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.

News: Indians among top property investors in Dubai

(PTI 19/10/2006) Dubai - Indians are among the top property investors among non-Arabs in Dubai following British nationals who top the list.

According to the land department, 119 Indians have registered properties in their names - second only to 124 British expatriates.

59 Iranians and 39 Pakistanis are some of the other prominent nationalities to have registered properties with the department.

Sultan Butti bin Mijrin, Director-General of Dubai's Land Department, was quoted in the media as saying 3,164 UAE nationals have registered their properties in specific developments where expatriates have also been offered freehold property ownership by the Dubai government.

"Local governments' investment in property projects have attracted expatriate capital, and helped create unprecedented investment opportunities for UAE nationals and expatriates alike," he said.

News: Le Havre wants Indian ships to make it transit point

(PTI 19/10/2006) Pune - Le Havre, France's largest shipping port in terms of tonnage, looks to attract Indian merchant ships to make it an important transit point in their increasing cargo transport voyages to Europe.

"Europe is going to be a major market for the Indian goods, which will be moved in containers. A multi-purpose and the biggest French port for containerised trades," Christian Leroux, vice-chairman, Port of Le Havre, said here on Wednesday.

"We want Indian exporters and shippers, while moving their goods to Europe, to make Le Harve, the transit point for the cargo," Leroux told reporters.

Located at an ideal geographic location, the port of Le Harve, the fifth biggest in Europe handled 2.1 million containers in 2005 and is equipped with hi-tech systems allowing access to multi-professional data bases, covering all transactions related to cargo transit.

"Port Autonome Du Havre (Port of Le Havre) aims to create an awareness about it among the exporters and shippers of India," Leroux said.

News: Hutch, Idea get nod for pan-India presence

(DNA 18/09/2006) New Delhi - Bharti Airtel, the only all-India global system for mobile communications (GSM) player, is set to face competition now. Applications filed by two other mobile service providers — Hutchison Essar and Idea Cellular — have been cleared by the government for operating across all 23 circles in the country. Both Hutch-Essar and Idea are GSM players.

Hutch-Essar, a joint venture between Hutch Telecom International Ltd (HTIL) and the Essar group, operates its mobile telecom services in 16 circles now. Hutch-Essar has also been permitted to operate its own national long distance (NLD) and international long distance (ILD) services, a Department of Telecommunications (DoT) source said. Hutch-Essar officials declined to comment.

Interestingly, the DoT nod for Hutch-Essar’s all-India presence has come at a time when Egypt-based Orascom has expressed interest to pick up a controlling stake in HTIL, which is a majority joint venture partner in Hutch-Essar. At present, Orascom has around 19% in HTIL, which translates into an indirect 10% stake in the Indian mobile venture, Hutch-Essar. According to sources, Hutchison Whampoa, the Hong Kong-based holding company for HTIL, is against selling a controlling stake in HTIL to Orascom. The National Security Advisor had written to the DoT saying that the Orascom stake in Hutch-Essar could be a threat to the country’s security as it has operations in Pakistan and Bangladesh.

It is learnt that Aditya Birla group’s Idea Cellular too has been granted permission to operate its mobile telecom services in all 23 circles. Idea already has licences for 11 circles and operates in 10 circles, the latest being Rajasthan. The company applied to DoT for the remaining 12 circles a few months ago. Recently, Idea got the licence for the Mumbai circle. Right now, it operates only in one metro-Delhi.

Besides Delhi, Idea has services in Haryana, UP (West), Gujarat, Maharashtra, Madhya Pradesh, Andhra Pradesh, Kerala, Himachal Pradesh and Rajasthan.

While Bharti Airtel is the only GSM telecom player to be present across all 23 circles in the country, Bharat Sanchar Nigam Ltd (BSNL) is present in all circles except in Delhi and Mumbai, which are the territories of its sibling Mahanagar Telephone Nigam Ltd (MTNL). CDMA player Reliance Communications is present across 21 circles and the group’s GSM business Reliance Telecom operates in the remaining two circles of Assam and North-East, among other places.

