News: RBI, finmin seek clear definition on FDI, FIIs

(TNN 31/10/2006) New Delhi - With foreign investments in critical sectors becoming a controversial issue, RBI and finance ministry have asked the department of industrial planning and promotion to define FDI and FII unambiguously.

The initiative also comes close on the government's plans to enhance the limits for foreign investment in some of the key financial key sectors.

The definition change could have a large scale impact on how foreign investors tap into the growing Indian story. As per current guidelines, FIIs can invest only up to 24% in a company. Further investments would need special approval from the company's board and in any case cannot go beyond the foreign investment cap for the sector, set by the government.

Sources said RBI has written to the department of industrial promotion, which is the nodal arm of the government to decide on foreign investment policy. The issue has also been flagged off by the finance ministry. The lack of clarity in the definitions has become a major issue in sectors like telecom. More recently, it was highlighted in the real estate sector too. In this sector, it was the categorisation of the pre-initial public offer foreign institutional investment which had caused the confusion.

The issue has been debated in the case of opening up the asset reconstruction business and that of stock exchanges. Even for sectors like insurance, where the government is considering raising the foreign investment cap to 49%, there is ambiguity about whether FII investment should be subsumed in it.

While it is the market regulator Sebi, which decides who is an FII, the guidelines from the DIPP could affect FIPB clearance for FDI in various sectors. The finance ministry-appointed Lahiri committee had pointed out that India has basically adopted the IMF definition of FDI, as an investor which picks up more than 10% stake in a company's equity.

The committee report submitted last year had also said there was no reason to prefer one over the other. As an interim measure it suggested that the FII investment in a company should be over and above the FDI limit.

According to Vivek Mehra, executive director of PricewaterhouseCoopers, there are clear distinct windows under government regulations for foreign investment.

"There is a separate window for FIIs. The window is separate as the FII investment supposedly gives a non-controlling stake from market purchases. In the same way there is non-resident Indian repatriable and non-repatriable windows. Unfortunately on the administrative front, these windows get blurred. There is lack of clarity. When there is a cap, it basically applies only to the FDI window unless it is mentioned otherwise,” he said.

News: Ambitious Indian firms set sights abroad

(RTR 31/10/2006) London - Tata Steel's daring move to buy Anglo-Dutch steelmaker Corus, a company with four times its sales, highlights growing ambition as cash-rich Indian firms begin to look beyond their home turf.

Consultants highlight companies in India's automotive, engineering, pharmaceuticals and software services sectors as potential acquirers as global markets buzz with mergers and acquisitions.

"One by one, slowly the sizes are increasing and confidence in making these kinds of acquisitions has increased across all sectors of the Indian corporate world," said Harish H.V., a corporate finance partner at Grant Thornton in India.

Corus's approval for Tata Steel's $8 billion takeover bid came after it had spent a year talking to potential partners in Brazil and Russia -- which underscores increasing acquisitiveness from emerging markets in general.

The Corus deal is India's largest foreign takeover and means the total value of Indian acquisitions abroad this year has outpaced purchases of Indian firms by overseas companies.

The driver of Indian firms' new acquisitiveness is a combination of technology and access to wider markets, said James Winterbotham, a co-founder of consultancy firm India Advisory Partners.

"There is still a lot of technology which is sitting within international companies. Historically, you would joint-venture into India, now Indian companies are of the scale where they can go and buy that technology," said Winterbotham.

The Corus deal highlights India's gradual shift from a capital importer. Asia's fourth largest economy, India launched market reforms more than a decade ago to woo foreign investment.

Also supporting takeovers are a booming economy -- which has grown at an average of 8.0 percent in the past three years -- and stock markets at record highs, up nearly 40 percent so far.

Including the Tata deal, Indian companies have announced overseas acquisitions worth $19.5 billion so far this year, up from $4.5 billion in 2005, data from research firm Dealogic shows.

In contrast, acquisitions in India by overseas firms add up to $9.06 billion so far this year.

The average size of overseas deals by Indian companies has increased to about $50 million from about $10 million three years ago, said Grant Thornton's Harish.

"The mega deals, if at all, are going to happen in the commodity sectors whether it is steel, paper or some of the mining kind of transactions," he said, but also highlighted fast-growing media firms as likely acquirers.

India ranks fifth among the countries making the most acquisitions of British companies by deal value so far this year after Spain, the United States, Germany and Australia.

Some of the biggest overseas takeovers by Indian firms this year include Tata Tea's planned purchase of 30 percent of Energy Brands for $677 million; Dr Reddy's Laboratories' acquisition of German generic drug maker Betapharm for $572 million; and wind-turbine maker Suzlon Energy's $520 million buy of Belgium's Hansen Transmissions.

Firms in India's showpiece software services sector -- which includes U.S. listed Infosys Technologies and Wipro -- have made some smaller niche acquisitions, but some corporate advisers expect mid-sized firms to step up takeovers.

Software product makers including 3i Infotech and Subex Systems have snapped up overseas companies.

"What might be interesting is that some of the tier two companies -- $300 to $500 million in market capitalisation -- are getting more aggressive," said Bundeep Singh Rangar, chairman of India-focussed IndusView, a corporate advisory company.

"Some of the smaller guys might be more aggressive because they just simply have to keep up with the bigger guys who are growing like monsters."

Infosys, which has roughly doubled its revenue over the past two business years, has a market capitalisation of $26 billion -- greater than that of rivals Accenture, CapGemini and Electronic Data Services.

But beyond tech, analysts say it will take time for Indian companies to grow acquisitive.

Indian companies are well-placed to do deals with large information technology divisions of big European manufacturing companies, analysts say. But big-ticket acquisitions in other sectors might be slow to emerge.

"India will be a relatively small player on the international M&A market place for some time," said Winterbotham of India Advisory Partners.

"There are probably at the moment still only a relatively small number of companies of the size and management depth to actually make those acquisitions and have that international culture."

News: $30 bn biopharma opportunity beckons India

(HT 31/10/2006) New Delhi - Biopharmaceuticals and one of its key aspects, research in monoclonal antibodies, might well turn out to be the next hot area for Indian drug companies, with a $30-billion market awaiting to be tapped globally over the next few years, industry experts say.

Biopharmaceuticals are medicines made by biological processes rather than by chemical synthesis. Many medicines developed using recombinant DNA techniques are termed biopharmaceuticals.

'Recombinant' is a term used to describe drugs that have been produced using the techniques of genetic engineering. The products are virtual replicas of compounds produced naturally by the body.

Bangalore-based Biocon Limited has recently developed Biomab-EGFR, a therapeutic antibody-based anti-cancer drug. The drug, the first of its kind to be indigenously developed in India, is prescribed for treating solid tumours of epithelial origin, such as those erupting in the head and neck.

The current global market size of biopharmaceuticals is estimated at $15 billion, and is expected to double by 2010. India is expected to be a strong centre for research in monoclonal antibodies.

Dr Kiran Mazumdar-Shaw, Chairman and Managing Director, Biocon Limited said: “While therapeutic monoclonal antibodies have been introduced in the country, they are beyond the reach of a majority of cancer patients because of their prohibitive cost”.

Rajesh Jain, joint managing director of Panacea Biotec Ltd, a Delhi-based biopharmaceuticals company, said that the company is focussing heavily on the development of monoclonal antibodies and other biopharmaceuticals, primarily in the areas of diabetes, arthritis and organ transplants.

“Biopharmaceuticals and monoclonal antibodies hold out enormous potential for Indian drug companies. A couple of successful biopharmaceuticals would result in a market of a few billion dollars,” said Jain.

Mukesh Ambani controlled Reliance Life Sciences is also developing a range of biopharmaceutical products in the categories of blood plasma proteins, biogeneric recombinant proteins, novel recombinant proteins and humanised monoclonal antibodies. Besides, the company says that there are 15 biopharmaceuticals in various stages of development.

The country’s largest drug maker, Ranbaxy Laboratories Limited, last week signed an exclusive licensing agreement with Debiopharm Group (Debiopharm), a Swiss biopharmaceutical development company, to market its New Chemical Entity (NCE), Sanvar (vapreotide acetate). The injectible molecule will be used for the treatment of bleeding related to hypertension.

Sanjeev Dani, Regional Director, India and Middle East, Ranbaxy, said that the agreement with Debiopharm in the gastroenterology area would enable Ranbaxy to increase its focus in this segment.

News: 'India has most innovative social entrepreneurs'

(IANS 31/10/2006) New Delhi - India is a key country to look for leading social entrepreneurs, says Klaus Schwab, executive chairman and founder of the World Economic Forum (WEF), as his Schwab Foundation prepares to shortlist a winner for the Indian Social Entrepreneur Award for the second year.

"India has some of the most advanced and innovative social entrepreneurs. We believe and already see that many of the models developed in India, for instance rainwater harvesting for schools pioneered by Barefoot College, are exported around the world. India is therefore a key country to look for leading social entrepreneurs," Klaus Schwab said in an exclusive interview.

Last year the first Social Entrepreneurship Award in India went to leading cardiologist Devi Prasad Shetty, founder of Narayana Hrudayalaya in Bangalore.

The awards are given with a view to highlighting social entrepreneurship as a key element to advance societies and address social problems in a pioneering way. This year there were close to 100 applicants, eight of whom have since been short-listed before a final decision is taken.

Based in Switzerland, the Schwab Foundation started by Klaus Schwab and his wife Hilde initiated this second complementary foundation to the World Economic Forum, which he founded in 1970.

They came across Bangladesh's Muhammad Yunus and the Grameen Bank, winners of this year's Nobel Peace Prize, and decided to create a foundation that would help to identify and disseminate such innovative solutions to crucial issues at an earlier stage. Yunus has been an active board member of the foundation since its inception.

Schwab said: "In most countries social entrepreneurs, even the leading ones, are not recognised. They have mainly been labelled 'crazy' by their environment.

"The Social Entrepreneur of the Year awards seek to highlight the outstanding social entrepreneurs of a country as national role models. We hope this will inspire others to either start a social enterprise or support one."

This time around the Nand and Jeet Khemka Foundation is working in partnership with the Schwab Foundation and in collaboration with the UN Development Programme and the Confederation of Indian Industry for the award.

In 2000, when the awards were instituted for the first time, they were more in the form of general recognition of people's achievements. The competitive application and jury selection format was not instituted till five years later.

Devi Prasad Shetty, who won the award last year, strives to make sophisticated healthcare available to all irrespective of their economic situation or geographic location. He founded the Narayana Hrudayalaya Hospital in Bangalore in 2001 and previously co-founded the Asia Heart Foundation.

In addition, Shetty has built a network of 39 telemedicine centres to reach out to patients in remote rural areas.

Together, the network of hospitals performs 32 heart surgeries a day, making it one of the busiest in the world. Almost half the patients are children and babies. Sixty percent of the treatments are provided below cost or for free.

"We identify a social entrepreneur as someone who has created a hybrid organisation that employs businesses methods. Its bottom line is social value creation," said Schwab.

"They plug the gap between the roles that governmental and philanthropic efforts play, often solving societal problems not in opposition to or even at the charity of corporations but rather in collaboration and mutual benefit to the private sector."

The Social Entrepreneur of the Year Award 2006 will be presented at the India Economic Summit on November 26 in New Delhi.

News: India high on EU investment focus, with spate of visits

(HT 31/10/2006) New Delhi - A spate of very high level visits by leaders from several European Union nations, including Belgium, Norway, Britain and Hungary, has placed India firmly in the international spotlight, with the economy and trade and investment the focus of most visits.

The EU is India's largest bloc trading partner.

Aiming to enhance bilateral ties in diverse fields, Belgian Prime Minister Guy Verhofstadt will begin a six-day visit to India from Thursday, the highlight of which is a landmark Social Security Agreement, that will particularly benefit Indians living in Belgium.

According to Belgian Ambassador Patrick De Beyter, the "unique" agreement will be fruitful for Indians in Belgium, as they will receive benefits like pension.

During his first ever visit to India, Verhofstadt will hold talks with Prime Minister Manmohan Singh on a wide range of issues, particularly covering Indo-US civil nuclear deal, terrorism and trade and investment. There will also be an agreement on space.

Accompanied by a high level delegation, including Deputy Prime Minister Didier Reynders and Foreign Minister Karl De Gucht and a large number of business CEOs, Verhofstadt will also travel to Bangalore, Mumbai and Chennai.

Economy will be the main focus of the visit, De Beyter said, speaking of the "significant" trip. Verhofstadt will meet Indian business leaders as part of an effort to attract investments from this country.

Belgium is the third preferred destination for FDI outflow from India (valued at around one billion euros) after the United States and Britain.

Bilateral trade between India and Belgium is currently €7.6 billion, and is growing at over 20 per cent per annum.

At a briefing on Tuesday, the spokesman for the Ministry of External Affairs Navtej Sarna also spoke of visits by the Norwegian Crown Prince, Haakon, who is scheduled to meet the President, Vice President and Prime Minister on Wednesday. Norway, like Belgium and Britain, is a member of the Nuclear Suppliers Group.

Less than a month after the Indian Prime Minister's visit to UK, during which India and Britain decided to take specific cooperative measures in the fight against terrorism, British Foreign Secretary Margaret Beckett will arrive here on Thursday to discuss follow-up measures.

During her week-long tour, that will also take her to Mumbai and Bangalore, Beckett will hold talks with External Affairs Minister Pranab Mukherjee and is expected to meet the Prime Minister.

Specific anti-terror measures to be discussed, Sarna said, will relate to curbing terrorist attacks on large metros (cities).

During Singh's visit, India and Britain decided to enhance cooperation between security agencies through sharing of intelligence and evolving mechanisms to protect their vulnerable sites like mass transit systems.

The Hungarian Foreign Minister, Kinga Goncz, is also visiting India. During talks with Mukherjee, he will seek enhanced economic cooperation, particularly in the Information Technology and pharmaceuticals sectors, particularly related to generic drugs.

News: Indian organic products market set to be Rs 600 cr

(BS 31/10/2006) Chennai/Bangalore - With organic retail outlets mushrooming in tier I and tier II cities, the domestic organic products market currently estimated at Rs 100 crore is set to grow exponentially to Rs 600 crore in two to three years.

Addressing a press conference to announce ‘India Organic 2006’ fair here on Wednesday, Ramesh L Harve, president, International Competence Centre for Organic Agriculture (ICCOA), said the organic agri-business was prospering on the back of a surge in the economy across many sectors and more companies taking up retailing of organic products.

“About a year ago, except for FabIndia, not many players were in retailing of organic products. But now in the last one year, Sresta Natural Bioproducts from Hyderabad and FreshEarth in Bangalore entered the business and have begun to expand rapidly by opening more stores. With more players entering the business and many retail stores providing shelf space, the organic products sector is expected to touch Rs 600 crore in 2-3 years,” he added.

According to a survey by ICCOA, nearly four lakh farmers have embraced organic cultivation for which there is a Rs 1,500 crore market in India with 200 million people willing to spend Rs 300 every week on organic products.

The global market for organic food ingredients is $35 billion and is growing over 8 per cent a year.

To spruce up and improve the dometic market for organic produce, 'India Organic 2006' fair has been created as a platform to bring together growers, buyers and sellers to strike deals, share initiatives and exchange know-how in the organic space. The event is to be held over three days from November 10-12, said Manoj Menon, co-ordinator ICCOA.

At a similar event last year, over Rs 42 crore of business enquiries were generated over the four days of the event, he added.

The main highlight of this year's exposition will be the 'Organic Congress', a series of seminars addressed by experts and participation from north-eastern states which are unique in their agricultural bio-diversity. Farmers from north-eastern regions will exhibit various organic products along with farmers from Punjab, Gujarat Rajasthan and Karnataka.

Harve said the meet had also made efforts to involve consumers by holding an organic food fair.

News: Sula Wines to put Rs 25 cr in expansion

(BS 31/10/2006) Mumbai/Nashik - Nashik-based Sula Wines, a premium grape wine producer in the country, is planning to invest Rs 25 crore by March 2010 to increase its joint production capacity from the current 17.50 lakh litre to 35 lakh litre per year.

Speaking to Business Standard, Pradeep Pachpatil, general manager, Sula Wines, said, “As part of our expansion plan, Sula Wines recently bought the Jaulke-based (in Dindori tehsil, Nashik district) cooperative winery, Pimpen Co-op India Ltd, for Rs 5.51 crore.” The installed capacity of this winery is 2 lakh litre per year.

By January 2007, we are enhancing the production capacity of this new winery (Pimpen) from the current 2 lakh litre to 5 lakh litre per year at an investment of Rs 5 crore. Pimpen, Sula’s fourth winery, will produce 3.5 lakh liter of wine in 2007 harvest. We are also planning to enhance Sula’s joint wine production up to 35 lakh litre per year by March 2010, at an investment of Rs 25 crore, he said.

To keep up with increasing demand, a second winery with three times the capacity of the first was completed in 2004, reaching a total joint production of up to 7.50 lakh litre per year.

Besides, Sula has just constructed its third winery at its vineyard, which is ready for production with the capacity of 10 lakh litre per year. With the takeover of the Pimpen Co-op India Ltd, Sula’s joint grape wine production has reached up to 19.50 lakh litre per year.

“We have set the sales target of 15 lakh bottles (one bottle is 750 ml) of grape wine for the current fiscal year (2006-07) and eyeing a sale of 25 lakh litre of grape wine in the next fiscal year 2007-08,? Pachpatil added.

Plantation of wine grapes by Sula, which was on 30 acres of family-owned land in the beginning, is now over 300 acres. Sula sources 20 per cent wine grapes from its own vineyard, while the rest through contract farming.

News: Taj Hotels' wilderness lodge to start in Nov

(BS 31/10/2006) Mumbai - The Taj Hotels Resorts and Palaces has announced the launch of its first `wilderness’ lodge in India.

The lodge — Mahua Kothi — located in the Bandhavgarh National Park, Madhya Pradesh, will be operational from November this year.

Taj will operate the lodge under the name of Taj Wilderness Lodges (TWL), an entity formed in association with Conservation Corporation Africa (CC Africa), which is a leading eco-tourism company and a comprehensive safari operator from Africa, and Cigen Corporation, part of Nepal-based Chaudhary Group.

Chaudhary Group and Taj are partners in Taj Asia, which is a vehicle through which the partners own, operate and plan to expand their hospitality interests in South Asian and Asia-Pacific markets.

Taj has entered into a business management contract on this property with its owners in MP, and plans to set up five such lodges — four in Madhya Pradesh and one in Uttaranchal.

The company has earmarked Rs 30 crore for the development of the lodges with each lodge costing around Rs 6 crore. Mahua Kothi, spread over a 40-acre land, will have 12 jungle suites and the package will cost Rs 23,000 for Indian tourists and $600 for foreign tourists.

The launch of Mahua Kothi will be followed by the launch of Taj’s second lodge ‘Baghvan’ on the border of Pench National Park, southern Madhya Pradesh in February 2007.

Taj has plans to aggressively advertise the wilderness lodges in Europe, North America, Australia and Asean countries through its sales offices.

Through TWL’s, Taj aims at promoting wildlife and eco-tourism in the country.

“India has a vast and bountiful wildlife offering and together with the advantage of CC Africa’s database, we will make a concerted effort to improve the quality of safari management in India and take it to international standards,” said Raymond Bickson, MD and CEO, Indian Hotels Company, at the launch.

News: 'I expect 20 desi firms in Fortune 100 list in 10 yrs' - Ambani

(PTI 31/10/2006) Bangalore - Reliance Industries chairman Mukesh Ambani today said he expects 20 Indian firms to make it to the list of global Fortune 100 companies in the next one decade.

Speaking at the Foundation Day at the Indian Institute of Management, Bangalore (IIMB), of which he is the Chairman of the Board of Governors, Ambani said India has one of the largest and best talent pool of managers in the world.

"There has been an increasing emergence of Indians at the help of major global businesses", he said.

"This trend is just a beginning. In the next one decade, I expect out of the Fortune 100 companies globally, we would have 20 per cent leadership. We have the opportunity and wherewithal to create so many global business leaders".

He said a key challenge that India would face in the 21st century is in the field of management. "Quality of management will make all the difference between achievement and mediocrity".

India is not short on ideas but execution remains the critial gap, he said, adding good management education can fill this gap and shape the ability to execute and excel.

"Management education needs to make quantum jump," Ambani said. "It should now look beyond creating managers by creating entrepreneurs. The true success of management education is in unleashing the spirit of entrepreneurship".

He expressed the view that leadership is not a fiction, or a position, or a rank. "It's a state of mind".

News: Indian Credit Policy - More convertibility now

(Agencies 31/10/2006) Mumbai - The Reserve Bank of India on Tuesday allowed resident individuals would be free to remit up to $50,000 per financial year as against the earlier limit of $25,000.

"Foreign exchange earners may retain up to 100% of their foreign exchange earnings in their Exchange Earners’ Foreign Currency accounts."

"Authorised dealer banks may borrow funds from their overseas branches and correspondent banks (including borrowing for export credit, external commercial borrowings (ECBs) and overdrafts from their Head Office/Nostro account) up to a limit of 50 per cent of their unimpaired Tier I capital or $10 million, whichever is higher.

"Borrowers eligible for accessing ECBs can avail of an additional $250 million with average maturity of more than 10 years under the approval route.

"Prepayment of ECB up to $300 million without prior approval of the Reserve Bank.

"Authorised dealer banks may allow remittances on behalf of their customers up to 15 per cent of the average annual sales/income or turnover during the last two financial years or up to 25 per cent of their net worth, whichever is higher, for initial expenses, and remittances up to 10 per cent of the average annual sales/income or turnover during the last two financial years for recurring expenses. They may also permit remittances for acquisition of immovable property for the overseas office, within these limits.

"The existing limit of $2 billion on investments in Government securities by foreign institutional investors (FIIs) to be enhanced in phases to $3.2 billion by March 31, 2007.

"The extant ceiling of overseas investment by mutual funds of $2 billion is enhanced to US $ 3 billion.

"Importers to be permitted to book forward contracts for their customs duty component of imports.

"FIIs to be allowed to rebook a part of the cancelled forward contracts.

"Forward contracts booked by exporters and importers in excess of 50 per cent of the eligible limit to be on deliverable basis and cannot be cancelled.

Authorised dealer banks to be permitted to issue guarantees/letters of credit for import of services up to $1 lakh for securing a direct contractual liability arising out of a contract between a resident and a non-resident.

News: 'Indian economy continues to exhibit strong growth'

(UNI 31/10/2006) Mumbai - The Indian economy continued to exhibit strong growth during the first quarter of 2006-07, according to the Central Statistical Organisation (CSO). The CSO's report states that the gross domestic product (GDP) registered an increase of 8.9 per cent in the first quarter (April-June) of 2006-07 as compared with 8.5 per cent in the corresponding period of 2005-06, benefiting from strong manufacturing as well as service sector activities. Industrial production, in its fifth year of expansion, remained buoyant during the first five months of 2006-07. During April-August 2006, industrial production accelerated to 10.6 per cent - the highest growth recorded in April-August period since 1995-96 - from 8.7 per cent in the same period of 2005. The manufacturing sector with a growth of 11.8 per cent, also the highest since 1996-97, continued to be the main driver of the industrial activity. The infrastructure sector witnessed some improvement during April-August 2006 (growth of 6.7 per cent as compared with 6.1 per cent in the comparable period of the preceding year) on account of better performance of crude petroleum and petroleum refinery products. Services sector with double-digit growth (10.5 per cent in April-June 2006 on top of 10.1 per cent in April-June 2005) remained the leading sector of the Indian economy. Although some of the surveys show some dip in business confidence and expectations, the buoyancy in manufacturing and services sector activities coupled with the recovery in domestic stock markets and positive investment climate suggest that the recent growth momentum in the Indian economy is likely to be maintained in 2006-07, as has also been projected by different agencies.

News: 23 Indian firms on Forbes' best under-billion list

(PTI 31/10/2006) Singapore - India has emerged as the fourth biggest home to the best small companies in Asia with as many as 23 domestic firms finding place in a list of '200 best under-billion companies' prepared by the Forbes magazine.

In a development that marks growing recognition for India Inc -- including small companies and not just the corporate giants and IT majors, India has been ranked ahead of countries like Japan, Hong Kong, Singapore, South Korea and Thailand.

Three Indian firms -- Great Eastern Shipping, Cipla and Sesa Goa have also managed to make to the top-25 of the "Asia's 200 Best Under Billion" list published in the latest Asia edition of the business magazine.

Taiwan leads the tally with as many as 31 companies, followed by China with 30 entries and Australia with 27 companies on the list.

The list include 11 companies each from Hong Kong, South Korea and Thailand, five from Indonesia, 19 each from Japan and Singapore, eight from Malaysia, three from Pakistan and one each from New Zealand and Sri Lanka.

Domestic shipping firm, GE Shipping has been ranked as the third most profitable entity on the list with a net income of $193 million, followed by pharma major Cipla at 9th position with net income of $136 million in the overall Asia list.

Sesa Goa has been ranked at 20th position with net income of $108 million. Hong Kong-based China Merchants Holdings tops the list with a profit of $305 million, followed by Australia's Oil Search at second position with profit of $193 million.

