several avenues such as project management, sales, marketing, financial services, research, consulting, facilities management, engineering etc.

More importantly, there is a greater need for senior professionals in leadership roles to cope with this unprecedented growth for a variety of organizations participating in this real estate growth. Be it developers, construction companies, property consultants, real estate funds, funding institutions or any other agency involved with any aspect of the real estate arena, there is an increasing demand for trained professionals , which has never been witnessed before,” he says.

The industry, which was largely unorganised till some time back is now also feeling the need for structured training and courses. “Given the fact that this market will become more aligned with global practices, it is only natural that greater number of MBAs will explore this industry. At the current rate of demand for professionals needed for this industry to cope with future growth, there will be a challenging demand supply gap unless, universities work with players in this industry and design courses which are formulated keeping in mind the needs and skill set requirements. Some schools have made a beginning in this arena,” feels Pradeep Jain, chairman, Parsvnath group.

News: World all out to woo Indian travellers

(TNN 09/04/2006) New Delhi - The Indian outbound travel has been growing by leaps and bounds, and the world at large is all out to woo the Indian traveller. The market potential can be seen from the fact that while five years ago there were just a handful of foreign tourist boards operating in India, today some fifteen countries are active here, and many more are lining up to display their countries’ attractions to Indian travellers. It is raining planes in India as state-owned and private airlines are expanding their fleets with a vengeance and foreign players are rushing in to grab a share of the Indian aviation pie.

Says Rajji Rai, secretary general of The Travel Agents Association of India (TAAI): ”The middle class of India is growing by almost 30 million every year and so is the rising disposable income as a result of which overseas travel is fast becoming a part of the modern lifestyle. In 2004 we had an estimated six million outbound travellers from India and this year the projected figure is expected to cross eight million and the majority of the travel from North India happens in the summer.”

“Persistent strong economic growth, new airports in ur-ban heartlands and air liberalisation will continue to drive the Indian outbound boom,” says Vinay Malhotra, GM, Emirates Airlines. “Indian outbound is growing at a staggering rate and the seat availability along with the airfares have become a major issue this summer.”

With the current Canton Fair scheduled to be held in Guangzhou in two phase from 16th April and 25th April onwards, the flights catering to this destination are ab-solutely choc-a -bloc. In fact, one had the option of flying to Hong Kong and then taking a bus, train or a ferry to Guangzhou but even those flights are full. As of now even the hotels in Hong King, Macau and Guangzhou are fully booked. Various Airlines like China Eastern, Thai Airways and Air India did have special airfares but seats are hard to come by even in the normal fares.

Malaysian Airlines have introduced a special fare of Rs 6,000, which is flight and date specific, for Kuala Lampur but if one were to log on to its site the seats are al-ready sold out. Even for London, which is a hot favourite destination, Jet Airways, British Airways & Lufthansa Airways have introduced special fares, which hover around Rs 18,500 with a stipulated condition of getting the ticketing done before a certain specified dates. But yet again the seats are simply not available. On certain dates even in the normal fares the seats remains a distant dream.

For March 2006, British Airway’s passenger capacity, measured in available seat kilometres, was 2.5% above March 2005. For the January to March quarter, available seat kilometres rose by 2.8%, with revenue passenger kilometres rising by 2.9%. This resulted in an increase in passenger load factor of 0.1 points, to 73.1%. This comprised a 10.1% increase in premium traffic and a 1.6% increase in non-premium traffic. CTKs rose by 0.9%.

The same stands true for Dubai which is a hot selling destination and has direct connections on Air India, Indian Airlines, Emirates and Etihad. Most of the airlines catering to this destination have special fares but to getseats is usually not possible. Keeping in mind the way the Indian outbound trade is growing, the airlines have a major role to play, says Naved Desai GM, Jet Airways.

“There is a dire need for airlines, catering to popular destinations like South East Asia and Europe to not only increase its connectivity and frequency but should push to operate from popular destinations. Also newer destinations should be explored and travel agents and tour operators should cater more and more to the emerging trend of exploring new countries and regions and savouring different experiences by the regular travelers.”

“It should be ensured that the political and bureaucratic indecision’s should not stymie or restrict the open air policy. The government still does not allow foreign airlines to start joint ventures, and a majority of the foreign investors are of the opinion that the limit for foreign equity stakes from sources with no significant airline connections, which has been raised from 40% to 49%, is not open enough,” adds Rajji Rai.

The biggest constraints in an otherwise promising story is the airport bottleneck. Though airport modernisation in 3-5 years features topmost on the government’s agenda, it will take a while for the results to take effect. Meanwhile, the airport infrastructure, which is deplor-able and crumbling, would make things worse as passenger and aircraft traffic surge.

News: Indian IPOs - Many FIIs making quick exit on listing

(BL 09/04/2006) Mumbai - In a new post-IPO trend, foreign funds are seen to be big sellers of shares of companies - sometimes even at a loss - on the day of IPO listing on stock exchanges, contrary to the belief that foreign funds enter stocks at IPO stage for long-term gains.

According to the data available from stock exchanges, the trend is more visible in public offers of small and mid-cap companies such as Visa Steel, Nitin Spinners, JK Cement, Nitco Tiles and Adhunik Metalics .

For instance, ABN-Amro Bank sold over 9 lakh shares of Visa Steel at Rs 54.92 on the day of listing of the stocks. This is a loss of Rs 2 per share compared to the issue price of Rs 57. BNP Paribas Arbitrage also sold 6.13 lakh shares of Visa Steel on the listing day at a loss of Rs 2 per share. However, most of the first-day sales are at a profit. HSBC Equity Fund, for instance, made a cool profit of over Rs 21 per share on Nitco Tiles on its sale of 1.68 lakh shares. Merrill Lynch and ABN AMRO made profits of over Rs 2 per share when they sold 5.47 lakh and 10.36 lakh shares, respectively of Adhunik Metalics on the listing day of the shares on the bourses. Significantly, the trend was not seen in IPOs such as Suzlon, where analysts bet on long-term benefits of investments.

"It could be possible that promoters' money may be routed through foreign funds to create a hype on the IPOs through over-subscription levels or to ensure that the IPOs are not devolved. This money may be getting out at the time of listing," said an analyst with a leading brokerage house, on condition of anonymity. Another view is that hedge funds, which are known for quick entry and exit in the stock markets, may be entering the stocks during the IPO-stage for making a quick profit at the time of listing.

Sashi Bhushan, Head (Western region), IL&FS Investmart, said the liberal pricing of the IPOs may be forcing some FIIs to act desperately on the listing day. Another reasoning that some foreign funds would not like to hold on to a particular stock if they do not get a "pre-defined quantity of shares" at the time of IPOs.

News: Bet on value-addition, innovation, India Inc told

(BL 09/04/2006) Chennai - Industry's competitiveness is resting too much on labour cost advantage than on innovation, according to R. Seshasayee, Managing Director, Ashok Leyland Ltd and Vice-President, Confederation of Indian Industry (CII).

Addressing a session on emerging challenges in sustaining growth at the CII's annual regional meeting here on Saturday, he said that the only durable way companies can extract a price premium is through value-addition and innovation.

Cost vs value

Intellectual capital needs to be a significant part of wealth of companies. "Not low-cost labour or arbitrage in labour cost - that is transient," he said.

The cost of inputs, and of commodities is bound to increase and can impede growth. Industries globally have addressed this through efficiency increase. Internal efficiency and continuous improvement has become a "part of today's DNA of Indian industries" in dealing with input costs and defending margins. But this cannot go on forever, Seshasayee said.

"Why would people pay more?" he asked.

The differentiation by which companies can command a price premium is in delivering value. Value-addition by an order of magnitude, changing the rules of the game to develop novel packages - that has been the success of the industry leaders. Continuous innovation is the challenge for Indian industries, he said.

Areas of concern

Ashok Soota, Chairman and Managing Director, MindTree Consulting Pvt Ltd, who spoke on employee attrition and increasing costs, felt that wage increase was a manifestation of success. But there has been a swing from one extreme - pathetic low wages a decade ago - to another and short-term cost increases could lead to loss of competitiveness.

Increasing compensation to tackle attrition would only lead to a vicious cycle. One solution would be for companies to move into new geographical areas to tap new human resources.

Another concern is the `Dutch Disease' - one sector growing at the cost of another - with the boom in information technology driving wages to levels that other sectors cannot afford.

On the supply side, the issues of quality and quantity of workforce need to be addressed. Educational institutions churn out graduates who are `unemployable.' But there is also talk of expanding reservation. That would be a wrong decision, as this would only take away quality. Industries need to focus on training to improve the quality of the workforce, Soota said.

India has demographics on its side. It has the human resource capacity to meet the global demand for knowledge workers by 2020. It is the time to act now - but unfortunately when things are going well, action is difficult, he said.

`Conform to global standards'

Ravi Uppal, Vice-Chairman and Managing Director, ABB Ltd and Deputy Chairman, CII Southern Region, said conforming to international standards despite the costs is a necessity for companies that are looking at a presence in the global market.

Whether a Sarbanes-Oxley accounting disclosure or the home-brewed Clause 49 of SEBI, companies need to have systems to instil confidence in the stakeholders. The Indian stock market cannot afford another scandal.

India scores higher than China on credibility and transparency. Companies should build on the platform of good practice and governance. "It is a must - Not an option," Uppal said.

Stress on CSR

Y.C. Deveshwar, Chairman of ITC Ltd and CII President, called for a system that provided an incentive or placed a value on a company's initiative in corporate social responsibility and environment conservation. The media too has a role in sensitising the civil society to good practices.

India has 17 per cent of the world's population but 2 per cent of the land mass and 4 per cent of water. So conserving natural resources and enabling a skilled workforce is the concern for all. The entire society should place a value on conservation.

News: The real estate boom reaches east Delhi

(BS 08/04/2006) New Delhi - Previously hopelessly unfashionable areas such as Ghaziabad and Greater Noida are becoming attractive to many developers.

Remember the story of the Ugly Duckling, who was jeered and laughed at, only to grow up into a beautiful swan? That, in a nutshell, is the story of the trans-Yamuna region.

Till a few years back, the snob value of the capital ended just before the river; anybody or any locality beyond was clearly labelled down-market. For east Delhi had hardly anything to offer by way of entertainment, quality education or health care; one had to venture across the Yamuna to central or south Delhi for anything in the way of fun.

But not anymore. For the the entire skyline of the trans-Yamuna region has changed remarkably in the last two-three years. While the Akshardham Temple on the banks of the river is the pride of the region, an increasing number of malls, multiplexes, amusement parks and entertainment hubs, as well as a plethora of well-planned townships, have put the region in a different league altogether.

No longer known as the locality for the less-endowed, every big brand today hastens to have a presence in the region that includes east Delhi, Noida, Greater Noida and Ghaziabad.

Small wonder then that rates of both commercial and residential properties in these regions have skyrocketed in the last couple of years. According to realtors, property rates in Indirapuram alone have registered a 70 per cent appreciation in the last one and a half years.

“While one could buy Shipra’s prime residential property in Indirapuram for Rs 1,200 per sq ft two years ago, it easily costs over Rs 2,600 per sq ft today,” says a top management official at Shipra Estate, which claims to be the first private developer to have ventured into this part of the city.

“We understood the potential in the area when no one wanted to come towards Indirapuram,” maintains the official.

Strategically located between three cities (Delhi, Ghaziabad and Noida), Indirapuram’s infrastructure is supposed to be its biggest strength. It also explains why the group built Shipra Mall in the area, which is now one of the largest malls (4.5 lakh sq ft) in the country.

While realtors and property developers identify this sudden spurt as part of the universal phenomenon of the explosion of tier 2 cities across the country, corporates acknowledge the soaring economic potential of the people across the river.

“We realised the economy of east Delhi was on the growth path, as there was a discernible boom in consumer spending,” points out Sujit Kumar, CEO and president, Aeren R Enterprises.

Kumar’s positive feedback on the region probably led the group, a real estate and infrastructure comglomerate, to set up their first IMAX theatre in northern India at the Pacific Mall in Kaushambi, on the Delhi-Ghaziabad border.

Going by footfalls at the specialised theatre with girth screen, 14,000 watts of surround sound and stadium seating for 450 people, it certainly seems to have been a good decision, claims the group.

“While the average capacity utilisation of most multiplexes in metros hover around 25 per cent, we are already clocking between 40-50 per cent,” says Kumar with satisfaction.

Evidently, good living is the buzzword here, and property developers appear to be giving oodles of attention to just that. For, besides developing offices and residential apartments, they are focused on providing social infrastructure, such as shopping malls, family entertainment centres, schools and hospitals, in a big way.

In contrast, the development carried out by Delhi Development Authority in, say, any south or central Delhi area seem to have no provision for entertainment except for poorly maintained parks.

“What is on offer in the trans-Yamuna region is certainly a better life as compared to Delhi, where all the infrastructure such as water, roads and drainage are severely strained,” points out J B Goel, chairman, Express Developers.

The real estate group has the sprawling 1 million sq ft Express Gardens opposite Noida Electronic City to its credit. Having come up at a cost of Rs 200 crore, all the 650 furnished luxury apartments promise to be Vaastu friendly. Another project of the group that’s underway is the Express Plus Mall which is being touted as one of the biggest shopping malls in Vasundhra City.

With more and more people realising the advantages of moving to the eastern suburbs of the capital, the developers are understandably making merry. While areas like Kaushambi, Patparganj and Mayur Vihar are already choc-a-bloc, they maintain, in another two years’ time Indirapuram and even Greater Noida will be full.

“The advent of the Metro Rail and the Commonwealth Games are two watersheds that have spurred demand for property development in these regions,” avers A S Aggarwal of MSX Developers behind the Golf Gardenia project at Greater Noida.

Spread over 1.2 lakh sq ft, the 40 crore residential project comprises four types of air-conditioned super deluxe apartments with price tags starting from Rs 40 lakh and, for a duplex penthouse, averaging at Rs 90 lakh.

The group claims to have come up with an innovative concept of 80 service apartments with all the facilities of a five-star hotel at almost one third its rate. With a tariff of Rs 4,000, Aggarwal sees a huge demand for his service apartments, which have furnished living rooms, bedrooms and offices along with small pantries.

“While Delhi has a requirement of 65,000 hotel rooms, the current capacity is only 30,000. And demand will rise manifold with the Commonwealth Games in 2010,” he says confidently.

Meanwhile, even as a horde of property developers have been quick to make hay while the sun shines, there are a handful who are either standing on the periphery or have diverted their attention elsewhere.

So while the Rs 17,000 crore Majestic Properties have trained their eyes to Meerut instead, the Sahara Group has been waiting for necessary clearances from the government for their projects in Greater Noida and Ghaziabad.

“We focus on long term developments and are very particular about getting all the necessary clearances before launching our projects, unlike most developers,” says Sunder Lal, senior advisor, Sahara Group.

ON THE GROWTH PATH Factors contributing to the phenomenal growth of the trans-Yamuna region:

Strategic location from Delhi Advent of the Metro and Anand Vihar railway station Improving connectivity with flyovers and expressways Better infrastructure, such as wide roads, regular water supply, advanced drainage and sewage facilities Lure of more open spaces as compared to the concrete jungle of Delhi Reduced pullution levels Planned development of townships with educational institutions and hospitals Scope for better living in terms of value-added services like ATMs, clubs, swimming pools and shopping centres

Mall Count East Delhi Mall Pacific Mall Galaxi Kaushambi Mall Wave Kaushambi, Wave Noida Shipra Mall Shoprix Spice World

News: Pink is too hot for builders, retailers

(IANS 08/04/2006) Jaipur - The Pink City is catching builders' fancy. And a retail war is only waiting to happen.

With several shopping malls and multiplexes coming up, Jaipur has now become a favourite destination for most builders to set up commercial ventures.

The city, which only a few malls, is all set to welcome another 25 to 30 malls in the next few years, of which 10 to 15 malls have already started their construction, says Alok Jain, a real consultant.

"The city has undergone tremendous transformation during the last few months. With more and more malls coming up overnight, there is a mad scramble among big retailers, licking their lips in anticipation. Consequently, the city is witnessing a sudden spurt in the prices of commercial property," Jain adds.

The unprecedented increase in the demand for commercial space can be traced to the fact that Jaipur has witnessed an investment of Rs 20-30 billion in the retail business. And, it is expected to see an investment of the similar nature in the next couple of years too, says Alok.

Several big retailers like Reliance, Big Bazar, Pantaloon, Max insurance, Lifestyle, Café Coffee Day and many more have either settled down or are looking for suitable place in the city.

The unprecedented expansion of these shopping malls has led to a sharp increase in the commercial prices. Commercial prices have seen a growth of over 200-300 per cent in the last couple of years.

"These prices, which were earlier hovering around Rs 4,000 to 5000 per sq feet have now shot up to Rs 15,000 to 20,000 depending upon the facility and location of the mall," informs Vishnu Agarwal, a real estate consultant.

Besides this, the likelihood of coming up of several specialised malls like Rs 350 crore World Trade Park, Gold Souk, Wedding Souk and Automobile Mall has further added to the price-rise.

However, the real estate consultants feel that prices "would not go up" further as "they have reached a saturation point" and they are likely to stay there in near future.

"Any further increase (in the prices) could divert new retailers to the other cities," Agarwal opined.

City experts, meanwhile, attribute the mushrooming of malls and increasing influx of the retailers to the city's improved infrastructure and changing lifestyle of the people.

"It's the transformation period for the city. Life style is changing, infrastructure has improved, paying capacity has increased and people are ready to spend any amount over quality products. All these factors lead to the commercial development," Agarwal added.

News: Kingfisher Air may set up venture abroad

(BL 08/04/2006) Bangalore - Kingfisher Airlines is considering a move to set up a new venture in the US or the UK to fly international routes even as it became the first to bid for all the five parking slots for superjumbo A380s in Mumbai and Delhi.

"We have applied for Airports' Authority of India's parking slots for A380s," the airline's Chairman, Vijay Mallya, told Business Line. The Airports Authority is in the process of building parking slots for A380s in Mumbai and Delhi.

Currently, Kingfisher Air is the only airline in India, which has placed orders for A380s. The ticket price for each of these aircraft, the largest passenger plane in the world, is around $280 million. The delivery of these aircraft, which can accommodate 800 passengers each, is not expected before 2010.

Mallya said if the Union Government does not allow his airline to fly on international routes soon, then it will consider setting up a venture in the US or UK. "If the Government does not give us permission soon, we will fly in the reverse direction," Mallya said. "It is hugely unfair on the part of the Government to bar newer airlines from flying international routes," Dr Mallya said. The airline has also ordered for five A350-800s, which are usually deployed for long haul operations, clearly indicating that the airline is readying itself to fly international routes sooner than later.

Low-cost model

He also ruled out any plans to follow the low-cost model. "These low-cost airlines are in fact low fare (airlines)," he said. He said LCCs (low cost carriers) do not have a future in India as long as there are no secondary airports in the country. He said unlike the US or the UK, India does not have secondary airports where landing charges are lesser. Even the fuel charges are the highest in the world, he said. "They have a lesser chance of succeeding in India," he said.

Good response

Dr Mallya said the newly introduced business class has met with a good response. "Our business class is fully booked even though we just had a soft launch," he said. The business class offers reclining seats and has several other features. Mallya said as the airline buys only new aircraft, it was cost-effective to customise them.

News: Dutch bio-medical mission to visit India

(BL 08/04/2006) Hyderabad - A large Dutch bio-medical mission, consisting of Dutch biotech companies, would be visiting India from June 6-9, according to Desiree Bonis, Deputy Head of Mission and Head of Economic Affairs, Royal Netherlands Embassy at New Delhi.

The visit of the delegation is aimed at exploring new business contacts in the biotechnology and pharmaceutical sector. As a part of this mission's programme, the Netherlands would also be represented at the Bangalore Bio with a Holland Pavilion, she said.

Bonis was addressing a seminar on `Doing business with Netherlands: Biotechnology and Pharmaceuticals' jointly organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Royal Netherlands Embassy here on Friday.

She said the Netherlands is a highly developed industrial country and one of the largest traders and investors in the world. Holland, which is considered the `Gateway to Europe', is among the 15 largest economies of the world. Stating that Holland has been the largest investor in the US for many years, she said it is now the third largest investor in India. It is home to several multinationals such as Shell, Unilever, Philips, AKZO Nobel, DSM, ABN Amro, ING and Rabobank, she said.

According to the Senior Policy Advisor in the Netherlands Ministry of Economic Affairs, R.M.F. van de Laar, the room for expansion and growth exists especially in the life sciences sector, an increasingly important sector for the Dutch economy.

There are currently about 400 companies specialising in biotechnology research and development in Netherlands.

Shift to India

The Dutch major PharmaMatch BV's Country Head, Irfan Vazirally, said many of the European pharmaceutical companies would like to shift their development, sourcing of materials and manufacturing activities to India aimed at improving their margins. Similarly, several Indian development and manufacturing companies are keen to establish their presence in Europe.

PharmaMatch BV, which is into matching two pharmaceutical companies - the customer and the manufacturer, is assisting European customers by improvement of margins on generic products by transferring production to India. It is also helping the European companies source pharmaceutical active materials from India for the European markets and finding Indian partners to develop new products jointly with European customers.

Further, PharmaMatch is also finding European partners for Indian manufacturers who wish to market their products in the EU, he said.

News: Pantaloon eyes travel business

(BL 08/04/2006) Mumbai - Pantaloon Retail is entering the travel business by launching a travel desk service at its seamless mall - Central.

Kishore Biyani, Managing Director, Pantaloon Retail, said, "There is a plan to start a travel desk at Central." With intentions of starting ticketing services for travel holidays, the retail chain is scouting for a partner to enter the business. Targeting customers visiting its Central mall, Pantaloon is targeting the upper middle class with its travel services, which would include hotel bookings as well.

Outsourcing

However, realising the fluctuating margins of the travel business, Pantaloon is considering the possibility of either entering the business by itself or outsourcing the services to a travel house.

Adds Jaydeep Shetty, Chief-Central Relationship Management, Pantaloon Retail India, "Presently, we are exploring the possibility of getting into the business either by ourselves or through a tie up with a partner who has a national presence."

Apart from retailing apparel and accessories brands, Pantaloon is also extending Central into new areas such as music and book retailing under the name, Depot, as an in-store brand. Besides, it is also considering launching a mobile and gadget bar under its group company's brand - `Convergence' - to offer almost every electronic brand.

Besides, Central is also expected to have a new umbrella brand for its food courts business. Considering there are multiple restaurant brands such as Bombay Blue, Copper Chimney and Noodle Bar at its existing malls, there are plans to integrate all its foods brands under one single umbrella brand.

Name change

In fact, its existing food brand - Fuel Station at Hyderabad Central - is expected to get extended to the rest of its branches and at the same time possibly undergo a name change. Adds Shetty, "We are looking at fortifying and changing the name of our food brand. A new umbrella brand to represent the food brand is being considered and we plan to bring all the food court brands under a single one with a master brand strategy."

At present, almost 20 per cent of Central's business comprises the foods business from the various restaurant brands, while the majority of the turnover is from apparel and accessories. Besides, cinemas and multiplexes also comprise a part of the business and have been leased out to players such as PVR and Inox.

Pantaloon launched its first Central in 2004 in Bangalore. Its revenue model is based on the concept of space utilisation - brands pay fixed charges based on the rental space occupied in addition to a certain percentage of monthly sales.

"The turnover of Central today is greater than that of the top few retailers put together,'' adds Biyani.

News: Delhi's shoppers' paradise

(TNN 08/04/2006) New Delhi - Luxury brands need luxury retail environment. And India Inc is warming up to the idea. The country will soon have its own version Bond Street of London, Rodeo Drive of Los Angeles, Plaza 66 of Shanghai and Emporio of Thailand. More than half a dozen retail projects, in different stages of development in Delhi and Mumbai, are set to target luxury brands from across the globe.

As a focused initiative, DLF Emporio and The New Delhi Dome are the two mega retail projects which will open the doors for some of the world’s finest luxury brands to showcase themselves. Being developed on the lines of so-called Town Centres in the US, by DLF and Select Infrastructure respectively, the two are currently busy marketing themselves as the ultimate luxury retail destination in Milan, Paris and New York to woo brands perched at the top of the luxury pyramid.

Retail analysts say that this development may turn what was hitherto a trickle of luxury brand in India into a cascade. “Absence of luxury retail environment was one of the major deterrent for premium brands to enter India,” says Saloni Nangia, associate director, Technopak.

And those who dared to reluctantly sneak into India — LVMH, Bvlgari, Burberry, Aigner and Bang & Olufsen — have remained confined to five star hotels for want of conducive retail ambience. With developers turning their attention to luxury retail projects, this is all set to change.

No wonder, Kajal Aijaz, CEO, DLF Emporio — the company behind mega luxury malls coming up in Delhi and Mumbai — is excited. “Emporio in Delhi is being built on an Asia platform and there’s nothing of that stature in the country,” she says, adding “There’s an opulent feel to the luxury mall.”

While DLF Emporio Delhi will open by this year end, Mumbai property will be complete by 2008. “You can’t hop around hotels to grab expensive gifts of a luxury brand for someone you love. Remember, a huge fraction of luxury brands are bought as gifts,” says Pranay Sinha, president & CEO, Select, adding that The New Delhi Dome will be a launch pad for labels like Salvatore Ferragamo and Paul Smith.

News: Cashing in on India's retail mania

(Bloomberg 08/04/2006) Mumbai - Bobby Gupta says he’d never seen a more massive crowd than on January 26, when Big Bazaar, India’s largest chain of discount stores, held its biggest-ever sale.

Two million people jammed Big Bazaar’s 24 locations across India, forcing three-quarters to shut early when employees couldn’t subdue the mobs. In Bhubaneswar in eastern India, hordes of bargain hunters jostled to grab cut-rate jeans, pressure cookers and mobile phones.

‘‘Half the town was in that store,’’ says Gupta, 27, a businessman who was shopping that day. ‘‘A lady in the toys section fainted.’’ Indian consumers, once relegated to sorting through mom-and-pop stores and roadside markets, are shopping with a vengeance at new malls, discount centres and combination food and department stores called hypermarkets.

India’s annual per-capita income has climbed 62% to Rs 25,778 ($581.37) during the six years ended on March 31, the government estimates. India’s middle class, 216 million strong, is clamouring for the latest in flavoured toothpaste and flat-panel TVs.

India’s retailing overhaul is another sign that the world’s biggest democracy is lurching toward modernisation, as it has done with computers, telecommunications and aviation. By 2010, there will be 351 million middle-income Indians in 65 million households, up from 40 million households today, New York-based consulting firm McKinsey & Co predicts.

Wal-Mart, Reliance

Right now, Indians do as much as 97% of their spending at small, independently owned neighbourhood shops. People pick up lentils in one spot, towels in another and sandals in a third. They make their way along streets crowded with cars, scooters and rickshaws and jam into tiny stores or narrow stalls packed to the rafters, bargaining with the proprietor to complete the daily shopping.

‘‘If you believe in the Indian consumer, if you believe in his growing wealth, then you will believe in organized retail,’’ says Pauli Laursen, who helps manage $6.5 billion of stocks and bonds at Sydinvest Asset Management in Aabenraa, Denmark.

Homegrown retailers and foreign hopefuls are rushing to ring up profits from India’s shopping spree. Mumbai-based chemicals and petroleum giant Reliance Industries Ltd plans to spend a total of Rs 15,000 crore by March 2007 to open 1,575 warehouse-style stores in towns and large villages across India, people familiar with the company’s plans said. In January, Reliance announced an initial $750 million investment.

In December, Wal-Mart Stores Inc., which reported $312 billion in sales in the fiscal year ended on Jan. 31, applied to India’s central bank to open an office to study the Indian market. The application is under review.

The numbers explain their enthusiasm. Spending by Indians on products and services outside of education, housing, health care and transportation rose 5 percent to an estimated $219 billion in 2005. Of that amount, retail chains took in just $8.2 billion, according to Technopak Advisors Pvt., a Gurgaon, India-based consulting company. Retailers’ share of consumer spending may increase to $25 billion by 2010, Technopak estimates.

‘‘India is clearly a country that is very attractive,’’ says Beth Keck, director of international corporate affairs at Bentonville, Arkansas-based Wal-Mart. Investors think so, too. They’re driving up shares of Big Bazaar’s parent, Pantaloon Retail India Ltd. The stock of the Mumbai-based company surged 176 percent in the year ended on April 3, to Rs 2001.75. ICICI Venture, the private equity arm of ICICI Bank Ltd., the biggest Indian lender that’s not controlled by the govt, says it made five times its 2001 investment in Pantaloon. Bala Deshpande, ICICI Venture’s director, investments, declined to say how much the firm invested.

Subhiksha Trading Services Ltd., which runs 145 discount grocery and pharmacy stores in the southern state of Tamil Nadu, plans to spend Rs 2.2 billion on 650 new stores this year. The Chennai-based company intends to sell shares to the public worth as much as $35 million by May.

Mumbai-based RPG Enterprises, which took in $1.89 billion of revenue from tyre manufacturing, power generation and other areas in the year ended last March, plans to invest Rs 450 crore to expand its Spencer’s chain. Spencer’s features Big Bazaar-type shops, supermarkets and convenience stores. ‘‘It will raise money from a share sale and through private equity,’’ vice chairman Sanjiv Goenka says.

Vishal Retail Pvt., which competes with Big Bazaar through its Vishal Megamart chain, is in talks with private equity investors to raise as much as Rs 50 crore, says chairman Ram Chander Aggarwal, 41, who declines to name the investors.

He plans an initial public offering worth as much as Rs 150 crore.

Retail Hurdles

Crowds of unruly shoppers aside, the threats to India’s retail ambitions are plentiful. Poor roads and inadequate storage mean that a quarter of the nation’s fruits and vegetables go bad before they get to market, the government estimates. Laws such as the Standards of Weights and Measures Act of 1976 control information on packaging and how products are sold, relegating India to archaic practices. A retailer can’t use the abbreviation ‘‘MFD’’ in place of ‘‘manufactured by,’’ and writing the size of a shirt in inches instead of centimeters is against the law. ‘‘Each of India’s 29 states interprets the statutes differently,’’ Pantaloon managing director Kishore Biyani says.

India’s retailers are forced to build their distribution networks and warehouses from scratch. Space in India’s teeming cities is limited. And because retailing is a new industry, it’s hard to find professional managers and clerks as stores compete for educated workers.

‘‘This country has no human resources in terms of skilled people to operate retail, and you have to build the supply chain because there is none,’’ says BS Nagesh, 46, CEO of Shoppers’ Stop Ltd., which runs 19 department stores. ‘‘Every state and every store goes through a different license, so even the largest player has to start fresh every time he opens a new store.’’

Wholesalers and distributors, afraid the new chains will shut them out, are adding to India’s growing pains. These groups act as middlemen and take a cut of sales. Now, chains such as Subhiksha are buying directly from drugmakers and consumer product companies, luring customers with average discounts of 10% and eliminating the distributors.

‘‘There was a lot of resistance from traders who didn’t like our discounting,’’ says managing director R Subramanian, 39, who founded the company in 1997. ‘‘They tried to organise supply boycotts to make sure we didn’t discount. We had to go to court to ensure we got our supplies.’’

Praveen Khandelwal, New Delhi-based secretary general of the Confederation of All India Traders, which represents about 50 million small shopkeepers, says chains like Big Bazaar are bad for traditional merchants. ‘‘We are opposed to any kind of chain of retail stores, whether Indian or foreign,’’ says Khandelwal, sitting in his hardware shop in New Delhi, which is stocked to the roof with boxes of door knobs and handles. ‘‘Ultimately, it is detrimental to domestic traders.’’

News: Pantaloon plans 10 new outlets in South

(TNN 08/04/2006) Bangalore - In a bid to take advantage of the huge consumer spending, Pantaloon Retail (India) has firmed up big expansion plans for South India in ’06. The company plans to set up 10 new stores in the region, including one in Mangalore.

“We will add 3-4 Big Bazaar stores in Bangalore this year, while the rest of the Big Bazaar and Pantaloon stores will be added in other metros of the South. We will also open one outlet in Mangalore next month,” Vishnu Prasad, president, operations, south zone, Pantaloon Retail (India), told ET.

Pantaloon is also looking to set up outlets in second-rung cities like Belgaum, Hubli, Dharwad and Mysore in ’07, he added.

The company, on Friday, opened its third Big Bazaar outlet on Double Road in Bangalore, taking the tally to 25 stores across the nation. The 42,000 sq ft store will offer over 1,60,000 products. It will also have a Food Bazaar within the store.

News: ING Vysya Life takes lead with 44 cooperative bank tieups

(TV18 07/04/2006) Mumbai - In a quiet but industry leading move, ING Vysya Life has stolen the march in cooperative bank tieups in the life insurance industry with 44 banks signed up as of 31 st March 2006. ING Vysya Life has tied up with major bank networks in Gujarat, Himachal, Haryana, Karnataka, Kerala, Maharashtra, Punjab, Rajasthan and Uttaranchal. Large tieups also exist with Nainital Bank in Uttaranchal and Abhudaya Bank in Mumbai. The 44 banks are spread over 9 states and have a combined customer base of 10 million customers with 900+ branches. The 44 tieups comprise of 1 scheduled commercial bank, 32 UCBs (Urban Cooperative Banks) and 11 DCCBs (District Commercial Cooperative Banks).

Kshitij Jain, Director Sales, ING Vysya Life said, “We have focussed on creating a compelling business value proposition for the cooperative bank segment that allows them to enhance their financial services offering to their customers as well as helps them to earn fee income. We have a specialized package that combines simple packaged products, simplified underwriting and application processing, training of branch staff and marketing support activities to help the banks get a running start and benefit from this opportunity.”

M R Rao, Head of Alternate Channels, ING Vysya Life said, “We believe that the trust and customer relationship that the cooperative banks enjoy with their clients is a strong and valuable asset. We have a team of dedicated relationship managers that provide the support from our side to the bank management. Our simplified products and processes, especially the Safal Jeevan endowment plan, are very well suited to cater to the needs of the coop banks’ customers. We now have a proven model and demonstrated success and this has helped us garner the largest number of such tieups in the industry.”

Apart from the coop banks ING Vysya Life has bancassurance tie ups with ING Vysya Bank and Bharat Overseas Bank. Alternate channels also include corporate agents in addition to coop banks. The tie ups are all referral agreements.

The Alternate channels business division within ING Vysya Life is one of the fastest growing parts of the company and contributed 20% to total premiums in 2005.

News: Hugo Boss not to foray into Indian retail now

(BS 07/04/2006) Mumbai - German luxury fashion group Hugo Boss, which already has a presence in India, does not intend to enter retailing for now though the Centre has permitted foreign direct investment (FDI) in single-brand retailing upto 51 per cent.

“Traditionally, we have been into the wholesale business. We have opened retail stores only in select regions across the world. Since the bulk of our business is generated through franchise, we intend to focus on expanding in the Indian market only through franchises. We do not intend to enter the Indian retail market at the moment,” an official representing Hugo Boss told Business Standard in Bangalore on Friday. Hugo Boss has been operating in India since the last seven years through its UAE-based franchisee, Bin Hendi Enterprise.

It has opened a store in New Delhi and two in Mumbai. The fourth store was officially opened at Leela Kempinski Palace Hotel in Bangalore on Friday.

“India is an important market for us. The economy is growing and it is an encouraging factor. We intend to make our presence felt in a strong manner by undertaking more campaigns,” the official added.

Tanveer Ahmed, vice-president (finance), Bin Hendi, said that the company has plans to open Hugo Boss stores in Chennai, Hyderabad and Kolkata in coming days.

“But we are very specific about the location of these stores. We are looking for suitable space for our stores in the three cities,” he added.

The company has invested nearly Rs 25 crore in the Hugo Boss stores in India. “We are the only franchisee to operate Hugo Boss stores in this country. We have plans to expand in a big way as the response has been encouraging. In the past two years, the menswear collection of Boss Black and Boss Orange have been highly successful in India, “ Ahmed said.

Column: Indian retail - The next marketing frontier

(BS 07/04/2006) Mumbai - Mass retailers provide an integrated marketing weapon that an innovative mind can use.

Last year Coke wanted to introduce a diet soda called Coke Zero. Wal-Mart thought they had a better idea—a drink that contained splenda, the artificial sweetener that had been selling extremely well at Wal-Mart, especially among women shoppers. Coke went back to the drawing board and in May, introduced Diet Coke with Splenda.

Similarly, Wal-Mart pushed Coke to change the way it distributed its sports drink, Powerade. It pushed a laundry manufacturer to make a super-concentrate version that occupied less pack and shelf space. All three examples illustrate the role of the retailer in actually influencing both “product” and “place” decisions within the marketing mix and going beyond just being a distribution and availability point of a brand.

While many supermarkets typically collaborate with large food and beverage manufacturers and marketers to promote products and create special in-store displays, Wal-Mart plays a role in influencing new product offerings and how products are distributed. The retailer has lots of latent power—hidden assets—waiting to be unleashed!