Another CDMA player, Tata Teleservices, does not operate in J&K, Assam and North-East.

Among GSM players, Bharti leads in subscriber numbers at over 27 million, while Hutch-Essar has around 19.4 million and Idea over 10 million users.

There are a total of 23 geographical circles across the country. Besides the four metros, there are three circles-A, B and C. A circle constitutes places like Maharashtra, Gujarat and Andhra Pradesh; B circle like Kerala, Punjab and Haryana; and C circle like Himachal Pradesh, Bihar, Orissa and North-East.

News: Tatas make $ 10 b bid for Corus

(BL 18/10/2006) Mumbai/Kolkata - Tata Steel has announced a $10-billion bid for UK-based steel maker Corus Group, in what is being termed as the biggest overseas acquisition by an Indian company.

If the bid ends in a successful deal, Tata Steel will shoot up in the league of world steel makers from the current rank of 56 to sixth.Tata Steel told the BSE on Tuesday that it has made an indicative non-binding offer to acquire 100 per cent equity in the British steel company through a recommendatory offer route at 455 pence per share in cash amounting to an enterprise value of about $10 billion. It, however, added: "There is no certainty that a final offer would be made."

Sources tracking the deal said that talks between the Tatas and Corus, UK's largest steel maker, were on the fast lane and the final deal would be shortly sewed up.

According to analysts, the deal would bring about significant synergies, with Corus getting access to the world's fifth biggest iron ore deposits and Tata Steel expanding its footprint in the global steel market.

After the takeover, the new entity would have about 23 million tonnes production capacity.

Tata Steel shares closed at Rs 515.70 on the BSE on Tuesday, up by Rs 4.35 or 0.85 per cent.

Under the UK takeover code, a "recommended offer" is considered an expression of intent and cannot be construed as a concrete offer. Corus also indicated that both the companies have kept the options (of making an actual offer and acceptance) wide open.

Analysts in London told Business Line that chances of the deal going through at this price are slim.

"I think the chances are less than 30 per cent; this price is too low, if it were 500 pence per share, then I would obviously have given more than 60 per cent," said an official of the British hedge fund Tisbury Capital, which currently holds around one per cent of Corus.

"This price gives the Russians some incentive to make a bid at 500 pence. Maybe it was meant to be low to see if anyone else is interested. I think the Tatas have the firepower to go for a higher price if the Russians come, and if they don't, then maybe they will get Corus cheap."

Corus is 90 per cent owned by different funds, including those sponsored by pension funds, insurance companies and banks.

The regional spread of Corus shareholding as on October 10 was: UK (British Steel legacy) - 49 per cent, North America (primarily ADS) - 11 per cent, the Netherlands (inheritance of Hoogovens) - 10 per cent; other countries 30 per cent.

Analysts at Dresdner Kleinwort, which has long-held overweight recommendation on Corus, today estimated that the Tatas may raise a loan of $6 billion (if the price is at $9 billion) and around $6.5 billion (if the offer price is $10 billion). Corus has 899 million outstanding shares.

According to the official of another UK fund, the unions appear to be positive about the Tata move and accept that Corus needs a strong industrial partner in a consolidating market.

They are more concerned about the Russians because they feel that the Russians have lower quality assets and therefore, investment would be focused domestically and not on Corus.

The fund official said that the fact that the Corus share price is at 480 pence seems to indicate that the market is expecting a higher offer and this is just the opening shot.

"Corus has been looking for a partner for over a year and the Brazilians and Russians don't seem to be very interested. Therefore, Corus does not have much option and if Tata Steel walks away, then Corus shares would go back to 350 pence."

News: Reliance eyes UK's Wood Group

(RTR 18/10/2006) Mumbai - India's top private company Reliance Industries Ltd (RIL) is in talks to acquire British energy services firm Wood Group (John) Plc, the Economic Times newspaper reported on Wednesday.

"RIL's talks with the Wood Group are in line with its exploration and production plans, which now envisage doubling of production to almost 80 million metric standard cubic metres per day by 2008," the newspaper said, quoting unnamed sources.

A Reliance spokesman was not available for an immediate comment.