News: ICICI Bank named as India's best borrower

(BL 31/10/2006) Mumbai - Domestic private sector banking major ICICI Bank has been named as India's best borrower in a poll conducted by the Hong Kong-based business and investment magazine FinanceAsia.

According to the latest annual fixed income research poll conducted by FinanceAsia, the results of which would be published in the November issue of the magazine, Hutchison Whampoa was named as the best borrower in Asia as well as Hong Kong.

Hutchison Telecommunications International Ltd (HTIL), a subsidiary of Hutchison Whampoa, holds a majority stake in India's fourth-largest telecom operator Hutch Essar.

ICICI Bank has bagged the award for the country's best borrower in the poll conducted in the month of September, which received votes from 354 fixed-income investors across Asia.

The research poll analysed the market participants' views on the Asian markets, views on credit rating agencies, as well as voting for the best borrowers and the best banks at producing credit research.

CNOOC topped the list in China, while Indosat, KDB, Petronas, DBS and PTT were the respective winners in Indonesia, South Korea, Malaysia, Singapore and Thailand, the magazine said.

In another category of the same poll, global research agency Standard and Poor's (S&P) was voted as Asia's most influential credit rating agency for the sixth year in a row.

S&P claimed the top position in all four individual categories of corporates, sovereign, banks and structured finance.

News: First Indo-Arab trade summit to be held in Dubai

(PTI 31/10/2006) Dubai - A trade summit aimed at exploring business opportunities between India and the Gulf region is scheduled to be held here in December.

The first India-Arab World CEO Summit that will engage industry leaders, slated to begin on December 7 will be hosted jointly by Commerce Minister Kamal Nath and UAE's Minister of Economy, Shaikha Lubna Al Qasimi and will be held yearly.

"There is a centuries-old relationship between India and Arab world that extends beyond trade and culture," Nath said.

"It is natural that we should seek to strengthen and build on the relationship that exists," Shaikha Lubna added.

"India with an infrastructure investment requirement of over $150 billion in 10 years and an investor friendly policy environment, offers excellent investment opportunity over the long term," Nath said.

An India-Arab CEO guide would be launched at the event. The guide would be the first in a series of such guides which will accompany each of the CEO summits that Dubai-based Moutamarat will co-organise with business leaders of Brazil, Russia, India and China.

Moutamarat, a joint venture between Dubai holding and Saudi Research and Publishing Company has partnered with the Confederation of Indian Industry to generate unique and essential business knowledge for the Arab world.

The summits are articulated around a programme of annual region-to-region summits, targeting leading global emerging economies (Brazil, Russia, India and China), who with the their large populations and immense potential for growth have begun to attract substantial investments from the Arab world, Khalid Al Malik, Moutamarat CEO said.

News: Mothercare, Shopper’s Stop team up for India foray

(TNN 30/10/2006) Mumbai - Mothercare is a brand that “travels well”, says Ben Gordon, global CEO of the British child and maternity products brand, which has been around since the 1960s. The brand now has a presence in 36 countries and is in the middle of implementing its big push into India in an exclusive partnership with Shopper’s Stop.

For Mothercare, business in the UK has been flat with a growth of barely 1.5-2%, most of the excitement is from international markets where revenue has grown at 28% in the last six months.

In a free-wheeling chat with ET, Mr Gordon spoke about the challenges of growing the brand globally as well as Mothercare’s plans for India. Currently, the key growth drivers for Mothercare are markets such as the Middle East, Russia and Greece. India is currently a nascent story. However, the company is looking at India as one of the future growth markets along with Indonesia.

With a total of 8 stores in the last 5 months, India for Mothercare is the largest growing market. The company had originally planned 40 stores in five years, which may now go up to a hundred now, says B Nagesh, managing director and CEO, Shopper’s Stop.

India is also a large global manufacturing base for Mothercare. An astounding 90% of the brand’s global sourcing for the company happens from India and China. So, while India has been manufacturing Mothercare products for the last 8 years from the company’s hub in Delhi and Tirupur in Tamil Nadu, the brand was launched in the Indian market only in April ’06.

He also further added that the products in India were initially priced at levels lower than the UK. That has now changed implying that that they are now at a perceived value which is about the same as the UK, he said. The company expects to breakeven in the first year of operations in India. “The advantage in India is that brand is well-known because customers have been exposed to it in markets like Dubai, Hong Kong and the Middle East,” says Mr Gordon. Products are being indigenised for Indian needs, he added.

Though the response has been encouraging for the first few months, Mothercare will have to prove itself in the long run by competing effectively with cheaper Indian brands. Some of these labels are also currently being sold at the Shopper’s Stop outlets.

Mothercare has chalked out plans for a big overseas push with 50 international stores scheduled to open in the next few months. It has already opened 34 stores outside the UK this year, including its 300th overseas shop in Russia.

In India, it has eight outlets — four in Mumbai and one each in Pune, Hyderabad, Bangalore and Chennai. The baby market for SEC AB Urban India is estimated at Rs 1,500 crore, and the market is likely to grow at 13%. Currently, the Indian baby care market is dominated by mom & pop stores, and there is very less awareness about branded products.

News: Old economy sectors overtake IT in growth

(BS 30/10/2006) Mumbai - Retail, mining, power transmission top 3-year charts.

Many old economy companies have shown far greater momentum than their software services counterparts in the last three years.

While software companies have been growing at a three-year compound annual growth rate of 33 per cent, retail, mining and power transmission firms have grown at a much faster rate.

For example, retail has been the fastest growing sector with a three-year compounded annual growth rate of 46.64 per cent (Pantaloon Retail tops the charts with 57 per cent growth), followed by mining companies, which grew 44.8 per cent on the back of a huge international demand for iron ore.

Non-ferrous metals and power transmission firms were next in the list of fastest-growing sectors, with 43.8 per cent and 36.6 per cent growth, respectively.

In fact, 15 sectors have grown at a three-year compounded annual growth rate of over 30 per cent since 2002-03, the year when corporate India made a spectacular turnaround with sales and profits rebounding after years of stagnation. The sectors include commercial vehicles, diamond and jewellery, and capital goods.

Among other sectors, diamond and jewellery has been growing at a three-year compounded annual growth rate of 33.2 per cent, IT-enabled services at 31.5 per cent, forgings at 30 per cent, automobiles (commercial) at 29.4 per cent and the hotels, textile machinery and construction sectors at 25 per cent each.

In terms of net profit, 72 industries have been growing at over 25 per cent due to rising commodity prices, higher price realisation and growth in sales.

“The growth per se is not the story any more. Growth is now sustainable and some of the sectors may continue to grow at a such a pace. This also explains overseas investors’ interest in the Indian market,” an analyst with a foreign brokerage said.

The profit of steel firms saw a compounded annual growth rate of 145 per cent to Rs 10,491 crore, while that of non-ferrous metal firms grew by 87 per cent. Following them were cement at 130.6 per cent, textile machinery at 93 per cent and hotels at 90 per cent.

News: India seeks energy cooperation with Russia

(RTR 30/10/2006) Moscow - India wants Russian energy companies to take part in a major expansion of its oil refining capacity in exchange for access to upstream assets in Russia, the country's oil secretary said on Monday.

M.S. Srinivasan told reporters India planned to buy 50 million tonnes a year of Russian oil in the near future, or a quarter of the country's total oil imports.

"India's Oil and Gas Corporation plans to boost its current refining capacity of 52 million tonnes per year (1 million barrels per day) to 300 million tonnes per year and welcomes Russian companies to take part in the project," Srinivasan said.

State-run Oil and Natural Gas Corp., India's largest oil producer, plans to modernise existing refineries and build a new plant with capacity of 15 million tonnes per year on the country's eastern coast, said ONGC Chairman Sarthak Behuria.

The Indian officials said commercial discussions on the expansion were under way, but did not specify which Russian companies were involved.

In return, India hopes to get more access to Russia's upstream assets and seeks to strengthen ties with energy heavyweights such as Gazprom and Rosneft.

"We have proposed creating a joint venture with Gazprom for joint bidding for exploration blocks and joint participation in exploration projects in Russia," Srinivasan said.

ONGC, already Rosneft's partner in the Exxon Mobil-led Sakhalin-1 project -- where the Indian and Russian companies each have a 20 percent stake -- planned more projects with Rosneft, Srinivasan said.

He said these could include joint exploration of Rosneft's Vankor field in eastern Siberia and participation in the Kurmangazy offshore project in Kazakhstan, in which Rosneft controls 50 percent.

India also hopes to get a share in the Sakhalin-3 offshore field to be auctioned by the Russian government. One of the Sakhalin-3 blocks is already explored by Rosneft and Chinese oil firm CNPC.

News: Tata Motors hits new African trail

(DNA 30/10/2006) Mumbai - Tata Motors is looking at options like setting up assembly lines, re-working on its price and product positioning, improving logistics and getting into local sourcing in order to beat the unexpected depreciation of rand, South African currency.

“We are looking at increasing our logistical efficiency besides considering options to set up an assembly unit in South Africa. We are also looking at using South Africa as a source for components,” chief financial officer Praveen Kadle said. The only commercial vehicle assembly unit the company has outside India is in Bangladesh.

Managing director Ravi Kant added that the company would look at “price positioning” and hedge against currency depreciation by moving some work to the African nation.

Tata Motors declared its July-September quarter results. On a consolidated basis, revenues, grew 42% year-on-year to Rs 7,703 crore, while net profit grew 36% to Rs 536 crore from a year ago.

Rival Ashok Leyland also declared its second-quarter results on Monday. Net profit was up 27% year-on-year to Rs 95.3 crore while revenues were up 34% at Rs 1,709 crore. Ashok Leyland suffered a bigger slide on its operating margins, which dipped by 130 basis points.

Force Motors also announced its July-September quarter results by reporting Rs 6.8 crore loss against Rs 3.75 crore profit during the year-ago quarter.

News: Indian investors richer by over Rs 3 trillion

(PTI 30/10/2006) Mumbai - It's bumper returns time for punters on Dalal Street, with the 1,000-point rise in the market that touched the 13,000 level making them richer by over Rs 3,00,000 crore in just six-and-half months.

Total investor wealth today soared to over Rs 34,000,000 crore, as the market finally scaled the elusive 13K peak for the first time in its history. Investors wealth stood at Rs 31,00,000 crore on April 20 when the Sensex first hit the 12,000 level.

A large part of this bounty, Rs 1,50,000 crore, has been cornered by investors in the country's 30 biggest blue-chip companies present on the Sensex.

Investors' wealth in the 30 Sensex companies, measured in terms of the cumulative market value of these firms, has soared to over Rs 16,50,000 crore, from about 15,00,000 crore on April 20.

While the journey to the 13k level has been a longer one as against the previous 1,000-point rallies and was marked with a sharp plunge of over 30 per cent during May-June period, investors are not complaining as they have not only recouped losses but have added significant wealth to their kitty, analysts said.

In the 135 days that the Sensex took to complete the 1,000 point journey, as many as 123 days were spent covering the 500-point journey between 12,500 and 13,000 level.

Earlier, the Sensex had taken just 19 days in its 1000-point jump to 12,000 level, while 29 days were taken between 10,000 and 11,000 levels.

The journey to the 13,000 level has been marked with sharp gains in new economy stocks like IT and telecom, while the performance of brick and mortar stocks has been relatively lacklustre except for a few ones like Reliance Industries.

Among the Sensex companies, Anil Dhirubhai Ambani Group telecom venture Reliance Communications leads the list of gainers with a surge of over 40,000 crore in its market value, followed by gain of over Rs 30,000 crore in Reliance Industries.

IT major Infosys and telecom major Bharti Airtel have also added more than Rs 20,000 crore each in their investors' wealth, while investors in banking and financial sector stocks like ICICI Bank, SBI, HDFC and HDFC Bank have also gained between Rs 4,000 crore to Rs 16,000 crore.

However, PSU energy giant ONGC has lost more than Rs 20,000 crore in its market value since April 20, while other old economy stocks like NTPC, ITC, Tata Steel, Tata Motors, Bajaj Auto, Hindalco Industries, Hero Honda and Ranbaxy have also lost ground during this period.

News: Sensex run doubles India's super-rich's wealth

(DNA 30/10/2006) Mumbai - Money begets money. In the past 12 months, Mukesh Ambani has earned Rs11.08 lakh a minute, or Rs6.65 crore an hour, including on Saturdays and Sundays.

Mukesh’s younger brother Anil has done only infinitesimally worse, earning Rs6.56 crore an hour. In dollar terms, that’s a shade under $1.5 million.

This is not about their salaries. They don’t matter. Even Rs25 crore annually for Mukesh, and a third of that for Anil, pale in comparison with what has unfolded for them on the bourses.

The 65 per cent growth in the Sensex in the past 12 months has added a phenomenal Rs2.40 lakh crore - or $55 billion — to the wealth of India’s top ten billionaires, thanks to the stakes they hold in their companies.

In Mukesh’s case, this translates into an addition of Rs58,236 crore in shareholding wealth, while for Anil the figure stands at Rs57,505 crore.

The wealth of India’s top ten billionaires has more than doubled — it rose exactly 133 per cent — in the last 365 days as the Sensex travelled from 7892 on October 31, 2005, to 13024.26 yesterday.

A surprise entry in this rarefied list is Ramesh Chandra, promoter of the New Delhi-based realty major Unitech. His 74 per cent stake in the company was worth Rs595 crore same time last year. It’s worth Rs23,970 crore today.

Chandra earned Rs4.45 lakh a minute as demand for real estate soared. In the 202 trading sessions that the BSE has seen in 2006, the Unitech share has hit the upper circuit (set at 5 per cent or 10 per cent, depending on the value-at-risk calculus of the stock exchanges) an incredible 93 times, or nearly every second session, multiplying the share 39 times in value.

So, what about Kushal Pal Singh, doyen of DLF? He is worth more than Ramesh Chandra, but as DLF is not yet listed, his remains a story for another day.

The rest of the A-listers of the billionairedom are the traditional names, barring Dilip S Shanghvi, the man who scripted the rise of Sun Pharmaceuticals. He brings up the rear as his shareholding wealth rose 50 per cent from Rs7966 crore to Rs11,951 crore.

Shanghvi earned about Rs75,000 a minute in the past year as his company’s strategy of focusing on global markets, especially North America, and research, paid off.

News: Messe Munchen plans subsidiary in India

(BL 30/10/2006) Chennai - International trade fair organiser Messe Munchen International of Germany plan to set up a subsidiary in India by June 2007.

"We plan to tie up with experienced Indian trade fair organisers to partly own our Indian subsidiary," said Manfred Wutzlhofer, Chairman and Chief Operating Officer, Messe Munchen International, at a press conference here on Saturday.

The subsidiary, likely to be set up in Mumbai, will help Messe Munchen host trade fairs in India. By 2011, it wants to host over 12 fairs in the country from the present five. The company now works with national and regional trade associations to jointly host trade fairs in India, he said.

Among the fairs planned are a biotechnology and instrumentation fair in Bangalore this November, and textile machinery and electronics products fairs in New Delhi early next year.

Messe Munchen hopes to introduce new themes for trade fairs in India. Plans include an auto component fair in Chennai and fairs relevant to the construction machinery industry, automation industry and transport and logistics. The company also plans to organise a fair on beverage technology in Mumbai next year, Wutzlhofer said.

A 17-member German delegation, including members of the supervisory board of Messe Munchen International, visited Chennai to survey trade fair grounds including the Chennai Trade Centre.

"Chennai Trade Centre is well run and has good infrastructure to support a fair of international standards. But it is located far from the city and lacks good hotels in its vicinity," said Wutzlhofer.

He said most Indian cities lacked the infrastructure and space to support international trade fairs.

The delegation will visit Bangalore, Mumbai and New Delhi before returning to Germany. Messe Munchen International has four subsidiaries and 62 foreign representative bodies in 82 countries.

News: Hero Honda to buy Honda's African units

(RTR 30/10/2006) Mumbai - India's top motorcycle maker, Hero Honda Motors Ltd. is likely to acquire subsidiaries of Honda Motor Co in Nigeria, South Africa, Egypt and other African countries, the Business Standard reported on Monday.

New Delhi-based Hero Honda, in which India's Munjal family and Japan's Honda each hold 26 per cent , would manufacture its existing products in those markets, the paper said.

"Talk are on with Honda Motor for a joint initiative in some foreign markets. Though we have been meeting the Honda people on this issue, nothing concrete has come of it," Hero Honda managing director Pawan Munjal was quoted as saying.

Another company executive told the paper that Hero Honda had identified the African markets as Honda was not a significant player there but had some manufacturing and marketing base.

Last week, the company posted a bigger-than-expected 9.2 per cent drop in quarterly profit as it battled rising costs and intense competition from rival Bajaj Auto Ltd.

News: L&T opens electrical manufacturing unit abroad

(PTI 30/10/2006) Wuxi (China) - Engineering and technology conglomerate Larsen & Toubro Ltd on Monday opened its first-ever electrical manufacturing facility abroad in the Chinese city of Wuxi. The company also announced plans to establish two more ventures in China - one in the valves sector and another in rubber to cater to the burgeoning needs of the country, whose economy is surging above 10 per cent per annum. Mumbai-based L&T has set up a wholly owned subsidiary, L&T (Wuxi) Electric Company Limited (LTW) in Wuxi, a booming city in east China's Jiangsu Province with an investment of $ 11 million to make high-end switchgear. The state-of-the-art manufacturing unit, established in the Wuxi New District, a national level hi-tech industrial park, will make high-end Air Circuit Breakers (ACB) for which China is the world's largest market. The factory was inaugurated by the Chairman of LTW and whole-time Director of L&T, R N Mukhija in the presence of Consul General of India in Shanghai, V Prakash, Vice Mayor of Wuxi, Tan Xue Ming and other senior officials. LTW will manufacture and market its indigenously developed, high-end ACBs and moulded case circuit breakers (MCCBs) at the new factory, which will meet international quality and standard certifications. The Wuxi factory will also roll out more switchgear products from the unit, Mukhija said. "L&T has supplied some critical and sophisticated equipment to heavy engineering installations in China. We are going to play a bigger role in China's huge infrastructure development," Mukhija said. Mukhija said L&T is setting up production facilities for valves business in Jiangsu Province and rubber machinery in Qingdao in Shandong Province. In the first year of operation, in 2007, LTW proposes to manufacture close to 5,000 units of ACBs valued at $ 8 million. In the third year of operation, LTW is confident of producing over 15,000 units for sale in China as well as international markets and earn sales revenue of $ 25 million, he said. The Wuxi project will generate employment for over 300 people comprising management personnel, engineers and skilled operators. Congratulating L&T for establishing the venture in Wuxi, Consul General of India, Prakash said the event is a 'red letter day' in India-China bilateral economic cooperation. He also briefed guests about the huge infrastructure projects and investment opportunities available for global investors, including Chinese businesses. The Consul General also thanked the Wuxi Municipal Government and the Wuxi New District administration for the support to L&T to set up the plant in record time. Vice Mayor of Wuxi, Tan also thanked L&T for setting up its manufacturing operations in the city and hoped that the Indian engineering and technology giant's example will lead to more Indian investments in China, especially in Wuxi. Tan also promised to continue to offer full support from the Chinese government side so as to expand its activities and introduce more high-end products and technology to China.

News: Gulf investors urged to cash in on India boom

(PTI 30/10/2006) Dubai - India has urged investors in Gulf countries to make use of the favourable investment climate in the country and pour in foreign direct investment to aid its development projects.

Inviting businessman from the Gulf to invest in India, Principal Secretary to the Prime Minister T K A Nair, who is on a visit to Kuwait, said the country has a huge market and fundamentals of the economy are strong and robust.

"India needs $320 billion for its development projects over the coming five to 10 years. Our country is, therefore, keen to attract more foreign direct investment (FDI). Many countries have shown a growing interest in India mainly because of its stable democracy, huge markets and liberalised economy," he said.

Speaking at an investment seminar organised by Indo-Arab Socio-Cultural Organisation in Kuwait, Nair said investors in Gulf countries should make use of its favourable investment climate.

He said the fundamentals of the Indian economy were strong and robust. "Our current economic growth rate is more than eight per cent," Nair, who is leading a high-power Indian delegation, said.

News: McDonalds gets set to park at petrol pumps

(TNN 29/10/2006) Pune - McDonald’s India is planning to start its first “drive thru” restaurant at Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) petrol pumps by June ’07 in western and southern India.The company though, has not firmed up on the city where it will locate the first outlet.

“We are planning to open 100 restaurants in the next three years in west and south India. This will include the “drive thru” restaurants at the gas stations although no date has been finalised for opening the outlets,” said Amit Jatia, managing director, Hardcastle Restaurants and joint venture partner, McDonald’s India (west and south).

He was talking at the launch of seventh restaurant in Pune. McDonald’s India currently has 100 restaurants across the country which includes 11 “drive thru” restaurants. “We already have 5,000 employees which includes the service staff and in the next five years, we are looking at employing 10,000 to 15,000 people,” said Mr Jatia, adding that the company, on an average, employs 50 people per outlet, depending upon the seating capacity.

With seven restaurants already in place, Pune is a big market for McDonald’s having invested Rs 21 crore excluding real estate. Next year it will expand in southern India with an outlet in Chennai.

McDonald’s India is a joint venture for west and south India between McDonald’s and Hardcastle Restaurants and for east and north India with Connaught Plaza Restaurants.

Hardcastle Restaurants already has nearly 25 outlets in Maharashtra and 40 all over west and south India. The company earns 20-25% of its revenues from “drive-through” restaurants.

Column: Why fuss over treaty with Mauritius?

(BS 29/10/2006) Mumbai - Ever since India embarked upon attracting Foreign Direct Investment (FDI), Mauritius has been consistently ranked as the single largest investor in India. The situation is no different with respect to investments from Foreign Institutional Investors (FIIs) in Mauritius.

The Economic Survey of 2005-06 suggests that Mauritian FIIs accounted for a major chunk of investment into India.

The primary reason for this is the 1992 offshore tax regime in Mauritius coupled with provisions of the Indo-Mauritius tax treaty. Offshore companies resident in Mauritius are exempt from tax on capital gains, according to the Mauritius tax laws.

The treaty came under the scanner of the Indian revenue authorities in 2000 as a result of its alleged abuse. FIIs making huge investments into the Indian capital markets and availing capital gains exemption were escaping taxes in both the countries. When notices from the revenue authorities led to FIIs taking a negative view on Indian stocks, the Central Board of Direct Taxes (CBDT) issued Circular No 789 on April 13, 2000, clarifying that a certificate of residence issued by the Mauritian authorities would be sufficient evidence of status of residence and beneficial ownership. Controversy heightened when the Delhi High Court, in response to a public interest litigation petition, declared the circular as ultra vires. A series of high-profile court hearings led to the court upholding the CBDT circular.

The Supreme Court observed that as long as there was income-tax liability in Mauritius, even though the law provided for an exemption, the treaty provisions shall apply. The court made important observations on why treaty shopping is not unethical and illegal.

“…if it was intended that a national of a third State should be precluded from the benefits of the treaty, then a suitable term of limitation to that effect should have been incorporated therein. As a contrast, our attention was drawn to Article 24 of the Indo–US Treaty on Avoidance of Double Taxation which specifically provides the limitations subject to which the benefits under the Treaty can be availed of. Article 24 of the Indo U S DTAC is in marked contrast with the Indo- Mauritius DTAC. There are no disabling or disentitling conditions under the Indo-Mauritius Treaty prohibiting the resident of a third nation from deriving benefits thereunder. They(‘the revenue authorities) urge that there is nothing like equity in a fiscal statute. Either the statute applies proprio vigore or it does not. There is no question of applying a fiscal statute by intendment, if the expressed words do not apply.”

The crux of the decision was the intent of the law-makers at the time of negotiating the treaty. Had the intent been otherwise, the limitation of benefit provisions would have come into play. The OECD Model contains various provisions to counter tax evasive activities intended at treaty-shopping. To illustrate, the “look-through” provision disallows treaty benefits to a company not owned, directly or indirectly while “bona fide” provision examines if the primary purpose of business is to obtain benefits under the treaty.

In 2000, OECD questioned Mauritius offshore regime and offered to classify them as a nation which offers “unfair” tax competition. In response, Mauritius wrote a commitment letter to avoid being classified as a tax haven and restricted use of foreign tax credits. It also carried out legislative changes, including setting up the Financial Services Commission (FSC) to regulate offshore companies. It also volunteered for a diagnosis of the strengths and vulnerabilities of the financial services sector by the World Bank/IMF. The exercise was aimed at building greater level of confidence in the country’s offshore regime.

In an attempt to address India’s concerns, Mauritius issued a circular on October 3, 2006, amending its tax laws to provide stringent procedures for issuance of tax residency certificates (TRCs). The FSC of Mauritius has been designated as the authority for issuing such certificates. It also has powers to cancel a TRC. Though the circular tightens the requirement for obtaining the TRC, one can’t rule out the possibility of mischief.

In a significant development , China and Mauritius agreed to amend the existing tax treaty on September 5, 2006. The new protocol seeks to limit treaty benefits on capital gains. In 2004, the Indonesian government gave notice of termination of its treaty with Mauritius. Reasons given were that following an assessment and evaluation, there was an abuse that inflicted a loss upon Indonesia. A similar view is now being held by the Indian side.

