News: Here's why western firms are heading towards India

(IANS 30/09/2006) Florence - Indians are great learners, India is a democracy and also a safe place to invest - this is the growing feeling among Western financial circles.

Aliza Knox, senior vice president of Visa's international commercial operations, says India is the other major source of interest at the moment.

"Indians have a strong desire to learn and to progress and are more adaptable to new ideas," she said. "Some of their bankers are even more sophisticated than their colleagues in Europe or the US."

Knox was among the more than 1,000 "money managers" from some of the world's most important companies who attended a meeting in this Italian city this week.

Now the world's fifth-largest economy - as measured by purchasing power parity - after the European Union, the US, China and Japan, India is attracting plenty of foreign direct investment. This is in part due to its strengths in IT and the ability of its workers to adapt to a changing world.

According to Harry Harding, head of research and analysis at Eurasia Group, a political risk advisory and consulting firm, India is also a safer place in which to invest than it was years ago.

"Relations with China have become more stable and terrorism still has only a limited impact. Let's hope it doesn't escalate," Harding said, while talking about India.

Harding said one of India's main attractions, setting aside its poor infrastructure, was represented by the fact that its leftwing parties were now beginning to embrace the market. "Of course there are backlashes, but India is a democracy and we are very optimistic. It is definitely a success story," Harding said.

China, without doubt, also remains a key attraction in Asia.

"Countries like China and India have enjoyed a huge amount of exposure and have attracted a lot of interest among participants," said Martin Giles, managing director of The Economist, the international affairs publication organising the Sep 27-29 Eurofinance conference.

The reasons are obvious enough.

With a gross domestic product (GDP) growth rate of 9 per cent over the past decade, China's economy is expanding fast. Joining the World Trade Organisation in 2001 and easing restrictions has reaped benefits, with a whopping $60 bn in foreign direct investment pouring into the country last year alone.

The fact that it has a population in excess of one billion means China has a huge domestic market that needs satisfying. Manufacturing in China is cheap and exporting easy.

But what are the main challenges and difficulties facing European and American companies that want to invest in China today?

According to Hong Kong-based Marlene Wittman, group managing director of Aquitaine Investment Advisors, an investment management firm that specialises in alternative investments in Asia, one of the main problems facing foreign companies is the fact that regulations in China keep changing.

"If the Chinese government needs to attract foreign investment, it will ease regulations, if it wants to protect its industries it will make them more stringent. Some call it the weathervane approach," Wittman said.

For instance, no less than six government ministers must now approve takeovers in China. "This makes things very difficult," Wittman said.

According to her, getting the support of a competent local partner is the key to doing business in China. "Spending lots of money on lawyers and accountants won't help."

But though red tape is still a major issue in China, the future looks bright.

"The business world is definitely pulling the government, and there is a new generation of civil servants who have studied in the West and will soon get into power," she said.

One company that is betting heavily on China and Asia in general is Visa, the credit and debit card company.

Visa's sponsorship deal with organizers of the 2008 Olympic Games in Beijing is obviously designed to increase its brand awareness and improve ways of penetrating those markets.

"The card business in China is growing tremendously, it's definitely looking up," said Knox.

Visa's latest figures indicate that the volume of transactions going through its electronic payment systems has hit $53.8 bn in Asia in the year ending June 2006, up 12 per cent from the previous year.

News: Indian FII inflows top $5bn in 9 mths

(BS 30/09/2006) Mumbai - Foreign institutional investors' (FIIs) investments in the domestic equity market has crossed $5 billion in the current calendar year. While it just took seven months to surpass this figure in calendar 2005, it took nine months in the current year.

FIIs' net investments touched $5.02 billion (Rs 22,814 crore) during the first nine months of 2006 compared with $8.60 billion (Rs 37,501 crore) during the period last year.

FIIs bought $274 million (Rs 1,275 crore) in the last two days. They bought $155 million (Rs 720 crore) of shares on Thursday and $119 million (Rs 555 crore) on Wednesday.

Their net investment in September 2006 at $1.17 billion (Rs 5,425 crore) was the highest in the last six months. Earlier in March, they had bought $1.51 billion (Rs 6,689 crore) shares from the Indian markets.

Net inflows in February stood at $1693 million (Rs 7,588 crore) and that in January $805 million (Rs 3,678 crore). FIIs made net investments of $1 billion in August.

New FIIs from the UK, the US, Germany, Singapore, Austria, Luxembourg and Oman have set up shop in the country in the last nine months.

In September, 13 new FIIs entered the market and 22 in August. In the current year thus far, 146 new FIIs have opened their offices, taking their tally close to 969.

FIIs pumped in a record $10.7 billion in 2005, making it their highest-ever investment in Indian equities since the markets opened up in December 1993.

According to data released by the Securities and Exchange Board of India, FIIs bought $8.5 billion in calendar 2004. They had bought $6.59 billion shares in 2003 and $740 million in 2002.

News: Piramyd to add 6 stores a year

(BS 30/09/2006) Mumbai - Piramyd Retail Limited is planning a rapid expansion of its multibrand stores in the next couple of years. The company would be adding four to six stores every year.

Company's chief executive officer Bipin Gurnani told mediapersons that besides growing in the north and west regions, Piramyd was considering entering into the south India market, with three stores on the cards.

The company opened its third store in Pune on Friday, which is located in the Kakade Magnum Mall in the city's busy Camp area.

Gurnani said the number of Piramyd stores in the country would reach 10 by the end of the current fiscal as it would open stores in Lucknow and Jaipur, and add one store in Delhi.

In the following fiscal, the company will go to cities like Chandigarh, Surat, Ludhiana, and also open one store each in Ahmedabad and Delhi where it has already a presence.

He said that the company's turnover, which was Rs 110 crore last year, was expected to rise to Rs 250 crore by the end of the current year, largely due to expansion of the stores network.

Besides stocking different retail brands in the apparel, accessories and footwear categories, the company also makes and markets its own brands, including Venti Uno in men's relaxed formals, and Boston Club in men's semi-casual, Enya in women's western wear, Rudra in women's ethnic wear and Peppermint in women's young fashion.

News: India's Leyland may bag Turkish firm

(HT 30/09/2006) Mumbai - The nation's second largest truck manufacturer, Ashok Leyland, is the frontrunner in a race to acquire Turkey's Doktas Casting Company, which has sales of 209 million euros, in one of the Indian auto component industry's largest acquisitions, investment banking sources said on Friday.

Doktas is Turkey's largest iron casting firm and the second largest aluminium wheel maker. Its global customers include auto giants such as Ford, Fiat, Caterpillar and Mercedes Benz. Ashok Leyland and fellow Indian firm Rico Auto Industries have submitted rival bids for the company after completing due diligence work, and the deal is expected to be clinched in the first fortnight of October, the sources said. Ashok Leyland's managing director R Seshasayee confirmed to Hindustan Times that his company had bid for Doktas. “I cannot tell you any thing more than this at this point of time,” he added.

Ashok Leyland has offered around $170 million (Rs. 779 crore) to acquire the entire 100 per cent stake, while Rico Auto has offered around $165 million, an investment banking source said. While refusing to divulge any details, Rico’s managing director Arvind Kapur confirmed that his company was in the race for Doktas Casting. In the past three years, Doktas Castings has reported a compounded annual growth rate (CAGR) of 25 per cent in revenues from 107 million euros in 2002 to 209 million in 2005. Since 1994, the company has invested 110 million euros.

The impending deal came a day after Mahindra & Mahindra Ltd. announced it would buy 68 percent in Germany's forging firm Jeco Holding AG, which has an enterprise value of 140 million euros (Rs. 812 crore).

Mahindra & Mahindra and Bharat Forge, however, have decided to keep away from the fray for Doktas. Bharat Forge’s chairman Baba Kalyani said, “We are continuously evaluating opportunities, but we have nothing do with Doktas.” Mahindra & Mahindra’s chief financial officer Hemant Luthra categorically stated that the company had not submitted a bid for Doktas.

Parent Doktas Holdings owns 51 per cent stake in the casting company, with the remaining 49 per cent is traded on the Istanbul Stock Exchange. Under Turkish stock exchange rules, the acquirer will have to make an open offer to buy out the entire 49 per cent floating stake of the company.

Leading auto ancillary companies from Germany like George Maria GMH have also evinced an interest in Doktas. In 2005, Doktas Casting reported an earnings before interest, tax , depreciation and amortisation (EBIDTA) of about 21 million euros. According to EFG Istanbul Securities, a securities firm, Doktas Casting has a total asset base of about 164 million euros.

News: 8.9% - Indian growth story only gets better

(DNA 30/09/2006) New Delhi - It’s been a busy summer for the hotel industry. There has been more than 12% growth in room nights. And enquiries are pouring in, says Rattan Keswani, vice-president, Oberoi Hotels & Resorts.

A clue to what’s happening: Siddharth Roy, economic adviser to Tata Services, has been meeting one foreign delegation every week. And domestic tourism has grown 40%, according to Ajay Bakaya, executive director, Sarovar Hotels.

At the end of August, India had 164.3 million telecom subscribers. Over the past year, the month-on-month growth in mobile subscriber numbers has ranged from 3.7% to 5.9%.

All that has added up to a mind-blowing 8.9% growth of the economy in the first quarter (Q1) of 2006-07 - among the fastest quarterly growth rates since the late 1990s - on the back of an 8.5% growth in Q1 of 2005-06.

Propelling this growth was a 13.2% surge in the trade, hotels, transport, and communication sectors. The other top performer was the manufacturing sector as factories churned out 11.3% more goods in Q1 this year. Services as a whole grew 10.5% on the back of 9.7% growth in last year’s Q1.

All this has improved the prospects of the economy growing at 8% in 2006-07. Investment bank JP Morgan has stepped up its growth forecast from 7.5% to 8%. But Ajit Ranade, chief economist, Aditya Birla Group, cautiously predicts 7.3% growth, factoring in some slowing later in the year.

If the economy does grow by 8%, it will be for the second consecutive year and third in four years. “This is one of the best phases the economy has ever had,” says Gaurav Kapur, senior economist, ABN Amro.

But most economists are blasé about the numbers. “Get used to it,” shrugs Surjit Bhalla, managing director, Ox[u]s Investments. “We’ve clearly moved on to a new growth trajectory.”

Finance Minister P Chidambaram has been quick to claim credit for his government. “In every quarter but one of the UPA government, GDP grew by over 7%,” he said at a press briefing.

Few, though, are willing to concede the point to him. “The difference in performance between government-controlled sectors like mining and electricity and those where prices are determined by the market is becoming sharper,” says Rajiv Kumar, director, Indian Council of Research in International Economic Relations.

But lagging agriculture has sounded a warning note. Sure, it sustained 3.4% growth for two consecutive years, but that is nowhere near enough, says Saugato Bhattacharya, vice-president of business and research, UTI Bank. Agriculture, he says, will be the key to sustaining growth and farm surpluses will be the next boost factor in the economy.

Nor can growth be sustained if the electricity sector continues to do poorly, notes Roy. A rise in interest rates could also spook the growth story.

Perhaps sensing this, Chidambaram promised to ensure that manufacturing gets the credit it needs and at reasonable rates. Kumar agrees: “The Reserve Bank should let the growth momentum continue and not do anything to disturb it.”

News: Ahmedabad may have India’s tallest hotel

(DNA 30/09/2006) Ahmedabad - The plans of Shree Raj Tours and Travels for setting up a 42-storey hotel, India’s tallest, in Ahmedabad, are taking shape.

The promoters have initiated talks with leading international players like Accor and its Novo Hotel, Four Seasons, Shelton and Sheraton, for construction, design and management of the Rs 350-crore project.

“We are in talks with a few international players. But we are yet to finalise a company. Raj will finance the project and also look after its promotion,” Lalit Sheth, chairman and managing director of Shree Raj Tours and Travels, told DNA Money.

“This will be tallest hotel, taller than the existing 39-storey hotel in Mumbai,” Sheth asserted.

The company is studying some locations and could settle for a five-acre patch off the Sarkhej-Gandhinagar highway, said sources. The land will be finalised by the end of this year and the hotel will come up in a year and half.

The first 20 storeys will house facilities including shopping centres, the largest spa and conventional centre in the country and other facilities. The remaining floors will have about 500 rooms.

Shree Raj Tours and Travels reported a turnover of Rs 200 crore last financial year and expects to push this up to Rs 300 crore this fiscal.

News: Indian forex reserves up $ 940 m

(BL 30/09/2006) Mumbai - Forex reserves increased by $ 940 million to touch $ 166.482 billion for the week ended September 22, according to the Reserve Bank of India's Weekly Statistical Supplement. In the earlier week, reserves stood at $ 165.542 billion.

The week saw good dollar inflows into the domestic bourses, explaining the rise in reserves, said the head of treasury at a private sector bank.

According to RBI data, foreign currency assets increased by $ 936 million to touch $ 159.175 billion during the week. Foreign currency assets expressed in US dollars include the effect of appreciation/depreciation of non-US currencies (such as euro, sterling, yen) held in reserves.

FII inflows into equities came to $ 311.3 million. Gold reserves and SDRs were unchanged at $ 6.538 billion and $ 1 million respectively.

The reserves with the IMF moved up by $ 4 million to $ 768 million.

News: Indian bank alliances, a positive development

(BL 30/09/2006) Chennai - Be it M&A (merger and acquisition) or `alliance', Basel or technology, many things have been happening in Indian banking these days. Business Line caught up with Sanjay Aggarwal, Head Financial Services, KPMG, for his views on the issues that concern banking now.

A fellow member of the Institute of Chartered Accountants of India, Aggarwal has been involved in the audit of banks such as ANZ, Citibank, Emirates Bank, Habib Bank and BCCI Bank during the period 1987-2001. Here is his take on a few questions:

What do you think of the alliances that banks are striking these days?

Very positive development. When capital and other resources are scarce, successful business strategies will definitely comprise alliance and collaboration strategies.

How would you describe the post-UWB-IDBI scenario? What has changed in the banking arena?

The immediate impact of the merger announcement is the increased awareness of the need for a framework for early identification and resolution of banks facing potential sickness. A proper framework will improve timely restructuring and action.

How long do you expect the current consolidation phase to last?

This is expected to be a regular feature. The environment is very competitive and business strategies could go wrong. Non-performers will, therefore, have to seek M&A to resolve crisis situations.

What are the key parameters that will force a bank to the M&A fold?

Most probable candidates will be the ones with low growth rates and low profitability. Being dependent on fewer customer segments is also a negative.

Assuming that banks merging have their own CBS (core banking solution), what happens after the deal? Will there be only one CBS after merger?

This would depend on the situation. All possibilities of synergies will have to be explored. For, there have to be good reasons to operate separately.

What according to you are the top three areas that Indian banks have to focus to increase their revenues?

Banks will need to continually be aware of customer needs and requirements and develop solutions. Banks will have to be clear on product profitability and distribution channels to be cost effective.

What does Basel mean for the customer?

Great opportunity to enhance risk management systems and operating effectiveness to create sustainable competitive advantage. Banks should look at this opportunity not as mere compliance but to develop and implement in substance better risk management systems in an integrated manner to achieve competitive advantage and improved profitability.

Where do Indian banks stand in terms of readiness for the next big thing in Basel?

We have just completed a survey of banks on this subject and the report is to be released shortly. The survey was aimed at assessing the level of preparedness of banks in meeting the requirements of the Basel-II Capital Accord. While the 1988 Capital Accord addressed market and credit risks, Basel-II has substantially changed the treatment of credit risk. It requires banks to have substantial capital to cover operational risks.

We find that there are a number of challenges around approach to Basel, understanding of Basel, and top management philosophy towards implementation.

Is Indian banking industry attracting the best talent these days?

It continues to attract the best talent. But retention is becoming a significant issue.

News: Three Indians voted best entrepreneurs in Asia

(PTI 30/09/2006) New Delhi - Three Indians were voted among the five best young entrepreneurs in Asia by readers of a leading international online magazine Business Week.

Andhra Pradesh-based 24-year-old Rama Krishna Gaddipati made it to the list as a co-founder of mobile applications and services outfit Bridle.

Mumbai-based Vishal Sampat and Divyank Turakhia for founding separate internet-based firms Convonix and Directi Group respectively.

The entreprenurial bug bit the 24-year-olds early on in their lives and with the advent of internet opening new avenues both Sampat and Turakhia got a taste of success while in their teens.

Gaddipatti, a student of Birla Institute of Technology and Science, Pilani, has also developed a service called SchoolMate, that allows parents to monitors their child's progress at school.

Sampat runs Convonix, an internet marketing firm that helps clients enhance their online traffic and get better placement in search engine results.

Turakhia's Directi Group has more than a million subscribers for its array of domain name registration, web hosting, and site building services.

Businessweek had asked its readers to nominate young entreprenuers and a team of editors of the magazines narrowed the list to a group of finalists who were put to vote on its website.

News: Indian gold demand affecting international prices

(PTI 29/09/2006) Mumbai - The gold rush during the ongoing festival season in the country is driving the firm rally in prices of the precious metal in international markets.

India is in a league of its own when it comes to the gold market, says World Gold Council (WGC) Investment Research Manager Natalie Dempster.

"The US is the biggest market in volume terms, but in tonnage terms India really dwarfs everyone else. Last year it accounted for around a quarter of total global demand in tonnage terms," she said in her report.

"Most of the international players are today looking at demand from India this festive season and demand from the rural India that have already firmed up the prices of gold in the international markets," Commodity Analyst Si Kannan told PTI.

Kannan said the demand for gold was seen increasing with huge offtakes in past weeks across the corners of the country. "It was reported that a trader at Delhi, whose offtake used to be 45 kg a day, is today selling 450 kg and similarly a trader at Mumbai, whose offtake use to be 300-400 kg of gold is today selling 700-750 kg.

When contacted WGC Joint Director Dharmesh Sodah he agreed that Indian demand has started creating an impact on the international prices but added "still majorly the international prices are ruled by investment demand from the West which in turn are governed by factors like crude, geopolitical tension etc".

News: Kolkata braces for mall mania

(BS 29/09/2006) Kolkata - Mall mania has gripped Kolkata, and the frenzy seems to be reaching a crescendo as the city readies itself for 46 malls by 2010.

Thereafter, prices might level out and finally drop after 2010 when new construction comes into the market.

The upcoming establishments are bringing brands like Globus, Spencer's, Fun Republic and Adlabs to Kolkata.

A few standalone mega stores and speciality malls are also in the offing.

These include one being promoted by the Avani Group that will host to high street fashion houses like Marks and Spencers.

Kolkata's projected requirement for retail space including malls and stand alone stores is expected to shoot up from 8,50,000 squarefeet in 2006 to 10 million squarefeet in 2010.

What is notable is the eagerness of developers to take the mall concept beyond the city itself and into the suburbs.

"The boom is not limited to Kolkata only. It is also catching up in the suburbs of the city. There are already two malls coming up on Jessore road and one in Madhyamgram in the north. Howrah in the west, too, will soon have its own mall. The latest trend shows a leaning towards developing speciality malls, but the only speciality mall that has a prospective future would be home malls that deal in home furnishings," feels Banerjee.

Mumbai-based K Raheja group is reportedly scouting for land in Kolkata to build another In Orbit in the city.

However, the shortage of large plots of land within the city might compel the promoters to consider land on the fringes of the city, say experts.

Land buyers and brokers in the city feel more and more available land will shift to use by the retail sector.

Consumer response to new shopping malls is positive and retailers are ready to pay for space.

News: Artiman Ventures to raise $175 mn second fIndia und

(BS 29/09/2006) Chennai/Bangalore - Artiman Ventures, an early-stage venture capital fund with a strong India play, is looking at raising its second fund which is expected to have a corpus of around $175 million.

Artiman is likely to exhaust commitments from its first fund, which also had a corpus of $175 million.

According to industry information, the process of raising the second fund had already been initiated with The Pennsylvania State Employees' Retirement System confirming that it would invest $25 million in Artiman Ventures II.

Artiman is venture fund put together by technology industry veterans such as Amit Shah of Cisco fame, besides Saurabh Srivastava (a renowned serial entrepreneur), and M J Aravind who was the co-founder of Daksh which was acquired by IBM.

Artiman investments range in the size from $100,000 seed to a conventional Series A investment of $2-4M. The fund prefers to limit aggregate investment over the life of a company to approximately $10 million in capital.

Artiman typically is the first institutional capital, most often at the 'concept stage' when entrepreneurs are still refining their key ideas and concepts. At the concept stage, the Artiman team acts as collaborative partners to give strategic direction to the venture.

During its first fund, Artiman funded companies such as NetDevices and Airwide Solutions besides a clutch of other companies which have significant development centres in India.

News: Pantaloon to open biggest Big Bazaar outlet

(BS 29/09/2006) Mumbai - Pantaloon Retail (India) Limited will soon be opening its second Big Bazaar outlet in city. Spread over 1.2 lakh square feet, the outlet, expected to open before Dasara, will be one of the biggest that the retailing major has in the country.

The outlet will come up in the swanky Poonam Mall complex which already houses Central India's first multiplex, Inox.

The complex will soon have a huge roof-top garden restaurant, the region's biggest bookstore and biggest entertainment zone, the first bowling alley, and Rajdhani Thali, the ethnic food joint that has all of Mumbai drooling. The employment generation potential even by most conservative estimates, has been pegged at 1,000.

According to Maneesh Gupta, store manager, Big Bazaar, the second outlet will have five floors (ground plus four) and will come up as part of the Poonam Mall at Wardhaman Nagar. The existing outlet covers 60,000 square feet and is located in the heart of the city at Ramdaspeth.

Gupta said that some innovative retailing formats, never tried before in the country, would be witnessed at the new outlet.

The store will have a live kitchen, a restaurant, a gymnasium, an entertainment hub and a saloon, besides the usual shop-in-shop counters. This would be the 32nd Big Bazaar outlet in the country and will soon be followed by another outlet which is to come up at Nashik.

The store will add buzz to a new area of the city. Wardhaman Nagar in east Nagpur is next to the business district of Itwari and is generally a residential area of the business class. Constructed by N Kumar Group, noted property developers and builders, Poonam Mall will be promoted as a "full day family outing place".

A movie, a snack, shopping for anything, including weddings, gaming, having a hearty meal and then browsing in the bookstore or on the Net is all going to be possible at the swanky mall. What's more, there are going to be several choices for doing any or all of these things.

Poonam Mall covers over two lakh square feet but some sharp designing gives the appearance of still more. The roof-top garden restaurant will be spread over 35,000 square feet. “The roof-top garden restaurant will be operated by a group company,” said Anil Kumar, director of N Kumar Group.

Such a huge complex would require more parking area than any other building in the city and traffic management would require more than available expertise, he said.

News: Carrefour to enter India as cash-carry

(BS 29/09/2006) New Delhi - The 75 billion euro multinational retailer Carrefour is planning to enter India via the cash-and-carry route. It will initially be investing $100 million and will start from the national capital region.

This will be the second instance of a global retail giant’s cash-and-carry operations here after Germany’s Metro AG. The bulk of Metro’s business comes from hotels, caterers, retailers and traders.

Cash-and-carry implies wholesale selling (business to business) and not direct sales to retail consumers, which is prohibited at the moment.

According to the existing guidelines on foreign investment, 51 per cent is permitted and that, too, only in single-brand retail. However, 100 per cent foreign investment is allowed in the cash-and-carry format.

When contacted, a company spokesperson in France said Carrefour had no comments to offer at this stage.

Globally, Carrefour has 120 cash-and-carry outlets. It already has a sourcing office in Gurgaon. Sources close to the Carrefour plan told Business Standard the retailer was keen to initially establish an extensive supply chain across the country using this route. Once the norms are eased, it will look at addressing the end consumer directly.

“Appointing a franchisee may be an easier option. However, the more tedious cash-and-carry route is a full-fledged investment, involving a far greater degree of control. It also provides an insight into pricing mechanisms and a better understanding of the market,” the source said.