The newspaper said Reliance was on the look-out to acquire energy services and rig companies in Europe and was in talks with at least two to three companies with a profile similar to that of the Aberdeen, Scotland-based Wood Group.

Reliance Industries, which is India's most valuable firm with a market cap of $37.2 billion, plans to invest up to $ 5 billion in getting natural gas on shore from its block off India's east coast, which is now estimated to hold reserves of up to a massive 35.4 trillion cubic feet and 6,700 barrels of oil.

News: DSP-Merrill Lynch plans to unveil gold fund

(ACERC 17/10/2006) Mumbai - DSP-Merrill Lynch (DSPML) has applied to the Securities and Exchange Board of India for introduction of their Gold Fund in Indian markets. To be launched in November, this will act as a feeder to Merrill Lynch's existing global Gold Fund that invests in gold stocks. Merril Lynch (ML) will raise $100 million (Rs 450 crore) from the Indian market through this open-ended scheme to fund gold-based companies.

The money will be invested in mid-sized companies with market capitalisation of less than Rs 4,500 crore. DSPML will focus on the agrispace, auto ancillaries, media and pharma companies in this segment. There were several new funds and offers from ML that are in the pipeline and awaiting SEBI approvals. The company is focusing on investing in small and mid cap companies as these have the potential to metamorphose into large corporates in the future, depending on their scalability, management and sector growth. While DSPML's asset under management (AUM) has risen from Rs 170 crore in 2002 to Rs 12,300 crore in August of 2006, the company has enjoyed a compounded annual growth rate of 27.2 per cent in its equity fund division since its inception.

News: Reliance Retail is not ready for launch - yet

(DNA 17/10/2006) Mumbai - Mukesh Ambani is known to do things with a Big Bang. Make that A BIG, BIG BANG.

But next week's Diwali will be a quite affair for his group's retail arm, Reliance Retail. If industry sources are to be believed, kickoff is still some time away as the company grapples with retail talent issues - specifically, training them - and some high real estate prices in Hyderabad. Realtors jacked up prices when they came to know Reliance was on the lookout. And training fresh personnel is taking more time than what the company expected, sources said.

Also, all systems are not in place yet, be it information technology or supply chain.

"We are in no hurry to launch, but whenever we are ready, we'll doing it with a big bang. There's no sanctity to any launch date or why we are starting off with Hyderabad," said a Reliance source. "The so-called October 18 launch date," he said, "is a rumour floated by some media groups."

Another source said it could very well be December before the official launch. That makes sense, since group founder and doyen Dhirubhai Ambani's birthday falls on December 28.

Also, Reliance Retail with kick off with the smallest of its format, called Field Fresh, which is around 2000 square feet big. The bigger formats - it plans a total three, including hypermarkets - will come much later.

Reliance Retail has identified three to four properties - all in the range of 2000 to 4000 square feet - in and around Hyderabad.

The company will kick off with whichever is ready first. After Hyderabad, it will be Ahmedabad and then Mumbai and New Delhi simultaneously. The Mumbai, Delhi launches will happen 45 days after the Hyderabad.

If construction activity is anything is to go by, the first one is likely to be the property at Uppal, about 7 km from Secunderabad railway station.

Apart from its outlets in Hyderabad, Reliance Retail has identified 15 cities in Andhra Pradesh including Vijayawada, Visakhapatnam, Chittoor, Tirupathi, Adilabad and Karimnagar for entry. All are B-class cities but with big potential to grow fast.

News: Indian govt approves FDI proposals worth Rs 896-cr

(PTI 17/10/2006) New Delhi - The Government has approved 22 FDI proposals worth Rs 896.25 crore, including over Rs 500 crore in real estate by Singapore-based Solitaire Capital Investments. Solitaire, with Rs 511.50 crore, was the single largest investor cleared by the Finance Ministry. The company will accept contributions on repatriation basis into a venture capital fund for making these investments. The proposals, cleared by Finance Minister P Chidambaram on the recommendations of Foreign Investment Promotion Board, also include a plan by Mauritius-based Bijlee Bharat Holdings that will bring FDI inflow of Rs 307.94 crore. Bijlee Bharat will set up a wholly-owned subsidiary in Hyderabad for investing in multiple power plants. Also, NSK Limited of Japan has committed Rs 41.25 crore to set up a new JV in Chennai to manufacture magnetic clutch bearings and ball bearings. The Tokyo-based company will bring in Rs 41.25 crore into India. Spain-based Lladro Commercials S.A. will pump in Rs 5.85 crore for increasing its equity in Spa Agencies (India) from 26 per cent to 49 per cent.