It is not for India to learn from global examples, be it others or its own as far as Mauritius is concerned. The intent to extend benefits to investments through Mauritius is clear and the Supreme Court decision is the law of the land. For sometime now, media has been abuzz with news that law-makers in India have been seeking to re-negotiate the treaty with Mauritius.

There is a greater need to understand why Mauritius should be given a cold shoulder after the enormous flow of FDI into India? Why is it difficult to accept that investment from any country enjoys certain tax benefits. Was it India or Mauritius who insisted and deliberately dropped the “limitation of benefit” when the treaty was negotiated in the 1980’s. Let’s not forget that the country was starved of FDI and foreign exchange in those days. Should India convince Mauritius to amend the treaty, would this be done with other treaties, particularly with Cyprus and Netherlands, as well?

Or does bias prevail? The endeavour is definitely not turning tables or seeking answers, but provoking thoughts and stirring minds of policy makers and political leaders into making conscious decisions, governed by rationale, logic and diplomacy. Not to forget the need for certainty of fiscal regime in the minds of global investors. India shall have to weigh the costs and benefits of amending the treaty.

The clear short to medium term advantage being tax revenues, which India is foregoing as a result of the treaty. Should India do that at the cost of building a long-term strategic relationship with an island nation well positioned at the tip of the Indian Ocean and culturally integrated?. It could be at the cost of larger trade, investment and mutual assistance ties that other wings of the Indian government is attempting to forge with Mauritius.

By Mukesh Butani, partner with BMR & Associates

News: 'Urban India to contribute 70% to GDP by 2011'

(PTI 29/10/2006) New Delhi - With major cities yielding various job opportunities, the contribution of urban India to the national GDP is likely to touch 70 per cent in the next five years, industry body Assocham has said. An Assocham paper titled ‘Urban India: Growth, Opportunities and Difficulties’ stated that almost 300 million Indians living in major metros and cities would push India’s GDP growth by 10 per cent by 2011. Urban India will emerge as a major epicentre for both domestic economic activities and overseas businesses which will pave the way for a higher urban per capita income of Rs 36,000 per annum by 2011, a Rs 10,000 jump from the current estimates of Rs 26,000 per annum. “Job opportunities for a large number of job seekers and qualified professionals in areas like IT and IT-enabled services, manufacturing and biotechnology will be offered in metros and smaller cities like Pune, Hyderabad, Kochi, Ahmedabad, Chandigarh, Dehradun and Jaipur,” Assocham President Anil K Agarwal said. The urban population grew to 27 per cent in 2001 from 25 per cent in 1991 due to migration of labourers from villages to cities for financial security and better standards of living. Towns in India grew by 16 per cent to 4,368 in 2001 from 3,768 towns in 1991 and are expected to touch the 5,000-mark by 2011. As a result, the urban employment rates would exceed the present 38 per cent, much higher than the rural employment growth rate of mere 16 per cent, Assocham said. The Centre, through the Jawaharlal Nehru Urban Mission, has already earmarked an outlay of Rs 1 lakh crore for the next seven years to cover around 60 cities with a million-plus population for improving infrastructure, sanitation and housing facilities. The annual investment for urban water supply, sanitation and roads are estimated to be about Rs 28,035 crores for the next decade, but improving urban transport infrastructure with a population exceeding 1 lakh, would need a whopping Rs 2,07,000 crore in next 15-20 years, the Chamber said. Assocham recommended urban reforms and private sector investment — which cannot be invited unless a proper legal and regulatory framework is put in place — to support this growth. It also called for innovative tax structures to protect the poor from paying more for municipal amenities.

News: Indian billionaire club membership quadruples in 7 years

(BS 29/10/2006) Mumbai - Wealth up 74% to Rs 6.33 lakh cr in a year; Mukesh Ambani tops list.

The collective net worth of India’s billionaires (those with assets of more than Rs 1 billion, or Rs 100 crore) has gone up by an unprecedented 74 per cent to Rs 6,33,457 crore, from Rs 3,64,000 crore last year.

Membership of the Billionaire Club has also swelled, with 89 new businessmen crossing the billion rupee threshold, taking the total membership of the club to 391. There were only 99 people in the club when this listing began in 1999.

Business Standard’s annual magazine, The Billionaire Club (issued free with this copy of the newspaper) ranks the wealth of India’s billionaires.

The wealth is computed on the basis of the market value of direct holdings in listed companies and any share in cross-holding, with the valuation being done at the end of August 2006.

Of the 89 new billionaires this year, no fewer than 45 people have qualified by riding on the 4,000-point surge in the Sensex over the past year, while 35 new members are there by virtue of taking their companies public in the last 12 months.

Behind both events lie not just stock market swings but also solid work put in by the billionaires to add value to their companies.

Reliance Industries Chairman Mukesh Ambani is the country’s richest billionaire this year, replacing Wipro Chairman Azim Premji, who comes in second.

Ambani’s personal wealth was Rs 76,509 crore, based on stock prices at the end of August. Premji is a distant second with Rs 59,557 crore.

Mukesh Ambani’s wealth has gone up by two-thirds in the last one year, partly because of restructuring in the wake of the split with his brother and fresh stock market listing. His younger brother Anil Ambani comes in fifth on the list with a wealth of Rs 23,721 crore, but has done better in terms of percentage increase in wealth — 140 per cent. Between them, the Ambani brothers now have marginally more than Rs 100,000 crore of wealth.

Bharti Airtel Chairman and Managing Director Sunil Bharti Mittal comes third in the list (Rs 35,034 crore), followed by Anil Agarwal of Sterlite Industries (Rs 31,902 crore).

Tulsi R Tanti of Suzlon Energy is like Anil Ambani, a new entrant in the billionaires list, and ranking up there in the sixth position.

He is followed by Unitech Chairman Ramesh Chandra, who has jumped from 114th position in 2005 to the seventh slot this year, with Rs 12,671 crore of wealth, courtesy a steep 2,100 per cent increase in Unitech’s stock price over the last one year.

Kumar Mangalam Birla, Dilip Shanghvi and Shiv Nadar are the other three billionaires in the top ten.

There are now 23 Indians with wealth of over Rs 4,500 crore, making them dollar billionaires. In 1999, there were only three dollar billionaires in the country.

The extraordinarily optimistic message that the list of 391 billionaires throws up is a simple one — with the opening up of the Indian economy, there has been no shortage of business opportunities, and entrepreneurs have grabbed their chances with both hands.

It is no wonder that over two-thirds of the promoters, who are now members of the Billionaire Club, are from small and medium firms. They added over Rs 1,89,800 crore to their wealth last year, taking their aggregate to Rs 2,41,000 crore.

Which are the sectors that generate the greatest wealth at the top? While many of India’s richest moguls continue to be from software and other service sectors (a total of 44 billionaires this year), pharmaceuticals, steel, automobiles and diversified businesses have spawned a large number of billionaires too.

But this is not just a story about winners, for there are also those who saw their wealth shrink, especially if their companies hit an air pocket. Jet Airways Chairman Naresh Goyal is the most prominent among the losers.

The promoter of India’s largest airline, who listed Jet last year to become the wealthiest new billionaire, has lost about Rs 4,500 crore on account of the Jet-Sahara episode and the downturn in airline fortunes.

The other major losers in what has been a bull market are the promoters of Ranbaxy, who lost Rs 1,560 crore, and Habil Khorakiwala of Wockhardt, who lost Rs 1,066 crore.

The Billionaire Club magazine also focuses on the highest-paid executives in corporate India, the cut-off being a minimum annual salary of Rs 1 crore. The noteworthy feature here is that salaries at the top have been going up faster (22 per cent) than the average increase in companies' salaries.

News: India Inc is on a roll; Q2 confirms growth momentum

(DNA 29/10/2006) Mumbai - India Inc is on a roll and there’s no doubt here. A little earlier, the GDP and industrial production growth figures had broadly confirmed that the economy continues to grow at a healthy pace. This time around, the performance of listed companies in the three months ended September, 2006 (Q2), reinforces the fact.

To gauge the performance of corporate India, DNA Money crunched the numbers of 590 manufacturing and services companies (excluding banks and finance companies) who have declared results so far. The verdict: better than expected.

The aggregate results for 590 companies, which together accounted for 50% of the market capitalisation of the Bombay Stock Exchange, indicate that net sales grew at 31.6% to Rs 221,600 crore, while their operating profits (excluding other income) grew at a far better rate of 38.7% to Rs 38,639 crore, enabling operating margins to rise 90 basis points to 17.44% (100 basis points make 1%). At the net level, profit grew by a whopping 45.9% to Rs 24,194 crore, consequent to significantly slower growth in interest (22.3%) and depreciation (10.6%).

Interestingly, there is no significant divergence in performance even if the aggregate performance is viewed in terms of the size of companies. For instance, 38 big companies (those with net sales of over Rs 1,000 crore), which accounted for 68.5% of the turnover, have seen their net sales grow by 33.6% to Rs 1,51,880 crore, while net profit is up 41.5% to Rs 17,147 crore, even as other income grew a mere 3.3% to Rs 2,930 crore.

This is despite the mixed role played by large companies like HPCL, Reliance Industries, ONGC and companies from the IT sector. For instance, HPCL turned in a profit of Rs 1,222 crore against a loss of Rs 22.14 crore in the corresponding quarter. While ONGC reported a paltry 0.86% rise in net profit to Rs 4,173.98 crore, Reliance’s profits grew marginally by 9.2% to Rs 2,709 crore. On the positive side, eight tech companies reported a 59.2% rise in net profit to Rs 3,534.32 crore during the quarter.

Medium sized (Rs 100-Rs 1,000 crore) companies, totalling 202 and accounting for nearly a fourth of aggregate figures, reported a good show with net sales rising 27.9% to Rs 58,253.07 crore, while net profits shot up 63% to Rs 5,909.8 crore. This is probably an indication that the boom is impacting a wider spectrum of the economy.

Among top performing industries (by net profit growth), metals reported the largest growth in net profits at 492% to Rs 1,043.63. However, only three major companies (Hindalco, Jindal Stainless and Ispat Industries) figured in the list as other big ones like Tata Steel are awaited. Here, while the performance is not identical, most reported a good improvement in performance, including Hindalco and notably Ispat, which turned around from a loss of Rs 363 crore to a net profit of Rs 2.3 crore. The latter two made the difference. In refineries, as mentioned earlier, HPCL made the big difference, while in tech, the eight big-to-medium companies-87.7% of sector profits (including Tech Mahindra, i-flex, HCL Technologies and Patni, which reported net profit growth ranging from 90-373%), clearly made the difference.

Similar was the case in pharmaceuticals, where the big seven (77.6% of profits) reported an 82% gain in profits. Here, Ranbaxy (753.8% net profit growth) and Dr Reddy’s (153.5%) were the top two performers, beating the average profit growth by a wide margin.

In the other two big industries, viz., cement and engineering, the story is well-known and companies should continue their good show over the next few quarters. In telecommunications, Bharti Airtel stole the lime-light as MTNL reported a 25% decline in profit to Rs 121 crore and Tata Teleservices (Maharashtra) reduced its losses. Here, the results of VSNL and Reliance Communications are awaited. Lastly, in automobiles, with the exception of motorcycle companies, M&M and Maruti have reported good numbers, beating analysts’ expectations too. Here, results of Tata Motors and Ashok Leyland are awaited. Among dark horses, shipping did well, especially the top two. GE Shipping and SCI reported a 61%/89% rise in net profit.

So, far the going is good. External factors like steady interest rates in the US and decline in crude prices augur well for the industry. Contrarily, the Reserve Bank may hike domestic rates by 25 basis points during its policy announcement this week. Additionally, the real impact of a possible US slowdown is not yet known. However, given the strong domestic story, most companies should continue to report good numbers. But one thing is very clear. Not all companies will do well, which is also evident from the results. The trend shows that bigger companies have fared well, while their chances of their doing well in future too are equally good. So, to earn higher investment returns, obviously, one will need to be very selective while stock picking.

News: Reliance kicks off 'Fresh' retail in Hyderabad

(BL 29/10/2006) Hyderabad - Reliance will kick off its Rs 25,000-crore national retail initiative here by opening the first `Fresh' outlet in the upmarket Banjara Hills on Sunday.

The company would sell fruits and vegetables in the Fresh series. The company is putting in place supply chain network across the country to launch scores of Fresh and Fresh Plus and hypermarkets in a phased manner, source said.

Reliance retail venture would see the opening of several outlets in the twin cities of Hyderabad and Secunderabad.

The company has firmed up plans to open hypermarkets in cities such as Visakhapatnam, Vijayawada, Guntur in Andhra Pradesh.

Nita Ambani, wife of Mukesh Ambani, visited Hyderabad two days ago to personally check out the interiors and other details ahead of the launch.

News: Rabo India eyes derivatives, debt syndication

(PTI 29/10/2006) Mumbai - Rabo India Finance (RIF) is contemplating a host of new lines of businesses such as launching of derivative products in the carbon credit space, debt syndication, leading IPOs and offering advisory to corporates in restructuring their stressed assets. "We are giving serious thought to all these businesses and have even made small beginning in some of them," RIF's CEO & Managing Director Sanjiv Bhasin told media here. A 100 per cent subsidiary of Dutch financial powerhouse Rabo Bank, RIF is in the process of concluding three transactions in the carbon credit space. "We are now looking at offering more-structured derivatives." With both Central and State Governments having conducive laws, and coupled with our expertise and knowledge, "this business will constitute a strong focus area for the company in the coming years," he said, adding "within six months, we should be ready to take off in a big way in this space." On leading IPOs, Bhasin said plans here were still on the drawing-board stage but "this is a space where we have immense expertise. Besides, there are a number of mid-caps who are in need of specialised services and we are ideally positioned to provide them." However, it will handle IPOs only in specialised segments of agri and food, renewable energy, telecom and media. The company, a NBFC, will also be launching its debt syndication business within 12-18 months. Restructuring and offering new financial package for stressed assets of corporates, which brought in Rs 300 crore for RIF last fiscal, is another area it is eyeing, he said. RIF will, however, move cautiously in the stressed assets restructuring, Bhasin said, "since to be a significant player in this business, one must have the ability to house stressed assets on one's balance-sheet." "We are AAA-rated and hence we will have to take a decision whether to house them on our balance-sheet or not. This will be done only after due deliberation." RIF, growing at a CAGR (compound annual growth rate) of 30 per cent in the last three years, aims to up its fee-based income from the present 30 per cent to 50 per cent of its total income within the next three years. The company had posted a 120 per cent vault in its profit after tax (PAT) in FY 06 at Rs 51.95 crore.

News: Munich Re eyes India JV to enter direct insurance

(TNN 28/10/2006) Mumbai - Munich Re, the world’s second-largest reinsurance company, is eyeing the direct insurance market in India through the joint venture route. The company, which already has a services company in place here, is examining both life as well as non-life insurance.

Although it is better known as a reinsurer, Munich Re has a sizeable direct insurance business. However, the direct business is concentrated largely in Europe and particularly in Germany. Munich Re’s direct insurance ambitions are crystallising at a time when it has unwound most of the cross shareholding with Allianz AG, which has a strong presence in India.

The property insurance market in Europe and Germany have reached a level where growth opportunities are limited. In Germany, Munich Re is the the second-largest primary insurance group in terms of gross premiums. A presence as a direct insurer in India would require Munich Re to partner domestic company, which would hold 74% stake. Besides direct insurance, Munich Re has also been keen on setting up a branch in India to conduct the reinsurance business.

However, under current guidelines, foreign reinsurers can have a presence in India only by having a joint venture company with a domestic partner holding 74%.

Industry officials say that setting up a local company is an ineffective method of deploying capital since Indian insurance companies can freely reinsure their risks with companies in the international markets.

Munich Re’s primary insurance arms are ERGO Insurance Group and Europäische Reiseversicherung. The ERGO Insurance Group was created in 1997 through the merger of Victoria, Hamburg-Mannheimer, DKV and DAS.

Munich Re’s focus is on personal lines insurances, including life, health and personal accident insurance.

Another important segment of ERGO’s business is insurance for small and medium-sized firms as well as, on a selective basis, industrial business. Europäische Reiseversicherung has several subsidiaries and affiliated companies in 11 countries as well as a network of strategic co-operation agreements.

News: Morgan Stanley, Fidelity buy 10% in DCB

(BS 28/10/2006) Mumbai - Morgan Stanley and Fidelity picked up over a 10 per cent stake in Development Credit Bank (DCB), which made its debut on the bourses today.

According to bulk deals data released by the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), Morgan Stanley & Co International bought 9.94 million shares, representing a 6.73 per cent stake, in DCB for Rs 44.32 crore.

This is significant because going by the acquisition norms in listed banks outlined by the Reserve Bank of India (RBI), no entity can buy more than 5 per cent stake in any bank without the banking regulator’s approval.

Sources close to the central bank said Morgan Stanley would need to move the RBI for permission for the 6.73 per cent acquisition in DCB.

“The RBI will decide whether it should be allowed to retain the stake or would need to bring it down to 5 per cent,” sources said.

Morgan Stanley acquired 6.46 million shares on the NSE and 3.48 million shares on the BSE. Its average purchase price was Rs 44.40 a share on the NSE and Rs 44.87 on the BSE.

Fidelity Far East Fund bought 6 million shares, or a 4.06 per cent stake, for Rs 25.39 crore. It acquired 2.05 million shares on the BSE and 3.95 million shares on the NSE.

ABN Amro also bought 780,000 shares for Rs 3.54 crore, according to data released by the BSE and the NSE.

When contacted, Gautam Vir, managing director of DCB, declined to comment, saying he did not have access to the trade data of the exchanges. “The DCB registrar will get the information only tomorrow,” he added.

The DCB stock today listed at Rs 35.35, nearly a 36 per cent premium over the issue price of Rs 26, on the BSE. The stock went up to Rs 48.65 in intra-day trade before its close at Rs 47.50.

The paid-up equity share capital of the bank is Rs 147.63 crore. The bank raised Rs 186 crore through its initial public offering.

News: Providence buys 15% in Idea for Rs 1,800 cr

(BS 28/10/2006) Mumbai - Providence Equity Partners of the US, which had made an abortive attempt to enter India through the acquisition of C Sivasankaran’s stake in Aircel last year, has picked up a 15 per cent stake in the Aditya Birla Group-controlled Idea Cellular for an undisclosed amount.

Industry sources pegged the deal at Rs 1,800 crore, valuing the company at Rs 12,000 crore.

The deal, signed in New York yesterday, marks Providence’s entry into India. The private equity fund, with $9 billion under its management, has a big exposure to infotech and telecommunications companies across the globe.

Providence has acquired 338.85 million shares of Idea Cellular, paying over Rs 53.12 per share.

At this price, it has paid a 31 per cent premium over the rate (Rs 40.50) at which the Birla group had bought the Tata group’s stake in Idea this April. The Tata group had sold its entire holding of 48.14 per cent in Idea Cellular for Rs 4,406 crore.

Providence had earlier planned to pick a one-third stake in the company but decided to settle for less. After the sale, the Birla group’s holding in Idea Cellular has come down to 83.3 per cent from 98.3 per cent. C Sivasankaran holds 1.7 per cent in the company.

Sanjeev Aga, newly appointed managing director of Idea Cellular, confirmed the deal but declined to comment on its valuation, saying “this is in the private domain”.

The Providence acquisition price will act as a benchmark for further stake sales in Idea as well as the pricing of its initial public offering.

News: Indian govt nod to 46 more SEZs

(TT 28/10/2006) New Delhi - The commerce ministry’s board of approvals today cleared 46 more special economic zones (SEZ), of which as many as 17 are for the infotech sector. A sector-specific textile zone proposal for Dadra and Nagar Haveli also figured among the approvals.

However, a proposal for setting up a pharmaceutical SEZ in Bengal by Ramky Industries was deferred as the company’s net-worth fell short of the required norms.

Commerce secretary G.K. Pillai said the total number of formal approvals for SEZs had now gone up to 236, while the in-principle approvals had increased to 169.

While 25 SEZs were formally approved today, the remaining 21 were given in-principle clearance. A Rs 16,000-crore proposal by Suncity to set up a multi-product SEZ in Haryana and a Rs 1,900-crore proposal by Wockhardt Infrastructure for a pharmaceutical SEZ in Maharashtra figured among the approvals.

Pillai said the list to be used by the board of approvals for authorising operations to be undertaken in the special economic zones was also being notified.

He said the earlier permission to allow the setting up of golf courses at SEZs has been withdrawn as the government did not want land to be diverted to non-productive use.

Pillai said the government expected to generate 80,000 jobs through the 36 SEZs that had already been notified and their turnover would touch Rs 25,000 crore. He added that the concern over misuse of land was unfounded as the SEZ promoters were not very keen to set up housing and power projects.

However, the development of this infrastructure was essential otherwise the additional employment created by these SEZs would bring the existing urban infrastructure under strain. The burden would then fall on the cash-strapped state governments. So it was better to leave this responsibility with the SEZ developers, he added.

Pillai said it normally takes three to five years to fully develop a sector-specific SEZ and the built area of one million square feet required an investment of anywhere between Rs 250-400 crore.

He said free market forces were at work and the promoters of the SEZs would have to compete with each other to attract customers. Senior officials said setting up SEZs was not an easy task and as many as 25 per cent of those getting approvals could even drop out.

According to sources, even Hewlett Packard has decided not to go ahead with its SEZ proposal in Bangalore although it had obtained a formal clearance for the project.

The company appears to have veered around to the view that it would not be able to attract suitable customers. It also fears that it would face a industrial security risk if it invited other companies to share its SEZ premises.

News: Indian forex reserves rise $1.2 b

(BL 28/10/2006) Mumbai - Forex reserves rose by $ 1.202 billion to $ 166.153 billion for the week ended October 20, due to a rise in foreign currency assets. In the previous week, reserves fell by $ 324 million to $ 164.95 billion.

Foreign currency assets increased by $ 1.199 billion to touch $ 159.304 billion during the week, according to RBI's Weekly Statistical Supplement. "FII inflows at $ 558 million have moved into the stock markets in the week under consideration.

With corporates turning out good Q2 results, dollar inflows could rise impacting the rupee," said a treasury head of a private bank. The reserves with IMF rose by $ 3 million to $ 646 million. Major currencies such as the euro and the yen gained against the dollar during the week. The euro traded in the range of $ 1.2531 to $ 1.2613. Gold reserves were unchanged at $ 6.202 billion and Special Drawing Rights remained at $ 1 million. Dealers said the outlook on rupee is bullish and the home currency could touch 45.05.

News: Excise duty on all cars may be lowered

(DNA 27/10/2006) New Delhi - The frequent price increases by leading domestic car makers appear to have triggered a thinking about rationalisation of excise duties.

The excise sops announced for small cars in the Budget earlier this year were meant to make vehicles of certain dimensions more affordable for consumers.

But with a series of price increases effected by almost all car makers over the last six months across all vehicle sizes, there is a feeling within the echelons of power that the excise sop has not really served its purpose of making small cars more affordable to the common man.

To set the situation right, the Government is now thinking of lowering excise across all cars, including larger ones such as the sedans.

“This is the only way we can spur the domestic industry to become competitive. Why should only small cars enjoy the excise benefit, when manufacturers of these cars have not effectively passed on the benefits to the consumer?
If India is to become a global hub for the automobile industry, it should be far more competitive,” official sources told DNA Money.

The recommendations of 2006-07 Budget allow any car up to 4 metres in length and with 1200 cc engine capacity (for petrol) or 1500 cc (for diesel) to qualify for the lower 16% excise duty against 24% for all other automobiles manufactured in India.

This definition enables only seven existing cars to qualify for lower excise - Maruti 800, Alto, WagonR, Zen and Omni; Hyundai Santro and Indica petrol. It leaves out the premium hatchbacks from Maruti and Hyundai and virtually all sedans and larger cars.

If the current thinking within a section of the Government does find favour with the finance ministry, all cars regardless of length, engine displacement etc would qualify for the lower 16% bracket. But whether they will consequently become cheaper also remains to be seen.

Many sections of the automobile industry have been arguing against the Budget provisions, citing the auto policy. The policy defines a small car as having length up to 3.8 metres, without specifying the engine capacity or the type of fuel used.

The Budget provisions had extended this definition to 4 metres. Then, the recently released Auto Mission Plan - which charts a roadmap for the automobile industry for the next decade - also says the government will make all necessary policy interventions needed to convert India into a global hub for passenger cars.

NATRIP signs pact with VCA: The National Automotive Testing and R&D Infrastructure Project (NATRIP) on Friday signed an MoU with the Vehicle Certification Agency (VCA) of UK to offer homologation certification for Indian vehicle manufacturers who export to various countries in Europe, parts of US, Japan and Australia.

As on date, any vehicle exported from India to any other country needs to be physically transported to the destination country for certification before being launched. This collaboration is expected to bring substantive savings in homologation and certification costs that the Indian industry incurs overseas.

VCA is an executive agency of the Department of Transport, Government of UK, and provides vehicle certification across a host of countries.

NATRIP, started under the aegis of the Ministry of Heavy Industries, is the operative agency for upgrading and expanding automotive testing facilities in India.