Carrefour has already begun scouting for land and has appointed Jones Lang LaSalle as its real estate consultant.

Organised retail in India is estimated at $6 billion and is projected to grow at 20-25 per cent per annum. Other multi-branded global retailers like Wal-Mart and Tesco are eager to enter the country. Carrefour has a strong presence in China, among other countries. Just under 8 per cent of its annual sales come from Asia.

News: Indian airlines may face entry barriers

(BS 29/09/2006) New Delhi - Taking on the budget carriers, full-service airlines today demanded that the government should regulate prices and suggested that higher entry barriers for new players could be a way out of the present financial cauldron facing the industry.

The move, however, was vehemently opposed by budget carriers, which stated that the excess capacity was only a temporary phenomenon and would pass as the market grew on lower fares.

The government, which called a meeting with airlines to work out a method to solve the sector’s financial problems, told the carriers that it would not interfere in pricing, which will be left to market forces.

The budget carriers are Air Deccan, SpiceJet and GoAir, while the full-service carriers include Jet Airways, Indian and Kingfisher.

There was a lot of concern over capacity building in certain routes and this was seen as a major reason for a large number of airlines bleeding, said Ajay Singh, director, SpiceJet, who attended today’s meeting. Singh also said the carriers raised questions on rationalisation of fares.

According to industry estimates, the domestic carriers together are expected to make staggering losses of Rs 2,500 crore in 2006-07.

The meeting was attended by Jet Airways Chairman Naresh Goyal, Kingfisher Chairman Vijay Mallya, Air Deccan Managing Director GR Gopinath, SpiceJet’s Singh, Paramount Airways Managing Director M Thyagarajan, and Air Sahara President Alok Sharma.

The government, on its part, is planning a slew of steps to bring financial health back into the sector. The government is putting stiff conditions on the entry of new airlines that want to fly in the domestic skies.

These include enhancement of the minimum paid-up equity capital requirement, prior approval of business and fleet plans before permission is given to fly and directly linking an increase in fleet size with a commensurate increase in the paid-up equity capital norms laid out for carriers.

In order to ensure that the financial health of a carrier does not lead to bankruptcy, and also to curtail any example of predatory pricing by carriers, the government has proposed that it will review the business plans as well as the financials of the airlines every quarter and suggest corrective measures if required. This was a model the government said it was borrowing from the US.

The paid-up equity capital norm for new carriers will be hiked from the current Rs 30 crore to Rs 50 crore. For every five new aircraft inducted in a fleet, the airline’s paid-up equity capital will be enhanced by Rs 20 crore.

So for instance, a carrier that increases its fleet strength from five (which is the minimum needed for starting operations) will have to enhance its paid-up equity capital to Rs 70 crore if it has 10 aircraft.

In case it starts operation with 10 aircraft, it also has to pay the same amount. Earlier there were no such norms.

According to Civil Aviation Minister Praful Patel, the government has decided to step in to ensure that the Indian carriers remain in good financial health.

“There is massive growth, but at the same time, there are losses, too. We want to ensure better business conditions. The government does not want a repeat of 1991,” said Patel. In 1991, a number of private airlines went belly up due to bad business plans and mounting losses.

New applications to start airlines will have to wait for some more time for licences, as the government wants to evaluate the business viability of these companies before awarding them permission to fly. This has been done to ensure that only sound players enter the sector.

The government came under fire from the private players on higher jet fuel prices. The airlines had pointed out to the government that while prices were high, oil marketing companies passed on the increased price to the carriers, but no such step was taken when fuel prices were down.

According to airlines, the civil aviation minister has assured the carriers that the civil aviation ministry is taking up this issue with the oil and finance ministries. The contribution of jet fuel prices to a carrier’s costs is about 40 per cent.

In addition, the civil aviation ministry is also proposing a tax package to the finance ministry, including long-term waiver of aircraft leasing tax, financial transaction taxes and abolition of services taxes.

News: Legal prop for small, medium industries

(TT 29/09/2006) New Delhi - A new micro, small and medium enterprises act will come into effect from October 2. The act will give statutory safeguard to purchase preference of goods and services produced by micro, small and medium enterprises and incorporate stronger legal provisions to check the delay in payments to them.

The act also empowers state governments to exempt small and medium enterprises that employ up to 50 people from the provisions of existing labour laws. The government expects this to facilitate the graduation of small enterprises to medium ones.

The policy being introduced on the birthday of Mahatma Gandhi, keeping in mind his love for cottage industries, gives prominence for the first time to micro enterprises with fixed investment in plant and machinery of Rs 25 lakh. For small enterprises, the investment ceiling has been raised to Rs 5 crore, while for medium enterprises it has been fixed at Rs 10 crore.

It will introduce a new category of “service enterprises” which will have lower investment limits for the micro (Rs 10 lakh), small (Rs 2 crore) and medium (Rs 5 crore) categories than that stipulated for the “manufacturing” units.

The act will also give a statutory basis to ensuring the smooth flow of credit to these enterprises within the guidelines of the RBI. A fund for the development of micro, small and medium enterprises will be created under the act and all central government allocations for these enterprises will go into this fund.

The act provides for the creation of a national board for micro, small and medium enterprises to be headed by the central minister for small-scale industries and comprise 46 members which will include MPs, representatives of state governments, associations of small industries and trade unions.

News: M&M forges pact with German firm

(TT 29/09/2006) Mumbai - Mahindra & Mahindra today said it would acquire a 67.9 per cent stake in German forging company Jeco Holding at an enterprise value of 140 million euros (over Rs 816 crore).

M&M said it had decided to acquire the stake through its subsidiary and claimed that it was the largest outbound acquisition in the auto component arena.

Jeco Holding primarily focuses on the truck, bus and trailer market. While Scholz AG holds a 90 per cent stake in the company, the remaining 10 per cent is with the management.

Its major products include gear boxes, engine and axle pans, hubs, gears and piston heads and its customers include DaimlerChrysler, ZE Group, MAN Nutzfahrzeuge, Volvo, Linde, Renault, Agco, Kessler and Kolbenschmidt.

“With this acquisition, the Mahindra group has taken a decisive and important step towards creating a global class and global scale business in auto components. This creates a platform that enables us to pursue our vision of building the auto components business as one of the core businesses of the Mahindra group,” managing director and vice-chairman Anand Mahindra said.

According to Hemant Luthra, president, systems and technologies sector, the transaction will result in the group establishing a significant footprint in continental Europe.

“We would also be uniquely positioned to serve our customers from three locations — the UK, Germany and India — for their auto component needs, by driving synergies across the locations.”

“This acquisition is an important component of our strategy of building a global auto component business serving OEMs across geographies,’’ he added.

News: Indian developers queue for IPOs, foreign funds

(RTR 29/09/2006) Hong Kong - Tens, and even hundreds, of Indian developers are lining up to raise funds through initial public offerings in an attempt to ramp up construction to fill an estimated shortfall of 20 million homes.

Many of the companies are small and hope that by raising their profile, they will also attract funds from abroad.

Foreign property investors, who have earmarked around $5 billion for India's vibrant economy, are struggling to identify reliable local partners who can navigate through the country's notorious red tape and often dubious property titles.

Only a handful of developers are listed. And their scarcity during a property boom has contributed to up to nine-fold stock price gains for some firms since the start of 2005, when India eased rules on inward investment in the construction industry.

Anish Jhaveri, director of equity sales at HSBC in India, said hundreds of companies were hungry for funds. But they were small and might lack the skills and capacity to deliver rapid growth investors were after.

"Between 50 and 80 companies will be listed on a yearly basis in the next three years," Jhaveri said on a trip to introduce 11 Indian developers to private equity investors in Hong Kong.

"But we'll see a difference between the men and the boys, those who can execute projects, and those who can't. Ultimately, there'll be consolidation in around five years' time."

After heady gains, the Mumbai stock market slid in May and held up many IPOs this year, including a planned listing by DLF Universal, which developed the New Delhi suburb of Gurgaon.

But now the market has recovered, DLF is planning to resurrect a share sale it hoped would raise up to $3.5 billion.

Jhaveri said several other firms, including New Delhi-based Parsvnath Developers Ltd. and Sobha Developers Ltd. in Bangalore, have filed for IPOs, and Ambuja Realty Development Ltd. is expected to follow suit.

HOME IMPROVEMENTS

Hyderabad-based IVR Prime, a unit of listed construction firm IVRCL Infrastructure and Projects Ltd., is also preparing to file for a stock market listing within three months.

Shares in IVRCL have surged three-fold since the start of 2005, outpacing an 87 percent gain in the benchmark index.

But Ram Kumar, director at IVR Prime, said his firm also wanted to tap foreign investors for the funds it needs to expand.

He said IVR would quadruple revenue to around US$125 million in 2007, and aimed to develop 50 million square feet of land in Hyderabad, Bangalore, Pune, Chennai and New Delhi in five years.

"We've got the construction ability that small contractors don't have," Kumar said. "And we're concentrating on mass housing people can afford. Low salary people need to own houses too."

Such sales pitches have lured many big-name investors to India, including U.S. pension fund CalPERS, and the property private equity arms of Merrill Lynch, JPMorgan, and Morgan Stanley, which has taken a stake in two developers. But not all property funds are ready to jump in.

"Everyone is asking for us to take them to India, but it's not that easy," said David Blight, head of investment management at Netherlands-based ING Real Estate.

"Investing with partners you don't know well is not a considered way of entering a market."

In India, ING would follow its business model in China, where it is about to close an "opportunity fund" for development worth US$300-$350 million, but first tested the water with a couple of joint-venture projects with listed developers.

"It helps when companies go public, there's more transparency," Blight said of investing in India.

Foreign investors cannot own land or existing buildings, so they are forced to join local partners to develop, and keep their investment in the country for at least three years.

Risks include a morass of bureaucracy, difficulties buying land split among multiple owners for tax purposes and frequent contests over property titles. But projects can be lucrative.

Mumbai-listed Ansal Housing and Construction Ltd., which is planning to raise $25 million in the next two months through a preferential share placement and foreign currency convertible bonds, is touting its 30 percent internal rates of return. The company has seen its share price jump nine-fold since the start of 2005.

"The price of our land has doubled in the last two and a half years," said Ansal's vice president, Mohinder Bajaj. "And people are living in crumbling places and desperate to move."

HSBC's Jhaveri, whose income has risen 15-fold in five years, said he was a prime example.

"I don't want to live where I'm living," Jhaveri said. "I want my children to live somewhere like that," he said, pointing to a 35-storey apartment block perched half way up the Peak, a mountain that overlooks Hong Kong.

News: Birla Sun Life collects 4.05 bln rupees in equity fund

(RTR 29/09/2006) Mumbai - Birla Sun Life Asset Management Co. Ltd. has collected about 4.05 billion rupees in its close-end Birla Long Term Advantage Fund, Raghvendra Nath, vice-president - marketing and strategy, told Reuters on Friday.

"Over 100,000 investors have invested in the fund," he said.

The fund was open for initial subscription between Aug. 7 and Sept. 15.

The fund house managed about 171 billion rupees as on August 31, data from the Association of Mutual Funds in India showed.

News: India's net international investment deficit rises

(RTR 29/09/2006) New Delhi - India's deficit on its net international investment position widened to $46.07 billion on March 31, 2006 from $40.31 billion a year earlier due to the rise in the current account gap, the central bank said on Friday.

The net international investment position is the stock of a country's external financial assets less its stock of external liabilities.

India's total assets stood at $183.13 billion at the end of March, up from $168.9 billion a year earlier.

Liabilities, which include foreign direct and portfolio investments, were $229.20 billion at the end of March, compared with $209.22 billion a year earlier.

In a statement, the central bank said the deterioration in net position of about $6 billion during the year was attributable to the widening of the current account deficit to $10.6 billion in 2005/06 (April/March) from $5.4 billion a year earlier.

News: India needs reforms to sustain high growth - Chidambaram

(RTR 29/09/2006) New Delhi - India needs to speed up reforms and maintain fiscal discipline to sustain high economic growth, Finance Minister Palaniappan Chidambaram said on Friday as he hinted at more steps to keep inflation under 4 percent.

Government data on Friday showed that India's economy grew at an annual rate of 8.9 percent in the April-June quarter, and the minister said it was possible to maintain growth of more than 7.5 percent in coming quarters.

"We must continue to follow fiscal discipline and prudence," Chidambaram told reporters.

"Unless financial sector reform is completed, it will be hard to sustain a high growth," he said, but added a combination of reform and discipline could enable the economy to sustain growth rates of more than 8 percent.

India's gross domestic product (GDP) grew 8.4 percent in the fiscal year ended March 2006.

The federal deficit rose to 906.78 billion rupees ($19.7 billion) in the April-August period, 61 percent of the full year target, the minister said, adding the revenue deficit was 793.98 billion rupees.

But given the buoyancy in tax collections, Chidambaram said the government would meet its fiscal targets during 2006/07.

India aims to bring down fiscal deficit to 3.8 percent of GDP in 2006/07 from 4.1 percent in 2005/06.

PRICE PRESSURES

The government wants India to be a manufacturing hub in 12 to 24 sectors. To that end, it is setting up special economic zones for petrochemicals, information technology, electronics, pharmaceuticals and auto parts.

It has also promised tax breaks and access to bank loans to achieve high growth in manufacturing.

"The government will ensure that credit is not denied or delayed, and is available at reasonable rates to productive sectors," Chidambaram said.

The minister noted there was pressure on food prices, and said he would discuss further steps with the central bank governor to keep inflation in check.

Government data showed on Friday the annual inflation at 4.56 percent for the week ended Sept. 16, and Chidambaram said the government intended to keep it at 4 percent or less.

The Reserve Bank of India next reviews monetary policy on Oct. 31.

News: Logan doing the last laps before launch

(DNA 29/09/2006) Paris - Sylvain Blain remembers that day in mid-2004 well. A global survey on manufacturing abilities of countries was just handed over to him. One look at the contents, and the eyes of the chairman of Mahindra Renault popped: the report said India will be the top global manufacturing country in the world.

This month, Blain got affirmation. The $55 billion European auto giant just signed a deal to source two auto parts from India.

It’s a small beginning, but quite symptomatic of the way the French auto giant’s Logan car project has been going.

More than half of the parts of the sedan - 52% to be exact — to be launched in the first half of next year, will be local.

The engine will be imported from Romania, the sedan is doing the final rounds of testing on Indian roads, around 20 vehicles made at the joint venture’s Nashik plant have clocked 3,00,000 km on rough Indian terrain.

By the first year of the launch, the localisation would have increased to 58%, including engine parts.

“The first trials for the Logan in India started in May 2006 and we did 70,000 km, going through the rigours of summer and monsoon,” said Rajesh Jejurikar, managing director of the joint venture, Mahindra Renault.

“The engineering for the right-hand drive (Logan is sold as a left-hand drive elsewhere) is complete. Some work was also done in Romania using parts sent from India and the Logan is now ready for homologation,” said Jejurikar.

The company is also planning Logan variants and work is currently on on five derivatives.

Patrick Pelata, executive vice president, Renault, said the right-hand drive Logan would be steered into other right-hand drive markets across the globe.

Good quality parts and cheaper vendor sourcing means Mahindra Renault has already managed to bring down the costs. “Our expense data shows the project cost is down substantially,” he said.

The Logan project has an outlay of 125 million euros or about Rs 700 crore. “The quality of the parts is very good,” says Pelata.

So, will the Logan’s low-style-quotient work against the product - derived as it is from an East European milieu? Pelata says the car is based on the fundamental principle of “getting the basics right” - that of roominess, robustness and affordability.

Jejurikar says changes have been made to the Dacia Logan model sold in Romania to make it a more contemporary look and swisher styling, including interiors.

The pricing for the mid-sized sedan, analysts said, could come down following the high level of localisation. “It should be in the Rs 5-6 lakh range,” said an analyst with a foreign brokerage in Mumbai.

The Logan was launched in Romania in 2004 and sells in the $9,000-10,000 range. The joint venture will have the capacity to produce 50,000 cars a year.

“No C-segment car in India has that kind of sales at present. The highest seller in the segment, the Honda City, sells about 3,500 a month. So the production capacity can take care of the market needs now,” he said.

Will Renault, which has already started a beachhead in Mumbai for research, go alone some time down the line, considering the potential of the market?

Pelata says that’s no easy decision. “India is complex. There have been many who tried to go solo and did not succeed in the country. If you have a good partner, the value proposition just multiplies and the failure rate is drastically lower.”

Indeed, the auto major has operations beyond research and part-sourcing. The local entity also looks after CBU imports of the Renault range.

The auto parts promise interests Nissan, too

Renault’s sourcing from India is sparse now, just totting up to about 7 million euros. But Patrick Pelata, executive vice-president, Renault, believes this is just the beginning. This is because product development in India costs “much less”.

“We are asking for quotations for engine parts. We’re trying to send more of our managers to India for parts purchases,” Pelata said.

Pawan Goenka, president (automotive sector), Mahindra & Mahindra Ltd, said the development of outsourcing contracts take time. “They follow a one-and-a-half year cycle from product planning to validation.”

The outsourcing, though puny now, has elicited interest from even Nissan.

“Recently, some purchasing managers of Nissan asked us, ‘Hey, could we also share the parts made in India?” said Pelata. “This is good for all - for Mahindras, for Renault, and, of course, Nissan - to have a low-cost parts base.”

News: Indian economy grows by 8.9 pc

(PTI 29/09/2006) New Delhi - The Indian economy grew by 8.9 per cent in the first quarter (April-June) of this fiscal, compared to 8.5 per cent last year.

Inflation declined to 4.56 per cent for the week ended September 16 from 4.61 per cent in the previous week. It was mainly due to lower prices of food items and industrial fuel.

The wholesale price based inflation stood at 4.17 per cent during the corresponding week last year.

The economy grew on the back of a strong growth in manufacturing and services sectors.

While agriculture remained stagnant at 3.4 per cent during April-June 2006-07, manufacturing sector rose 11.3 per cent in the first three months of the current fiscal as against 10.7 per cent in the same period of 2005-06, according to government data released on Friday.

In the services, trade, hotels, transport and communications sector showed the highest growth of 13.2 per cent in the first quarter compared to 11.7 per cent in the year-ago period.

The construction sector, however, slowed down to 9.5 per cent this year from 12.5 per cent, while growth in electricity, gas and water supply slipped to 5.4 per cent from 7.4 per cent in April-June 2005-06.

The mining sector registered a growth of 3.4 per cent this fiscal compared to 3.1 per cent. Financing, insurance, real estate and business services grew marginally higher at 8.9 per cent as against 8.8 per cent, and community, social and personal services rose by 7.4 per cent from 7.3 per cent in the corresponding period of last year.

In rupee terms, GDP at factor cost stood at Rs 6,56,064 crore in the first quarter this fiscal as against Rs 6,02,476 crore in April-June 2005-06.

News: EurIndia plans to raise Rs 100 cr for real estate

(BL 29/09/2006) Mumbai - EurIndia, an early stage venture capital fund that recently raised a Rs 100-crore fund out of Mauritius to invest in the Indian real estate sector, plans to raise a similar fund later this year.

Vinod Ganjoor, key founder and CEO of EurIndia Ltd, told Business Line that this time round the company proposes to raise funds for a real estate multi-sector fund.

"We are looking at residential, commercial, hospitality, retail, etc. While we are looking to maintain a pan-Indian presence, our main focus would be Goa and the South."

The fund, which is well known for having invested in startups such as Allsec Technologies, Thinksoft Global and OnMobile, is in exit mode. It plans to exit from these companies over the next 12-18 months.

Typically, an early stage venture capital fund would invest in development stage projects in the residential, commercial/IT/BPO, and hospitality spaces and exit through sale of the units or IPO (say, in the case of a hotel or hotel operator).

"Allsec Technologies is our leading portfolio company and with Carlyle coming in, we are looking at landmark returns for a startup deal," Ganjoor said.

"We have stayed invested in this company since 2002 and are now looking to making 10x returns. With regard to OnMobile, at current valuations established on conclusion of pre-IPO private equity deal, we have established a valuation of over 5x returns. Over time we are targeting 12-15x returns. In Thinksoft we are looking at almost 6-7 times returns on our investment."

EurIndia's recent real estate fund has identified two projects for investment.

"One is a large hotel project in Goa where we have acquired land and are close to identifying a hotel operator to manage the hotel. This will be a Rs 150-crore project over time and we expect to close the deal with a hotel chain by November and start construction some time next year. About 38 crore has been invested so far in this project."

The fund is also close to finalising a multi-city hotel project with a reputed partner in Chennai.

"We will construct and operate 8-10 business hotels in the 3- and 4-star segment in southern India. The project will absorb over Rs 200 crore of equity capital and we will contribute half of that - so, about Rs 100 crore, over the next three years," Ganjoor said.

He added: "We will initially commit approximately Rs 20 crore seed capital to the second (3/4-star hotel) project by November when the deal closes. Another Rs 15 crore has been earmarked for deals that we hope to close before December. The rest will be deployed by June next year."

EurIndia is a Gibraltar-based fund while its hospitality fund is via the Mauritius-based Elliot Resorts. EurIndia owns 17.18 per cent of Allsec Technologies (before Carlyle) through its company, Euronet, and 31.2 per cent of Thinksoft Global through a company called Euro-Indo Investments Ltd.

News: ING Vysya's first asset allocation fund

(BL 29/09/2006) Mumbai - ING Vysya Mutual Fund has launched a new close-ended fund, ING Vysya Dynamic Asset Allocation Fund. The three-year close-ended fund has been given AAA (so) rating by Crisil.

The fund will invest in equity/equity-related securities and for defensive purposes, it may place funds in debt and money market instruments.

The new fund offer opens on September 27 and closes on October 19.

The scheme will have a pre-determined `floor' and `multiplier'. Also, the portfolio will be juggled every 15 days or every time the market turns volatile. The floor and multiplier will work on a formula seeking to protect capital at any given point and offer reasonable returns.

Thus, the scheme will lift its exposure in equities, every time the markets go up. "As the market is becoming more and more volatile, we should have a pre-determined rebalancing frequency in switching our portfolios from one segment to another for sustainable benefits to investors," said Ramanathan K. Head - Fixed Income, ING Vysya Mutual Fund.

The fund will invest up to 50 per cent in mid-caps and the rest in large caps. The fund is available in three options: Growth, Dividend and Bonus.

The fund will have a nil entry and exit load and the minimum investment will be Rs 5,000. It will be benchmarked against the Crisil Balanced Fund Index.

News: 'Indian economy can withstand global slowdown'

(PTI 29/09/2006) Mumbai - Country's economy, growing at a healthy eight per cent, will be less affected by a global slowdown due to its internal strengths and resilience, and inflation will remain in the broad range of 5.5 per cent, the RBI chief has said.

"Though there would be an effect, India is likely to be less affected and in the medium term can confidently aim to remain in the broad range of GDP (8 per cent) and inflation (5.5 per cent)," the RBI Governor, Dr Y.V. Reddy, told reporters here.

Considerable domestic demand, diversified external trade of institutions and limited exposure to foreign currency of the corporates and individuals are the factors that will safeguard India's economy from the global slowdown, he said on the sidelines of a FICCI-IBA global banking conference.

Reddy pointed to a global paradoxical phenomenon in which growth expectations were moderating and inflation was hardening.

"It is an interesting combination," he remarked.

News: Kalam launches LIC's micro insurance product

(TNN 28/09/2006) Newe Delhi - President A P J Abdul Kalam on Thursday launched a micro insurance product of LIC that targets to benefit economically underprivileged segments of society.

The policy -- Jeevan Madhur -- will cover individuals in 18-60 year age group and the minimum sum assured under the plan is Rs 5,000 while maximum is Rs 30,000.

The premium can be paid weekly, fortnightly, monthly, quarterly, half-yearly and yearly.

The minimum premium is Rs 25 per week, Rs 50 for fortnightly, Rs 100 per month and Rs 250 for other premium paying periods.

The term of the policy ranges between 5-15 years.