News: Reliance ADAG enters credit card biz

(BL 16/10/2006) Mumbai - The Reliance Anil Dhirubhai Ambani Group (ADAG) has ventured into the credit card business.

The group has launched credit cards in association with Citibank. According to the press release, the card is co-branded with Citibank in association with Visa International.

The cards will be available in two categories - silver and gold. Initially, they will be available in Mumbai and Delhi, followed by other metros such as Hyderabad, Chennai, Kolkata, Pune and Bangalore and thereafter in all other cities and towns nationwide.

Benefits

These cards will be have the usual benefits that are available with other cards such as free for lifetime and reward points as part of the loyalty program.

Points earned can be redeemed across various Reliance ADAG products and services such as recharge of prepaid mobile connections, payment of mobile bills, electricity bills, life and general insurance premia and availing services across Reliance World and Reliance Communications retail outlets as well as Adlabs multiplexes.

They will offer complimentary vouchers on joining, cash advance facility, free utility bill payment facilities, hospital allowance, free towing of vehicles and zero fuel recharge at IndianOil petrol pumps.

One of the unique features include addition of five add-on cars at no additional charges, free email statements, free alerts and the compatibility to transfer money from one Visa card to another using Citibank online.

News: Engineering services outsourcing next on Indian cards

(BL 16/10/2006) New Delhi - Taking the BPO-KPO wheel forward, the offshoring industry is looking to tap the $750 billion-a-year global engineering services industry.

India enjoys a relatively strong position in the automotive and high-tech telecom engineering services market with a $25 billion opportunity by 2020, according to a latest industry report.

Aerospace offers the greatest potential for expansion - though it is also one of the toughest opportunities to tap because of its close association with the defence sector. "The total offshore engineering spend is expected to grow to $150-225 billion by the year 2020, and India with its talent pool and existing experience in engineering services, is well suited to realise 25 per cent of this opportunity," according to Kiran Karnik, President, NASSCOM.

"Companies in India have developed capabilities and skill sets, and invested in technology platforms to leverage this opportunity. The growth in engineering services signifies the need for global corporations to expand their R&D pool beyond their home countries," said Karnik in the report.

Engineering services are a $40 billion opportunity for India by 2020, but to achieve that there is need to create 2,50,000 jobs for Indian engineers and also chalk out a roadmap for stakeholders to achieve this, said Dr Harsh Gupta, Director, Centre for Design and Research, Pentair.

Also, to capture the market, what is needed is a brand name for Indian services, same on the lines of software, Dr Gupta said.

News: India Inc raises over $13 b from overseas mkts

(PTI 16/10/2006) New Delhi - The charm of foreign shores as source of funds is getting stronger in India, with domestic firms already having raised over $13 billion (Rs 60,837 crore) from global debt markets, surpassing the 2005-figure.

Riding on the back of a growing global appetite for Indian securities, rising domestic interest rates and robust worldwide liquidity position, India Inc raised about $13.29 billion from overseas debt securities through August this year, with a major chunk coming through Foreign Convertible Currency Bonds (FCCBs).

Indian companies raised about $13.16 billion (Rs 60,218 crore) in the entire 12-month period last year.

Major companies that have raised funds abroad through FCCBs this year include Ranbaxy Laboratories ($400 million), Jubilant Organosys ($200 million), Mahindra & Mahindra ($200 million), India Cements ($75 million) and Larsen & Toubro ($100 million).

Besides FCCBs, other debt securities like Eurobonds and syndicated loans have also seen significant growth this year.