Clearly, the retail revolution is bringing retail a full circle in the world of marketing and selling. Before the manufacturing and marketing eras of the 20th century, the retailer was the king. He was actually the brand the consumers bought into and it was his word that convinced or dissuaded prospects. “Product” branding, as it evolved in the 20th century, changed all this. It suddenly shifted the power from the retailer to the marketer, as the marketer started creating brand pull through remote-controlled yet effective brand-building measures like mass media advertising. Consequently, the retailer had to stock what consumers asked for and this “asking” was triggered by marketing. Push strategies gave way to pull strategies. The marketer could dictate to the retailer, who had little choice but listen and stock. This was the theme through much of the 20th century. The emergence of Wal-Mart as a mass “retail” brand is perhaps a milestone in the world of both marketing and branding. It is not a case of “death of branding” as much as one of emergence of a new marketing weapon.

The power of the retail comes from four distinct elements:

It is the new technology playground. While the nineties was the period when technology was used mainly to bring efficiency, tomorrow the power of technology will be used in enhancing experience. And this is where “product” brands have the opportunity to use it at the retail store to deliver to more human senses than they could previously—through innovations. While RFID (Radio frequency identification) technology-based “smart tags” have helped retailers in inventory management and thus improved store value efficiency, new technology innovations by marketers can help them give their products and brands a cutting edge at the point of purchase. Companies like McDonald’s and Procter and Gamble are experimenting with “targeted audio” technology that enables delivering audio content only an individual consumer in a store can hear—in her ears, in her head. It may no longer be a fantasy to imagine, for example, the development of a chip that enables a brand’s pack to emit “aromas” to the nose of a consumer as sooas she sees the brand on shelf—perfect sync between visual and nasal senses—thus helping to engage another sense to stimulate purchase by enhancing the brand experience at the final point of contact with the consumer. Many other such technological advances may be in the offing! It is the new consumer research centre. Retail is the final moment of truth in a brand’s life. It is becoming more and more necessary to get closer to the moment of purchase to actually understand consumer motivations for brand preference, rather than depend on consumer claims or memory. The retail space provides the ideal centre to actually get in touch with consumers and understand them. Paco Underhill uncovered a lot about consumers by just sitting and observing behaviours at the retail outlet. The feedback received from buyers at this point perhaps represents the richest and most relevant insights into their minds about the brand and the category! It is a new media channel. Consumer communication is moving from monologue to dialogue; from story telling to conversations; from just equity building to action orientation. Clearly, while media like the internet and mobile provide marketers and brands opportunities to interact with prospects and carry on dialogues, the retail environment is also a powerful place to catch the consumer and talk to her. After all, it is where the consumer makes the decision—to buy or not to buy. It provides opportunities to do all kinds of communication—from one-way to dialogue to interactive; from educational to informational to entertainment. Marketers need to recognise this as a formal channel and communication specialists need to understand this medium for best use—with the right content and with enough hard data to gauge channel effectiveness. It is the new brand. Frightening though this may sound, “retail” brands pose a threat to “product” brands. By their sheer physical presence, their size and their continuous delivery of experience through the ambience and salespeople, brand values and connections get built with its consumers. They don’t need conventional advertising! And this equity is strong enough for it to sell any category. With technology driving product parity and outsourcing becoming a part of life, smart retail brands can easily move up the value chain and offer many products under the store brand label. And this can be done at highly competitive rates to traditional “product” brands.

Is this a distant phenomenon in India? Not really. The retail boom is for real. The growth of “Big Bazaar” is not an aberration but the signal of a future trend. And clearly this is not going to be restricted to the big cities only. As infrastructure develops, personal transportation grows and the consumer habit of “outing” increases, it will all aid in making shopping a ritual. And this will give impetus to retail chains. And as they grow, so too their power!

Mass retailers provide an integrated marketing weapon—from understanding consumers to developing products to delivering messages to actually triggering end purchase. It needs an innovative mind to use this weapon.

Something worth thinking about.

Madhukar Sabnavis is Board Partner-Discovery and Strategy, Ogilvy and Mather, India.

News Indian retailers to tap technology to aid growth

(BS 07/04/2006) Mumbai - As retail gets more organised in India, technology would play a larger role in the industry. Discussing this at ReTechCon, where the topic was Intelligent Retailing- Efficiency through Technology, Ganesh Natarajan,deputy chairman and managing director, Zensar Technologies, said as non-IT companies are increasingly finding it difficult to develop their IT capabilities, there is great potential in outsourcing this function to an external party.

“Outsourcing IT capabilities also helps in bringing down costs and improving earnings for the company,” Natarajan said.

It is estimated that globally, about 10 per cent of backoffice process in retail like HR management, IT etc would be outsourced, with a strong likelihood that even more mainstream processes like buying and merchandising will start getting outsourced.

Natarajan said it is likely that a larger number of processes would be outsourced to India.

BS Nagesh, Managing Director & CEO, Shopper’s Stop said IT companies need to look beyond the big five retailers at the second level of companies which could drive the industry’s growth.

“Implementing technology is important, not only to improve the productivity, but also to provide a better experience to the customer,” he added.

Fred Balboni, vice president and retail industry executive, Asia pacific, IBM Global Services, pointed out it was adoption of technology to improve the in store experience that would ensure customer loyalty as there was no major differentiation between retailers on the basis of products anymore.

Gibson Vedamani, ceo, Retailers Association of India, said the retail IT has emerged as the backbone of the industry and the idea behind ReTechCon is to provide a platform for the retailers and technology service providers.

News: Alghanim Group bullish on India

(BL 07/04/2006) Hyderabad - Alghanim Group, the Kuwait-based $1-billion business conglomerate, is bullish on the opportunities in the Indian market. It is now evaluating plans to expand in the Indian market, according to its Chief Executive Officer, Omar Kutayba Alghanim.

The group has interests in automotive, manufacturing, retail, financial services, consumer products and others world over. It is into the manufacture of pre-engineered steel building (PEB) solutions and thermal and acoustic solutions in the country.

"We may either set up greenfield manufacturing units or weigh the option of acquiring the existing facilities. We have asked the merchant banking professionals to conduct due diligence exercise and we expect to decide over the investment plans shortly. Within the country, we are bullish on Hyderabad.

"Though we are yet to zero in on our Indian headquarters, we are keen on Hyderabad," Alghanim said.

Alghanim Group, which employs over 4,000 people in 34 different countries around the world, has 500 people working for its Rs 300-crore Indian company - Kirby Building Systems India - at Hyderabad.

Expansion plans

Riding high on the booming infrastructure segment in the country, Kirby India, which is into PEB solutions, has embarked upon an expansion involving an investment of $20 million. The company is aiming at a turnover of Rs 500 crore and double the workforce to 1,000 by the current fiscal-end.

According to the Kirby India Chairman, Marwan J. Karadsheh, the company now has its manufacturing facility in the outskirts of Hyderabad that was set up at an investment of $30 million with a capacity of 75,000 tonnes. The new plant, coming up at Hardwar in Uttaranchal with a capacity of 60,000 tonnes, would take off shortly, he said.

News: Indian chain plan is a blow to Tesco hopes

(ES 07/04/2006) London - TESCO'S hopes of breaking into India have suffered a setback after it emerged that one of the country's richest men is to launch a nationwide store chain.

Mukesh Ambani's Reliance Group plans to open 500 stores, with the first in Mumbai, Gujarat and Delhi. He also wants to buy 25 cargo planes to transport produce from remote farms to his stores.

Tesco had hoped to be among the first to tap into India's increasingly wealthy middle class, and had been in talks with mobile phones magnate Sunil Mittal about launching a $1bn (£570m) supermarket chain to exploit the country's $250bn retail market. It already has a support centre and non-food sourcing operation in Bangalore.

The talks began amid speculation the Indian government would lift its bar on foreign investors owning more than 26% in retail joint ventures. Ministers removed restrictions on foreign single-brand chains earlier this year.

India is desperate for investment in its farming and logistics sectors as almost half the fruit and vegetables it produces rots before it reaches the market. Ministers are hoping major supermarket chains will help turn the country into a net food exporter.

News: Dutch universities scout for Indian students

(TH 07/04/2006) Chennai - For Indian students looking for a hassle-free education abroad, Holland could, perhaps, be the best bet.

Admission to Dutch universities is much easier than to institutions in the United States, the United Kingdom or Australia. The institutions themselves process the visa requirements of students.

Representatives of six Dutch universities — all of them members of the Holland Education Consortium — were here on Thursday to give Chennai students a glimpse of high quality European education, courtesy the Dutch Education Fair got up by New Directions Overseas Education Consultant.

Courses on offer

Three research universities, Leiden University, Tilburg University, Wageningen University, and two applied sciences universities, CHN University and Hanze University, took part in the fair.

The courses on offer were mostly management programmes such as those in hospitality, tourism, international business and international retail, besides arts and sciences programmes such as archaeology, biology, cultural studies and history, business administration, philosophy, economics, agricultural and bio resource engineering, bio-informatics, biotechnology, geo-informatics, food technology and urban environmental management.

"Dutch universities offer high quality education at a much more affordable cost than the U.S., U.K. and Australian universities. Also, unlike most other European countries, students will not face a language barrier as knowing Dutch is not mandatory, and Holland was the first non-English speaking European country to offer courses in English. The Dutch higher education institutions offer more than 1,000 international study programmes and courses that are taught entirely in English," said J. Augustine of New Directions. "The number of Indian students arriving at our university is steadily increasing and right now, we admit 20-25 Indian students every year. Along with Chinese, Brazilian and Iranian students, Indian students are the most preferred. We look for quality, not quantity, and accept only those students who have an Indian bachelor's degree and not less than 70 per cent grade points," said Rien Bor, International Relations, Wageningen University and Research Center.

Dutch universities do not offer scholarships, except in exceptional cases, as higher education is subsidised by the Government.

A masters' programme in management can cost anything from 7,500 euros to 35,000 euros annually depending on the university.

Also, students enrolled in the Dutch universities can avail themselves of the benefits of the `Schengen' visa, which facilitates easy movement between 13 countries for study and travel.

News: Indian real estate mix 'n match

(EH 07/04/2006) Chennai - While mixed-use development has proved to be a successful concept abroad, it is still at a nascent stage in India. Bhavika Jhaveri explores the current scenario.

While it's all about creating footfalls for developers, many hotels seem apprehensive about getting into mixed-use development - having retail, commercial and hotel facilities under one roof. The term, mixed-use, has various forms; permutations/combinations of malls with a hotel, or a convention centre with a hotel, multiplex and so on.

It is a well-documented fact that India is witnessing a hospitality boom. According to a forecast by HVS International, the consequential surge in demand will mean adding another 1,00,000 to 1,25,000 rooms in the next five to seven years. An important factor that will drive this demand is mixed-use development. However, most such projects in India currently don't have a hotel. But considering the demand for mid-market hotels, presence of the hotel component would prove beneficial. A recent example would be the Hyderabad International Convention Centre (HICC) developed by Emaar Properties, billed to be the largest convention centre in India. HICC offers event organisers 2,91,000 square feet of primary meeting space with a capacity to seat 5,000 delegates and 2,50,000 square feet of pre-function areas. Anshuman Magazine, MD of CB Richard Ellis, real estate consultants, reckons that the concept has a lot to offer and is slated to be a future trend. "Mixed-use normally means residential, office and also a hotel. A lot of new developments are coming up in the periphery of Mumbai and having an integrated development enables the developer to maximise returns. In future, we should see more such developments," he predicts.

Courting plazas

In Chennai, the buzzword seems to be integrated development with more than five malls slated to come up in the city; hotels, food courts are jostling for space alongside multiplexes and corporate offices. Though integrated development here began more than two decades ago with corporates setting shop in Alsa Mall and Spencer's Plaza, the oldest malls in the city, the concept has evolved with food courts, gaming centres and restaurants cashing in on the shoppers frequenting the place. The new Ampa Centre One, for instance, is planning a 20-room boutique hotel in its mall. Ampa Palaniappan, MD of Ampa Centre One, firmly believes that setting up restaurants, hotels and food courts in a mall are more financially viable. "The costs are minimised when restaurants, food courts and other entertainment centres are set up in a mall," he opines.

Deepak Banerjee, director of DLF Retail Developers, a real estate company in India, feels that there is a large retail development taking place in India. "A mixed-use development project can become a destination in itself for families. For instance, in Minneapolis people go for shopping and spend the weekend at the hotel it houses. Indian middle-class families seem to be going the same way," he adds. DLF is planning two new projects called South Court and The Courtyard that will have hotels with 60 and 100 rooms each.

The upcoming 3,00,000 square feet Chennai City Center will have retailers, multiplexes and offices in it. In fact, business centres are going to occupy about one lakh square feet of space leaving the rest for retail shops and multiplexes. A Shankar, manager (Consulting Services) at Trammell Crow Meghraj Property Consultants Pvt Ltd, points out that setting up offices in a mall is 50 per cent cheaper than standalone because of lower construction costs. "Integrated development is catching on as a trend and we are doing our part to promote this concept. Now we need to have convention centres and service apartments, even pubs, as a part of it," he observes. He adds that the presence of offices increases footfall in malls by at least 20 per cent. But while costs may be cheaper for offices, there is a fear that production levels might plummet due to the presence of large public thronging the place.

Mumbai is not too far with Grand Hyatt, Mumbai setting up its shopping plaza spread across 1,00,000 square feet comprising two levels around a central atrium. According to Nawabzada Omer Bin Jung, managing director of Prestige Leisure Resorts Pvt Ltd, "Mixed-use development started recently and it has to be seen as to how long it can sustain its success. A dedicated hotel or a mall offers a different experience and we have to wait and see the turn of trends. But otherwise, this format benefits the growth of a particular location or city. Currently, the retail as well as the hospitality sector is flourishing and the yield of a hotel on per square feet return increases if retail is incorporated. Retail is a premium at the lower level while the hotel is a premium on a higher level and the handshake is working well for now."

Permutate and combine

According to KnightFrank India, a consultancy firm, the concept is not yet a trend but developers have been exploring the idea. Akshay Kulkarni, head of its hospitality division, says, "Having a branded retail outlet and branded accommodation is a different ball game. If I have 1,000 square feet of land, I can build a hotel and get double FSI. If I build a mall I will get regular FSI but regular returns. So if you use that space to build a hotel, it reduces the cost of land. With a five-star accommodation, the mall is likely to create less footfalls, with a budget hotel the retail component will increase because it allows more footfalls." While there are few hotels who have signed up with mall developers, Amitabh Devendra, national head, (Hospitality & Leisure Services), Chesterton Meghraj points out that balanced space in a three- to four-storeyed mall should be utilised productively. Building a hotel is viable for a developer but for a hotelier it is about the price. "There is a fair amount of scope in mixed-use development. The problem is that many hoteliers haven't come to terms with leasing out their hotels or the unutilised space. It is a question of acceptability," Devendra continues. "On one hand it makes economic sense to the developers while on the other, it can prove profitable for hoteliers only if the lease is not high."

In any case, there are more properties coming up in Delhi beyond Gurgaon and in Mumbai towards Thane, Malad, Navi Mumbai and even Pune (the Ruia Group is building an International Convention Center in Pune). The Reliance Group is also planning to set up a convention centre at the Bandra-Kurla Complex in Mumbai. Evidently, budget hotels will do well in cashing in on the opportunity that this offers. Besides, the associated value from a mixed-use development project is bound to increase with the presence of a hotel component.

News: Citi Style to step up retail sales

(F2F 07/04/2006) Kolkata - In a bid for strategic expansion across the country, Kolkata-based fashion chain, Citi Style, is to increase number of stores in India.

Citi Style has stores in Jamshedpur and in its home city, and will set up one in Varanasi soon.

Catering to the garment needs of men, women and children, the store was launched a year ago keeping affordability at centre.

Expansion will mainly take place in east with the slogan ‘Get more 4 Less’, said Ravi Goenka, Company Director.

Citi Style recently set up a manufacturing plant in Bengal with combined capacity of producing 10,00,000 garments per annum.

Casual clothing like denims, semi-formal trousers and shirts and formal officewear for men as well as western outfits, casual fashion, Indian ethnic wear and nightwear for women fall under the umbrella of Citi Style.

To walk with the trend, if not ahead of it, Citi Style will introduce innovative fabrics and products in garment industry with outstanding service to consumers, Goenka said.

News: Emaar-MGF plans $1bn Indian hotel chain

(TNN 05/04/2006) Mumbai - The Dubai-based real estate company, Emaar Group, and its Indian joint venture partner MGF have decided to enter the Indian hospitality sector with an investment of at least $1bn. Emaar-MGF has acquired 15 acres of land in Delhi and Hyderabad together for around Rs 400 crore to set up its luxury hotel chain.

The combine has acquired a 10,257 sq m plot for Rs 199.5 crore and another 8,909 sq m plot for Rs 189 crore in Jasloa at Delhi. In Hyderabad, it is developing a national convention centre cum five star hotel project in collaboration with the Andhra Pradesh government.

“We have plans to set up 10 luxury and 15 to 20 budget hotels in various parts of India in the next 2 to 5 years. We will be investing around $1bn for the hospitality sector foray,” Shravan Gupta, managing director, Emaar-MGF told ET. He said that the overall demand for hotels is going up by 10-15% annually, and there is a large demand and supply gap which will only widen due to an increase in business travellers and foreign tourists.

Emaar-MGF’s move is important because India is currently facing a severe shortage of quality hotel rooms, a crunch that has spurred hotels to raise rates dramatically. A shortage of hotels that meet western standards has led many hotels in major cities such as Bangalore, the country’s high-tech hub, to seek three weeks advance notice for bookings.

In cities such as Bangalore, Chennai, Goa and Mumbai, rates went up more than 20% last year. In New Delhi, the rates rose almost 50%. The average room rent in quality hotels has gone up to $222 in Bangalore, to $110 in Mumbai, and about $130 in New Delhi.

Emaar-MGF has already planned an investment of $4bn in various housing and infrastructure related projects to be taken up in the coming years. “We have already signed an agreement with the government of Punjab to develop infrastructure and integrated township projects with a capital outlay of Rs 4,000 crore,” Mr Gupta.

He said that the integrated township in Mohali would be spread over 2,000 acres of land. Up to 80% of the land has been acquired and the work will start from this year. Besides those in Mohali, Emaar-MGF would take up projects in Ludhiana, Jalandhar and Amritsar with an initial investment of Rs 1,000 crore.

Emaar-MGF is a 50-50 joint venture with an initial investment of $500m each. The combine was one of the bidders for the Bandra-Kurla convention centre in Mumbai for which the Mukesh Ambani-controlled Reliance Industries won the contract.

News: 'Indian organised food retail to grow by 30% in 5 years'

(TNN 07/04/2006) Mumbai - The organised food retailing industry is likely to grow by 30per cent in the next five years and become a Rs 11,000-crore industry by ’10 from the current Rs 2,500-3,000 crore, an industry expert said.

“It will be the entry of big corporates in the sector, in addition to relaxation in FDI policy, that will achieve the Rs 110-bn figure by ’10,” Rabo India Finance CEO, Sanjiv Bhasin, said at a seminar on food retailing.

He added that a large section of young people in India, in addition to new consumption patterns and rising standards of living, will drive the change in retail methodology.

Speaking on global trends in the sector, Mr Bhasin said the thrust on private labels is increasing for higher gross margins and control on price and quality of merchandise.

Citing a report, he said, “The share of private labels in sales of UK retailers rose from 22per cent to 41per cent between 1980 and ’05, and German food retailers’ share increased from 5per cent to 35per cent in the same period.”

Tata strategic management group practice head, Pankaj Gupta, emphasised on the importance of private labels and said they are yet to pick up in the country.

News: Titan opens Xylys boutique in Hyderabad

(BS 07/04/2006) Hyderabad - Titan Industries Limited opened its flagship boutique – Xylys Boutique – here on Thursday. The 900-sq ft retail store was inaugurated by brand ambassador and actor Rahul Bose. Titan launched its Xylys brand of Swiss-made watches in February 2006.

Addressing mediapersons, Ajoy H Chawla, business head (Titan), Titan Industries Limited, said, “We plan to fork out Rs 8 crore in this calendar year as marketing spend for promoting the Xylys brand.”

The Hyderabad boutique has been set up at an investment of about Rs 40 lakh, Chawla said, adding that the company would be opening another boutique in Mumbai sometime next month.

Xylys will be available in Bangalore, Hyderabad, Mumbai and Delhi at the launch phase, and is being planned to be extended to 10 more cities by March 2007. The brand will be showcased at select Titan stores and high-end multi-branded watch outlets across the country.

Unconventional, the concept for the retail store allows customers to browse and pick from the range displayed in a well-lit niche in the wall, with the help of a special card reader.

The chosen models are then kept ready for the customer to make the personal choice. The Xylys range of watches comes in three collections – Contemporary, Classic and Sport – and offer over 60 distinctive models in the price range of Rs 10,000-33,000.

News: India and EU discuss energy cooperation

(PTI 07/04/2006) New Delhi - India and European Union will set up a working group on cooperation in hydrocarbons under the ambit of India-EU Energy Panel, as part of steps to intensify bilateral cooperation in energy sector.

"The second meeting of the Panel reviewed the functioning of three working groups that were set up last year... a fourth group would be set up for development of hydrocarbon markets," said, EU Energy commissioner, Andris Pielbags.

Asked what would be the EU policy for nuclear cooperation with India, Piebalgs said Europe was looking at the debate in the US Congress over the India-US nuclear cooperation pact and stressed that "the basic condition is non-proliferation".

"Some member states have a lot of interest in India's nuclear programmes while some others are not very interested," he added.

The Panel, which had its first meeting in Brussels in June 2005, discussed issues of energy security, promotion of renewable sources and energy efficient technologies.

The three working groups relate to energy efficiency, renewable energies, coal and clean coal technologies and fusion energy, which is discussing India's membership in International Thermonuclear Experimental Reactor project.

News: Italian bank starts rep office in India

(PTI 07/04/2006) Mumbai - World's oldest bank and amongst top five in Italy, Banca Monte dei Paschi di Siena (MPS) has stepped into India by opening a representative office here.

The bank would maintain a prudent approach in expanding its reach and presence in India, bank's Head International Affairs, Mr Primo Brioni said adding that the bank intended to advance 'step by step but steadily'.

"In the first phase we will open another representative office in New Delhi. Then in the second phase, which is few months' away from now, we will report to our board of directors with the inputs of the Indian market and getting a nod from them we will s tart retail and corporate banking in India, replicating our operations in China," Mr Brioni said.

Asked whether the opening up of the representative office was a step towards acquiring a bank in India, he said, "The bank's corporate strategy does not prevent acquiring stakes abroad if it promises opportunity. However, if we decide to go for acquiring stakes, we don't buy minority stake. It's always the majority stake".

"The year 2009 attracts us very much," Mr Brioni said making the bank's intention clearer. The Reserve Bank of India will review its banking policy in 2009 and is expected to take a call on whether foreign banks can grab more than five per cent stake in a bank. But, he was tight-lipped when asked what could be the size of investment for acquisition.

News: 'Rupee convertibility not before 2009'

(UNI 07/04/2006) New Delhi - Ruling out capital account convertibility before 2009 and a rise in the interest rates, the Finance Minister, Mr P Chidambaram sought to allay apprehensions that the proposed labour reforms would result in 'hire and fire' and expressed confide nce about India hitting double digit economic growth, fuelled by higher farm output and growing investment.

Dwelling at length on fiscal and trade and economic issues in an interview to 'The Straits Times', the Finance Minister indicated that there would not be any change in the personal and corporate tax structure and said no market 'bubble' had been brought to his notice in the light of the soaring Sensex.

Strongly defending the steep duty cuts for small car manufacturers, which promptly responded by slashing prices, Mr Chidambaram said that the move was aimed at improving transportation in rural areas.

Ruling out a free trade agreement (FTA) with China in the near future, the Minister said that the Government would first wait for a rise in the bilateral trade with Beijing.

Asked how long would it take for rupee convertibility, he said it would have to wait until the revenue deficit was wiped out and the fiscal deficit brought down to three per cent. "Which means, not earlier than 2009," he added.

Further, he was not sure what the S S Tarapore committee, appointed to suggest a roadmap by July this year, would recommend. "I don't think, in any event, we will be ready until the fiscal goals were met".

Mr Chidambaram said that he did not expect corporate lending rate to even touch banks' prime lending rate (BPLR) and felt that the RBI was likely to take steps to inject greater liquidity, easing liquidity conditions.

News: 'Indian FDI worth $10 bn expected in FY-07'

(PTI 07/04/2006) Mumbai - Bullish on modestly increasing foreign investment inflow into the country, Union Government on Friday said it hopes to attract Foreign Direct Investment to the tune of USD 10 billion this fiscal.

"We hope to have FDI worth USD 10 billion in 2006-07," Industrial Policy Secretary Ajay Dua said.

Most of this would come into the manufacturing sector while, the remaining would be mainly into pharmaceutical sector and research and development, he added.

"We had FDI worth USD 5.3 billion in FY-05 and the inflow from April 2005 to January this year saw an increase of 60 per cent," he said.

According to calculations done by RBI, we think FDI inflows for FY-06 have crossed USD 7 billion mark, he added.

News: India targets 20 pct export growth in 2006/07

(RTR 07/04/2006) New Delhi - India said on Friday it was aiming for 20 percent growth in exports in 2006/07 as demand from traditional and new markets increased but analysts said it would have to step up infrastructure improvements to reach its goal.

Exports from India, Asia's third-largest economy, crossed the $100-billion mark for the first time ever in the last financial year which ended on March 31, hitting $101 billion, Commerce and Industry Minister Kamal Nath said on Friday.

He told a business seminar exports grew 25 percent on robust demand from traditional markets in the United States and Europe, while imports surged 32 percent to $140 billion.

India is trying to upgrade its poor road network, congested ports and overloaded power sector. Analysts say this is necessary if the country wants to raise exports.

"It is not impossible to achieve the 20 percent growth but infrastructure has to improve to sustain strong exports," said Saumitra Chaudhuri, economic adviser to domestic credit rating agency ICRA.

News of the increase in exports bolstered sentiment for the Indian rupee , which was recovering from a three-month low in early trade on Friday. It was quoted at 44.69/44.70 per dollar by 1045 GMT from 44.7425 earlier.

BOOSTING TRADE, MARKET SHARE

Stronger exports have boosted the government's confidence that India can double its share in global trade from just 1 percent by 2009, although it falls far short of rival China, which had exports worth $55 billion in February alone.

"We have seen the trade winds changing. The centre of gravity of trade has shifted from the Atlantic Ocean to the Indian Ocean," Nath said.

Exports account for nearly 10 percent of gross domestic product and have bailed out the manufacturing sector during years of sluggish domestic demand.

Imports have risen on robust industrial output and as the fast-growing economy, estimated to have expanded at a rate of 8.1 percent in the fiscal year 2005/06, sucked in more foreign goods.

Nath, unveiling a series of steps to boost trade, noted that rising exports had created 1.4 million jobs, both direct and indirect, in 2004/05 and said exports could hit $165 billion by 2009/10.

Trade in services, which already constitute 52 percent of GDP, exceeded $100 billion in 2005/06.

Nath announced incentives for the gems and jewellery trade, auto components and aviation to enable India to win market share from other Asian countries.

India will treat refuelling and supply of food and beverages for long distance flights as exports, entitling them to benefits under a government export promotion scheme.

These have emerged as a big business opportunity and many airlines currently replenish supplies or refuel in Thailand, Malaysia or Singapore.

"This will hopefully enable India to offer competitive fuel prices and will attract mid-route stops of international flights," Nath told the seminar.

Industry groups said the measures would help boost exports.

"The foreign trade policy has been export centric," Sanjay Budhia, a trade official at the Confederation of Indian Industry.

"The kind of buoyancy we are witnessing in manufacturing it's not surprising that we will achieve 20 percent growth in exports."

News: 'India's growth will slow to 7.6% in '06'

(TNN 07/04/2006) New Delhi - The Asian Development Bank (ADB) has projected a slightly lower growth rate of GDP in India for ’06 at 7.6%. It expects the rate to rise again to 7.8% in ’07.

The flagship publication of ADB, Asian Development Outlook released on Thursday says that the GDP growth rate “for South Asia is expected to moderate to 7.3% in ’06 as a result of some slowing in India and Pakistan, but then rise slightly to 7.5% in ’07.”

In the same period, China’s growth rate is likely ease to 9.5%, softening further to about 8.8% in ’07.

The reasons, it cites, for the lower expectations, include a rise in the rate of average inflation for the region to 6.1%, as it expects there would be a removal of subsidies on some petroleum products.

This could also lead to an increase in the rate of interest, while the level of current account deficits for the region is projected at 3% of GDP.

“India faces two key policy challenges as it continues its structural transformation. First, it must maintain consolidation of its fiscal position, while ensuring spending on infrastructure improvements to support industry and services development and investments to advance rural productivity and human development.

Second, it needs to improve the investment environment by lowering the cost of doing business,” the report says.

The publication has assessed that developing Asian economies will continue to deliver strong growth in ’06 supported by a broadly favourable outlook for the international economy, continuing trend towards improved economic management and apparent resilience to high oil prices.

Overall, the region will achieve an economic expansion of 7.2% in ’06 and 7% in ’07, which is a marginal easing from 7.4% in ’05.

According to Ifzal Ali, Chief Economist of the Manila-based multilateral development bank, Asian economies will take strength from the continuing upswing in the global electronics sector and fast growth expected in China and India.

The Asian Development Outlook says growth projections for developing Asia as a region are heavily influenced by three key economies — China, India and South Korea. “Together, these economies have a combined weight of 66% of regional income,” the report notes.

It also says the Chinese government is now targeting a slower growth trajectory for the economy as it intends to focus on some of the social and environmental stresses that have emerged as a consequence of rapid economic expansion in recent years.

News: India's Reid & Taylor dons new suit

(TNN 07/04/2006) Bangalore - Diversifying its retail foray from a mainly fabrics and limited ready-to-wear brand for men, Reid & Taylor has firmed up plans to reposition itself as a full-fledged apparels brand over the next few months. Govind Mirchandani, president & CEO, worsted suitings, S Kumars Nationwide (SKNL), said the brand’s complete wardrobe solution offering will include shirts, trousers, blazers, suits and accessories. Targeted at the upper end of the consumers, Reid & Taylor will now compete with the likes of Louis Philippe, Van Heusen, Arrow and Zodiac. The lifestyle suiting brand is seeking to reposition itself as a “premium aspirational brand for those in the 25-45 years age group,” Mr Mirchandani said. Besides its formal wear range — Reid & Taylor Legends — the brand offers casuals under the Reid & Taylor Leisures tag. The shirts have been priced in the Rs 895-2,495 range, trousers at Rs 1,295-2,295 and suits at Rs 6,695-12,995. Its mid-priced offering, World Player, will tap the economy segment of the branded apparel market pegged between Rs 300 and Rs 500. “Amitabh Bachchan will continue as the brand ambassador for the fabrics division. We are in talks with another celebrity to endorse the apparels range,” Mr Mirchandani said. With the domestic apparels retail sector revving up, Reid & Taylor plans to add 50 exclusive stores this year to the existing 22 outlets at an investment of Rs 25 crore. Currently, it is available in multi-brand outlets such as Shopper’s Stop, Piramyd, Central and Ebony and is eyeing a presence in another 150 MBOs by the year-end. “We want to be present in all the top 40 cities in the country in the next couple of years. Of the 150-odd stand-alone outlets to be located in High Street and malls, 50 will be company-owned and the rest will be franchised,” Mr Mirchandani said. The Reid & Taylor brand experience entails premium worsted fabrics, synthetic suitings, ready-to-wear formals and casuals and accessories (belts, ties and cufflinks). Registering a 30% annual growth, the Rs 200-crore brand boasts of a 15% market share of the Rs 1,300-crore worsted suitings segment.

News: India to ease precious metals import norms

(PTI 07/04/2006) New Delhi - India today said it would make imports of precious metals and stones easier in order to promote gems and jewellery exports.

Announcing the Annual Supplement 2006 to the Foreign Trade Policy, Commerce and Industry Minister Kamal Nath said Mumbai has to match Dubai and Tel Aviv in gems and jewellery trade.

There are a number of unutilised gems and jewellery manufacturing units, which need to be revived, he said, adding that imports of precious metals and stones would be made easier.

He said tax benefits would be extended only to inputs and not for finished jewellery products.

News: Indian exports cross $100 billion mark

(PTI 07/04/2006) New Delhi - Exports today crossed the $100 billion-mark to reach $101 billion in 2005-06 - registering a growth of 25%.

Imports increased 32% to $140 billion in 2005-06 with non-oil imports accounting for $97 billion.

Announcing the annual supplement 2006 to the Foreign Trade Policy, Commerce and Industry Minister Kamal Nath said Vishesh Krishi Upaj Yojna has been expanded to include village and cottage industries.

He also introduced two new schemes - focussed product scheme and focussed market scheme - to promote exports of specific products such as fish, leather, sports goods and handlooms in specific markets like Africa.

News: Michael Dell gung-ho on India

(AP 06/04/2006) Oklahoma City - Dell Inc. Chairman Michael Dell defended efforts to hire abroad during a recruiting visit with Oklahoma college students.

Responding to students who asked about whether Dell plans to outsource more jobs overseas, Dell said the hiring is "not so much outsourcing as it is expanding around the world. We believe in global trade, and we're expanding our markets all over the world."

He made the comments as he took a personal hand in recruiting for his computer manufacturing company's new call center, appearing before about 500 college students to tout the technology industry.

Dell Inc.'s Oklahoma City campus, which opened in September, employs about 1,000 people. The company plans to add another 400 over the next several months. Dell said the Round Rock, Texas-based company wants to build new manufacturing facilities in India and eastern Europe. "Those are high-growth markets for us," Dell said. "We haven't made any announcement yet, but we're exploring different locations."

Dell said that while the company plans to have its largest sites in the United States, it cannot ignore the growing markets in Eastern Europe, Asia and Central and South America. "The American economy is a great economy ... but about 96 percent of the people we want to sell to don't live in America. You can't sell to them from here. You have to go there, and we've been globalizing our company since we were a little 3-year-old baby company. That's all part of growing and developing a company."

Dell also said a recent decision by Microsoft Corp. to delay until early next year the release of its new operating system, Windows Vista, will not be problematic. "We're not too entirely surprised," Dell said. "The important thing is that the new operating system, Vista, is released when it's ready," he added.

Dell said the company will help ease the transition by making its new series of XPS systems released over the next few weeks Vista-compatible. He said Microsoft typically develops "bridge strategies ... to allow customers to move from one operating system to another."

Windows Vista is Microsoft's first major update to the company's flagship operating system since Windows XP was released in late 2001. The planned November release was pushed back because Microsoft needed more time to enhance security and other functions.

News: 'India must tap changing global demography'

(IANS 06/04/2006) New Delhi - India must tap the vast potential being created by the changing global demography where the developed world faces ageing population and younger workforce is coming from developing nations, Commerce Minister Kamal Nath said Wednesday.

"With the greying of populations in the developed world, the workforce, not just labour, but also skilled and technologically qualified manpower, will come from developing countries," the minister told students of global trade policy here.

"This is an opportunity for India that in 10 years will have a workforce larger than even China's," Kamal Nath told the 40th annual convocation of the commerce ministry-promoted Indian Institute of Foreign Trade.

"With a right blend of IT, biotech and pharma manufacturing, India could be the key destination for knowledge process outsourcing and engineering outsourcing, along with business process outsourcing (BPO)," Kamal Nath added.

The minister said India was becoming a major global trader with its merchandise exports touching $100 billion last year, up from $63 billion in 2004 - a growth of about 26 per cent.

"Our total economic engagement with the world today, including imports, tops 350 billion dollars that reflects our growing significance in international trade," he said, adding that there were fresh challenges to sustain the momentum.

He said the developed world was creating subtle non-tariff barriers to trade in the subtle guise of addressing health, environment or social concerns that countries like India must fight against.

The minister, however, assured that the country's primary concerns and interests had been addressed at the Hong Kong meeting of the World Trade Organisation with enough space for future negotiations.

"Government will continue to engage various stakeholders in each of the areas to ensure the best result which will fully protects our farmers, industry, and our overall national interests," he added.

According to institute officials, campus placement has been good this year with not only the entire batch being recruited but also walking away with an average annual domestic salary of Rs 810,000 ($18,500).

There was also a record high domestic salary offer of Rs 1.05 million per annum and an international salary of $100,000, with several firms in pharmaceuticals, banking, consumer goods, IT and trading participating in the recruitment drive.

The institute's director, Prabir Sengupta, said the Kolkata campus would start functioning from July this year with a business administration programme at the master's level.

News: Deal to privatise Delhi, Mumbai airports signed

(HT 06/04/2006) Mumbai - The mother agreements to handover Delhi and Mumbai airports to joint venture companies led by GMR and GVK groups were signed by the Union government in New Delhi on Tuesday.

The OMDAs (Operations, Maintenance and Development Agreement) were signed by AAI Chief K Ramalingam and Director Finance VDV Prasada Rao in presence of Civil Aviation Minister Praful Patel and Secretary Ajay Prasad.