The likely maturity sum assured on a premium of Rs 1,200 per annum for a 15-year-term would be Rs 18,396.
The plan is being marketed through some micro insurance agencies.

Life Insurance Corporation is the largest life insurer in the country with a market share of about 77 per cent.

News: No word on Bharti’s retail partner yet

(DNA 28/09/2006) Ludhiana - With just a few days to go for Bharti’s retail plan announcement, group chairman Sunil Bharti Mittal is keeping everyone guessing about the joint venture partner.

Although Mittal had indicated recently that UK’s Tesco would be the preferred joint venture partner for Bharti’s retail project, on Wednesday, he said discussions were still on with three international players - Tesco (UK), Walmart (US) and Carrefour (France).

“The JV partner could be any of these three,” and an announcement is likely by the first week of October, he said on the sidelines of the inauguration of the R&D centre of FieldFresh in Ludhiana. Prime Minister Manmohan Singh inaugurated the R&D centre - FieldFresh Agriculture Centre of Excellence - here on Wednesday.

While the rules on FDI in retail sector only allow the franchise route for the Bharti JV project, the group is in the process of striking alliances for its agri-business, FieldFresh Foods, which is a joint venture with UK’s financial service giant, Rothschild. Even as the vision for the FieldFresh project is to link India’s fields with the world, domestic alliances are also big on the company’s agenda.

FieldFresh is open to supplying to all retail chains, according to FieldFresh director Rakesh Bharti Mittal. Among others, FieldFresh is likely to supply vegetables and fruits to Pantaloon and Mukesh Ambani’s retail venture.

FieldFresh is expected to export its products to major retail chains by February 2007. Pilots are currently on with some of them, including Tesco and Marks & Spencer, it is learnt. The target destinations for FieldFresh’s exports include the UK, the US and the Middle-East.

After the inauguration of the FieldFresh R&D centre, Sunil Bharti Mittal announced that the agri-project would over a period of time be spread across the country. While currently FieldFresh has over 4,000 acres under cultivation in Punjab, and growing partnerships in Maharashtra, Rajasthan and Uttaranchal, talks are on with the state governments of Bihar and West Bengal for taking the agri-project there too. Also, from the current 4,000 acres, there are plans to increase the cultivation area to 20,000 acres in the near future.

FieldFresh has an initial investment outlay of $50 million. According to Mittal, it is “effort intensive,” rather than a capital intensive business.

News: India keen to sell black tea in China

(PTI 28/09/2006) Beijing - Indian tea industry keen to forge a long-term relationship with its Chinese counterparts, is seeking market opportunities for its black tea in the world's most populous nation, Chairman of the Tea Board has said.

"Both our great nations share some common features like rich cultural heritage and the tradition of producing and drinking tea. While China produces world class green tea and India produces world class black tea," Basudeb Banerjee said at an 'India China Tea Symposium' held in the eastern Chinese metropolis, Shanghai.

"We would like to offer to them, through the importers, packers, distributors and retailers the wide range of Indian Black Tea," he said while making a presentation on the Indian Tea industry sketching out areas in which the Tea industry of both countries could collaborate.

The meeting was organised by the Consulate General of India in association with Tea Board of India and Tea Institute of Shanghai.

"The interaction was aimed at acquiring better understanding of business opportunities in both countries and forging new partnerships," official sources said.

In his opening address, Consulate General of India in Shanghai, Vishnu Prakash termed the initiative as timely and farsighted.

With rising affluence in both countries and a growing preference for health foods, consumption habits and preferences were undergoing a rapid change, he noted.

News: Mauritius woos the wealthy

(DNA 28/09/2006) Mumbai - Come October, the shimmering blue seas of Mauritius - an island state strategically located in the Indian Ocean midway between the continents of Asia, Africa and Australia - will look even more attractive for the wealthy. “We are opening up our country to foreign investors to buy property and become a permanent resident in Mauritius,” says Raju Jaddoo, managing director of InvestMauritius.

For those who came in late, the government of Mauritus has amended 15 pieces of legislation to free the country from red tape and give instant resident status to investors.

So far the island has been a tourist destination that doubled up as a tax haven for investors. Can Mauritius become a Bermuda or a Monaco?

Actually, Mauritius wants to become another Singapore. “Our country itself is an special economic zone”, declares Jaddoo.

Jaddoo’s in India to woo Indian bulge bracket investors to settle in Mauritius along with their stash of wealth. He is fully clued to the stampede of investors rushing in to set up SEZs in India.

A change in government this year brought about a chance to reinvent Mauritius, which has so far positioned itself as a kind of tax-haven for shell companies by signing a series of double taxation avoidance treaties with countries such as India. The shadow of terrorism and the insistence on transparency has practically made the secrecy laws for accounts difficult to sustain in the longer run.

Jaddoo says rich Europeans have already bought into the dream villas by shelling out half a million dollars (Rs 2.3 crore each), attracted by the sun-kissed verdant beaches situated around the island state.

Prince (Amir) al Waleed bin Talal bin Abdul-Aziz, the Saudi Arabian investor with stakes in Four Seasons hotels and Citigroup, has already jumped into the fray and is said to have acquired 60-70 villas, which he has leased to Four Seasons, the luxury hotel chain. The villa projects are worth US $ 500 million each and a series of projects are planned in the island state.

It is not the rich and the famous alone who can take up permanent residence permits. Even retired non-citizens can apply for the permit provided they can bring in US $ 40,000 annually (approximately Rs 19 lakh) in bank accounts in Mauritius.

“We have decided to invite people to come, live and work in Mauritius,” Jaddoo says.

Even businessmen can set up enterprises in Mauritius, if they can promise to generate revenues of US $ 1,00,000 annually. Salaried individuals can settle in Mauritius if they can ensure that they will earn US $ 14,000; self-employed people can do the same provided they can earn about US $ 20,000.

“The onus is now on the investor,” says Jaddoo. We have changed all the cumbersome legislations that took six months to process. It has changed to three days, and if you don’t hear within that period it is a silent consent to your residency.

For ease of doing business, Mauritius is 32nd in the rankings among all countries. “We want to be in the top 10. We are prepared to walk the talk.”

Mauritius is beckoning.. Is anyone interested? Check investmauritius.com.

News: India, Pak banks may open branches across the border

(BL 28/09/2006) Mumbai - Banks in India and Pakistan may open branches across the border in the near future, according to Dr Shamshad Akhtar, Governor, State Bank of Pakistan.

Speaking to reporters at a banking seminar, Dr Akhtar, not naming the banks, said banking regulators in both countries will have to endorse the move, she added. "We share cordial relations with the RBI," she said.

Talking about the banking sector in Pakistan, she said, "We are also trying to consolidate our banking system." They were also looking at floating GDR (global depository receipts) issues, she said. Habib Bank is looking at floating a GDR issue in the next three to four months, while Muslim Commercial Bank, will be coming out with a $100 million GDR issue.

Currently, money is tight in Pakistan. "It is very difficult to say when the situation will ease. We would like to see a decline in the core price index," Dr Akhtar said.

The inflation target for the current year is around 6.5 per cent and economic growth is expected at 7 per cent, she added.

News: ICICI to hire 40,000 annually

(PTI 28/09/2006) Mumbai - ICICI, the country's largest private sector financial services group, said it expected to hire up to 40,000 people a year for the next three to five years to service expected growth in the country's burgeoning banking and insurance sectors.

The recruitment drive by ICICI, which currently employs about 1,50,000 staff, is part of efforts by the country's financial groups to step up their retail banking services and to prepare for expected liberalisation of the insurance industry.

Indian industry is suffering from an acute shortage of skilled manpower as breakneck growth across a range of sectors, from finance and manufacturing to the IT and business process outsourcing industries, soaks up available talent. The country's banking industry has reported double-digit revenue growth over the last few years on the back of a booming consumer finance sector, with a newly affluent middle class buying homes, cars and appliances.

News: Indian real estate fund from HSBC Mutual

(ACERC 28/09/2006) Mumbai - In a bid to tap the booming real estate sector, HSBC Mutual Fund is planning to set up a real estate investment fund. Simen Munter, Deputy Chief Executive Officer, HSBC India, said this on the sidelines of the banking seminar organised by FICCI and IBA. Munter said the bank had seen heavy demands for investments in the real estate. However, he denied of any bubble existing in the same. The corpus for the fund was not yet fixed, he added. Commenting on the Indian operations, he said India is one of the key business areas for HSBC. It is among the top 10 profit contributors to HSBC. HSBC is pumping in $3 million for its Hyderabad branch expansion. The bank is planning to relocate its branch to a 50,000 sq feet premises very soon. HSBC is also setting up a processing centre at Malad in Mumbai. The 200,000 sq feet centre will take care of its BPO operations. HSBC has invested $10-15 million for the processing centre. On the branch expansion, Munter said the bank had got three licences this year, of which two branches, in Raipur and Patna, are already set up, while it is planning to set up a branch in Lucknow. Meanwhile, on the NBFC licence, he said it had not yet received permission from the regulator and once it is received they would relocate the consumer finance business of the bank to NBFC.

News: George Soros' fund hikes stake in Delhi realty co

(TNN 27/09/2006) New Delhi - George Soros’ investment fund has increased its stake in Delhi-based real estate company Anant Raj Industries. Soros’ Quantum Fund, which bought 1% equity of Anant Raj Industries last month, has picked up another 1% stake over the last two days through the open market.

Quantum Fund has been pretty active in the Indian stock market for the last 2-3 months where it has picked small chunks of shares in real estate and infrastructure companies including Unitech and GMR Infrastructure apart from Anant Raj Industries.

It is understood that the investment fund picked about 2.5 lakh shares through open market transactions for a price range of Rs 830-840. This would mean a total transaction value of about Rs 20-22 crore.

When contacted by ET, Amit Sarin, executive director of Anant Raj Industries, confirmed the development, “They have picked up another 1% equity from the secondary market.” Quantum Fund had earlier picked 1% equity in Anant Raj at a price of Rs 680 per share.

Anant Raj Industries, a major player in the ceramics tile industry in the past, now generates more than half of its revenues and a significant part of its profits from the real estate business. Within the real estate sector the company has an interesting business model that involves renting of commercial space which brings fixed revenues every month.

Moreover, a string of group companies which are in the real estate sector are being merged with the listed entity. The promoters, who own close to 60% stake in the company, today would be holding about 71% equity of the company after these mergers take place.

News: Oberoi to tap private equity cos for $100m

(TNN 27/09/2006) Mumbai - Another real estate mega deal is in the making. Mumbai-based Oberoi Constructions is raising funds to the tune of $100m from private equity firms.

Morgan Stanley Real Estate fund is the front-runner, according to the sources, while 14 other leading real estate funds like HDFC Real Estate, Banyan Real Estate Fund, IL&FS Realty and India Reit Fund, are also in the fray.

The race has now narrowed down to four players and the deal is likely to be finalised in the next four weeks. Sources also say that the company is valued at $1bn by the investment bankers. Kotak Mahindra is the investment bank brokering the deal.

When contacted, Vikas Oberoi, MD, Oberoi Constructions said, “We are in the process of raising funds through the private equity route. However, at this stage we are in talks with potential investors and are bound by confidentiality agreement and would not be in a position to reveal any details.”

The Morgan Stanley representatives, however, didn’t respond to ET queries. The company refused to divulge the percentage of stake to be divested in lieu of the proposed investment.

The Mumbai-based developer requires capital to pursue its aggressive growth plans. Currently, the company has ongoing residential and commercial projects in Mumbai’s suburbs — the Oberoi Mall in Goregaon, Oberoi Chambers and Garden Estate in Andheri, among others. It also has upcoming projects for NRIs that require funding.

Last year, the company had bought a unit and plot from GSK for development. The company is planning residential and commercial complexes in other metros as well.

The real estate sector is growing at 35-40% and has seen some big-ticket private equity deals in the last few months with nearly $350m in investments flowing into the booming sector. The action started in January with Siachen Capital investing $100m in Bangalore-based Nilesh Estates. Then Morgan Stanley Real Estate pumped in $67.4m to Mantri Developers. In yet another sizeable deal, HDFC Real Estate invested $35m in the Ansals IT City and Parks.

It also invested $31m in Pune-based developer Vascon Engineers. Other companies like L&T Urban Infrastructure, E-City, Vipul SEZ, SSI, and Suntech Project, have also raised Private Equity in the last few months. Experts say that with more than 20 real estate funds in the race, the sector will continue to be the flavour of the season for some months to come.

News: Reliance Retail to debut on Oct 18

(TNN 27/09/2006) Mumbai - Mukesh Ambani is a big believer in the power of number nine. The auspicious number or a factor of nine invariably crops up in various facets of his life. Be it the number plate of his car, his birthday or even the launch date for a major business initiative from the Reliance Group.

So it doesn’t take much to guess the proposed date that the chairman of the Reliance Group has chosen to kick-off his next big bet: the launch of Reliance Retail.

On October 18, ET learns that Ambani and the Andhra Pradesh chief minister YSR Reddy are expected to inaugurate the group’s first retail format — a basic fresh food & vegetable chain — in Hyderabad. Nearly 28 outlets in AP are expected to go live on the same day.

After AP, Punjab is expected to be the next stop for the Rs 25,000 crore retail juggernaut. As is widely known, Reliance Retail has plans to launch two different formats, ‘Feel Fresh’ and ‘Feel Fresh Plus’. ‘Feel Fresh’ stores will stock fresh fruits, vegetables and staples and will be spread over 3,000-5,000 square feet.

On the other hand, ‘Feel Fresh Plus’ stores will be spread over 10,000-15,000 sq ft, and stock fruit and vegetables as well as apparel, consumer electronics, FMCG items and even medicines. Both these formats will be entirely company-owned and managed.

After the launch in AP and Punjab, Reliance Retail will then spread out to other cities such as Mumbai and Delhi, where Reliance has identified up to 80 locations each. Reliance is also in the process of acquiring six acres of land in Hyderabad from Bhagyanagar, a real-estate developer in AP, for Rs 75-100 crore. RRL is planning a mall in the acquired land which will be the centre point of RRL’s operations in Hyderabad.

RIL spokesperson declined to comment on the development. The company has already signed agreements with the West Bengal and Punjab governments to tie up for procurements and roll out retail outlets. Sources said that after entering into an alliance with Sahakari Bhandar in Mumbai, the company had been looking at strategic alliances with other co-operatives too. However, the other initiatives are yet to fructify.

News: Tatas, Rembrandt may set up budget hotels

(TNN 27/09/2006) Ahmedabad - The Tata group’s Indian Hotel Company (IHCL) is entering Ahmedabad’s booming hospitality industry with its GenNext ‘Smart Basics’ Hotel —’Ginger’ brand in the budget hotel category.

Sources said the Tatas are in talks with the Rembrandt group, which recently acquired Natraj Cinema on Ashram Road for the project. “The Taj group will set up a hotel with the Rembrandt group, which will own the hotel,” a source said. Sources added the former owners of Natraj had also spoken to Taj for a possible venture, but it was later decided to sell off the property.

The Rembrandt group, which has developed the Rembrandt building on CG Road acquired Natraj theatre property 4-5 months back. According to the preliminary plans, the theatre site will house two separate towers. “There will be one commercial complex and a hotel at the location,” a source said. Amit Gajjar, the partner in Rembrandt group declined to confirm this but said, “The Tata group has shown interest but talks are at a very preliminary stage.”

The Ginger Hotels are budget hotels with around 100-200 rooms equipped with a gymnasium, yoga centre, restaurant, meeting rooms, ATMs. The plans will be drawn up in the next two-three months. On Monday, IHCL launched Ginger hotel in Mysore, its fourth such hotel in India.

Gujarat is already witnessing a hotel boom with several players such as Dawnay Day Group, IHHR Hotels, Mayfair hotels, DLF group and several others coming up with new hotel projects.

The demolition work at Natraj cinema is going on in full swing at the Natraj cinema. The decades-old single screen Natraj cinema like many other theatres in the city suffered huge losses with the entry of multiplexes and it was then that the owners decided to sell it off.

News: Reebok to open 1100 Indian stores

(BS 27/09/2006) New Delhi - Reebok has decided to step up the heat on its rivals in the country, its acquisition by Adidas last year notwithstanding. “We are going to increase the number of our stores from 350 now to 1,100 by 2010,” Paul Harrington, president and CEO, Reebok, today told Business Standard.

India is the only market in the world where Reebok has a higher share than Adidas and Nike. After last year’s acquisition, it was not clear with which brand Adidas would lead the charge in the country.

The aggressive growth plans outlined by Harrington clearly suggest the Adidas group does not wish to upset the applecart. In the last one year, Reebok has expanded its market share in the country from around 40 per cent to over 50 per cent.

To promote its brand, Reebok will kick off a new campaign ‘When Did I Know’ with cricketers Rahul Dravid and Mahendra Singh Dhoni from October 1. “This is part of our global strategy to go after individual athletes,” Harrington said.

Though it lost the kit sponsorship deal for the Indian cricket team to Nike, Reebok claims that it has, at any time, at least eight brand ambassadors in the playing eleven. The company also claims to have 25 per cent share of the bat market in the country.

Talking about new lines, Harrington said Reebok might introduce its Scarlett Johansson range of apparel in select stores worldwide in March next year. “We will have the range in some of our stores here as well,” he added.

It is worth noting that Reebok has withdrawn its watches from the Indian market as the segment did not fit into its mainline business.

On price points, Harrington said Reebok did not have plans to go any lower as consumers were showing evidence of moving up the value chain. “All our top-end products are doing extremely well,” he said. Although Reebok’s footwear line starts at Rs 1,099, the bulk of its sales is in the Rs 2,000-4,000 range.

News: India breaks BRIC ranks in competitiveness

(BS 27/09/2006) New Delhi - Ever since Goldman Sachs came out with its much-talked-about report saying Brazil, Russia, India and China will dominate the world’s economy by 2040, India has often found itself clubbed with the other three.

However, the World Economic Forum’s Global Competitiveness Index (GCI) gives India the chance to break out.

The rankings for 2006-07 place it 43rd, well ahead of Brazil (66), China (54) and Russia (62). Even last year, India, in 45th place, was ahead of the other three.

In fact, each of the other three slipped this year: China from the 48th place to 54th, Brazil from the 57th to 66th and Russia from the 53rd to 62nd.

Switzerland, Finland and Sweden are the world’s most competitive economies, according to the report.

Denmark, Singapore, the US, Japan, Germany, the Netherlands and the UK complete the top 10, but the US shows the most pronounced drop, falling from first to sixth place.

As in previous years, India continues to score well in indicators related to innovation as well as in the adoption of technologies from abroad.

However, a number of weaknesses remain. Efforts to reduce the high fiscal deficit — one of the highest in the world — need to be sustained, and, as in previous years, the lack of appropriate infrastructure impedes growth in more remote regions of the country.

Dealing with shortcomings in the provision of health services and education will ensure that the benefits of economic growth are more broadly distributed, the report says.

“The quality of the business environment in India has improved tangibly in recent years... The available evidence suggests that the Indian economy may have entered a high growth plateau — the challenge for the authorities will be to ensure that this process is sustained and that it precipitates further progress in poverty reduction,” said Augusto Lopez-Claros, Chief Economist and head of the World Economic Forum’s Global Competitiveness Network, in a press release.

The rankings are drawn from a combination of publicly available hard data and the results of the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum, together with its network of partner institutes (research institutes and business organisations) in the countries covered by the report.

This year, over 11,000 business leaders were polled in a record 125 economies worldwide. The survey questionnaire is designed to capture a broad range of factors affecting an economy’s business climate that are critical determinants of sustained economic growth.

The forum annually delivers a comprehensive overview of the main strengths and weaknesses in a large number of countries, making it possible to identify key areas for policy formulation and reform.

News: Basel breathe-easy for Indian banks

(TT 27/09/2006) Mumbai - The Reserve Bank of India (RBI) may extend the deadline for banks to adhere to Basel II norms.

The final guidelines on Basel II will be announced by the central bank in the next few weeks. The Basel II regulations distinguish banks on the basis of their risk profiles and are slated to take effect from March 31, 2007.

“The RBI is constantly monitoring the state of preparedness of all banks. The latest indication is that there may be a marginal extension of the date,” RBI deputy governor V. Leeladhar told newspersons on the sidelines of the Ficci-IBA conference on global banking here today. Leeladhar, however, did not reveal the new deadline.

What is Basel II?

The Basel II regulations, drafted by the Bank for International Settlements (BIS), significantly upgrades the Basel I norms that are in place since 1992-93 in India.

The main difference is the measurement of risk in Basel II, which prescribes different levels of capital allocation on assets based on their risks as opposed to the broad measurement of risk in Basel I.

Slow but steady

The RBI would impose the new regulations gradually, Leeladhar said. He told the conference that the country’s approach to reforms was to align with global best practices but at a pace suited to the economy and the environment. “Therefore, we have consciously decided to mandate the standardised approach and basic indicator approach to all scheduled commercial banks in India as the first step in migration to Basel II,” he said.

Easier norms

As part of this approach, the RBI has decided to ease some of the rigorous rules, Leeladhar said.

It has allowed in the initial phase a risk weight of 100 per cent on unrated loan assets. This comes even as the central bank has tightened its risk weightages for loan exposures. It recently put the risks on loans to SEZs on a par with real estate by assigning a weightage of 150 per cent to such loans.

The relaxation on unrated loans gives banks some breathing space since only 10 per cent of loan assets are rated by independent agencies.

Rating riddle

Elaborating on the challenges in Basel II, Leeladhar said banks wanted to use their own ratings to assess loans of corporate houses that do not have an external rating, till such time the bulk of the issues of corporate houses get an external rating. The problem arises from the practice in India of rating individual debt issues of a company rather than rating its overall borrowing capability. This suggestion was however, not “accommodated’’ by the RBI.

Pak support

Both Leeladhar and State Bank of Pakistan governor Shamshad Akhtar said there were misgivings about the impact of Basel II on the financial systems of emerging market economies. This concern is shared by global banks like Standard Chartered which find themselves in an enviable position of having to churn out a large number of reports as 92 countries switch over to the new set of rules over the next five years.

Setting speed limits

“In Europe, you can race down the autobahn at a speed of 200 kmph which I did recently. But in countries like India and Pakistan you need to regulate speed with the state of the roads and its special circumstances. We need to follow different speeds in the adoption of Basel II norms as well,” said Akhtar.

News: Indian open skies fail to thrill western carriers

(DNA 27/09/2006) Bangalore - Like every year, the government is considering throwing open its skies to foreign carriers between November and February this year, too. But, not every overseas carrier is thrilled about the opportunity.

This is because some international sectors already have capacities more than the current market growth, so carriers would wait for the excess capacity to fill up before they take a call on upping their flight frequency.

Another reason is that route rationalisation on a medium-haul flight is easier than long-haul flights.

Also, the international traffic into and out of India is skewed towards the Middle East and South East Asia. According to figures available with Amedeus, around 40% of the overseas traffic is into the Middle East, 35% into South East Asia and the remaining 25% is to Europe and the US.

Ankur Bhatia, managing director, Amedeus India, feels the open skies opportunity during the peak season this year would be mainly utilised on the Middle and South East Asian sectors.

“Over the last two years, sectors like India-UK, and even some European and the US sectors have grown more than three to four times. This has led to capacity overtaking the market growth, which has resulted in price war on these sectors. So, we may not see many flights being added on these routes. This year, I believe, the action will be concentrated on the Gulf, Singapore, Malaysia, Thailand and other South East Asian destinations,” says Bhatia.

British Airways alone operates 42 flghts per week from five locations in India, but it has no plans of adding any extra capacity except for another daily flight from Bangalore in October.

“I won’t say there is saturation on the India-UK route… there is always scope for more. But we won’t be adding any more flights except for the one from Bangalore,” says a BA spokesperson.

Unlike BA, though, UAE budget carrier Air Arabia is very excited at the prospect of the four-month open skies. Last year, it had operated two flights a day from Mumbai instead of one during the open skies period.