FCCBs have further cemented their position as the preferred overseas fund raising instruments and total capital raised from them could surge by about 80 per cent this year.

According to investment banking major Barclays Capital, companies raised about $5 billion through FCCBs issue in the January-August period this year, as against $3.9 billion in entire 2005.

Funds raised through FCCBs could surge to $6.5-7 billion (around Rs 32,000 crore) this year, registering a growth of about 80 per cent over 2005, Barclays said.

The sharp jump in Indian companies' overseas fund raising was primarily driven by the need to fund their overseas expansion and acquisitions, it noted.

Besides, the need to expand the investor-base, the ability to raise funds at competitive rates on account of high demand for Indian securities and the improvement in the credit rating are also contributing to the surge, it added.

Companies have already raised close to $1.1 billion through Eurobonds, while syndicated loans account for about $7 billion through August. India Inc had raised over $1.3 billion through Eurobonds and about $7.8 billion through syndicated loans in 2005.

Out of a total of about $5 billion raised through FCCBs in January-August period, Barclays' share was $1,257.24 million, while that from Eurobonds and syndicated loans was $200 million and $309.40 million respectively.

News: Mukesh Ambani is India’s top richest man

(PTI 15/10/2006) New Delhi - In a double-treat of sorts, Reliance Industries' emergence as India's most valued firm has also catapulted its Chairman and Managing Director Mukesh Ambani right on to the top of the country's richest list.

After toppling state-run energy giant ONGC as India's largest corporate house among listed entities after more than four years, RIL's market cap has further swelled to over Rs 1,65,000 crore taking Mukesh Ambani's net worth based on his shareholding in group companies to more than Rs 70,000 crore.

Ambani's elevation to the top of the country's richie-rich club has pushed Wipro's Azim Premji to the second position with a net worth of about Rs 64,700 crore.

The younger Ambani brother Anil's net worth has also soared after the recent record breaking rally in the stock market. Anil Ambani maintains his position as the country's third richest person with a net worth of over Rs 61,000 crore based on his shareholding in group companies.

The combined market value of Mukesh Ambani group companies -- RIL, Reliance Petroleum (RPL), IPCL and Reliance Industrial Infrastructure Ltd (RIIL) has soared to about Rs 2,04,000 crore.

The cumulative market capitalisation of Anil Dhirubhai Ambani Group companies -- Reliance Communications, Reliance Capital, Reliance Natural Resources and Reliance Energy -- currently stands at about Rs 1,08,500 crore.

While Wipro has also witnessed a sharp rally in its share price over the recent past, Azim Premji's net worth has not risen much due to the fall in the total promoter stake in the company.

News: India to attract $412 bn investment in retail

(PTI 15/10/2006) New Delhi - A staggering Rs 18,09 crore ($ 412 bn) investment will flow into the Indian retail sector by 2011 as rapid economic growth, increasing disposable incomes and lavish lifestyle habits would see the format expand exponentially, according to a study by Price Waterhouse Coopers (PWC) .

"Industry estimates suggest that $412 billion will be invested in the retail sector by 2011. The majority of this investment will be directed toward the two most popular retail formats: hypermarkets and supermarkets," PWC said in the fifth edition of its annual study 'From Sao Paulo to Shanghai - New Consumer Dynamics: The Impact on Modern Retailing'.

According to product category, half of the investment could be directed to food-related retail and the remaining share would be allocated to non-food retail, the study said.

PWC pointed out that a growing population, a youthful workforce and soaring consumer confidence are "solid arguments for long-term growth in India.”

‘Indian consumers' lifestyles and shopping habits are evolving rapidly. Discretionary spending witnessed a 16 per cent increase for the urban upper and middle classes.

"Lifestyle habits are shifting from austerity to complete self-indulgence and Indians are now unapologetic about spending lavishly on non-essential goods such as luxury watches, cars, hi-tech products etc," it said.

Interestingly, Prime Minister Manmohan Singh had earlier this month pegged India's investment requirement for the core sector at ($320 billion) Rs 14.05 crore.