"The OMDA and the shareholders agreements have been signed. The JV companies are in place and their Boards are meeting today," Patel told reporters after signing of the agreement.

The OMDA is between the Airports Authority of India (AAI) and two private consortiums led by GMR-Frapord and GVK-South African Airports.

The OMDA is considered the mother document under which the AAI grants a joint venture company the right to operate, maintain, develop, design, construct, upgrade, modernise, finance and manage the airport.

Initially the OMDA is for 30 years, which can be extended for another 30 years.

Now, a new board of director--including representatives from the private developers --will be put in place.

The signing of agreements for privatising Delhi and Mumbai airports comes amid stiff opposition from the left parties and AAI employees' Unions.

News: B'lore, Hyd rooms costlier than Paris, London

(TNN 06/04/2006) Washington - You know India’s economic boom has gone over the top when the US declares Bangalore to be more expensive than Paris, London, and Tokyo when it comes to accommodating its diplomats.

In a dubious upgrade, the US State Department’s per diem for accommodation in two of India’s premier “boom’’ cities is among the highest in the world: $299 for Bangalore and $268 for Hyderabad.

In comparison, the per diem for accommodation in Paris and London is $261, and for Tokyo, widely regarded as the world’s most expensive city, it is a mere $189.

Evidently, it’s just the shortage of hotel rooms and the rising costs thereof in India’s boom cities that has persuaded Uncle Sam to pony up top dollar for its mandarins. When it comes to meals and miscellaneous expenses, the Indian cities are still relatively cheap.

Bangalore is $299 plus $92 per day (for food and miscellaneous expenses) for a total of $391 and Hyderabad is $268 plus $81 ($349). In contrast, the tab for Rome is $299 plus $168 ($467) and for Paris it is $261 plus $142 ($403).

News: 'Make India outsourcing hub for manufacturing'

(PTI 06/04/2006) New Delhi - Having carved a niche for itself as a global outsourcing hub for services, India should now look at becoming the world's preferred manufacturing destination, Infosys chief mentor NR Narayana Murthy said on Thursday.

Making India a outsourcing and offshoring manufacturing destination in a big way would create millions of jobs in rural areas, he said at an information and communication technology conference here.

Murthy said in India, "when one talks about outsourcing and offshoring, one only thinks in terms of software.

"Frankly, I believe we have to go beyond that and include manufacturing in that definition as China has done," he said.

He said 26 per cent of the GDP of India is produced by a whopping 65 per cent of the people in rural areas by way of agriculture. "It means...You are looking at 320 dollars (per person per capita GDP) for 65 per cent of people. What it means is less than a dollar a day."

"If we have to make life better for these (rural) people and give them reasonable standards of living, disposable incomes, healthcare and nutrition and education, I personally believe we have to look at low-tech manufacturing to start with and then high-tech manufacturing in a big way just as China has done because most of these people are semi-literate or educated at a very basic level," Murthy said.

He also said "If we have to succeed in bringing the power of low-tech and medium-tech manufacturing to create millions of jobs for these people,then we have to enhance our supply chains."

News: Hindujas line up $1 bn realty fund

(BS 06/04/2006) Mumbai - The Hinduja group, which holds significant land parcels in southern India, is foraying into realty with the launch of two dedicated real estate funds.

The first, a dollar fund, will be of $1-billion with large investments from West Asia, the US and the UK. The group was in the process of working out agreements with several West Asian investors, including Saudi Arabian and Omani entities, company sources said.

This is the first time Saudi and Omani investors will be putting money into Indian realty. Dubai has been a more active investor in the Indian real estate with several companies investing directly into developing projects in the country as well as through funds.

The second fund is a smaller domestic fund of $300-400 million. The Hindujas themselves were expected to pick up 10 per cent in both funds as well as provide the land for the projects, group sources said.

While no details were available on when the funds would be launched, executives indicated that both funds would debut in the calendar year.

The funds will be put together by the group’s Geneva-based bank, Amas Bank, for investment in properties being developed by the realty arm of group company Ashok Leyland Properties.

Another group company, Gulf Oil, holds 3,500 acres of land parcels scattered across southern India. They are in Chennai, Bangalore, Hyderabad and Visakhapatnam, where the initial projects are likely to be located. The funds also are expected to invest in enhancing the group’s land banks.

Ashok Leyland Properties is planning to develop a mini township in Bangalore near the proposed second airport at Yelahanka, which will include commercial information technology and high-end residential spaces on a 210-acre plot. It is also working on an exclusive 40-acre high-end residential property in Bangalore.

In Hyderabad, the company is looking at a knowledge park to house research and development centres for IT, biotech and nanotech companies.

It has appointed German consultants Bio Allainz to advice on the project.

In addition, the group is planning an SEZ in Visakhapatnam where it holds 1,100 acres of land as well as looking at reviving its plans for a 1,040-Mw thermal power plant.

Group executives clarified that discussions with the Centre and the state were still on and no firm decisions had been taken on the SEZ and the power plant. Sources also indicated that the group was interested in bidding for the ultra mega-power projects planned by the Centre.

News: Indian health tourism market worth $350 m

(SNS 06/04/2006) New Delhi - The PHDCCI secretary general, Mr Bibek Debroy, has said the Indian healthcare industry is very bullish with a potential to make India a perfect health tourism destination on the world map.

PHDCCI estimates that the medical tourism market in India is worth $350 million with about 1,00,000 foreign patients visiting India every year. The estimates also show that medical tourism alone can earn more than $10 billion as additional revenues by 2010. India has the potential and the capacity to attract more than two million tourists per annum, which could contribute up to $8 billion to the Indian economy.

Thailand has been able to attract more than one million medical tourists due to world class infrastructure facilities. India should be able to replicate the Thailand example by focusing on development of good quality medical as well as tourism infrastructure. The first issue is the cost advantage. The cost of quality medical treatment in India is 1/5th of the cost of similar treatment in the USA. For instance, a heart surgery in the USA costs $30,000, while it costs $6,000 in India. Similarly, a liver transplant costs $5,00,000 in USA, while in India it costs only $40,000.

India also offers holistic medicinal services. With yoga, meditation, ayurveda, allopathic and herbal treatments.

News: Holland Denies Crisis with Venezuela

(PL 06/04/2006) Willemstad - Netherlands Foreign Minister Ben Bot denied any diplomatic crisis with Venezuela and announced he accepted an official invitation to Caracas in July, although he cancelled commitments with Venezuela this week.

The Venezuela-Netherlands controversy began in March over statements by Netherlands Defense Minister Henk Kamp that "President Chavez coveted small Netherlands territories off the Venezuelan coasts."

Chavez called the statements slanders spread in the framework of the US´ anti-Venezuela campaign to coincide with the US and Netherlands Caribbean Lion 2006 drill.

This May 23-Jun 15 exercise involves 4,000 sea, air and land troops from Canada, France, Belgium, Curacao and Guadeloupe. Caracas refused to participate in Lion 2006.

Venezuelan and Netherlands naval officers met to discuss bilateral cooperation in Willemstad on Monday.

The Pentagon runs an illegal naval base in Guantanamo (Cuba), and others like Hato Rey (Curacao), Fort Buchanan and Roosevelt Roads (Puerto Rico) and Reina Beatrix (Aruba).

This includes Comalapa (El Salvador), Manta (Ecuador), Soto Cano (Honduras) and thousands of soldiers stationed in Colombia.

News: Cabinet oks ICICI Ventures to raise $750 mln

(RTR 06/04/2006) New Delhi - The cabinet has allowed ICICI Venture Funds Management Co. Ltd. to raise $750 million from non-resident Indians, persons of Indian origin and foreign investors, an official said on Thursday.

The company would be allowed to use the funds for investments only in sectors where foreign direct investment is permitted by the Indian government.

ICICI Ventures is a subsidiary of ICICI Bank Ltd. and is one of the largest private equity and venture capital management companies, managing about $650 million.

News: India inflation at 3.96 pct

(RTR 06/04/2006) New Delhi - Finance Minister Palaniappan Chidambaram said on Thursday the country's wholesale price inflation rate rose 3.96 percent in the year to March 25, slowing from 4.06 percent a week earlier, television reported.

This is the lowest rate for nearly 3 years.

"Inflation will be reported today at 3.96 (percent), (its) gone below 4 (percent)," he told a function in Bangalore, according to CNBC TV18 news channel.

The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it has a higher number of products in its basket and is published weekly.

News: Indian firms get the overseas acquisition itch

(TT 06/04/2006) Mumbai - More and more Indian companies are prowling to buy up companies abroad.

A global study conducted by the Boston Consulting Group and the Confederation of Indian Industry focuses on 100 companies from rapidly developing economies (RDEs) that have started to aggressively buy up assets overseas.

India has the second highest number of predators on the list — 21 — after China.

The study assessed the activities and strategies of a 100 globalising companies from 10 rapidly developing economies such as Brazil, China, India and Russia with collective revenues of $715 billion, 28 per cent of which is from international business.

Most of the Chinese firms are state owned. The Indian 21 with collective revenues of $61 billion includes Tata Steel, Tata Motors, Tata Tea, ONGC, Videocon, Ranbaxy, Bharat Forge, Mahindra and Mahindra, TCS, Reliance Industries, Crompton Greaves, Wipro, Infosys, Cipla and VSNL.

The study reveals that of the 2000 plus overseas mergers and acquisitions deals by all RDE firms, Indian firms accounted for about 15 per cent of overall activity and about 26 per cent in mature markets, more than any other RDE.

Almost 60 per cent of Indian M&A activity overseas takes place in mature markets. This emphasis, shared only with South Africa, is different from that of most RDEs, which concentrate their M&A activity in developing economies.

In 2005, the number of overseas acquisition deals were 21 for Indian 21 companies, against 11 deals in 2004.

News: Tatas, Reliance in fray for private transmission lines

(PTI 06/04/2006) New Delhi - Corporate giants Tatas, Essar, Reliance Energy and L&T are among the dozen companies in race to build India's first fully independent private power transmission lines in Gujarat and Maharashtra at an estimated investment of Rs 1,500 crore.

State-run transmission monopoly Power Grid Corporation of India, which had invited bids for the independent grid lines associated with western region strengthening scheme in November last year, will select the private company by June this year so as to complete the two projects by 2009.

"Tata Power, Reliance, Essar Power, Larsen & Toubro, GMR group, Kalptaru Power, Gammon India and Jyothi Structures, China Light & Power and four Spanish companies including Isolex Wat and Abengoa are in the fray for these projects," Power Grid Chairman and Managing Director R P Singh said here.

Singh said a total of 28 bid documents were purchased and of those 12 companies participated in the pre-bid conference for each of these projects.

"We will have another pre-bid conference on April 18 and the bids would be opened in June this year," he said.

While one project is for building sub-stations and grid lines in southern Maharashtra at a cost of Rs 1,000 crore, the other will be set up in Gujarat at an investment of about Rs 500 crore.

When executed, these would be India's first transmission lines built fully by private players. PGCIL has so far formed joint ventures to build some grid lines. In fact, the only joint venture in transmission operational at present is between PGCIL and Tata Power to get power from Tala hydroelectric project in Bhutan.

News: Red alert on Indian telecom FDI

(TT 06/04/2006) Mumbai - The Left wants the Manmohan Singh government to slam the doors on “undesirable” telecom turks — specifically British Telecom and Orascom of Egypt.

CPM leader Nilotpal Basu has fired off a letter to the Prime Minister urging the government to exercise greater vigil and ensure that “undesirable elements” don’t manage to carve up lucrative slices of the telecom turf by subverting the guidelines that permit 74 per cent foreign direct investment (FDI) in the sector.

Basu said the Left has been “extremely disturbed” about the shareholding changes in Hutchison Essar (where Orascom of Egypt has picked up an indirect stake of 10 per cent) and British Telecom’s move to set up a joint venture called BT Telecom India Pvt Ltd with Indian partners “who are not clearly identified”.

Basu doubts whether these unnamed partners of BT would qualify as “serious resident Indian investors” as specified under the licensing guidelines of DoT.

The letter comes at a time when the Ruias — the Indian partners of the Hutchison Whampoa group of Hong Kong — have written to the department of telecommunications (DoT) protesting against the manner in which Orascom has picked up an indirect stake in Hutchison Essar.

Last December, Hutchison Telecommunications International Ltd (HTIL), the $ 3.1-billion Hong Kong conglomerate, sold a 19.3 per cent stake to Orascom Telecom of Egypt. HTIL has a 42.34 per cent stake in Hutchison Essar, and this thereby gave Orascom an indirect stake in Hutchison Essar.

The Ruias were upset because they had not been informed about HTIL’s stake sale. But even more galling was the fact that HTIL had promised Orascom a board position in Hutchison Essar.

The National Security Advisor MK Narayanan had since written to the DoT that Orascom posed a security threat since it had a dominant status in the telecom industry of both Pakistan and Bangladesh.

Basu said in his letter that the Left was disturbed about “certain investments and shareholding patterns of companies such as Hutchison who either have undesirable investors or have chosen to pass on equity stake to employees in a manner that is clearly undervalued and, therefore, unethical if not illegal.”

The stake sale to employees refers to the restructuring that Hutchison has attempted in the shareholding of Telecom India Investments Ltd (TII) – a vehicle through which the Hong Kong group routes its investments in Hutchison Essar.

On March 1, Asim Ghosh, managing director of Hutchison Essar, and Analjit Singh of Max India bought out the Kotak group’s stake using loans that were given to them by HTIL. As a result, Telecom India Investments Ltd (TII) ended up with a 19.5 per cent stake in Hutchison Essar.

HTIL has the option to buy back the stake held by the firms owned by Ghosh and Singh within a period of 10 years. This will actually raise HTIL’s stake to 61.9 per cent (including the direct stake of 42.34 per cent). Li Ka-shing’s Hutchison Whampoa will then have an effective stake of a little over 30 per cent in Hutchison Essar.

Basu’s letter also takes a sideswipe at the UPA government for making a strong pitch for raising FDI limits in the hope that this would bring in more investments into greenfield areas. He claims that far from doing this, it has only enabled existing Indian players to sell their stake and transfer control “while earning a massive premium”.

“Today, three months after the hike in telecom FDI, India is yet to see any large scale FDI or infusion in a greenfield project,” says Basu.

News: The ringtone is rural for telecom firms

(DNA 06/04/2006) Mumbai - All the major telecom players are strengthening their mobile connectivity in the rural hinterland.

Tata Teleservices (Maharashtra) Limited (TTML), India’s second largest telecommunication service provider in the code division multiple access (CDMA) space, is eyeing rural India for growth in the mobile sector.

The company will invest Rs 600 crore this fiscal, of which Rs 100 crore will be earmarked for rural Maharashtra. H D Khosla, head network operations, TTML, said, “We are giving a major thrust to rural telephony development in Maharashtra. There is a huge untapped rural market.”

According to him, the metros already have a teledensity of 60%, with a rural penetration of a mere 9.7%. TTML will provide services to 162 towns by the end of December 2006, up from the current 128 towns. It will touch 30 more towns next year.

The company will add 173 new cell sites and six more switches in next the next three to four months. At present, TTML has 429 cell sites in Mumbai, 374 in the rest of Maharashtra (ROM).

The company will invest Rs 100 crore over the next three months in new new mobile services switching centres, and 173 additional cell sites to provide robust and congestion free services to its subscribers in Mumbai, Maharashtra and Goa.

It isn’t the only one. State-owned Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) propose to invest Rs 20,000 crore to install additional 60 million lines in the next three to four years. Recently, communications and IT Minister, Dayanidhi Maran, said 50% of these proposed connections would be in rural areas.

Reliance Infocomm will set up information kiosks and high-speed public tele-information centres at block headquarters and in villages with a population of more than 2,000. A kiosk which comprises a multimedia personal computer with an Internet connection, is owned and operated by rural entrepreneurs to ensure better customer interaction.

These centres will be rolled out in a phased manner to cover one lakh villages over the next three years. The project is said to cover nearly 48% of the total rural population in the country, informed a Reliance company official.

Khosla further said that Tata Teleservices is committed to provide customers with seamless network coverage and the newly installed Ericsson Switches and Motorola radio elements will reduce the call drop rates and congestion in the network and offer enhanced usage experience.

TTML has recently launched a host of new value added features like caller ring back tones and various data and voice content in Mumbai and Goa. These features will be launched in Pune next month.

The company presently offers telephony and ISP services in Mumbai, Pune, Nagpur , Nashik, Aurangabad, Kolhapur, and Panaji. It focuses on all market segments, like commercial, residential and PCO (public call outlets).

News: NRI IT women mix biz with pleasure at home

(TNN 06/04/2006) New Delhi - Pantaloon may have had to carve out a unique designation, keeping in mind the research background of former Goldman Sachs economist Roopa Purushothaman, who’s relocating to Mumbai from Manhattan.

But for the Indian IT girls at Silicon Valley, the passage to India is logical, smooth and top of the mind. Consider the big names from the 90s — Radha R Basu, Lata Krishnan, Punita Pandey and Anu Shukla. They’re all Indian, all techies and they all made their mark as entrepreneurs in the Silicon Valley. But today another thing that they have in common is India, which is central to their business plans.

“Our Indian subsidiary employs close to 70 full-time personnel. SupportSoft sees an immense potential in bustling markets like India, especially with the increasing use of broadband and triple-play services in home networking. We do not see India as just another offshore site for cost reduction. In addition to India being a critical market for our sales and marketing, and business development initiatives, our Indian subsidiary owns worldwide product lines and P&L. In fact, SupportSoft India is a very strategic operation for our company,” says Radha R Basu, chairman & CEO, SupportSoft, a global and publicly-listed software company.

It may be recalled that in the mid-1980s, Basu had relocated to India to set up Hewlett-Packard’s operations here.

For Punita Pandey, chairman & CEO of Silicon Valley-based start-up netCustomer, the operations at Noida are an integral part of her business.

“India has been a key part of netCustomer from the very beginning. We established a 24x7 centre way back in 1999 when the concept of round-the-clock operations out of India was not very common. Over the years, we have evolved delivery capabilities. Today, our India team provides advanced application support and services to worldwide users of ERP applications. One of the key factors fuelling our high-quality and low-cost services engine is our innovative remote delivery capability leveraging a 24x7 India centre,” she says.

RubiconSoft may not have set up Indian operations yet, but founder & CEO Anu Shukla is convinced that it needs to be an integral part of plans moving forward.

“India is an important market for RubiconSoft’s Internet-based consumer service and an important resource for our development and operational needs. Our plans are to address the market and leverage the resources afforded to us in the IT arena in approximately 12 months. We have reviewed the alternatives available, met with companies in India and also tried offshoring on a project basis,” she says.

The other high-profile woman entrepreneur of Silicon Valley, Lata Krishnan, has left behind a career with salary and stock options worth $3.9m.

But her current job as president of the high-profile NGO American India Foundation (AIF) keeps India very much on her radar. “Last October, we raised an incredible $1m at the AIF gala in Silicon Valley. I am very excited about drawing hi-tech companies like AMD and Cisco to the event,” she said. Ms Krishnan, who also holds the position of CFO at her husband Ajay Shah’s investment company, Shah Capital, doesn’t rule out entrepreneurial forays involving India in future.

For now, her primary responsibilities at AIF include project selection, managing the India board of advisors, developing NRI outreach programmes and building partnerships with US and India-based non-profits.

On a personal front, Basu enjoys trekking in India and is involved in an AIF project to create livelihood centres for rural entrepreneurs, starting with the Sunderbans region. Pandey spends up to three months at a stretch in Noida, and has recently joined the international board of directors of Association for Services Management International (AFSMI) to help start an Indian chapter.

Shukla, who often feels tempted to relocate to India, travels every year to meet family in New Delhi and Mumbai. Now she’s also visiting Pune and Bangalore often on business.

News: Multiplex cinema tickets down to Rs 40

(TNN 06/04/2006) New Delhi - Following the footsteps of the aviation industry, the exhibition industry too seems to be moving to the low price mode.

Reliance owned Adlabs Cinemas will take the lead with the launch its first popular or low-priced multiplex in India on Friday. Adlabs’ first such multiplex will be opened in Ghaziabad in the National Capital Region (NCR).

This would be incidentally the second property of Adlabs in the northern region. The multiplex will price its tickets between Rs 40 and Rs 90.

Adlabs Cinemas’ chief operating officer Tushar Dhingra told ET: “We are foraying into the ‘popular’ priced multiplexes mainly with the aim of increasing customer penetration.

Secondly, we want the customer to increase the frequency of their visits and be able to catch a movie more often.

We also want to increase conversion rate of the footfalls that frequent a mall into watching films.”

As per the company’s new pricing strategy, it will now have three segments — luxury multiplexes which will have tickets ranging between Rs 180 and Rs 300, the average priced multiplexes with tickets ranging from Rs 90-180 and the low-priced multiplexes with tickets ranging from Rs 40-90.

With a seating capacity of 1,093, the new Adlabs multiplex in NCR will have three screens Adlabs also plans to expand its presence to 41 cities in the next 2-3 years. In 2006 alone, the company will be investing over Rs 100 crore to expand to 12 new cities, with the new format in mind.

Adlabs forayed into the South last week with a multiplex in Mangalore. It had entered the northern region in November last year with the plan of housing 14 screens in NCR region alone. The company’s first multiplex, located in the Pacific Mall, has three normal screens and one IMAX screen.

News: Oberoi group proposes to run luxury train

(PTI 06/04/2006) New Delhi - Ministry of Railways has received a proposal from Oberoi Group of Hotel chain to "own and run" an eight coach, 24-cabin luxury train in Rajasthan, through Agra and Delhi. Executive Director of Indian Railways Catering and Tourism Corporation P K Goel said that if finalised it would be another milestone in "Public-Private-Partnership" project of Indian Railways in the sector. The state already has world famous 'Palace on Wheels' under its feet and recently the State Tourism has decided to launch another luxury train to attract more and more tourists for its historic picturesque sites. The project's future lies with the IRCTC, a Public Sector Undertaking of Indian Railways, which would be funding the ministry's share in the project. Oberoi Luxury on Wheels would be the third venture in the state which would have unmistakable stamp of luxury, sumptuousness and splendour. Goel said "we are always looking for such ideas and the proposal from the Oberoi's is a first in this direction. We have no objection to anyone running such trains". He, however, said that the terms and ownership are yet to be worked out. "The Oberoi proposal is only a draft, we will see how much investment is required and work out the modalities. But I don't think there would be much problem". The train will start from Delhi and will travel to Jaipur, Jodhpur, Jaisalmer, Udaipur, Chittor, Ranthambore, Agra before arriving back in Delhi. It will travel all night and reach a new destination every day.

News: Indian FII inflows cross $4 bn mark

(FE 06/04/2006) Mumbai - The impressive returns given by Indian equities have received yet another stamp of approval and this time by the prime drivers of the bull run, the foreign institutional investors (FIIs) themselves. The net FII inflows in Indian equities have crossed the $4 billion mark in the current calendar year (CY06). As on April 4, FII inflows stood at $4.03 billion.

Interestingly, experts opine that the Indian markets have become a global force and the coming days will only further cement India’s place in the global arena. This will, in turn, attract more and more FIIs to the country, too. Uday Kotak, managing director, Kotak Mahindra Bank, said, “I expect that in the next five years, if nothing goes wrong, India will be the second largest capital market in the world after the US. The current trading volume on Indian bourses is $10 billion and I expect it to be $30-40 billion in the next 3-4 years.”

A section of market participants is also of the view that while on one hand, Indian equities look a bit overvalued, on the other hand, they have been able to outpace most of the other global and emerging markets in the recent past. This will only lead to an increase in the inflows to the equity markets. However, it seems that the dependence of the markets on foreign inflows is dipping at a time when the bourses are moving further northwards. This can be clearly seen if one compares the movement of the benchmark Sensex of the Bombay Stock Exchange (BSE) with the FII inflows. In the Sensex’s journey from 7,000 points to 11,000 points, the addition of every subsequent 1,000 points has seen lesser amount of FII inflows with the exception of the move from 8K to 9K.

The rise of the Sensex from 10,000 to 11,000 levels witnessed FII inflows of only $2.31 billion. Contrary to this, when the Sensex rose from 9,000 to 10,000, it was pegged at $ 3.1 billion. The journey from 7,000 to 8,000 also saw higher FII inflows of nearly $4 billion. The recent past also witnessed huge mobilisation from the domestic mutual fund industry and they have also played an important role in the rise of the equity bourses. Incidentally, in the current calendar year, February proved to be the best month with FII inflows pegged at $1.7 billion. March also witnessed net FII inflows at $1.5 billion. In Jan, FII inflows were pegged at only $737.50 million.

News: India's fashion industry finds its feet

(AP 06/04/2006) Mumbai - India's top designers have been unveiling ready-to-wear collections rich in hand-embroidery with an eye toward Western markets as global buyers scout for fresh talent at Mumbai's fashion shows.

Elegant jackets with subtle beadwork, fluid skirts and linen tunics in off-whites and earth tones along with silk and wool have dominated the autumn-winter shows at the five-day Lakme Fashion Week, which ends Saturday.

Better known for garment factories that make clothes for big Western retailers like the Gap and Banana Republic, India is slowly gaining a reputation as a land where high fashion can be found alongside silk saris.

Hollywood movie stars such as Nicole Kidman and Judi Dench have worn Indian creations. Indian designers sell their labels at high-end boutiques in London, New York and Paris, and a handful of Indian labels are available at London's Browns and Saks Fifth Avenue in New York.

Still, the Indian designer market remains in its infancy -- about US$49 million in domestic sales compared to the sizable US$35 billion global market.

India's total garment exports are worth about US$5 billion a year. While there are no exact figures for how much of those exports are high-end fashions, experts say it's likely not more than a minuscule percentage.

In the past, most Indian designers looked to the local clothing market -- currently about US$4.8 billion in sales.

But now -- as was clear at this week's fashion shows in Mumbai -- they are now being aggressively courted by Western buyers.

``India is hot now, everyone is interested in India. Designers must not let the opportunity slip by,'' said Lavelle Olexa, a senior vice president at American retail chain Lord & Taylor. ``With the recent trend of embellishments, department stores are looking for fresh and new Indian detail.''

Albert Morris, a buyer from London's Browns, came to India looking for new styles.

``I'm looking for new silhouettes, crisp designs,'' said Morris. ``I'm looking for something that could stand near an Armani that should make people say, `Oh, that's new and fresh. Who's the designer?'''

Reflecting a rising interest in Indian design, global and domestic buyers will move from Mumbai's catwalk to India's capital New Delhi for another major fashion show beginning next week.

Designing for an international market entails toning down vivid colors and cutting back on extravagant embroidery that do brisk business locally. Indian designers say overseas recognition will be gradual.

``Designing for the precision couture segment takes time,'' said Sabyasachi Mukherjee, who has shown his collection at the Milan Fashion Week and retails in British and European stores. ``I'll stick to growing slowly -- first I need to learn the market in Europe and then move into America.''

Well-known designer Ritu Beri, the first Asian to head French fashion house Scherrer's ready-to-wear line, said she uses softer color palettes for clothes sold abroad.

She said a fusion of Western silhouettes with rich Indian brocade or cotton fabrics worked well. ``What buyers are looking at is tops and jackets with an Indian spirit without directly spelling out India,'' she said.

Rajesh Pratap Singh, India's top menswear designer, makes no changes when he retails abroad -- he bridges the East-West divide with uncluttered, sharp designs. ``I keep it simple with subtle embroidery on wool and an emphasis on cut and new shapes,'' said Singh, who sells his clothes in stores from Palm Beach to Paris.

But designers like Manish Arora, who showed at the London and New York fashion week, believe bright pinks and blues can make the trans-Atlantic trip.

``My look is very embroidered and very modern. I believe the whole world will see our edge in craftsmanship and in textiles,'' Arora said.

News: Indian honchos on the move

(HT 06/04/2006) Mumbai - India Inc is witnessing yet another round of churning at the top. Lured by fat salaries and exciting career opportunities, many top executives in corporate India are shifting jobs. This time around, many executives are exploring opportunities in sunrise sectors like retail and private equity funds.

Rajiv Kaul, Senior Director at Microsoft’s Redmond headquarters quit the company on Wednesday and currently is in the process of joining UK-based private equity investor Actis’ London office as partner. Kaul, who was also the managing director of Microsoft’s India operations, will be responsible for deriving synergies between India, China and South East Asia.

N Sridhar, CFO at FMCG major Britannia Industries, quit on Wednesday. The buzz is that Sridhar, a former Coke executive, is planning to take up an important assignment in a Chennai-based retail chain, which is aggressively expanding operations in the west and the north.

Pradeep Mansukhani has recently quit as CEO (sales) of FMCG major Marico to join as the COO of UKbased Moorjani group’s Indian operations. He will implement the retail expansion plans of Moorjani group, which is planning to bring in global brands like Gucci into India.

Recently, Foster’s India head Pradeep Gidwani quit to join Red Bull in Dubai.

And the automobile industry has seen the exit of high-profile executives like Hyundai’s BVR Subbu.

Mohit Bhatnagar, a senior executive with Bharti Telecom, is tipped to join private equity firm Westbridge. Kotak Mahindra group has recently hired Citi group executive Vikram Sud to head its technology department.

The financial sector has seen a number of high profile appointments recently. Bharti-Axa insurance joint venture is understood to have hired a top executive from ABN Amro. “Top-level movements are gaining momentum. This is mainly due to the fact that sunrise sectors offer bigger challenges,” said Toral Patel, a Mumbai-based HR consultant.

HR consultants opine that Mukesh Ambani-led RIL’s plan to hire executives for its retail venture has set new salary benchmarks.

RIL has roped in many top talents from rival industry by offering attractive pay packets. “We are on a hiring spree for our expansion in India. We constantly face the problem of finding talent,” said Vijay Moorjani, director, Moorjani group.

News: India’s gold malls - A glittering retail experience

(IDEX 06/04/2006) New Delhi - A new breed of specialty jewelry malls are changing the way that jewelry is being sold in India. In a country that loves gold – India has an annual consumption of 700-800 tons – this concept is designed to give retailers better value for money, since specialty malls offer a higher conversion rate of browsers to buyers than generic malls.

Gold Souk was the first such mall to appear in the NCR region of India. The massive 180,000 sq ft mall is brimming with traditional jewelers, a designer’s gallery, and India’s largest brand store - Avenue Montaigne, which displays over 40 counters of watches and high end accessory brands. The mall offers both rental and ownership options with rentals ranging from Rs 150,000 to Rs 350,000 ($3,360 - $7,850) per month.

Weekday traffic is 800-1,000, rising to 2,000 at the weekends. With a conversation rate of over 60 percent, no wonder that during the last Diwali, a strong gifting occasion, souk sales were on average Rs 10 million ($224,210) a day.

Following the success of the Gold Souk, the developer Aerens, is planning to take this concept all over India, while Avenue Montaigne soon be launched abroad.

Fort Knox is set for a mid-April inauguration in Calcutta. Mall developers hope to attract tourists from Malaysia, Bangladesh, Hong Kong and Singapore as well as from neighboring towns and cities. In all, there is a potential market of more than 120 million people.

Rentals in this 80,000 sq ft mall, which will house jewelry stores and offices, start at Rs 90 per ($2) sq ft. There are expectations of a high conversion rate from the 400 to 500 people who are expected to visit the mall daily.

Down south, Prashanth Real Gold Tower will soon open in Chennai. The mall sprawls over 130,000 sq ft. As well as jewelry showrooms, the mall will have a business center, a gold bullion market, and a gem lab.

Unlike the other malls, retailers only have a rental option, with a nine year lease, starting at Rs 100 ($2.25) per sq. ft. The mall is in a prime location on Usman Road, an up market jewelry bazaar with 200,000 daily visitors.

With state of the art security systems, which include CCTV, sensors, metal detectors and armed security personnel, as well as high marketing budgets to woo consumers, this new jewelry retail concept is doing well in India. Is this concept here to stay? Only time will tell.

News: US' Dollar Store on Indian expansion spree

(TV18 06/04/2006) Mumbai - Pick what you like, it's only Rs 99. Bars of foreign chocolate, shampoo, soap, soup, drain cleaners, door-mats, bath towels. It's all there- My Dollar Store is set to blaze its way through several Indian towns.

By April next year, the 25 stores will expand into 100, in places like Chennai, Ahmedabad, Surat, Baroda and Goa. But for all those plans the store has yet to make profits.

CEO at Sankalp Retail Value Stores, Ajoy Krishnamurthi says, "Our margins are wafer thin. We see this as a concept which will succeed due to volumes, not in terms of the value per item. The idea is to excite the customer to pick up 8, 9 or even 10 items."

Sankalp Retail Value Stores, the master franchisee for My Dollar Store in India, won't say how much it has invested. But it claims each store in Mumbai notches up sales worth Rs 50 lakh a month.

Though the company hopes to break even by the end of this financial year, retail analysts say the store might need to consider a judicious mix of Indian and imported brands to boost sales. This is true especially for smaller towns where customers might not be familiar with many foreign brands.

Besides there is no discounting the fact that The Dollar Store faces serious competition. Not only are foreign brands easily available in large cities through the unorganised sector but stores like Trumart and Big Bazaar also use foreign brands to hook the consumer.

News: Retail buzz boosts Viceroy Hotels

(BL 06/04/2006) Mumbai - Shares of Viceroy Hotels Ltd rose by 3.5 per cent on Wednesday on market talk that the company may enter the retail business through a tie up with a Singapore-based bakery boutique chain, dealers said.

They said the Hyderabad-based company would begin with 50 such boutiques in Mumbai, which will later be scaled up to 250 outlets. The company officials could not be contacted for confirmation. The stock has gained by 29 per cent over the last one-month period.

The company has convened an EGM on April 10 to get shareholders' approval for a preferential share allotment to promoters and select investors at Rs 100 per share. On the BSE, the shares closed at Rs 118.

News: ‘India's role in global trade becoming significant’

(BL 06/04/2006) New Delhi - The Government's foreign trade policy initiatives have begun paying rich dividends and this was evident from the fact that merchandise exports have touched $100 billion now, up from $63 billion in 2004, an increase of about 26 per cent year-on-year, during each of the last two years, the Union Commerce & Industry Minister, Kamal Nath, said on Wednesday.

Addressing students at the 40th convocation of the Indian Institute of Foreign Trade (IIFT) here, Kamal Nath said in the changing world economic order, India has successfully demonstrated its capability to capture potential markets through value addition in several fields as diverse as engineering goods, chemicals, pharmaceuticals and biotech and also fashions, lifestyle products and leather goods. India dominates the global diamond market with 11 out of 12 diamonds in the world being cut and polished in India.

Role in global trade

The Minister said along with its services imports and exports, India's aggregate economic engagement with the world today tops $350 billion. He said even as India was becoming very significant in global trade with its tariffs coming down to ASEAN levels with liberal FDI regime and TRIPs-compliant domestic laws, the barriers in developed countries have now become more subtle - they are non-tariff barriers (NTBs) and sanitary and phytosanitary standard regulations.

Pointing out that India's membership of the WTO has admittedly been beneficial, the Minister said its core concerns and interests have been addressed in the Hong Kong Ministerial Declaration.

IIFT Kolkata Centre

The Director, IIFT, and former Commerce Secretary, Prabir Sengupta, announced that the IIFT Kolkata Centre would start functioning from July 2006 with the launch of the flagship MBA (International Business) Programme.

"Another fresh initiative of the institute is the setting up of small and medium enterprise (SME) Center. The Centre promises to provide continuous support by carrying out activities such as training programmes, provision of business intelligence services through a databank, besides being a catalyst for interface with other concerned institutions," he said.

News: ‘India to lose much if trade talks fail’

(PTI 06/04/2006) New Delhi - World Trade Organisation (WTO) today warned that India and other developing countries stand to lose much more than their developed counterparts, if the ongoing trade talks fail.

"India has a huge stake at the trade negotiations... If it (the talks) fails India may be one of the victims," WTO Director, General Pascal Lamy, said, in the wake of crucial April 30, deadline approaching for finalising modalities in agriculture and industrial tariffs trade negotiations.

For India both in trade and diplomatic terms, Lamy said, "keeping and solidifying" the multilateral trading system was a huge issue and beneficial to the economy.

Stressing that WTO negotiations had approached "last spasm" as in any other talks, Lamy said it was important that all 150 member countries work towards a collective discipline by successfully completing the current Doha Round of trade talks.

The current round of trade negotiations to liberalise the global trade further was launched in Doha in 2001.

Lamy is now on a two-day visit to India as part of his whistle-stop tour of key member countries to push the trade talks mired by differences on cuts in farm subsidies and reduction in industrial tariffs.

Though there are 20-25 issues on the table in the trade talks, which are to be clinched by this year end, the farm and industrial tariffs were two crucial issues without which it will be difficult to arrive at a consensus for completion of Doha round of talks, he said.

India and other developing countries have been insisting on resolving agriculture issue first. But advanced nations want developing countries to commit to a greater reduction in industrial tariffs for any concession in agriculture.