With an investment of Rs 1,718 crore already earmarked, NATRIP is on course to set up two new homologation centers in Haryana and Chennai besides upgrading the existing ones at Pune and Ahmedabad.

News: 'India can attain sustained growth of 9-10%'

(BL 27/10/2006) New York - The Finance Minister, P Chidambaram, has said that India can attain a sustained economic growth of nine to 10 per cent over the next seven to 10 years with right fiscal discipline.

Observing that there was need for expansion and reform of banking, insurance and pension sectors to mop up additional resources for long-term investment, he said the growth rate could even cross 10 per cent with good monsoon coupled with 'right policies, new initiatives and better governance.'

But that would require a mix of right policies, new initiatives and better governance, Chidambaram told a select audience of investors and analysts here yesterday.

He said the Government plans to bring a bill in parliament to lift the voting cap of 10 per cent on foreign investors in the banking sector and reiterated Government's view that the percentage of foreign investment in insurance sector should be raised fr om 26 to 49 per cent.

Chidambaram, however, did not specify the limit to which the cap on voting rights is proposed to be scaled up, saying the Government is having consultations with its political partners and final figures would depend on the consensus achieved.

Talking about investment opportunities in India, Chidambaram said the country needs $320 billion to upgrade its infrastructure over next five years.

The country would be able to find $200 billion from its own resources but a foreign investment of $120 billion would be needed, he said.

News: Starbucks seen sailing into India

(Forbes 27/10/2006) Mumbai - There are, roughly, 8,800 Starbucks stores in the United States these days, or one for every 34,000 Americans (although if you have visited Manhattan recently, you might think the penetration is even higher).

At the same ratio of stores to population, India would have more than 35,000 coffee houses filling white-and-green tall, grande and Venti cups with lattes, Frappuccinos and the odd Pumpkin Spice Crème.

But as of now there are no Starbucks outlets in India, a shortfall the company plans to remedy by the end of next year. Recent local news reports indicate a move may come more quickly, saying the world’s largest coffee chain plans to venture into the Indian market in partnership with entrepreneur Kishore Biyani’s Planet Retail Holdings. The company is a leading lifestyle retailer in India with stores in 22 cities. It is the master franchisee for international brands like Guess, Marks & Spencer and The Body Shop.

Planet Retail declined comment, but an Indian daily reported the firm would become the master franchisee for Starbucks in India and other South Asian markets. The first Starbucks outlet in India is likely to open early next year.

India, traditionally a country of tea drinkers, is seeing increasing competition among the big coffee retail players. Barista, owned by India’s Sterling Infotech Group, Britain’s Costa Coffee (in partnership with an Indian firm) and Café Coffee Day, a division of India’s Amalgamated Bean Coffee Trading are the leading coffee chains.

Café Coffee Day is India’s leading coffee chain. Earlier this year, Sequoia Capital invested $20 million in Amalgamated Bean Coffee Trading.

Earlier this month, Starbucks had said in a financial release that it planned to open stores in four new international markets-Brazil, Russia, India and Egypt-by the end of 2007. “India represents one of the most exciting growth markets in the world for the company… Starbucks’ initial focus will be on major cities such as Delhi and Mumbai,” the release said.

Starbucks, which has annual sales of $6.4 billion, cannot enter India on its own yet because of government curbs on foreign direct investment in the retail sector.

Though coffee drinking isn’t a trend across all of India, it is popular among young urbanites, and their growing spending power is a great lure for foreign chains like Starbucks. Cafes are mostly frequented by a clientele between the ages of 15 and 35.

According to the Coffee Board of India, Indians currently consume about 80,000 tons of green beans (coffee measured before it’s been roasted) a year. But the country exports almost thrice that amount-206,400 tons. Italy is the biggest importer of coffee from India.

News: 'FDI outflow due to acquisitions not a concern'

(PTI 27/10/2006) New Delhi - The Government today said the FDI outflow, due to growing foreign acquisitions by Indian companies, is not a cause for concern as the country has comfortable foreign exchange reserves. "FDI inflow is every day phenomenon, outflow is occasional... This phenomenon (FDI outflow) has to be viewed in totality. Don't be worried. It is not a cause for concern," the Finance Secretary, Adarsh Kishore, told PTI. With mega acquisitions this year, including largest ever by Indian industrial house Tatas, there is a possibility that the country may see less FDI inflow than outflow this year. If opportunity comes for acquisitions abroad, it should not be lost, Kishore said. He said outflow and inflow of FDI should not be looked from short-term perspective. The country has substantial forex reserves, he said adding that if some FDI is coming in, some will go out. India has $165.27 billion of foreign exchange reserves as on October 13 this year. National Manufacturing Competitiveness Council (NMCC) also said yesterday that it was not disturbed by the increasing number of acquisitions abroad by corporate India, but feels the trend would accrue economic gains for the country. "I do not see any warning signals (in overseas acquisitions). It is a positive sign and displays managerial and entrepreneurial abilities of Indians who can takeover under managed companies abroad and run them profitably," the NMCC Chairman, V. Krishnamurthy, said.

News: 'Indian business confidence up 7.6% in Q2'

(RTR 27/10/2006) New Delhi - Indian business confidence rose in July-September from a slump in the previous quarter on the back of a booming stock market, fall in oil prices and strong growth, an economic think tank said on Friday.

The business confidence index (BCI) for July-September rose 7.6 per cent to 152.5 from 141.7 in the previous quarter, the National Council for Applied Economic Research (NCAER) said.

It has risen 4.5 per cent from the same quarter in 2005.

"The rise in BCI comes on the back of recovery of the capital market, deceleration in international crude oil prices, close to normal rainfall and a strong economic growth in the first quarter of the current fiscal," it said in a report.

The overall economic conditions index rose 11.5 per cent to 73.6 points while the investment climate index was up 13.2 per cent at 59.2 points.

Asia's fourth largest economy expanded at an annual rate of 8.9 per cent during April-June, slower than 9.3 per cent in the earlier quarter.

India aims to sustain 8 per cent growth rate this fiscal year and take it up to 10 per cent by 2011/12.

News: Alstom opens global engineering centre in Kolkata

(BL 27/10/2006) Kolkata - Alstom Projects India Limited, a subsidiary of Alstom SA of France, on Friday inaugurated a global engineering centre at Salt Lake near here to serve the environmental control systems business across the globe.

Phillippe Joubert, President of Alstom Power, said that the Salt Lake facility would supply high-value engineering skills to projects executed not only in India, but also in North America and Europe.

About 70 per cent of the capacity of the centre would be dedicated to serve international customer needs. The Salt Lake centre would employ 250 people.

The environmental control systems business of Alstom specialises in air quality control systems for power generation and industrial process markets.

Alstom had successfully partnered with Indian companies such as NTPC, Nalco, Balco, Hindalco, Tata Steel and Grasim by helping them to reduce harmful emissions.

Joubert said that the company, a major player in the power equipment-manufacturing arena, was also in the process of expanding the capacity of boiler production at its plants at Durgapur and Shahabad.

Out of the global turnover of six billion Euros, one billion Euro was generated from the environmental control systems.

News: Inflation rate at four-month high of 5.26%

(PTI 27/10/2006) New Delhi - Ahead of the Reserve Bank's busy season credit policy review on October 31, inflation shot up to four-month high of 5.26 per cent for the week-ended October 14 mainly due to increase in prices of food and manufactured items.

The recent upward inflation trend is likely to put pressure on interest rates as RBI had raised its two key short-term interest rates by 0.25 per cent in July, the fifth such increase since October 2005 to manage inflation.

The wholesale price-based inflation at 5.26 per cent, was higher than 5.16 per cent in the previous week and 4.77 per cent in the corresponding week last year.

This was the highest inflation in 17 weeks after it touched 5.44 per cent during the week ended June 17.

Prices rose for vegetables, condiments and spices, eggs, ragi, maize, some edible oils, cement, zinc, computer, raw rubber and silk, fodder, soyabean, bidi, polyster staple fibre, methanol, carbon black and oxygen.

The prices eased for jowar, bajra and barley, oil cakes and sacking bags while there was no change in the prices of fuel group during the week under review.

The Government has time and again said it would not hesitate to take further steps to contain price rise, which is due to supply crunch of essential items.

The Finance Minister, P. Chidambaram, had said government wants to keep inflation below five per cent and more fiscal and monetary steps can be taken if required.

In July, the government had removed restriction on imports of pulses and wheat while banning export of sugar to ensure adequate supply for consumption.

News: Fast boat from Nariman Point to Bandra in 20 minutes flat!

(Afternoon 27/10/2006) Mumbai - The proposed Passenger Water Transport system will ease commuting nightmares in Mumbai big time!

Finally, the Maharashtra State Road Development Corporation Limited’s (MSRDC) dream of giving a new transport corridor to the harassed Mumbai commuters on the western waterfront is all set to come true. Last year, the state government appointed MSRDC as nodal agency to implement the Passenger Water Transport (PWT) project in the city.

Interestingly, the project has finally been awarded to the Mumbai-based Satyagiri Shipping Company (SSC) by the MSRDC. And according to plans made by SSC, high-speed hovercrafts will be used to transport passengers commuting between Nariman Point and Bandra in 20 minutes flat. The SSC will build six terminals at Nariman Point, Bandra, Juhu (near Holiday Inn), Versova, one either at Erangal or Charkop and Borivali.
The company will initially run 100-seater hovercrafts or 200-300 seater catamarans at 30-minute intervals and the work is expected to begin in January.

The SSC will also provide passengers with facilities like well-equipped approach roads, terminal buildings with amenities like waiting halls, cafeterias, restaurants, libraries, fire fighting and safety measures, navigational aids, communication systems, appropriate berthing piers for safe and efficient mooring of crafts, embarking and disembarking at different states of water levels at different stages of tides, and all other facilities required for comforts of the passengers. All this will turn into a reality in just two years.

Sources in MSRDC said, “During the past two decades the existing rail and road services in Mumbai have become highly congested and the traffic levels have reached saturation conditions. The Passenger Water Transport facility is envisaged to go a long way in relieving pressure on the overloaded commuting systems operating in this city. The water transport system will be affordable to passengers. It will give competition to BEST and the Railways as people would prefer to use the water transport for time management.”

The project is anticipated to cost Rs. 1,000 crore including terminals, dredging, and breakwaters besides the cost of the crafts. The all-weather hovercrafts are being purchased from ABS Hovercrafts of UK.

“We have been awarded the project and have cleared all formalities for the execution of work. We are supposed to obtain the concession certificate and possession of land from the BMC for the construction of terminals by next month. Then we will slowly start construction by January and the work is expected to be complete in two years. The hovercrafts will be specially designed as per the wind force and climatic conditions of Indian seas,” said Nitin Joshi, chairman and managing director of SSC.

News: Traditional trade channels still a draw for retail biggies

(TNN 26/10/2006) Mumbai - Malls, supermarkets and big bang retail formats may have captured the buyers’ imagination, but manufacturers are spending time and resources like never before on local grocers, chemists and even the hole-in-the-wall paan-beedi shops.

These smaller trade channels are fast gaining new prominence with more and more companies realising that attention to bigger, modern retail channels cannot be at the cost of the age-old ones. Creating dedicated teams, relationship building, space management and imparting lessons on visibility and signages form the pivots of trade marketing.

Amit Burman, CEO, Dabur Foods, which has fruit juice brands like Real, Activ and Coolers, says while for the beverages business of Dabur Foods, modern trade is a big platform, conventional trade also plays an equally important role.

“Trade marketing programme has not been pursued actively so far and has largely been the responsibility of zonal managers who look after the needs of vendors and distributors,” says Mr Burman. However, that’s likely to change as Dabur Foods is undertaking a trade marketing project in west and north India.

“We are trying out a model where there will be one person looking after trade marketing activities,” explains Mr Burman. The idea, he says, is to look after the needs of the grocers who still form a huge portion of the distribution network of Dabur Foods.

At CavinKare, the trade marketing team co-ordinates with the brand team, looking after the needs of channels like grocers, chemists and modern trade. “Modern trade has a separate trade marketing team, while the chemists and grocer outlets are handled by the same team,” explains CK Ranganathan, MD, CavinKare. There is, however, a separate team to handle the paan-beedi outlets across major metros.

“Each channel has different requirements and therefore, there is a need to focus on each channel independently,” says Mr Ranganathan. He adds that in cities like Mumbai and Pune, around 50,000 paan beedi outlets are covered by the trade marketing team.

“These outlets are different as their stock requirements are not more than a few days and these are all-cash transactions. Therefore, one cannot club them together with the regular grocer or chemist outlets,” he adds.

While the trade marketing structure has been in existence for some time within companies, increasingly the need for a more concerted effort is being felt. The realisation is that even as modern trade provides new avenues for manufacturers in terms of space, visibility and new promotion techniques, it accounts for just 3-4% of the overall retail trade in India.

Companies are looking at a more relationship-oriented approach from the earlier manufacturer-retailer relationship that existed. So from merely pushing products down the chain, companies are looking to help general trade scale up in aspects like store visibility, signages, planograming and even local area activation like news paper inserts and cable TV advertising.

Sanjay Purohit, director-sales and marketing, Cadbury, says that across 20,000 outlets in India, Cadbury is looking to replicate key lessons learnt from modern trade and incorporating them in its interaction with general trade.

“Modern trade is about management of space and we are taking inputs like visibility, signages and trying to incorporate them at conventional retail outlets,” says Mr Purohit, adding that even stand-alone super markets realise that there is a need to change.

Trade marketing will increasingly gain importance as various kinds of formats come into being, he adds. “The range availability is different, depending on the formats. There could be a smaller number of SKUs and quicker turnaround. For example, in chemist stores, our presence has been good, but not great and there is definitely scope to stock more Cadbury brands,” he says.

News: Retail chains circle over Indian airports with outlet plans

(TNN 26/10/2006) Kolkata - Modernisation and privatisation of Indian airports appear to have opened up new vistas for Indian retailers. Most of them, if not all, are working on their business strategies to grab a slice of this emerging business, either independently or through partnership with foreign specialised airport retailers.

While players like the Future Group and Shoppers’ Stop have already entered into JV agreements, others like Trent’s Landmark and Ebony are believed to be exploring options. The agreements come in the wake of expressions of interest being sought from retailers for opening up outlets within Mumbai, Delhi and Bangalore airports. Modernisation of Hyderabad airport is also on the cards.

Citing examples, sources said gifts-book-entertainment retail chain Landmark, in which the Tatas hold some 76% stake through their retail arm Trent, is also studying the market. It has initiated talks with the airports to finalise its foray.

Elaborating, Landmark’s chief operating officer Himanshu Chakrawarti said, “We are currently finalising our business plan. Spread over some 1,000-5,000 square feet, the stores will have a merchandise mix like travel-related books, maps, light fiction, self-help books as well as management books.”

Since it is still early days, retailers or even industry analysts could not put a number on the size of the airport retailing business but they felt it will be big business. Sources attribute this rush amongst retailers for grabbing a slice of this emerging business to the 25-30% growth in air traffic and the Union government’s move to modernise Indian airports.

Owners of the Pantaloons and Big Bazaar chain — the Future Group too has entered into a 50:50 JV with UK’s Alpha Airports Group with plans to set up duty free shops and enter into in-flight and airport catering. Though it is still early days, the group’s think-tank is toying with a merchandise mix ranging from liquor to cosmetics, apparel, chocolates and even gift items.

When contacted by ET on the merchandise mix, Future Group CEO Kishore Biyani said: “Why not? We are retailers and would like to be present at centres where consumption is maximum.” Ebony Retail Holdings is contemplating options for an entry into airports of Tier II cities which too will be modernised.

“We are exploring options, but not in partnership since we already have the domain expertise,” Ebony Retail Holdings’ CEO Lalit Kumar said. Incidentally, Ebony was part of DS Construction-Munich Airport consortium bidding for privatisation of both Mumbai and Delhi airports with the sole intention of setting shop within airports, the source said.

The re-modelled and privatised airports will require retail and F&B (food and beverages) partners to make themselves viable and a refreshing experience for travellers, BS Nagesh, customer care associate and managing director, Shoppers’ Stop, added.

Shoppers’ Stop has teamed up with the Nuance group, a specialty airport retailer operating more than 330 outlets across the globe, for its proposed entry into the Indian airport retail market. What is obvious is that both domestic and foreign airport retailers are excited about the business.

Apart from the ones who have already formed JVs, multinationals like DFS Group, Dufry Group and Gebr Heinemann too are keen to offer retail services including duty free shops at the existing as well as new airports being built across the country.

News: SABMiller closes in on deal to buy Mohan Meakins' beer biz

(TNN 26/10/2006) Mumbai - SABMiller, the world’s second-largest brewer, is close to acquiring the beer business of India’s oldest beer & spirit company Mohan Meakins. The latter has in its portfolio the Golden Eagle brand that sells nearly 9m cases of the 107m cases in the Indian beer market.

Both companies have been in negotiations for the past few months, and a senior official from SABMiller - a specialist in acquisition and mergers - was in India to finalise the deal. Kapil Mohan, the patriarch of Mohan Meakins family told ET that the issue of the South African company taking a stake in the company will be clear within a week.

He said the stake may be around 49% to 51%. He, however, declined to discuss the valuation of his beer business. If the deal materialises, SABMiller will be close in on UB’s position as the leading beer major in India. SABMiller already has 37% of the beer market through the Shaw Wallace brands it acquired.

With Mohan Meakins’ 8% share, it will have about 45% of the market, just a whisker short of the UB group’s 47% share as the market leader. In this scenario, SABMiller will be a major threat to UB’s pole position in the Indian beer market. SABMiller has the advantage of deep pockets.

Mr Mallya’s strength lies in his knowledge of the local market and even his detractors admit that no one feels the pulse of Indian beer and spirit market better than this beer baron from Bangalore. Mr Mallya has initiated the launch of new beer brands under the umbrella of Kingfisher Ultra, which he thinks will checkmate the overseas beer major.

The question of a threat to the No 1 position of UB first came to the fore when Foster’s Indian business, including its state-of-the-art brewery, was acquired a couple of months ago by SABMiller.

The Australia-based Foster’s — though its market share is about only 2% — is a visible and respected brand in the Indian market and hence, its acquisition was a morale booster for SABMiller’s India foray. But the acquisition of Mohan Meakins’ beer business will turn the game from a war of perceptions to real numbers and industry-watchers already see a beer war brewing between the two entities.

Mr Mallya told ET: “Yes, I am aware that they are close to finalising the deal.” On an earlier occasion, he had told ET that Mohan Meakins’ market share could not be more than 5% and even if SABMiller acquires Mohan Meakins, UB’s leadership position was not threatened.

News: Manmohan bullish on India's growth

(PTI 26/10/2006) Mahaboobnagar - Prime Minister Manmohan Singh expressed confidence that the Indian economy would expand by 10 per cent in the near future and poverty afflicting millions be eradicated in the next 10-20 years.

"Today, India is developing at a rapid pace. A growth rate of 8-9 per cent, which was not considered feasible a few years ago, is not only possible now but we can hope to grow at 10 per cent in the near future", he said after laying the foundation stone of the four-lane road at Kothakota near Mahaboobnagar.

The Planning Commission's Approach Paper for the 11th Five-Year Plan has already set a growth target of 10 per cent in the final year of the plan (2011-12).

"With such a rapid growth, it is our expectation that in the coming 10-20 years, we will be in a position to remove the ancient scourges of poverty, illiteracy and unemployment from our country," he said.

"On completion of the ongoing development projects, these will lead to an increase in our agricultural and industrial growth and a complete change in the prospects of the country," he added.

News: 'India hopes to attract $125 bn foreign invstmt in infra'

(PTI 26/10/2006) Paulo Alto - India has expressed hope that it would attract 125 billion dollars of foreign investment, particularly in infrastructure, to assist the economy in sustaining a high growth rate.

"That is (attracting 125 billion dollars of investment) is entirely within our hands to make it happen," Finance Minister P Chidambaram said in a speech at Stanford University on Tuesday.

Prime Minister Manmohan Singh had said earlier this month that the Indian economy needed 320 billion dollars of investment for infrastructure development in the next five years.

Chidambaram said more public investment is needed to keep up the growth rate of 8 per cent a year.

He called for greater public investment in agriculture and said India faces serious problems in the pricing and distribution of electricity.

"This requires a mix of right policies, new initiatives and better governance. It also requires funding the resources to finance such growth without compromising on financial stability and fiscal prudence," he said.

Investment in education and health care, along with productivity gain are among measures needed to maintain the pace of growth, the Finance Minister said.

"We have miles to go before we rest," Chidambaram was quoted as saying in a Bloomberg report.

News: RBI may peg 9% growth in 5-year Plan

(BS 26/10/2006) Mumbai - The Reserve Bank of India (RBI) may estimate a higher average growth of the economy during the five-year Plan period 2006-07 to 2011-12.

According to sources, the average rate of growth may be raised to 9 per cent against the current expectation of 8.5 per cent. This would endorse the government’s growth projection of 10 per cent in the terminal year of 2011-2012.

The higher growth expectation has been primarily because of rapid growth in the services sector, in which the major contribution is that of productive services.

Among services, productive services are those which provide impulses for other categories of economy such as agriculture and manufacturing.

Services sector constitutes 60 per cent of the gross domestic product (GDP) and manufacturing and agriculture have equal share of 20 per cent each.

However, inflation remains a concern for the regulator even as it is felt that essential commodities which is a major factor for the inflation to go up, could be best tackled by fiscal measures rather than monetary, said a banker.

The worry for the market rather has been the status of liquidity to fund high growth. While banks have been engaged in term lending, the resources are mostly available for the short term of 1 to 3 years.

In the pre-credit policy meeting with the RBI, most banks have raised this issue to which the regulator has assured liquidity support in the fourth quarter if required.

It is currently maintaining a stock of around Rs 70,000-80,000 crore under the market stabilisation scheme, cash reserve ratio, open market operations. Bankers feel that while liquidity may not be an issue but it will be available at a higher cost.

This may push up cost of loans for the retail customer as the corporate sector is flush with funds.

In fact, most of the banks are currently raising bulk deposits from the corporate at higher rate which is getting factored in the loan pricing.

News: Private firms spend 71% of India Inc`s capex

(BS 26/10/2006) Mumbai - The share of public sector undertakings (PSUs) is Rs 25 and that of multinational companies a paltry Rs 4.

The private sector accounted for Rs 71 of every Rs 100 spent on capital expenditure in 2005-06.

Of the 1,769 listed entities that spent Rs 1,09,845 crore on capital expenditure in 2005-06, 1,559 private companies’ contribution was Rs 77,766 crore. Forty-two PSUs collectively spent Rs 27,487 crore and 168 multinationals the remaining Rs 4,592 crore.

Five years ago, India Inc had spent about one-third of this amount, Rs 36,000 crore, on capital expenditure.

At that time, the private sector’s share was around 59 per cent. Private companies had spent Rs 22,720 crore on capital expenditure in 2001-02, while PSUs spent Rs 12,678 crore and multinationals Rs 2,907 crore.

The private sector has been on expansion mode in the last two years, raising its share in overall capital expenditure from less than 60 per cent between 2002 and 2004 to 64 per cent in 2005 and 71 per cent in 2006.

In contrast, the share of PSUs in capital expenditure has declined from around 35 per cent between 2002 and 2004 to 31.3 per cent in 2005 and 25 per cent in 2006. The share of multinational companies in capital expenditure fell from 7.6 per cent in 2002 to 4 per cent at present.

“There is nothing surprising about this trend. All the action is in the private sector. Barring ONGC, no other PSU is active overseas. Even on the domestic turf, there has not been much of an investment except by public sector oil companies, which have been strengthening their marketing networks,” said an economist with a large corporation.

Overall, the five-year compounded annual growth rate of India Inc’s capital expenditure is 17.55 per cent. However, private companies’ capital expenditure has been growing at a much faster 21.3 per cent.

For PSUs, the five-year compounded annual growth rate is 10.6 per cent while for multinationals capital expenditure has been growing at 6 per cent.

Of the total 1,559 firms studied in the private sector, the top 25 accounted for 50 per cent of the total capital expenditure and the top 100 for 72 per cent.

Similarly, of the 42 PSUs studied, the top 10 shared almost 93 per cent of the total capital expenditure. Among multinationals, 10 of the 162 firms accounted for 65 per cent of the total capital expenditure and the top 25 accounted for 82 per cent.

Entrepreneurs are in the forefront with capital expenditure plans, accounting for almost one-fourth of the total capital expenditure made by the private sector. Their capital expenditure has been growing at a five-year compounded annual growth rate of 51.5 per cent.

After unveiling a Rs 25,000 crore expansion plan in the retail space, Mukesh Ambani has increased group flagship Reliance Industries’ capital expenditure by 10 times.

The Tata group’s capital expenditure has been rising at a compounded annual growth rate of 12.9 per cent to Rs 5,066 crore in the last five years.

News: RBI allays realty fears

(TT 26/10/2006) Calcutta - An RBI study has said that the prices of property are on a par with the long-term equilibrium housing price index, scotching fears of an asset price bubble fuelled by speculation.

The speculative element in the build-up of domestic real estate prices to their present highs is not materially significant and, in fact, the actual housing prices are in close convergence with the long-term equilibrium housing price index.