News: Repsol YPF to drill for oil and gas offshore Suriname

(CNN 14/10/2006) Paramaribo - Spanish oil producer Repsol YPF will next year drill for oil and gas in Suriname’s offshore territories. The multinational signed a US$100 million contract with Transocean Inc. to execute two test drillings in the Block 30 offshore concession, officials in Paramaribo said.

Between July and October, Transocean will put up the oil rig Sovereign Explorer, to drill at two different locations.

If there is a commercial find, it could take between 4 and 6 years to develop all facilities to start commercial production, said Israel Hernandez, Repsol YPF’s Project Drilling Manager. Repsol YPF would by then have made an investment of around US$1 billion in this venture.

Currently Repsol YPF and Transocean are conducting information sessions with possible local contractors for several necessary services. The sessions are meant to inform the Surinamese business community about the commercial possibilities of the future drilling activities.

Both companies in the near future will open tenders for workers, accommodation, chemical supplies, storage facilities, transportation and provisioning. “It is up to the business community to react on this opportunities,” said Hernandez. Services which are not available in Suriname, the companies will tender for.

Although the exploration in offshore Suriname is a very risky investment, Repsol YPF is positive it will discover commercially exploitable oil and gas reserves.

The Spanish multinational signed a production sharing contract with the Surinamese state-owned company, Staatsolie, for the exploration and production of oil in Block 30, which is 100 km offshore Suriname. The contract was signed April 24 at a ceremony attended by the President of the National Assembly and the Minister of Natural Resources of the Republic of Suriname.

Block 30 has a surface area of approximately 18,600 km2 and is in the Guyana - Suriname basin, where oil is currently produced at the Tambaredjo and Calcutta fields near Paramaribo. The production sharing contract is for thirty years, and includes a six-year exploration period.

This contract is the result of a two-year technical study of the region, administered by Repsol YPF, and based on existing seismic and geological data on offshore Suriname supplied by Staatsolie. The results of these studies show possibilities of significant hydrocarbon accumulations, especially in the deep-water area of Block 30.

News: Wolters Kluwer to set up shop in India for scientific journals

(TNN 14/10/2006) New Delhi - One of the world’s largest publishers for professional books and journals, Wolters Kluwer, is getting into the business of printing and publishing scientific journals and magazines in India. The e3.4-bn Dutch group is engaged in creating content for professionals in the areas of health, tax, accounting, law, regulation, education, corporate and financial services. It operates through brands like Ovid, Bankers System, Adis, Croner, Ipsoa, CT Corporation among others.

The company had earlier this year taken government approval for import and sale of books relating to health and medicine, including medical research. Now, it is expanding operations of its subsidiary Wolters Kluwer Health (India) to include printing and publishing scientific journals in India.

As per the existing policy related to foreign investment in the field of printing and publishing of scientific journals a no objection certificate (NoC) is required from the ministry of information and broadcasting.

According to sources, Wolters Kluwer has received the mandatory NoCs for bringing out Indian editions of 10 specialised international journals. These include The Laryngoscope, Anesthesiology, Neurology, The Neurologist, Current Opinion in Urology, Current Opinion in Nephrology and Hypertension, Anesthesia & Analgesia, Current Opinion in Neurology, Current Opinion in Obstetrics and Gynecology, Current Opinion in Pulmonary Medicine.

Wolters Kluwer’s health division operates in four business segments, including clinical solutions, medical research, professional education and pharma solutions.

The Dutch group had set up its Indian operations early this year with a new office for Wolters Kluwer Health (India) under the management of MS Mani who was roped in from rival publisher Elsevier. At Elsevier, he was serving as director of the Academic Division Elsevier Health Sciences.

News: The changing face of retailing

(TNN 14/10.2006) Mumbai - Mine the data or observe Ms Mehta? That’s the question keeping senior officials at retail chains busy. Increasingly, retail marketers are preferring to rely on direct observation of consumers while they shop rather than simply use market research data to understand consumer behaviour.

Says Jitu Mehta, president, Spencer Retail, “Traditional market research is based on the premise that you can’t talk to consumers because they’re spread out too far. However, modern retail changes that tenet completely because you’re face to face with the consumer and you’re giving her an opportunity to express herself.”