“In any negotiations, the weakest are weak and the strongest are in a strong position and this applied to WTO negotiations as well,” Lamy said.

But, a failure of WTO negotiations will hit the weakest the hardest as rule-based trading system would benefit the developing countries more, he said.

Emphasising the need for adopting a flexible approach on industrial tariffs, Lamy said three-fourths of the global exports were from the developing countries and further opening up would benefit them even as it provided market to developed countries as well.

Lamy said emerging economies like India, Brazil, and China must be prepared to make more efforts on industrial tariffs as they would be the major gainers.

"India and China have to do more effort. EU and the US are being asked to bite into their existing subsidies, so India and Brazil, who have huge differences in their applied and bound tariffs will have to see how much they can bite into their applied tariffs," Lamy said.

Asked if he was optimistic about forward movement in WTO talks, Lamy said, "I am never pessimistic or optimistic. It is doable but not yet done.”

"The issue is clearly political," he said, adding that the WTO trade negotiators are meeting in Geneva from April 18 after which a Ministerial of key 25-30 member countries would be held in April end or May first week to finalise the modalities for agriculture and industrial tariff negotiations.

Column: The India hype is ahead of reality

(FE 06/04/2006) The economic growth India has achieved, to quote the finance minister, is ‘quite a heady mix’ and we saw the effect recently in Davos, where the world looked at India with great interest. We discovered our importance in that milieu. We even believed in what we were saying in that we have ‘arrived.’ Today, when we talk of double-digit growth, it does not appear to be so raucous.

If we analyse the profile of this growth, it is clearly fuelled by private enterprise. In the past few years, private enterprise has blossomed—unshackled, it is finding new business opportunities and crossing the shores of the country. It is truly a statement of what enterprise can achieve despite problems. It is also a demonstration that democracy (in the context of developing countries) is capable of delivering such growth, and that private enterprise, operating within the confines and pitfalls of a democratic set-up, can still flourish. India’s success demonstrates that democracy and economic growth in developing economics are not in conflict.

This growth has three major components. One of these is the manufacturing sector, whose competitiveness has increased enormously in recent years. It has come about with companies becoming more productive on the shop floor and more conscious of customers’ demand for quality. This is not confined to the top echelons of industry but has cascaded down. Japanese words such as kaizen and muda are now a part of the shopfloor lexicon. In an economic sense, this means we have used less capital to get more output, enormously increasing the capital-output ratio of the manufacturing sector in recent years. We must also recognise that this has happened despite strong inhibitors, including lack of labour flexibility.

The second area where private enterprise has contributed is the export orientation witnessed primarily in the services sector. This sector has demonstrated our ability to deliver value and succeed in a high-tech industry. It is a case of proving the impossible: global success despite a poor image of brand India. It is an extraordinary statement—a snake charmer can also compete in the software industry.

The third component of the growth performance—again, with private enterprise in full play—is the spawning of several self-employed entrepreneurs, especially among the lower strata of society and women, despite lack of credit access and lack of physical infrastructure.

In each of these theatres of action, what is common is the will to succeed, the determination to scale obstacles.

But having said that, to my mind, this is not a sustainable model of growth and the hype that is being generated is ahead of reality. It is not sustainable for two reasons. Shopfloor competitiveness cannot give you long-term presence in the market unless backed by innovation and creativity, leading to the ownership of intellectual property and intellectual capital. Does the total wealth portfolio of this country contain a reasonable amount of intellectual capital that can be used? No. We are too dependent on our mineral resources and conventional resources or capital rather than intellectual capital.

Also, while we have proved that we can grow despite infrastructural issues, growth has largely come about because of the headroom we have had in the domestic market. Our exports, other than those who can cross the shores through telecommunication links, cannot flood the global markets without adequate physical infrastructure and our ownership of intellectual capital. The way out is to create even more entrepreneurship, backed by ideas and a huge thrust for getting the leadership position in intellectual capital, in every industry segment.

This can be done across three levels.

At the national level, we need to identify missions. A national mission should target a few hundred patents in cutting edge technologies. If we consider the automotive industry, we can’t ignore the prospects of oil reserves drying. We should respond by taking a leadership position in alternative fuels—set up a national mission for this. It is incorrect to say we don’t have the resources. This can be done in private-public partnership. We need to think big. National missions can also look at technology to attack issues such as drinking water or sanitation.

Second would be industry-level missions. One ready example is the Core Group for Automotive Research (CAR), set up by the central government and the automotive industry. CAR is associated with a wide range of ongoing dispersed research, in materials, telematics and such other areas. We can devise a mechanism by which the technology gains can then be shared by the industry.

The third is at the company level. The challenge of any chief executive is to promote innovation and creativity. To compete in the market on the basis of what you currently have takes you up to a point. However, to make the leap takes a great deal of creativity in finding innovative solutions to everyday work through employee involvement and in developing leapfrog technology.

Parallely, we need to pursue global trade, not in substitution of the internal growth mode but in conjunction with it. The roadblocks are not only the lack of physical infrastructure, but also mental block. Global trade is not a choice anymore. FTAs, today, are not driven by economics but by geo-politics. Once we are into an FTA, we are sucked into an entire gamut of free trade. The key issue is how we can manage this change to supplement internal growth.

—By R Seshasayee, MD Ashok Leyland

News: Watch out, the Swiss are coming to India

(FE 06/04/2006) Geneva - The retail landscape in India is all set to change soon with as many as 10 of the top Swiss luxury watch brands Cartier, Rado, Tissot, Omega, Chopard, Harry Winston, Vacheron Constantin — to name just a few — looking at opening their exclusive boutiques in the country. This follows the government’s recent decision to permit 51% foreign direct investment in single-brand retailing, a move that has excited almost all the major players in the Swiss luxury watch making industry here.

Currently, these brands are operating through retailers in select metros and their watches are displayed among many other products in multi-brand showrooms. A dedicated showroom for each brand would allow them to display a much larger range of products and promote the brand in a more comprehensive fashion.

“We are happy to see that the Indian government has allowed foreign investors majority stake in mono-brand retailing. We will set up shop the moment we find the right location in Delhi and Mumbai,” Patrick Normand, managing director, Cartier, said.

Rado too is considering opening exclusive showrooms. “We are certainly considering our own showrooms. These will be more like a flagship store for us,” Roland Streule, president, Rado, said. Another Swatch group company, Tissot, is in the process of setting up a subsidiary in India to launch its own boutique. Omega, according to its spokesman, is also evaluating options.

The rush by watch manufacturers to set up own boutiques is riding on back of rising consumerism in an economy that has recorded the third consecutive year GDP growth of 8%. For most watch manufacturers, India is a key strategic market and would be consuming a good chunk of their marketing budget in the years to come.

News: Hattrick - Indian stocks ahead of global peers

(TNN 05/04/2006) Mumbai - India does a hat-trick. Returns from Indian equities are once again the highest across emerging Asia for fiscal year '06 (April '05-Mar '06). At a 74% return, India is far ahead of the next best, which is the 41% return offered by the Korean equity market (see table).

Returns from the Indian equity market have also been far ahead of other emerging markets such as Mexico (52%), Brazil (43%) or Gulf Co-operation Council (GCC) economies such as Kuwait (26%).

In short, Indian equities have delivered the highest returns in the world. Russia, another emerging market and is part of the BRIC economies, too has delivered returns in line with India, in dollar terms.

This is the third year in a row since FY04 that the Indian equity market has offered such incremental gains. During FY04, the Indian benchmark index - Sensex - delivered an 84% return, followed by a 16% return during FY05 and now a healthy 74% gain.

Since the beginning of the bull run (in the last week of April '03), the local equity market has gained more than 286% till the last trading day of FY06.

Since then, the Indian equity market has delivered another 360 points, totalling a return of 300% since the beginning of the bull run. At the beginning of the fiscal year, the sensex was quoting at a trailing four-quarters P/E (price to earnings) ratio of nearly 20.

However, the growth prospects of India are absolutely rock hard and market players are betting big on India Inc. So, even at a high premium, India still can deliver considerably. This has been proven once again during FY06.

What is significant about the gains during FY06 is the fact that retail interest, too, has started rising in the domestic market. This is evident from monies collected by several mutual funds. MFs, through their new fund offerings or otherwise, have collectively mopped up close to Rs 25,000-30,000 crore during FY06.

And a major chunk of this money is definitely retail. Based on an analysis, ET estimates show that the portion of household savings into equities and equity-related products is definitely on the way up.

Foreign institutional investors (FIIs), which have been the bloodline to the current bull run, are continuously pumping money into the Indian market. Liquidity is not an issue and will not be an issue in the near future also.

FIIs are confident and betting big on the growth prospects of India. An FII tally proves this point. The number of registered FIIs in India has consistently moved up from 540 in '04 to 686 in '05 to 882 during the current year.

News: 5 New Indian Firms In $1 Bln Market Cap Club

(RTTN 05/04/2006) Mumbai - The BSE Sensex grew over 500 points to 11,564.36 on April 3, from 10,950.30 as at March 24, in six trading days. Meanwhile, during this period, the market capitalization of listed stocks rose by Rs. 173,174 crores to Rs. 30,91,049 crores from Rs. 29,17,875 crores on March 24.

It has been indicated that in the 500-points rally, there were gainers and losers in the ratio of 5:1. Of the 2,705 actively traded stocks, the gainers were 2,179 and the losers were 455, while as many as 69 stocks remained unchanged. The gainers increased the shareholders value by Rs 178,528 crores, while losers destroyed its shareholders wealth by Rs. 5,354 crores.

Among the Sensex gainers, Gujarat Ambuja Cement tops the list, swelling its value by 10.2% to Rs. 106.30, followed by Bharti Tele-Ventures 10.1% at Rs. 421.40, Tata Steel up 10% at Rs. 542.80, Cipla up 9.6% at Rs. 686.70 and Hindustan Lever up 9.4% at Rs. 279.40. In the list of losers, Tata Power figured with its market price declined by 0.7% to Rs. 584.30.

It has also been reported that the $1 billion market cap club has increased to 109, with Essar Oil, Pantaloon Retail, Britannia Industries, JSW Steel and United Breweries joining the big league.

At the Sensex level of 11,500, India Inc. has 59 companies in Rs. 100 billion or Rs. 1,000 crores bracket, with ONGC topping the list with market cap of Rs. 187,424 crores, followed by NTPC Rs.111,603 crores, Reliance Industries Rs. 115,597 crores, TCS Rs. 95,289 crores and Infosys Rs. 86,125 crores.

According to a survey on119 sectors by Business Standard Research Bureau, only two sectors lost ground during the 500 point rally and as many as 25 selectors gained over 10%, while 57 gained between 5% and 10%. Industrial explosive topped with 29.51% gains, followed by breweries up 27.93%, metals 21.3%, industrial gases 20.3% and man-made textiles 16.98%.

News: ICICI Bank to launch white label credit card

(BS 05/04/2006) Mumbai - ICICI Bank is launching a white label credit card in association with Loyalty Services and Research Ltd (LSRL), a company formed by a group of venture capitalists reports Business Standard. The credit card will be the same as the one launched by State Bank of India (SBI) and Tata Sons in February 2006.

The white label card will be launched in about a month with ICICI Bank as the card issuer bank and Loyalty Services and Research Ltd (LSRL), managing the loyalty programmes. “ICICI Bank has a minor stake in the LSRL,” said Madhivanan B, ICICI Bank’s general manager, retail asset products group. He, however, declined to give the exact stake the bank will hold in LSRL.

A white label credit card does not carry on its face the brand of the issuer, as against a co-branded credit card which bears the logos of both the alliance partners. Also, a while label credit card can have loyalty alliances with any number of partners. The number of alliances could be as high as 100, Madhivanan said.

ICICI Bank is also in the process of launching a private label credit card for home-makers for use at Big Bazaar outlets. The credit limits on this card will be very low ranging from about Rs 2,000 to Rs 3,000.

These initiatives come as the largest private sector bank has crossed a credit cards base of five million. It is adding as many as three lakh credit cards every months and is now way ahead of the number two credit card issuer, Citibank, with 2.9 million cards.

ICICI Bank is trying hard to push use of cards, including debit cards, outside the top eight cities and for this has rolled out 1.55 lakh point-of-sale (PoS) terminals. It plans to add another 1.5 lakh PoS terminals in 2006-07 to provide facilities for use of cards in smaller towns and cities. Almost 45 per cent of the cards issued by ICICI Bank are in smaller cities and towns, but they account for less than 30 per cent of the card spend.

News: Puma to emerge as popular Indian sports lifestyle brand

(F2F 05/04/2006) Mumbai - Puma brings complete changes in its strategy to emerge as the most popular sports and lifestyle company. The brand has always been under the dark shadows of low visibility, though it catered to Indian market since 2002.

In the first place, Puma has decided to discontinue the licensee agreement it had with Planet Retail and start its own subsidiary.

Company’s General Manager Martyn Bowen said this was part of what the company adopted startegy, globally.

This company plans to launch a 1,500-sq ft brand store in Bangalore or Chennai in the next six months.

Moreover, it would continue to set up stores through Planet Retail even though Puma is not the licensee for the brand while Puma also plans to strengthen its presence in the multi-brand outlets.

Puma has the long-term mission of becoming the most desirable Sportlifestyle company. Phase IV, Puma’s long-term oriented business plan, was launched in 2006 to reinforce its position as one of the leading multi-category Sportlifestyle brands.

News: India real estate boom woos CalPERS

(NDTV 05/04/2006) Mumbai - India's property boom has attracted California-based CalPERS to pump in money to fund property acquisition.

The world's largest pension fund has already invested $100 million and plans to raise this investment up to a maximum of $400 million, with a return of at least 18 per cent.

As the retail and tourism sectors gather momentum, CalPERS also wants to fund housing, office, retail and hospitality segments in the country. It will initially focus on Delhi and Mumbai, with Hyderabad and Chennai being the other options. The company has tied up with IL&FS Realty Fund for the move.

One of the reasons prompting such high interest is that foreign investors who could earlier only buy into projects larger than 100 acres are now allowed to buy 25 acres or more of real estate.

The year 2006 has seen Warburg Pincus investing in Bangalore, Morgan Stanley investing $68 million in Mantri Developers and the Chatterjee Group investing $450 million.

The bullishness has also driven up the prices up, and real estate is up 35 per cent since last year's already high levels.

News: Reliance Industries to foray in agri-business

(IRIS 05/04/2006) Mumbai - Mukesh Ambani-controlled Reliance Industries plans to invest over Rs 4,000 crore in north India, especially in Haryana and Punjab, for its ambitious foray in agri-business and agri-retail sector.

The petrochem giant is believed to have tied up more than 900 acres of land in Punjab, just days after it was alloted 28 acres, for building two projects at an investment of Rs 93 crore in Haryana.

RIL`s agri-business plans revolve around forward and backward linkages in the agriculture and food retail sector across the region.

Indicating the mega-scale of the company`s operations, sources said the company plans to build warehouses, cold storage, processing plants, retail and distribution outlets.

Reliance Industries Limited was among the gainers at the exchanges and closed at Rs.839.55 at the BSE, up 0.23 per cent. Combined volumes at the exchanges came to 1,003,962 on Wednesday.

News: India's retail shopping revolution

(Bloomberg 05/04/2006) Mumbai - Hypermarkets are changing the nation's spending habits, write Abhay Singh and Subramaniam Sharma.

Bobby Gupta says he had never seen a a crowd as large as that on January 26, when Big Bazaar, India's leading chain of discount stores, held its biggest-ever sale.

Two million jammed Big Bazaar's 24 locations across India, forcing three- quarters to shut early when employees could not handle the influx. In Bhubaneswar in eastern India, hordes of bargain hunters jostled to grab cut- rate jeans, pressure cookers and mobile phones.

Indian consumers, once relegated to sorting through neighborhood stores and roadside markets, are shopping with a vengeance at new malls, discount centers and combination food and department stores called hypermarkets.

India's middle class, 216 million strong, is clamoring for the latest in flavored toothpaste and flat-panel TVs.

By 2010, there will be 351 million middle-income Indians in 65 million households, up from 40 million households today, consulting firm McKinsey predicts.

Indians do as much as 97 percent of their spending at small, independently owned neighborhood shops, where they can pick up lentils in one spot, towels in another and sandals in a third. They jam into tiny stores or narrow stalls, bargaining with the proprietor to complete the daily shopping. "If you believe in the Indian consumer, if you believe in his growing wealth, then you will believe in organized retail," says fund manager Pauli Laursen.

Homegrown retailers and foreign hopefuls are rushing to ring up profits from India's shopping spree. Mumbai- based chemicals and petroleum giant Reliance Industries plans to spend a total of 150 billion rupees (HK$26.1 billion) by March 2007 to open 1,575 warehouse-style stores in towns and large villages across India. In January, Reliance announced an initial US$750 million (HK$5.85 billion) investment.

In December, Wal-Mart applied to India's central bank to open an office to study the Indian market. The application is under review.

Spending by Indians on products and services outside of education, housing, health care and transportation rose 5 percent to an estimated US$219 billion in 2005. Of that amount, retail chains took in just US$8.2 billion, according to consulting firm Technopak Advisors. Retailers' share of consumer spending may increase to US$25 billion by 2010, Technopak estimates.

"India is clearly a country that is very attractive," says Beth Keck, director of international corporate affairs at Wal-Mart. Investors think so, too. They are driving up shares of Big Bazaar's parent, Pantaloon Retail India. The stock of the Mumbai-based company surged 176 percent in the year ended April 3, to 2001.75 rupees. ICICI Venture, the private equity arm of ICICI Bank, the biggest Indian lender that is not controlled by the government, says it made five times its 2001 investment in Pantaloon.

RPG Enterprises, which took in US$1.89 billion of revenue from tire manufacturing, power generation and other areas in the year ended March 31, 2005, plans to invest 4.5 billion rupees to expand its Spencer's chain. Spencer's features Big Bazaar-type shops, supermarkets and convenience stores.

Vishal Retail, which competes with Big Bazaar through its Vishal Megamart chain, is in talks with private equity investors to raise as much as 500 million rupees, chairman Ram Chander Aggarwal says. He plans an initial public offering worth as much as 1.5 billion rupees.

However, the threats to India's retail ambitions are plentiful. Poor roads and inadequate storage mean that a quarter of the nation's fruits and vegetables go bad before they get to market, the government estimates.

Space in India's teeming cities is limited, and because retailing is a new industry, it is hard to find professional managers and clerks as stores compete for educated workers.

Praveen Khandelwal, New Delhi- based secretary-general of the Confederation of All India Traders, which represents about 50 million small shopkeepers, says chains like Big Bazaar are bad for traditional merchants.

"We are opposed to any kind of chain of retail stores, whether Indian or foreign," says Khandelwal, sitting in his hardware shop in New Delhi. "Ultimately, it is detrimental to the domestic traders." Khandelwal, 45, has allies in India's communist parties, which support the Congress Party-led government in parliament.

"No one is coming here for philanthropy," says Dipankar Mukherjee, a member of India's upper house of parliament from the Communist Party of India, Marxist. "I'll welcome foreign investment, whatever the industry, as long as it creates an asset, creates employment and gives us technology."

More pressing to Kishore Biyani, managing director of Pantaloon, is how to deal with Wal-Mart and other hovering international competitors. In January, India took the first step in opening retailing to foreign investors. The government now allows overseas businesses to own 51 percent of companies that sell products under a single brand.

Retailers such as Wal-Mart that provide a range of goods made by different manufacturers under one roof are still barred from opening stores in India.

"There's a tearing hurry," Biyani says. "We should be large enough before anybody comes in - whoever that may be. We learned from them that you can sell utensils and fashion together."

In 2001, Biyani opened the first Big Bazaar in Mumbai and followed with two more in the space of 22 days. That year, Pantaloon's average stock price was 17.78 rupees, less than one- hundredth of the price on April 3. The 44 percent holding of Biyani and his family is now worth US$529 million.

The few international companies that have set up stores in India are not finding a similar path to riches. Since 2000, India has allowed foreign cash- and-carry wholesale stores such as Germany-based Metro, the world's third-largest retailer, to operate in the country. Metro stores sell to companies and other retailers, which get a free membership by showing their business license. Consumers cannot use them.

Metro opened two cash-and-carry locations in India in October and November 2003. Since then, it has been slow going. Laws such as the Agricultural Produce Marketing Committee Act restricted Metro to government- controlled markets for fruits and vegetables. Even if Metro had been willing to buy from government markets, the law prevented it from selling the fruits and vegetables in its stores. Metro decided not to stock produce.

As of January, local governments in nine Indian states changed the agricultural act to allow wholesalers and retailers buy produce directly from farmers and sell it from their stores.

Changing the way Indian consumers shop may be the biggest challenge to both foreign and domestic retailers.

"I'm not convinced that for food and groceries, big box-style retail will work in India," says Raman Mangalorkar, of management consulting firm AT Kearney. In India, refrigerators and cars are small, traffic is heavy and people tend to like fresh food, he says.

The most competition for Biyani may come from firms that are just starting to knock on India's retail door. Reliance is to focus on consumers outside cities like Bangalore and Mumbai.

Reliance, India's second-biggest company by market value, plans stores in two formats: a Big Bazaar-style setup spread over 150,000 square feet and 75,000-square-foot supermarkets. The retail foray will require 500,000 employees. Reliance has already hired 6,000 managers from India and overseas, sources say.

"2006 will be the inflection point for retail in India, and the catalyst will likely be Reliance," says Arvind Singhal, chairman of Technopak. "So far, very incremental investments have been made in India by modern retailers ranging between US$5 million and US$50 million a year. The pace of change and the penetration have been very slow."

Wal-Mart, which draws 318 million shoppers each week to more than 6,000 worldwide locations, will shake up the pace even more. "We are hopeful the Indian government will liberalize direct investment," Keck says.

Biyani is not waiting for Wal-Mart. He is already putting its methods into practice - even if the execution may need some tweaking. On January 28, the last day of the Big Bazaar sale, the store in Gurgaon was packed. Biyani says in spite of the apparent chaos, there is a method to his strategy for Big Bazaar.

"We learned one basic formula for retailing from Wal-Mart founder Sam Walton's book [ Made in America: My Story], which has stood us in good stead in all times," he says. "Your operations can be made right tomorrow. But if you get your merchandising wrong, there will be no chance to run your stores ever." That means that figuring out what people want comes first.

Biyani says the next step for Pantaloon is to introduce specialty retailers. Home Town stores will sell everything from doors to hammers. Biyani plans eight by the end of 2008. He intends to open 65 gold jewelry stores called Navarasa by March 2008.

"Biyani is able to strike a chord with the customer; it's a skill," says Rakesh Jhunjhunwala, who owns 1.9 percent of Pantaloon stock. "I predict in five years he will be four times the size of his nearest competitor."

For this to happen, Biyani may have to start watching what his competitors are up to with the same zeal with which he observes shoppers at Big Bazaar.

News: SBI - More glamorous too

(TH 05/04/2006) Mumbai - We have realised that the first choice for a bank in the case of a high net individual is not necessarily SBI. There has to be continuous effort on our part to tell such people that SBI does not wear the same hat as other PSU banks. The perception that we are a bureaucratic, rule-bound, slow bank has to change," says T. S. Bhattacharya, Managing Director, SBI.

Industry observers also think it is time that the bank highlight its assets and change the market perception of it. "All these years, SBI has been focussing on the mass market. At the same time, it probably has more corporate clients than all the foreign banks in the country. It loses out to the private and foreign banks simply because it does not have the right marketing push and focussed communication about the kind of products it offers," observes Ashok Das, Managing Director, Hansa Research.

As Rensil d'Silva, Senior Creative Director, O&M, elaborates, "Although SBI has a solid and trusted image, it was still not considered to be an approachable bank. Through the campaign we are approaching the new Indian, a generation with new disposable income, and at the same time retain the loyalists who have been consumers over the years."

"The purpose is to open up the consumer base and in all our future campaigns we will try to sustain the interest of the consumers and continue to connect with the youth," states d'Silva.

Strengthening its offerings and services across the gamut of its retail products, SBI believes it is offering a unique selling proposition in every aspect of retail banking - ranging from car and home loans to its credit and debit cards. Creating added awareness of each of its retail products is an ongoing exercise for the banking behemoth.

For instance, in spite of having a 14 million customer base for its debit cards, the product lacked adequate visibility in the market. Claims Joydeep Dasgupta, Group Business Director, Mudra (the agency handling its debit card account), "The concept of a debit card is still novel in India. We found the biggest reason to have a debit card was that it was a secure way to carry cash." SBI has released a campaign where it shows pickpockets going out of business due to a `cashless' world.

However, SBI's campaign has come in for much surprise and criticism. Many have wondered why the bank needed to tag itself "Surprisingly SBI" and have called it self-deprecating. BrandLine sought the opinions of a few in advertising.

M. G. Parameswaran, Executive Director, FCB Ulka, says, "Being India's largest bank, SBI has a leadership image to protect. It also has to protect the image of the banking industry. Doing ads which are funny for the sake of being funny ends up devaluing the SBI brand and the banking industry."

K.V. Sridhar, National Creative Director, Leo Burnett, says, "SBI needs to have a more positive, upbeat image. The debit card commercial is in bad taste and you end up sympathising with the protagonist. It is a wasted opportunity for the SBI brand and shallow thinking on the part of the agency to have created an ad like this in today's day and age."

Defending his debit card campaign, Madhukar Kamath, Chairman and Managing Director, Mudra, says, "The ad is shot with a simple idea about creating a cashless world. At the same time we are addressing a social menace such as pickpocketing and how it is being taken away from the streets. We stand by the campaign."

In its efforts to provide a well-rounded banking experience, SBI has been tying up with various companies to strengthen its retail products portfolio. It has been associating with companies such as Maruti Udyog, Hyundai Motors and Tata Motors for its auto loans and Thomas Cook and Raj Travels for its travel-related retail products such as its Easy Travel scheme and Vishwa Yatra card.

Elaborating on the added thrust in its retail banking initiatives, Bhattacharya says: "We perceive retail lending as a tool to increase the profitability of our advances portfolio as well as to widen our customer base by building relationships through a range of products. The bank proposes to impart a sharp focus to certain types of retail loans such as SBI personal loans, mortgage loans and education loans. SBI's personal loan or Saral will cater to all the segments of the market, both salaried and non-salaried. It is tailored to meet the needs of the customer without any insistence on security. The bank will also be focussing on educational loans to attract the younger generation and build a lifetime relationship."

At the same time, SBI is not scouting for a brand ambassador. "We feel that all successful ads do not have brand ambassadors. In our case, the advertising should have quality in its presentation. It should have something novel and unique to attract consumers and the face of Amitabh Bachchan or someone else is not necessarily going to work," says Bhattacharya.

The business of the bank stands unaffected despite its lack of marketing push. In spite of intense competition and pressure on spreads, the operating profit for SBI crossed the Rs 10,000-crore mark, going up by over 15 per cent, and net profit rose by almost 17 per cent to Rs 4,304.52 crore in 2004-05.

News: Murjani to set up 4 Calvin Klein stores

(BS 05/04/2006) Mumbai - The Murjani Group will be bringing premium brand Calvin Klein to India, with four stores being planned by the end of 2007.

Mohan Murjani, chairman, Murjani group told Business Standard, that they would be exploring different options for the brand in India.

“In addition to the brand stores, we are also considering freestanding stores for the innerwear range as well as for accessories. While we have rights to some accessories, we are in talks to bring in other accessories such as eyewear to India as well.”

Murjani said the company was considering setting up freestanding stores for Calvin Klein and French Connection UK (FCUK) as well as the shop-in-shop format at the larger format retail outlets.

The company already retails the Tommy Hilfiger brand in India, and will be setting up a total of four Gucci and Jimmy Choo stores in the country by the end of 2007.

Murjani said the company would continue to bring in brands to India that fit in the luxury, premium or specialised category over the next few years, before moving on to a slightly lower band between the premium and mass brands.

“The potential for brand retailing in India is huge, and we want to be a major multi-brand player in India,” he said.

Vijay Murjani, managing director, Murjani group said, “We are very aggressive on the build-a-bear (BAB) format, and plan to have between 50 and 100 outlets over the next five years,” he said.

This will be a more mass format as compared to the other brands that the company is bringing in and will be present in malls as well as high streets.”

While there would be a couple of large flagship stores of about 2,000 square feet, the average size the group is considering for this brand is 1,200-1,500 square feet.

The pricing for all brands, said Murjani, would be more or less at par with prices in Dubai or Singapore, with the starting level for BAB being Rs 500. The group is also launching luggage brand Tumi in India.

News: Indian private banks all smiles

(HT 05/04/2006) Mumbai - The private sector banks in the city are gearing up to receive a flood of new deposits in the coming days. And this would be without taking up fresh deposit mobilization drives. Reason: possible shifting of a major share of deposits by the SBI customers to private banks.

The two largest players in the retail banking space mainly the HDFC Bank and ICICI Bank in the city already have a huge portfolio of customers also maintaining savings and current account balances with the State Bank of India (SBI) branches where the indefinite strike by employees have crippled banking transactions at every level.

While, the SBI top management negated the fact that a large chunk of the bank’s deposit base could move to private banks as soon as the strike gets called off by the employee unions, the alert has already been sounded at least among other public sector banks having strong employee unions in the Lucknow circle.

“The shifting of a major share of deposits by the SBI customers to private banks is certain in the current circumstances. We have no plans to poach upon SBI customers by starting any special deposit mobilisation drive to take advantage of the situation. That would be totally unethical,” Govind Pandey, Head, HDFC Bank (UP, Uttaranchal & parts of Haryana) told HT Lucknow Live.

However, the message is very clear— about 70 per cent of the banking business in the city is in the hands of public sector banks, out of which the SBI has a lion’s share of 30 per cent. “If SBI customers decided to move their deposits to private banks when the strike got over, that’s good news for all the private banks in the city,” he said..

As far as HDFC Bank was concerned, the 30 per cent of overall banking business remaining with the SBI in Lucknow circle was a very important market segment for us. If a major share of SBI’s deposit base moved to private banks, it would be a definite plus for HDFC Bank, Pandey said.

The private banks in the city are also gaining immensely from the transaction charges levied for using their ATMs by SBI customers.

“While SBI would compensate for all the charges levied on their customers for use of ATMs of other banks, the transaction charges are certainly additional revenue for any bank,” Pandey added.

Similar views were echoed by an ICICI bank official from Mumbai, who said deposits from SBI might move not just in Lucknow circle to private banks but also from the entire SBI branch network in UP.

News: H2O Plus to set up more outlets

(TT 05/04/2006) New Delhi - Within a year of its entry in India, Chicago-based high-end cosmetics maker H2O Plus is set to expand its reach.

Encouraged by the response and queries about H2O products, the $100-million firm will add four exclusive stores and 30 sale points.

The expansion plan is expected to cost about Rs 1.6 crore.

H2O offers a range of water-based skin care products made from marine ingredients mixed with vitamins and minerals. The marine-based skin care products were launched in India in March, 2005.

H2O’s skin-care products contribute 60 per cent to its revenues.

It also offers spa, bath and body care products, gift sets and accessories.

The high-end skin care products are targeted for women in the age group of 25-39 years.

Its products are priced between Rs 490 and Rs 6,000 with the average price of a H2O Plus item being Rs 1,200.

Currently, the brand has four stores and 15 counters in India.

“By the end of this year, we are looking at a total of 38 points for sale,” said Garima Makkar, brand manager, H2O Plus.

The company plans to add three stores in Delhi and one in Mumbai. At present, it has two stores in Delhi and one each in Mumbai and Chandigarh.

“We had a good 25 per cent growth in 2005-06, which was far beyond our expectation,” Makkar said.

The company is also talking to leading retailers in India for selling H2O products through their chains.

Sports Station (India) Pvt Ltd is H2O’s domestic distributor and retailer.

News: Taj Hotels turns globetrotter for more revenues

(TT 05/04/2006) Mumbai - The Indian Hotels Company plans to take its Taj brand to China, Australia and Hong Kong as it prepares to make a stab at achieving robust growth in revenues from overseas operations.

Indian Hotels expects to get a third of its revenues from international operations in the next five years. “Almost 22 per cent of our business comes from global operations,” said Raymond Bickson, managing director and CEO of Indian Hotels Company.

“The Asian region is our focus area for the next few years,” Bickson added. With the extension of the brand, the group expects to extend the Taj brand loyalty to the new international locations.

Indian Hotels, a part of the Tata Group, has 18 overseas hotels and operates luxury residences in Mumbai and London.

Last month, Indian Hotels signed a marketing alliance with Korea’s Shilla Hotels, similar to the one it has with Singapore’s Raffles Hotel. Last July, it took over the lease of New York’s Pierre Hotel for 30 years. It also bought W Hotel in Australia last December for $27 million.

The group signed a 10-year management contract today with Dubai-based property developer ETA Star for a luxury hotel and residential apartment complex in Dubai.

Indian Hotels’ luxury Taj Hotels brand will operate and manage the Taj Exotica Resort and Spa and the Grandeur Residences located at the Palm Jumeirah Crescent in Dubai as it seeks to expand its presence in fast-growing international markets.

ETA Star will develop the $330 million project, which will comprise a luxury hotel and 200 luxury residential apartments for sale and lease.

The management contract may be renewed after a period of 10 years. Indian Hotels and ETA Star will examine the possibility of other similar agreements, Bickson said.

Speaking about international operations, he said the Taj Exotica Resort and Spa will be operational by 2009 and target the business and leisure traveller. “We will earn about Rs 2-5 million a year in revenues," he said, adding the group will provide full service to the Grandeur Residences.

Refusing to divulge any financial details of the agreement, Bickson said, “We are looking at a combination of joint venture deals, equity partnerships and management arrangements, as these give us access to more distribution channels.”

“Getting into a management contract helps us because this way we are able to participate in the development of the property without having any equity involvement,” he said.

News: Japan flies at China via India

(PTI 05/04/2006) Tokyo - Japan's foreign ministry plans to reorganise itself this year to focus more on India and check China's growing influence in Asia, a newspaper reported today.

The ministry plans to create a South Asia department after the current Parliament session ends in June, the conservative Sankei Shimbun said.

"The move is aimed at making clear the diplomatic stance of attaching importance to India, whose political and economic presence is growing while checking China, whose influence is spreading among Asian nations," it said.

The new department would coordinate diplomacy for India, Pakistan and other South Asian nations along with member states of the Association of Southeast Asian Nations (ASEAN), it said.

The work is currently handled at separate smaller divisions under the Asian and Oceanian Affairs Bureau.

A foreign ministry spokeswoman said the ministry was ‘considering reinforcing’ the bureau and focusing more on ASEAN and South Asia but had not decided whether to set up a South Asia department.

Japan has been seeking closer ties with India amid tense relations with China over history, energy and other issues.

While delaying funding decisions on aid to China, Japan said last week that India was the top recipient of Japanese loans for the third consecutive year, with $1.3 billion marked for New Delhi for the year to March 2007.

News: 'India must be flexible on tariff'

(PTI 05/04/2006) New Delhi - WTO on Wednesday asked India and other emerging economies to adopt a flexible approach on industrial tariffs for giving a push to the ongoing trade negotiations and meeting the crucial April 30 deadline sealing the deal in agriculture and NAMA.

"We are approaching the moment of truth in next few days. Developed countries like EU and US will have to reduce subsidies in agriculture, their agriculture tariffs also should come down but developing countries like India, Brazil and South Africa will also have to reduce their industrial tariffs.

"This round is development round and trade needs to be rebalanced in favour of developing countries," World Trade Organisation Director General Pascal Lamy said, expressing optimism about meeting the deadline.

Asserting that he was catalysing the "most important" deal for every country, he said India which had both defensive and offensive interests in both agriculture and industrial goods could do much more in terms of reducing its tariffs by bringing down the gap between its applied tariffs and those bound at WTO.

Lamy said India had lot more to gain than it has to pay to and there was a need to weigh options in offensive and defensive areas.

News: NRIs remit $21 b back home last year

(UNI 05/04/2006) Kochi - With India overtaking China as the largest recipient of remittances from abroad, non-resident Indians sent more than $21 billion back home last year, according to the latest World Bank Report, Western Union Services India Managing Director Anil Kapur said today.

Addressing a press conference here to announce a special scheme for money transfer from the UAE to Kerala, Kapur said China had the highest number of diaspora in the world while India ranked second. However, India had overtaken China a couple of years ago in receiving non-resident remittances.

“As per estimates, Chinese remittances would be about five to ten per cent less than India," he added.

Stating that remittances constituted three per cent of the Indian GDP, Kapur said at present these were double the FDI received by the country and were playing a vital role in its development.

With over one million Keralites in the UAE alone, Kerala was among the highest recipients of remittances in India and the Western Union was offering a special scheme for the next six months, whereby a non-resident Keralite could send up to $ 3,000 back home at a charge of only 15 Dirhams as against the normal charge of 25 Dirhams.

At a live demonstration of Western Union operations at the press conference, P A Abdul Rasheed, a resident of Ernakulam, received Rs 25,000 from P V Abdul Wahab, a prominent industrialist and Rajya Sabha MP, who is currently in Dubai.