“We will definite increase our flight frequency as the air traffic shoots up drastically during this period because many expatriates come home for Christmas and News Year’s holiday,” says Rohit Ramachandran, Air Arabia’s India manager.

Air Arabia, which currently operates 25 flights per week from Mumbai, Jaipur, Cochin and Nagpur, witnesses a jump in its inbound (into India) traffic between December 15 and December 28, while the outbound traffic shoots up between January 1 and January 13.

Another UAE carrier, Etihad Airways, which has 10 flights per week (seven to Mumbai and three to Delhi) to India, is also jumping at the opportunity. “It is a very big opportunity. Last year, we could not add more frequency because of limited fleet, but this year, if the government permits, we have our plan in place to increase both frequency and aircraft capacity on most routes,” says Neerja Bhatia, area manager, Etihad Airways.

Austrian Airlines, which operates 12 flights a week in India from Mumbai and Delhi, is planning to increase its flight frequency to Mumbai from five per week to seven per week in January.

News: Yes Bank to open 60 branches by June '07

(SB 27/09/2006) Mumbai - Yes Bank Ltd has announced that the bank has charted out aggressive growth plans and is making significant new investments in building a state-of-the-art retail banking framework.

According to a release issued in BSE, some of the immediate plans include; establishment of 60 bank branches and 75 offsite ATM centres by June '07, two processing centres at DLF cyber city centre at Gurgaon and Tiecicon House at Mahalaxmi, Mumbai and thereby ramping up the retail banking headcount (currently at 1000) to at least 1800 executives by March '07.

The bank has also further strengthened the retail banking team by nominating two top level executive sponsors and appointing three regional heads, who will be reporting into Rana Kapoor, Managing Director and CEO, who continues to directly oversee and is actively involved in building the retail and wealth management business, said the release.

Sunil Gulati who is currently the group president & head- risk management & corporate development will take on additional responsibility as the executive sponsor responsible for the retail risk framework, KYC norms and retail assets, while Ajay Mahajan, group president financial markets & investment management will be the executive sponsor for the development and execution of key differentiated product offerings and non branch channel distribution, added the release.

Commenting on the bank's retail banking plans, Rana Kapoor, Managing Director and CEO of the bank, said, "Yes Bank has set out aggressive retail expansion plans, we are determined to evolve an enduring service trust mark with excellence in service and product quality."

News: Indian BPOs can process 30% of US bank transactions

(PTI 27/09/2006) New Delhi - The BPO industry in the country has the potential to process up to 30 per cent of the US bank transactions by 2010, Nasscom President Kiran Karnik has said.

"Currently, 8 per cent of the US banking transactions are processed by Indian BPOs and the figure has the potential to rise up to 30 per cent by 2010," he said.

According to a research conducted by Forrester in 2005, there were more security breaches in the UK and the US than in India, he said.

Karnik said there have been two cases in India of breaches in data security in the last 18 months and in both instances arrests were made by the police.

The watchdog of the UK banking industry, banking code standards board, had announced that they had scrutinised Indian call centers and standards have yet again proven to be amongst the best in the world, he added.

An independent Self Regulatory Organisation (SRO) to establish, monitor and enforce privacy and data protection standards for the ITES and BPO industry in the country would be formed, Karnik said.

The SRO has already completed its initial round of funding and the final roll out phase, including industry memberships, is underway, he said.

Karnik said it would commence operations in the next 3-6 has already received approval of the Nasscom executive council.

News: Citigroup India to lend more to small businesses

(RTR 27/09/2006) Mumbai - Citigroup India, the Indian unit of Citibank N.A. sees a growth opportunity in lending to small businesses in the country, a senior official said on Wednesday.

"It is a significant focus area for us and a major growth segment not only in India but other countries also," Director & Business Manager, Commercial Banking Group, Sandeep Ghosh said on the sidelines of a seminar on global banking.

The lending rates for this segment are 1.5-2 per centage points higher than for a tripe-A rated large company. "The lending rates are competitive for a SME (small and medium enterprise) with a good track record," Ghosh said.

About 10-15 per cent of the multinational bank's corporate lending portfolio is for the small and medium businesses, he said. Citibank started lending to small enterprises in India in 1998.

"The spreads are not significantly higher in this segment, but we get higher yields over a period of time, we get stickier customers and regular annual revenues," he said.

"In order to have a sustainable revenue model for this segment, we have to grow the business at 30-40 per cent," Ghosh said, adding it was not always possible to get this kind of growth every year.

The bank plans to double the number of its 300 employees dedicated to the SME segment in the near future, Ghosh said.

News: LIC micro-insurance scheme for Indian poor

(BL 27/09/2006) New Delhi - A simple savings-related life insurance plan for the impoverished and the poor in the country is on the cards.

It is to be jointly managed by the Life Insurance Corporation of India (LIC) and NGOs operating in the rural areas, which would be the primary facilitator.

NGO sources told Business Line that the LIC will unveil the micro-insurance scheme on September 28.

The President, A.P.J. Abdul Kalam, will launch the scheme in the presence of the Union Finance Minister, P. Chidambaram, and the Minister of State for Finance, S.S. Palanimanickam.

LIC has entered into an MoU with the Confederation of NGOs in Rural India (CNRI), which would implement the scheme with its network of more than 3,000 NGOs/SHGs across 30 State Chapters and 400 districts.

CNRI functions under the Chairmanship of Dr Mohan Dharia, former Central Minister and Deputy Chairman, Planning Commission.

The scheme, named Jeevan Madhur, is a modest savings-linked life insurance plan where one might disburse premiums regularly at weekly, fortnightly, monthly, quarterly, half-yearly or yearly intervals over the term of the policy.

The minimum instalment premium for different modes would be Rs 25 for weekly, Rs 50 for fortnightly, Rs 100 for monthly and Rs 250 for quarterly/half-yearly/yearly.

The premium should be subject to the minimum and maximum sum assured of Rs 5,000 and Rs 30,000 respectively payable on death or maturity.

The sources said that member-NGOs of CNRI keen on popularising the scheme would have to undergo three-day or 25-hour training programme organised by the LIC in association with CNRI.

The certificates, on satisfactory completion of the training, would be issued by the LIC.

In order to preclude any hassles to prospective policyholders, requirements of proof of age and health status have been greatly simplified under the scheme, mainly with a view to include a large number of people from the disadvantaged sections, the sources said.

Subject to production of satisfactory evidence of continued insurability, a lapsed policy may be revived by paying arrears of premium coupled with interest within a span of five years but before maturity from the due date of first unpaid premium. The rate of interest applicable in such cases would be as fixed by the LIC from time to time.

When contacted, L.V. Saptharishi, co-Chairman of CNRI, said that 10 NGOs have been identified to implement the scheme in Delhi; the personnel have been given the requisite training.

After Delhi, it is proposed to launch the scheme in Lucknow, Kolkata, Guwahati, Bhubaneshwar, Chennai, Hyderabad, Thiruvananthapuram, Indore and Pune. The scheme would gradually be extended to the rest of the country.

News: DLF, Hilton to set up hotels jointly

(TNN 26/09/2006) Mumbai - Gurgaon-based DLF group and overseas giant Hilton have struck a deal to set up a chain of hotels across the country for an estimated investment of Rs 10,000-12,000 crore, people close to the transaction said. DLF will hold 74% in the JV with Hilton holding the rest. The foreign chain will have the option of increasing its stake to 49% after some years.

DLF, which will hold 74% in the JV, will be able to use its vast land bank effectively, riding on Hilton’s brand name and expertise.

If DLF’s hospitality plans, which include a presence through the five-star, resort, business and budget category spread over 25,000 rooms in five years comes through, Hilton’s presence in the country, would be substantially strengthened.

The deliberations, which were on for the past few months, have finally ended in a workable plan and the deal is expected to be announced in the next few days, sources say.

“The talks are at a very advanced stage,” DLF vice-chairman Rajiv Singh told ET. “We are exploring opportunities for strategic partnerships with leading developers globally and India specifically,” Faith Thoms, director communication, Hilton International, Middle East & Asia Pacific, told ET from Singapore. She added that it was too premature for details.

The JV with one of the most popular hotel chains in the world will help DLF utilise its vast land bank better, while Hilton will gain from the ready availability of prime land across the country in DLF’s possession.

India is a key growth market for the hospitality major and one in which the chain is very keen on significant expansion, Ms Thoms said. “Following the merger of Hilton Hotels Corporation with Hilton Group Plc in February ‘06, Hilton Hotels Corporation has a diverse portfolio of leading brands that extend from the luxury segment to business and focused-service hotels that we intend to launch internationally and adapt in key markets worldwide,” she added.

If DLF’s hospitality plans, which include a presence through the five-star, resort, business and budget category spread over 25,000 rooms in five years comes through, Hilton’s presence in the country, would be substantially strengthened. In April ‘04, Hilton International signed a strategic alliance with EIH Limited, giving the company presence in eight locations across India; seven of which was under the Trident Hilton brand and the eighth being Hilton Towers in Mumbai.

EIH manages all the hotels while Hilton is responsible for international marketing, promotion and reservations through the Hilton global network. While Trident Hilton Mumbai, a 500-room new property in north Mumbai, is scheduled to open next year, Hilton also has management contracts for three properties.

According to the arrangement that is being worked out, DLF would carry out the construction work and develop the hotel, with the day-to-day operations managed by Hilton. “We want to be principally the owners of the hotel assets because that is the business we are in at present. Hotel operating skills are a different game altogether,” DLF vice-chairman Rajiv Singh had said in July.

With much of the land already in the DLF kitty, the first hotel from the JV is most likely to be in the business sector, which is projected to grow 4% in the next couple of years.

News: Netherlands to ease stake norms for Indian firms

(TNN 26/09/2006) Mumbai - Netherlands is going all out to woo Indian investors by relaxing its tax treatment rules for holding companies. The country plans to reduce the present shareholding requirement for holding companies based there to 5%, from the current 25 %.

This would imply that if any Indian company goes and sets up a holding company even with a 5% shareholding, it would become eligible for exemption from capital gains and dividend tax, said Marc A Kuijlaars, tax lawyer with KPMG Meijburg.

Under a new law, Netherlands would also allow the concept of ‘passive-investment participation’. This will allow companies who do not have active presence to be taxed at lower rates, he said.

The new law is expected to come into effect from January 1, ’07, he said. The concept of non-business related investments is also being brought in from next year, which will facilitate all such investments to take advantage of tax breaks as non-business related investments. These could be characterised as passive investments.

Pointing out that even L N Mittal-promoted Mittal Steel had its holding company in Netherlands due to the benefits of being there, he said a large number fo Indian companies in IT, pharma, paper were already in the process of setting up a presence there. Netherlands offered a much more attractive regime than other European countries besides being a gateway to EU markets.

Column: Indians on a spending spree

(BS 26/09/2006) Mumbai - Global consumers’ confidence remains at 2005 levels, with Indians leading the world in the 2006 ACNielsen Global Consumer Confidence Index (CCI), followed by the Norwegians and Danes.

According to ACNielsen, the world’s leading market research and information company, the 2006 ACNielsen Global Consumer Confidence Index remained at the same level of 98 as in the November 2005 study.

By regions, North America has been at its November 2005 level of 107, while Asia Pacific showed a significant drop from 101 last year to 94. Europe more or less remained the same at 93 as against 95 last year.

India again tops the entire world for the third time in a row since the Index was established in early 2005. It scored a high of 131 in 2006 and is closely followed by the Scandinavian countries of Norway (130) and Denmark (127), which made their way into the ranking as the world’s second- and third-most optimistic markets respectively.

Indians are exceedingly feeling bullish about the job market (with 90 per cent of the respondents rating it as excellent or good) as well as the state of their personal finances in the next year (86 per cent).

On the other hand, Portuguese and Koreans are terribly pessimistic about both the aspects in their country, with over 90 per cent of them saying that it will be bad.

The optimism amongst Indians also translates into their perception that it is a good time for the people to buy the things they want in the next 12 months.

India’s booming economy shows no signs of slowing down, which helps make the nation the world’s most optimistic country again. Along with the continued IT boom came the new generation with lots of spare cash and the willingness to experiment.

These well informed, well groomed consumers are now the target for all products from insurance to durables, and the marketers who can touch them first will reap the benefit in the long run.

While the level of consumer confidence declined slightly in Asia Pacific with New Zealand and Korea registering a significant decline, it remains the region housing the most confident consumers of all. Hong Kong (111), Indonesia (111), Singapore (110) and the Philippines (100) registered increases of five to seven points in their index scores respectively.

The least optimistic countries in Asia Pacific are Taiwan (80), Japan (79) and South Korea (54).

Major concerns
While overall consumer confidence has been sustained, globally, consumers continue to cite the economy (47 per cent), health (37 per cent) and job security (31 per cent) as their major concerns for the next six months with varied levels of importance by regions.

The concern about their economy ranks highly in Asia Pacific and recorded a major increase in North America. For Indians, too, the economy is a major concern.

While scaling crude oil price is one of the major concerns for Indians, the upward rising interest rates is probably the cause that has made the economy the biggest concern for Indians. About 30 per cent of consumers are willing to repay their loans to avoid steep interest fees. But the fact that the index is still over 100 is proof that consumers still harbour hopes.

Led by Thailand (77 per cent), Malaysia (71 per cent) and Indonesia (70 per cent), eight of the 10 markets expressing greatest concern for the economy originated from Asia Pacific.

Germany and Turkey are the only two European markets with a high level of concern about the economy, taking over from Greece and Austria, both of which made it to the top 10 list in the previous survey. Yet when compared with last November’s survey, people in Greece, the Philippines and Korea appear to be less concerned than before about their economy.

The level of concern about health has dropped among Indians, but it is still top-of-mind for consumers across Asia Pacific. Interestingly, compared to other regions, North Americans were the least concerned about job security.

With advanced healthcare benefiting people across the board, Indian consumers’ concern about health has gone down significantly. Yet they are now more sensitive about matters concerning health and are willing to spend on the best possible service when it comes to healthcare-related products.

For marketers belonging to this category, quality should definitely be the primary focus to lure the new age consumers.

Ever since reports of outbreaks of the avian flu first appeared in Europe, on the tail of an occasional mad-cow outbreak, consumers in the continent have shown increasing concern for health, surpassing their North American and Asia Pacific counterparts.

Nearly four in 10 Europeans cited health as one of their major concerns after the economy. Asia Pacific follows at 36 per cent and North America at 34 per cent. Topping the world with the greatest number of health-conscious consumers were Hungary, the Czech Republic, Slovakia and people in the Baltics.

Spending desires
Although putting spare cash on a savings instrument is still the most popular avenue for Indians, the bullish stock market also makes investment in mutual funds and shares favourable options (40 per cent).

In fact, preference for equity and mutual funds exhibited by Indians is matched only by those in Hong Kong among all the countries studied, which underlines the spread of equity culture in India. A seven percentage point drop is seen in Indians’ desire for holidaying, while an equal rise is seen in people’s fascination for out of home entertainment.

Time is a constraint for more and more people because of demanding career and family obligations; there is hardly any time to take planned holidays.

The mushrooming of multiplex theatres, theme parks and so on in city outskirts have offered Indian consumers more options to relax within the periphery of their own city, where they can relax by taking a day off rather than planning a long holiday.

By Sarang Panchal

News: Tatas will add 3,000 mid segment rooms

(BS 26/09/2006) Chennai/ Mysore - Roots Corporation Ltd (RCL), a subsidiary of the Indian Hotels Company Ltd (IHCL) is foraying into three-star hospitality category in a big way by targeting to add over 3,000 rooms with the launch of Ginger budget hotels at select cities across the country by March 2008.

Leading tourist and pilgrim cities to which it is foraying include Hardwar, Bhubaneswar, Thiruvananthapuram, Puna, Durgapur and Nashik. The Thiruvananthapuram Ginger is scheduled to be opened on September 29, the Poona hotel in the next two weeks, and Hardwar, Bhubaneswar and Pune cities by March 2007.

Work has commenced in Goa, Nashik, Pondicherry and Agartala, and will also commence in Tirupur, Varanasi, Pantnagar, Baroda and Ahmedabad, amongst other destinations in the next couple of months.

The Tata group’s IHCL operates Taj Hotels, Resorts and Palaces, and is one of the largest group of hotels in South Asia, with the earliest one being the Taj Mahal Palace Hotel in Mumbai which opened in 1903.

Briefing reporters on its future plans on the eve of the launch of the 100-room hotel in Mysore, RCL Chief Executive Officer Prabhat Pani said on Monday that the IHCL’s focus was on providing three-star hospitality to the mid-market segments — new business locations, new industrial hubs, SEZ, IT and ITeS centres.

“The biggest growth is in the three-star and below in India. In these cities, there is no market yet for the 5-star category. Therefore, the focus is on a GenNext category of hotels,” he said.

News: Reliance Retail eyes credit arm

(BS 26/09/2006) New Delhi - Reliance Industries is foraying into personal finance services, including the highly competitive automobile and consumer loan segment.

The service will be provided under the aegis of the company’s retail venture. An executive of a leading multinational financial services company has been roped in for the venture.

When contacted, a company spokesperson declined to comment.

A source said the aim was to provide Reliance Retail users with one-stop services at the stores. “The company intends to provide financial services on its own. If required, it may also rope in banks like ICICI Bank and HDFC Bank to complement the product portfolio,” he added.

Citing an instance, the source said in some of its bigger properties, where Reliance Retail would set up automobile marts, it would also provide the facility of car loans.

Reliance will have to float a non-banking finance company to provide these services. While the company says it is early days yet to incorporate a non-banking finance company, “it will comply with all the statutory legal requirements” for this venture. Other details, including the size of the lending portfolio, are not yet final.

The source added that Reliance Industries did not foresee any non-compete issues with Reliance Capital of the Reliance-Anil Dhirubhai Ambani Group. “Reliance Industries’ personal finance services will fit into the retail plans and, therefore, there is no question of violating any agreement between the two groups,” he said.

“Instead of customers running around for loans, Reliance Industries wants to provide these services on its own,” he added.

The investment for the personal finance venture will be separate from the Rs 25,000 crore that Mukesh Ambani has committed to his retail foray. That money is meant to be used to own retail assets as well as the supply chain.

The source said personal finance services would not be available in all stores and formats, because it would not make sense to provide them in supermarkets.

This is not the only retail venture planning to finance users’ purchases. The Future Group, formerly Pantaloon, which has a tie-up with ICICI Bank for retail financing, is also looking at getting into the business on its own.

Headed by Kishore Biyani, the group will hold a 74 per cent stake in Future Generali through Pantaloon Retail, while Generali will have a 26 per cent stake.

News: India keeps confidence in stride

(BS 26/09/2006) Mumbai - Country leads world in consumer confidence for third year in a row.

The ACNielsen Consumer Confidence Survey for the first half of 2006 shows India in the lead of both the 41-nation global survey as well as the 14-country Asia-Pacific study. This is the third time in a row that India is at the top of the Consumer Confidence Index.

While the global index has held at 98 points since the last round of the survey conducted in November-December 2005, India’s score is 131, down one notch from 132 in the last survey. (See Unrelenting Optimism in The Strategist, being distributed with today’s edition)

Conducted in May-June, the survey covered close to 22,000 people, including over 500 people from India.

For the first time, China and Vietnam were also included in the Asia-Pacific study, the results of which were made available exclusively to Business Standard.

The consumer confidence result for India is in stark contrast with that for the Asia Pacific, where the sentiment is turning negative — the index for the region fell seven points, from 101 to 94.

The survey shows Indians remain confident of the job market and personal finance: 90 per cent rate employment prospects as excellent or good, compared with the regional and global averages of 47 and 53 per cent, respectively.

Indian consumers’ perceptions of the state of their personal finances is also encouraging — 86 per cent rate them as excellent or good, while the corresponding figure for the region is 45 per cent.

In the Asia Pacific, the least optimistic countries are Japan (79) and South Korea (54), which is also the most pessimistic nation globally. South Korea was the least optimistic country in the region in the last round, too.

That sentiment has worsened, with the index for the country falling 12 points in this round. New Zealand also registered a sharp drop in consumer confidence, with its index moving down nine points to 114.

The survey also polled consumers on their major concerns. Compared with previous surveys, Indians’ concerns about health have dropped seven points to 26 per cent, although the economy remains a major worry for close to half of those polled.

Across Asia, 42 per cent of all respondents are concerned about the economy, compared with 41 per cent worried about job security and health.

Globally, 47 per cent respondents cited the economy as their biggest and second biggest concerns, while 37 per cent and 31 per cent named health and job security, respectively.

News: All engines firing as Google seaches India for takeovers

(PTI 26/09/2006) Hyderabad - Internet search giant Google is scanning India for potential acquisition targets as also the points-persons to drive its expansion in the region.

Google Inc is currently in talks with a number of start-ups with unique and innovative business models, particularly in areas like voice and SMS-based advertising, to expand its presence in the country, an official close to the development said.

A Google spokesperson told PTI: "Our M&A strategy has been to look for unique products, technologies and engineering teams that can help us provide innovative products to our users or enhance existing services."

However, the spokesperson of the search engine leader declined to comment on the issue that the company was talking to potential acquisition targets. "We do not comment on speculation," he said.

According to industry sources, Google has already identified some start-ups — based out of India as well as other markets — but with significant operations in the country.

The company is also scouting for some senior level officials to lead its investment and acquisition strategy in India and neighbouring countries.

The company has already advertised a job opening on its India website for the position of Corporate Development Manager, South Asia, to be stationed in Mumbai or Bangalore, who would look after the development and execution of market strategies that drive market expansion opportunities.

The managers Google is seeking to hire would also negotiate on investments, partnerships, acquisitions and creation of deal terms.

However, the job postings do not directly and 100 per cent correlate with the people that the company is actually hiring. "We hire the person, not the job at Google," the company said, while adding that the job postings are not an indication of what we are going to do in the future.

However, the company, which already has a big research team and a huge India manpower at its centres in Bangalore and Hyderabad, said that its "hiring continues apace" in the country.

When asked whether the company was talking with venture capital firms as well for its potential investment plans in India and other Asian markets, Google said: "As a matter of policy we do not share such information."

The company is reportedly planning to significantly expand its operations in the country, which could include continued hiring activities, acquisitions and investments in new-age technology segments particularly in the Internet and telecom areas.

The company had opened its Research and Development in India at Bangalore with starting strength of about 100 people in 2004, while it has another R&D centre at Hyderabad and offices in Delhi and Mumbai.

The company has been always known as an aggressive recruiter. It's full-time employee strength stood at about 7,942 people at the end of June this year, which was almost double of its year-ago workforce.

While the company declined to disclose its exact India workforce, the industry estimates Google's India strength at more than 3,000 people.

News: Dutch firm paints Indian expansion

(TT 26/09/2006) Mumbai - The Netherlands-based Akzo Nobel is eyeing the household paints market in India.

The 13-billion-euro company already has a presence in houseware and powder coating segments in the country. Coatings comprise the largest segment of the company with sales reaching 5.55 billion euro globally.

“For decorative coatings in India, we are making a business plan to cover products, brands, supply and sourcing strategies. This will take us a few months. We are interested in the decorative coatings market in India and will enter it soon,” said a company spokesperson in a written reply to The Telegraph today.

Akzo Nobel’s coating businesses in India is in excess of Rs 250 crore in terms of annual sales. In total, the company employs more than 1,000 people in the country. The total size of the paints market in the country was Rs 12,000 crore in 2005 and it was close to 1.4 million tonnes in terms of volume. The market is growing at a rate of 12-15 per cent.

Almost 78 per cent of this market in value terms consists of decorative paints and 22 per cent of industrial paints.

“So you can easily figure out how big a market it is. And international players have been eyeing this market for a long time,” said an industry analyst.

International players like Nippon and DuPont have already made their intentions clear.

There are five major players in the Indian paints market.

“The growth rate in the decorative market is much higher. In any developed market, one-third of the paints market consists of decorative paints,” said Sumeet Budhraja of Edelweiss.

Recently, Japanese paint firm Nippon Paints has also announced its intentions to set up manufacturing facilities in the country.