This has been brought out through empirical data collected monthly between April 2002 and June 2005 by the Reserve Bank of India today ahead of its quarterly review of monetary policy on October 30.

Prepared by Himanshu Joshi, director, monetary policy department, RBI, the study, however, pointed out that “the growth in real income (of individuals) played only a minor role in determining housing prices, reflecting an adverse selection in overall bank financing in the housing sector”.

Stating that housing prices are much more sensitive to interest rate changes than availability of the credit, the study suggested that the apex bank should carefully evaluate the consequences of monetary policy, especially when the housing market is seized by price bubbles.

“A pre-emptive hike in interest rates, over and above what is judged necessary for overall price stability purposes, may well be counterproductive,” it noted.

News: Of brand sluts and the Chindia century

(DNA 26/10/2006) Mumbai - Marian Salzman knows all about “brand sluts”. They are the fickle face of today’s consumers who are low on brand loyalty and conducive to better deals. Noted trend-spotter and executive vice-president at J Walter Thompson America, Salzman is credited with identifying global trends such as metrosexuality, globesity, the rise of the Al-Qaeda and brand sluts.

She stoutly believes there’s a yin-yang relationship between global and local trends, so her prophesies should hold weight for marketers here too.

She tunes into some current international trends:

• eBay nation — the culture of buying and selling is catching on internationally, whereas in Asia bargaining and bartering has been part of business for centuries.
• Brand sluts: Consumers don’t have brand loyalty, they’d rather shift to the better offer.
• No downtime: Due to Wi-fi connectivity we have lost time to relax—smart brands in 2006 will be able to tap into consumer’s free time to get their message across.
• BRIIC: Brazil, Russia, India, Indonesia and China are the future markets and trend-setters to look out for.

What is trend-spotting?

“Trend-spotting is all about pattern recognition; you can look at what’s happening in the now and extrapolate what will happen in the next,” explains Salzman in a one-on-one with DNA Money. The most important thing is to tell the difference between a fad and a trend. “Metro-sexuality was a fad; the real trend is that gender roles have changed, there has been a blurring of what’s male and what’s female.”

Through looking at what people are writing, reading, watching and talking about, Salzman is able to strip away the layers to get through to the trends that are here to stay. “We do qualitative research and look for data patterns that call out to us and help in identifying consumer shifts,” she says.

‘Chindia’ time

It’s her first visit to India, and she is already making observations: “This is the decade of Europe, but the century of Asia, or rather ‘Chindia’.” In India she sees two or three major trends already. She cites the phenomenon of the free-woman, where women in the 20-25 age group are given total monetary indulgence and freedom and then suddenly thrown into married life. Then there is the “empty nester” phenomenon, where more people are living it up in the second stages of their life and are far from retirement, and finally, the sachet culture, where people want miniature sachets, to try before buying a whole product. Marketers can use the information Salzman researches to do targeted selling, or for creating products for those niches.

She believes the future lies in flip-flop, where India and Asia will be the trend-setters and the rest of the world the followers. “Right now, the fad is to wear Indian clothes, eat Chinese food, and watch Bollywood movies. But the trend is like the Tatas buying Corus; the footprint of Asia is here to stay,” she says.

“One has to use the communication and relate it to the product or brand they are making it for,” she says. With the vastness of India, she believes Indian marketers have to play small yet reach big. “India is all about narrow-casting and micro-niches.”

Salzman believes Indian marketers will have to see a lot of wrong before they finally get it right.

News: India’s first dotcom listing on the cards

(DNA 26/10/2006) Mumbai/Hyderabad - After a few hiccups, Sanjeev Bhikchandani, the promoter of Info Edge India, has mustered courage to throw the gauntlet at Indian investors.

Sanjeev is offering a slice of his company that owns popular portals such as naukri.com, the jobs site, and jeevansathi.com, the marriage site, through an initial public offer.

Not that Sanjeev didn’t try earlier. He has been contemplating a local float for some years now. The company has filed a red herring document with the Securities and Exchange Board of India in the past, but the issue advisors let the filing lapse on apprehensions that investors may not be receptive to a dotcom stock.

Dotcom companies are valued more on the basis of intangible assets - they have very few physical assets to show, something that’s alien to what has been traditionally touchy-feely buyers. And when Info Edge lists, Sanjeev will become India’s first indigenous dotcom billionaire in rupee terms.

He holds 53.71% of Info Edge, which will have a paid-up capital of Rs 27.2 crore post public issue.

In September 2006, Sanjeev sold a small chunk of his holding at Rs 245 per share, netting him about Rs 10 crore. If this transaction is any benchmark, Sanjeev would be worth about Rs 855 crore.

The to-list-or-not dithering of the past has not harmed the company in any way, because Info Edge has managed to grow to a size and scale that few could have imagined when launched in 1995-96.

Info Edge has generated a total income of Rs 84.05 crore for the fiscal year ended March 31, 2006, and

has reported a net profit of Rs 13.29 crore. Revenues have ridden almost totallty on naukri.com —- the job portal contributes more than 90% of income.

So, will Indian investors take a bite of the virtual world? One global Indian already has - Ram Shriram, the man who funded Google, recently picked up a stake in Info Edge through his firm Sherpalo LLC.

But there are doubters, too.

“I can’t say that technology companies or for that matter dotcoms can go public in general. I don’t think the Indian market is mature enough in the sense that a more mature capital market is needed if tech companies need to go public,” says R Ramaraj, former managing director of Sify, the first Indian dotcom company to be listed in Nasdaq at the height of the dotcom boom in the late nineties.

Nevertheless, he thinks Info Edge has the mettle. “The company has something to it — given its strong leadership and business model and sustainable revenue stream. Naukri.com has a proven track record and thus it may still be attractive to the Indian public.”

Ramraj, who’s now mentoring a few businesses apart from being an advisor to venture capital funds such as Sequoia Capital, believes that where dotcom listings go, markets such as Nasdaq are a better bet as overseas investors are more aware of the issues involving such companies.

But what holds back Bhikchandani from peddling a foreign listing that can possibly fetch him far better valuations is that a listing in the US markets may not be possible for smaller technology companies as the cost of compliance thanks to Sarbannes Oxley Act would be prohibitive.

“A domestic listing in that respective would perhaps be more manageable then given the lower compliance costs”, reasons Ramraj.

Concurs an investment banker from a premier merchant banking outfit who preferred not to be quoted as his firm is not involved with the lnfo Edge listing. “If the underlying story is presented properly, the issue can do well. It’s the institutional investors who take the lead in taking a call on a new issue, and retail investors take the cue from them,” says the banker. The big investors will come in, if the revenue model shows promise.”

Ramraj believes that the dotcom boom is already there where venture capital funds are concerned, it is still somewhat removed from the lay investor. To that extent the market will definitely watch the Info Edge IPO and perhaps it can even be a test case for the second coming of the internet boom in India.

News: Finance Ministry plans ways to woo pvt funds in core sector

(PTI 26/10/2006) New Delhi - Grappling with the issue of attracting private sector investment in infrastructure, the Finance Ministry is likely to start consultations next month with the RBI, market regulator Sebi, merchant bankers and multi-lateral agencies on innovative financial instruments to woo these funds.

While the Finance Ministry is quite certain about the quantum of funds needed from the private sector in infrastructure projects, it is yet to do an analysis of the kind of policy requirements that are needed to attract this money, said a key ministry official.

"This analysis, we will do now. We are in the process of working out a concept paper and will come out with it in four weeks," he said.

He said the ministry will hold consultations with merchant banks, multilateral agencies, RBI and Sebi on the ways to attract the private capital in infrastructure.

The ways would include new financial instruments and developing the debt market, which is at a very nascent stage right now.

Infrastructure like roads, power, railways, aviation require an enormous amount of $320-350 billion by 2012 to raise rate of investment in key areas at par with economic growth, 20 per cent of which will have to be chipped in by the private sector, the official said.

As such, the total requirement of private sector investment in infrastructure is somewhere near $65-$70, of which $25 billion should come from equity and the rest through debt in public-private partnership (PPP) projects, the official said.

Huge private sector funding is required since public investment in the area is constrained by limitations on the government borrowing programme imposed by the FRBM Act and demand for investment by other growing sectors of the economy.

News: Germany's Sixt eyes 10% of India's car rentals

(RTR 26/10/2006) New Delhi - German car rental firm Sixt hopes to win at least 10 per cent of India's car rental and leasing market by 2011, an official said on Thursday.

"We are transferring the know-how of this business (to the Indian partner). In return there are certain royalties and fees on a per centage of turnover," Sixt's vice president, Rudiger Proske, said as the firm marked its formal arrival in India.

"Over the next five years we see at least 10 per cent market share in car rentals business and car leasing business each."

India's Sona Group, which is heading Sixt's foray into India, has been running a rental service through Sona Mobility Services Ltd. for the past 9 months and clients include top mobile services provider Bharti Airtel Ltd., Microsoft, Nestle and Dell.

"The corporate vehicle leasing market in India is currently pegged at Rs 1,500 crore ($331.5 million) and is expected to grow at 30-40 per cent year on year," Sunjay Kapur, CEO of Sona Mobility said.

"In five years we aim for revenues of Rs 1,600 crore from leasing about 35,000 cars and another Rs 400 crore from rentals of 4,000 cars.

The Sona Group's flagship company -- Sona Koyo Steering Systems Ltd. -- 20.47 per cent owned by Japan's Jtekt Corp. and 7.85 per cent by car maker Maruti Udyog Ltd. -- is India's largest steering gears maker with a 45 per cent market share.

News: London 'losing India and China'

(BBC 26/10/2006) London - The City of London needs to do more to develop business relations with China and India, or else risk losing out to rival financial hubs, a report warns.

Despite London's global reputation, the study said Indian firms were building closer links with the US and Dubai.

It found that Chinese businesses were also looking to the US, in addition to Hong Kong and Singapore.

The report by risk analysts Sami Consulting and Oxford Analytica said London was not meeting its potential.

Commissioned by the City of London itself, it pointed to the UK's close historical ties with India and significant Chinese communities.

Fast-growing economies

With China and India's economies continuing to enjoy stellar growth, the report points out the opportunities in India for project financing, and demand in China for savings and pensions products for the country's ageing population.

"City companies will need to seek out and develop long-term relationships with people at all relevant levels within the Indian and Chinese financial and business communities," it said.

In India, the report recommends that UK firms widen their investment scope and not simply "focus narrowly on the traditional financial centres of Mumbai and Bangalore".

About 1.8% of the UK's 60 million people are of Indian origin, while 0.4% are Chinese, according to the 2001 census.

News: Mahindra & Mahindra in talks to buy German firm

(TNN 25/10/2006) New Delhi - India Inc’s appetite to shop abroad seems to be growing by the day. India’s utility vehicle major Mahindra & Mahindra (M&M) plans to add another German forging company, Schoeneweiss & Co, to its already loaded shopping cart as part of attempts to grow its auto component footprint across the globe.

Though company officials refused to comment on the matter, sources close to the development said M&M is in advanced talks to buy the firm and a deal is expected soon. Sources further stated that the deal would be pegged at close to $150-200 million.

“We would not discuss our M&A strategies... All I can say is that we continue to look at opportunities across the globe, but our focus now would be low-cost countries,” said Mahindra Systems and Automotive Technologies president Hemant Luthra — the man driving M&M’s merger and acquisition strategy.

“But if some deal comes across at an absurd price, why not?” Luthra added.

Schoeneweiss is a major supplier to leading commercial vehicle manufacturers like DaimlerChrysler, MAN, Scania and Volvo. In addition, its client base include global car-making biggies like Audi, BMW, DaimlerChrysler, Volvo, Bentley, Skoda and Volkswagen. The acquisition, sources said, will add to M&M’s customer base besides giving it access to newer markets and technology.

This comes close to the heels of M&M buying a 67.9% stake in another German forging company Jeco Holding at an enterprise value of around Rs 830 crore.

This was the latest in a series of forging company acquisitions by M&M.

In addition, the firm is also said to be looking at some acquisitions in the domestic market as part of plans to grow its auto component business to a $1-billion unit by the year 2010.

News: France to triple investments in India

(IANS 25/10/2006) Paris - France says it will aim to triple the number of French companies that have invested in India within the next two years.

This announcement was made by Nicolas Forissier, a junior minister in the French government at an India Business Meet held on the sidelines of Salon Internationale de Agroalimentaire (SIAL) — one of the world's largest food shows — in Paris on Tuesday.

"Today, there are about 270 French companies that have invested in India —from any sector of the economy. We would like to multiply this number by three times in the next couple of years and I would like to make sure that there is adequate representation from the French food processing industry in the new investments," Forissier told the gathering.

He said he would visit India twice between now and the end of the year to ensure that the target was met. "I will represent France at the Green Revolution meeting in November and again in December with a large delegation of small and medium enterprises from France for a weeklong visit," Forissier said.

The delegation, to be led by Christine Lagarde, the French trade minister, will have over 250 CEOs.

At the meeting, India's Food Processing Minister Subodh Kant Sahay, who is leading the Indian delegation at SIAL, announced that India would significantly increase its presence at the next fair, slated for 2008.

There are about 30 Indian companies participating in the current SIAL, with basmati rice producers dominating the list. Also present at the fair, which concludes on Thursday, are several producers of ready to eat foods, spices, curries and wines.

Sahay emphasised the need for greater cooperation between France and India in this key sector.

"We are a large agro economy and you have a lot of rich and varied experience in the food processing industry. This experience and the technology is what India needs today in order to optimise the use of its agricultural output," Sahay said.

He said the government had liberalised the sector very largely and that India was seeing large companies taking active interest in the food sector. "There is a lot of interest and a lot of potential for French companies to invest in this and benefit from the booming economy," Sahay said.

Earlier, the two ministers toured the fair and the Indian pavilion. Sahay had also met the senior management of Carrefour, the largest French retailer, which is now eyeing India.

News: Indian exports up 41% in September

(TT 25/10/2006) New Delhi - India’s exports grew 41.2 per cent in September to $10.3 billion while imports rose at a faster rate of 49 per cent as trade deficit widened to $24.6 billion in the first six months of this fiscal.

Cumulative exports during April-September 2006-07 rose 37 per cent to $59.32 billion against $43.22 billion in the corresponding period last fiscal, according to the provisional data released by the government today.

Exports grew at more than 40 per cent for the second successive month in 2006-07 to $10.3 billion compared with $7.29 billion in September 2005.

Upbeat over the export figures, commerce minister Kamal Nath said in a statement that the sustained double-digit growth showed India's exports were on a high growth trajectory and the enhanced export target of $125 billion for 2006-07 would definitely be met.

Imports in September 2006 increased by 49 per cent to $15.63 billion from $10.48 billion in the same month last year. Total imports so far this fiscal increased 32.06 per cent at $83.92 billion against $63.55 billion in April-September 2005-06.

Trade deficit during April-September this fiscal has widened 21 per cent to $24.601 billion compared with $20.326 billion in the same period of 2005-06.

Oil imports in September rose 25.77 per cent to $5.09 billion compared with $4.04 billion in the same month last fiscal. Cumulative oil imports in April-September 2006 have increased by 36.83 per cent at $28.66 billion against $20.94 billion in the same period last year.

News: Co-branding just got a bit more sweet

(DNA 25/10/2006) Kolkata - Cadbury India is tying up with coffee retail chain Café Coffee Day (CCD) to offer the experience of chocolate combined with coffee.

It could be Cunchy Perk or Caramely 5 Star, but the brand name has not yet been finalised yet.

For CCD, the tie-up is of huge significance, said Sudipta Sengupta, senior general manager, marketing, Cafe Coffee Day. “We were looking at launching a new category — chocolate drinks - and the tie-up with Cadbury fits the bill since the company is synonymous with chocolates. Introduction of a new category in a coffee chain menu happens only occasionally and involves a great deal of research. Take, for instance, cappuccino, espresso or mocha …. these have been around for centuries.”

A Cadbury India spokesperson indicated that this is the first time such an association is being forged. Subsequently, there could be a possibility of widening the scope of the co-branding tie-up — by adding new products if things looked successful. Added Sengupta: “Maybe in a year’s time we will explore Cadbury’s other chocolate brands.”

CCD, however, not is tying up for co-branded drinks for the first time. Previous experiences include short-term tie-ups with Rasna and Dabur Real fruit juice for launching seasonal drinks.

Said an FMCG analyst: “Cadbury has found a ready teenage platform. CCD, in its turn, will be able to explore a new area.”

This national co-branding initiative will offer two new products initially and that will be a combination of chocolate blended with sweetened milk cream, coffee and chocolate sauce. The drinks will hit the shelves from November this year across 225 cafes.

While Cadbury will supply chocolates in bar forms, CCD will evolve the recipe using coffee and other raw materials. While CCD will pay Cadbury a bulk rate fee per unit, on its turn, it will charge Cadbury a branding fee for promoting the two brands.

But will a price point of Rs 70 be a bit stiff for teenage pockets? Sengupta brushes aside doubts, saying: “Volumes will be a factor of taste and price but Rs 70 will be lower than the price points of most mocktails.”

News: Toasting India entry Caribbean style

(DNA 25/10/2006) Mumbai - CL WorldBrands group, part of the CL Financial Group, Trinidad, has entered the Indian liquor market with its Angostura Premium rums. Bottled in the Caribbean, they will be sold in Mumbai. They will be gradually rolled out across other parts of India.

Making up close to 25% of the CL liquor portfolio and aged between 3 to 25 years, the Angostura range will be retailed only through hospitality outlets due to the 500% market duty. It will be distributed by S.V Distributors.

“At a future stage we will be looking at volumes, possibly working with partners locally,” Mike Arnold of CL WorldBrands told DNA Money.

News: Mittal shares gain 26% since word of Tata-Corus deal

(AFP 25/10/2006) Paris - Mittal Steel shares slipped here on Wednesday on profit taking but have surged 26 percent since an announcement three weeks ago of merger talks between fellow producers Tata of India and the Anglo-Dutch group Corus.

Mittal was down 0.09 percent in mid-morning trading in Paris at 33.87 euros on an overall market that was 0.21 percent stronger.

But the Mittal share price has soared since October 4 following the revelation in Indian press reports of advanced talks between Tata and Corus.

On Friday, Corus directors recommended acceptance of an acquisition offer from Tata of 7.62 billion euros (9.6 billion dollars).

Market analysts said Mittal, which has Indian origins but is based in the Netherlands, has also been boosted by healthy economies of scale stemming from its acquisition of European group Arcelor in June.

Analysts at Morgan Stanley, in a note to clients, said increased consolidation in the steel sector and more efficient production are supporting the Mittal share price.

Following the Tata-Corus tie-up, the number two and three steelmakers, Nippon Steel of Japan and Posco of South Korea, said they were to strengthen their strategic alliance.

News: Hyundai small-car hub’s in India

(DNA 25/10/2006) New Delhi - India is on the fast track to becoming a global hub for small cars.

Hyundai Motor Corp is thinking of shifting production of all its low-cost models to markets like India and China, so that it can concentrate on making high-margin models in the home market.

This follows Suzuki Motor Corp eyeing annual exports of 4 lakh units from the country by 2010.

To begin with, the Korean auto major may shift all production of its premium compact car Click — known as Getz in some markets — to India and stop making this model in the home market altogether. Already, India has become the only production base across the globe for Hyundai’s bread-and-butter model Santro. With the latest move, India could become the global hub for both, Santro and Getz.

Says Arvind Saxena of Hyundai Motor India: “India offers very good cost efficiencies. Hyundai is thinking in terms of moving all production of Getz to India but no final decision has been taken on the matter.”

Getz was launched in India two years back. At the time of its launch in 2004, the Indian consumer appeared rather hesitant to buy a hatchback pegged at the premium end of the market.

And last year, when market leader Maruti jumped in the fray with its Swift in the same price bracket, Getz sales suffered further.

According to Hyundai India figures, Getz sells only about 1,400-1,500 units a month in the domestic market against over 5,000 units a month by Maruti’s Swift. No Getz is being exported from India, but from South Korea, 15,000 Getz are exported every month to markets including Europe and South Africa. Last year, Hyundai produced 2,00,903 units of Getz in South Korea.

Saxena attributes the unsatisfactory sales of Getz in India to capacity constraints. “For Hyundai India, production of Santro is top priority since this model has a continuous backlog. We are producing and selling up to 13,000 Santros every month but still there is a three-month backlog of about 25,000 units. In this scenario, we are unable to produce more Getz.”

At present, there is no backlog for Getz. But with Hyundai India gearing up for capacity expansion - its second plant should go on stream late next year, taking total production capacity to 6 lakh units per annum- production constraints for Getz should lessen. But will exports be as robust from India two years from now? Only time will tell. Saxena declined to divulge the capex planned for Getz once the new facility is operational.

News: Indian online travel market booming

(PTI 25/10/2006) New Delhi - Netizens in small towns are as savvy as their urban cousins in using the web for purchasing goods and services, with 74 per cent of all online transactions traced back to non-metros.

Far from the popular perception that only people from big cities use the Internet to plan their travel, including book tickets, it has come to light that web users hailing from small cities like Surat and Bhubaneswar are second to none in using the net for e-commerce, travel portal makemytrip.com's founder and CEO Deep Kalra said at the Travel Distribution Summit 2006.

Given the high credit card usage in India, where industry estimates suggest 70 per cent of all online purchases are made with plastic money, the web marketplace is emerging as a convenient and cheaper alternative for shopping -- be it clothes or airline tickets.

Kalra said there were around 30 million credit card users and 40 million Internet users in the country. However, the future of this market heavily depends on Online Travel Agents diversifying their service basket like offering hotel bookings in addition to e-ticket sales.

Making travel arrangements online is becoming a habit with the emerging middle class, who would grow to become 400 million-strong by 2009, and would generate an income of around 420 billion dollars, travel portal Yatra's co-founder Dhruv Shringi said, adding travelling for business is still the most frequent bookings online as leisure travel is still a fairly small but fast growing segment.

News: Mukesh Ambani's rich reward

(Forbes 25/10/2006) Mumbai - While India celebrated the triumph of good over evil at Diwali, billionaire businessman Mukesh Ambani commemorated a smaller triumph of his own. Thanks to the recent gains of his Reliance Industries on the stock market, Ambani has moved up to second place among India’s wealthiest citizens, and he is the richest person who actually lives in the country.

In the last few weeks, Reliance Industries raced ahead of public-sector behemoth Oil and Natural Gas to become India’s largest company. Reliance Industries’ market value stands at around $37.4 billion, and Ambani’s net wealth has consequentially risen to more than $15.5 billion.

Reliance Industries, the flagship company of Ambani’s Reliance Group posted record results that beat analysts expectations. Net profit for the quarter ended September 30 increased 10 per cent, to $1.1 billion. Sales rose 30 per cent, to $12.1 billion.

The company is making a big push into India’s booming retail market, spending $5.4 billion to open a chain of supermarkets and other stores across the country.

Mumbai-based Ambani, 49, has displaced Wipro’s Azim Premji, who was No. 2 on last year’s Forbes list of India’s 40 richest people. Premji has a net worth of around $14.2 billion. The leader of the elite pack remains Lakshmi Mittal, with a net worth of around $20 billion, but the international steel magnate now calls Britain home.

Ambani’s younger brother, Anil, is next, with a net worth of about $13.4 billion. Anil Ambani’s wealth is also based on his shareholding in companies of the Anil Dhirubhai Ambani Group.

The feuding siblings split the companies of the Reliance Group following a truce brokered by their widowed mother last year.

The Anil Dhirubhai Ambani Group companies—Reliance Communications, Reliance Capital, Reliance Natural Resources and Reliance Energy—has a market value of around $24 billion.

The Mukesh Ambani Group, comprising Reliance Industries, Reliance Petroleum, Indian Petrochemicals and Reliance Industrial Infrastructure—now has a market capitalisation of $45 billion.

Mukesh Ambani, who holds a master’s degree in business administration from Stanford University in California, joined the company founded by his late father, Dhirubhai Ambani, in 1981.

News: SBI focuses on retail banking for growth

(UNI 25/10/2006) Singur (West Bengal) - State Bank of India (SBI) is focussing on retail banking for growth, Managing Director, Yogesh Agarwal, said today. The retail banking is showing the maximum growth and has huge potential. The bank is looking at more growth in the segment, Agarwal, who came to inaugurate a branch near the site of the proposed small car project by Tata Motors here, said. The country's largest bank is aiming at 20 per cent growth in deposits and 25 per cent growth in advances in the current fiscal over the corresponding period last fiscal, he said. SBI is also looking at ending the year with less than 2 per cent gross NPA and less than one per cent net NPA levels, he said. He said the Bank already has 9,000 branches of its own and 5,000 branches of the associate banks. The Bank would expand its branch network in areas which were showing potential for growth, he said. He said SBI is keen to expand operations in Singapore and China and have initiated talks with the respective governments. Following the approval from the respective governments, the RBI's nod is also required for opening branches or representative offices in foreign countries, he said. He said SBI is comfortably placed with 12 per cent capital adequacy ratio (CAR) as against the Basel II requirements of 9 per cent. SBI's Deputy Managing Director U S Roy said Bengal circle is expected to contribute an additional business of Rs 10,000-12,000 crore by the end of the current fiscal over Rs 35,000 crore business clocked till now. Roy said the Singur branch is the 785th branch in the Bengal circle and confirms to the rural focus the bank had been following through the years. To give an extra emphasis to the rural credit initiative the bank has appointed 100 special recovery officers, he said. The Singur branch was opened within one month of obtaining the licence for setting up the branch.