Kapur said Western Union was present at 2,70,000 locations in 200 countries. In India, it had 25,000 locations in 5,000 towns, cities and rural areas. Of these, 2,000 were in Kerala.

Stating that there was a ''huge corridor of business between the Gulf and Kerala,'' Kapur said Kerala was among the top five markets in India in terms of business for the Western Union.

Shobha Koshy, Chief Post Master General, Central Region, Kerala, said the Department of Posts had in a "path-breaking initiative" tied up with Western Union to work as its agent as there was a "complementarity of services".

At present, 5,500 post offices in the country offered Western Union money transfer services. "With the post offices always being associated with financial services such as money orders and small saving schemes, this tie-up was a natural progression for us," she added.

News: Marriott set to introduce Ritz Carlton in India

(DNA 05/04/2006) Kolkata - After bringing in well-known hospitality brands like the JW Marriott, Marriott, Renaissance and Courtyard, Marriott International is now readying plans to introduce the high-profile Ritz Carlton to India.

Marriott is also planning to expand its serviced apartment business. The blueprint is to manage new properties that will be a combination of hotels and serviced apartments.

With average room tariffs of $300 per night, the Ritz Carlton is a top-end label from Marriott’s stable. “The market in India is now ready to support such rates,” Navjit Ahluwalia, director, development, Marriott International, told DNA Money. The cities Marriott is looking at are Mumbai, Delhi and Bangalore. “We are looking to bring the Ritz Carlton to India in the medium term,” said Ahluwalia.

Ritz Carlton will be clubbed with its executive apartments, which too will operate in the high-end space. The project should kick-start in the not too distant future. “It all depends on finding the right partners to work with,” indicated Ahluwalia. Incidentally, real estate bigwigs Rahejas have built properties like the JW Marriott in Mumbai and Courtyard in Chennai.

At present, Marriott operates only one serviced apartment property in the country, the 173-room, Marriott Executive Apartments (MEA) in Mumbai. The 253-room Renaissance hotel is also located on the same site. Currently, it is exploring properties in Chennai, Gurgaon and Bangalore among others.

“The idea is to have hotels and serviced apartments in the same location as this will save costs though profits could be as high as 60%,” said Ahluwalia. He added location costs, which comprise almost 50% of the entire investment in some cases, can be offset through a rational and simultaneous use of land in hotel and serviced apartments. Other cost saving factors could be in the form of single management, marketing and accounts teams.

Marriott International is predominantly involved in managing hotels. Worldwide, there are more than 2,700 Marriott International lodging properties but it owns less than 10 hotels.

Currently, Marriott International operates five brands in India, including the luxury JW Marriott and Renaissance Hotels & Resorts and Marriott Executive Apartments (all in Mumbai), the premium full-service brand Marriott (in Delhi and Hyderabad), Marriott Hotels & Resorts (Goa), and five star select services Courtyard (Chennai). A JW hotel is under construction in Bangalore.

News: India drafting integrated energy policy

(PTI 05/04/2006) Washington - India is in the process of drafting an integrated energy policy to provide a roadmap for meeting its growing energy needs in an environmentally sustainable manner.

Petroleum and Natural Gas Minister Murli Deora pointed out that the entire need of India in the realm of commercial energy has been met by fossil fuel.

He said the country has crafted a multi-pronged strategy to counter the challenge of fuelling economic growth and this strategy would include a conscious shift to promote larger public-private participation in oil and gas.

"Our policy has been carefully evolved to create a level-playing field for all the participants in the sector. With the recent passage of the Petroleum and Natural Gas Regulatory Board Bill in Parliament, agencies to regulate and monitor the midstream and downstream sectors of oil and gas are being put in place," he said in an address on the occasion of the Annual General Meeting of the US Energy Association here.

Deora said the energy security concerns of India to fuel the targetted economic growth also take into account preservation of the environment.

"India, cradling a sixth of world's population is also its sixth largest consumer. India is poised to achieve a sustained GDP growth rate of 8 per cent this year, and may be even higher in the future," he said.

News: India Inc tots up huge realty

(BS 05/04/2006) Mumbai - Land sought by just a dozen firms is over a third the area of Delhi. Reliance Industries is hoping to be allotted more than 50,000 acres for its special economic zones (SEZs); The Andhra Pradesh government has offered SemIndia 1,200 acres for Fab City; The Indonesia-based Salim-Ciputra group has plans to occupy 5,000 acres near Kolkata; South Korean steel major Posco’s 12-million-tonne steel plant will come up on 4,000 acres in Orissa. India Inc is going fast forward on land acquisition. Consider the scale. The land sought by just about a dozen companies adds up to 125,000-150,000 acres. that is more than the area of Pondicherry, and over a third the area of Delhi. While the investments are large—Reliance Industries proposes to spend Rs 50,000 crore on its various projects—what is striking is the huge amount of land that is being acquired. Says an official in the Maharashtra government, “In their anxiety to woo big companies and attract large investments, state governments may be allocating more land than is necessary for projects.” Sitting on fairly strong cash flows, corporates are using some of it to acquire land, especially now that many state governments have made it easier to do so. Says Gulam Zia, head of advisory services at Knight Frank, “Whether it is for hospitals, hotels, petrol pumps or for sprawling technology campuses, Indian companies are scouting around to own some property.” So sharp has been the price escalation in recent months——as much as 120 per cent in areas like the Thane-Belapur belt in suburban Mumbai — that consultants like Akshay Kumar, CEO of Colliers, feel the time has come to put in place some anti-speculation norms, like those prevalent in China. Sanjay Dutt, ED of Cushman & Wakefield, says that even MNCs that have traditionally believed in leasing land are now exploring options of owning land, in places where the government is subsidising the rates and the titles are clear. Microsoft acquired land in Hyderabad some time ago and others are likely to follow. The Andhra Pradesh government appears to be particularly generous while allotting land. Consider the project being set up by SemIndia Inc, near the new Hyderabad airport, a $3-billion (Rs 13,500 crore) facility for the manufacture of semiconductors. The state government has offered to allot 1,200 acres at Tukkuguga, 20km from the city, for the Fab facility. According to Ajay Shah, independent scholar, “A stand-alone Fab costing $3 billion occupies 25 acres (eg TI’s in Dallas, Texas) and a full mini city with a Fab occupies 75 acres (eg Intel’s Fab 18 in Israel). It is hard to explain the political allocation of 1,200 acres for SemIndia.” The Andhra Pradesh government has also agreed to provide a 550-acre plot for Infosys to set up a campus to house around 25,000 people, at a cost of Rs 12 lakh per acre. That works out to over 100 sq yards of land per employee! That raises obvious questions about excess land being acquired, especially since Infosys packs 15,000 employees into its existing 80-acre facility in Bangalore’s Electronics City. According to the Infosys management, what will be additional in the Hyderabad facility compared with its other centres, are an extensive training facility, a residential complex, convenience stores and parking area. In Orissa, where Posco is putting up a 12-million-tonne steel plant, there is indirect admission that the land originally allotted for the project was excessive. The company has scaled down its land requirement to 4,000 acres from the earlier request for 5,000 acres (in comparison, Posco’s 16-million-tonne plant at Gwangyang in South Korea covers 3,558 acres). According to Jeong Tae Hyun, overseas project head for Posco, “The plant area has been downsized after we came to know that 2,000 less families will have to be re-located. Now just 400 families will have to be taken care of.” Tribals in the region have been protesting the displacement on account of the steel plant, following which the government has set up an R&R policy committee. One issue that has arisen in the land deals is that of fairness. The tribals who sold their land in Orissa contend that the government acquired the land from them at Rs 37,500 per acre, and is now selling the same land at Rs 3.7 lakh per acre, or nearly 10 times higher than what the government paid for the land. The government says that the higher amount that it charges from the private companies will be used for building roads and developing infrastructure. In Uttar Pradesh, the charge is not of profiteering by the government, but of the state subsidizing large companies. Former Prime Minister VP Singh has demanded a job for at least one member of each farmer’s family that has provided land for the Dadri power project being set up by Reliance Energy. Singh has questioned how the government could ignore farmers when it had exempted Reliance from paying stamp duty. The 5500 mw gas-based project, will be spread over 2,500 acres of land, entailing an estimated investment of Rs 12,000 crore. About 2,500 acres are to be acquired in seven villages for the project and the land acquisition cost is to be shared by the UP government and Reliance in the ratio of 60:40. However, the agreement between the state government and the company stipulates that any increase in the land acquisition cost will be borne by the state. Reliance Energy has paid Rs 80 crore towards acquisition of the land, according to a media release put out by the company. In Kolkata, too, there have been protests against the Salim group’s 5,000-acre Kolkata West International project, which has been cleared by the state Cabinet. The government is yet to take a decision on the group’s request for land to set up a two-wheeler project (65 acres) and a commercial-cum-residential complex, spread over 400 acres in Howrah. The details of how the remaining land is to be used are not available. The lease rent being talked about is Re 1 per acre per month, a fraction of what is being given to the farmers as compensation. The Salim group is looking for land in southern and western Kolkata, and most of it is elevated farm land along the national highway. Meanwhile, the twin SEZs coming up in the Mumbai mainland where Reliance Industries has taken the controlling interest through group companies, are spread over 35,000 acres. The company has also asked for an additional 850 acres in the same area. Besides, the group has requested the Andhra Pradesh and Haryana governments for 25,000 acres each, one of them for a petrochmicals SEZ.

According to Shyam Chainani, environmentalist, a green belt around Mumbai is necessary, and with so many projects coming up in places such as Navi Mumbai, the city will be deprived of open spaces. “Too much land is being given away by the government for commercial purposes and there is no thought being given to town planning,” says Chainani. Adds an urban land development expert, “While it is true that the concept of the work place is changing, with managements wanting to provide better housing and recreational facilities than before, the amount of land being asked for is substantial.” The advent of corporate farming is yet another reason for large-scale land acquisition by companies. Reliance Industries is one among many that are planning to take “thousands of acres” on lease for crop farming. Others such as the UB group, ITC, Bharti and Hindustan Lever are understood to be planning a foray into farming. Together, these groups will be investing Rs 500 crore in Punjab. The Bharti group has taken on lease 100 acres in Ladowal village near Ludhiana for five years.

News: Mr Hotmail plans $2 bn Nano City in Haryana

(BS 05/04/2006) Chandigargh - Hotmail founder Sabeer Bhatia will launch a “Nano City” in Haryana. The project, to be set up in collaboration with the Haryana government, is likely to attract an initial investment of $2 billion.

Addressing reporters in Chandigarh, Bhatia said silicon technology had become obsolete and nanotechnology represented the future of IT and bio-technology. “The objective of our effort is to recreate the vibrance of Silicon Valley in Haryana,” said Bhatia.

He said he shortlisted Haryana due to the initiative taken by the state government and added that he was considering some other states to launch new projects, but “Nano City” was exclusively for Haryana.

Bhatia said, “It will take 5-10 years to reap the full benefits of the project but once we are successful in this, India will take a big leap.” Nothing of this kind had been done before, he asserted.

The scope for creating jobs in the knowledge-based industry was far greater than what manufacturing offered and it was time India cashed in on the boom in the industry, said Bhatia.

Principal Secretary of Haryana and Financial Commissioner, Industries, PK Chaudhary, who was also at the press conference, said a location-specific study of the project would reveal the volume of investment needed.

He added that “Nano City” would offer the best Internet connectivity, state-of-art institutes and world-class infrastructure.

He said a detailed agreement would be signed between Bhatia and the Haryana State Industrial Development Corporation for this mega-project.

Chaudhary also said infrastructure for the project would be developed through the public-private partnership route. A concrete project report would be prepared in three months, he added.

Chaudhary said the state government expected this proposed city to provide, apart from nanotechnology, bio sciences, software product development, next-generation Internet products, and materials research.

“We foresee the creation of world-class research establishments on the lines of US universities and research and development centres of companies that have been the centres of innovation, to carry out multi-disciplinary and collaborative research with Indian centres of excellence, in this city. We will also aim at setting up a fast track mechanism for getting the required approvals,” he added.

News: Sweat equity to become easier for MNCs

(BS 05/04/2006) Mumbai - The Reserve Bank of India is set to relax the norms for issuance of employee stock options (Esops) by foreign companies to their employees in India. The proposed relaxation may allow a foreign company to issue Esops even if it has an indirect holding of 51 per cent in an Indian subsidiary, according to sources close to the development. At present, only those foreign companies which directly hold at least 51 per cent stake in their Indian ventures can issue Esops. Foreign companies may also be allowed to buy back their shares if an employee does not subscribe to it. Employees can buy stock options only if they continue in their jobs for three years at a stretch. But, if an employee leaves a job within three years, the shares are returned to a trust formed by the company in India. Thereafter, the company has to take the RBI’s permission to buy back the shares from the trust. Under the proposed norms, a company may not be required to take RBI permission to buy back Esops that get transferred to the trust. The company will only have to inform the RBI of such transfers as part of a reporting formality. The RBI has been continuously relaxing the norms for overseas inward and outward investment norms as part of current account liberalisation. It has also formed a committee to chalk out a road map for capital account convertibility. Recently the central bank eased the norms for Indian companies to divest their investments in overseas ventures. Corporations now are not needed to take the permission of the RBI for such divestment if joint ventures or wholly owned subsidiaries are listed in overseas stock exchanges. Earlier, the government and the RBI had relaxed the norms for acquisition of foreign securities by resident individuals in Esop schemes related to American depository receipts (ADRs) and global depository receipts (GDRs). Under the relaxed norms, banks can make remittances up to $50,000 or its equivalent in a block of five years without the approval of the RBI for purchase of foreign securities under the ADRGDR-linked Esop scheme.

News: Hyderabad calling - B'lore losing IT lure

(IANS 05/04/2006) Hyderabad - With more IT companies based in Bangalore looking to expand operations in Hyderabad because of its superior infrastructure, this city has never had it so good.

Blaming the crumbling infrastructure and political instability in Bangalore, so long known as India's Silicon Valley, Andhra Pradesh Chief Minister YS Rajasekhara Reddy is wooing investors to set up shop in the state capital.

Reddy, who made a bold visit to Bangalore on Monday, explained to investors the relative advantages of Hyderabad: good infrastructure, an industry-friendly government and other incentives.

The visit came close on the heels of Infosys' decision to set up its biggest development centre in India here with an investment of Rs 12.5 billion.

Last week Infosys signed an agreement with the Andhra Pradesh government, which agreed to allot 550 acres of land for the project. Officials here expect more IT and pharma companies to follow suit. Biocon, which is India's largest biotech company, has said it would not expand operations in Karnataka any further.

Infosys' chief financial officer TV Mohandas Pai has declared that Hyderabad is better than Bangalore in all ways. "Hyderabad probably has the best infrastructure for IT in India," he said.

In February, Hyderabad beat Bangalore to bag the $3 billion Fab City - a mega semiconductor fabrication facility, the first such in India.

The Andhra Pradesh government signed a memorandum of understanding with SemIndia, a consortium of overseas Indians, for the project and allotted 1,200 acres of land near the upcoming international airport.

As a further impetus to IT growth, Intel, the world's largest chip maker, agreed last week to be a financial and technology partner in a $600 million Fab project being developed by South Korean firm Intellect Inc.

The investment flow is not confined to just IT software or hardware sector. Hyundai, the premier South Korean automobile company, decided Sunday to set up its Rs 2.5 billion research and development centre in Hyderabad.

While Bangalore's infrastructure is crumbling, in Hyderabad it is growing by leaps and bounds.

Work is progressing rapidly on a $320- million international airport and the government is also working on a 160-km Outer Ring Road to decongest the city.

International bids have been invited for a $1.4-billion metro rail project. The investment into the state has doubled in the last two years.

According to the Centre for Monitoring Indian Economy (CMIE), in January 2006 Andhra Pradesh occupied the third position among 10 top industrialised states with investments of Rs 753.91 billion. Maharashtra (Rs 1,020 billion) and Gujarat (Rs 786.96 billion) came on top.

The IT sector itself attracted Rs 96.97 billion during the last two years.

Andhra Pradesh, which registered $1.9 billion of IT exports during 2004-05, aims to achieve $15 billion exports by 2009.

With the Fab City coming up, the state expects a similar spurt in development in the hardware sector. The government has already earmarked 5,000 acres for a Hardware Park.

The growth is not confined to Hyderabad alone. Last month, Whitefield Paper Mills Ltd signed an MoU with the state government to set up Rs 12-billion paper mill in West Godavari district.

Work has also begun on an Rs 5-billion Apache (Adidas shoes) plant at Tada in Nellore district.

The major investment projects cleared last year include a Rs 90-billion aluminium refinery of the OP Jindal Group near Visakhapatnam, a Rs 5-billion Rajiv Gandhi Gems Park, a Special Economic Zone for gems and jewellery in Hyderabad, a $1.1-billion (Rs 50 billion) in an alumina refinery by the state-run National Aluminium Co Ltd and the expansion of the public sector Visakhapatnam Steel Plant at a cost of Rs 156.66 billion.

Another pubic sector company, Oil and Natural Gas Commission (ONGC), plans to set up a Rs.82-billion refinery at Kakinada.

The state also hopes to finally bag its dream project. German auto major Volkswagen has reportedly decided to set up its manufacturing unit in Visakhapatnam. An agreement for the $1.2-billion (Rs.54- billion) project, hanging fire for the last three years, is likely to be signed soon.

News: NRI deposits picking up in Kerala

(BL 05/04/2006) Thiruvananthapuram - The flow of non-resident deposits to the commercial banks in Kerala has picked up between September 30 and December 31, 2005.

This marks a reversal in the declining trend in non-resident deposits recorded in the first half year of 2005-06, according to the latest review by the State Level Bankers Committee (SLBC).

The non-resident deposits increased by a healthy Rs. 822 crore during the quarter - from Rs. 28,819 crore as on September 30, 2005 to Rs 29,641 crore at the end of December 2005.

The non-resident deposits constituted 40.67 per cent of the total bank deposits of Rs 43,236 crore in the State at the end of the quarter. Compared to March 31, 2005, the non-resident deposits increased by Rs 521 crore.

In the corresponding period of the previous fiscal, there was a fall of Rs 1,163 crore in non-resident deposits in the State. On a year-on-year basis, there was a modest increase of Rs 704 crore as on December 31, 2005.

The State Bank group accounted for the maximum share of non-resident deposits with 38.01 per cent, followed by private sector banks with 30.25 per cent. The other nationalised banks reported a share of 30.07 per cent, while the foreign banks had a share of 0.89 per cent.

The semi-urban areas contributed the chunk of Rs 20,675 crore, which was 69.75 per cent of the total non-resident deposits in the State. The urban areas logged Rs 6,250 crore (21.09 per cent) and the rural areas Rs 2,716 crore (9.16 per cent).

The SLBC review showed that the total number of branches of commercial banks in Kerala stood at 3,554 at the end of December 2005.

Of this, the public sector banks accounted for 2,410 branches, which formed 67.81 per cent of the total branch network in the State.

News: Reliance MF doubles assets

(PTI 05/04/2006) Mumbai - Reliance Mutual Fund, an Anil Dhirubhai Ambani Group company, has become the top private sector mutual fund in the country by doubling assets under management to Rs 24,669 crore till March 31, 2006.

"Reliance MF has grown by leaps and bounds to become the number one private sector mutual fund in the country," the company said in a release.

The fund house grew its Assets Under Management (AUM) by more than 100 per cent to Rs 24,669 crore till March, 2006, from Rs 9,542 crore as of March, 2005.

Reliance MF's equity portfolio is at over Rs 15,010 crore, one of the highest in the industry.

In the last one month (February-March), the company expanded AUM by Rs 7,810 crore thanks to the new fund offer Reliance Equity Fund, which collected Rs 5,759 crore.

This was the largest new fund offer in the 42-year history of Indian mutual funds, which had attracted as many as 9.29 lakh applications, the company said.

Reliance MF now boasts of over a million investor base. Reliance MF is a wholly-owned subsidiary of Reliance Capital.

News: Red Tape plans a bigger retail footprint

(TNN 04/04/2006) New Delhi - Red Tape, the flagship brand of Mirza International plans to foray into women’s footwear, men’s fashion wear and accessories.

It is also launching a low-priced footwear brand, ‘Nucleus’, in the next few months.

“We are looking at becoming a holistic fashion brand, which would offer everything from footwear to apparel. All new additions to our product portfolio are aimed at extending and building the Red Tape brand,” Rashid Mirza, managing director, Mirza International, told ET.

For the men’s fashion line, the Rs 250-crore footwear brand is in talks with apparel majors like Arvind Mills. “The clothes line should hit the stores by September this year. After evaluating the success of the men’s line, we will introduce a women’s line in the future,” Mr Mirza said.

The women’s footwear collection will hit the market by the end of this month.Targeted at the upper end of the consumer spectrum, the shoes will be priced between Rs 2,000 and Rs 3,000. Investments of approximately Rs 80 crore have been made to introduce the women’s range, Mr Mirza said.

The footwear manufacturer and exporter has been supplying women’s shoes to brands like Next, Debenhams, Clarks and Burtons in Europe and the US. Interestingly, out of the Rs 250-crore sales turnover, international markets contribute about Rs 200 crore.

Elaborating on its new brand, Nucleus, Mr Mirza said the brand will cater to the lower end, as opposed to the Red Tape brand.“We are looking at Nucleus to give us volume growth, and if it does well, we expect it to make four times the sales of what Red Tape does,” he said.

The Nucleus range will be priced in the range of Rs 1,200-1,500, specially targeted at the Tier-II towns. An advertising campaign for the fashion line, the women’s wear range and the Nucleus brand will be launched soon. The Red Tape footwear brand is endorsed by actor Salman Khan.

On the domestic retail front, the company is preparing to open 50 exclusive Red Tape outlets during ’06, which will be doubled by ’07. “We are looking at retail expansion largely in smaller towns, since it’s a huge market out there,” Mr Mirza said. The brand will also be present through shop-in-shop stores and 1,200 multi-brand outlets.

News: Deloitte to double its India headcount by 2010

(PTI 04/04/2006) New Delhi - Global management consultancy firm Deloitte on Tuesday said it would strengthen Indian operations by doubling its headcount to 12,000.

It also said that it was open for acquisitions in order to garner 10 per cent of global revenues from the country by 2010.

"We are working towards generating 10 per cent of global revenues from the country and would increase our headcount from current 6,500 to about 12,000 by 2010," Deloitte CEO William G Parett said on the sidelines of a CII-organised session on 'Sustainable Competitive Growth' here.

Competitiveness would help position local companies for global success through rigorous management practices that the firm aims at instilling in various companies here, he said.

The firm aims at generating 25 per cent of its global revenues from Asian region by 2010 and would set up Centres of Excellence -- one each in India, Japan and Singapore, Regional Marketing and Communications manager Anna Tehan said.

"China and India would contribute 30 per cent of the revenues from Asia Pacific," she said.

The 'Centre of Excellence' coming up in Mumbai would help train personnel in auditing, consulting, risk assurance and getting more partners from the country to extend its niche services, she said.

The firm would strengthen existing centres but is also looking for acquisitions for inorganic growth, she said.

Deloitte already has offices in as many as 13 locations across the country and is investing in personnel, technology and infrastructure, she said, adding that the Indian arm of the firm could figure among top six regions of Deloitte Touche Tohmatsu's global operations.

News: Indian car sales shift to top gear

(FE 04/04/2006) New Delhi - After a tepid 11 months, when volumes crawled at single digit growth rates, passenger vehicle players closed the fiscal in fourth gear.

All carmakers, who reported numbers on Monday, registered double digit growth rates for March. Sales traditionally spike in March because auto companies push sales to meet targets.

Also, vehicle demand from corporates increases to avail depreciation benefits. In the past two years, customers have also postponed purchases in February in expectation of excise sops leading to increased demand in March.

Market leader Maruti Udyog Ltd sold 61,000 vehicles in March, its highest in a month, riding on compact car sales after the excise cut. Boosted by demand for compact cars like the Alto and Swift, the company registered a 20% increase in March volumes.

Even the M800 sold 10,937 units, registering a 6.7% increase in March, its first growth in sales in over a year. Sales for the financial year, however, were subdued, wth a growth rate of only 8.13%.

The second largest carmaker, Hyundai Motor India Ltd saw a robust growth of 38% in march. Its record breaking sales of 30,038 units were the highest among all Hyundai subsidiaries outside Asia. The company closed 2005-06 with sales of 1.59 lakh units, a growth rate of 11.87% over 2004-05.

For Honda, Ford and GM, recently launched models -- City Zx, Fiesta and Chevrolet Aveo respectively – boosted sales in the final month of 2005-06.

All the MNC carmakers registered their all time high monthly volumes in March. While the former closed the fiscal with 12.6% growth rate, the American giants grew at a more sedate 5%.

News: Lehman setting up banking unit in India

(RTR 04/04/2006) Hong Kong - Lehman Brothers, a top Wall Street firm, is launching an investment banking unit in India this year, joining a host of competitors expanding in a fast-growing market for deals like mergers and IPOs.

Lehman, which worked on the first wave of overseas Indian listings in the mid-1990s, is moving in the same direction as Goldman Sachs and Merrill Lynch in a country where the economy is growing at more than 8 per cent a year.

"We're setting up investment banking now ... people will be on the ground this year," Charles Alexander, Lehman's head of Asia corporate finance in Hong Kong, told Reuters. "It's one of the big opportunities our senior management sees globally."

Lehman wound down its Indian operations in 1999 amid weak business growth and the Asian financial crisis.

The firm, which has an office in Mumbai, had been working on Indian deals mainly with bankers from places like Hong Kong, but the size of the market has become large enough to demand a bigger local presence.

The Indian sub-continent accounted for $6.1 billion in stock issuance in the first quarter of this year, up 32 per cent from the year-earlier period and bigger than markets like Australia and China, according to market data provider Dealogic.

Its mergers and acquisitions market was the fourth-biggest in Asia Pacific, excluding Japan, with about $6.3 billion worth of deals in the first quarter.

Last month, Lehman said it would add about 2,300 jobs in Asia and Europe, with most of these going to Asia.

GROWING RANKS

To get a bigger piece of that activity, Goldman and Merrill have changed the structures of their onshore operations.

Goldman has sold its stakes in two Indian joint ventures for $74 million to start its own investment banking and securities businesses there.

Goldman, which also plans $1 billion in Indian principal investments, joined up with partner Kotak Mahindra Bank Ltd. in 1992 but decided the time was ripe to go it alone.

Merrill paid about $500 million last year to increase its stake in its Indian joint venture, DSP Merrill Lynch, to 90 per cent from 40 per cent.

For more recent market entrants, the more independent model has proven popular as well.

Credit Suisse poached Morgan Stanley veteran Mihir Doshi this year to run its business in India, where it is relaunching its securities unit and building an M&A practice.

Australia's Macquarie Bank has also started up in the country and Britain's Barclays Plc. has been expanding its presence.

The market has speculated that Morgan Stanley, which operates two ventures with JM Financial Ltd., will be next to go independent but the investment bank has stood by its arrangement.

Lehman's Alexander, who spoke to Reuters last week, is no stranger to Indian joint ventures, having helped set up JPMorgan's foray with local partner ICICI Bank Ltd. in 1992.

JPMorgan decided to strike out on its own in 1998 and the US bank and its rival, Citigroup Inc., have had increasing success going against the joint ventures, which boast strong domestic networks for selling stock and bond offerings.

Lehman is planning a gradual roll-out of its services.

"The investment banking team will be first on the ground, fixed income and equities will be the next phase," Alexander said. "We'll do some transfers and we'll hire some people locally."

News: The realtor-retailer tango is a win-win development

(DNA 04/04/2006) Mumbai - After the consumers, it’s the turn of the realtors to get bitten by the retail bug.

With supermarkets coming up left, right and centre, and the retail industry growing at a 30% plus rate, some order was, well, in order where it comes to mall space development.

So what do the chains do? Go for corporatisation.

Sector pioneer Pantaloon was the first off the blocks in this effort, grabbing big retail space through subsidiary Kshitij Ventures. The trendsetter is now being followed by another big retailer, Trent.

The Tata firm has tied up with New Delhi-based builder DLF Universal to anchor its next 12 malls across various cities.

Arvind K Singhal, chairman, Technopak says “With the evolution of modern retail, corporatisation has finally arrived in mall space development. There have been such tie ups earlier in the country but that has not been for more than 3 to 4 projects. And this tie up is larger enough to mark the corporatisation.”

“And the corporatisation also means that the organised retailers can now access quality space more quickly,” he added. Trent will have 27 stores totaling to about a million square feet of space for its brands like Westside, Landmark, and Star India Bazar in these malls.

“Real estate and retail industry are in an aggressive growth phase and this alliance along with participation in some of their future projects will be beneficial for both companies,” said Noel Tata, managing director, Trent recently said at a press conference in Gurgaon. Pantaloon, in the beginning of the year had announced to set up 51 malls in 29 cities across 14 states of the country through subsidiary Kshitij.

But mostly the mall space development at large scale has been devoid of big corporates. Trent also launched its first Westside store in Gurgaon in the newly developed property of DLF Universal. Westside is now present in 13 cities and has 22 outlets across the country.

News: Indian Railways to set up 100 'budget hotels'

(IBN 04/04/2006) New Delhi - After a marked improvement in its financial health, the Indian Railways plans to build over 100 budget hotels on its vacant land near railway stations across the country.

"We want to construct over 100 budget hotels across the country for people who travel by trains extensively and provide them facilities to stay comfortably," P K Goel, Executive Director of Indian Railways Catering and Tourism Development Corporation said.

This is keeping in view the fact that the railway traffic is growing over 17 to 18 per cent and Railway Minister Lalu Prasad Yadav's decision to provide adequate amenities to its passengers in trains as also at the stations.

Prasad's step was motivated by the "turn-around" of Railways lately, which by the end of 2005-06 has generated additional revenue of over Rs 11,000 crore.

Goel said construction of budget hotels on the Railway's land would be undertaken by IRCTC under the scheme "Public- Private Partnership".

The IRCTC chief said of the total 100 such hotels planned, 44 have already been permitted to go ahead with the scheme. Tenders have already been issued for five hotels at Sialdah (West Bengal), Chandigarh (Punjab), Madurai (Madras), Secunderabad and Vijaywada (Andhra Pradesh).

News: Capital Hospitality Index - India ahead of China

(BL 04/04/2006) Kolkata - Forbes has placed India below Brazil, but above China and Russia in the recently launched 135-country Forbes Capital Hospitality Index.

Claimed to be the first comprehensive index of its kind, which assigns relative percentage rankings for 10 categories, it has listed India at the 104th position with an overall score of 51.6. China with 41.2 and Russia with 40.9 points have been ranked 129th and 130th or 7th and 6th from the bottom. Brazil has been slotted at the 73rd position with a score of 64.7.

The BRIC countries fared poorly against the four Asian markets of Singapore, Hong Kong, Taiwan and South Korea. These four figure in the top 15 with the US, the UK, Australia, New Zealand, Ireland, Luxembourg and Norway.

Interestingly, the US has been ranked fourth (score: 89.9), below the highest scorer Denmark (it scored 91.8 despite a high corporate tax rate), Finland (90.6) and Iceland (90.6).

The scores are an averaged total of the points obtained in all categories - wage and price freedom, restrictions, regulation, competitiveness, technology, days to start a business, investor protection, personal freedom, tax rates and corruption.

The US Chamber of Commerce (USCC), CIA, World Bank, Heritage Foundation, World Economic Forum, Deloitte Tax, Freedom House (an NGO) and Transparency International contributed data for the compilation of the index, Forbes said. Additional analysis was provided by Moody's Economy.com, the index team acknowledged.

News: 'India needs $100 b investment in power sector'

(BL 04/04/2006) London - India is searching for investments in its power sector from the UK with a senior official saying the country would need $100 billion to add another 62,000 MW to its capacity.

"This will include 44,000 MW thermal, 15,000 hydro and 3,000 MW nuclear," Umesh Narayan Panjiar, Additional Secretary in the Power Ministry, said in a meet, "Showcasing Indian power sector" to potential investors at the India House here last evening.

Elaborating on investment opportunities, Panjiar said, "Today, with 100 per cent FDI allowed, opportunities exist across the entire value chain forming a large matrix of unexplored business options. On one hand, great potential lies in development of fuel options particularly coal washing and mining. The generation segment has become active with a thrust on ultra mega projects, non-mega projects and renovation and modernisation of existing units."

"Already, generation capacity of 39,000 MW entailing an investment of $43 billion is under execution," he said.

Panjiar said, "from being a predominantly coal-based generation (60 per cent share), the Indian electricity sector is today on the look out for more efficient, economical and environment-friendly fuels."

"Electricity utilities are actively exploring untapped potential of hydel sources and host of renewables including wind, solar, tidal and geo-thermal while pursuing development of new fuels such as natural gas, coal-bed methane, gas hydrates and bio-diesel."

Despite its current generation base of over 118,000 MW, India faces peak power shortage of 11.7 per cent at present.

News: ABN Amro Indian Multi Manager Fund launched

(ACERC 04/04/2006) Mumbai - ABN Amro Mutual Fund has launched a new scheme, ABN Amro Multi Manager Fund.

It is a close-ended Fund of Funds scheme and seeks to provide long term capital appreciation by investing in a portfolio of diversified equity schemes and liquid / short term / floating rate schemes of mutual funds registered with SEBI.

The fund was initially available for subscription from 21 March to 31 March 2006.

News: Pact signed to privatise Delhi/Mumbai airports

(BL 04/04/2006) New Delhi - The Government on Tuesday signed the mother agreements to handover Delhi and Mumbai airports to joint venture companies led by GMR and GVK groups.

The AAI Chief, K Ramalingam and Director Finance V D V Prasada Rao, in the presence of Civil Aviation Minister, Praful Patel and Secretary, Ajay Prasad signed the OMDAs (Operations, Maintenance and Development Agreements).

"The OMDAs and the shareholders agreements have been signed. The JV companies are in place and their Boards are meeting today," Patel said.

News: Boom in the Indian retail sector

(LA 04/04/2006) Mumbai - The retail sector in India properties is one of the prime indicators of economic health of India. The importance of retail sector can be gauged from the fact that retailing is the second largest industry in terms of number of employees and establishments in the US. Who has not heard of Wal-mart and its contribution to the US economy?

Indian retail sector belonging to India Real Estate accounts for about 9-10% of the country's GDP. It remains one of the least developed sectors in India. According to Associated Chambers of Commerce & Industry (ASSOCHAM), the estimated annual retail sales accounts for about $ 6 billion and is expected to reach $ 17 billion dollar mark by the year 2010. Historically, the Indian retail sector is dominated by sole proprietorship mostly governed by old principles of business inheritance. The perception is now changing with Indian government, under pressure from the US and other western countries, deciding to gradually increase the limit of Foreign Direct Investment (FDI) in retail sector.

The decision is fuelled by booming economy and the positive reports of leading retail assessors of the world. The favorable business environment in the country is indicated by the increased NRI investment in India since the past few years. The Non resident Indians are also putting added pressure on the government to open up the retail sector in India for the FDI as the prices of commercial property in India are already on the upswing and the ever-increasing spending power of the consumers lend positive air to the business environment in the country.

The Indians have just started to feel the malls, cineplex, multiplex culture that has revolutionized the west. All the major global players like Wal-Mart, Tesco and others are keen to enter the Indian retail market with a bang. A T Kearney has ranked India 5th out of 30 most attractive retail markets in terms of investment.

It is being estimated that if the government timely adopts the favorable policies, then by 2009 the retail industry will start appreciating by the rate of 25-30 % per year. Further, millions of jobs are expected to be generated by the retail sector. Integrated retailing (retail-cum-entertainment) – a sub-division of retailing – is already booming in tier cities of India. And with the liberalized policy of FDI in retail sector, the things can only get better.

News: Canon set to rev up its retail landscape

(DQC 04/04/2006) New Delhi - It recently inaugurated its first Canon Experience showroom in a Gurgaon shopping mall and hopes to have 12 such showrooms in all the metros.

Buoyed by the success of the retail segment in the country, Canon India is embarking on a strategy to further enhance its focus towards this segment. Billing this initiative as 'Canon Experience', it will soon have its exclusive showrooms in all the bustling metros.

“The retail segment is doing pretty well for us. We already have our focus towards this segment in terms of our DigiClick Zones for cameras and IT imaging zones for printers. Now we are trying to create exclusive Canon showrooms in the form of 'Canon Experience'. We would be targeting places like shopping malls, and here all our products will be showcased,” said Alok Bharadwaj, VP, Canon India.

Canon has recently inaugurated its first Canon Experience showroom in a Gurgaon shopping mall and hopes to have 12 such showrooms in all the metros. Keeping its focus towards the camera and printer segments, presently, the company has 28 DigiClick Zones and 140 IT imaging Zones within India.

“Retail is very important to us. These are the places where an end-customer can walk in and get a feel of our products and offerings. We are planning to increase the number of DigiClick Zones to 100 and IT Imaging Zones to 300 by the end of this year,” he added.