Hypercity, a hypermarket operating out of Mumbai, found out that market research does not always work. When the hypermarket set up shop in Malad, Mumbai, earlier this year, there was a section for frozen foods and cut vegetables and fruits. According to Andrew Levemore, CEO, Hypercity, market research suggested that Indian housewives wouldn’t opt for cut and packaged vegetables and fruits, opting instead for the complete variety. However, when Hypercity started doing business, shop-floor managers observed that housewives actually made a beeline for the cut and frozen vegetables.

Hypercity learnt that many housewives actually prefer the hygiene factor that packaging brings to foods and vegetables. Says Mr Levemore, “We started off with two workers for that section, but the demand is such that we now have eight in that section.” What explains this disconnect between shop-floor behaviour and market research? Damodar Mall, president, (foods), The Future Group, says, “Every customer’s response will always be a socially-correct one. But give the customer a wide range of choice and then you see her true response to a stimulus.”

Add to that the various simulation errors that creep in when focus group participants are led through a mock shop, and an absence of qualitative shop-floor observations and you have a data that can drive you to take a decision that is totally off the mark.

Some retail groups have realised that a store does not have the ring of finality that a `show room’ has. They are using the store as marketers have used their websites, a place to experiment, to see what works and what doesn’t and then quickly adapt the merchandising and product mix. Consider Food Bazaar’s dilemma when it was toying with the idea of a private label in foods a couple of years ago.

When they launched Fresh and Pure, they decided to go the whole hog rather than the traditional method of test-marketing with focus groups and a long-drawn research process. For the same product line, they tried different packaging and placements in their stores and worked out a strategy from there. Adds Mr Mall, “We got results instantaneously. We could make prototypes, retain what worked, and fine-tune and tweak our product mix.” Fresh and Pure, according to Mr Mall, has become one of the highest selling brands in Food Bazaar.

It is the highest selling brand in ghee, one of the largest selling brands in teas and in butter. Mr Mall adds, “As the brand progresses, we changed the logo, the packaging, introduced 2-3 product variants and quickly removed what wasn’t working.” Had the brand not hit the shop-floor first, Food Bazaar would probably not have seen these results.

Today, The Future Group’s management team makes it a point to spend time on the shop-floor of various stores, just to get insights on consumer behaviour. Does this mean it is time to sing a dirge for market research? Not really. There are still certain cases for which the tried and tested market research methods work best, for instance, a product variant on an already well-established brand. “Market research only meets part of the need, but it isn’t adequate when innovation is involved,” says Mr Mall.

Adds Arvind Singhal, chairman, Technopak, a retail consultancy, “When modern retailers are looking to pinpoint what to offer in various store locations, they’ll require a combination of market research as well as inputs on consumer behaviour.” Some believe that the way forward is for companies and researchers to use the format better. According to Mr Mehta, we’ve allowed certain companies like HLL to carry out research on our shop-floor and we believe that modern retail will only serve to make market research more robust.

News: India Inc eyes profit with an 'inclusive' model

(TNN 14/10/2006) New Delhi - Can charity make bottomline sense? For a section of India Inc, it’s the only way to do business in the future. Corporate social responsibility is no longer good enough.

The new theme in corporate circles is leadership through an inclusive business model. “A new business model, that focuses on doing good for people while making profits, is required. Companies in India have begun asking how they can do that,” says Boston Consulting Group chairman Arun Maira.

Companies like Tata Steel, Satyam — through its Byrraju Foundation —and Genpact are working on a model where inclusiveness is key to growth and fostered. Tata Steel is working with tribals in Orissa — who have been compensated for surrendering their land — on how to make use of their compensation package and how best to invest their money for the future.

The Byrraju Foundation has 300 employees in its rural BPOs in Andhra Pradesh. The employees have been trained in English and basic computer knowledge. These BPO employees work for Satyam and three other corporates in the country. BPO major Genpact has begun training people in Dehradun and Jaipur for its operations.

This, Mr Maira says, is a good way of dealing with the problem of shortage of skilled manpower, while providing a good employment avenue to people in these cities.