Nippon Paints plans to invest about Rs 160 crore to set up two manufacturing units in India. Proposed to be set up at Chennai and Gurgaon, the units will start production from 2008 and will cater to the decorative and automotive paints segments. Both the units are expected to have a minimum capacity of 20,000 tonnes and will have the provisions to scale up to 40,000 tonnes.

Currently, top five players in the paints market are Asian Paints (19 per cent), Berger (8 per cent), Goodlass Nerolac (9 per cent), ICI (5 per cent) and Shalimar (2 per cent) according to Cris-Infac figures.

Almost 70 per cent of the market consists of organised players.

News: Merrill taps Indian cash for overseas funds

(TT 26/09/2006) Mumbai - DSP Merrill Lynch plans to tap investors in India who will be offered investment opportunities abroad. Merrill will kick off with a feeder fund — for which it has filed a prospectus with Sebi — that will plug into the Merrill Lynch Gold Fund abroad.

The scheme is one of the first proposed by DSP Merrill Lynch Fund Managers to tap local money for overseas funds.

“We aim to be among the top five mutual fund houses in terms of assets under management over the next 18 months and have put together an aggressive business plan to achieve that,” said S. Naganath, president and chief investment officer, DSP Merrill Lynch Fund Managers.

At the end of August, the fund house ranked 12th with a corpus of Rs 10,980 crore, according to the figures of the Association of Mutual Funds of India (Amfi).

“We plan to offer innovative schemes to our investors and also have some overseas funds on the anvil. We have already submitted the draft prospectus for the world gold fund with the regulator,” said Naganath.

According to the document filed with the Securities and Exchange Board of India (Sebi), the scheme will invest in Merrill Lynch International Investment Funds — World Gold Fund, which invests primarily in the equity of companies whose predominant economic activity is gold mining.

“This will be a feeder fund which will invest in the Merrill Lynch Gold Fund abroad. The scheme does not hold any physical gold or metal but invest in equities of companies worldwide whose main business activity is gold mining," explained Naganath.

According to the prospectus, the parent scheme may also invest in securities of companies whose predominant economic activity is other precious metal or mineral and base metal or mineral mining.

“However, there is an individual fund house cap of $100 million on the amount raised in overseas schemes. As and when the limit is relaxed, we will have the flexibility to launch more such funds since Merrill Lynch has many such attractive funds in the global market,” added Naganath.

The fund house today launched the DSP Merrill Lynch Small and Mid Cap Fund after a hiatus of over two years.

News: More Indian women now buying gold

(RTR 26/09/2006) Mumbai - More women are buying gold in India due to greater independence, a shift in attitudes and increased personal wealth, a World Gold Council report said on Tuesday.

"The number of women falling into gold's core target group in India has increased to 32 million in 2005 from 25 million in 2002, contributing to the rise in gold purchases," the report, based on a recent study, said.

Between 2002-2005, Indian demand rose to 750 tonnes from 571 tonnes despite higher gold prices as many people became richer, it said.

"Indians are enjoying a rapid acceleration in income growth, which is supporting discretionary spending on consumer goods, including gold," it said.

News: ABN AMRO Mutual launches portfolio management service

(RTR 26/09/2006) Mumbai - ABN AMRO Asset Management (India) on Tuesday launched a new portfolio management service that targets high net worth individuals.

"The 'ABN AMRO Exclusive Portfolio' will normally invest in not more than 15 stocks," senior portfolio manager Sameer Narayan said.

The minimum investment needed to avail of this service would be 5 million rupees, he added.

The fund house had 40 billion rupees of assets under management at the end of August.

News: DSP Merrill launches Small and Mid Cap fund

(BL 26/09/2006) Mumbai - DSP Merrill Lynch on Monday launched the DSP Merrill Lynch Small and Mid Cap fund, an open-ended equity growth scheme.

It will invest almost 75 per cent of its portfolio in mid and small-cap company stocks. The new fund offer opens on September 29 and closes on October 16.

The fund portfolio will invest almost 55-60 per cent in mid-cap stocks and around 15-20 per cent in small-cap stocks. The rest of the portfolio would comprise large stocks to provide liquidity.

The fund house plans to raise around Rs 1,000 crore.

"Indian capital markets are undergoing a scale shift. The profitability of companies across sectors is increasing due to strong industrial growth and economic expansion. Several companies in the small and mid-cap category have yet to benefit from this structural change and our new fund will seek to identify and capitalise on such opportunities," said S. Naganath, President and Chief Investment Officer, DSP Merrill Lynch.

"Mid-caps are expected to outperform the market; also the number of sectors and companies will scale up," said Anup Maheshwari, Head- Equities and Corporate Strategy, DSP Merrill Lynch.

News: India Inc seeks to park money beyond metros

(PTI 26/09/2006) Mumbai - India Inc is rearranging its investment itinerary with little known investment destinations like Bihar, Assam, West Bengal and Orissa gaining a place on the country's economic roadmap.

An analysis of the recent investments made by big business houses reveal that corporates are getting attracted to these states, long known to have unrealised potential like abundant minerals, sufficient green cover and skilled and cost effective manpower but lagging behind on the investment scene.

However, the recently acquired investor-friendly attitude of the state governments, availability of resources, better accessibility and tax incentives are driving capital investments to these states.

Bihar could be a striking example of this shift in the investment paradigm after remaining out of the ambit of the corporates' investment radar for a long time, due to factors like socio-economic backwardness and infrastructure-related issues.

However, Bihar has recently played host to a number of big brothers of corporate India, like Ratan Tata of the Tata group, Max Healthcare Chairman Analjit Singh and Ashok Ganguly of call centre firm ICICI OneSource, while others like Mahindra and Mahindra's Anand Mahindra and Singapore's foreign affairs minister slated to visit the state soon.

Tata Group chairman Ratan Tata, who also holds the position of Investment Commission Chairman, said during his recent visit to Patna that the state offered great opportunities in areas of infrastructure, health, tourism, education, urban development and agriculture.

M&M Vice Chairman Anand Mahindra is also scheduled to visit the state soon and is said to be mulling over the possibility of a tractor production plant in Bihar. Max Healthcare too is looking to set up a super-specialty healthcare centre and hospital in the state.

The Max Healthcare proposal holds significant promise since more than 50 per cent of the patients coming to New Delhi's All India Institute of Medical Sciences (AIIMS) are said to be from Bihar.

The state, which is under a rebuilding phase, promises lots in terms of profit for corporate houses with cheap real estate prices, limited labour-related issues and a large educated manpower at nearly one-third the cost in cities like Bangalore or Chennai, experts believe.

However, Bihar may have to fight challenges like huge infrastructural requirements and socio-economic backwardness, law and order, over-population and poverty.

Bihar, accounting for a seventh of the country's population below the poverty line, also has problems like low investment rates, weak transport system, lack of water management and fragmentation of land holdings to resolve.

The state was ranked the third worst performer in terms of investments made by corporate houses in the June-August period in a recent study conducted by industry body Assocham.

India Inc has made investment announcements of over Rs 6,72,000 crore across the country in two and half months till August 31, with states like Bihar, Assam and Himachal Pradesh getting a total investment commitment of about Rs 1,600 crore only, the Assocham study shows.

While states like Orissa and Chhattisgarh have already started emerging on the investment landscape, with investment proposals worth between Rs 33,000 crore to Rs 47,000 crore, states like Bihar, Assam and Himachal are still trotting around to get actual investment commitments.

West Bengal has also started attracting huge investments from corporate majors like DLF, Reliance Industries Limited, Tata, Monnet Ispat Industries. In order to improve its image as a preferred investment destination, the West Bengal government has already announced incentive schemes like subsidies on capital investment, interest payments and waiver of duties and fees.

West Bengal's neighbouring state Orissa is also emerging as a major investment hotspot in sectors ranging from IT, power, hospitality and healthcare, while grabbing attention of industry giants like Mittal, Posco, Jindal Steel, Essar, TCS and Infosys.

In the healthcare sector, Apollo Hospital and Asian Heart Hospital are also looking to invest in Orissa while in the hospitality industry, Oberoi, Hyatt, Sinclair's and Best Western are looking at expanding their base in the state.

News: Indian organised retail changing FMCG cos' revenue model

(TNN 25/09/2006) Ahmedabad - With organised retailing coming up in a big way across the country, the revenue model of the fast moving consumer goods (FMCG) firms is witnessing a change. The Rs 3,700-crore co-operative dairy giant Gujarat Co-operative Milk Marketing Federation (GCMMF), which sells Amul and Sagar brands of dairy products through 5,00,000 unorganised retailers, is now generating 3% of its total revenues from organised retailers.

The biscuit manufacturer Parle Products, which sells its products at retail stores as well as the local paan outlets, is also benefiting as sales to organised retail chains grows. “Our revenues from these stores in the last two years have increased rapidly. But it is difficult to quantify it,” says Maria Iyer of Parle Products.

A local snacks manufacturer, Balaji Foods, has seen its revenues from organised players shoot up to 10% from a mere 3% in the last two years. “Earlier, neighbourhood kirana stores were the primary purchase point. But in recent times, there is a visible shift towards hyper markets for purchase of foodgrains and other grocery products,” says Piyush Sinha, professor of marketing at the Indian Institute of Management, Ahmedabad.

The revenues of the Vadodara-based Rs 200-crore Ashwin Vanaspati India, which sells the corn oil brand Korndrop, has seen its revenues from the organised retail stores go up to 5% from 2% of total sales in the last two years. GCMMF has joined hands with Pantaloon, Adanis and Shubhiksha for the supply of bulk quantity of its products.

RS Sodhi, CGM of GCMMF, feels that Amul is getting better mileage from the organised retail set up as there is no one to influence the consumer behaviour like kirana stores where shop-keeper pushes rival brands that might be fetching better margins for him. “Amul is a trusted brand and customers get an opportunity to use their discretion to buy it in super stores and hyper markets,” added Mr Sodhi.

News: Reliance to adopt retail as well as supply model

(TNN 25/09/2006) New Delhi - Reliance is not content with its massive plans to become a retail major in the country. The company is working on strengthening its procurement and supply chain efficiencies to emerge as a key supplier and exporter as well.

The company, as a way of practising its procurement tie ups, had earlier supplied fruits and vegetables to Big Bazaar. Ready to roll out its first stores- five large-format stores (5,000-10,000 sq ft) in size in Hyderabad in the third week of October, it is keen to continue supplying to other retail players here.

The company will soon receive a major consignment of goods from China, which will include electronics, apparel, stationery and also FMCGs. Sources say these goods will not just be for the retail venture and could be supplied to other buyers as well. Procurement is a separate division from retail and there will be cost advantages as the company builds up farm linkages, said a source.

Reliance is setting up rural business hubs in Punjab, Haryana, Himachal Pradesh, Uttaranchal and West Bengal. These hubs, which will come up in the next six months or so, will not only be procurement centres for grains and milk, but also house schools, medical care centres, apart from having weather and soil specialists to help farmers produce better yield.

Reliance is also keen to buy capacities, including food processing and FMCG manufacturing ones. It is learnt to have acquired a fewflour processing capacities in Punjab and is scouting for others in India and abroad.

News: Indian coffee retail mkt to witness Rs 350 cr invstmnts

(PTI 25/09/2006) New Delhi - As coffee culture gets bigger in India, a traditional tea drinking nation, domestic and international chains are lining up big expansion plans to the tune of nearly Rs 325 crore in the next 3-5 years.

Majors players like Barista, Costa Coffee, Cafe Coffee Day and Barnie's are already working overtime to expand their presence in the country and implement product portfolio overhauls. On the other hand, global player Starbucks Corporation is all set to make its India debut in 2007.

The latest to announce big plans for expansion in theIndian coffee retail market is UK-based coffee shop chain Costa Coffee. The company's master franchisee, Ravi Jaipuria group company, Devyani International Ltd (DIL) has earmarked an investment of Rs 150 crore to set up 300 outlets in the next five years.

DIL like other chains, is looking to cash in on the booming coffee retail in India, which is expected to grow at an annual rate of over 30 per cent in the next couple of years on the back of patronage from the young population in the 18-25 age bracket with a growing disposable income.

We will have 25 outlets by the year end, DIL president and ceo virag joshi said adding that outlets would come up at Jaipur, Agra, Lucknow and Punjab. The company is planning to invest over RS 20 cr in the next one year during which the chain would open 30-35 outlets in Mumbai.

DIL opened 15 stores in the first year of its operations, with an investment of about RS 15 cr, in Delhi and the national capital region and plans to add 10 more by December 2006

News: Indian hotels make room for more

(TNN 25/09/2006) New Delhi - Hotels in India are thriving like never before with average room rates (ARRs) skyrocketing and the second quarter growth pegged at 35-40%. No wonder then the hospitality industry wants to make it even bigger, by opening new hotels.

Hotel chains such as Marriott International, Claridges, the Oberoi group and the Clarks group are all busy expanding their operations in India. While Marriott International will be opening four properties, Claridges, Oberoi, and Clarks will be opening two properties each.

Claridges is inaugurating two properties on the outskirts of Delhi. Its Atrium Hotel is scheduled to open doors to customers on December 1. The second property will be a 5-star facility spread over 100 acres, at an investment of about Rs 100 crore (excluding the price of the land), and is scheduled to open in October ’07. “The next 4- 5 years is the right time to expand operations in India as the demand is more than the supply,” says Sanjeev Nanda, managing director, Claridges Hotel.

The Oberoi group of hotels has two projects in the pipeline — The Oberoi, Gurgaon, a super luxury hotel; and Trident Hilton, Mumbai, a business hotel. The investment in the Gurgaon property will be around Rs 400 crore.

The 150-room hotel will offer its customers the luxury of staying in a 600 sq ft room — perhaps the largest in India. Trident Hilton, Mumbai will have 440 rooms and the investment will be to the tune of Rs 600 crore( including land price).

Marriott International will be adding around 852 rooms under its brand, Courtyard. The 199-room Courtyard, Gurgaon and the 210-room Courtyard, Noida are scheduled to open in ’08 whereas the 250-room Courtyard, Kolkata and the 193-room Courtyard, Hyderabad are slated to open in ’09.

On the other hand, the Clarks Group is targeting tier 2 cities with its budget hotels. Clarks Inn, Gorakhpur, a 70-room hotel with investment per room of around Rs 5 lakh will start operations in November this year. With over 325m domestic tourists criss-crossing India, the group is having a special focus on them, while also targeting foreign tourists and business travellers.

“The growth of domestic tourism is humongous and the purchasing power of Indians is increasing. This is just the right time for expansion, be it the deluxe or the budget segment,” Rahul Maini, chief operating officer, Clarks Inn, told ET.

The Intercontinental Hotels Group is also in an expansion mode in India, targeting business centres such as Hyderabad, and tier 2 cities. However, the group spokesperson did not reveal any details as the deals have not been finalised yet. The group is likely to announce a couple of deals in the next few months.

News: RBI to clear $1bn foreign VC funds in realty space

(TNN 25/09/2006) Mumbai - Foreign venture capital investment in the real estate sector may finally see the light of day. The funds had been blocked due to differences between regulators.

The government has asked the banking regulator — the Reserve Bank of India — to approve proposals submitted over seven months ago by dozen foreign venture capital firms to invest in the Indian realty sector. These firms had lined up plans to invest over $1bn in real estate projects here.

Although the proposals were approved by the Securities and Exchange Board of India (Sebi), which regulates venture capital funds, RBI had objected to it saying it was not consistent with the foreign direct investment norms for the real estate sector. Subsequent attempts by the government to resolve the differences proved to be a failure.

According to senior government officials, RBI has now been told to approve the old proposals which have been stuck since they conformed to Sebi’s norms on investments by foreign venture capital funds.

Policy managers in Delhi are of the view that blocking these proposals could lead to credibility being impaired. Instead, the way out for RBI could be to propose amendments to the regulations now in force to prevent any norms being breached, an official said.

India’s FDI policy provides for 100% overseas investment in the realty sector, including housing, commercial facilities, resorts city and regional level infrastructure townships.

This is subject to a minimum capitalisation of $10m for fully-owned subsidiaries and on the condition that the minimum area to be developed under each project is 10 hectares for development of serviced housing plots and a built-up area of 50,000 square metres for construction of development projects. Sebi’s foreign venture capital norms were eased last year to allow overseas funds to invest in real estate.

The central bank has been wary of funds — both foreign and local — being poured into the real estate sector. It fears that the inflow could stoke a possible asset price bubble, a fact which has been borne out from the experience of the meltdown in some of Southeast Asian economies.

The funds flow from a variety of funds, including local ones, could drive property prices up, especially in the light of relatively poor valuation practices. Foreign funds, on the other hand, are keen to cash in on the potential to earn annual returns of well over 15% in one of the fastest growing economies of the world.

As the managing director of a US real estate firm said earlier this month, any one who does not have a toe hold in India may lose out on gains. Among the firms which had sought RBI’s approval for investing in real estate through venture capital funds are the Purnendu Chatterjee-Vornado Capital combine and firms promoted by Kotak and IL &FS.

News: Reliance, Pantaloon plan online retail blitz

(BS 25/09/2006) Mumbai - Fledgling online retail players in India better watch out. Reliance Retail and Future Group (Pantaloon) are building up significant online channel to run parallel to their physical formats, adopting the highly successful online model of Wal-Mart. Online sales of Wal-Mart has been growing faster than sales of eBay and Amazon.

Given the muscle of Reliance and the hunger for growth of the Future Group, these players are aggresively setting up online channel to tap the fast growing e-commerce pie.

Currently this market is worth around Rs 1,100 crore and is expected to touch Rs 2,300 crore in the one year. Though a majority of this is accounted for travel and ticketing, the retail sale through these channels is doubling.

While the Future Group is putting its weight behind www.futurebazaar.com, Reliance Retail is understood to have already set up a separate team to put in place the nuts and bolts for its e-commerce platform.

According to industry analysts, players such as Fabmall and Rediff are also sprucing up their strategies in an effort to be ready when the onslaught happens.

However, one critical element that the physical retail chains have to grapple with is how to establish the brand recall in the virtual world.

"Online retail chains have gone through this exercise over the past 5-6 years and they have a good recall. Reliance and Future need to figure this out and earlier the better for them," notes an industry analyst, adding that making a customer buy online is the most difficult part that these players have to face.

Fabmall's CEO K Vaitheeswaran is not unduly worried over these plans. "More than competing with each other, we should figure out how to grow this pie. The internet penetration has to be first increased which is expected to reach 100 million in two years time. The industry is growing at 30-40 per cent year-on-year and there is huge potential for all of us."

One more aspect that is fuelling this growth is that the attitude of citizens have changed over the past five years. "Indians are now ready to pay a premium for the convenience of online commerce.

They are now accepting the various services offered on the Internet and the increasing penetration of broadband at homes also promises to bring in more revenues. We are sitting on a pure gold mine," said an industry player.

News: Indian retail sector to offer two million jobs in two years

(BS 25/09/2006) Mumbai - The retail sector in the country will require an additional 2 million professionals in two years.The Retail Association of India (RAI), which represents the country's Rs 90,000 crore organised retail sector, estimates that the current personnel requirement at the front-end alone is about 1.25 million. It will go up to 3.25 million by 2008-09.

According to RAI, the total employee base in the organised retail sector currently is one million and it expects that the current initiatives will produce another 1 to 1.5 million trained manpower by 2008.

To meet the immediate manpower requirement, big retail houses such as Pantaloon, Wadhwan, Pyramid and Shoppers' Stop, Lifestyle, Arrow, Landmark among others have initiated massive recruitments and the newcomers, including Reliance, Raymonds, Aditya Birla and a few other corporates, are also on an extensive head-hunt. In addition, existing retail companies Westside, Spinach,Oddisey, Depot are also looking for countrywide expansion in the next few years.

However, the dearth of trained personnel and retail professionals in the country has just started.This has forced many retail houses to start inhouse training programmes as well as management courses with the support of RAI and various universities and business management schools.

While the existing majors like Future Group, Landmark and Pyramid have already joined hands with leading business management schools, the RAI has initiated a dozen new retail management and professional training programmes along with internships in large retail outlets.

Gibson G Vedamani, CEO, RAI, said,"The modern retail in India would require more than 5,00,000 retail-ready employees for the retail ventures coming up in the next one year." He added that in order to create such able human resources, the RAI has taken efforts to develop the right learnig and training modules at the entry level known as Professional Retailing Skills (PRS), and it has also tied up with Mudra Institute of Communications, Ahmedabad (MICA) and Gurukul Online Learning Solutions for certain other professional retail training and management programmers.

Since the RAI has also proposed the extension working hours with permission from the state governments, the manpower requirement would double from the current level due to different shifts in the major retail outlets.

"Since the malls and supermarkets are all set to work in shifts, if they are allowed to operate 24/7, it will also result in creation of more employment opportunities in the retail sector," says Vadamani.

News: India Inc's capex tops Rs 1 trillion

(BS 25/09/2006) Mumbai - Reliance, NTPC, Bharti, ONGC, Essar Steel top 5 asset builders in 2005-06.

Evidence that the economy is on a roll is getting stronger. India Inc’s capital expenditure touched a new high with manufacturing and services companies spending Rs 1,10,000 crore in 2005-06.

This is 29 per cent (Rs 24,608 crore) higher than the Rs 84,685 crore spent on expansion in 2004-05.

What is more, over half the total capex, or 52 per cent, was spent on plant and machinery. Of the rest, 26.5 per cent was spent on capital work in progress and 21.5 per cent on other fixed assets, such as land and buildings.

“This kind of spending on capital expansion has not been seen in recent times. It has been growing in tandem with growth in corporate earnings and this will increase further as some large companies are now eyeing overseas expansion,” said the chief financial officer of a manufacturing company.

The 1,425 firms studied by the BS Research Bureau aggregated gross fixed assets of Rs 7,67,104 crore last year, up 11.7 per cent from 2004-05. The capital spent on work in progress was up 32.2 per cent to Rs 118,497 crore.

Just 25 firms accounted for over 53 per cent spending on fixed assets and the top 100 companies’ share is 80 per cent.

Reliance Industries (Rs 9,427 crore), NTPC (Rs 6,696 crore), Bharti Airtel (Rs 5,252 crore), ONGC (Rs 4,630 crore) and Essar Steel (Rs 4,630 crore) were the top five asset builders in 2005-06.

Refinery firms continued to be the largest asset builders with purchase of fixed assets worth Rs 17,626 crore in 2005-06, up 36.25 per cent. However, there was a marginal decline in the growth rate of purchases, which was 50.6 per cent in 2004-05.

While Reliance, HPCL and Mangalore Refineries stepped up their capital expenditure in 2005-06, ONGC and IOC reduced it.

The integrated steel and steel products firms collectively spent Rs 11,719 crore in 2005-06, almost double that of the previous year. Power companies were third in the list (Rs 8,016 crore), followed by telecommunications (Rs 7,376 crore), textiles (Rs 5,280 crore) and information technology (Rs 4,863 crore).

While most of the capital expansion was seen in core sectors such as steel, engineering, cement, capital goods and telecom, other sectors that have stepped up spending were sugar (Rs 1,689 crore), automobile ancillaries (Rs 2,161 crore), chemicals (Rs 1,531 crore), paper (Rs 833 crore), construction (Rs 731 crore) and tyres (Rs 704 crore).

News: Indo-China trade to touch $20 bn by end of 2006

(PTI 25/09/2006) New Delhi - China on Monday said that its bilateral trade with India would touch $20 billion in the current year.

"Last year, we had drawn a five-year-plan for economic and trade cooperation. We had set a target of achieving bilateral trade volume of $20 billion by 2008," Chinese Ambassador Sun Yuxi told a trade cooperation conference organised by FICCI.

However, given the present situation, this year itself the trade is expected to touch $20 billion - two years ahead of the target.

At this pace, bilateral trade between the two countries will be around $30 billion by the end of 2008, he said.

By the end of 2010, this is expected to touch $50 billion against the earlier target of $30 billion, he added.