With an employee strength of 440, Canon India generated revenue of Rs 306 crore in 2005 and this fiscal it is targeting the Rs 400 crore in revenues.

News: DLF wants Hilton for hotel foray

(BS 04/04/2006) New Delhi - The DLF group, India’s largest real estate developer, is learnt to be in talks with Hilton International for a foray into the hospitality sector. DLF had acquired a 1.24-acre hotel site for Rs 97 crore in the Rohini district centre from the Delhi Development Authority last month.

Sources close to the development told Business Standard that the talks with Hilton were centered around setting up business hotels at various locations across the country.

DLF may also foray into the luxury and budget hotel categories, but that is planned for a later stage. The sources said the talks could culminate in an agreement shortly.

When contacted, a DLF spokesperson said, “We are open to exploring new ventures in the area of speciality projects, including the hospitality sector. As of now, there is nothing in the pipeline to confirm or discuss.”

Company sources confirmed the Rohini land acquisition through a group entity, Breeze Construction. DLF is permitted to have a maximum built-up area of 20,516 sq metres at the site and given the location, it is likely to be a business hotel.

Unlisted DLF, promoted by KP Singh (ranked 114th in the recent Forbes list of billionaires with a net worth of $5 billion), has construction activity spread over 100 million sq ft in a dozen cities. It has lined up development plans for over 1,000 acres every year.

The group has extended its business from building houses to building shopping malls and multiplexes. Hotels seem to be the next logical extension. The unprecedented “boom” in inbound tourism as well as business travel has led to an acute shortage of rooms, with hotels all over the country reporting highest ever occupancy rates.

Another hint of DLF’s hospitality plans comes from its recent moves on the special economic zone (SEZ) front. DLF has planned SEZs in Punjab, Haryana and other states for multi-purpose industries. It is obvious that SEZs will need hotels and other related facilities. That need neatly dovetails with the company’s expansion into the hospitality sector.

For instance, in Amritsar, DLF has plans for a 1,100-acre, multi-sector zone for textiles, food processing and engineering. In Ludhiana, it has planned a multi-product zone spanning 2,500 acres.

In Gurgaon, DLF is planning projects in phases which may cover a total of 10,000 acres at a projected investment of well over Rs 1,000 crore.

At Hyderabad, it is investing Rs 662 crore for a 30-acre zone for information technology and related services. It also has plans for SEZs in Kolkata (25 acres), Pune (60 acre) and Chennai (38 acre).

News: Forget Gandhi; give me Chanel

(AP 03/04/2006) New Delhi - Its sleek contours are ringed by etched filigree. Its design was inspired by the architecture of ancient Greece. Handmade in Italy, it is available in only a handful of high-end boutiques and costs more than many Indians earn in a year.

It's a ballpoint pen.

Or it is unless you happen to be the guy selling it.

"What we are using here is not a pen. It is a jewel ... a masterpiece," said Juzar Zaveri, the sales manager overseeing the Indian launch of OMAS pens. Then he paused, struggling to find the right level of hyperbole: "It is a jewel of a masterpiece!"

In a country long known for its poverty, a tiny pocket of immense wealth is growing, lifted by a booming economy and lusting for brand-name luxury goods. For this subclass, consumption is nothing if it's not conspicuous.

So the sellers are coming, many in just the past few months: Louis Vuitton, Dior, Chanel and Bulgari have all opened boutiques. You can now buy a Rolls-Royce Phantom for about $790,000 or a Porsche 911 Cabriolet for $170,000.

There are magazines telling the rich how to spend their money (colon cleansing at an elite Bombay clinic, one glossy recently suggested) and news conferences to unveil designer wear ("The color nude is all you need to know this season," Dior representative Kalyani Chawla told reporters). There's even help for the staff, with Rolls-Royce reportedly flying a representative to India to help train chauffeurs.

More than 40 percent of India, a country of more than a billion people, live on less than $1 a day, many without electricity or running water. But this country also has an economy growing at nearly 8 percent, fed by its importance as an international center for outsourcing and high technology. As import restrictions have loosened in the past couple of years, the trickle of foreign luxury goods has become a torrent -- aimed directly at the appetites of the new spending class.

"Now it's not Mahatma Gandhi who is important, it's Coco Chanel," said Suhel Seth, one of India's best-known marketing executives.

"Today we have multiplexes, we have malls, we have restaurants," said Seth, who navigates the country's clogged streets in a Porsche Boxster. "In all these places you want to be seen wearing the right badge ... and that badge is the Dior, the Chanel, the Louis Vuitton."

Times, very clearly, have changed.

When India achieved independence from Britain in 1947, everyone was expected to pay public fealty to the example of Mohandas Gandhi, the "Mahatma" or "Great Soul," who made his own clothes, ate only sparingly and always traveled third-class. For a time, homespun cloth was a gesture of ostentatious denial in wealthy Indian circles. Even India's royalty -- the network of maharajas and nawabs who became famous for their profligacy during colonial rule -- had to tone things down.

Tikka Shatrujit Singh remembers those days with a shudder.

"We had to hide our Rolls-Royces and drive around in half-moth-eaten vehicles," said Singh, a society fixture whose father was the maharaja of Kapurthala, a former north Indian princely state. His grandmother, he said, was particularly enamored of Gandhi's example, and made sure the rest of the family complied. "You sort of were ashamed of being wealthy," said Singh, who is now an adviser to Louis Vuitton.

In those days, class was most often determined by education or job status, and star university graduates became government officials, writers and professors.

With the new money, though, comes a redefinition of class.

Those jobs still have prestige, but it's the investment bankers, real estate developers and software magnates who can navigate the world of $450 OMAS pens and $1,000 Dior purses.

And the truly rich remain a very small crowd -- about one-thirtieth of one percent of the population, according to India's National Council of Applied Economic Research. That's about 50,000 households with annual incomes above $225,000.

While still a minuscule percentage, however, it's more than twice as many as five years ago, and the number is expected to double again by 2010.

The nouveaux riches are a reflection of an economy that has changed dramatically since socialism was abandoned for economic liberalization in the early 1990s.

Some made fortunes in real estate, others in the stock market. Some have moved home after years spent working in the United States or Britain. Top business school graduates now receive pay packages that rival salaries in New York or London.

But to some Indians, these people reflect a skewed vision of a country struggling with profound social problems, where the rise of the rich has simply widened the already vast gap between the wealthy and the poor.

"A hyper-inequality is being imposed on already high levels of inequality," said P. Sainath, a journalist who has spent much of his career writing about rural poverty.

High-tech cities like Bangalore, filled with free-spending young people and crowded bars, have become the new clichŽ of India, but much of the country remains cut off from modernity.

According to government statistics, barely half of rural Indian homes have electric lights and only four percent have refrigerators. Hundreds of debt-burdened farmers have committed suicide in south India over the past four years, crippling water shortages are increasingly widespread and the schooling system barely functions in some states.

News: ‘Enter retail, revisit airports’

(IE 03/04/2006) Mumbai - The retail fever is fast catching up. Even before the noise created by Mukesh Ambani’s high-profile recruitment for his retailing venture died down, another tycoon appears to have been hit by the retail bug. This time round it is telecom baron Sunil Bharti Mittal. Industry sources claim that Mittal is already in talks with global retailers Wal-Mart and Tesco to plot his maiden entry into the sector. They further add that the tycoon is in talks with the latter for a œ750-million joint venture to launch a supermarket chain in the country. Mittal refuses to share any details about the project at the moment. He however maintains that contrary to general perception, his ‘retail link’ is not entirely new as his agri products company Fieldfresh Foods (Bharti’s joint venture with El Rothschild Group) is already supplying produce to Tesco. The tycoon should be well aware that supplying to an international retail chain and running a retail chain could be entirely different ball games. It’s quite apparent now that Mittal is not one to remain content with the ‘telecom czar’ tag. Only a year back he had made a high-profile entry into the airport privatization space, which subsequently was aborted following the withdrawal of his foreign partner Changi. But Mittal is again bracing up for the airport modernization arena. He is waiting for Government’s decision on invitation of bids for the modernization of Kolkata and Chennai airport. But having burnt his fingers once, the tycoon of course will be treading cautiously this time round but the word is he aims to be there.

Embracing Embraer

M. Thiagarajan’s Paramount Airways is not just another low-cost airline though it was born at a time when ‘budget lines’ are calling the shots. To distinguish his offering from his competitors, the tycoon has opted not only for a completely different revenue model but a different kind of aircraft as well - Embraer. Thiagarajan was the first to bring the Brazilian aircraft maker to India and is now looking to add at least 20 more of them during the next two years. But realizing that the 70-90 seater Embraer 170/175s restrict his revenue earning potential, the tycoon this time round is considering adding the new Embraer 195s to his fleet that can carry 108-118 passengers. But the tycoon is yet to decide as to how many of the new acquisitions are going to be Embraer195s. Aviation observers believe Thiagarajan’s talks with the Brazilian aircraft manufacturer is at an advance stage. Interestingly Boeing executives have also made a presentation to him to sell their new varieties. But Thiagarajan is unlikely to go for the large Boeings, as they don’t suit his current revenue model. Thiagarajan plans to induct 10 Embraers by the end of 2006 and is likely to double his fleet by the end of next year. Despite his ambitious fleet expansion plans, the tycoon is intent on remaining focused on South India only for sometime now. For he knows it wont be prudent to think national yet, even with a lean mean fleet.

News: High on fashion, low on pocket

(TH 03/04/2006) New Delhi - "Price is Sweet" is an organisation that was set up with the aim of bringing in international fashion brands to India at promotional prices. Prada, one of the biggest names in the fashion industry from Italy, is the first to be showcased here in the Capital on April 10, 11 and 12.

At a time when India is witnessing the launch of some of the leading brands of the world, "Price is Sweet" stands out in the retail market by its unique combination of low price for a high end product and it will bring in a wide range covering different seasons.

It plans to bring in the coming year other prestigious brands such as Dolce and Gabana, La Pearla, Juicy Couture and Versace and bring to the Indian consumers the latest trends, fashion at a price like never before.

News: ‘Organised retail will change the face of India’

(HT 03/04/2006) New Delhi - Retail is clearly the next big battlefield and Bharti Airtel chairman Sunil Mittal is positioning himself on the springboard to be the early bird to catch the worm. With large industrial groups jockeying for elbow room in the retail sector, Mittal has zeroed in on food and farm produce as his business model. With cash and carry allowed in retail, Bharti's holding company will invest 100 per cent to rig up the new entity. The project is on his table presently and, as he told Sandeep Bamzai and M Rajendran, “this flame is drawing moths. Organised retail will be the next big play and the good news is that it is scalable like telecom.” Excerpts:

Why is always there so much talk about your position in telecom. That you will exit sooner than later...

We are in the final lap of telecom. Restructuring has received a lot of traction and it has now stabilised under the single unified command of Manoj Kohli. The restructuring of the corporate office is on my table and even as it gets my attention, I am releasing time to concentrate of retail, agriculture and insurance. Already I am traveling a lot, as I focus on northern Indian towns like Jaipur, Chandigarh and their surrounding areas for both retail and agri operations. I think the model that both the Tatas and Aditya Birla Group have evolved is something that will work for us as well - several business lines under the group's umbrella.

I don't see SingTel or Vodafone increasing their stake. Look at our positioning, we have an Asian powerhouse and a global behemoth, this gives us the benefit of both the worlds.

Airtel is now a household name. All the international forays will be done outside Bharti Airtel. When these guys took a position, they knew that this company is not for sale. At the same time, we are creating value for them, I don't see either one of them exiting.

It appears that you want to be a serial entrepreneur...

In many ways, the execution of tele com is behind me, now the new areas fascinate me. At the same time, I want to reiterate that we are not exiting from the telecom business at any stage. I like to sit down personally and look at the next levels of competence. That’s the only way to capture the feel of the organisation.

It also means that we can release more energy for other business. In the telecom space, what is on the anvil, domestically it is pretty much covered, isn’t it?

We are looking at small and medium sized telecom companies in emerging markets in Africa and, hopefully, this financial year we should grab some international ventures. One licence that we will get soon is for Jersey. It will purely be a Bharti Enterprise venture, led by us. Going in for acquisitions with partners slows you down. There is nothing on the table immediately, but we are watching a couple of things closely.

But do you plan to offload additional equity in BTVL?

We have raised a large amount of cash through the Vodafone deal and there is no need to divest more stake. Control in telecom will not be compro mised. It is reflected in the 46 per cent control we have in telecom through our holding company.

Fieldfresh is your farm produce venture and you have indicated that retail will take up your time, so how will it work out?

Agriculture and retail will be driven by us. Even as one awaits regulatory clearances, the development of contract farming will be vital. Our partners in insurance - Axa - have the necessary domain knowledge, so that it not an issue. The agri-retail operation for starters will have to be a northern Indian play. Food, grocery and farm produce are all connected in a manner. The model is a mini-Tesco. At the same time, I must add that everyone has jumped the gun. We are still in the planning stage, it will take three to four months. Yes, we are in an exploratory dialogue with Carrefour, Wal-Mart and Tesco. To me, it seems that the cash and carry model will be the way forward. Our point of presence will be the neighbourhood markets. Bharti will put in 100 per cent and the business will be capital intensive. As it grows it will be pan Indian.

Would it be on lines of Tesco or the Marks and Spencer’s food store model? Will Tesco be your partner for the retail venture?

Not exactly, because Tesco sells many more things like TV, bicycle, computers. Our thrust will be only food and grocery. So it will be a mini Tesco model. With Tesco we have been discussing to sell our fresh produce.

You sound very committed to this new business line?

I am extremely passionate about both agri and retail. It is the next big opportunity, believe me. Many summers ago, it was telecom and, fortunately, I was there. Now the train is back at the station and I once again have an opportunity to hop onto it. Look around you, organised retail will change the face of this country. All the big business houses are venturing into retail.

How are you dividing your time?

Currently, 50 per cent of my time is on telecom and 30 per cent is on travelling, speaking at various fora, participation in seminars and 20 per cent on the new businesses. Going forward, it could be 25 per cent in telecom and 75 per cent on other businesses.

Interview: Nimesh Kampani - Chairman JM Morgan Stanley

(Rediff 03/04/2006) Mumbai - It will not be an exaggeration to say that Nimesh Kampani, Chairman, JM Morgan Stanley, knows the Bombay Stock Exchange like the back of his hand. His father Nagindas and uncle Jamnadas Morarjee were names to reckon with at the BSE, but Kampani -- the ace merchant banker -- surprises us saying that he has never speculated in the market. That, however, has not stopped him from carrying forward a rich legacy.

One of the key players in making the BSE the engine of growth for the new Indian economy, Kampani has attained fame over the years for making possible mega acquisitions and mergers. He has come to be known as one of India's foremost votaries of liberalisation.

Kampani was one of the leaders who propelled the stock exchange boom in early 1980s when Reliance Industries founder and visionary Dhirubhai Ambani entered the world of equities.

Nimeshbhai, as he is popularly known, is media-shy and a man of few words. For a change, however, he agrees to a rare and exclusive interview with Managing Editor (National Affairs) Sheela Bhatt over dinner in New Delhi and talks about what can bring about changes in India and about the do's and don'ts of investing in the stock market.

The second of a three-part interview:

Part I: 'India has arrived'

The world is saying India will grow, India will become a big power. What are the hidden risk factors in this hype?

There is too much liquidity across the globe. Rich people all around have so much cash in hand that they are looking for markets that are growing. How many places in the world are registering growth? Europe doesn't have much of it. Only Asia is attractive.

The US is showing one to three per cent growth in most sectors. The US economy is developed. People there have cash in hand to spend. People in the US want to consume using credit cards.

Our risk factor lies in liquidity. Too much liquidity of those consumer economies is chasing Indian stocks. Because there is an absence of growth in their domestic markets. Their money is welcomed in India but the risk of withdrawal comes along with that.

If withdrawal of money happens it can very well bust Indian stocks.

In the last five years, $45 billion investment has come to the Indian markets from foreign institutional investors. Today, the market value of their money should be around $120 billion. Who will buy when they will rush in to sell?

Right now, one lot is selling and the other lot is buying. Those who bought shares at much lower price of say, Rs 80 are selling at Rs 800 and booking profit. The newcomers, on the other hand, are buying at Rs 800 with confidence in market. The new buyers will like to wait for the next five years for the stock prices to go further up.

We know Japan has invested $5 billion in the Indian market. Much of it is retail money. These days, as soon as new public issue opens, it gets filled up within the first few hours.

Why is it so?

Because Japan has saved money for years. Investors there get zero or negligible interest. At some places, bank charges them for keeping deposits. In our banks, on the contrary, we get four per cent, at least. The Japanese are tired of dead investment. So they are looking out.

In the last one year, the Japanese have got return of 48 per cent in the Indian stock exchange. They had started with $1 billion. Now it has reached $5 billion. Nomura Securities and others invested in it. They take index stocks. When an investor does not know the country well, he tends to buy index shares only.

The Japanese and the Koreans have invested. Recently I met 30 parliamentarians from Denmark. I made a presentation to them on India's future. Thereafter, two of them came and talked about investing in Indian stocks.

What can go wrong in realising your dreams of India?

Politics. If something happens to this government and there is instability at the Centre, it can affect our growth.

In 2004, between May 13 and 18, the stock index plunged when Sonia Gandhi delayed her decision to announce (Dr Manmohan) Singh's name as the prime minister. The market picked up only when the announcement was made.

The investor does not like political uncertainty. They are afraid of power in the hands of Left parties or the so-called Third Front because all they want is a stable government. These days people say Dr Singh is the weakest prime minister but the stock market does not think so. Dr Singh may be weak politically but he is the best prime minister as far as the country's economy is concerned.

The prime minister along with Finance Minister P Chidambaram, Commerce and Industry Minister Kamal Nath and Deputy Chairman of Planning Commission Montek Singh Ahluwalia are too good for Indian markets.

China has not grown with the help of FII investment. Your comment.

Yes. China has grown with the help of bank money, or people's money. China has got four prime banks owned by the government. These banks' non-performing assets is approximately above 30 per cent. Can you imagine about Rs 6 lakh crore (Rs 6 trillion) is disappearing from the total deposits of Indian people kept in the Indian banks?

Indian banks have deposits worth around Rs 20 lakh crore (Rs 20 trillion).

Chinese banks have more than what Indian banks have. Out of that money, 30 per cent has vanished. Its savings rate is around 40 per cent. The question is: Where has people's money gone? It has gone into building infrastructure. They have issued loans to whoever came to the bank. To build infrastructure, they were fast to disburse money. Now, they are writing off those loans. In India, bad debts of banking industry stands at a meagre 1.75 per cent.

China went ahead full steam without taking care of the accounting and financial niceties. India is a democratic country. Here, journalists and Parliament would ask questions about fiscal management. About 30 per cent of bad debts won't be allowed.

A friend of mine was in China recently. He was travelling along a road lined with houses on both sides. After 15 days, when he returned along the same road, he saw those homes had disappeared and a bigger road was being built. That is China. There the government can evacuate you in no time.

Many of us feel the Sensex boom helps only a few people. Indian slums are growing as ever.

Slums will not go away in the next two decades. You need wealth to distribute it. We need to create wealth in private hands. In China, government created wealth. In India, we are following a different route. The Indian process will be a slow one.

Recently we at Morgan Stanley, handled the issue of China Construction Bank. It is the first government-owned bank in China to go public. It was heavily subscribed. Meaning, China is now adopting discipline in fiscal management.

Recently, China collected around $8 billion from the US and Hong Kong and other places and wrote off old bad debts. Now, it has begun repairing its balancesheet.

Therefore, we need huge investment in infrastructure before we can even think of removing slums. We cannot tackle poverty until we raise money to finance infrastructure. I always believe that more roads, more construction and development of tourism are sure-shot ways to create huge employment.

Do you find deficit financing a big issue for Indian fiscal management?

I don't think it's an issue. India's deficit is under control. The problem lies with the states and not with the Centre. India's combined deficit is 10 per cent. States should improve financial management. Gujarat and Tamil Nadu are the best managed states as the governments there are excellent in financial management. They are developing their states' resources impressively.

If you are asked to take one creative decision as finance minister, what will that be?

I will go to Parliament and ask for permission to create fiscal deficit. I want to spend $50 billion on infrastructure! Here deficit financing is justified because I am not spending on people. Rather, I am creating assets. People will get employment and that should justify deficit planning. You need political guts and courage to do it.

Planners would fear that if tax does not rise, inflation will increase and savings would pump in more money. This, in turn, will increase liquidity. But all depends on the management of spending on infrastructure.

Spending on infrastructure will increase internal mobility of our people. I feel tourism and infrastructure are the areas where the Indian government should be involved. All other areas can be developed with private money.

Does India need more foreign direct investment?

India doesn't need FDI. To get FDI, you have to install infrastructure first. China is getting 10 times more FDI than India because they have invested in roads and bridges and airports.

Why do you say India doesn't need FDI?

You need infrastructure to manage incoming FDI. You need clear policy.

FDI is not needed in India because we are getting more money from the FIIs. We are getting around $12 billion from them.

They are buying in secondary markets and that money gets into the Indian economy. While India gets around FDI worth $5 billion, China gets around $50 billion. They don't have our types of stockmarkets. So FIIs are absent there. In India, when FIIs pump in $12 billion, it means a few Indians have sold their shares to them (the FIIs), so that free cash gets invested somewhere within India by Indians.

That money goes into land, buying of new stocks and into banks.

The fundamentals of money are that it goes where it gets sound returns. Therefore, if you keep up our policies and make them fair, India should not worry which way it gets money. Mittal Steel, Reliance, Tata, Vedanta and other Indian companies are going to invest more than Rs 2 lakh crore (Rs 2 trillion) in the coming years.

FDI is not a big issue because Indians are in now a position to raise big money and invest in India. The government should see that people get returns.

News: International buyers come shopping at Lakme Fashion Week

(UNI 03/04/2006) Mumbai - Over 40 key international buyers along with nearly 150 domestic buyers visited the Lakme Fashion Week.

Among the international buyers were Lord and Taylor, Tracey Ross, Harvey Nicholas, Browns, Studio Saks and C K Tang Ltd, while the domestic buyers were ensemble, Kimaya, Aza, Fuel, Shoppers Stop, Ebony and Amara among others.

''The clothes are not in tune with the look, otherwise I would buy them,'' said a representative of Studio Saks while talking to media persons here on Sunday.

''I am going home with some money which is sad because buyers love to shop,'' he added.

Sangeeta from Milange said, ''The international market works very differently compared to national market. Relationships need to be built and strengthened. We need to learn the ethics of business and put our best foot forward. We have just taken a baby step. We should have a government body to regulate this.''

A Lord and Taylor representative said, ''India is very much in the limelight. It is the flavour of the month. Other countries are looking at you. But you must walk before you run. It has been an exciting week but there is a lot to learn from this Lakme Fashion Week, which concluded here Saturday.

A representative from Browns said, ''We are looking for new talent, a designer with a total package. She can be Indian, western or crossover. Everybody is asking why have we come here. I have liked a shirt here or a skirt there. Here we do not do the buying the retail stores do.''

He further said, ''The designers should know everything from sizing to fibre. For instance, if we like a product and ask for 4,000 units the designers will die. The product needs to be shipped. That is why we need agents all around the world. It is a huge business.''

''We do not bargain. We insist on quality. We get the same price as Milan or Paris. Sabyasachi has delivered to us twice and that speaks for itself,'' he explained.

They concluded by saying, ''it takes time to build bonds. It takes years for stores to invest and buy. The relationship cannot be built by a 15-minute walk on the ramp. India’s future is extraordinary and you are making an impact on the world. You have talent. Nurture it. From what we see there are two markets. One is national which is satisfying and the other is international which has a lot of potential.''

''With globalisation, we see a lot of young talent in India like Rahul Mishra. Invest in him. Encourage him. The fashion industry is very young with a lot of potential. You come up with the goods, we will come up with the money. It is that simple,'' they added.

News: International buyers come shopping at Lakme Fashion Week

(UNI 03/04/2006) Mumbai - Over 40 key international buyers along with nearly 150 domestic buyers visited the Lakme Fashion Week.

Among the international buyers were Lord and Taylor, Tracey Ross, Harvey Nicholas, Browns, Studio Saks and C K Tang Ltd, while the domestic buyers were ensemble, Kimaya, Aza, Fuel, Shoppers Stop, Ebony and Amara among others.

''The clothes are not in tune with the look, otherwise I would buy them,'' said a representative of Studio Saks while talking to media persons here on Sunday.

''I am going home with some money which is sad because buyers love to shop,'' he added.

Sangeeta from Milange said, ''The international market works very differently compared to national market. Relationships need to be built and strengthened. We need to learn the ethics of business and put our best foot forward. We have just taken a baby step. We should have a government body to regulate this.''

A Lord and Taylor representative said, ''India is very much in the limelight. It is the flavour of the month. Other countries are looking at you. But you must walk before you run. It has been an exciting week but there is a lot to learn from this Lakme Fashion Week, which concluded here Saturday.

A representative from Browns said, ''We are looking for new talent, a designer with a total package. She can be Indian, western or crossover. Everybody is asking why have we come here. I have liked a shirt here or a skirt there. Here we do not do the buying the retail stores do.''

He further said, ''The designers should know everything from sizing to fibre. For instance, if we like a product and ask for 4,000 units the designers will die. The product needs to be shipped. That is why we need agents all around the world. It is a huge business.''

''We do not bargain. We insist on quality. We get the same price as Milan or Paris. Sabyasachi has delivered to us twice and that speaks for itself,'' he explained.

They concluded by saying, ''it takes time to build bonds. It takes years for stores to invest and buy. The relationship cannot be built by a 15-minute walk on the ramp. India’s future is extraordinary and you are making an impact on the world. You have talent. Nurture it. From what we see there are two markets. One is national which is satisfying and the other is international which has a lot of potential.''

''With globalisation, we see a lot of young talent in India like Rahul Mishra. Invest in him. Encourage him. The fashion industry is very young with a lot of potential. You come up with the goods, we will come up with the money. It is that simple,'' they added.

News: India's Lust for Luxe

(TA 03/04/2006) New Delhi - India's nouveaux riches are spending like never before, and high-end retailers from Hermès to Tiffany are eager to oblige.

New Delhi entrepreneur Natasha Chaudhri chases after expensive fashion products like a big-game hunter in pursuit of wildlife pelts. Owner of three restaurants in Bombay and Goa, two lifestyle stores in Delhi and an export business, Chaudhri, 30, has the money, if not necessarily the time, to go on shopping safari, and her closet is full of trophies: Louis Vuitton, Prada and Chanel handbags; sunglasses by Bulgari and Gucci; countless designer outfits; shoes by Sergio Rossi, Tod's and Jimmy Choo. These days, she doesn't have to go overseas to indulge. Jimmy Choo, for example, just announced plans to open its first outlet in India, much to Chaudhri's delight. "I think it is fabulous," she says, "because India has become a great luxury goods market." Upscale Indians "are super-trendy," adds Chaudhri. "We love brands."

And brands love India. Jimmy Choo and Gucci are just the latest makers of luxury goods to target India as the next hot growth market, joining Hermès, Christian Dior, Louis Vuitton, Cartier, Piaget, Tiffany, Moschino and others. Last October, Chanel launched its brand by organizing an exhibition and haute couture extravaganza in New Delhi's tony Imperial Hotel with models flown in from Paris. That same month, Swatch Group introduced its Breguet watches (average price: $30,000) to India, which it hails as one of the world's most enticing growth markets. In January, the Indian government gave upscale retailers a further boost by allowing foreign companies to own a controlling interest of 51% in joint ventures operating "single-brand" stores. Although multinational chains like Wal-Mart and Tesco remain effectively barred from India, the move is expected to make the country more appealing to retailers like Nike and Cartier that sell their brands in exclusive outlets. "I am very, very optimistic about India," says Xavier Bertrand, India general manager for Chanel.

Not long ago, few high-end merchants had any interest in the country, put off by its pervasive poverty and an unsophisticated retailing environment populated mainly by small, independent shops. The handful of luxury brands operating in India did so quietly, selling mainly from boutiques located in five-star hotels. There was virtually no other option. India's major cities lack high streets, which elsewhere provide symbiotic clusters of posh retailers. While India is in the midst of a mall-building boom, there are very few upscale shopping centers in which companies can showcase their luxury products alongside those of similarly chic retail neighbors. India even has a shortage of major department stores. The country's leading domestic chain, Pantaloon, has fewer than 100 outlets. Given such conditions, "our marketing plan for Hangzhou or Dalian [two mid-sized Chinese cities] is bigger than for all of India put together," says Ravi Thakran, South Asia group director for LVMH, owner of 50 top-end brands such as Louis Vuitton, Fendi, Moët & Chandon and Givenchy.

What's changing, of course, is India's demographic makeup as the nation's booming economy mints a critical mass of newly affluent consumers. Last year, the average Indian salary surged 14% (18% for IT professionals), the highest wage growth in Asia, according to a study by Hewitt Associates, a global human-resources company. There are now about 1.6 million Indian households that spend an average of $9,000 a year on luxury goods, according to The Knowledge Company, a management-consulting firm in New Delhi. "With multi-income families and increasing international exposure through travel and the Internet, the attitude is changing from the traditional [emphasis on] savings to a spending approach," says Thakran of LVMH. "The expense basket is shifting from necessity to lifestyle products." Younger Indians from wealthier families increasingly match—and even eclipse—the purchasing power of their European and American counterparts, says Priya Sunder, director of PeakAlpha, a Bangalore-based financial-planning company that advises IT professionals on their investments. "Most of their disposable income goes towards buying luxury products, be it a Chanel lipstick, Fendi belt or Hermès scarf."

Foreign brands that got in early have made rapid progress. Upscale watchmaker Tag Heuer, which has averaged 40% growth in India over the last three years, has plans to expand from 80 shops to 120 in 2006; and Jimmy Choo is looking to open 10 shoe stores in India by 2011. The first will launch in New Delhi at the end of 2007, under the terms of a distribution agreement with the New York-based Murjani Group, which also distributes the Tommy Hilfiger brand in India. It helps that more retailing locations are becoming available. Two luxury malls are being planned in Delhi, and hundreds of others are in various stages of construction and planning throughout his country. Chanel's Bertrand says the company is in talks about distributing its shoes in top retail chains like Shopper's Stop, Lifestyle, and Ebony.

Still, many luxury-goods retailers predict that their India business will develop relatively slowly compared with their business in other emerging markets such as China. One major barrier is India's stiff tariffs on high-end imports—the tax on imported watches, for example, is 50%. Joseph Wan, Group Chief Executive for Harvey Nichols, the London-based retailer, says India's recent economic growth and indications that New Delhi is prepared to liberalize its markets are encouraging, but adds that prime real estate in Indian cities is too expensive and that tariffs are prohibitively steep. "Harvey Nichols caters to the top 3% of the population, and that 3% are very well-traveled," says Wan. "If my Dolce & Gabbana in India has to be more expensive because of import duties, how can I do any business? You just can't." For now, other emerging markets strike him as a better bet: Harvey Nichols recently opened in Hong Kong and has also set up shop in Dubai and Turkey. "India may not be ready yet, but I can start to see that it's coming. I don't know whether it's in one, two or three years, but obviously we've been watching carefully for a long time and as soon as it's ready, we'll go there."

By then, the market may already be crowded. Just before New Year's Eve, Tag Heuer hosted an all-night party for big spenders in Goa. About 400 diamond-dripping, air-kissing Indians decked out in brands like Manolo Blahnik and Balenciaga sipped champagne and sampled canapés as they watched Bollywood star Shah Rukh Khan play volleyball and emcee a bikini contest. "India cannot hide behind the fact that it is a developing country anymore," says Khan. "Every Indian now wants to own products that inspire awe and envy." Can the French sell cake to people who not long ago had to scramble for bread? Given the ambitious plans luxury brands have for India, they seem to think so.

News: 'DLF is India's largest developer'

(PTI 03/04/2006) New Delhi - Global realty consultants Jones Lang LaSalle and Colliers International have assessed DLF Universal Ltd as India's largest real estate developer.

"Based on our internal research and secondary sources we are happy to acknowledge DLF s India's real estate developer with operations in multiple cities and sector in the country," Colliers and Jones Lang LaSalle said in a communique to the DLF.

The comments of both the consultants were in reference to DLF's expansion plans in various cities in the country.

DLF, whose portfolio include over 35 million square feet of built-up area across its core business of residential, retail and commercial spaces, has development plans for over 1,000 acres year-on-year for projects across the country.

News: Sandeep Kohli to head Wal Mart India

(NDTV 03/04/2006) Mumbai - Sandeep Kohli, who set up Pizza Hut and KFC in India under the brand Yum Foods, is likely to take charge of Wal Mart's India operations.

He is likely to take over soon because Wal Mart has clearly chalked out its plan for stores in India and is currently scouting for land.

The company plans 12-18 stores in the first 18 months through a local supplier partnership.

These stores at 140,000 sq ft will be smaller in size than the 200,000 sq ft Wal Mart super centres worldwide.

What's also speeding up Wal Mart's plans is the fear that Reliance's retail stores will soon open up. Mukesh Ambani has bagged top talent for his retail plans by making offers people can't refuse.

Changing course

P Jagannath of Target who used to head India sourcing for the American giant has changed course and is now headed for Reliance.

High profile exits are a part of and parcel of India's retail boom but as expansion continues some of the country's upcoming small and listed players could see a setback in their planning.

With attrition rates getting close to 40 per cent, they are now planning strong loyalty programmes.

What's clear is that to create three lakh jobs for a market that is worth $20 billion some permanent solution will soon have to be found to train and retain employees.

News: Escorts eyes entry in 7 countries

(ACERC 03/04/2006) New Delhi - Betting big on Africa for its tractor exports growth, Escorts Ltd is looking for joint ventures in new markets in the continent where it has set a target of selling about 2,000 units this year.

Plans are in the pipeline to enter seven new countries in Africa to sell our tractors, some of which should materialise during this year. The company was looking for partnership, mainly in the form of a joint venture, for marketing and distribution.

The company looking in arrangements where the local partner puts in the majority of investment while it provides product and technical support system. Usually, Escorts appoint one distributor partner in a particular country and all the dealers there are catered through that distributor.

The company, which is already present in nine countries of the African continent through exports of completely built units (CBU), is eyeing to sell about 2,000 units this year. Already, Escorts is in the last leg of despatching 1000 units to Ghana, which is one of the biggest order we have got so far from the continent, the company had also sold about 400 units, which are in the 40-75 horse power range, in Senegal.

The company was looking at an overall revenue of around Rs 250-300 crore this year from its overseas exports. The company markets its tractors in the US, Sri Lanka, Bangladesh and Europe apart from the African continent.

News: India to woo over Rs 1,00,000 cr FII investments

(ACERC 03/04/2006) Mumbai - Even after investing over Rs 2,00,000 crore in the Indian markets so far, foreign institutional investors' (FIIs) appetite for Indian paper seems to be growing.

According to leading analysts, India has the potential to attract over Rs 1,00,000 crore FII investments this year. Market players say the reason is simple: India is currently the only economy in the world where annual growth is envisaged at over 8 per cent. According to GDP growth projections for 2006-07 by CLSA Asia Pacific Markets, China's GDP is expected to grow by 3-5 per cent, Hong Kong 4.3 per cent, Singapore 4.6 per cent, Indonesia 3.5 per cent and Malaysia 1 per cent.

Infrastructure is seen as the key contributor to the India story. FIIs expect fast-track infrastructure development in India over the next five to ten years. The comprehensive maritime policy has proposed an investment of $1 trillion, and investments worth Rs 70,000 crore are in the pipeline for irrigation, railways, water and waste management projects. Another Rs 65,000 crore will be invested in metro projects, flyovers and national highways.

The Bharat Nirman Yojana proposes to spend Rs 1,70,000 crore on electricity, irrigation, drinking water, rural housing and rural road connectivity. The National Urban Renewal Mission has proposed Rs 1,00,000 crore development plans for cities and villages. Urban development, including transport systems for all major cities, airport improvement, water and sanitary systems, will require a spend of around Rs 35,000 crore.

News: BBC eyes JV for Hindi, Urdu channels in India

(BL 03/04/2006) Colombo - The British Broadcasting Corporation (BBC) on Monday said that it was looking for possible joint ventures for their Hindi and Urdu news channels in India.

"We are launching a 24-hour news channel in Arabic next year and we are looking at TV services in Hindi and Urdu. They will be joint ventures," Michel Lobelle, Business Development Manager, BBC World Services said here.

The expansion of television saw a slight dip in radio listenership in India but it is on the rise again with more people tuning into radios, he said.

The BBC also announced its re-broadcasting deal with Sri Lanka's state-run SLBC radio.

SLBC radio will re-broadcast nine hours of BBC programmes under the new deal, Lobelle said adding that the deal provides an opportunity for the Sri Lankans to easily access BBC programmes through a network of FM channels.