News: Hikes to prick realty bubble may boomerang - RBI

(PTI 25/10/2006) Mumbai - Ahead of its quarterly policy review on October 31, Reserve Bank of India (RBI) has expressed doubts on the efficacy of "pre-emptive" raising of interest rates to prick the housing bubble.

"There is a need to carefully evaluate consequences of monetary policy actions, especially when the housing market is seized by price bubbles. Raising interest rates more than what is required for overall price stability may prove to be counter-productive," the central bank said today.

Such a policy could also be potentially damaging for other sectors in the economy, the central bank said in a chapter on "Identifying Asset Price Bubbles in the Housing Market in India-Preliminary Evidence" posted on the website under "Occasional Papers".

The papers have been issued at a time when several commercial banks have expressed the view that there should not be any further hike in short-term rates to contain inflation, which has crossed the 5-per cent mark.

Bankers argue that with oil prices falling and seasonal factors tappering off, the Reserve Bank should not hike rates as it may impede the high growth momentum.

The RBI study said direct measures taken for demand compression may be less worthwhile than sectoral measures such as withdrawing or reducing regulatory accommodation. As a pre-emptive measure, the RBI, in its annual policy statement for the current fiscal, had increased general provisioning for residential housing loans beyond Rs 20 lakh and commercial real estate from 0.40 per cent to 1 per cent.

News: Starbucks brews India story with Biyani

(TNN 24/10/2006) Mumbai - The world's largest coffee chain, Starbucks, is finally here. The Seattle-based iconic brand is learnt to have signed up with Kishore Biyani's Planet Retail Holdings (formerly Planet Sports) to enter India, putting to rest speculations about the company's partner in the country.

Planet Retail will be the master franchisee for the Starbucks brand in India and other South Asian markets. It is already the licensee for Starbucks in Indonesia. The first Starbucks coffee outlet will open in India early next year. The other modalities of the deal are still being worked out.

Planet Retail Holdings MD Arun Bhardwaj was not available for comment. “The company can't comment on this issue as of now,” said an official e-mail sent by Planet Retail Holdings in response to a query sent by ET.

The $6.4-billion coffee chain's India strategy has been a matter of great interest and speculation, as company officials have been making routine visits to India twice a year. It has been in talks with various Indian companies for almost three years, prominent among them being the Rahejas and RPG group.

Sources said discussions had also reached advanced stages with ADAG too. Meanwhile, the company was all along hoping that India would allow FDI in retail; so that it could come on its own. However, foreign investment in retail is still not high priority for the government, and Starbucks cannot afford to miss the consumer boom in India.

Earlier this year, Starbucks chairman Howard Schultz had said, at the company's Q3 result conference, “We are equally excited about two other major markets we intend to enter during 2007 - India and Russia... We are in discussions with potential joint venture partners in each of these markets. Meanwhile, we are scouting for locations, meeting government officials - all for gaining additional market knowledge and building critical relationships to make our market entries a success.”

Mr Schultz had said, “As the world's second most populous country, with more than 1 billion people and growing at 6% per year, we see unique and great opportunity for bringing the Starbucks experience to this market.”

Planet Retail Holdings, Starbucks' franchisee, is one of the leading lifestyle retailers in India. At present, the company's portfolio includes stores such as Planet Sports, Sports Warehouse and The Athlete's Foot in the sports lifestyle segment. In the lifestyle retailing segment, it is the licensee for brands such as Marks & Spencer, Guess, Next and Women's Secret.

Column: Mittal and Tata deals differ in style, substance

(HT 24/10/2006) New Delhi - Their personalities are vastly different, but two Indian tycoons are writing similar headline-grabbing stories in the global steel industry. However, it turns out that the deals stitched by Laxmi Niwas Mittal and Ratan Tata also differ in style and substance.

Mittal Steel Company merged with Luxembourg's Arcelor in a hostile deal, while Ratan Tata's $7.6 billion (Rs 34,200 crore) bid to take Anglo-Dutch Corus Group PLC to make it the planet's fifth largest steel maker is being billed as a copybook case in friendly acquisitions.

Mittal Steel, the world’s largest steel manufacturer with a production capacity of 60 million tonnes per annum, bid for Arcelor, which had an installed capacity of 50 million tonnes for an enterprise value of 18.9 billion euros on January 26. After a five-month battle that involved intense negotiations and lobbying with European governments, Mittal finally sealed the deal on June 27, but only after he revised his offer thrice--taking the final price paid to 26.75 billion euros ($38.3 billion).

Around the same time, the Tatas moved stealthily to get Corus. “During the course of discussions, the synergy was discussed in detail and found that operations of both the companies are complementary to each other,” said a senior official close to the deal. There were stark differences in the two deals. Mittal used his company’s market capitalisation as “acquisition currency" to pay for the merger in a stock-cum-cash deal, while the Tatas used leveraged buyout, which involves raising debt based on future revenues of the acquiree company to pay for itself.

Tata Steel is the world's cheapest steel maker, with an attractive platform in aggressively growing Asia. This would combine well with a demand for higher-value products in a more stable European market, where Corus can gain from Tata's expertise, said Jagdishwar Toppo, analyst at Enam Securities.

“Once it happens, it clearly proves that Indians are reaching out to the global market. Among the top five companies in the world's steel sector, two companies will be managed by Indians,” said Nimesh Kampani, chairman of JM Morgan Stanley. The Mittal-Arcelor deal was aimed at global consolidation and regional leadership in places like Europe and North America, while the Tata deal is aimed at complementary opportunities, making it a matter of match than magnitude, he said. Corus Steel's net profit of $861 million is on a production of 18.2 million tonnes of steel, while Tata Steel earned $840 million on a production of 5.2 million tonnes. Tata Steel’s market cap is $6.5 billion as against Corus Group's market cap of around $7.6 billion. Once the Tatas are in the saddle, there are clear chances of a margin improvement for Corus, Kampani said.

Industry experts say Tata Steel will export steel slabs or raw steel to Corus for value addition. This will help in improving profit margins while offering a larger market, while Tata Steel, with cheaper technology will have access to Corus's technology for value addition to create products for which India will increasingly become a hot market.

Besides creating mammoth size, Mittal’s acquisition was also aimed at accessing markets for high-end steel. Despite making flat products in Poland, Czech Republic, Russia and Romania, Mittal on its own did not have a European footprint to address the continent's high-end auto market. Arcelor had flat product customers in the US while Mittal had captive iron-ore. Value addition has been at the heart of Mittal's bid which was nearly forced when Dofasco, a value-added player, was acquired by Arcelor. That forced Mittal to a defensive position because he did not have a value-addition firm on his portfolio.

By Arun Kumar

News: Indian realty sector to touch $50 billion, says study

(BS 24/10/2006) Mumbai - The domestic real estate sector may emerge a $50 billion industry by 2010 and prove one of the most attractive sectors for foreign investments.

An industry research by financial services firm India Infoline (IIL) said the real estate sector, which was growing at 33 per cent CAGR (compound annual growth rate), could be a $50 billion industry in the next four years, if the institutional participation supported its growth.

The research saw strong economic growth, favourable demographic changes, fiscal benefits, lower interest rates and improvements in institutional framework helping the industry’s growth in the last two-three years.

“The evaluation reflects that since 2004 most companies have reported astronomical growth in profitability on the back of rising property prices. In 2005, the industry grew at around 30 per cent. Now, companies have lined up projects, which are more than two-three times the size they have completed in the past five years,” the report said.

Sachin Neema, research head, IIL, said, “We estimate India to experience a demand-supply gap of 17.9 million housing units by 2010. This apart, commercial real estate demand is expected to be around 350 million sq ft, of which IT/ITeS and organised retailing sectors should contribute around 300 million sq ft. Sensing this huge opportunity, the market has seen increased interest following the FDI relaxation and government’s SEZ policy. Cities are expected to form hubs of development, around which economic activity will prosper.”

The research report also said tier-I and tier-II cities were best placed to take advantage of the growth in the real estate market.

News: Small is really big

(BS 24/10/2006) News Delhi - Grameen Bank won its founder the Nobel Peace Prize for bringing about social welfare. But how is micro-finance faring in India?

First the good news. Over and above the nearly Rs 4,500 crore outflow last year through NABARD’s SHG bank-linkage programme, micro-finance institutions (mFI) in India attracted Rs 2,300 crore in funding from commercial financial institutions (FIs) in ’05-’06, as per figures with Sa-dhan, an industry association of mFIs in India.

This is a huge jump from the Rs 1,100 crore in refinance the sector got the year before. Besides the Small Industries Development Bank of India (SIDBI), those giving loans include ICICI Bank (total outstandings: Rs 1,200 crore), HDFC Bank (Rs 300 crore), foreign banks HSBC, Citi, and ABN Amro, and public-sector banks Indian Overseas Bank, Canara Bank and Bank of India.

The “partnership model” initiated by ICICI Bank in 2002, whereby the bank shoulders/shares the risk while the mFIs act as disbursment and collection agents, has been especially successful in scaling up the operations of partner-mFIs as also bringing down interest rates to end-users.

Then there were the venture capitals picking up equity in mF-start-ups, a trend that surfaced this year. The three principal players are Bellwether Microfinance Fund (allocated $6 million as of July 31, 2006, with another $15 million committed), Vinod Khosla (funds invested Rs 5 crore) and Lok Capital (fund size $10 million).

Vijay Mahajan, chairman of BASIX,says the sums coming into the sector are a factor of mainstreaming, “The banking sector is like a juggernaut. It’s slow to move but difficult to stop once it starts rolling.”

S V Prasad, director and fund-manager, Bellwether, reports: “There is a lot of interest among international investors looking for instruments that will deliver strong financial and social returns.” Bellwether, a 15-year-long fund, expects an annualised return of 12-18 per cent.

The reasons? Some policy initiatives by the government, the need to meet priority sector lending targets, and enlightened thinking by bankers like Nachiket Mor of ICICI Bank.

But most important is the realisation, says Mathew Titus, executive director, Sa-dhan, that “repayment rates are far higher in comparison to other parts of their portfolio”.

On the social welfare front too, mFIs have made significant inroads. As for March 2006, 2.24 million SHGs and 33 million households had benefited from NABARD’s SHG-Bank linkage programme since 1992.

The SHG-Bank linkage model is the dominant model in India, compared to the private sector, where you have the Grameen model, the SEWA model, joint liability group model and so on.

As for private sector mFIs, Titus reports that in the last fiscal, they had 6 million clients and are growing at a healthy annualised rate of 35-40 per cent, up from 20-25 per cent around three years ago.

But as always there is a downside to the rosy picture. Despite the fast growth, mFIs in India have managed to tap just 10 per cent of the unbanked poor.

The close-down of 50 branches of two large mFIs in Krishna district of Andhra Pradesh, based on complaints of extortionary practices, points to another possible danger — from government-subsidised poverty reduction projects.

The high penetration of mFIs within a limited geographical area also enhances the risk from natural disasters. A number of large mFIs, like SKS, have started branching out into other states but, says Titus, in the short-term it will result in stretching the management.

Also, while mFIs have expanded their services into insurance and money transfer, savings (a crucial service for the extremely poor) are still not allowed, although some mFIs have started transforming themselves into NBFCs to get around the policy constraints as also for greater ease in raising capital.

“Demand is there, and despite all the money coming in, it is still inadequate,” says Shubhankar Sengupta, CEO of Arohan, an mF start-up in West Bengal. “The challenge facing mFIs in India is the paucity of high-quality professionals to handle the growth effectively.”

News: India is port of call for global shipping lines

(BS 24/10/2006) Mumbai - Foreign shipping lines are cashing in on the boom in the Indian container market. All global container carriers are either starting new services or enhancing their services connecting India, China and the Far East.

Going by preliminary estimates, foreign shipping lines are expected to start at least 10 new container services by the end of the year. The Shipping Corporation of India (SCI) is also in the process of tying up with overseas partners.

Sources said Gateway Terminals India, the third container terminal at JN Port, operated by Container Corporation of India and Danish shipping line Maersk, has received over 40 applications from overseas shipping companies for berths.

“With the availability of cheap labour and value-added services, India and China are becoming hubs for semi-manufactured and manufactured goods. This has led to a huge increase in container shipping services,” said SCI Director Sudhir S Rangnekar.

However, Indian container companies are not part of the scramble. “Container shipping services operate on wafer-thin margins. Container ships cost around $60-70 million. You need to have a strong international marketing network, along with an expensive infotech backbone, to operate a box shipping service,” said Rangnekar.

SCI has joined Dubai-based Emirates Shipping Line (ESL) and Taiwan’s TS Line to launch Hyper Galex, a service connecting China, South East Asia, India, and West Asia. Hyper Galex will be served by six vessels of 3,100 twenty-foot equivalent units. ESL will provide four vessels, while SCI and TS Line will provide one each for the service, which starts on November 11.

“Hyper Galex will provide comprehensive container shipping links involving three of the world’s fastest growing economic regions. With this in mind, we have focused on providing a very wide port coverage to our customers,” said Vikas Khan, chairman and CEO of Emirates Shipping Line. The service will call on Kochi, JN Port, and Mundra.

SCI, along with Israeli company ZIM Integrated Shipping Services, had started an India-US East Coast weekly service in May. Japanese carrier Mitsui OSK Lines launched China-Singapore Service Loop 1 on October 19, connecting Chennai Port and JN Port to Shanghai and Singapore.

Mitsui OSK Lines and Singapore-based Sea Consortium have also started a new container service, Singapore Chennai Express (SMX), linking Chennai and ports in the Singapore straits.

October saw the launch of another service, PIX or Pakistan India Express, by Thai company Regional Container Lines, German Hapag-Lloyd, and TSK Line, a unit of Japanese line NYK.

News: Indian tax collection up 44% on strong quarterly show

(BS 24/10/2006) New Delhi - The good second quarter earnings of Corporate India has reflected in buoyant direct tax collections, which has increased almost 44 per cent till October 15, 2006, compared with th Budget target growth rate of 28 per cent.

Direct tax collections up to October 15 this year stood at Rs 87,147 crore, compared with Rs 60,537 crore during April-October 15 last year. The budget had estimated overall direct tax collection at Rs 2,10,684 crore.

The increase in direct tax collections is mainly on account of a 52 per cent increase in corporation tax collection at Rs 53,853 crore, as against Rs 35,476 crore in the same period last year. The Budget had pegged corporation tax collections for the current financial year at Rs 1,33,010 crore with a growth target of 34 per cent.

Income tax collections, inclusive of fringe benefit tax, banking cash transaction tax and securities transaction tax up to October 15 this year stood at Rs 33,184 crore compared with Rs 24,939 crore, an increase of over 33 per cent. The Budget had pegged income tax collection for FY07 at Rs 77,409 crore with a growth target of around 19 per cent.

The only head which reflected lower collections is other direct taxes —comprising primarily of wealth tax, gift tax and some older taxes such as estate duty, interest tax, expenditure tax and hotel receipt tax among others. However, barring wealth and gift tax, all the other taxes have been repealed over the years.

Collections under this head up to October 15 stood at Rs 110 crore compared with Rs 122 crore collected in the same period last year.

Revenue department officials said this is not worrying, since the overall collection under this head for the current financial year has been pegged at Rs 265 crore against Rs 307 crore collected during 2005-06.

The mop-up from securities transaction tax up to October 15 has touched Rs 2,556 crore, which is an increase of over 96 per cent compared with Rs 1,304 crore collected during the same period in 2005-06.

Fringe benefit tax collection was Rs 1,595 crore against Rs 1,018 crore last year, an increase of nearly 57 per cent. Banking cash transaction tax collections more than doubled at Rs 260 crore, as against Rs 94 crore last year, an increase of over 177 per cent.

News: Indian malls offer space to offices as retail demand lags

(BS 24/10/2006) Mumbai - Malls in north India are offering space to offices as supply grows faster than demand for retail space. Some malls are either not finding buyers or are being occupied by inappropriate business units.

“This is because of the over-supply of retail space. When a mall offers space to an office, it is a sign of sickness,” said Pranay Vakil, chairman, Knight Frank India, a real estate consultant.

A recent Knight Frank report says, “The large amount of existing retail space and the quantum of mall space lined up in Gurgaon has been a reason for concern and debate for some time now.”

The report cites examples of retail-specific projects being converted into mixed-use development with “a combination of retail and office or hotel floors”. Orchid Plaza, Central Plaza , Orchid Agora and Time Towers are some examples of the “new movement” in Gurgaon.

In Mumbai, too, there are a few instances of malls turning sick. One such mall was revived by fine-tuning the location of the escalators.

“This particular mall has a multiplex theatre in it. By changing the exit way of the multiplex audience, we have ensured more footprints in the mall. This has helped turn around the mall,” said an expert, who declined to name the mall.

According to real estate researchers, over 110 million square feet of space will be available across India for the organised retail industry by December 2008. The retail boom is spreading to Tier-2 and Tier-3 cities and 361 projects are under way. Of this, 227 are in the top seven cities and the rest in Tier-2 and Tier-3 cities.

Besides, 35 hypermarkets, 325 large department stores and over 10,000 outlets are also under development.

The biggest mall is coming up in Noida. This project, Citi Center, will have 5 million square feet. In Mumbai’s eastern suburbs, three malls are coming up and each of them will have more than 1 million square feet of space.

“The new and upcoming malls must be innovative if they want to succeed,” said another real estate expert. For instance, in Dubai, Mall of Emirates maintains a pocket of minus 2 degree Celsius in the centrally air-conditioned premises. The objective is to offer a different experience to shoppers in the desert city.

“Malls in India must also start experimenting. Without innovation, it will be difficult for many large malls to survive,” he said.

News: 40 US firms sign plan for health outsourcing

(PTI 24/10/2006) New York - At least 40 American corporations have signed a health plan which allows sending employees abroad, including countries like India, Malaysia, Thailand and Singapore, where they could save more than 80 per cent on the cost of medical procedures.

United Group Programmes, a health insurer in Boca Raton, Florida, began offering the programme six months ago. With medical costs skyrocketing in the US, where Americans spend an estimated 16 per cent of the GDP on healthcare, and in Europe, the idea of going abroad to get healthy is becoming more and more attractive, Newsweek reported.

More than 1,50,000 North Americans and Europeans are currently seeking medical treatment abroad, it said.

Giving instances of the savings, Newsweek quoted GlobalChoice Healthcare, a firm arranging foreign procedures, as saying that angioplasty which costs $50,000 in an American hospital can be performed for merely $6,000 at Mohali in India.

The magazine quotes Abacas International, a leading travel facilitator, as estimating that medical tourism to Asia could generate up to $4.4 billion by 2012.

For invasive surgeries, the magazine says the preferred destinations include India, Thailand, Singapore and Malaysia where large hospitals, like the Apollo chain in India and Bumrungrad in Bangkok in Thailand, actively court American, European and Middle Eastern patients.

Slick websites tout their partnerships with nearby luxury hotels for post-operative recovery. Bumrungrad arranges limousines to pick up patients at the airport, and sheiks and princes congregate in the Platinum Lounge of Apollo’s Delhi hospital, the report said.

Bumrungrad, Newsweek said, treated 4,00,000 patients from 150 countries, the highest in the world.

News: Citigroup buys stake in Ansal

(TT 24/10/2006) Mumbai - Citigroup affiliates will acquire a 5.75 per cent stake in New Delhi-based Ansal Properties and Infrastructure Ltd for Rs 175.8 crore.

In a filing on the Bombay Stock Exchange, the city-based realty firm today said it would allot 28,83,149 equity shares (face value Rs 5 each) on a preferential basis to Citigroup affiliates — CBC Bahrain, Citigroup Venture Capital International Growth Partnership Mauritius Ltd and to certain co-invest trusts at a price of around Rs 610.

The decision, which was taken by the company’s board at its meeting held on October 20, is subject to shareholders’ nod and other regulatory approvals.

The shares of the company today ended at Rs 727.45, up almost 5 per cent from their previous close on the BSE.

Ansal would also raise Rs 50 crore by allotting 8,19,659 convertible debentures (Rs 100 each) on preferential basis to HDFC Venture Trustee Company Ltd.

The debentures could later be converted to shares at a price of around Rs 610 each share.

The board also approved issue of securities of up to Rs 2,500 crore and decided to convene an extraordinary general meeting of the company on November 18.

During the first quarter ended June 30, 2006, the total income of the company was at Rs 161.20 crore compared with Rs 86.14 crore in the same period a year back, an increase of 87 per cent. Net profit at Rs 28.22 crore was 169 per cent up over the net profit of Rs 10.48 crore posted during the same period a year back.

News: ICICI Bank Q2 net up 30%

(PTI 24/10/2006) Mumbai - ICICI Bank has reported a 30.2% increase in net profit at Rs 755.01 crore for the second quarter ended September 30, 2006 when compared with Rs 580.05 crore in the same period last year.

According to a release issued by the bank, second quarter total income surged 58.5% to Rs 7,039.56 crore from Rs 4,440.88 crore in the year-ago period.

Net interest income was up 47% at Rs 1,577 crore for Q2FY07, from Rs 1,070 crore in Q2FY06. Advances for the quarter grew 45%, while deposits were up 57.3%.

Net profit for the half-year ended September 2006 was up 23.9% at Rs 1,375.02 crore as against Rs 1,110.06 crore in HIFY06. Total income was up 54.5% at Rs 13,355.75 crore from Rs 8,647.37 crore.

News: Future Group, Travel Port form alliance

(TNN 23/10/2006) Pune - Now shopping for a pair of jeans or shirt can be combined with buying an air ticket or a travel package. The Future Group, formerly Pantaloon Retail (India), has tied up with Travel Port, the Rs 20-crore travel house, for introducing travel in retail.

The travel company opened its first retail outlet at Central mall in Pune. It is planning to open 50 retail outlets across the country, which will include one outlet each at all central malls of Pantaloon.

“There was a lot of talk of travel coming into retail, but we have launched it first in India. Now, just as one buys a pair of sunglasses, or trousers, one can also buy air tickets or travel packages .

With four franchisees and a branch in Pune, the city is the third largest contributor to Travel Port revenues after Mumbai and Delhi.

“We are looking at a turnover of Rs 15 crore till next fiscal only from this store in Pune,” said Travel Port India’s chief executive officer OK Venkatesh.

Travel Port has roped in actor and travel enthusiast Milind Gunaji as the brand ambassador for the concept.

Pune Central’s general manager Sanjay Katara said, “With this tie up, we are looking at enhancing our bouquet of services.

This is an internationally successful concept which is being tried in India for the first time and we think it was essential to have a travel outlet as a part of the various services we offer in our mall.”

News: Seagram to roll out Indian made wines

(TNN 23/10/2006) Mumbai - In a development that will provide global identity to the fledgling Indian wine market, Seagram India, the Indian arm of global wine & spirit major Pernod Ricard, has decided to roll out brand new wines produced in India from November.

This is the first time a major global wine & spirit company is producing domestic wine brands in India. This strategy is in total contrast to the style followed by other multinationals who attempted to barge into the Indian market with their global brands, but could not make much headway as they encountered stiff resistance in the form of huge tariff wall put up by the government following pressures from the domestic industry.

Seagram has already set up a winery at Nashik, using the grape varieties cultivated there. The company plans to position its products against the Indian wine brands that come mainly under the umbrella of Grover's, Indage and Sula. The price of Indian wines ranges from Rs 300-550 per bottle and Seagram is planning to fix a competitive price for its brands.

So far, the 300,000 cases Indian wine market is dominated by three companies, the Bangalore-based Grover's, Maharashtra based Indage group and the Sula Vineyards. Seagram's entry is the first major competition for the domestic wine industry from a global player.

By producing wine in India, Seagram is turning the logistics in its favour. First, it can escape the huge tariff wall, about 400% of the CIF value, which makes global wine brands hugely expensive.

For example, Moet Chandon, the flagship brand of lifestyle major LVMH can cost Rs 3,400 for a bottle in India, which by any standards, is beyond the reach of the average wine connoisseur in India. The high prices has restricted the market for foreign wines in India to a minimal 150,000 cases a year.

On the other hand, Seagram has already tasted success in an experiment in local production in spirit segment with its Royal Stag whisky which sells nearly four million cases. Seagram thinks it is worth trying to replicate their success in local whisky production to local wine brands.

Secondly, it can take advantage of all the incentives the various state governments, especially Maharashtra government, have accorded to the vineyards and grape farmers as a futuristic exercise for boosting the domestic wine production.

Seagram's experiment in the Indian market is keenly watched by other global wine majors who are looking at India as the only market that grows at a pace of 25% a year against the global rate of 3%. Though part of the reason for the high rate of growth may be the small base, one can't fail to see the rising global interest in the Indian market.

News: Remittances to India rise on Diwali, Eid

(PTI 23/10/2006) Dubai - Remittances to India have gone up in the festive season of Diwali and Eid despite the Indian rupee gaining in strength.