As compared to Indian presence in China, Chinese representation is comparatively low.

According to our statistics, only 15 Chinese companies have their presence in the country, he said.

Committed to providing all sorts of support to Chinese companies, Ministry of Commerce and Industry joint secretary Dinesh Sharma said there was greater scope of cooperation between the two countries and it was the right time to do business in the country.

There is quite a lot to make the trade more diversified, he said.

News: Foreign dream in reach of new Indian airlines

(TT 25/09/2006) New Delhi - The Congress-led government is likely to relent in the face of renewed lobbying by a crop of new airlines to allow them to fly abroad long before they fulfil a government-mandated criteria that requires them to possess five years of operational experience in domestic skies.

Top officials said the government might change conditions at least for the Asean region with which India has signed a treaty that opens up its four metropolitan cities to almost daily flights by any Asean carrier.

Airlines expect a decision to come through in December, which will allow them to plan schedules next summer.

“Several airline barons have approached us and pointed out that start-up airlines like Asian Air have been allowed to fly into India. Hence, it made no sense to block newer airlines out of India. We may look into this as it is a valid point,” top officials said.

New airlines like Kingfisher and SpiceJet have long been lobbying for permission to fly abroad. U.K. Bose, chief executive of Jagsons Airlines and former Air Sahara head, said, “It (the permission) may come as early as December. We have been asking for it for long. If a start-up airline from abroad that meets certain financial and safety criteria can be allowed to fly here, why should we not extend the same benefits to an Indian player?”

At stake is a host of profitable routes where seat occupancy is as high as 80-90 per cent on an average because of a shortage of flights on those sectors. While it is certain that Southeast Asian skies will certainly be opened up, the government has yet to decide whether to allow the newer players to operate flights to Europe and the US.

SpiceJet director Ajay Singh said, “We have always wanted to fly to Asean destinations.” However, most airlines want to touch down at lucrative destinations like Kuala Lumpur, Singapore and Bangkok.

Very few are interested in the other Asean destinations.

Current rules qualify only state-run carriers Air India and Indian Airlines and private carriers — Jet Airways and Air Sahara — to fly to overseas destinations. The state-run carriers, however, enjoy the exclusive monopoly to fly to Gulf destinations.

Jet Airways and Air Sahara are challenging this dispensation and have been pleading with the government to break the monopoly and to allow them into this lucrative sector.

The government had granted this monopoly to the state-run carriers as compensation for the losses they routinely incur in providing services to the government by flying troops and health workers to areas hit by natural calamities and flying out earthquake and tsunami-affected civilians.

A section of aviation ministry officials also feels the experience clause should not be relaxed as its imposition means India “exports air proven services”.

Their point is that things should be allowed to stay the way they are. “Let new players mature and then fly abroad. We do not know how many of them will be around at the end of two to three years.”

Although they have been allowed to fly foreign routes, the private Indian-owned airlines together operate only account for only 35-40 per cent of permitted capacity on these routes.

Foreign airlines are cornering an overwhelming 60-65 per cent of unutilised entitlements. With growing foreign passenger traffic demand due to opening up of the economy and foreign tourist flow, this asymmetry may well increase.

News: Media activities set to spice up Biyani malls

(TT 25/09/2006) Mumbai - Kishore Biyani, CEO of Future Group, has set his sights on mall media — a concept where the excess space within a mall is used for advertising and other media functions.

“We are planning a mall media company called Future Media Ltd, which will look after our mall media business,” Biyani told The Telegraph.

Biyani, however, refused to state when he plans to start the new venture.

In the meantime, the company plans to set up more retail outlets across the eastern region. “We plan to open stores at Siliguri, Kharagpur, Sealdah, Bhubaneshwar, Patna and Ranchi. We are looking at all formats in these towns,” said Biyani.

By November-December, the group plans to set up 100,000-sq-ft Home Town stores and E-Zones in Calcutta. Home Solutions Retail (India) Ltd, a group company of Pantaloon Retail’s E-Zone, deals with consumer durables and electronics. It already has two stores, one in Indore and the other in Bangalore. “We plan to set up six E-Zones in Calcutta,” he added.

It had recently proposed to raise about Rs 960 crore through various channels, including a private placement, a warrants issue, a follow-on public offer or a rights issue and a quasi-equity instrument such as fully or partly-convertible debentures.

Pantaloon Retail plans to expand to 30 million sq ft by 2010.

According to industry sources, the company had close to 3.2 million sq ft at the end of June 2006. It is believed that more than 50 per cent of the 30 million sq ft is already booked.

The company could be looking at around 80 Pantaloon stores by 2010 against the present 20. The total area will go up to 2 million sq ft from 0.5 million sq ft. The company aims to set up around 22 central malls by 2010 from three at present.

The number of Big Bazaar outlets will go up to 225 from 30 by 2010.

News: Reliance plans $500 mln private equity fund

(RTR 25/09/2006) Mumbai - Reliance Capital Ltd. plans to raise $500 million from foreign institutional investors by March 2007 for a private equity fund, a company official said on Monday.

"We have already had successes with private equity. This is the first time we will be raising funds from external investors for private equity investment," the official, who did not want to be named, said.

He said the company was in talks with JP Morgan and Deutsche Bank for the private equity fund, first reported by The Economic Times on Monday.

The company is a part of the Anil Dhirubhai Ambani group, which also has interests in telecommunications and power. It was formed last year after the Reliance group was split between Anil and his brother, Mukesh Ambani, who controls Reliance Industries Ltd.

Last month, Matrix Partners, a U.S.-based private equity firm, said it had set up a $150 million fund with an Indian partner.

JM Financial Ltd. said in August it had teamed up with U.S.-based Old Lane Partners LP to launch a private equity fund of $150-175 million.

Private equity deals have increased in India as companies seek capital to fund growth, acquisitions and expansions. A booming stock market has added to deal making.

Private equity deals rose sharply to $3.5 billion across 146 transactions in the first half of 2006, compared with $795 million through 67 deals in the same period last year, according sector tracking firm Venture Intelligence.

News: TCS to open new office in Colombia

(PTI 24/09/2006) Mumbai - Domestic IT major, Tata Consultancy Services will open office in Colombia to cater to the IT and BPO needs of Latin America-based global and regional companies. "The Colombia office will serve the sophisticated IT and BPO needs of global and regional companies based in Colombia. Colombia represents an important strategic market being the third-largest country in Latin America in terms of population and the regions fifth largest economy," Gabriel Rozman, president of TCS Iberoamerica, Latin American subsidiary of the company, said. TCS has also bagged three new clients in Colombia including the Ministry of Finance and two leading telecom companies, he said. TCS Iberoamerica currently operates in 14 countries across Mexico, Central America, South America as well as Spain and Portugal. "With the Colombian economy gearing up for further stability and growth, on the back on strong government policies and improved security, companies are looking forward to build world class IT systems for the future," he said. TCS has over 100 consultants providing application services to its clients in Colombia by leveraging its global delivery infrastructure in Latin America, primarily its center in Uruguay, which has over 550 local consultants.

Over 3,000 local consultants provide services to over 150 regional and global clients across the Iberoamerica Operations of the company, he added.

News: India to set up global nano research centre

(IANS 24/09/2006) Bangalore - India will soon set up an international nano-science centre for material sciences to undertake research and development (R&D) projects in the application of nano-technology.

Announcing this in Bangalore on Saturday, Minister of Science and Technology Kapil Sibal said the centre would be thrown open also to non-resident Indian (NRI) scientists and technologists to take up research projects and collaborate with other public and private institutes for developing nano products.

"We have earmarked Rs 10 billion for investing in nano-science and nano-technology over a five-year period. During the current fiscal (2006-07), Rs 1.8 billion are being spent to set up seven-eight nano-science and nano-technology centres in the country," the minister told reporters on the sidelines of a function.

Earlier, inaugurating the country's first nano lab at the Jawaharlal Nehru Centre for Advanced Scientific Research (JNCASR), Sibal said though India had missed the semiconductor revolution, efforts were being made by the government and the scientific community to tap the potential of nano-technology fully to develop a host of applications across verticals for the benefit of the common people.

"The nano lab at the JNCASR will focus on the energy sector to develop devices like super capacitors for batteries and photo voltaic cells to tap solar energy optimally. Similar nano labs in other cities will develop technologies to devise applications or sensors that can be used in healthcare, agriculture, electronics, hardware and life sciences," Sibal said.

The nano-science labs will undertake fundamental research to develop modules for using nano-technology in diverse fields, while nano-technology centres will device applications and products for mass production by the private sector.

CNR Rao, national research professor and chairman of the prime minister's scientific advisory council, said advances in nano-science and nano-technology during the last five years have brought about phenomenal changes in material manufacturing, electronics, pharmaceutical and catalysis industries.

"Nano-science and nano-technology pertain to the synthesis, characterisation, exploration and utilisation of nano-structured materials, which are characterised by one dimension in the nano-metre range. These constitute a bridge between single molecules and bulk systems.

"Individual nano-structures involve clusters, quantum dots, nano-particles nano-wires and nano-tubes, while collection of nano-structures involve arrays, assemblies and super-lattices in one, two or three dimensions," said Rao.

News: ‘Only 20% of the total insurable population of India is covered’

The insurance industry is in the limelight on account of innovative products being offered to people who want risk coverage as well as savings. Trevor Bull, MD, Tata AIG, spoke to Teena Jain of The Financial Express on various issues related to the insurance business in India. Excerpts:

India is an under-insured country. How are you planning to increase your base here?

The private insurance industry in India is still at a nascent stage and growing. To date, only approximately 20% of the total insurable population of India is covered under various life insurance schemes.

Given this, we have diligently worked towards educating the masses about life insurance and its relevance. We firmly believe that reaching out to people and educating them about the need for insurance will bear fruits in the long run. Our philosophy is to anticipate the needs of people and introduce innovative products and services to meet these needs. We also have many accolades to our name in terms of product innovation, servicing efficiency and training of our channel partners. We aim to build on the expertise of the partners to the joint venture, strengthen our distribution network and leverage our understanding of the Indian insurance landscape to provide need-based and innovative insurance solutions to the Indian masses.

Are the traditional plans fading away with ULIPs giving you benefits of both insurance and savings?

ULIPs have gained popularity due to the flexibility they offer to the policyholder in choosing the investment pattern along with the transparency in charges, besides the ease of comparison of the final illustrated values. Traditional products did not offer the facility to choose and change their pattern of investment in a particular policy. However, it is incorrect to say that the traditional plans are fading away with the emergence of ULIPs. ULIPs are best suited for those who have a conceptual understanding of financial markets and its operations together with a risk appetite and are genuinely looking for a flexible, long-term investment-cum-insurance. On the other hand, traditional insurance products are more suitable for investors who are financially more conservative and who are primarily looking at insurance as a means to secure their future.

How much is the premium coming from ULIPs and traditional plans?

At Tata AIG Life we have managed to strike a fine balance between all our plans. ULIP accounts for only 50% of new sales, as need-based selling is the belief of the company. Catering to multiple customer profiles, life + health + wealth solutions based on needs are recommended. "Solution flavour" is always put forth than the "market flavour" while guiding our customers.

Though allocation charges for ULIPs even out in the long term they are very high in the initial years. Does this make ULIPs less attractive as an investment tool vis-à-vis MFs?

ULIPs are not a proxy to mutual funds. While ULIPs as an investment avenue is closest to mutual funds in terms of their functioning and structure, the first and foremost purpose of insurance is and will always be 'protection'. The value that this provides cannot be downplayed or underestimated. As an instrument of protection insurance provides benefits that no investment can offer. It is important for an investor to understand that the allocation charges in ULIPs are high as it offers protection that a mutual fund does not offer. However, this does not make ULIPs any less attractive as they are long-term in nature, ranging anywhere between five years to whole of life. Over a longer horizon ULIPs provide attractive returns due to the fact that they also provide tax benefits.

In the private sector pension market where do you stand? What is the growth potential of this market?

Pension is the key area of business for insurers worldwide. Life insurance and pensions are closely interlinked - life insurance covers the risk of dying too early and pensions cover the risk of living too long - the risk of outliving one's financial resources.

India is one of the youngest nations in the world with average age of 26 years. Insurers have the responsibility to increase awareness about retirement planning, and come up with innovative products that meet young India's needs.

At Tata AIG we constantly strive to launch innovative products. For corporates we have the gratuity and superannuation schemes that serve as funding vehicles, to build a retirement kitty ensuring financial freedom for the participating employees. We are a leading private sector player in this space, and one of the few companies offering both unit linked as well as traditional funds for investment.

To help individuals build a nest egg for a dignified and financially independent retired life, we have Nirvana, Nirvana Plus and Invest Assure Plus products that serve as funding vehicles. We have been doing well in this area as well because by focusing on priority need of asset accumulation, first, we provide customers the ability to choose how they use these funds at a future date they have planned towards.

New players have innovative products and they are aggressively marketing them. How do you plan to compete with them?

We have always been committed to introducing innovative insurance solutions and are enhancing our product suite by leveraging the expertise of the partners to the venture to address the varying needs of Indian consumers. We have pioneered the concept of standalone health insurance policies in India with the launch of our products Health First and Health Protector.

We are the first life insurance company in India to launch a suite of micro insurance (MI) products and services that cater to the needs of the rural masses. And not forget the master products such as Maha Life and Maha Life Gold.

The focus of the company has always been on its customers and recommending appropriate solutions. Mere aggressive marketing has never been philosophy of the company.

How are your risk products -- Health first & Health Protector -- faring?

We are the first life insurance company in India to offer standalone accident and health (A&H) insurance products. We have pioneered the concept of standalone health insurance policies in India with the launch of our products Health First and Health Protector. These products provide comprehensive hospitalisation benefits as well as options to choose cancer care protection, family accidental death and dismemberment benefit and critical illnesses.

India still remains a hugely underinsured market and the A&H policies by Tata AIG Life, with its innovative features and competitive pricing, addresses the needs of a wide cross-section of the population. Both these innovative products have been very well accepted by the market.

Does launching a new product result into more business? What is your experience?

We believe that insurance is a need-based product. Our financial advisors are trained to understand the needs of our customers and provide them appropriate solutions keeping in mind their financial goals and objectives. Our focus is to develop a quality product portfolio. Thus launching a need-based product is of more importance than just duplicating the products already available in the market.

Tata AIG Life has a balanced portfolio that caters to the needs of individuals as well as corporates. It has been our constant endeavour to anticipate the needs of our customers and service them with innovative product offerings. We believe in providing the best of our services without focusing only on our end results.

Why are term insurance policies not so popular in India?

A term insurance policy is a pure risk cover without any element of savings or investment. Since this is a pure risk cover plan, no benefits are payable on survival at the end of the term of the policy.

Unlike saving plans like endowment and money back plans, an individual does not get his money back in term insurance plans. In India, there is a mindset against investing in a policy which provides only death benefit as the policy holder cannot enjoy the invested corpus. However, it's pleasing to note the change in the outlook of people and increasing acceptance of these products.

Is it true that even insurance companies are not pushing term products as the premiums collected are low?

We do not believe in pushing any single product in the market. Term insurance is a pure risk cover and it provides protection to the policyholder's family in case of his untimely death. The value that this provides cannot be downplayed or underestimated. It is important for an individual to evaluate their needs and requirements with a professional advisor and buy a life insurance cover based on that.

News: Mumbai rocks at night, Delhi by day

(FE 24/09/2006) Mumbai - The verdict is out. Amchi Mumbai has been voted as India’s most hip and happening city, closely followed by Delhi and Bangalore, in a survey conducted by The Financial Express and C fore among 20-30 year-olds.

Mumbai, the perennial favourite, topped the list of ten best cities with its trendy restaurants, buzzing nightlife and cosmopolitan lifestyle. And if Delhi’s shopping malls and sports facilities got it the second place, Bangalore’s pubs took India’s Silicon Valley to a respectable third place.

The survey asked the respondents to rate their favourite city on the basis of various parameters like nightlife, cultural haunts, eating out options, sports facilities, cost of living and law and order, among others.

The biggest surprise entrant in the list is Pune. Ranked fourth, the city is ahead of the other two metros, Kolkata (fifth) and Chennai (seventh). Hyderabad was at sixth place while Chandigarh, Ahmedabad and Kochi account for the rest of places.

Mumbai got the maximum points for nightlife, with Bangalore coming a close second. With dedicated jazz bars and watering holes dotting it, this city of pubs sports a nightlife that puts Delhi to shame.

The capital scores a poor fourth in nightlife. For eating out options in the city, Mumbai, once again topped the list, with Delhi coming a respectable second, followed by Kolkata, known for its popular street food.

Thankfully, Delhi’s ever-burgeoning malls and multiplexes saved the day for the national capital. Ranked as India’s shopping paradise, Delhi also took the honours for its better infrastructure. No longer a retiree’s paradise, Bangalore ranks second as the costliest city after Mumbai, with Pune fast closing the ranks. Kolkata continues to be the cheapest metro, where having a good time is easy on the pocket.

Chennai follows a close second. It is the same story for cultural activities, with bhadralok Kolkata taking first place and laidback Chennai coming second. The southern metro has also been voted the safest city with Kochi and Pune taking second and third places respectively, even as Delhi continues to be the wild West.

And if you have a bohemian lifestyle and don’t want nosy neighbours, then Mumbai is the place for you with the most liberal attitudes. Surprise again, Kolkata is number two (the bhadralok is not inquisitive), followed by Bangalore with IT geeks constantly trooping in. Patriarchal Delhi is at number four followed by Pune at fifth place.

Sadly, none of the big cities, not even the metros, boasts of world-class sport facilities. Bangalore, with its great weather, has given the outdoors a go-by. Looks like the young techies prefer to spend their days in front of their PCs. The surprise was Delhi, with all its big stadiums and now swimming pools, golf courses and pool tables, at number one.

News: Bajaj Auto, BHEL, RIL in Forbes’ Fab 50 list

(PTI 24/09/2006) Singapore - Bajaj Auto, BHEL, Infosys, ITC and RIL are among 12 listed Indian companies that figure in the latest list of Fabulous 50 of the Forbes Asia magazine.

This is the second annual Fabulous 50 list, the best of Asia-Pacific's publicly-traded companies with revenues or market capitalisation of at least $5 billion.

Other Indian companies are ICICI Bank, HDFC Bank, L&T, Satyam Computers, Sterlite Industries, Tata Motors and Wipro.

India has been represented by the maximum number of companies followed by Japan with nine and South Korea and Taiwan with six companies each and China and Australia with five each.

Bajaj Auto has regained momentum in the battle of two-wheelers with its main competitor Hero Honda, Forbes said, adding that "last year, Bajaj made $238 million on sales of $1.9 billion, ensuring a spot on Forbes Asia's Fab 50 companies list."

BHEL's heavy order book for its turbines, boilers, valves and pumps are up six-fold over last year as the government pushes to increase industrial capacity and improve infrastructure.

BHEL, with a market value of $11,835 million remains a favourite with overseas fund managers, says Forbes.

According to Forbes, every name in the list of Fab 50 had to meet a gamut of statistical measurements -- long-term profitability, sales and earnings growth plus projected earnings and stock price gains.

Most of the 12 companies listed in the Fab 50 have gained substantially on the bourses over the last year.

The Mukesh Ambani led Reliance Industries Limited ensured its spot in the list for its market value at $33,258 million.

"Chairman Mukesh Ambani doesn't do anything in a small way. Ambani is one of India's richest men... He is building the world's largest refinery in India and has announced plans for a new Reliance company to build a farm-to-fork distribution system for agricultural goods in India," the magazine said.

L&T, India's largest construction and engineering firm, builds everything from oil and gas platforms to stadiums and its shares have gone up by 80 per cent in the last 12 months.

L&T is also building a part of India's $6 billion Golden Quadrilateral highway linking the national capital New Delhi capital with Mumbai, Chennai and Kolkata.

Some of the leading and well-known MNCs are Australian mineral and metal company BHP Billiton, China Mobile of China, South Korea's Daewoo Shipbuilding and Marine, Hyundai Mobis and LG corporation.

Nidec (capital goods), Nitto Denko (chemicals) Konika Minolta (household and personal products), Toyota Tsusho (trading companies) and Yahoo Japan (software and services) are among the leading Japanese companies for registering their names in the Fabulous 50.

News: Bharti ranked 13th in 'Asia Business Week 50'

(PTI 24/09/2006) New Delhi - Leading telecom service provider Bharti Airtel has been ranked 13th among the best performing 50 companies in Asia by 'BusinesWeek' magazine, ahead of corporate giant Reliance Industries and Infosys.

The annual ranking, 'Asia Business Week 50', of best companies across all sectors in Asia ranked Bharti ahead of compatriots Reliance Industries (17) and Infosys (23).

Commenting on the ranking, Bharti Airtel CMD Sunil Mittal said it highlighted the company's relentless pursuit to create a world-class organisation providing best in class services.

Business Week said Bharti's plans to invest two billion dollars on network expansion and marketing to reach underserved markets in rural areas was "serious money" and a step towards Mittal's broader ambition to be the most admired brand in India by 2010.

"Investors already like what they see. Bharti Airtel delivered 30 per cent total shareholder returns in 2005 and a head-turning 493 per cent over the last three years," the release said quoting Business Week.

News: Reliance finds gas in KG basin

(BL 24/09/2006) Mumbai - Reliance Industries Ltd (RIL) has discovered gas in the Krishna-Godavari basin off the east coast of India.

The company has notified the Directorate General of Hydrocarbon about the gas discovery in KG-OSN-2001/1 (NELP III) block.

The discovery has been named Dhirubhai28. The notification was made in terms of the production sharing contract signed between RIL and the Government of India. A company press release said the potential commercial interest of the discovery was yet to be established.

News: Singapore co to invest $1bn Timil Nadu SEZs

(TNN 23/09/2006) New Delhi - Singapore-based property developer, Ascendas, has proposed to invest $1bn in two multi-product special economic zones (SEZs) in Tamil Nadu. The proposal will be taken up at the Board of Approvals (BoA) meeting for SEZs in October. The company’s Indian arm is already developing an international technology park in Chennai in a joint venture with the Tamil Nadu Investment Development Corporation (TIDCO), at the cost of Rs 450 crore.

Commerce ministry officials told ET, the interest of foreign players in Indian SEZs was growing. Apart from Ascendas, international majors, including South Korean steel company Posco and Indonesia’s Salem group, are also waiting to get their SEZ proposals cleared.

The BoA already has its task cut out with 200 pending proposals spilling over from its previous meeting. However, ministry officials said there will be no problem in accommodating fresh proposals. “As we have decided to hold five meetings to clear proposals state-wise, there will be no problem in taking up new applications,” an official said.

Interestingly, less than half-a-dozen new proposals have been submitted to BoA after the ceiling on the number of approvals was lifted last month. Officials said that the mad rush of applicants last month was because of the 150-cap imposed by the empowered group of ministers (EGoM) on SEZs. Once the cap was lifted, applicants became more relaxed.

The commerce ministry hopes to clear all pending proposals by October 10. Although the EGoM has removed the cap on the number of applications, it will relook at the situation in February ’07, or sooner if 70 SEZs get notified before February. As only 24 SEZs have been notified so far, it is unlikely that the next EGoM meeting will take place before February ’07.

News: Bharti's retail model to be finalised by October

(TNN 23/09/2006) Kolkata - Bharti Enterprises plans to finalise its retail business model this October, Bharti Enterprises chairman Sunil Mittal indicated on Friday.

“Currently, Bharti is in talks with all large multinational retail chains keen to enter India, including Tesco. Different business possibilities are being explored. A team of experts has been formed for the purpose.

They are examining various models and formats that can be adopted. This team will suggest the most appropriate retail model by October,” said Mr Mittal.

He was talking reporters on the sidelines of CII’s National Council meeting in Kolkata. It has been widely reported in the media that global retailers like Wal-Mart, Tesco and Carrefour have plans to enter India. “The retail venture will be undertaken by a new company that will be floated,” Mr Mittal said.