News: 'India Inc outshines foreign firms in M&A'

(FE 03/04/2006) New Delhi - With 35 outbound deals, Indian companies have outshone their foreign counterparts when it comes to acquiring companies overseas, an Assocham study has said.

The first three months of 2006 saw 133 merger and acquisition (M&A) deals in sectors like IT and ITeS, banking and financial services, automobiles, pharmaceuticals, fast-moving consumer goods (FMCG) and media, the Assocham Eco Pulse study said.

The foreign companies, however, were ahead of the Indian companies as far as acquiring minority stake in companies was concerned.

Out of the 30 inbound M&A deals, only seven involved a majority stake in the domestic firms by overseas entities, whereas out of the 35 transactions overseas, Indians acquired 100% stake in as many as 32.

“Financial services, pharmaceutical and manufacturing sectors like auto components are likely to see continued high levels of M&A activity with international interest in India as an outsourcing base as well as growth in the domestic market,” Assocham president Anil K Agarwal said.

The sectoral breakup revealed that IT and ITeS sector led the list with 20% of total M&As and pharmaceutical sector was next with 14%, closely followed by banking and financial sector with 12%.

Others in the list included automobile sector (10%), textiles (5%), telecom and media (both 7%).

The IT and ITeS sector had the highest share in terms of total M&A operations during the period. Of a total of 131 deals, 27 were from the

IT sector, out of which nine were outbound.

The Indian pharma sector is likely to touch $30 billion mark by 2010 due to increased outsourcing and a large number of drugs going off-patent.

Merger and consolidation in this sector are driven by the growing research and development capacities. The banking and financial services sector saw a total of 17 deals. Domestic M&A activity has picked up in the Indian banking sector this year.

News: Tribe of Indian CXO crorepatis grows

(TNN 03/04/2006) Hyderabad - There was a time, not very far back, when an annual salary of Rs 1 crore was unheard of and hence graced many a headline. Quite obviously, it is not such a rare phenomena today with the economy stepping on the gas, the Sensex breaching new barriers and corporate India pumping funds and charting mega expansion plans.

Not surprisingly, nobody grudges a fat pay packet to the CXO manning mammoth operations and chasing stretch targets. CXOs are top corporate executives who are the chiefs of their functions. Sceptics, however, fear that India would lose out on its cost arbitrage going by the unprecedented rise in salaries in some sectors. “It is like a bull entering the china shop” in sectors like retail, they say. On the other hand, optimists say that it is not management salaries alone that comprise costs. “There are ways to improve efficiency and billions of dollars worth of investment plans need an able person on the driving seat,” HR experts add.

According to wide-ranging views from HR experts, the number of CXOs earning the magical Rs 1 crore and more could be at least a few 100s to up to 5,000, depending on various parameters. While there are no precise or audited numbers available on the ‘crorepati’ CXOs, it is clear that this tribe is not so rare anymore. Amrita Nathani of Cornell International says, the basis of calculation of salaries has also changed. “Earlier , salaries were based on individual performance and targets achieved. But today, they are calculated on the basis of market potential. Salaries have doubled in many sectors,” she adds.

CXO salaries comprise several components like fixed, variable, target-linked , perks and stock options. HR experts peg the number of CXOs getting Rs 1 crore without stock options at 2,000. With salary benchmarks raised in India, there are global employees and returning Indians . Companies are not batting an eyelid to fork out $200,000 for CXOs. Companies project the huge savings potential that an Indian salary offers for those wishing to relocate to India.

Adecco Peopleone India managing director Ajit Issac feels that the upward salary spiral could prove detrimental to India’s cost advantage in the long-term . The sectors that have been called turbulent in terms of steep salary increases are retail, BPO/ITES and auto components. Ma Foi managing director K Pandiarajan says, “retail CXO salaries have seen doubling of growth. A typical CEO of a 1,000-seater BPO could attract Rs 65 lakh plus a performance pay of 30%. IT industry has been sober. Auto ancillary has sprung a surprise in the last few years. A CEO of a 500-600 strong auto component company will draw Rs 50 lakh. The HR industry itself, marked by acquisitions, is witnessing redefinition of salaries.”

News: Realty boom helps business families land on gold mine

(TNN 03/04/2006) New Delhi - Old business families, some of which have accumulated real estate assets over generations, are unlocking the value of the land.

With assets prices shooting up to record highs, business houses are either selling estates and properties in multi-crore deals or re-developing them to tap new opportunities in retail and residential townships.

The trend is not restricted to the textile barons, who have got an exit route in Mumbai with the Supreme Court judgement allowing property sales. The list features families such as the Bajajs, Goenkas, Wadias, Bharat Rams and the Khaitans.

In some cases, groups are encashing the value of the land. In others, they are looking at developing them into malls and industrial parks.

In the North, DCM, the Vinay Bharat Ram group company, has joined hands with some Singapore-based NRI investors to set up a 3 million sq feet commercial-cum-residential complex in the heart of Delhi with a project outlay of Rs 1,800 crore. Plans are afoot to look at similar such projects in other cities where the group has land.

In the east, the RPG Group is among those sitting on large swathes of real estate. Says Sanjiv Goenka, vice-chairman of RPG Enterprises, "The idea is to convert the non-performing and under-performing assets for productive purposes.”

A few months back, the group sold some assets in its plantations business, which is under Harrisons Malayalam. This included the Rs 63-crore deal for Cheruvally Estate and the Rs 9.5-crore transaction for Nagamallay Estate.

The group is also believed to be looking at properties of other companies which have prime assets in Mumbai, Kolkata and other places either for redevelopment as malls or for a selloff.

The GP Goenka group is also is negotiating a deal for the Kalyan property of group company NRC —known as National Rayon Corporation earlier.

Another Kolkata based group, the Khaitans of Eveready, recently sold off their building complex at Guindy, near Chennai, for Rs 72 crore. The Bajajs sold their Kurla property, which housed a foundry unit of Mukand, for Rs 221 crore.

Then, there is the pack of Mumbai textile barons. This includes the Bombay Dyeing’s Wadias, who are planning to develop their properties scattered in and around the financial capital for commercial and residential projects. Ness Wadia is spearheading the initiative.

“Many old business groups are leveraging the value of their real estate assets. Some are unlocking their value to upgrade and expand their core businesses, while others are using it to enter sunrise sectors like retail, hospitality and real estate,” points out Anuj Puri, managing director of TrammellCrowMeghraj, a real estate consultant.

While old business houses are doing it with their family jewels, other companies with surplus assets are liquidating them to generate cash. These include many small and mid-sized companies in the country, including MNCs.

Stock market analysts say this is one of the other factors pushing valuations of scrips beyond limits justified by their core operations.

News: NRIs, MNCs, lenders make a cool $10bn from India

(TNN 03/04/2006) Mumbai - It’s not just FIIs who are making money out of India. What often gets overlooked is that MNCs, foreign lenders and the Indian diaspora have together earned a mindboggling $10bn from the country in ‘05. This is the highest they have earned so far out of India in a single year.

Amid spiralling growth, money flowed out as dividend on stock holdings, interest payments by India Inc and returns given by banks on foreign currency deposit.

Even after excluding $1.5bn as interest expense on the India Millennium Deposit, the return that overseas institutions and NRIs earned on their exposure to India is around $8bn — a new high.

Even in the best year, their combined earnings from India did not cross $7.3bn, according to RBI data. This is inevitable as demand for money grows, and corporates fish around for cheaper funds abroad.

The huge external commercial borrowings (ECB) by Indian firms will result in interest payments to lenders abroad.

On the other hand, decent corporate earnings in ‘04-05 led to dividend income to foreign shareholders and parent MNCs.

Under the balance of payments classification, the ‘outflow on account of return on investments’ or investment income comprises payment of interest on NRI deposits, payment of interest on loans from non-residents, payment of dividend/profit to non-resident shareholders, reinvested earnings, payment of interest on debentures, fixed deposits, government securities etc.

The RBI, however, does not give the detailed breakup of outflow under these heads. The data for past years shows that more than the dividend earned on equity investments in India — either through FDI or FII route — servicing of debt (NRI deposits and loans by foreigners) accounted for the bulk of the outflow. For instance, more than half the outflow has been on account of interest payments under this head.

The RBI data indicates that three items — interest payments on foreign currency loans, interest payment on NRI deposits and reinvested earnings by MNCs — together comprise close to 85% of such outflow with their respective shares at 43%, 20% and 25% each in ‘03-04.

For almost a decade, ECB has emerged as a popular fund raising route for Indian corporates. India Inc borrowed as much as $10bn through ECBs in ‘04.

With the government gradually liberalising the access to the ECB market, more and more companies preferred the overseas markets to the domestic banking system.

So much so that there has been regulatory concern that the route has been used to bring back money taken out in the past through irregular transactions. If the current trend is any indication, the outflow on account of ECB interest servicing will grow this year and the next.

News: 'India set to garner huge offshoring pie'

(BL 03/04/2006) Thiruvananthapuram - The banking, financial services and insurance (BFSI) vertical will continue to witness some of the largest offshore spending, and India stands to get at least 30 per cent of the $400-billion pie being thrown up for grabs by the US industry by year 2010.

Surveys have estimated that the US BFSI industry would outsource as much as 20 per cent of its cost base (amounting to $400 billion) to offshore locations over the next four years.

BFSI customers have been one of the earliest adapters of offshoring, lured by significant business and cost advantages. India would surely play a big part from a location attractiveness perspective, says Sajan Pillai, Chief Operating Officer, US Technology. The Technopark-based company is an emerging player in the BFSI vertical.

"But one needs to remember that business would be moved to various offshore locations on multiple vehicles and one of the preferred models of operations is going to be captive units servicing," he told Business Line here.

Still, there is always space for small and medium companies provided they are adequately differentiated in their value proposition. Any service provider offering a niche service offering would have an assured large market to cater, Pillai said.

BFSI is definitely attractive on account of the size and growth of opportunities. But more than the competence of Indian BPO companies, it is the readiness of clients to identify and bring in processes amenable to outsourcing that has helped the business sustain here.

The real challenge will line in how a single transaction can be completed through multiple touch points operating from multiple locations even while ensuring highest standards of service and quality.

US Technology has been providing IT services to various financial services organisations in the US ranging from a leading tax services provider to one of the biggest title insurance players, apart from large retail and corporate banks. But Pillai refused to give names citing a confidentiality clause.

The company couples "best of breed" domain consulting skills with effective technology solutions to provide better "bang for the buck." It has on its payrolls senior industry veterans who understand complex business processes with the ability to engage at very strategic level with customer and their needs.

News: Mumbai ferry alternative but not solution, say experts

(HT 03/04/2006) Mumbai - Is passenger water transport the answer to Mumbai’s traffic woes? Can the city become another Hong Kong where around 20 per cent of the traffic is on water?

According to experts, water transport is going to become crucial in future for Mumbai. Not only is it environment-friendly, it will also bring down air pollution. “When there is a manifold increase in the volume of traffic in a city, you need to create alternate modes of transport. With restricted road and parking space in Mumbai, water could be the best alternative,” says transportation planner R.K. Jha, former chief of Cidco and MSRDC.

Jha however points out that most water transport projects can at best be alternatives to cars and taxis. “It can’t replace mass transport system like the Railways so it can be an option, not an alternative,” he said.

If we look at basic travel times between Borivli and Nariman Point now, it takes nearly two hours to travel from one point to the other by road. The catamaran or hovercraft service, which will primarily target people who take a car or cab, will halve that time. When conceptualised, the service had claimed it would take 8,000 cars off the road between Bandra and Nariman Point.

However, the earlier two water transport services did not work due to steep passenger fares. Though the common argument is that the service is targeted at people who travel by cars or cabs, economical passenger fares are essential to sustain the service. Satyagiri Shipping — which has been appointed for the project between Borivli and Nariman Point — has been negotiating for subsidies to bring down fares. As of now, the fare has been fixed at Rs 130 (one-way) between Borivli and Nariman Point.

Some planners argue that this service is good for inland, not coastal waters, particularly on the rough Mumbai coast.

“This service would be more suitable between Vashi and Gateway of India because it’s a cross-harbour service. But the west coast is an open sea and catamarans or hovercrafts have to stop for rough weather. To beat rough weather, very high speed, modern ferries are required, which are hugely expensive,” said PRK Murthy, chief transportation planner, Mumbai Metropolitan Regional Development Authority. However, Murthy added that even if the ferry or catamaran service actually operated for even 300 days in a year, as the MSRDC project promises, it would give quite some relief to the city’s traffic.

Earlier services failed due to steep fares Failed projects 1998 Vashi to Gateway via hovercraft Cidco had launched hovercraft services between Vashi and the Gateway of India. However, the operator suspended services in December 1998 due to lack of adequate infrastructure and support from the government. Cidco was in charge of infrastructure at both ends of the terminal. Though there was a proposal to set up one terminal near the Radio Club at Colaba, it was eventually not allowed by the Bombay Port Trust. 2002 Versova-Chowpatty route Services were initiated between Versova and Chowpatty in South Mumbai, which cut travel time down to 25 to 30 minutes. This was operational for one season, shut for a monsoon break and never resumed operations. The problem was unusually steep fares.

News: Forget Gandhi; give me Chanel

(AP 03/04/2006) New Delhi - Its sleek contours are ringed by etched filigree. Its design was inspired by the architecture of ancient Greece. Handmade in Italy, it is available in only a handful of high-end boutiques and costs more than many Indians earn in a year.

It's a ballpoint pen.

Or it is unless you happen to be the guy selling it.

"What we are using here is not a pen. It is a jewel ... a masterpiece," said Juzar Zaveri, the sales manager overseeing the Indian launch of OMAS pens. Then he paused, struggling to find the right level of hyperbole: "It is a jewel of a masterpiece!"

In a country long known for its poverty, a tiny pocket of immense wealth is growing, lifted by a booming economy and lusting for brand-name luxury goods. For this subclass, consumption is nothing if it's not conspicuous.

So the sellers are coming, many in just the past few months: Louis Vuitton, Dior, Chanel and Bulgari have all opened boutiques. You can now buy a Rolls-Royce Phantom for about $790,000 or a Porsche 911 Cabriolet for $170,000.

There are magazines telling the rich how to spend their money (colon cleansing at an elite Bombay clinic, one glossy recently suggested) and news conferences to unveil designer wear ("The color nude is all you need to know this season," Dior representative Kalyani Chawla told reporters). There's even help for the staff, with Rolls-Royce reportedly flying a representative to India to help train chauffeurs.

More than 40 percent of India, a country of more than a billion people, live on less than $1 a day, many without electricity or running water. But this country also has an economy growing at nearly 8 percent, fed by its importance as an international center for outsourcing and high technology. As import restrictions have loosened in the past couple of years, the trickle of foreign luxury goods has become a torrent -- aimed directly at the appetites of the new spending class.

"Now it's not Mahatma Gandhi who is important, it's Coco Chanel," said Suhel Seth, one of India's best-known marketing executives.

"Today we have multiplexes, we have malls, we have restaurants," said Seth, who navigates the country's clogged streets in a Porsche Boxster. "In all these places you want to be seen wearing the right badge ... and that badge is the Dior, the Chanel, the Louis Vuitton."

Times, very clearly, have changed.

When India achieved independence from Britain in 1947, everyone was expected to pay public fealty to the example of Mohandas Gandhi, the "Mahatma" or "Great Soul," who made his own clothes, ate only sparingly and always traveled third-class. For a time, homespun cloth was a gesture of ostentatious denial in wealthy Indian circles. Even India's royalty -- the network of maharajas and nawabs who became famous for their profligacy during colonial rule -- had to tone things down.

Tikka Shatrujit Singh remembers those days with a shudder.

"We had to hide our Rolls-Royces and drive around in half-moth-eaten vehicles," said Singh, a society fixture whose father was the maharaja of Kapurthala, a former north Indian princely state. His grandmother, he said, was particularly enamored of Gandhi's example, and made sure the rest of the family complied. "You sort of were ashamed of being wealthy," said Singh, who is now an adviser to Louis Vuitton.

In those days, class was most often determined by education or job status, and star university graduates became government officials, writers and professors.

With the new money, though, comes a redefinition of class.

Those jobs still have prestige, but it's the investment bankers, real estate developers and software magnates who can navigate the world of $450 OMAS pens and $1,000 Dior purses.

And the truly rich remain a very small crowd -- about one-thirtieth of one percent of the population, according to India's National Council of Applied Economic Research. That's about 50,000 households with annual incomes above $225,000.

While still a minuscule percentage, however, it's more than twice as many as five years ago, and the number is expected to double again by 2010.

The nouveaux riches are a reflection of an economy that has changed dramatically since socialism was abandoned for economic liberalization in the early 1990s.

Some made fortunes in real estate, others in the stock market. Some have moved home after years spent working in the United States or Britain. Top business school graduates now receive pay packages that rival salaries in New York or London.

But to some Indians, these people reflect a skewed vision of a country struggling with profound social problems, where the rise of the rich has simply widened the already vast gap between the wealthy and the poor.

"A hyper-inequality is being imposed on already high levels of inequality," said P. Sainath, a journalist who has spent much of his career writing about rural poverty.

High-tech cities like Bangalore, filled with free-spending young people and crowded bars, have become the new clichŽ of India, but much of the country remains cut off from modernity.

According to government statistics, barely half of rural Indian homes have electric lights and only four percent have refrigerators. Hundreds of debt-burdened farmers have committed suicide in south India over the past four years, crippling water shortages are increasingly widespread and the schooling system barely functions in some states.

News: Scotch industry eyes vast Indian market

(TNN 02/04/2006) London - India's annual budget for 2006-07 dampened the spirits of the Scotch industry here when no tax concessions were announced. But now the industry hopes that the European Union will intervene to ensure fair access to the country's large spirits market.

For some time the Scotch Whisky Association (SWA) has been lobbying with the Indian government to reduce the basic customs duty on the import of Scotch, but without success.

The SWA claims that the high import tariff on Scotch had given rise to a flourishing market in counterfeit products in India. Lowering the tariff would not only ensure that genuine Scotch reached consumers but also bring India's tax structure in line with WTO regulations.

According to the SWA, market access to India for Scotch whisky and other imported spirits is unfairly restricted by a discriminatory fiscal regime, which is contrary to international trade rules. The overall duty burden faced by Scotch whisky ranges from 212 percent to 525 percent, SWA says.

SWA sources confirmed that after the budget - considered "disappointing" within the industry - there has been no contact with the Indian government. The industry is waiting for a report by the EU on India's import regime as relevant to the spirits industry.

Europe's wine and spirits industry had reportedly lodged a complaint under the EU Trade Barrier Regulation procedure in July 2005, seeking a level playing field for European spirits manufacturers and Indian producers. The EU report is to be released in April.

David Williamson, senior SWA official, told IANS that after the EU report was released, the SWA would consider the option of persuading the EU to take India's allegedly discriminatory import regime to the WTO for dispute settlement.

Scotch industry sources here believe that one of the major opponents of moves to lower India's tariff is noted industrialist-politician Vijay Mallya, who has major interests in India's spirits industry.

Mallya has often criticised the SWA for allegedly preventing the sale of Indian whisky in Britain and Europe, while the SWA sees him as a major roadblock in securing access to India's spirits market.

Without naming him, the SWA said that after India's budget failed to announce any concessions: "Domestic interests appear to have outweighed international commitments and, as a result, market access continues to be unfairly restricted by a protectionist tariff and tax system."

The SWA refutes Mallya's charge on the ground that spirits produced by Mallya's companies do not meet EU definition of whisky - that it should be made from cereals and not molasses - and as such cannot be marketed in Europe as 'whisky'. The SWA had no objection if it were called 'spirits' instead of 'whisky'.

In line with traditional practice, the EU requires 'whisky' to be produced from cereals and aged for a minimum of three years, at a strength not less than 40 percent vol. All whisky produced or sold in the EU must be produced in line with the definition.

Williamson said: "The law aims to prevent consumer deception - consumers expect whisky to be cereals-based - and ensures fair competition in the spirits market. These are recognised objectives under WTO rules.

"In India, there are no mandatory definitions of spirit drinks and many Indian products labeled 'whisky' (and brandy and gin) are produced from molasses alcohol, and are not subject to a minimum ageing requirement.

"While a molasses-based product would not be recognised as 'whisky' by international consumers, this does not prevent such products being freely imported and sold in the EU. Such products can be sold provided they are appropriately labeled to avoid consumer confusion.

"A molasses-based product can, for example, be sold under the description 'spirit drink' or 'Indian Spirit Drink'. Indian products are already marketed in this way in Canada."

He added that the SWA welcomed the fact that Indian whiskies that complied with international standards could be and were being sold in the EU.

India represents one of the world's largest whisky markets, with the potential to sell 65-70 mn cases.

Every year, over two billion pounds worth of Scotch whisky is exported - equivalent of 70 pounds a second to the balance of trade - making the industry one of Britain's top five manufactured export earners.

News: Indian apparel cos cash in on branded kidswear

(TNN 02/04/2006) Mumbai - No more kidding around. The untapped kidswear segment in India is fast gaining momentum. The retail blitz and higher disposable incomes have led to a surge in interest in branded children’s wear. This, along with high margins, has prompted companies to spin off their own brands in the segment.

According to Anil Lakhani, director, Giny & Jony, one of India’s oldest exclusive children’s wear brands, kids fashion is now being clubbed with the lifestyle segment, with higher standard of living and more families willing to spend on brands.

“Naturally, a number of apparel companies are dipping their fingers into the pie,” he said. Children’s wear constitutes 17% of the total Rs 43,000-crore apparel industry, or about Rs 7,310 crore, according to a study by KSA Technopak. Of this, the organised segment is only about 7% or over Rs 500 crore.

But the segment is growing rapidly at 10% per annum. Margins are in the range of 20-25% (for dealers and distributors), while companies enjoy an average gross margin of about 10%.

Pantaloon recently set up a JV with Giny & Jony under the name ‘Giny & Jony Future Fashions’. This company will be responsible for setting up all the exclusive brand outlets, seven of which are planned for the April-June ’06 quarter.

The company also has a licencee agreement with Levi’s to market ‘Levi’s Skyes Junior’ from May ’06. The Anil Dhirubhai Ambani Group has also picked up a 22% stake in the company.

Raymond, India’s largest textile and apparel entity, recently launched its kidswear brand Zapp! targeting 4-14 year olds, and plans to open 12 large format flagship stores in the next year.

According to Gautam Hari Singhania, CMD, Raymond, “With the launch of Zapp!, Raymond is increasing its presence in the apparel segment. Kidswear is one of the fastest growing segments in India and a natural fit into our overall growth strategy.”

Large retail stores like Shopper’s Stop, Westside, Globus, Lifestyle and Landmark have also increased their presence in this segment. ITC is looking at the segment through its apparel division, Wills Lifestyle.

Existing children’s brands are also sprucing up. Gokuldas Images, India’s largest garment exporter, is positive on the growth of its children’s wear brand, Weekender Kids.

Another children’s brand, the Rs 85-crore Ruff Kids, is aggressively expanding. With companies having stepped up their interest in the segment, more excitement is in store for tiny tots.

News: Van Cleef & Arpels plans local foray

(TNN 02/04/2006) Mumbai - Stanislas De Quercize is proud of being audacious. He feels audacity is the DNA of Van Cleef & Arpels. Its mystery settings are audacious, its legendary zip design is audacious, the first high-end jewellery brand to launch a fragrance in ’74 is audacious.

In a market where 80% is held by the unbranded segment, to be the most recognisable brand in the world, audacious. “Wealthy women who choose to buy Van Cleef & Arpels are chic, glamorous and audacious,” says the president and CEO, Van Cleef & Arpels International, of the legendary high-end jewellery brand, which is celebrating its centenary year.

On his first visit to India, Mr Quercize — who has spent the past decade-and-a-half with the world’s second-largest luxury group, Swiss giant Richemont (total turnover as of FY05 was e3,717 or Rs 17,000 crore) and has had experience with brands like Mont Blanc, Cartier and Alfred Dunhill — is sure that the time has never been more right to foray into the Indian market.

In fact, the high-end jewellery house has been growing in double digits, says the CEO, without divulging any figures. He says the pie is equally divided between Europe, America and Asia.

While Van Cleef & Arpels made its first Asian foray into Japan way back in 1972, its Hong Kong entry came a decade later (three boutiques at present), followed by Taiwan (two), Korea (three) and Singapore (one).

Mr Quercize says there is more wealth in the world and consumers are discerning, but buying. Being recognisable has, of course, helped, as has being timeless in its design.

Legendary for its mystery settings, exquisite stones and famous clover collections among many others, the legends who have chosen to wear the brand include people as diverse as the Duchess of Windsor to Grace Kelly, Julia Roberts and Britney Spears.

The CEO is sure that India, a country with a passion for jewellery, will be a good market, though he agrees that with branded high-end watches already being an established market, he expects his watches will do good business.

In the jewellery segment, following its Asian neighbours, Mr Quercize expects that the world-wide success story of the Alhambra collection will be repeated in India too.

A line whose entry point begins at $800, (going up to more than $7m) is the reason why Mr Quercize has chosen to depart from his global retail strategy of standalone boutiques to be part of a multi-brand fashion retail format in Mumbai called ‘Thanks’, which already houses luxury brands like Fendi and D&G among others.

“Indian consumers are ready for self-purchase, which is the new buzz among women world-wide. They no longer wait for occasions to buy jewellery. And a multi-brand fashion retail format like Ashish Chordia’s ‘Thanks’ helps in diminishing the barrier and intimidation of a jewellery brand like Van Cleef & Arpels.

This retail strategy allows us to understand the Indian market,” says Mr Quercize. His long-term strategy will include both self-standing boutiques, as well as a presence in a multi-fashion brand retail format.

For now, the CEO is eagerly awaiting the release of the limited edition (100 pieces) of the Poetic complication watch from Van Cleef & Arpels at the Geneva watch fair. The dial of the watch changes with the four seasons, spring, summer, autumn and winter. “We did say we are an audacious brand,” says Mr Quercize.

News: India's exports cross $100 bn in 2005-06

(TNN 02/04/2006) New Delhi - India's exports have for the first time crossed the magical figure of $100 bn in 2005-06, which ended on Friday. Achieving a growth rate of about 25 per cent over last year, the country's exports have crossed the $100 bn mark in this financial year, said official sources.

The target for 2005-06 was set at $92 bn but commerce minister Kamal Nath had asked the exporters to run an extra mile and reach $100 bn mark.

With export growth rate slowing down to 12 per cent in February, there were fears that it may not touch $100 bn in 2005-06 ut exports picked up in the last month of the year, sources said, adding that detailed figures for imports and exports would be compiled in a few days.

Also, the February data did not capture the entire export in the month as last week's figures had not reached from Jawaharlal Nehru Port Trust, sources said.

At the end of February, India's exports stood at $88.7 bn and the country had a trade deficit of over $37 bn.

The government has set a target of achieving $150 bn exports by 2008-09 and double India's share in global trade to 1.5 per cent from 0.8 per cent at present.

News: India Inc to invest $607bn in projects

(TNN 02/04/2006) New Delhi - Corporate India is firing on all cylinders. Such is the unprecedented corporate action that the quantum of outstanding project investment proposals is at a historic high.

Figures collated by CMIE reveal that at the end of January ’06, almost 10,200 proposals amounting to a cumulative investment of more than Rs 27 lakh crore (almost $607bn) were outstanding. This, significantly, works out to 77% of GDP of $785bn.

Such is the pace of investment that a recent survey quarter recorded fresh investment proposals of almost Rs 2.9 lakh crore, a sum greater than the annual fresh investment of between 1.5-2 lakh crore seen in the last eight years. The mild dark cloud to this silver lining is that a significant proportion of outstanding investments in manufacturing is accounted for by three sectors.

Fresh investment proposals are more than keeping pace with the cumulative outstanding project proposals. It is estimated that from May ’05 to January ’06, almost Rs 6,750 crore worth of fresh investments have been proposed.

This works out to almost $150bn. Figures collated by CMIE also reveal that of the total outstanding project investments of Rs 27.3 lakh crore at the end of January ’06, almost 30% were accounted for by manufacturing, 28.7% by electricity and 27.3% by services.

Mining, irrigation and construction together made up less than 15% of cumulative outstanding investments. Interestingly, in manufacturing, steel accounted for almost half the outstanding investments. Textiles and paper are two other industries that have more than doubled investments.

This hectic capex commitment has been motivated in large measure by the peaking out of capacities. It is estimated that capacity utilisation levels for most industries are between 80-90%. That the industry had not been investing much too is clear. The rate of growth in fixed assets slowed down steadily to a low of 6.5% in ’04-05 from a high of 14.2% in 1998-99. “The impact of these investments is expected to be significant. The much needed investment flow to infrastructure provides banks with another avenue for credit deployment.

This spend will also have a positive feed-through in related industries such as capital goods, transport, etc.,” says a recent CLSA report.Credit growth has climbed to new levels. The credit growth (Y-o-Y) at 30% plus is the highest seen in a decade, the last peak of 27% was recorded as far back as January 1995.

“This credit momentum is sustainable,” says the CLSA report. The rate of increase in long term borrowings is also borne out by growth data from CMIE. Growth rate of total borrowings (for non-financial companies) bottomed out at 1.3% in ’02-03. It rose in year ’03-04 to 4% and to 4.6% in ’04-05.

Corporate India, however, seems less reliant on borrowings now. Growth in total corporate borrowings in year 1998-99 was as high as 7.9%. While borrowings is one way to fund this expansion, companies now have enough internal resources too. The growth in retained earnings in ’04-05 worked out to a healthy 42%.

News: Indian Inc. get high on patents

(TNN 02/04/2006) Mumbai - There are different ways of measuring innovation. The number of international patents that a country accumulates is one of them. India seems to be doing rather well on this count, with an increase in both the number of US patents issued and the number of patent applications.

India filed for 1,278 US patents in ’05, up by 36% over ’04, reversing a decline in ’04 when the number of patents filed declined by 15%. What’s more interesting is that the number of patents issued to India increased by 11% to 405, much higher than the growth rates of Japan, Taiwan, Canada, Germany and even China.

Indian companies have been stepping up their R&D activity and pharmaceuticals is one obvious sector, which has seen many companies being issued patents. Indian companies are making inroads into global markets, and a strong IPR pipeline will give them an edge.

Indian drug makers, which were granted patents in ’05 for the US market, include Ranbaxy Labs, Orchids Chemicals and Pharmaceuticals, Biocon, Sun Pharma, Lupin, Dr Reddy’s Labs, Wockhardt, Aurobindo and Cipla. Then there are others like Unilever’s India-based R&D operations.

Indian drug makers, which were granted patents in ’05 for the US market, include Ranbaxy Labs, Orchids Chemicals and Pharmaceuticals, Biocon, Sun Pharma, Lupin, Dr Reddy’s Labs, Wockhardt, Aurobindo and Cipla. Then there are others like Unilever’s India-based R&D operations.

“The R&D projects are designed to deliver higher and true consumer value at affordable cost. There is increasing focus to derive value generated in this laboratory to benefit consumers all over the globe,” said AS Abhiraman, executive director – research, HLL. Innovations like detergents that use less water have come from the Unilever labs in India.

Among the Indian entities, the Council for Scientific and Industrial Research (CSIR) ranks as a key patent acquirer.

Data supplied by CSIR for the year ended March ’05, show that of the 495 US patents issued to Indian residents in ’04-05, 266 were granted to foreign assignees.

The share of patents issued to foreign assignees has been steadily increasing over the last two years, reaching 54% in ’04-05, from 48% and 43% in ’03-04 and in ’02-03, respectively.

Foreign assignees are those where the Indian R&D operation is part of a multinational set-up and the patent is assigned to the parent company.

“We file about 30-40 patents in a year as an outcome of the research in India. 75% of this gets filed and granted in Europe or US. About 18 applications have been filed/issued during ’04-05 in US,” said Mr Abhiraman.

However, if one excludes foreign assignees, CSIR was the Indian inventor to be granted the largest number of patents in ’04-05.

According to the organization, of the 229 US patents granted to Indian inventors in ’04-05, 142 were issued to CSIR.

CSIR’s share in the number of patents issued to Indians, thus stood at 62% in ’04-05, up from 58 % in ’03-04.

“Growth was mainly driven by inventions in the pharmaceuticals and biosciences fields”, said a CSIR senior official who did not want to be named.

“Developing countries such as India have started a few years back filing for patents and, hence, are witnessing higher growth rates than countries such as Taiwan or Canada”, he added.

Among other countries, while Germany and Japan count among the largest countries to be issued patents, the US still dominates the patent scene with about 85,000 patents being issued to US residents in ’05 and about 2,25,000 patent applications filed.

News: Investors put faith in desi companies

(TNN 02/04/2006) Mumbai - MNC magic finally waning? Or have our own companies succeeded in steering greater investor interest? During last year’s market rally, when investors reached the bourses in droves, Indian companies managed to attract more of them compared to their MNC counterparts.

An ET survey of 100 top Indian companies and 100 top MNCs in terms of market cap (M-cap) as on March 31, 2006 finds that while the number of shares of Indian companies traded on the bourses increased by 226% between April 1, 2005 and March 31, 2006, that of MNCs increased by 144% during the same period.

Indian investors never had it so good. Riding high on improved macro-fundamentals, stock prices have increased consistently throughout 2005-06. The 30-share Bombay sensitive index has risen by 70.8% from 6,605 on April 1, 2005 to 11, 280 on March 31, 2006.

This has led to a sharp rise in the M-cap of the companies. The aggregate M-cap of the sample 200 companies has increased by 65.1% during the year. The sharp rise in M-cap in turn had improved the investor sentiment as never before. This is reflected in the rise in number of shares traded on the bourses.

Multinational companies were the bigger gainers of the rise in M-cap. Their aggregate M-cap has grown by 85% last year, compared to 61.8% rise in the aggregate M-cap of the Indian companies during the same period.

The rise in aggregate M-cap of the MNCs was, however, accounted for by mainly two leaders, ITC and Hindustan Lever. Together, they contributed more than two-fifths of the incremental M-cap of the sample MNCs. The M-cap of ITC has increased by 117.2% and that of Hindustan Lever by 106% during this period.

The market cap of more than two-thirds of them at the other end, grew at a lower rate than the average growth rate of the samples. Eleven of them in fact, have witnessed a fall in their M-cap during last fiscal. The market cap of Jet Airways has declined by 21.2% and that of Micro Ink and ING Vysya Bank by 23.2% and 7.7%, respectively.

In contrast, the rise was far more broad-based among the Indian companies. Their aggregate market cap has increased by 65.1% despite four of the top five companies ranked in terms of M-cap on March 31, 2006 achieving less than 50% rise.

The M-cap of ONGC, the number one on the list, grew by 48.7% during the period while that of Reliance Industries, the second in order, increased by 41.1%.

And although NTPC, the third ranker, did somewhat better with 53% rise, it was still way below the average growth rate of 61.8% achieved by the sample companies.

But if the M-cap of Reliance Industries grew at a lower rate compared to the average growth rate of the sample companies, the investors were convinced of higher future return.

The company, which has always been considered investor-friendly, attracted huge investors’ interest during last fiscal. This is reflected in the massive rise in the number of shares traded on the bourses — up by a phenomenal 1,909% between the first and the last trading sessions of 2005-06.

Past record apart, the spurt in investors’ interest in Reliance shares must have been influenced by its spectacular financial performance.

Net profit of the company has increased by 24.3% during the first nine months of 2005-06 over the corresponding period of 2004-05. The net sales has increased by about 17.6% during the same period.

News: Mumbai Metro to lobby for Japanese loan

(TNN 02/04/2006) New Delhi - It’s Mumbai’s turn to press hard for securing Japanese soft loan for financing its ambitious metro rail project. Japan has already announced extending of loans to Bangalore Metro and the second phase of Delhi Metro.

In fact, Maharashtra chief minister Vilasrao Deshmukh may likely to visit Tokyo in the end of April to find ways to secure Japanese assistance to the project, Japanese government sources told ET. Significantly, Mumbai Metro’s proposed implementing mechanism of build-operate-and-transfer (BOT) may turn out to be a handicap because Japanese soft loans are not extended to private parties.

During his visit, Deshmukh is likely to woo Japanese investment in Maharashtra. However, discussions on possible Japanese ODA to Maharashtra may figure out prominently.

Recently, MD of Delhi Metro Rail Corporation E Sreedharan presented details of the first phase of the project to Deshmukh. Mumbai Metropolitan Region Development Authority (MMRDA), the implementing agency of the project, is proposing three metro lines — Colaba to Charkop, Versova to Ghatkopar and Bandra to Mankhurd — in the first phase of the project. The longest of the route, 38-km-long Colaba to Charkop may cost over Rs 8,500 cr.

MMRDA, however, says that the sources of the funding are not clear as yet. Also, it has not decided as yet that the BOT method will be applied to get funds. Deshmukh may try to convince Japanese government to modify its rules and allow soft loans to the project, which may be partially financed by private participation.

In fact, Japanese soft loan is preferred because of its low interest rates in comparison to other funding agencies like the Asian Development Bank. The interest rate for Japanese loan is as low as 1.3 per cent and the repayment period is 30 years, which at times are extendible. There is also a grace period of 10 years on repayment of infrastructure-related loans.