The rupee was quoting at 12.34 per Qatari riyal on Sunday gaining two to three points overnight, but the Trust Exchange managed by State Bank of India, in Dubai said business this festive season was more than what it was last year.

"I would say the remittances were 10 per cent more compared to last year," Trust Exchange's general manager, Brahma Rao told the Peninsula daily.

There were more volumes than numbers, he added. "People do not seem to mind the higher remittance costs, but they want to make sure cash is delivered to their families," he said.

News: Four Indian banks poised for flotations

(TT 23/10/2006) New Delhi - North Block will allow four state-run banks — Canara Bank, Bank of India (BoI), Central Bank and Indian Bank — to tap the market.

Finance ministry sources said while the two unlisted banks — Indian Bank and Central Bank — will make initial public offerings (IPOs) early next year, Canara Bank and BoI will make follow-on public offers to increase their capital to risk assets ratio.

Indian Bank is likely to issue 8.9 crore shares in January to raise between Rs 800 crore and Rs 1,200 crore to increase its capital base. The bank will dilute the government’s stake by 25 per cent through the proposed IPO. After the issue, its capital adequacy ratio (CAR) will move up from 11 per cent to 15 per cent.

The bank is in the process of selecting merchant bankers for its IPO. Banks, which need to comply with Basel II norms by March 2007, have been asked by the government to meet increased capital requirements through IPOs and bond issues.

Central Bank of India officials said the bank is considering an issue of subordinated debt of around Rs 700 crore under tier-II capital as it is keen on recording a 30 per cent growth.

The tier-II issue could be completed before December-end and improve the capital adequacy to at least 11.3 per cent, officials added.

For its follow-up offer, Canara Bank officials said the bank would raise Rs 1,380 crore from the international market during the current quarter.

The bank has already raised Rs 1,075 crore from the domestic market. Officials said the bank is raising resources in excess of Rs 3,000 crore through upper tier II and hybrid tier I bonds to maintain capital adequacy above 12 per cent, fund expansion, diversify operations and comply with Basel II norms.

BoI is also on the verge of finalising its second public offer. The bank plans to offer Rs 125 crore capital to raise total funds of over Rs 1,500 crore, including premium.

“We plan to go in for a second capital offering sometime during June-July 2007. It could be either through a domestic offer or issue of global depository receipts,” bank officials said.

The bank is evaluating the options and will finalise the offer route soon.

News: Realty funds fail to bag Indian deals

(TT 23/10/2006) Mumbai - The moneybags are swarming the market — but they are starved of options to strike deals.

International real estate funds have piled into India after the government threw open the sector but they are unable to find local partners who will make effective use of the moolah.

According to industry estimates, close to $3 billion has come into the country through India-dedicated realty funds.

Dearth of deals

“We have the money but no deals have happened. As a result, we have had to change our strategy recently,” said Balaji Rao, country head of Starwood Capital. The firm plans to invest close to $200 million over the next several months.

It should have been a really good fit. Real estate developers are facing a cash crunch after the RBI raised the risk weightage on commercial real estate loans to 150 per cent.

“Yes, the number of deals has not been high,” said Anuj Puri, MD of Trammell Crow Meghraj Property Consultants.

“There are two reasons for this,” said Puri. “First, land owners’ or developers’ expectations have increased. They are asking for a premium on the price they have bought the land at. Second, the due diligence process is long and tedious and the funds can find this irksome.”

The problem is not just with small real estate developers. “A year back, the situation was different. It was mainly the tier II developers who were facing this problem. Now, even tier I developers face a problem. The funding requirements of tier I developers are huge and they are taking larger positions. As a result, deal sizes are bigger, but it is taking a long time to conclude,” he added.

The time factor

“We are more interested in a long-term relationship. If we decide to invest, we first evaluate the project, the developer, carry out due diligence and it is a fairly long process. Developers are looking more at short-term relationships. So, yes, there is a dearth of deals,” added Anandjit Sunderaj, CIO of TCG Real Estate.

The company is in the process of closing its $500-million India real estate fund. The increase in risk weightage on real estate lending by banks has had mainly two implications: first, the cost of borrowings has gone up by at least 50 basis points and, second, banks are becoming careful in selecting developers and projects for debt lending.

Result: small-time developers are facing difficulty in raising bank loans.

“This situation means that real estate projects can leverage less, and hence would have to rely on equity funds to finance their projects. However, these funds prefer developers with good land parcels,” said Sunderaj.

Developers’ dilemma

The developers also have their cup of woes.

“The situation in India is very different from the rest of the world. Approvals take more time here... International funds don’t understand that,” said Mukesh Patel, head of Neelkanth Group. “Besides, these funds are looking at a three to five-year time frame, while we want to get into a five to seven-year time frame.”

Nitin Gupta, associate director at PricewaterhouseCoopers, said, “Over the last three to six months, at least 10 to 15 deals have been closed and funds released.”

“The challenge is to strike the right deal with a developer who is able to provide a professional working environment for investors. Developers need to understand the synergies that could accrue from such relationships rather than focus on maximum entry valuation,” said Archana Hingorani, ED of IL&FS Investment Managers Ltd.

News: Videocon inks deal to acquire Daewoo Electronics

(PTI 23/10/2006) Seoul - India's largest electronics firm Videocon on Monday said a consortium led by it has reached an agreement to acquire South Korea's debt-burdened Daewoo Electronics for $700 million (Rs 3,150 crore).

The agreement was signed on October 20 by a consortium led by Videocon and creditors of the troubled South Korean firm, which was earlier part of the Daewoo Group that wound up in 1999 after running up a debt of about $80 billion.

"The Videocon-led consortium (has) entered into an agreement for acquiring Daewoo (Electronics) at $700 million," a company official confirmed.

Videocon and US-based equity fund Ripplewood had jointly bid for Daewoo Electronics, after it was put on the block by its lenders.

The Creditor Financial Institutions Committee for Daewoo Electronics, said: "The consortium was selected... as an exclusive negotiation partner based on various factors including financial capacity, complementarity of businesses, track record in various acquisitions including commitment toward ongoing investments..."

The deal will mark Videocon's third purchase in the last one year after Thompson's global picture tube business for 240 million euros (about Rs 1,260 crore) and loss-making Indian subsidiary of AB Electrolux, Sweden.

Videocon had taken over Electrolux Kelvinator India in a cashless transaction, wherein AB Electrolux agreed to subscribe to Videocon's GDR worth about Rs 406 crore as part of the deal.

While the Daewoo deal has been on for several months now, the news of the acquisition comes on the heels of compatriot -- Tata Steel -- reaching an agreement to acquire Anglo-Dutch steelmaker Corus in what was described as the largest acquisition by an Indian company abroad.

"The completion of the transaction is subject to various conditions, amongst others the execution of definitive agreement, completion of due diligence, corporate approvals by the buyers and the approval of the Korean authorities including the Fair Trade Commission.

Daewoo Electronics had last month said that the takeover move was the "only realistic option" to save the country's third largest electronics group, which is now in the seventh year of a debt workout programme.

News: 'Clutch of directors holds sway in India Inc'

(BL 23/10/2006) New Delhi - India Inc's top management might not be as broadbased as is generally thought. An analysis of the board compositions of around 1,500 companies listed on the BSE shows that 58 individuals occupy over 10 directorship positions each in these firms, with several of them holding up to 15 directorial slots.

Most of those occupying a large number of directorial positions are seen to be generally holding non-independent director positions, but are not involved in the day-to-day running of these companies.

According to data compiled by Prime Database, the largest number of directorial positions occupied by a single individual is 15, with four such persons in the list of the firms surveyed.

A majority of those holding the largest number of directorial positions are either chartered accountants or corporate lawyers.

Prominent among them is 92-year old Field Marshal Sam Manekshaw, who is a Director on 12 company boards including Britannia Industries and Nagarjuna Fertilisers and Chemicals.

The HDFC Chairman, Deepak Parekh, and the Development Credit Bank Chairman, Nasser Munjee, are on 13 company boards each.

G.P. Goenka is on the boards of 12 companies, including Nicholas Piramal India and Gujarat Carbon and Industries.

Ratan Tata, who is on the boards of the Tata Group companies and also holds an independent Directorship on the board of Bombay Dyeing, and Kumaramangalam Birla, are on the boards of 11 companies each.

Equity investor Rakesh Jhunjhunwala is on 10 boards.

The data, which combines the lists filed by various listed companies on directorships held by each individual, excludes most private limited companies and firms that are not listed on the stock exchanges.

News: And now, Indian education malls in the offing

(BL 23/10/2006) New Delhi - Taking forward the concept of dedicated malls, the GTM Group will set up 10-12 malls across the country for the education sector in the next few years. The project will leverage the current boom in educational institutes and the initiative is to make India an education hub in the future. To start with, the Delhi-based company is constructing a 10,000-sq-m mall in Jaipur, at an investment of Rs 60 crore. The mall will bring as many as 60 colleges and institutes under one roof. "It will be a hub of educational bodies and will not have more than two colleges of the same stream," said Avinash Keswani, Vice-President, Marketing, GTM Builders and Promoters Pvt Ltd. On the choice of Jaipur, Keswani said, "The city attracts students from not just Rajasthan but also from Delhi, Madhya Pradesh and other adjoining States. It has been witnessing a 20-30 per cent annual growth in student arrivals for the last several years and the growth is likely to continue." Diwali special: Hot products The company will provide pick-up and drop facility for students for up to five km radius. The property is slated to be ready by the end of 2009, when the company will look at setting up more such educational hubs in the country. The company has acquired land and construction will begin by early next year. Other properties to be developed include "Golf Greens" in Jaipur. It will be spread over 14 acres and will have 92 per cent of open land. It will have a total of 80 premium dwelling units to be priced at Rs 1.15 crore each. GTM's turnover stood at Rs 700 crore last fiscal and is expected to touch Rs 1,200 crore by the end of the current fiscal.

News: RBI keen on mobile banking

(BL 23/10/2006) Hyderabad - Banking transactions through mobile phones could soon become a reality, going by Reserve Bank of India plans.

RBI Governor Dr Y.V. Reddy has said that experiments are currently on at the Institute for Development and Research in Banking Technology (IDRBT) on using mobile telephony technology for banking transactions.

He was speaking to newspersons on the sidelines of the `International Seminar on Payment and Settlement Systems' organised by the Bank for International Settlements (BIS), Switzerland in association with RBI and IDRBT.

According to him, technology - mobile technology in particular - helps in bringing the masses into the overall financial system and in ensuring easy financial inclusion.

Mobile telephony makes the financial transactions quicker, safer and cheaper, he added.

However, he was quick to add that the RBI would consider using mobile technology for financial transactions provided there are adequate safeguards.

"We have to make sure that there are enough safeguards. We have to check its feasibility, the security and safeguards, including the know-your-customer norms."

Earlier, addressing the bankers, he said that one of the recent technological advances that had a significant positive impact on the payment systems related to chip-based processing. The integration of smart cards with mobile phones holds exciting promises for the future.

"Perhaps the payment and settlement chain may soon witness a sea change with the bank account transaction being initiated through a mobile phone, followed, within a few seconds, by the inter-bank settlement effected in Central bank money. If and when that happens, the benefits would accrue to all concerned."

News: $2 b of USO Fund unutilised in India

(BL 23/10/2006) Singapore - India accounts for nearly 50 per cent of the money lying unused in various Universal Services Obligations funds across 15 developing countries.

Of the $ 4.4 billion lying unutilised across countries such as Brazil, Malaysia and Pakistan, the Indian USO Fund has nearly $ 2 billion waiting to be pumped back into the telecom sector, according to a new report released by the GSM Association.

Indian operators also contribute the highest amount for universal services compared to their counterparts in other developing countries. The report on universal access said that India and Brazil account for 78 per cent of the money collected by the various USO Funds.

"A total of 15 funds in the developing markets that have already levied and distributed resources were studied in detail.

They have collected a total of approximately $ 6.2 billion from operators, beginning in the late 1990s but mostly since 2001-02.

As much as 78 per cent of the total collections ($ 4.8 billion) came from two countries (India and Brazil), 9 per cent ($ 548 million) from Malaysia and 2 per cent ($ 111 million) from Peru.

The remaining 12 countries totalled less than 12 per cent ($ 725 million). The total contribution of mobile operators to this amount has been $ 2.1 billion, approximately one third," said the GSMA report.

Higher revenue share

The Indian operators also pay a higher revenue share to the USO Fund compared to other countries.

While the Government in India has set a USO Fund levy of 5 per cent of the operator's revenues, most other countries such as Venezuela, Peru, Brazil, Argentina and South Africa charge only one per cent of the annual revenues from the operators.

However, despite the high rate of revenue share and the huge amount of money lying unused in the USO Fund, India still has low telephone penetration. While telephone density in India is around 15 per cent, countries such as Kazakhstan, Malaysia, Chile and Argentina have more than 40 per cent mobile penetration.

While the Government has taken a decision to allow mobile operators to take benefit from the USO Fund,

GSMA said that the policy needed to be market friendly to induce operators to make use of the fund. GSMA also said that other duties and regulatory charges in India are also extremely high and this combined with low tariffs meant low cash flows for mobile operators, which may hold back expansion in rural areas.

News: Ratan Tata plans to retire; 'heir' yet to be identified

(PTI 22/10/2006) New Delhi - Chairman of Tata Group Ratan Tata has said he plans to retire but has not identified his successor yet.

Asked whether he plans to retire at some point, Tata told the New York Times in an interview yesterday that he has plans but his successor has not yet been identified.

"I'd like to retire when I can still walk and play golf and fly and do all the things that I like to do," the 68-year old chairman of the Tata Group said.

News: Tata plans to expand in Africa, EAsia & LatAm

(PTI 22/10/2006) New York - Tata Steel's $7.7 billion acquisition of the London-based Corus Group may be the largest foreign deal by an Indian company, the conglomerate, however, is not about to rest on its laurels, so to speak.

The group plans to expand its growth into countries in Africa, East Asia and Latin America, its chairman Ratan N Tata has said.

In an interview with New York Times in London on Friday, Tata said the company's next moves include some far-flung markets.

The Tata Group, the parent of Tata Steel, is looking to expand in Vietnam, Indonesia, South Africa, Brazil, Argentina and Uruguay, he said.

Tata invests in countries where "we can make our presence felt," where the company already has products that fit the needs of the country or the market has been too small to attract other global conglomerates, the 68-year-old chairman of the Tata Group said. "We're not just blindly growing turnover and growing scale." With the deal, Tata, until now the 55th largest steel maker in the world, will become the fifth largest. The Tata Group also owns auto manufacturing, consumer goods, energy and technology companies around the world.

Tata is paying 455 pence a share for Corus. Tata said his company had spent a long time weighing the deal. "What we have today is the evolution of almost a year of discussions," he said.

He ultimately decided to do the deal because he had been impressed by the similarities in management at both companies, and by Corus's turnaround in recent years.

News: BBC to outsource accounting, financing to India

(PTI 22/10/2006) London - British Broadcasting Corporation is outsourcing some of its accounting and financing services to India in a move aimed at saving 20 million pounds a year for the next decade.

"The BBC is taking advantage of the significant savings of globalisation while maintaing the benefits of more local customer support," the Corporation said today. The contract, which includes managing payroll and financial management, has been won by Xansa. Xansa will provide customer support services from the UK, but other roles will be performed at its Chennai offices. Savings will go towards the BBC's target of releasing 355 million pounds to be invested in programmes and services. The contract was previously held by another private organisation, Medas.

News: India to witness big CEO churn

(PTI 22/10/2006) New Delhi - India Inc will witness a big churn of CEOs in the next few years considering the amount of changes it has seen in the past five years, global executive firm EMA Partner International has said.

A study done by the firm stated that in the past five years 66 per cent of companies in India have changed their CEOs, with MNCs having the highest percentage at 86 per cent.

"We expect the attrition rate to go up, especially in certain sectors like financial services, ITEs and BPO, which are in the process of maturing," EMA Partner International managing partner K Sudarshan told PTI.

He said even a mature sector like manufacturing will see changes as many of the stable CEOs, who had been at the helm for a long period, will be retiring in the next few years.

"The manufacturing sector will have to look at younger people as replacements for the old guard who are set to retire in the near future," he said.

According to the EMA study, 57 per cent of Indian business houses witnessed change in CEO in the past five years, while that of MNCs stood at 86 per cent.

The IT/ITEs sector saw the highest rate of change of CEO at 88 per cent followed by banking at 70 per cent, pharma (67 per cent) and FMCG (61 per cent).

Sudarshan said even emerging sectors like retail could have an impact on the rate of change of CEOs as it would try to poach experienced people from sectors like FMCG and telecom.

The EMA study said CEO changes in India were primarily led by resignations (41 per cent) or retirement (24 per cent).

News: ONGC discovers huge oil resources in Mizoram

(UNI 22/10/2006) Aizawl - Mizoram Chief Minister Zoramthanga said that the Oil and Natural Gas Corporation (ONGC) has identified a huge oil reserve in a 5000 sq km area in Hortoki.

''We have requested the ONGC to carry out exploration in the state, which would contribute to the development,'' the Chief Minister said.

He said, ''Hnahthial area also has a huge oil reserve and a global tender has been floated for exploration works. Twenty per cent of the profit would go to state's revenue provided Mizoram is a share holder.'' Besides, the Ministry of Petroleum has already directed the Directorate General of Hydrocarbon (DGH) to explore natural gas to start a mega project in the state.

Following the initial survey by the National Geophysical Research Institute (NGRI), the DGH has conducted various surveys in the region to identify oil reserves.

News: 'India is facing a dearth of talent'

(HT 20/10/2006) Mumbai - “India is now-a-days facing a dearth of talent,” said Chairman of Godrej group of companies Adi Godrej, at a function organised by the University of Mumbai, on Friday. The function was held a part of its ongoing 150-year celebrations.

Godrej said that this talent crunch could be met only if more research programmes are encouraged in the institutes of higher education, he added.

Sighting the example of how the involvement of private players has changed the face of telecom industry in India, Godrej insisted that privatisation of higher education should be encouraged. "The government should strive towards improving the plight of primary education specially in the Eastern region of the country," he explained.

Focusing on the recent trends in industry, Godrej discussed how more and more students from the foreign universities are seeking summer trainings and internships in the Indian companies.

"But, that hunger to go out and experience the market is missing in the Indian students," he shrugged. He repeatedly focused on how higher education in India needs to grow bigger and better specially because India was moving towards a "knowledge-based economy".

Meanwhile, speaking in favour of reservation in private sector, he said, "Reservation should be done in terms of providing opportunity," Godrej however, advocated reservation for women more than anybody else.

"Women in India are the most under privileged but there is not much being done because of vested political interests," he signed off.

News: India Inc`s leitmotif

(BS 21/10/2006) Mumbai - India Inc has been quick to celebrate the Tata-Corus deal. Sajjan Jindal, vice-chairman and MD of JSW Steel, said the deal was good for Tatas and India. It might not have a direct impact on the domestic steel industry but would improve India's position in the global market, he said.

"We are also looking around. If there is anything that matches our size and biting ability, we will look at it,” Jindal said.

JJ Irani, former managing director of Tata Steel under whose leadership the firm first became a global least cost steel producer, said, "This is a great and exciting opportunity for Tata Steel to become one of the leading steel companies in the world. We sincerely believe that Corus and Tata Steel share the same values and will become a very effective team worldwide."

The Confederation of Indian Industry hailed it as the leitmotif of a confident India Inc and its 'internationalisation'.

According to R Seshasayee, president, CII, "The agreement is a sign of a confident India Inc being recognised as a very significant global economic player. The internationalisation of the Indian corporate sector has reached a new high with this landmark deal."

In times to come this trend would become the rule rather than the exception, he added.

The Tata-Corus deal signified three things, according to Sunil Kant Munjal, past president, CII. One, Indian companies, especially larger corporates, are actively pursuing their global aspirations. Second, groups such as Tatas are showing leadership in many fields. And, thirdly, the steel industry seems to have come of age having been at the beginning of consolidation last year.

"This is a pre-cursor to what we can expect over the next three-four years," Munjal added.

News: Zee plans wider global footprint

(BS 21/10/2006) Mumbai - To make Zee Telefilms a global broadcasting network, its chairman Subhash Chandra will launch channels in various languages across the globe.

Chandra’s Zee Telefilms is all set to launch a Russian entertainment channel in Russia and a local language news channel in Indonesia. This is the first attempt by an Indian broadcaster to launch entertainment channels in an international market in the local language.

Indian news channels like Star News, Aaj Tak and NDTV have launched international versions in markets like West Asia and Europe. NDTV recently entered into a joint venture with Astro Networks to launch news channels in Indonesia and it is also expected to launch news channels in Malaysia.

“India does not have a global broadcasting venture. It is time we started to think global in the entertainment business, too. Zee as a broadcaster will be offering content to an international audience. We will be launching more international channels,” Chandra said today.

Two years ago, Chandra had announced Zee Telefilms was taking steps to become a global network, broadcasting across continents and in different languages.

“Since then, we have been taking gradual steps in this direction. We have launched a news channel in English from Dubai aimed at the Commonwealth nations,” he said.

News: Foreign target - No full stops for Tatas

(TT 21/10/2006) Mumbai - The spate of overseas acquisitions by the Tatas in the last six years has given the group formidable knowledge of the processes relating to foreign takeovers to embolden it to make a successful grab for Corus with a £4.3-billion offer that dwarfs the sum of £271 million paid to acquire Tetley UK in 2000, according to analysts.

International operations, including exports, now account for roughly around 30 per cent of the revenues of the Tata group. This could rise to over 50 per cent as other companies of the group eye overseas acquisitions. Unconfirmed reports say that both Tata Motors and Tata Consultancy Services (TCS) could soon announce overseas acquisitions. There is also the possibility of other group companies, such as Indian Hotels, Tata Tea, Tata Chemicals, buying foreign companies.

“The Indian economy has been in a robust shape, companies are doing extremely well and they want to grow further through both the organic and the inorganic route. Even as money is not an issue, the Tata group has been so far successful with the companies that they have acquired. They have not faced any integration problems. That explains why Tata Steel acquired a company that was several times its size,” said a merchant banker.

Sources said that leading companies from the group, such as Tata Steel, Tata Motors, Indian Hotels and Tata Tea, have strong balancesheets to support acquisition, with additional ballast provided by Tata Sons, whose current investments are valued at around $50 billion.

Since 2000, the Tata group has made 28 acquisitions in India and abroad. The acquisition of Corus marks a giant leap for the group as the bid sum of £5.3 billion is more than the combined sum for other takeovers.

It was only in August when another Tata group company,Tata Tea, picked up 30 per cent in Glaceau, the US bottled water company, for $677 million, which was, so far, the largest deal by an Indian company in the private sector.

On the other hand, Tata Steel, which is acquiring Corus, established itself as one of the strongest pan-Asian steel manufacturing groups by formalising its partnership with NatSteel Asia Pte Ltd (NatSteel Asia) in February 2005. The company acquired 100 per cent in NatSteel Asia Pte Ltd, which has assets in Singapore, Malaysia, Thailand, Vietnam, the Philippines, Australia and China, in a deal worth Singapore $486.4 million.

News: Smaller Indian cities get Visa power

(DNA 21/10/2006) Kolkata - India has emerged as the fastest-growing among eight key Asia Pacific markets for Visa, with tier-II and tier-III cities reporting higher card transaction volumes.

According to a recent Visa International study, Gurgaon, Cochin, Vijaywada, Ghaziabad, Indore, Madurai, Lucknow and Ludhiana are among the cities showing a notable surge in usage of plastic money.

While the bulk of the cardholders are still in the top 8-10 cities, card issuance in the tier II and III towns and cities has grown, riding on the growing reach of private and public sector banks in these locations.

“The Indian payment industry has matured over the past few years. With products like pre-paid and debit cards being introduced, access to and availability of cards have become much easier for a larger section of the population. Visa expects a double-digit growth rate for both card sales volume and retail sales volume in India,” Santanu Mukherjee, country manager, South Asia, Visa International Asia Pacific, told DNA Money.

“The key challenge in these smaller towns and cities is that card penetration has to catch up. Preference for cash is also a key challenge that needs to be addressed. Infrastructure is still lagging behind for acceptance of payment cards and industry-wide initiatives are necessary to ensure that the acceptance infrastructure is in place,” he said.

While Visa does not interface with cardholders, it has initiated technological and infrastructure activities to capitalise on growth potential through expanding network of its member banks.

News: ABN, Deutsche set for step up in India M&A roles

(RTR 21/10/2006) Mumbai - ABN AMRO and Deutsche Bank are set to leapfrog up the M&A advisory table in India from the bottom, thanks to Tata Steel Ltd.'s acquisition of Corus Group Plc for $ 8.04 billion.

Bankers say Credit Suisse Group, which has been cranking up its activity in India this year after a regulatory suspension in 2002, would also use this opportunity to showcase its services after advising Anglo-Dutch steel maker Corus.

Tata Steel won approval from Corus on Friday for its takeover bid, which will propel Tata to the position of the world's number five steelmaker from 56th currently.