Regarding Bharti’s plans in the West Bengal region, he said, the group was exploring multiple investment opportunities in several states, although nothing had been firmed up yet.

Bharti has, however, entered contract into farming in Punjab over 5,000 acres of land. Mr Mittal also said: “About $2bn will be invested in various projects in ’06-07, primarily in telecom.”

News: Coming soon - Indian specialty malls

(TNN 23/09/2006) New Delhi - The retail story is not just about convenience stores and hypermarkets. Big action is taking place in the specialty retail space. The trend is spreading across sectors and includes some pretty offbeat categories that are coming out of the unorganised mom-and-pop stores.

While FMCG major Hindustan Lever is mulling a retail chain for — believe it or not — laundry products, some other categories, which are attracting early movers include electronics, office products, toys, lingerie, chocolates, electrical products, stationery and furnishings. Both big and small players are entering the electronics space.

The big names include the Dubai-based Jumbo group and the Tatas. Lifestyle segments, for instance, lingerie has attracted chains like Sensa, rebranded as Straps, and Marks & Spencer under Women’s Secret brand.

Thapars-controlled Bilt is planning a paper-products chain and Luxor Parker is looking to set up a stationery retail chain. Havells, Philips and Bajaj Electricals are among those interested in electrical products.

Meanwhile the Indo Rama Group has opened Office1 superstores for office products after striking a deal with US-based Office1 Superstore International. Then there are segments like candies, where Candico is already active, and toys where both local and international players, including UK-based Hamleys and Toys Kemp, are planning big moves.

“Internationally, specialised retail is a big business. Similar trends will emerge in India,” said Harminder Sahni, chief operating officer of Technopak Advisors.

In fact, some international majors have already started the search for real estate. They are said to be negotiating with mall developers. “Since most stores in these specialised categories will need much lesser space in comparison to the existing formats, such as lifestyle and hypermarkets, they will all come up in malls. There won’t be too many stand-alone stores,” says Abhijit Das, head of the Ansal Plaza Mall Management Co.

Some retail sector trackers, however, feel that success will depend on how mature the market is for a particular segment. “In some categories, the market has evolved enough to absorb a specialised retail chain, but in the case of some categories, the timing may just not be right. On a long term basis, there will be space for everyone,” says Deepankar Sanwalka, head of the consumer markets wing of KPMG India.

News: 'India needs more FDI in manufacturing'

(PTI 23/09/2006) New York - India is seeking major investments in the manufacturing sector as part of its effort to take the benefits of development to the poorest of the poor, Minister of State for Industry Ashwani Kumar said.

Speaking at a meeting with entrepreneurs and lawyers organised at the Indian Consulate here yesterday, Kumar said the government is trying to put on fast track litigations that affect investors. India is expected to have an economy $1.2 trillion in the next 7-10 years, Kuamar said adding the aim is that the manufacturing sector, which contribtues around 10% to the economy, should expand its share to 25%. Kumar said India could absorb around $240 billion over 8-10 years with the power sector alone requiring some $140 billion.

News: UAE property giants eye India

(PTI 23/09/2006) Dubai - Leading UAE-based firms, especially in the real estate sector, have joined the list of global companies, targetting investments in India in hotels, malls, healthcare, housing, IT Parks and integrated townships.

A booming economy and the huge middle class segment in India offers a lucrative destination for investors and several leading UAE real estate companies such as Emaar Properties, Al Ghurair Group's ETA Star, Al Rostamani Enterprises' KM Properties, Nakheel, and Dubai Properties have announced major plans in the country.

They are investing in hotels, malls, healthcare, housing, IT parks and integrated townships all over the country from Mumbai, Delhi, Chennai, to Hyderabad.

Emaar, the largest property developer in the Middle East, has announced a joint venture in India between Emaar and MGF Developments- Emaar MGF Land Private Ltd.

In December 2005, Emaar MGF announced India's largest foreign direct investment in real estate, for projects with a capital outlay of USD4 billion. Developments are planned in Delhi, Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra.

ETA Star is developing a mall in the heart of Chennai

and a one million-square foot tech park in the city's IT

corridor, Abid A. Junaid, ETA Star's executive director told the Gulf News.

The company has launched a 10-tower residential project in Bangalore, and in Mumbai's Juhu district, it has a joint venture with the Supra Group for developing service apartments, residential buildings and a mall.

"The company is also spreading its operation in cities including Kolkata and Hyderabad, where land acquisitions are in progress and projects will be announced early next year," Junaid said.

Better Homes, the UAEFs biggest real estate agency, this month opened offices in Mumbai, which will sell Dubai and Mumbai property to Indian residents and NRIs.

Ryan Mahoney, managing director of Better Homes, said the company will set up six offices in Mumbai that offer brokerage services for residential property.

"This is a turning point in the Indian economy as FDI restrictions have been relaxed and real estate sector now offers tremendous potential," he said.

Sudir Kumar, executive director for property at Dubai-based Morison Consulting, said the opportunities in India were too good to miss, a fact demonstrated by visits to India by global business leaders including Bill Gates.

KM Properties, another Mideast real estate major, has set up a huge real estate development fund for hotel and real estate development across Middle East and Asia. "We presently have property in Saudi Arabia and are exploring opportunities in India as well," Mohit Gupta of KM properties said.

News: Chicago Mercantile Exchange to enter India

(RTR 23/09/2006) New Delhi - The Chicago Mercantile Exchange could enter India's booming commodity derivatives market if the government relaxes its rules, managing director John Davidson said on Friday.

CME also plans to offer its expertise to exchanges in India, and is eager to help enable trading of Indian commodity derivatives elsewhere, Davidson told Reuters in an interview while on a trip to India.

"The Indian commodities market is growing at a remarkable pace," he said. "I think we will set up an office here sometime, but I don't know when."

"US investors will be interested in Indian commodity market as they have been in equities," Davidson said.

India allowed trading in commodity futures in 2002. Three exchanges -- the National Commodity and Derivatives Exchange, Multi Commodity Exchange, and National Multi Commodity Exchange -- were set up in 2003.

Trading volumes in these exchanges totalled 15.6 trillion ($340 billion) rupees during April to August. Volumes were 21 trillion rupees during the fiscal year to March 2006.

Asked if the CME would be interested in picking up a stake in any of the Indian commodity exchanges, Davidson said: "There is always a possibility, but there is no specific plan as of now."

Davidson met officials of financial and commodity regulators, and the finance ministry in the last few days.

A bill is pending in parliament to permit foreign players to pick up stakes in Indian exchanges and take positions in commodity futures. India's commodity market regulator does not allow banks and financial institutions, both domestic and foreign, to trade in these markets.

The CME could help Indian exchanges start trade in a variety of economic derivatives such as those based on inflation, housing prices and non-farm employment, Davidson said.

The CME, the largest futures exchange in the United States and owner of largest futures clearing house in the world, offers trading in derivatives of interest rates, equities, foreign exchange, agricultural commodities and alternative investments.

News: US House bill to knock India out of favour

(RTR 23/09/2006) Washington - A Republican bill to extend trade benefits for developing countries would knock key industries in Brazil, India and other countries out of the program, development groups said on Friday.

Oxfam America said it welcomed the bill introduced in the U.S. House of Representatives on Thursday by Ways and Means Committee Chairman Bill Thomas, a California Republican, but called for number of changes to be made.

"The exclusion of some developing countries from the GSP (Generalized System of Preferences) program is troubling, given the millions of poor people who are employed in sectors that directly benefit from duty-free benefits," said Raymond Offenheiser, president of Oxfam America, in a statement.

Oxfam said their initial analysis suggested that certain exports from Brazil, India, Argentina, Turkey and Venezuela could lose duty-free access to the United States under the legislation.

Democrats were expected to support the legislation in hopes of revisiting the issue next year, when they could control the House if they win a majority of seats in Nov. 7 elections.

The bill also provides new trade benefits for Haiti, which has been a priority for Rep. Charles Rangel of New York, the top Democrat on the Ways and Means panel.

Another section extends through September 2008 a provision expiring next year that allows African manufacturers to use fabric from Asian or other suppliers to make clothes they can sell in the United States without import duties.

That extension would allow thousands of African women to keep their jobs a while longer, but another provision requiring at least 50-percent African content beginning in October 2008 "could set the bar too high," Offenheiser said.

The United States' main trade benefits program for developing countries -- the Generalized System of Preferences -- expires on Dec. 31, as does a separate program for the Andean countries of Colombia, Peru, Ecuador and Bolivia.

The Bush administration favors renewing GSP, but is in the midst of a review that could kick many large developing countries like Brazil and India out of the program.

Many lawmakers, such as Senate Finance Committee Chairman Charles Grassley, an Iowa Republican, no longer want to provide duty-free treatment to products from major developing countries that are resisting U.S. pressure in world trade talks to open their own markets to more U.S. exports.

The bill would exclude India's jewelry sector from the program by barring duty-free treatment for any product from a developing country that has annual export sales of more than $1.5 billion, said Viji Rangaswami, an associate at the Carnegie Endowment for International Peace.

Another provision aimed at developing countries with a per capita income of more than $3,400 would deny duty-free access for Brazil's auto parts exports and other Brazilian sectors by barring USTR from issuing certain waivers, Rangaswami said.

The bill would not extend trade benefits for Andean countries. Peru and Colombia have negotiated free-trade pacts that lock in their duty-free access to the United States, but Bolivia and Ecuador have not.

News: Bengal realty dawns on Godrej reality

(TT 23/09/2006) Calcutta - The Godrej group is planning a large-scale foray into real estate development in Bengal.

The company is developing two information technology parks of 3.5 million sq ft each at Salt Lake and a shopping mall of 4 million sq ft at Park Circus in joint venture with RPG group-controlled CESC. It now wants to develop a large residential project in the city as well.

“We are planning to develop a big residential project — over 10 million sq ft in size — in Calcutta,” Godrej group chairman and managing director Adi Godrej said after an interactive session with Bengal chief minister Buddhadeb Bhattacharjee. The session was organised by the Confederation of Indian Industry here today.

“Our large residential projects in Mumbai have got a good response and we see a lot of opportunity in Calcutta, too,” Godrej said.

“I have already spoken to the chief minister about it and he was very responsive,” Godrej added.

Godrej, however, hasn’t identified a location where the project will come up. “We have asked the government to find land for us and we will take a final call after that,” he said.

Investments required for the proposed project could only be estimated after the land cost is known, he added.

Like its IT parks and the shopping mall, Godrej Properties — the Godrej group’s real estate subsidiary — will develop the real estate project. The company will invest between Rs 300 crore and Rs 400 crore in the IT park and mall projects.

Interestingly, CESC-Godrej Plaza is the first shopping mall of Godrej Properties in the country.

Adi Godrej also plans to acquire companies making consumer care products both in India and abroad. “We have recently acquired two companies overseas. We are looking for more acquisitions, small or big, for our consumer care division. We are looking at both India and overseas for the buyout,” Godrej said.

Another group company, Godrej & Boyce, managed by Jamshyd Godrej, has already evinced interest in setting up a furniture manufacturing plant in the state.

News: Stock split, payout on Pantaloon agenda

(TT 23/09/2006) Mumbai - Pantaloon Retail, promoted by Kishore Biyani, may soon consider a stock split. In a notice to the Bombay Stock Exchange today, the company said it would seek the approval of its board on September 30 for the stock split. The company is also considering a dividend.

In the meantime, the shareholders of the company at the EGM today approved the issue of securities worth Rs 260 crore to investors.

The securities could be new shares or existing shares of the company or a rights issue; or convertible securities with or without detachable warrants; or convertible debentures. The prospective investors could be institutions, incorporated bodies or mutual funds.

The shareholders at the EGM also approved a preferential issue to the promoters in the form of 12,12,480 warrants with the option to acquire for every warrant an equity share of Rs 10 each at a price of Rs 1,635 per warrant aggregating to about Rs 198 crore.

An analyst said the company was keen on a stock split to raise its floating stock which is low, possibly, due to the high FII holdings in the company.

The shares of Pantaloon closed today at Rs 1,843.30, 5.61 per cent higher than yesterday.

Last month, the company announced it would divest up to 24 per cent in its subsidiaries, such as Home Solutions, Central Mall and Future Media and Future Logistics, to raise up to Rs 500 crore.

The market is abuzz with rumours that Biyani plans to hive off Central Mall as a separate company.

Considering that the company has drawn up an ambitious expansion plan of close to 30 million sq feet by 2010, Pantaloon is expected to need close to Rs 3,600 crore, believe retail analyst.

News: Indian Forex reserves increase by $ 404 m

(PTI 23/09/2006) Mumbai - Forex reserves increased by $ 404 million to stand at $ 165.542 billion during the week ended September 15, as against $ 165.138 billion during the week ended September 8.

The reserves had decreased by $ 1.320 billion during the preceeding week ended September 8, compared to a week ago period.

Foreign currency assets increased by $ 404 million to $ 158.239 billion during the seven day period ended September 15, according to figures released by the Reserve Bank.

Foreign currency assets in dollars include the effect of revaluation of non-US currencies such as Euro, Sterling, Yen held in reserves.

Reserve position in the IMF remain static at $ 764 million.

Gold reserves as well as SDRs remained static at $ 6.53 billion and at $ one million respectively.

News: Air Canada plans more direct flights to India

(BL 23/09/2006) Toronto - Air Canada is planning to introduce more direct flights from Toronto to Mumbai and other Indian cities from next year.

Robert Milton, Chairman of Air Canada said expansion of its services in India will be possible as the company will have new Boeing 777 planes next year.

The new aircraft would have a longer range, allowing Air Canada to fly to more destinations non-stop in India, Milton said while addressing a transportation conference sponsored by RBC Dominion Securities Inc.

Milton said the Air Canada would also benefit from the cargo services to and from India.

News: The great Indian dream gets a taste of foreign plots

(HE 22/09/2006) New Delhi - The reserve Bank of India does not allow Indian citizens to invest more than $25,000 per person a year in real estate abroad. That works out to Rs 11.5 lakh; one would not get even a decent apartment in a Tier II city in India with that kind of money. But Indians are still buying property abroad — often at top -end prices.

“Indians are next only to Malaysians among foreigners who buy real estate in Singapore,” says David Neubronner, executive director, Savills Residential-Singapore. Property rates range between 1,000 Singapore dollar (about Rs 30,000) per sq ft and 3,000 Singapore dollar.

The other top destinations? Dubai, London and New York. “The kind of Indian who wants to invest in property abroad is extremely affluent, has business interests at a particular place or visits that place often because of family or sentimental reasons,” says Pankaj Ranjan, regional director of global realtors Trammell Crow Meghraj.

Actor Shah Rukh Khan has purchased property in Dubai, which earlier did not allow foreigners to buy real estate. In 2002, it announced free zones for property holdings.

Most real-estate dealers shy away from discussing transaction details because there is a cloud over the purchase procedure. Kaviraj Singh, partner, Trustman & Co, a law firm specialising in real estate, says, "The RBI regulation basically means that if the valuation is below the cap, the approval is automatic; when the value is more, you may prepare a project report and make a case to the government — which may or may not be passed."

But usually, "people form companies in tax havens like Mauritius or the Isle of Man, and invest in personal properties under the company name," says a real-estate consultant. A favoured route, she says, is to purchase property through the hawala network, investing cash from real-estate sales in India in property abroad. The other option is to buy property in the name of friends or relatives — but there is a risk involved there.

Yet another option is the one devised by companies like UK Land Investments that offers land in the UK for less than the permitted $25,000. Many in the trade, however, feel that this is a highly suspect procedure as the land offered is usually farmland, not residential land.

News: Indian exports grow 20.5% in August

(BS 22/09/2006) New Delhi - India's merchandise exports of $10.38 billion in August represent growth of 20.5 per cent over the $8.61 billion clocked in the corresponding period last year.

According to provisional data released by the commerce and industry ministry, imports during the month increased by 11.67 per cent to $13.86 billion, as against $ 12.42 billion last year.

The higher growth in exports caused the trade deficit to improve marginally to $3.48 billion from $3.80 billion in August last year.

Cumulative exports during April-August increased by 21 per cent to $48.08 billion, as against $39.83 billion in the same period last year. Imports increased by around 18 per cent to$68.29 billion, against $58.01 billion last year. The trade deficit increased to $20.20 billion from $18.18 billion in 2005-06.

Oil imports in August were valued at $5.03 billion, 27 per cent higher than the $3.95 billion last year.

Oil imports during April-August were valued at $23.57 billion, 39 per cent higher than the $16.9 billion in the corresponding period last year.

News: Kumar Birla plans $2 bn retail foray

(BS 22/09/2006) Mumbai - With an eye on the nascent organised retail business opportunity, the Aditya Birla group will invest over $2 billion in the next five years for rolling out a mix of supermarkets and hypermarkets across the country.

A key element of the group’s strategy will be its focus on “private labels”, products that are sold under brand names owned by the company. The initial roll-out is expected to begin within 15 months.

Unlike the retail plans of other Indian corporates, the Aditya Birla group, headed by Kumar Mangalam Birla, is not looking at tying up with a global major. Project finances were being tied-up, sources said. Key resource people have already been hired from existing retail majors like Shoppers’ Stop and Pantaloon.

When contacted, the group spokesperson declined to comment.

Barring branded fast-moving consumer goods, the Aditya Birla group’s retail foray is expected to look at creating private labels in all categories such as food and groceries, apparel and homecare products.

Sources added that most of the sourcing would be from within the country, because the duty structure did not make imports a viable option.

The group has substantial experience in textile retail with Madura Garments, which has leading brands like Van Heusen, Allen Solly, Peter England, Louis Philippe and SF Jeans in its kitty. It is also the licensee for international brands like Esprit.

The booming retail sector is attracting the country’s leading business houses such as Reliance Industries, Bharti Enterprises, the Tatas and the Reliance Anil Dhirubhai Ambani Group. Organised retail in India is estimated at $6 billion and is projected to grow at 20-25 per cent per annum.

News: TCS overtakes Infosys in market capitalisation

(BL 22/09/2006) Mumbai - Tata Consultancy Services Ltd (TCS) has replaced Infosys Technologies as the country's biggest IT firm and second biggest private sector company in terms of the market capitalisation.

TCS, the country's largest software exporter, today achieved a market cap of Rs 1.02 lakh crore, surpassing Rs 1.01 lakh crore of its closest rival in the IT space Infosys.

TCS has also replaced Infosys as the country's fourth most valued publicly listed corporate entity after ONGC, Reliance Industries and NTPC. TCS had re-entered the Rs 1 trillion market-cap league earlier on September 20.

Wipro retained its position as the third largest IT firm with a market cap of Rs 74.5 lakh crore at the end of today's trading session.

TCS had attained a market cap of about Rs 1,00,550 crore with a surge of 1.71 per cent in its share price to Rs 1,027.50 at the Bombay Stock Exchange. The country's largest software exporter had first hit the 1 trillion bracket on April 18, 2006, but had failed to sustain at that level.

Currently, TCS and Infosys are the only two IT companies with a market cap of over Rs 1 trillion, while Wipro has also previously breached this level. Wipro, whose current market-cap stands at about Rs 74,000 crore, is the only company to have attained a market cap of Rs 2 lakh crore, which was achieved on February 2, 2000.

News: Pantaloon to open 17 Big Bazaar outlets

Bangalore - Pantaloon Retail (India) plans to open 17 new Big Bazaar outlets in the south in next one year, including eight-nine stores in Kerala, where it will make a foray, a senior company executive said on Friday.

The company currently has eight Big Bazaar outlets in the south, five in Bangalore, one each in Hyderabad, Vizag and Mangalore.

"We will have 25 Big Bazaar outlets in the next 12 months", company President (South) Vishnu Prasad said adding that the company spends between Rs 10 crore to Rs 20 crore to set up a store depending on its size.

The investment for expansion in the region is expected to be around Rs 200 crore, Prasad said. Eight-nine stores each would be established in Tamil Nadu and Kerala. "We will be present in A class and B class cities", he said.

Pantaloon is opening tomorrow its fifth store in Bangalore, it's the company's 32nd Big Bazaar outlet in India. Five more stores would be added in the city in the next one year.

The 1,60,000 sqft latest store here, spread across six floors, is the biggest one in India. Bangalore now has the highest number of Big Bazaars in India, company officials said.

Prasad said the five Big Bazaar outlets here expect total revenue of Rs 500 crore in the current fiscal.

News: Affluent Indians to grow 12% by 2009

(BL 22/09/2006) New Delhi - Believe it if you can. There are an estimated 7,11,000 individuals with liquid cash of over $ 1,00,000 in India, and the number is expected to increase to 1.1 million, growing annually at 11.6 per cent by 2009.

These individuals have cumulative liquid wealth of $ 203 billion, which is expected to rise by 12.2 per cent per year to $ 322 billion by 2009, says American Express' White Paper on `The Changing Lifestyle Expectations of the Affluent In India' that was released on Thursday.

Clearly, the affluent class is a fairly large chunk of the population and as a group, possesses both power and money and hence the demand it makes on the market is also top class. As a matter of fact, there is a fast emerging, young and dynamic affluent class in India for whom acquiring luxury is not an occasion, but something to be expected. Exclusivity is the mantra they follow.

According to the survey, affluent consumers seek the best brands, the best quality, and the best services. But in the midst of their pursuit of an exclusive affluent lifestyle, they have not lost sight of what they are. This class celebrates the fusion of global luxuries and indigenous Indian brands in their lifestyles. Shoddy products, sub-par services, unpleasant purchase experiences are no longer tolerated or forgiven.

All these facts, the survey points out, have opened a wide door for a number of premium brands, international and domestic, across all sectors - be it clothing, accessories, airline services or hotels. But with the huge growth in demand for such products and services, manufacturers and service providers also need to constantly prove their worth.

The survey, however, warns service and product providers that mass affluence doesn't mean mass marketing. Hence there is a need to focus on both a short and long term individual relationship building strategies with the class. The brands also must recognise that with growing competition it is imperative to maintain performance and customer satisfaction levels.

The survey also points out that since the Indian affluent class likes celebrating its `Indianness,' international brands need to create services and products that understand the Indian culture, create familiarity in the market place and earn the respect of affluent customers. Further, as the affluent Indian aspires to be extraordinary, all brands and services should endeavour to make the ordinary extraordinary to stay in the race.

News: TCS rejoins Rs 1 trillion m-cap club

(PTI 21/09/2006) Mumbai - IT major Tata Consultancy Services (TCS) today returned to the elite league of companies with a market capitalistion of over Rs 1 lakh crore (Rs 1 trillion) -- a feat currently shared by only four other Indian companies including ONGC, Reliance Industries, NTPC and Infosys.

TCS attained a market cap of about Rs 1,00,550 crore with a surge of 1.71 per cent in its share price to Rs 1,027.50 at the Bombay Stock Exchange.

The stock jumped more than 2 per cent to an intraday high of Rs 1,035 late in the trading session.

The country's largest software exporter had first hit the 1 trillion bracket on April 18, but had failed to sustain at that level.

Currently, TCS is the second IT company after Infosys to enjoy a market cap of over Rs 1 trillion, while Wipro has also previously breached this level.

PSU oil exploration major ONGC leads the pack with a market-cap of over Rs 1.67 lakh crore, followed by corporate behemoth RIL with Rs 1.56 lakh crore, state run power generation major NTPC with market cap of over Rs 1.06 lakh crore and Infosys with total shareholder wealth of about Rs 1.01 lakh crore.

After corporate behemoth RIL and another IT major Infosys, TCS has become the third private sector company to have gained a market cap of over Rs 1 lakh crore, while other two - ONGC and NTPC - are public sector undertakings.

ONGC and RIL had first reached market cap of Rs 1 lakh crore on December 12, 2003 and August 2, 2005 respectively.

Wipro, whose current market-cap stands at about Rs 74,000 crore, is the only company to have attained a market cap of Rs 2 lakh crore, which was achieved on February 2, 2000.