Japan had announced on Friday that the loan assistance to Delhi Metro would be Rs 566 cr for the coming financial year whereas it’s Rs 1699 cr for Bangalore Metro.

News: Out-of-box solutions for India-Singapore business

(BS 02/04/2006) New Delhi - India and Singapore have agreed to explore “out-of-the-box solutions” to allow Singapore-based special purpose vehicles (SPVs) to qualify for advantages under the bilateral Double Taxation Avoidance Agreement.

The issue was discussed at the first ministerial review meeting on the India-Singapore Comprehensive Economic Cooperation Agreement (CECA) on Friday where Commerce and Industry Minister Kamal Nath said investment from Singapore continued to be below expectations, an official release said.

The Singapore side, led by Minister for Trade and Industry Lim Hng Kiang, stated that one of the main reasons for low investment in India was the rigid condition in the Double Taxation Avoidance Agreement (DTAA) that stipulated an annual expenditure of Singapore $ 2,00,000 in each of the previous two years.

He said the rule restricted investment by both existing and new investors. In response India said the condition was meant to address the issue of shell companies. Both sides, however, agreed to explore solutions to the problem.

The two sides also agreed to complete negotiations on mutual recognition agreements (MRAs) before July 31, 2006.

MRA-related issues from the Indian side are: minimum requirement for generic medicinal products from India, clearances for export of egg products, Qualified Full Banking (QFB) status to the State Bank of India, and Customs cooperation issues.

Nath urged Singapore to accord high priority to FDI, especially in infrastructure and Special Economic Zones (SEZs).

In 2005, FDI from Singapore was around $300 million, up from $62 million in 2004.

According to trade data till November 2005 Indian exports to Singapore had risen by over 40 per cent while imports from Singapore increased by 11 per cent during the August-November period.

News: ADB may fund ultra mega plants

(PTI 02/04/2006) New Delhi - The government plans to rope in the Asian Development Bank for financing five ultra mega power plants of 4,000 Mw, each of which will require an investment of Rs 15,000-20,000 crore, to boost the confidence of private developers and achieve faster financial closure.

The power ministry recently held talks with ADB officials to involve the Manila-based multilateral funding agency in the programme, for funding and other help for effective implementation of the projects, official sources said.

ADB’s Deputy Director-General for South Asia John Samy confirmed that the bank had discussed the issue with the government and assured that it would consider assisting in the projects if required.

“ADB had discussions with the ministry of power about the ultra mega power projects. ADB fully supports the government’s initiative to ensure energy security by increasing generation capacity through diversification of energy sources,” he told PTI from Manila, Philippines.

Samy said the government’s plan was to have the projects financed by the private sector once the project development work was completed by the special purpose vehicles established for this purpose by the Power Finance Corporation.

PFC has already sought expressions of interest for Sasan, Mundra, Sindhudurg and Karwar projects. It has now invited pre-qualification bids for Sasan and Mundra projects.

“As a long-term development partner ADB would follow the progress of these projects with great interest and would be prepared to consider assistance should it be required,” he said, adding so far the government has not sought technical assistance support for these projects.

Sharing ADB’s role in India’s power sector, Samy said the bank’s strategy was to assist with reforms and restructuring, infrastructure capacity expansion and removal of bottlenecks.

The bank would also assist in capacity building, private sector development and promotion of clean energy and energy efficiency, he said.

The bank would be working with national agencies like Power Grid corporation and states carrying out reforms pursuant to the 2003 Electricity Act, to address sector constraints and capacity issues, he added.

The funding agency had recently approved a $300 million multi-tranche financing facility for Uttaranchal power sector investment project.

The project would promote clean energy development, improve transmission capacity and build capacity in state’s power sector companies and the regulator.

ADB President Haruhiko Kuroda, who visited India in early March, had said the bank would increase its total lending to the country from $1.2 billion in 2005 to $2.25 billion this year and $2.65 billion in 2007.

News: Reliance Energy seeks partner for oil hunt

(BS 02/04/2006) Mumbai - Anil Ambani-controlled Reliance Energy is scouting for partners with experience as operators in oil and gas exploration for striking a strategic alliance to bid for blocks under the new exploration and licencing policy (NELP) VI.

As Reliance Energy does not have any experience in the exploration sector, it will have to be a non-operator in consortia due to NELP VI regulations.

The company has started talks with global exploration and production majors, oil industry sources said. Most of the global oil majors — including Shell, Exxon Mobil, Chevron and BG — which had approached Reliance Industries for joint venture explorations, were talking to the Anil Ambani group as well, the sources added.

Reliance Energy executives refused to comment.

“For NELP VI bids, the operator of a consortium should have exploration experience. Acreage holding, average accretion of crude and probable resources, and average annual production, are the other technical criteria for becoming an operator. Reliance Energy cannot lead a consortium because of its lack of experience as an operator,” an industry analyst said.

Oil industry sources said Reliance Energy had recruited a few executives from oil and gas companies and they had started studying the regional and other seismic surveys for selecting blocks.

“The oil majors are evaluating their technical skills and the prospects of the NELP VI blocks. The ministry of petroleum has been holding road shows across the globe. Bids can be submitted till September 15 and the blocks will be awarded by January next year,” government sources said.

News: 'RPL to recreate miracle'

(BS 02/04/2006) Jamnagar - Reliance chief showcases Jamnagar II to investment bankers. Around 250 of the country’s top investment bankers and retail brokers flew down to Jamnagar today to listen to Reliance Industries Chairman Mukesh Ambani’s first presentation on Reliance Petroleum Ltd, which is setting up the world’s largest stand-alone refinery. Reliance Industries’ chartered two Boeings to bring the bankers from all over the country.

Ambani, who landed in Jamnagar in the wee hours of the day after a whirlwind tour of the US, said Reliance Petroleum wanted to “recreate a miracle”.

The first miracle was the existing Reliance Industries refinery that was built in a record time of 36 months at half the cost of comparable refineries all over the world.

“We will complete the new refinery in record time once again at a time when the country is witnessing another oil shock after the ones in 1973 and 1979,” Ambani said.

Asking the investment bankers and brokers to join him in this “exciting” initiative, Ambani said the world’s energy needs would be more than 50 per cent higher in 2030 than today.

Over 60 per cent of that increase would be for oil and natural gas. By 2030, the world would be consuming 16.3 billion tonnes of oil equivalent — 5.5 billion tonnes more than today. Oil remained the single most important fuel, with two-thirds of the increase in oil use coming from the transport sector, he said.

Demand for oil, he said, would reach 92 million barrels a day in 2010 and 115 mb/d in 2030. Ambani said, for the first time in many years, the world was experiencing serious constraints in refining capacity.

In the next 20 years, the world oil demand would not be met unless a hundred world-scale refineries were erected, he added.

News: Foreign funds rush to get a slice of India's realty

(IANS 02/04/2006) Mumbai - Enthused by the gradual removal of investment restrictions and spiralling demand for real estate on the back of a sizzling economy, a string of overseas private equity funds are making a beeline to India.

Long viewed as a risky business associated with huge equity premiums in the absence of any transparency, India's real estate market is now attracting investments from private equity majors like Morgan Stanley and Warburg Pincus.

Morgan Stanley Real Estate said last month it had invested $68 million in Mantri Developers Pvt Ltd, a private Bangalore-based real estate developer focusing on residential, office and retail projects.

New York-based private equity firm The Chatterjee Group is planning to raise $450 million to invest in commercial real estate in India. Britain's Trinity Capital has also expressed interest to pump in funds into the sector.

'The surge of investments is backed by corporate office demand that is growing by 13 to 14 percent year-on-year,' said Chanakya Chakravarti, joint managing director of real estate services firm Cushman and Wakefield India.

'There are few emerging markets that are offering the kind of yields that India is offering in a transparent environment. India offers a huge opportunity for investors who are looking at Greenfield projects,' Chakravarti told IANS.

'I am extremely bullish on the Indian real estate sector. There is clearly an opportunity for the market to move forward in the years ahead.'

Although the concept of private equity investments in India has been in existence for a long time now, real estate by and large has been considered an alternate asset class and a risky business associated with huge equity premiums.

The fact that foreign investment was prohibited in most real estate categories by the federal government not long ago also acted as a deterrent in the flow of overseas funds into the sector.

The sector's potential, however, has been unleashed in the last couple of years with one of the world's fastest growing economies allowing 100 percent foreign direct investment in the construction sector under the automatic route.

The minimum area threshold for foreign direct investment in integrated township projects has now been reduced to 25 acres from 100 acres.

The ease in overseas investment norms coupled with a booming economy, which expanded by a robust 8.1 percent in the fiscal year ended March 31, has triggered a huge demand for commercial and residential projects.

The build up of capital in 2005 was the highest in residential property as housing affordability received a boost from rising middle class incomes and lower financing costs, says a study by Cushman and Wakefield India.

According to the study, there is a shortage of 12 million housing units in urban areas alone and scope exists for 400 township projects over the next five years spread across 30-35 cities, each having a population of half a million.

Cumulative office space demand over the next three years will be in excess of 66 million square feet and IT and technology outsourcing services segments is estimated to account for over 70 percent of net absorption.

Capital flows into corporate real estate are estimated at over $5 billion over the next three years.

'The Indian real estate market is finally finding its rightful place under the sun,' said Balaji Rao, managing director of TCG Urban Infrastructure, The Chatterjee Group's real estate investment arm.

'If we believe in the knowledge industry's growth, even by a conservative estimate the office space requirement in India is going to touch 40 million square feet in the next three years up from 22 million square feet now.'

Rao said The Chatterjee Group was in talks with US-based Vornado Realty Trust to partner for the $450-million India Property Fund that will be utilised for constructions in special economic zones and integrated townships.

'We believe India presents an extremely compelling investment story and expect to be a long term investor in the real estate sector,' said Sonny Kalsi, managing director and global head of Morgan Stanley Real Estate Investing.

'The residential market is attractive because of rapid urbanisation, the availability of housing finance and the strong growth of the consumer segment,' he said, while announcing the firm's first real estate investment in India.

News: India's dual advantage

(TNN 02/04/2006) Mumbai - Modern India is evolving very fast and catching up with the western world. High GDP growth and higher disposable incomes riding on the IT and BPO boom have added punch to changing lifestyle and profile of consumer demand and aspiration.

Till a few years ago, the number of brands operating in India was few as were the number of branded and organized retailers. However, all this is changing and much of that has happened in just the last 5 years and the organized retail segment as per KSA study is likely to grow to about 10% by 2010 from the present level of about 3%. Large scale shopping malls are the most visible sign of this.

Malls have been a part of most of the western world, Middle East and Singapore, and in India it is likely to happen in much less time at no more than 5 to 7 years. Sitting at the bottom of the learning curve, builders and developers here are leaping on the bandwagon without adequate knowledge of the dynamics of mall development .

In this scenario, Crown Interiorz mall has been planned with a scientific approach and is positioned as advance second phase mall with fusion of retail of lifestyle and interior products under one roof.

The developers Dr Rajesh Aeren and RS Gandhi with their past experience of having developed prime properties are well educated in the fine art of retail, and with the realization that for a successful model the developer cannot be static in thinking but has to visualize how business will be run for the next 20 years, have conceived of a new concept of a mall -a mall for both lifestyle and interior products.

Before defining the profile of the mall, KSA Technopak was engaged to do a detailed study of the catchment area, market surveys and also a serious study of the need gap of existent and also upcoming malls. On the recommendations of KSA, a value centric mall concept was conceived, reserving 2,25,000 sq. ft on 1st and 2nd floor for interior products for homes and offices and 3rd floor for 4 screen multiplex and food court.

To synergise the vision of the developers of a destination mall of 5,00,000 sq ft retail area with 2,00,000 sq. ft of parking space for 800 cars and high number of footfalls and conversion from the retailers’ perspective and needs and aspirations of consumers, a detailed retail mix focus of value proposition products has been adopted. According to Dr Rajesh Aeren,‘‘ Our mall has many USPs like size, location and concept.

In order to ensure that customers keep coming to the mall, its management will be very professional. We will work on the premise that the best customer is a repeat customer and will think of ways of attracting customers to the mall all the time. We also plan to have an exclusive artisans’ ‘haat’ like Dilli Haat for craftsmen to showcase their expertise ‘’. Adds RS Gandhi,‘‘ For the interiors customers, we have thought of many things.

We’ll have a product catalogue centre, an exclusive library on interiors and a building design resource centre having onsite professional interior designers , etc to guide people. We will also have model rooms, kitchens, etc where new products, etc can be displayed’’ . Any architect can plan plazas with larger gangways, good height, entry, exit, parking, etc.

The important thing is to know how the business of the mall goes. To synergistically develop the mall for multiple activities like retail, entertainment and leisure, Olivier Vidal of Swanke Hayden Connell Architects, USA was hired to develop the concept of the mall.

For detailed plans, architects Mathur, Kapre and Associates have been engaged. This double mall with its unique concept of fusion of lifestyle and interior products with mega size strategically located on Main Mathura Road, Faridabad just about 2 kms from the border of Delhi, when operational, shall add a new chapter in the lifestyle of people of Faridabad and surrounding areas.

News: Future Group to link up Pantaloon

(BS 02/04/2006) Mumbai - Future Group, formerly known as Pantaloon Knowledge Group, is setting up a central control system linking all its diversified corporate entities.

With this new central office, Kishore Biyani, the CMD and his core team will be able to monitor all its other corporate offices, stores and warehouses and the retail businesses.

Chinar Deshpande, chief information officer, Future Group, told Business Standard that the control room would enable the chairman to interact with the other group corporate offices such as Kshitij, the real estate fund, Indivision, the investment consultancy arm and Home Solutions.

“In addition to this, it would also be possible to track details like in store displays as well as receive continuous business alerts from all the centres,” said Deshpande.

While companies such as Reliance and Hindustan Lever have set up similar systems, this is the first time a retailer is installing something like this.

News: MRTPC slams Reebok India

(PTI 02/04/2006) New Delhi - The monopolies & restrictive trade practices commission (MRTPC) has slammed the Indian arm of US sports major Reebok for adopting restrictive trade practice against its retailers.

Reebok India, having a chain of showrooms through its retailers, was paying commission to them ranging between 5% and 23%.

However, some of its smaller retailers alleged that this became discriminatory as the company paid more commission to its bigger retailers, which put them at a disadvantage.

On their complaint, the commission forwarded the case to its investigative arm, DGIR (director general of investigation and registration), which in its PIR (preliminary investigation report) confirmed there were elements of ‘restrictive trade practices’.

“Such a restrictive trade practice by its inherent nature impairs competition and is prejudicial to the public interest,” the DGIR said in its report. It also pointed out that the commission varied according to the percentage of the maximum retail price. Hence, disproportionately lower rates of commission in the same location would tantamount to “distorting competition” as far as the consumers were concerned.

However, the sports major has denied adopting such practices and contended that such differential commission is not sales oriented. It also does not affect the consumers because its products are available at one price throughout the country.

The commission, however, rejected Reebok’s arguments saying that it will distort competition.

“The payment of different rates of commission within such a wide range for the retailers (5-23%) in the same city distorts competition thereby indulging in restrictive trade practice,” said the MRTPC bench.

It also directed Reebok to “cease and desist” from indulging in such practices with “immediate effect”.

News: ‘Indian entertainment, media industry to grow 19%’

(UNI 02/04/2006) Mumbai - The Rs 35,300 crore Indian entertainment and media (E&M) industry is expected to grow at a compounded annual growth rate of 19 per cent in the next five years.

As per industry estimates and Pricewaterhouse Coopers (PwC) analysis, the television industry continues to dominate the E&M industry by garnering a share of over 42 per cent. This is expected to increase further by nine per cent and reach about 51 per cent.

The share of the film industry currently stands at 19 per cent and is not expected to change materially over the next five years.

Print media, which stands at over 31 per cent, is projected to lose some of its share in favour of emerging segments.

The report says the E&M industry is a cyclical one, which grows faster when the economy is expanding. It grows faster than the nominal GDP rate during all phases of economic activity due to its income elasticity. On the other hand, when incomes rise, more resources are spent on leisure and less on necessities. Besides, consumption spending is increasing due to rise in disposable income of individuals, following sustained growth in income levels. This also builds the case for a strong bullish growth in the sector.

Last year new players made entry across all segments of the E&M industry. The most prominent entry was that of the Reliance group into the film entertainment and radio segment. In the previous year, Reliance Capital bought a majority stake in Adlabs, enabling it to have a presence across the entire value chain of film entertainment segment, ranging from film production to exhibition and distribution.

Through Adlabs, Reliance also, made a foray into the radio segment by bidding for over 50 FM radio stations across the country for over Rs 150 crore.

News: More Gulf investors look to play in Indian stock markets

(TP 02/04/2006) Mumbai - It’s not just the non-resident Indians, but also Gulf nationals who are seriously looking at the Indian stock markets which continue to amaze the world.

Strong liquidity and hiccupping local stock indices have encouraged investors in the oil-rich Gulf countries to look beyond their shores and, as far as equity is concerned, India seems the best bet for now.

Some market experts put the expected inflow of Gulf portfolio money at a conservative $1-2bn this year, but added that it could be even more as other investment options are drying up. Gulf money is finding its way into India increasingly through the private equity route.

India’s benchmark 30-share Sensex has settled atop the 11,000 point mark rather comfortably, signifying an unprecedented faith reposed by Indian and foreign investors in the fundamental strength of the country’s economy. Stocks are up nearly 17per cent so far this year after a gain of 42 per cent in 2005.

According to dealers the latest gains appeared to have been sparked by news the government plans to introduce full rupee convertibility, a major liberalisation which should attract much needed foreign investment to keep the country booming.

We shall look at the prospects of full convertibility in a subsequent edition of this column.

For the moment, however, analysts say foreign investor interest was buoyant after India’s central bank on Monday appointed an expert panel to review the currency system with the aim of making the rupee fully convertible on the capital account. That would free up capital transfers, which are still controlled under rules dating from India’s days as a closely regulated and planned economy, hostile to foreign investment.

Today, foreign investors are major buyers of Indian stocks, investing a record $10.7bn in 2005 and almost $3.5bn more so far this year, confident the economy will grow by at least eight per cent in fiscal 2006.

On the other hand, Gulf stock markets, which had made unprecedented gains over the past five years, are witnessing a “healthy” correction needed to take the steam off the overvalued markets. All five major bourses in the Gulf have now dipped below their 2005 closing, shedding some $200bn of their capitalisation since the start of the year, and pushing investors in some countries to protest.

This correction in the Gulf markets has come at a time when liquidity is very high on the back of the sustained rise in oil prices. A multinational bank issued a report recently saying that Gulf States have generated over $300bn in excess cash over the past four years’ oil-boom and are likely to generate a similar amount this year.

Big investors from this region are looking at private equity investments in India even as Indian companies are equally keen to offer shares to Gulf investors. Man Industries (India), for example, will be the first issuer from Asia to list a $50m global depository receipt (GDR) on the Dubai International Financial Exchange (DIFX). Dubai Bank, the investment banker for the deal, expects more such deals to happen soon.

Leading foreign funds have initiated talks to float India-specific funds in the Gulf region that adhere to Islamic or Shariah Law.

Already, the Bahrain-based TAIB Bank manages two funds — Everest Fund (minimum subscription of $10,000) and another Mauritius-registered fund — worth a total of Rs1,0bn investments in the Indian bourses.

Now, ‘India Profit Sharing Fund’, another open-ended Shariah compliant fund with an exclusive focus on India is on. The fund, which will be managed by a domestic fund house, is targeted at the oil-rich HNIs in the Gulf. The minimum subscription amount for this fund is $200,000. Similarly, during 2005-end, Al Madina, a Shariah-compliant investment firm backed by Gulf Bank, raised $171m for investments in the Indian stock markets.

As Islamic law stipulates, the funds will not invest in companies that sell pork, tobacco or alcohol, or in casinos and most media and entertainment businesses.

Last week, Mumbai-based Sabre Capital announced the setting up of a $250m fund in partnership with Dubai-based Abraaj Capital. The joint venture will buy stocks in Indian companies that have strong growth prospects across different sectors including retail, BPO, IT, auto ancillaries, life sciences, leisure and travel and healthcare.

Abraaj Capital has an extremely distinguished Board of Directors which includes H E Sheikh Nawaf bin Nasser bin Khalid Al Thani from Qatar.

News: Foreign funds rush to get a slice of India's realty

(NK 02/04/2006) Mumbai - Enthused by the gradual removal of investment restrictions and spiralling demand for real estate on the back of a sizzling economy, a string of overseas private equity funds are making a beeline to India.

Long viewed as a risky business associated with huge equity premiums in the absence of any transparency, India's real estate market is now attracting investments from private equity majors like Morgan Stanley and Warburg Pincus.

Morgan Stanley Real Estate said last month it had invested $68 million in Mantri Developers Pvt Ltd, a private Bangalore-based real estate developer focusing on residential, office and retail projects.

New York-based private equity firm The Chatterjee Group is planning to raise $450 million to invest in commercial real estate in India. Britain's Trinity Capital has also expressed interest to pump in funds into the sector.

"The surge of investments is backed by corporate office demand that is growing by 13 to 14 percent year-on-year," said Chanakya Chakravarti, joint managing director of real estate services firm Cushman and Wakefield India.

"There are few emerging markets that are offering the kind of yields that India is offering in a transparent environment. India offers a huge opportunity for investors who are looking at Greenfield projects," Chakravarti told IANS.

"I am extremely bullish on the Indian real estate sector. There is clearly an opportunity for the market to move forward in the years ahead."

Although the concept of private equity investments in India has been in existence for a long time now, real estate by and large has been considered an alternate asset class and a risky business associated with huge equity premiums.

The fact that foreign investment was prohibited in most real estate categories by the federal government not long ago also acted as a deterrent in the flow of overseas funds into the sector.

The sector's potential, however, has been unleashed in the last couple of years with one of the world's fastest growing economies allowing 100 percent foreign direct investment in the construction sector under the automatic route.

The minimum area threshold for foreign direct investment in integrated township projects has now been reduced to 25 acres from 100 acres.

The ease in overseas investment norms coupled with a booming economy, which expanded by a robust 8.1 percent in the fiscal year ended March 31, has triggered a huge demand for commercial and residential projects.

The build up of capital in 2005 was the highest in residential property as housing affordability received a boost from rising middle class incomes and lower financing costs, says a study by Cushman and Wakefield India.

According to the study, there is a shortage of 12 million housing units in urban areas alone and scope exists for 400 township projects over the next five years spread across 30-35 cities, each having a population of half a million.

Cumulative office space demand over the next three years will be in excess of 66 million square feet and IT and technology outsourcing services segments is estimated to account for over 70 percent of net absorption.

Capital flows into corporate real estate are estimated at over $5 billion over the next three years.

"The Indian real estate market is finally finding its rightful place under the sun," said Balaji Rao, managing director of TCG Urban Infrastructure, The Chatterjee Group's real estate investment arm.

"If we believe in the knowledge industry's growth, even by a conservative estimate the office space requirement in India is going to touch 40 million square feet in the next three years up from 22 million square feet now."

Rao said The Chatterjee Group was in talks with US-based Vornado Realty Trust to partner for the $450-million India Property Fund that will be utilised for constructions in special economic zones and integrated townships.

"We believe India presents an extremely compelling investment story and expect to be a long term investor in the real estate sector," said Sonny Kalsi, managing director and global head of Morgan Stanley Real Estate Investing.

"The residential market is attractive because of rapid urbanisation, the availability of housing finance and the strong growth of the consumer segment," he said, while announcing the firm's first real estate investment in India.

News: Hariyali Kisan Bazaar expands

(ZEE 02/04/2006) New Delhi - Doubling the number of its rural utility marts 'Hariyali Kisan Bazaar', DCM Shriram Consolidated Ltd would invest about Rs 75 to 80 crore and foray into another six states in southern and western regions of the country by the end of this fiscal.

"We already have about 25 retail outlets in five states in north and central India and plan to have 50 such outlets by the end of this fiscal. The new outlets would come up in six states in southern and western states," business head Hariyali Kisan Bazaar Rajesh Gupta told mediapersons.

Retail outlets cater to the needs of farmers, including agricultural products are already running in the states of Punjab, Haryana, Uttar Pradesh, Madhya Pradesh and Rajasthan.

On the investments, he said, "It depends on the place but generally takes about Rs three crore to make a retail outlet functional and we are planning another 25 outlets."

It would be anywhere between Rs 75 crore to 80 crore, he said.

When asked as to why eastern region is the only part left, he said: "We will plan Hariyali Kisan Bazaar outlets in the eastern states once we are through with south and west operations."

On the focus of such retail outlets, Gupta said, they were started with a focus on the needs of rural population especially agricultural needs of the farmers.

"We generally focus on agricultural products and consumer goods but depending on the market we may offer electronic and telecommunications products as well," Gupta said.

Goods in the outlets depends on the buying pattern of the area they are in. Buying pattern in Haryana and Punjab is different from that in Uttar Pradesh, Madhya Pradesh and Rajasthan, he said.

Farmers in the two states (Haryana and Punjab) are economically better that other three states and therefore can afford expensive products.

The retail chain had tied up with mobile manufacturer Motorola on March 10 to sell their handsets through its outlets and was in talks with various other companies for such partnerships.

"We are in talks with various players but nothing has fructified as yet," he added.

News: More Gulf money to Asia after correction

(RTR 02/04/2006) Dubai - Some of the $80bn in managed funds in the Gulf Arab region, mostly focused on larger markets, will disperse to smaller regional bourses and increasingly head to southeast Asia, asset managers said on Tuesday.

Asset managers speaking at the Meed IPO and Asset Management conference in Dubai said that after a steep correction throughout regional bourses earlier this month investors will seek to diversify away from the Gulf, boosting funds heading to smaller markets such as Lebanon, Egypt, or Morocco.

Retail investors armed with cash often loaned by banks have been stung by a downturn in regional markets which shaved 30% off the capitalisation of the Saudi bourse and knocked 18% off Dubai’s index during three days in mid-March.

“Investors realised that investing in one country can be difficult and they will be looking at multiple markets now,” said Hashem Montasser, head of regional asset management at Egypt-based investment bank EFG-Hermes. “Investors realised they had been losing the benefits of diversification.”

Fund managers are predicting a migration away from retail investment back toward funds, predicting that the amount of Gulf cash invested in funds could surge around 150% to $200bn within five years.

Haissam Arabi, managing director of Dubai-based Shuaa Capital, said compared to market capitalisation of more than $1tn on Gulf bourses, the $80bn in managed funds is far smaller than ratios for other emerging countries.

He said a retreat from retail investing in the Gulf will fuel growth in managed funds, 80% of which had been focused in Kuwait, Saudi Arabia, and the UAE.

Fund managers said the majority of assets under management will remain in the large Gulf markets, although an increasing percentage will siphon off to North Africa and Southeast Asia.

Money won’t head as much to the US, where investors are worried about the political risk of their investment. They said the furore over Dubai Ports’ acquisitions in the US, which the state-owned company sold after Congress raised national security concerns, would dampen the flow of Arab money to the US.

“The Dubai Ports issue is a big discouragement and a reminder of the obstacles to investment in the US,” Arabi said.

Montasser said Gulf money would begin to flow more to Morocco, Lebanon, and Egypt, where he said markets are performing well this year despite the correction in the Gulf.

“We expect neglected regional markets to experience a rally,” said Mohannad Aama, managing director of Beam Capital Management. “It is fair to assume that smaller markets in North Africa might enjoy a growth spurt.”

Arabi said India, China, and Pakistan would also see increasing flows of Gulf petrodollars.

Fund managers also said investors would seek diversified products to reduce their exposure to regional equity markets.

“You will have a diversification of products that were predominantly invested in equity markets,” said Montasser. “You’re going to see product diversification in funds, fixed income products, and structured products with capital guarantees.”

News: NGC to expand presence in India

(BL 01/04/2006) Mumbai - After being present in the Indian market for the past five years, National Geographic Channel (NGC) is looking at expanding its brand in the country.

"We are looking at bringing in more brands and strengthening the business in India,'' says Rajesh Sheshadri, Vice-President, Marketing, NGC India.

The Nat Geo brand already exists in different formats, which includes merchandise, books, maps, expeditions and DVDs. "As long as the market is ready for it, we don't mind exploring more options to bring in more formats under the Nat Geo brand,'' adds Sheshadri.

Targeting women

At the same time, the Star Group-promoted channel is looking at segmenting its channel further by creating afternoon slots targeting women. In the past it had created a kids band under the Nat Geo Junior brand. "We are exploring a woman's band in the afternoon and would create content for this target group. The purpose is to have tactical insertions for strategic groups on the various time bands,'' says Sheshadri.

Content

Meanwhile, the channel is also open to trying out different avenues in India for promoting its brand. In the past, it associated itself with the film Kaal, where one of the protagonists was shown as a reporter from the National Geographic Magazine. "As long as the values and theme of the channel are in sync, we are open to associating the brand in any format,'' says Sheshadri.

Besides, the channel has been trying to localise content with programmes such as Mission Udaan and It Happens Only in India. "Our viewers expect international content since that is the core of the brand, but at the same time we have some amount of local content,'' Sheshadri said.

More channels

In India, NGC is sold independently as a channel brand for ad sales. Besides, Nat Geo is not looking at introducing more channels in the country unlike its direct competitor, Discovery Channel, which has introduced its second Travel and Living channel.

Nat Geo existed as brand under the Fox Cable Networks Group, which subsequently got acquired by NewsCorp, the parent company of the Star Group. Apart from Nat Geo, the History Channel, which also belonged to Fox, got included in Star's bouquet and has a presence in India.

Globally, NGC (including NGC US which is a joint venture of NGT&F and Fox Cable Networks Group) is available in over 318 million homes (including day-part households) in 164 countries and 27 languages.

News: Japanese firms bullish on India

(BL 01/04/2006) New Delhi - The Indian economic growth story has got Japanese companies sanguine about their future performance and investments in the country.

A survey of Japanese manufacturers, conducted by the Japan External Trade Organisation (JETRO) in ASEAN, India and China has found that 79.7 per cent of the respondents in India expected to post an operating profit in 2005, which is higher than 75.4 per cent in ASEAN and 73 per cent in Northeast Asia.

Meanwhile, nearly half of the respondents in ASEAN and 64.7 per cent in India expect improved year-on-year profit/loss performance in 2005. The survey further pointed out that 61.4 per cent of the Japanese companies cited increased sales in the domestic market as the driving force in their improved profitability in 2005.

Regarding the outlook for 2006, nearly half of respondents in ASEAN (47.5 per cent) expect improved profit/loss performance, mainly due to improved product efficiency and increased export sales. Compared to prospects for 2005, a smaller percentage of respondents in ASEAN expect increased sales in the domestic market in 2006, suggesting that Japanese manufacturers in the region will be looking more to exports for profits in the current year. This contrasts with India, where nearly 70 per cent of respondents expect higher sales in the domestic market, on the back of growing demand in the country.

India also seems to be emerging as an attractive production base for Japanese manufacturers.

On the parameter of most optimal location for establishing a production/sales base in the coming 5-10 years, while Japanese companies ranked Thailand highest, this was followed by Vietnam, India and China (in that order).

Further, a half of Japanese firms surveyed said that production costs in India are lower as compared to China. Indian engineers were also rated as superior to those in China.

News: Bank credit up by Rs 22,706 cr

(BL 01/04/2006) Mumbai - Gross bank credit increased by Rs 22,706 crore to touch Rs 14,42,591 crore for the fortnight ended March 17, according to Reserve Bank of India's Weekly Statistical Supplement.

This is inclusive of food credit, which increased by Rs 377 crore to touch Rs 41,825 crore, and non-food credit, which increased by Rs 22,329 crore to touch Rs 14,00,766 crore. Total accommodation provided by scheduled commercial banks to the commercial sector in the form of bank credit and investment in shares, debentures, bonds and commercial paper was at Rs 14,82,018 crore.

News: Reliance Retail ties up with Himalaya Drugs

(BS 01/04/2006) Mumbai - Reliance Industries has signed up with the Bangalore-based herbal healthcare major Himalaya Drugs for lifestyle drugs and nutritional products even as the Mukesh Ambani-controlled company is busy giving concrete shape to its ambitious retail foray.

With the key management team in place, the company is in the process of identifying players and products for the retail space.

Sources close to Reliance’ retail venture said that the company would soon sign up with a host of other companies in the areas of food and food supplements, consumer durables and cosmetics.

Reliance’ retail business project, which has apparently arrived at an operating structure with the appointment of a CEO and divisional heads, wants to enter into big and small retail format including malls, hypermarkets, super markets and convenience stores.

Himalaya Drugs is one of the largest players in the herbal-based lifestyle drugs and nutritional supplements sector in the country.

The company, with a significant presence in the export markets (the Middle East in particular) through leading retail chains, has over 90 exclusive retail stores across India. These outlets offer 180 branded herbal products, ranging from pharmaceuticals to head-to-heel personal care and veterinary therapeutics.

Himalaya Drugs’ retail outlets also serve as information centres where trained managers answer customer queries on its healthcare products. They are electronically linked to a CRM cell, which is assisted by doctors.

The herbal major, as part of its aggressive retail expansion plan, had tied up with several leading retail chains in the country and abroad.

Its partners includes Big Bazaar, Food World Supermarkets, Spencers, Nilgiris, MKRetails, Shoprite, Giant, D Mart, Ebony, Vishal Mega Mart, Salasaar Bazaar, Lifestyle and Big Shopper.

The pharmaceutical retail chains that the company has tied up with includes Pill & Powder, Apollo Pharmacies, Medicine Shoppe, CRS Health, Medisource, Health & GLow, Guardian Lifecare and 98.4.

News: Indian designers weave inroads into global fashion market

(AP 01/02/2006) Mumbai - India's top designers have been unveiling ready-to-wear collections rich in hand-embroidery with an eye toward Western markets as global buyers scout for fresh talent at Bombay's fashion shows.

Elegant jackets with subtle beadwork, fluid skirts and linen tunics in off-whites and earth tones along with silk and wool have dominated the autumn-winter shows at the five-day Lakme Fashion Week, which ends Saturday.

Better known for garment factories that make clothes for big Western retailers like the Gap and Banana Republic, India is slowly gaining a reputation as a land where high fashion can be found alongside silk saris.

Hollywood movie stars such as Nicole Kidman and Judi Dench have worn Indian creations.

Indian designers sell their labels at high-end boutiques in London, New York and Paris, and a handful of Indian labels are available at London's Browns and Saks Fifth Avenue in New York.

Still, the Indian designer market remains in its infancy - about 2.2 billion rupees (US$49 million; euro40.6 million) in domestic sales compared to the sizable US$35 billion (euro29 billion) global market.

India's total garment exports are about US$5 billion (euro4.1 billion) a year.

While there are no exact figures for how much of those exports are high-end fashions, experts say it's likely not more than a minuscule percentage.

In the past, most Indian designers looked to the local clothing market - currently about 220 billion rupees (US$4.8 billion; euro4 billion) in sales.

But now - as was clear at this week's fashion shows in Bombay - they are now being aggressively courted by Western buyers.

"India is hot now, everyone is interested in India. Designers must not let the opportunity slip by,'' said Lavelle Olexa, a senior vice president at American retail chain Lord & Taylor.

"With the recent trend of embellishments, department stores are looking for fresh and new Indian detail.''

Albert Morris, a buyer from London's Browns, came to India looking for new styles.

"I'm looking for new silhouettes, crisp designs,'' said Morris.

"I'm looking for something that could stand near an Armani that should make people say, 'Oh, that's new and fresh. Who's the designer?'''

Reflecting a rising interest in Indian design, global and domestic buyers will move from Bombay's catwalk to India's capital New Delhi for another major fashion show beginning next week.

Designing for an international market entails toning down vivid colors and cutting back on extravagant embroidery that do brisk business locally.

Indian designers say overseas recognition will be gradual.

"Designing for the precision couture segment takes time,'' said Sabyasachi Mukherjee, who has shown his collection at the Milan Fashion Week and retails in British and European stores.

"I'll stick to growing slowly - first I need to learn the market in Europe and then move into America.''

Well-known designer Ritu Beri, the first Asian to head French fashion house Scherrer's ready-to-wear line, said she uses softer color palettes for clothes sold abroad.

She said a fusion of Western silhouettes with rich Indian brocade or cotton fabrics worked well.

"What buyers are looking at is tops and jackets with an Indian spirit without directly spelling out India,'' she said.

Rajesh Pratap Singh, India's top menswear designer, makes no changes when he retails abroad - he bridges the East-West divide with uncluttered, sharp designs.

"I keep it simple with subtle embroidery on wool and an emphasis on cut and new shapes,'' said Singh, who sells his clothes in stores from Palm Beach to Paris.

But designers like Manish Arora, who showed at the London and New York fashion week, believe bright pinks and blues can make the trans-Atlantic trip.

"My look is very embroidered and very modern. I believe the whole world will see our edge in craftsmanship and in textiles,'' Arora said.