The biggest ever acquisition by an Indian firm, local or international, has left the big boys of investment banking, Merrill Lynch, Morgan Stanley and Citigroup, battling to retain their positions in India's increasingly lucrative mergers and acquisitions field.

The Tata group has long dealt with JM Morgan Stanley, the Indian joint venture of Morgan Stanley, and DSP Merrill Lynch, so choosing the Dutch and German banks was unusual.

"It was I think ABN's involvement with Corus's aluminium business sale," one banker said. "ABN had known the Corus management and what they wanted, they probably brought both the parties together."

Corus sold its downstream aluminium business of about $894 million earlier this year, advised by the Dutch bank.

The banker said Deutsche Bank had also approached Tata with a proposal for a steel joint venture somewhere in Europe.

Another person associated with the deal said both ABN and Deutsche had gone to the Tatas independently.

"And Tatas said since both of you are talking something similar, why don't you work together," he said.

Citigroup and Merrill topped the Dealogic M&A deal league table for India in the first half of the year, with deals worth $ 2.14 billion and $ 1.95 billion respectively.

The Tata-Corus takeover could push Deutsche Bank to the top of the Dealogic table by the year-end from 10th in the first half. Previously, ABN AMRO did not even figure among the top 10 M&A advisors but it began to make its mark when the Mumbai and Delhi airport privatisations got underway earlier this year.

"With this deal and the $ 2.5 billion airport privatisation deal, ABN could also end up among the top three in M&A," the banker said.

TATA EXPERTISE

Some bankers said the Corus deal idea originated within the Tata group itself, with Tata Steel managing director B. Muthuraman on the prowl ever since he took charge in 2001.

Tata Steel acquired NatSteel of Singapore and Millennium Steel of Thailand in the past two years, which boosted its capacity by about 3.5 million tonnes.

"I don't think Tatas needed much advice on the deal in terms of the industry and valuations," said R. Sankaran, a former investment banker for two decades. "It could be that Tatas just wanted funding from these banks, which is why you did not see plain investment advisors."

But moving from two small Asian buys to targeting a company four times its size in revenue terms was an ambitious leap.

"It was not the question of revenues, it was the market value," said another banker involved in the deal.

"Despite the size, Corus was valued less than Tata Steel when we first thought of the deal."

Both companies were valued at about $ 6 billion before the talks became public earlier this month.

News: 'Tata-Corus deal, sign of a confident India Inc'

(PTI 21/10/2006) London - The Confederation of Indian Industry (CII) has said the Tata Steel-Corus deal is a sign of a confident India Inc and reflects the consolidation of the Indian industry in the global economy. CII President R Seshasayee said the Tata Steel-Corus deal is a sign of India Inc being recognized as a very significant global economic player.

The "internationalization" of the Indian corporate sector has reached a new high with this landmark deal," he said. Sunil Kant Munjal, past president, CII, said the deal signified three things -- Indian companies, especially larger corporates, are actively pursuing their global aspirations, the groups like Tatas are showing leadership in many fields and the Indian steel industry seems to have come of age having been at the beginning of consolidation last year.

"This is a pre-cursor of what we can expect over the next 3-4 years, he said. Rajive Kaul, past president, CII and chairman, CII International Council, said the deal is reflective of the consolidation of the Indian industry in the global economy.

CII chief mentor Tarun Das said this is the first scaling up of an Indian company to global scale. The deal "reflects the Tata philosophy. It is a result of a dialogue between Tata Steel and Corus, the whole strategy is a reflection of the Tata philosophy of working with partners, with values and ethics. It is a different role model of acquisition and it is unique."

Echoing the sentiments, D S Brar, Chairman, CII Indian MNCs Council, said "there is tremendous growth potential for Indian MNCs. Change in domestic environment has encouraged and propelled Indian companies to go global".

He said the Indian corporate sector had witnessed active overseas investment in diverse sectors since 2005-06, with top ten overseas investments totaling USD 4556 million. It is in keeping with this trend, said Brar, that CII and Infosys together have launched the plan to create 100 Indian MNCs.

The Initiative will provide an "ecosystem" for entrepreneurs and Indian companies to accelerate their growth as successful next generation billion dollar MNCs.

The CII-Infosys initiative will include sharing of practical experiences of successful Indian MNCs mentoring, introducing global best practices, involve knowledge partners and finally nurture aspiring MNCs.

CII and Infosys have received as overwhelming response to the programme and companies like the ICICI Bank have already shown interest in partnering with them.

There are 37 companies in India with a turnover of over 1 billion US dollars. The programme aims to explore the potential of leveraging their experience. The successful companies will help in mentoring the aspiring 100 Indian MNCs.

News: 'Entrepreneurial chase' begins for Rs 1-lakh car

(TNN 20/10/2006) Kolkata - Tata Motors is understood to be considering an “entrepreneurial development” model for manufacturing its Rs 1 lakh people’s car. The company plans to select “potential entrepreneurs” across the country to assemble the car under its direct supervision. The company spokesman said he wouldn’t like to comment on the issue.

All the same, information seeping through suggested that this was being done for a “purely social cause” whereby Tata Motors will provide a completely knocked down package for the entrepreneur to assemble.

The corporate communications department deftly side-stepped the more sensitive aspects of the issue and, when grilled, preferred to come out with a statutory one-liner: “No decision has yet been taken”. Be as it may, the rough blueprint maybe something like this : The proposed plant at Singur will manufacture the complete car and market the same all over the country, sticking to the ticket price of Rs 1 lakh. And now hold on to your seats, for this is the funny part.

Should demand for the car explode to unmanageable proportions (some of those in the company who spoke to ET felt it will), at least more than what the rollout from the West Bengal plant can handle, these entrepreneur-led assembly lines would come in handy so that the car reaches the end customer smoothly and on time.

So why not expand the operations of the West Bengal unit itself should that happen? Well, there isn’t an answer to that yet from the company’s side and then there’s also the social benefit angle, whereby one expects the company to generate more employment opportunities elsewhere also.

All of this of course is still in the realms of possibility, including the West Bengal plant — for land hasn’t yet been handed over to Tata Motors and there is such a controversy snowballing by the day as the farmland acquisition issue at Singur in Hooghly gets increasingly wedged in a political turmoil that’s working at cross purposes.

But, Tata Motors is understood to have already issued letters of intent to various component suppliers, who will be the vendors in the proposed Singur project. Delhi-based Sharda Motor, for example, is one such which confirmed receipt of an LoI for “suspension parts of the Rs 1-lakh people’s car’. The vendors, according to the original design, will be housed in a park of some 300 acres close to the Singur plant.

“While it is true that vendors are being chosen, we cannot disclose their names. We cannot say who will set up units at the vendor park” said a Tata Motors spokesman.

Udayan Banerjee, executive director of the Rs 400-crore Sharda Motor was quite upbeat. “We have a long standing relationship with Tata Motors. We provide catalytic converters to the company. Our company is the sole supplier of exhaust system for the Tata Indigo car” he gushed. He felt that all vendors who “supply components to Tata Motors will have to set up units at Singur”.

News: India plans to roll out uniform tax regime in'10

(TNN 20/10/2006) New Delhi - Decks have been cleared for the roll out of the goods and services tax (GST) regime from ’10. The Planning Commission has also broadly endorsed the finance ministry’s view in the approach paper to the 11th Plan document.

The commission has gone by the suggestion made by the committee appointed by the finance ministry to work out a roadmap for the GST regime. With the Plan Panel going by the finance ministry’s recommendation with regard to the rollout, the issue may now be added to the reference of the empowered committee of state finance ministers, which is working on the implementation of VAT across the country to replace sales tax. The committee will be expected to work out the modalities of introducing the tax.

GST has been flagged off in Budget ’06 as the next big tax rationalistion measure in indirect tax after the introduction of state-wide VAT. GST will mean that all states and Centre will have a uniform rate of goods tax and a similar rate for services tax. The idea is to ensure a clearly spelt-out tax regime in the country for trade and industry.

The tax was proposed by the Kelkar Committee to reform the tax structure in the country. It is expected that GST will substantially reduce the incidence of indirect tax on goods and services from the current 28-30 % to about 24%. But, as the economy is moving on a high growth path, this will ensure a larger volume of tax receipts than now.

The GST roadmap is linked to the successful implementation of the time line for the Fiscal Responsibility and Budget Management Act and the phaseout of the central sales tax before ’10.

On Wednesday, Prime Minister said that the expenditure commitments cannot undermine the FRBM roadmap, which is expected to be achieved by the end of fiscal ’08-09. States have currently introduced differential value-added tax rates which has emerged as a big issue.

News: Oberoi group holds up DLF-Hilton JV

(TNN 20/10/2006) New Delhi - The fate of the proposed joint venture between Hilton International and DLF appears to be hanging in balance as the US hospitality major’s existing partner in India has raised objections to the venture. The Oberois, who have an alliance with Hilton for using the Trident Hilton and Hilton Towers brands, are learnt to have indicated that the new JV will be prejudicial to their existing business in relation to their alliance with Hilton.

According to sources, the Oberoi group is yet to furnish its nod for the new alliance. The group has asked time till October-end to sort out issues related to the new relationship on the existing arrangement with Hilton International. When contacted by ET, SS Mukherjee, managing director, East India Hotels, the flagship company of the Oberoi group, said: “At this point of time, we have neither agreed nor declined to give our consent. We have certain apprehensions and need more time to sort them out.”

Currently, the Hilton-Oberoi alliance is a marketing arrangement whereby the Hilton group markets the eight Trident-Hilton properties and Hilton Towers Mumbai in international markets. The arrangement includes a clause that there would not be any other Hilton property within certain territorial limits. This ‘area of protection’ — as it is commonly known in trade parlance — differs from location to location, depending on the market capability of each city.

What this effectively means is that Hilton will not be able to have another property in the vicinity of an existing Trident-Hilton. One of the Oberoi group’s apprehensions is how Hilton would market the Trident properties internationally, while maintaining its brand positioning vis-à-vis other forthcoming Hilton brands entering the country. The Oberoi group is currently looking at extending the Trident-Hilton brand to other cities, including Mumbai, Hyderabad, Kolkata and Chandigarh. There are Trident-Hilton properties across Gurgaon, Udaipur, Cochin, Bhubaneshwar, Chennai, Agra and Jaipur.

According to sources, Hilton’s other partner in India, PN Writer & Co, has given its consent to the proposed Hilton-DLF joint venture. Hilton has a hotel management deal with PN Writer & Co, which is setting up a resort in Shilim in Maharashtra under ‘Shilim Retreat by Hilton’.

News: 80 new luxury hotels coming to Delhi, Mumbai

(HT 20/10/2006) Mumbai - To meet the needs of a rapidly growing economy and a sharp rise in domestic and international travel, there as many as 32 new branded hotels coming up in Mumbai some of them in the closed textile mills, and 47 in the Delhi NCR region over the next 5 years.

Even Pune has 25 branded hotels and 4,600 rooms under development. The countrywide hotel boom could add on a gargantuan 55,366 new hotel rooms – more than double the existing stock of 22,400.

Even if, as expected, 40 to 50 percent of these are under construction or achieve completion by December 2008, the country will have 20,000 to 25,000 new hotel rooms ranging from the luxury to the ‘budget’ class by the end of the decade.

Some of the international brands that are part of the hotel growth programme in Mumbai include Four Seasons, Mandarin Oriental, Sofotel, the Aman chain and Marriott, while in Delhi the big names are Crown Plaza, Novotel, Grand Hyatt and Leela Ventures.

Bangalore, on the other hand, will see three Shangri-La hotels, the Golden Tulip brand, a Novell and a Radisson, said Manav Thadani, MD of international hospitality consultancy firm HVS International.

Contrary to the popular perception that there is an oversupply situation for hotel rooms, market tracking by HVS International – the hospitality consultancy and appraisal firm – shows that despite a sharp rise in hotel rates, the all-India occupancy touched a new high of 71 per cent.

“Many cities were completely sold out on a number of weekday nights, resulting in hotels taking their rates up sharply. The largest increases were seen in the luxury segment,” says the report. This is despite hotel tariffs being hiked annually 20-25 per cent.

According to the HVS survey, Mumbai will add on 3,000 hotel rooms to the existing 7,400 while Delhi-NCR is likely to double its stock from the existing 7,000 to as many as 14,000 by 2008.

“HVS surveys indicate that the supply of hotel rooms is far too inadequate in Mumbai Chennai, Hyderabad and Goa,” said Manav Thadani, adding that: “Delhi, Jaipur and Bangalore however will have to exercise caution as there are too many proposed projects.”

Predictably the biggest growth expected is in the two IT capitals of Hyderabad and Bangalore that will see an increase in hotel supply rising five-fold and four-fold, respectively.

However, the Commonwealth Games in 2010 has powered the largest actual growth of hotel development in the Delhi-NCR region.

Gurgaon and neighbouring Noida will see the bulk of the development in the form of 47 new hotels and 10,800 rooms adding on.

The pressure of the Commonwealth Games has led to a perception of severe shortage in Delhi which in turn has pushed the Delhi Development Authority to auction sites that are mediocre, says the report.

“Due to the the hype in proposed hotel shortage a few recent auctions have gone at prices which do not justify hotels to be financially viable.”

The HVS International study identifies Goa as the favoured leisure destination offering big opportunities for investors in the hospitality business. Goa’s proposed hotel supply will rise 117 per cent but a low 18 percent will actually get developed, says the report.

The hotel boom, according to Thadani, is riding on a robust 8.4 percent growth of the economy that has opened up international business interaction and travel.

This is supported by a big growth in tourism and air travel. The number of domestic and international passengers has risen 15-fold to over 73 million in 2005-06 from 1970, while both domestic and international air traffic grew 17 percent over the previous year.

News: Ratan Tata to be the chairman of merged Tata-Corus entity

(Sify 20/10/2006) London - Ratan Tata, chairman of Tata Sons, will be at the helm of the merged entity called Tata Steel and Corus after the board of the Anglo-Dutch company accepted the Indian steel major's $8 billion takeover bid on Friday.

The final details are now being agreed upon and a formal announcement is expected later, when Ratan Tata addresses a press conference in London Friday evening.

Corus acquisition is to be made via the U.K subsidiary, and all board members of Corus management will stay.

B Muthuraman, MD of Tata Steel disclosed that Ratan Tata will be the chairman of both the companies. He said, "both the companies have similar work cultures and that they are looking at smoothest integration in a short span.”

Corus officials Philippe Varin, Schraven and Hayward will join the Tata Steel board while Muthuraman, Ishaat Hussain and Arun Gandhi would be on the Corus board. Both companies had a strong cultural fit, Muthuraman added.

News: India Inc hails Tata-Corus deal

(PTI 20/10/2006) New Delhi - Upbeat over an agreement reached by Tata Steel for acquiring Corus Group in an $8.09 billion deal, the biggest by an Indian company abroad, domestic steel players hailed the takeover as a stamp of authority of Indian entrepreneurs in overseas market.

According to India's largest steel producer Steel Authority of India Limited, the takeover shows the confidence of Indian entrepreneurs.

"It shows the competitive and financial strength of Indian entrepreneurs to go overseas and acquire assets," Sushil Maroo, Director (Finance), Jindal Steel and Power Limited said, similar feelings were echoed by SAIL Chairman SK Roongta who added that it shows the confidence of Indian entrepreneurs in overseas markets.

Consolidation of steel businesses by NRI steel tycoon LN Mittal and now by Tata Group will help the steel industry to tide over fluctuations in the market. "This is good for the sector and also for the country," Maroo added.

Corus Group's Board backed Tata Steel's 455 pence a share bid to takeover the Anglo-Dutch steelmaker. The deal valued at $8.09 billion would make Tata Steel the world's fifth largest steel producer.

Maroo of JSPL said that the Tata-Corus deal would also fire ambitions of many other Indian entrepreneurs.

News: Tata Steel clinches Corus for Rs 36,500 cr

(PTI 20/10/2006) London - In the biggest foreign takeover by an Indian company, Tata Steel and Corus Group on Friday reached an agreement on the acquisition of the European steel giant by the Indian firm for 4.3 billion pounds (Rs 36,500 crore). The Board of Directors of both the companies approved the acquisition of Corus at a price of 455 pence per share in cash, paving the way for creating the world's fifth largest steel entity with a capacity of 23.5 million tonnes per year. "Corus Directors consider the terms of the acquisition to be fair and reasonable, so far as shareholders are concerned. The Directors intend to unanimously recommend that Corus shareholders vote in favour of the scheme," a joint statement released by Tata Steel and Corus said. The acquisition will be made by Tata Steel UK, a wholly-owned indirect subsidiary of Tata Steel. The Indian firm has also been able to satisfactorily address the concerns of Corus' two main pension funds. "This proposed acquisition represents a defining moment for Tata Steel and is entirely consistent with our strategy of growth through international expansion," Tata Group chief Ratan Tata said.

News: Goldman Sachs may invest $221 m in DLF

(RTR 19/10/2006) Mumbai - US investment bank Goldman Sachs is likely to invest Rs 1,000 crore ($221 million) in unlisted Indian real estate firm DLF, the Economic Times newspaper reported on Thursday, citing unnamed sources.

"Goldman Sachs is bullish on investing in some of the company's ongoing projects, including the one being developed in Delhi," the report said.

DLF's chief financial officer, Ramesh Sanka, told Reuters the report was "absolutely baseless and speculative."

Goldman, which ended an investment banking and broking alliance with Kotak Mahindra group in March, has said it was looking to invest $1 billion in India in the next few years.

News: Everyone wants a slice of Indian retail now

(TNN 19/10/2006) New Delhi - Call it the Reliance effect! The retail boom has sent the aspirations of small regional retailers soaring.

Delhi-based pharmacy chains, Guardian and 98.4, garment retailer Ritu Wears and Bombay Selections, department store Big Jo’s, V-Mart, Gokul Mart and SRS, South Indian durables retail chain Viveks are all engaged in talks with banks, high networth individuals (HNIs) and private equity funds to raise money for expansion. Not surprisingly, scores of terms sheets and investment seeking proposals are floating in the market.

For instance, Guardian Life Care is looking to raise $20m and is in talks with a few PE firms. “We want to put in place 2,000 -3,000 outlets in the next five years and the fund we are raising will help implement our first phase of expansion (600-700 outlets),” says Ashutosh Garg, CMD, Guardian Life Care.

Similarly, South Indian durables retail chain, Viveks, wants to raise around Rs 150 crore to complete its expansion in the South. Subsequently, it has plans to go for an IPO to fund its pan India expansion. Gokul Mart and Bombay Selection are looking for funds to open 10 new stores.

Small retailers have sought the help of financial consultants who can devise innovative ways to raise funds. Says Jyoti Gadia, director of Resurgent India, a management and financial consultancy, which has the mandate from six retailers to tie-up funds, “Banks put forth too many conditions on small players. Under such circumstances, we have to look at new ways of raising funds. Credit card securitisation is one of them.’’ According to him, many HNIs have also shown interest in the retail sector. “Some of the retailers want only Rs 25-30 crore to help them open the first few stores and that’s not much for an NRI,’’ says an industry source.

Even private equity players find the sector interesting as most retailers are no longer single store entities. As they show reasonable scalability, PE firms see a clear exit prospect,” says Devangshu Dutta, CEO, Third Eyesight, a retail consultancy. “On the other hand, small retailers are finally showing appetite for external investors and willingness to share ownership.”

For instance, last month PE fund Actis invested $65m in the Nilgiri’s group, a South Indian food brand. GIC Special investments from Singapore has joined Actis in making this investment. The funding provided by Actis will be used to expand the company’s South Indian franchise network and strengthen its supply chain and distribution capacity as well as to expand the group’s food manufacturing operations.

News: 'India to be workshop of the world'

(PTI 19/10/2006) Haridwar - Lauding the dynamism shown by major Indian firms against global competition, Prime Minister Manmohan Singh on Thursday expressed his government's desire to transform India into the ‘workshop of the world’, just like England once was.

Acknowledging the potential of manufacturing industries towards making the country an industrial giant as well as creating millions of jobs, Singh stressed on the need to turn India into a global manufacturing hub. “The UPA government will do whatever is necessary to realise this goal,” he said while laying the foundation stone of the world’s largest two-wheeler company Hero Honda’s third manufacturing unit at Haridwar on Thursday.

Listing his government's economic policies that have resulted in eight per cent annual growth for the last three years, Singh said that it had been possible because of creation of an environment where creativity and enterprise could flourish. “I am amazed at the dynamism being shown by our industries and firms. Many of them are actually taking over firms in other countries, setting up factories and becoming global companies,” he said. “Firms such as Hero Group represent the future of Indian business and manufacturing,” he said.

The company will invest Rs 1,900 crore in this plant along with ancillaries by 2010. The plant, expected to be operational by mid-2007, will have an initial capacity of 500,000 units that would be scaled up to 1.5 million units by 2010.

Hero Honda Managing Director Pawan Munjal said the initial investment in the plant would be Rs 400 crore, which would see the company produce five lakh units by 2007.

A senior company official said that Hero Honda had put plans and strategies in place to maintain its market leadership in India as it hopes to close the financial year at a double-digit growth.

Munjal said Hero Honda would launch six new bikes in the Indian market by the end of this financial year.

News: Indian mobile operators to replicate 'Grameen Phone' concept

(BL 19/10/2006) Singapore - In a bid to increase rural telecom penetration, the GSM Association Development Fund is in discussion with Indian cellular operators, including Airtel, Hutch and Idea Cellular to replicate the successful model adopted in Bangladesh by Grameen Phone.

The project involves setting up GSM-based mobile PCOs and Internet kiosks in rural areas that can be shared by the village community similar to the Government-sponsored village public telephony and Internet dhaba schemes on fixed line telephones.

Business model

GSMA Development Fund has already conducted pilots with Airtel and is likely to announce the launch of shared access to voice with Idea Cellular this month. Speaking to Business Line at the 3GSM Congress, Dawn Hartley of GSMA Development Fund said, "We are working with the Indian operators to evolve a business model for the rural areas. We have been able to cut down the cost of setting up such shared infrastructure from $300 to $35 per unit."

GSMA fund is using Motorola's emerging markets handset that costs about $20 and loads software on the SIM that turns the handset into a mobile pay phone. Operators will tie up with local entrepreneurs to offer a `business in a box' that contains everything required to start a shared access, including the modified handset, solar power-backed charger and training material. The Fund has undertaken similar projects in South Africa, Kenya and Algeria.

Operators are also embarking on setting up Community Information Centres based on GSM technology, which will enable rural consumers to access high speed Internet. The set up of a GSM connected Internet centre requires a PC and a GSM modem.

Pilots are being planned for such community centres.

The Fund was formed a year ago by all the global GSM operators to look at finding ways to promote cellular phones. It has also developed bio-fuels for powering mobile base stations. An Indian technology company ACME is in talks with the GSMA for offering hydrogen-based cell fuels.

News: Wal-Mart to source goods worth $600 m from India

(BL 19/10/2006) Bangalore - Wal-Mart Stores Inc on Wednesday announced that it is on course to source directly more than $600-million goods in 2006 from suppliers in India for the company's stores around the world. Last year, the company's Indian arm WM Global Sourcing India Pvt Ltd directly procured more than $ 400-million goods from suppliers in India. In addition, Wal-Mart bought a substantial amount of Indian-made goods through importers. Major categories sourced from the country include home textiles, apparel, fine jewellery and house wares, said a company release. Appoints GM Wal-Mart has appointed Rajnish Kapur as General Manager of WM Global Sourcing India to oversee sourcing from India, Nepal and Sri Lanka. Earlier, Kapur was working as Vice-President, Hardlines & Home Division of Li & Fung Ltd, in charge of accounts for several leading retailers. "Wal-Mart's position as one of the leading buyers of Indian products is a position carefully earned over the years through close partnership with our suppliers. We expect that direct sourcing from the region will continue to grow as suppliers in the region are innovative and respond quickly to new trends and business opportunities," said Kapur. Wal-Mart Global Procurement began its activities in India in 2001 with the opening of a sourcing liaison office in Bangalore and this year grew to a full subsidiary with more than 120 associates.

News: 'India to grow by 9-10 % annually in next 5 years'

(BL 19/10/2006) Hardwar - The Prime Minister, Dr Manmohan Singh, on Thursday expressed confidence that the Indian economy, currently growing at an unprecedented 8 per cent for the third straight year, would expand by 9-10 per cent annually over the next five years. "We are targeting a 9-10 per cent annual growth rate in the next five years," he said after laying the foundation stone of Hero Honda's new two-wheeler manufacturing plant here. "The UPA government has put in place policies, which are generating over eight per cent (GDP) growth on an average for the last three years," he said. Singh said the growth rates would be the basis to generate resources needed for the massive investments India plans to make in agriculture, rural development and infrastructure and poverty alleviation. "This growth has been possible because we have created an environment in which creativity and enterprise can flourish and the vitality of our entrepreneurs unleashed," the Prime Minister said, adding that he was amazed at the dynamism shown by the Indian industry. "They are investing on an unprecedented scale and expanding their capabilities to boldly take on global competition. Many of them are actually taking over firms in other countries, setting up factories and becoming global companies," he observed. Dr Singh lauded the Uttaranchal government for taking forward the process of industrialisation. He also complimented the Munjals of Hero Honda for setting up their third plant in the state.