News: Merrill Lynch, Fidelity raise stake in Indiabulls

(RTR 21/09/2006) Mumbai - Indiabulls Financial Services Ltd. said on Thursday Merrill Lynch Capital Markets Espana S.A. SV and funds managed by the Fidelity group increased their stake in the company last week.

Shares in Indiabulls rose after the news and were trading at noon at Rs 445.90, or 7.95 per cent higher, in a firm Mumbai market.

Merrill Lynch Capital picked by 2.546 per cent stake to raise its stake to 8.853 per cent, Indiabulls said.

Funds managed by FMR Corp., Fidelity International Ltd. and their subsidiaries picked by 0.95 per cent stake to reach the level of 10.35 per cent, it added.

Merrill Lynch bought the shares from the market. The stake increase by the Fidelity group was achieved through market purchases as well as conversion of Global Depositary Receipts into equity shares.

News: Tatas plan mega foray into durables retail biz

(TNN 21/09/2006) New Delhi/Gurgaon - After Reliance Retail, Videocon and Pantaloon, the Tata Group is doing an encore. Following its tie-up with the UK-based retail major Woolworths, the Tatas are working out an aggressive foray into the consumer durables retail space in India.

The group, which has named its durable venture with Woolworths as Value Electronics, has already initiated an aggressive drive for the acquisition of real estate in various parts of the country and is in talks with consumer durables majors, LG and Samsung, for supply of goods.

The first of the retail stores will kick-start in Mumbai before the end of this year. When contacted, Anand Jadhav, marketing head of Value Electronics, said he was unable to comment on the developments.

According to sources, the company will also develop its own store-brand durables, and is already in talks with few big Indian electronics manufacturers, including Videocon, and may ink a sourcing deal with them later this year. The in-house brand will be marketed under the Millenia brand, according to sources.

Ravinder Zutshi, deputy managing director, Samsung India, confirms that his company has already tied up with the Tata-Woolworth joint venture for supply of its products. Value Electronics will be one of the largest consumer durable retail store chain in the country, with space ranging from 60,000 square feet to as much as 1.5 lakh square feet.

While the Tata Group is in talks with big mall developers in larger cities, its durable chain will primarily operate through stand alone formats in smaller cities. Industry sources peg the group’s overall real estate requirement by the end of this year to be at around 40-45 lakh square feet.

Meanwhile, the group is banking high on the inorganic route and is learnt to be in talks with a host of local consumer durable retailers in the metropolitan cities.

For Tatas, this will be the third in a series of retail ventures. While Value Electronics will mark the group’s maiden entry into the consumer durable retail space, it has already been present in the lifestyle retail area for more than six years with the Westside brand. Recently, the group had also launched its hyper-market chain Star India Baazar.

News: Foreign insurance cos capture 22% biz in India

(PTI 21/09/2006) London - Leading foreign insurance companies operating in India have captured 22 per cent of the total insurance business in the country within a short span of time, Minister of State for Commerce and Industry Ashwani Kumar has said.

"22 per cent of the Indian market has been captured by foreign insurance companies who are currently working with an Indian partner," Kumar said at an Interactive Session on Investment Policies and Opportunities in India, organised at the India House here last night, to attract foreign investments in diverse fields.

He said as a sequel to their success, the foreign insurance companies are keen to increase their investment in the Indian companies from 26 per cent to 49 per cent.

"There is a proposal under consideration but as of now there is no specific move in that regard," he later told reporters.

However, Kumar said, "Government is considering to increase the voting rights of the foreign companies in their ventures from the current 10 per cent to a maximum of 15 per cent. A Bill is before Parliament."

The minister's visit is being considered as a preparatory visit for Prime Minister Manmohan Singh's three-day visit to Britain from October 9 during which he will address an India-UK Investment Summit.

Addressing the gathering, Indian High Commissioner Kamalesh Sharma said India has emerged as the second largest investor in UK and more Indian companies were setting up their operations in Britain.

At present a total of 500 Indian companies are operating in UK and they have so far created 3,000 jobs in Northern Ireland, he said.

Lord Karan Bilimoria, Chairman of the India-British Partnership Network, said at present Britain's trade with India was less than one per cent of the global trade and there was vast scope to improve it.

"Potentiality in India in every field including manufacturing, apart from the knowledge-based industries is enormous," he said.

News: Indian govt to decide FDI in bourses within 10 days

(PTI 21/09/2006) New Delhi - The Government today said it will make it clear within 10 days whether foreign players be allowed to hold stake in stock exchanges or not.

The policy on allowing FDI in bourses will be firmed up in a week to 10 days time, Finance Ministry sources said.

The policy would make it clear if bourses can invite foreign direct investment while divesting brokers equity in them below 49 per cent, in line with SEBI guidelines on demutualisation.

NASDAQ has reportedly expressed its keenness to pick up stake in Bombay Stock Exchange.

The Finance Ministry officials already have two rounds of discussion with RBI Governor Y V Reddy and others. Another round of discussion will be with Sebi Chairman M Damodaran in 2-3 days, they said.

The need for FDI policy on stock exchanges were not felt earlier since most of them were not companies but associations of persons and not demutualised, which meant that traders held equity in these bourses.

But since, the Government has made it mandatory for all the bourses to corporatise and demutualise, the policy becomes inevitable, the sources said.

While the Finance Ministry will give inputs, the Commerce Ministry will frame the FDI policy, they said.

While the FDI policy will be framed by the Union Government, the market regulator SEBI would issue regulations on mechanism of demutualisation, which basically means that trading activity and the management should be controlled by separate entities.

Many stock exchanges like BSE are awaiting the FDI policy and regulations on demutualisation from Sebi.

BSE had reportedly made it clear that 26 per cent of the stake would be sold to strategic investors and the remaining 25 per cent through an IPO.

Over a month back Nasdaq official met their counterparts in BSE, giving rise to speculation that the technical exchange would pick up a stake in it.

BSE has appointed Kotak Mahindra Capital Company as its financial adviser for the demutualisation process.

However, BSE MD and CEO Rajnikant Patel time and again refused to specify whether Nasdaq has expressed interest in buying a stake in BSE.

He had also said IPO is linked to demutualisation regulations, which are yet to be finalised. May, 2007 is the deadline for BSE to bring down brokers stake in it to 49 per cent.

News: Diageo plans to set up Indian bottling units

(BS 21/09/2006) Mumbai - Diageo India is planning a manufacturing footprint across the nation in the near term. Asif Adil, managing director, Diageo India and South Asia, said the company would have bottling units in the north, south and east. At present, it has units in Aurangabad and Madhya Pradesh.

Adil said the move to consider local bottling units stemmed from the excise structure and regulations. The company has enough capacity at the existing bottling units.

Diageo could either set up bottling units or tie up with local bottlers. Adil was speaking on the sidelines of its brand launch, Shark Tooth, which marked the entry into the prestige vodka segment.

Shark Tooth, distilled and bottled in India, would be available in two variants, Shark Tooth and Shark Tooth Extra containing ginseng.

The company targets sales of one million cases of Shark Tooth. The priority would be Indian market and would then look at West Asia.

News: Reliance bid to get retail logistics right

(TT 21/09/2006) Mumbai - Mukesh Ambani’s retailing venture has decided to outsource a part of its logistics requirements to third party providers as it knuckles down to launch its operations later this month.

The exact numbers are not known at this stage, but if industry circles are to be believed, Reliance Retail, which is spearheading Ambani’s “revolution” in this front, has already initiated discussions with some of India’s leading logistics providers.

“The deal size could be worth hundreds of crores of rupees. Reliance Retail is already getting a good response and a few outfits have already made a pitch to bag the prestigious order. Negotiations are now in progress,” said a source in the industry who did not wish to be identified.

Some of the names that are doing the rounds include DHL and Gati. This, however, could not be independently confirmed.

Reliance Retail plans to have a pan-India presence in over 1,500 cities and towns and it plans to invest Rs 25,000 crore over the next few years to bring competitive offerings across a host of formats ranging from neighbourhood convenience stores, supermarkets, speciality stores to hypermarkets.

The retail initiatives would also have an array of domestic and international brands catering to both mass market and luxury segments.

It is the sheer magnitude of this retailing foray that had led Reliance to look at third party logistics providers to take over a part of the function that would also include supply chain management.

It is learnt that Reliance Logistics Ltd (RLL), a group company, which is now engaged in the process of ramping up its operations in the country, will also take this responsibility, though on a much smaller scale.

RLL provides third party logistics and it has created more than 50 distribution centres in 33 locations across the country.

Sources say an outsourcing order from Reliance could only be the beginning of a trend for the industry.

Logistics companies in India have lately been pretty gung-ho about business prospects with the economy growing at a fast clip and many companies outsourcing this function. In such a scenario, the booming retail sector is fast turning out to be a source for some big bucks.

“Several players are pumping huge sums of money into the retail sphere. Over a period of time, large foreign players will also be allowed to set up operations in the country. There is, therefore, a lot of potential for logistics companies as retailers will choose to concentrate on their core operations while functions like supply chain management and warehousing will be farmed out,” said an official in the logistics industry.

Attracted by such an opportunity, foreign logistics providers like the Panalpina group, based in Basel, Switzerland, has already commenced its operations here in the country. On the other hand, domestic companies like Gati are also in an expansion mode.

News: Move to regulate Indian microfinance units

(TT 21/09/2006) New Delhi - The government is likely to bring in a legislation to regulate micro-finance institutions in the winter session of Parliament.

The finance ministry has drawn up a draft to set a minimum threshold capital level of Rs 25 lakh for microfinance institutions, with the provision that they can also accept deposits only if their capital base goes up to Rs 2 crore.

The draft, which is expected to be put up before the cabinet next month, will give NBFCs engaged in microfinance three years within which they will have to declare themselves section 25 companies or not-for-profit firms or register themselves as NBFCs.

They will be allowed to accept deposits only if they turn into NBFCs. Not-for-profit companies will be allowed only to on-lend money to self-help groups. The company law board will allow self-help groups to be members of section 25 companies.

Capital adequacy norms for such NBFCs will be 10 per cent of risk weighted assets. This is far more stringent than formal financial institutions, but is considered necessary as all microfinance loans are collateral-free loans.

The finance ministry will also make suitable changes in income tax laws to allow section 25 microfinance companies accept tax-free donations and contributions.

Officials said the interest charged by NBFCs and not-for-profit companies will have to be made public under the new legislation and the method of fixation has to be transparent. The interest could cover the capacity building and management costs as well. This is being done as there were allegations of certain microfinance institutions charging high rates and making huge profits.

While there will be no limits to loans to SHGs, the new legislation, when enacted, will set Rs 50,000 as the ceiling for loans to individuals under microfinance schemes.

At the same time, the government will consider a blanket income tax exemption for section 25 companies involved in micro-credit, including exemption from tax for income earned.

However, the new law will ensure that the savings or profits of SHGs, promoted by section 25 companies, are maintained only with permitted organisations like government securities, small savings funds and scheduled banks.

News: IBM to add 3,000 new employees in India

(RTR 21/09/2006) New Delhi - IBM, the world's largest computer services company, will take in up to 3,000 new staff in Kolkata to meet robust demand for outsourcing, a company official said on Thursday.

"We are very bullish to fill up this capacity very soon because the business is growing and customers are showing more and more interest in sourcing of global delivery services," Amitabh Ray, vice-president for application services at IBM India, said.

The new centre at Kolkata, an emerging IT hub, will provide application development and application maintenance services. In June, IBM said it would invest $6 billion in India over three years as part of its move to increase outsourcing services and client management from Asia's fourth-largest economy.

"India is by far the largest global delivery centre within IBM," Ray said.

India's low-cost English-speaking engineering workforce has attracted a slew of global companies, which outsource services such as supply-chain management, payroll processing, handset designs and financial analytics from the country.

India's software services sector is likely to grow by more than a quarter in the year to March 2007, on rising demand for outsourcing, India's National Association of Software and Service Companies has estimated. Contracts worth a combined $100 billion are coming up for grabs over the next two years, it said.

News: Subhiksha to roll out 80 stores in Andhra

(BS 20/09/2006) Chennai/Hyderabad - Riding on the success of its sharp discount offers, Chennai-based Subhiksha retail chain is planning to launch 80 stores across Andhra Pradesh in the next four months at an investment of Rs 40 crore.

Of this target, it has already set up 53 stores as part of a soft launch in Hyderabad besides important cities in coastal Andhra in the past few months.

Addressing a press conference in connection with its Andhra plans, R Subramanian, managing director, Subhiksha, said the company was offering up to 10 per cent discount on products across all the four verticals, namely telecom, supermarket, fruits and vegetables and pharmacy.

According to him, the company has been pursuing a strategy for faster growth aiming at large turnover on lower margins as compared to the competition.

“Our business model appears mainly targeting the middle income groups but our 10-year experience in Tamil Nadu gives a different picture," Subramanian said, adding that sharp discounts on purchases are equally attracting upper middle classes as well.

He said the major benefit coming from bulk purchases by the company was being directly transferred to the customers through discounting instead of overspending on shop comforts.

While ruling out the possibility of entering into any kind of arrangement with Reliance retail business, Subramanian, however, said the proposed IPO is expected to happen in the next one year while it would become a 1,000-store strong company in the meantime.

Subhiksha's stores will have telecom divisions, which will offer products and services to the mobile customers, he said.

News: Indian retail sector wants to be open 24/7

(BS 20/09/2006) Mumbai - The Rs 90,000-crore organised retail sector has for the first time voiced a demand for flexible working hours across the country.

The Retailers’ Association of India (RAI) is negotiating with various state governments to allow “24/7” operational freedom to malls and department stores.

The body is talking to Maharashtra, West Bengal, Karnataka, Tamil Nadu, Kerala, Madhya Pradesh, and Andhra Pradesh for amendments in trade and labour rules.

“Four states, including AP, Maharashtra, West Bengal, and AP have responded positively to the proposal,” said Gibson G Vedamani, chief executive officer, RAI.

The demand stems from the widely varying timing regulations followed by different states, restricting large retail stores from keeping open beyond a certain hour (9 or 10 pm), especially in the metros and other cities. The regulations also call for a mandatory weekly off.

News: Hyundai chief shares India investment plans

(PTI 20/09/2006) New Delhi - South Korean car major Hyundai Motor on Wednesday sought New Delhi's support to make India an export hub for small cars, while expressing interest to bid for a 500 million dollar Delhi Metro contract for supply rolling stock.

Hyundai Chairman and CEO Chung Mong Koo, who called on Indian leaders including President A P J Abdul Kalam and Prime Minister Manmohan Singh, shared his company's investment plans for India, where it already has a car manufacturing facility.

"HMI will continue to be a responsible corporate citizen, creating additional employment in Tamil Nadu, contributing to the economy not only of the state but the Indian economy too," he was quoted as saying in a company statement.

Meanwhile, a Bloomberg report from Seoul quoting a separate statement said Koo told Singh that Hyundai's rolling stock affiliate, Rotem Co would bid for a 500 million dollar contract to build 400 trains for the second phase of the Delhi Metro.

As part of its global expansion strategy, HMI is setting-up a second car manufacturing plant with a three lakh capacity thereby doubling its production.

In addition to this, HMI will also set up an engine and transmission plant and a R&D centre in India, it added.

The setting up of the second plant and establishing the new R&D centre will increase the production as well as sales of Hyundai Motor India and also change the face of the company in India making it now a comprehensive automotive manufacturer, Koo said.

News: Mumbai developer mulls Calcutta foray

(TT 20/09/2006) Mumbai - The alluring Gangetic plains have caught the fancy of another big developer in Mumbai.

K Raheja Universal, a 50-year-old company, is looking at its first foray into the Calcutta market. According to industry sources, the company could be looking at residential developments near the Eastern Metropolitan Bypass. K Raheja Universal belongs to Suresh L. Raheja and his sons Rahul and Ashish.

“The urban land ceiling rules in the eastern market prevents the availability of quality land to the potential developers. Scarcity of good quality land is one of the biggest problems some prominent groups face,” said an industry insider.

The company officials, however, said although they are looking at the Eastern regions, especially Calcutta , nothing has been officially finalised yet.

The group has over 2,000 residential, commercial and educational buildings to its credit.

While developers from Delhi have already entered Calcutta, those from Mumbai have not been able to do so.

A lot of Mumbai developers such as the Hiranandanis and the Runwal group have expressed interest in the market, but nothing has fructified yet.

“A lot of Mumbai developers are interested in Calcutta. But Mumbai developers are more used to smaller projects with higher profits model. Calcutta is more of a high volume market. Developers from Mumbai are not accustomed with high volumes. To profit in Calcutta, the project size has to be big to ensure higher volumes. Rates in Calcutta are also not as high as in Mumbai. These are reasons for Mumbai developers taking so long to go there,” said Joygopal Sanyal, head (west India-land agency) of Trammell CrowMeghraj.

He said developers from Delhi have been more active in the eastern region, adding that Unitech and DLF have already entered the Calcutta market with Bengal Unitech and Bengal DLF.

Property prices in Mumbai are one of the highest in the country. “It is, therefore, very difficult to get the same rates anywhere else in the country. If the developers do not play the volume game, their profits suffer,” said an industry analyst.

“More and more developers in Mumbai are feeling the need to de-risk their business and spread across the country. They realise they have to increase their strength and depth. This is one of the reasons behind this interest in the Eastern Region,” Sanyal added.

News: India to have a tenth of Yahoo!’s global workforce

(DNA 20/09/2006) Mumbai - Internet major Yahoo! is looking at significantly ramping up its operations in India. Although its chief operating officer Daniel Rosenweig did not announce any multi-million dollar investment on his maiden visit to the country, he said India would be amongst the top investment destinations for the company, whose services one in every two internet users accesses at least once a month globally.

The company’s engineering centre in Bangalore, the largest outside the US, has 800 people on its roll, and is expected to rise to 1,000 by the year-end, representing one-tenth of Yahoo!’s global strength.

“Initially, when we started, it (the research and development centre) was strictly a back-end setup. Today, it is part of our global engineering set up, leading in innovation. In the future, there would be products developed completely out of India,” Rosenweig said.

Already, engineers in India are working on Yahoo!’s most popular services like search, mail, messenger, media operating system and mobile. The scope of work includes product engineering, technology research and market innovation, from conception to research, development and operations.

India’s contribution to its $5.3 billion global revenues may be less than significant today, but Rosenweig says he is “very satisfied” with the Indian operations. Low internet penetration in the country is the chief dampener for the company. But, with a population of over a billion people, it is a market nobody can take lightly.

Recognising that it cannot grow faster than the overall internet market, Yahoo! is breaking some boundaries here. Since along with connectivity, language is hampering growth, it would soon launch content in local language, as well as localise content to expand user base, says George Zacharias, head of Yahoo!’s Indian operations.

Also, the fact that India has more mobile phone connections - over 120 million and counting - than personal computers isn’t lost on Rosenweig. While Yahoo! mobile is already popular (by how much, he wouldn’t say), the company is entering into alliances with handset manufacturers and service providers.

“We realise that for many, their first point of contact with Yahoo! would be their mobile devices rather than the computer,” he says.

To gain market share, Rosenweing says the company follows the policy of ‘build, buy or partner’. Globally, it has gobbled up over two dozen companies over the last few years. Last month it acquired a stake in bharatmatrimony.com, a wedding site.

News: Jet eyes 50% revenues from overseas ops

(DNA 20/09/2006) Mumbai - How do you expect the shareholders of a company, who have seen their wealth erode by about half when the overall benchmark market has doubled, to react? Angry, agitated, and gunning for the management’s blood? Surprisingly, none of the above, if you were present at Jet Airway’s annual general meeting, its second since it went public, on Wednesday.

Intense competition (seat capacity is up 55%), high fuel cost (up 60% on-year), higher rental (+120%), increased selling and distribution cost (+40%) and high staff cost has taken a toll on the company. As a result, against an issue price of Rs 1,100 per share about a year and half back, the shares are now quoting at about Rs 650. But listening to the shareholders no one would have imagined that the counter has faced bloodbath on the bourses. Most reposed faith at the management .

Analysts’ call on the stock is more reflective of its performance on the bourses. Brokerage houses like Citi, SSKI, Enam, and Edelweiss have a sell/reduce/under perform rating on the stock.

The company said being sub-judice, it won’t comment on the blotched Air Sahara deal, on which it is reportedly losing about Rs 30 lakh a day purely as interest cost on the Rs 2,000 crore in the escrow account

Chairman Naresh Goyal offered no time frame as to when the company would raise $800 million by way of FCCB/GDR/ADR/ equity shares to finance its $2.5 billion aircraft acquisition plan.

“We are monitoring market condition and will revive our efforts to raise additional capital as soon as a window of opportunity arises,” he said. The company has raised debt in the interim to meet the pre-delivery payment commitments.

Expressing confidence that it would receive approvals for international flying rights before the airline takes delivery of wide-bodied aircraft next year, Executive Director Saroj Datta said in 2-3 years, half the revenues would come from international operations.

The airline is hoping to connect destinations like U.S, Canada, U.K, Africa, China, Europe, and South East Asia over the next few years.

News: Arcelor Mittal may form shipping JV in India

(RTR 20/09/2006) Mumbai - Arcelor Mittal is in talks with state-run Shipping Corporation of India to form an equal joint venture to transport raw material and steel for the global giant, The Economic Times newspaper reported on Wednesday.

The new company, which will be set up in India, will help the steel maker cut costs, while SCI, India's largest shipping firm, would gain as its ships would be used by the joint venture, the daily said, citing unnamed sources.

It said talks were at an advanced stage. Company officials were not immediately available for comment.

News: 'Indian realty sector emerging global investors' choice'

(BL 20/09/2006) New Delhi - The Indian real estate industry is poised to emerge as one of the most preferred investment destinations for global realty and investment firms in the coming three to five years, according to a survey done by the Federation of Indian Chambers of Commerce and Industry and Ernst & Young. Growth focus The focus for growth in the sector will be on product differentiation and quality, geographic de-concentration from metros to smaller cities, shift from regional developers to national developers, consolidation of large Indian business groups and their emergence as market leaders, shift from land transaction to development transaction, change in ownership to leasing, correction in supply format from investor to consumer driven, movement of construction giants up the value chain and the emergence of strong real estate capital market. According to the study, in the commercial office segment, the demand for office space is set to expand significantly in the next few years, primarily driven by the IT and ITES industry that requires an estimated office space of more than 367 million sq ft till 2012-13. Further, India's improving image, as a regional corporate base for Asian markets and strong growth in emerging sectors such as financial services, pharmaceuticals, telecommunications, and biotechnology will also boost demand and broaden the occupier base. Several upcoming special economic zones are also expected to provide the next generation impetus to the commercial office space development. Residential segment In the residential segment, rising disposable incomes, financing terms and increase in population will continue to drive housing demand in India. However, one phenomenon, which is likely to impact the housing market growth in the future is the trend of sub-urbanisation. Another growth catalyst for the residential sector could be the expected supply of prime land parcels in metros due to unlocking of land by leading public sector undertakings, which hold prime real estate assets in several urban centres. Other segments As far as the commercial, retail and entertainment segments are concerned, estimates suggest that by the end of 2008, the eight largest Indian cities will experience a supply of around 66 million sq ft of new retail space through more than 200 proposed retail centres. However, the operative fact that is likely to metamorphose the Indian retail market is the further relaxation in FDI guidelines. Though, according to the new FDI guidelines of the Government of India, foreign retailers are now allowed to invest in single brand retail outlets in the market to an extent of 51 per cent participation or through a franchisee route, the market is still restricted for large and multiple format retailers. However, there are certain factors that could act as an impediment for the growth of the sector. Though the commercial office segment is highly dependant on the performance of the Indian IT-ITES sector, any unforeseen downturn in the performance of IT-ITES industry will have a significant impact on the vacancy levels of the upcoming commercial office space stock in the country.

News: Hedge funds adopt 'wait and watch' approach towards India

(BL 20/09/2006) Mumbai - How are hedge funds viewing India currently and what is their strategy for markets here right now? James Breiding of Naissance C