“This is a model fundamentally different from CSR and philanthropy, followed by the most US companies. Here, social good is done as part of the company’s mode of generating profits. Making profits is not immoral. In fact, if you are using natural resources for your operations, it is immoral to do that without creating a surplus. It is equally immoral to do it without benefiting the people,” says Mr Maira.

Speaking at a CII summit, Fortis Healthcare chairman and MD Harpal Singh said: “The notion that private sector can’t do public good needs to be challenged and it is the efficiency of the private sector that needs to be tapped. The government should act as a facilitator, regulator and even protector. It should not be involved in providing services like healthcare and education, where it has failed.”

A view Mr Maira concurs with. “The purpose of governments is two-fold — to regulate and maintain law and order and to tax. It must provide funding wherever required.”

News: 'Big B' is the lord of endorsements

(IANS 14/10/2006) New Delhi - Many see Amitabh Bachchan as a materialistic and overexposed actor who is not ready to sit on his laurels but works relentlessly to build a larger-than-life media image never seen or heard before in Bollywood.

The actor, who rules both the small and the silver screens, has entrenched himself so deeply in the endorsement arena that he is giving the King Khans a run for their money.

According to media reports, Amitabh's take home last year was around Rs.190 million ($4 million), which is far more than mega star Shah Rukh Khan's who took home Rs.130 million (nearly $3 million). Khan's earnings include his endorsement deals for Pepsi, Hyundai Santro and Lux.

What really sets Amitabh apart from other ageing big stars is while most have faded into oblivion or been reduced to doing father or uncle roles, Big B rules the roost even at 64.

The small screen played an important role in giving him a new lease of life. After a rough patch in the 90s, he barged into Indian homes with one of the most popular quiz shows of Indian television "Kaun Banega Crorepati" (KBC) and the famous BPL ad. Post-KBC there was no looking back for him.

"We want to reinforce his image of being a global brand and also as the most saleable face of India. He has about a dozen endorsement offers," Sunil Doshi, CEO, Alliance Media and Entertainment, the company that manages Amitabh's endorsements, was quoted as saying when the second season of KBC set rolling.

It won't be an exaggeration to say that Doshi has surpassed his own expectations with Amitabh becoming one of the most commonly seen faces on the small screen.

Amitabh is endorsing everything - from pens to cars to hair oils to chocolates. His reach can be estimated from the fact that he was signed as a brand ambassador for Reid and Taylor. Earlier, Hollywood actor Pierce Brosnan endorsed the product.

"Amitabh Bachchan is an icon with universal appeal and has helped us reach out to the real 'Bharat'. While it is too early to quantify the results of our new campaign, our business associates are extremely excited about Mr. Bachchan's association with Reid and Taylor.

"In fact, agents and retailers have told us that customers have started asking about the 'Amitabh wali suiting'," Tarun Joshi, of Reid and Taylor, told media when Amitabh was roped in.

An All-India 2005 Celebrity Track Survey conducted by Hansa Research amongst respondents aged 15-50 years ranked Amitabh at the top. Big B also topped a celebrity likeness poll for two consecutive years - 2003 and 2004.

News: Indian mobile users will cross 300 mn mark

(IANS 14/10/2006) New Delhi - With the arrival of third generation telephony and more penetration into rural areas, Indian mobile phone users are going to cross the 300 million mark by 2011 against the current 125 million, say industry leaders.

The mobile telephony trend the country is witnessing today portrays a contrasting image. On the one hand there is a huge rural and semi-rural mass waiting to be connected, while on the other one sees that to the chic and modern urban class, mobile phone is now more than just a device to stay connected.

"Indian mobile phone users can now compete with China's, so it is just a matter of time when India will be able to match or rather cross China. And owing to the exponential demand that we are experiencing both in terms of urban and rural market it is imperative for us to manufacture from here and stay near the market," Moon Bum Shin, LG's deputy managing director, told on the sidelines of the three-day Mobile Asia 2006 exhibition from October 13-16.

"Owing to the huge market there which is waiting to get connected India will soon cross the 300 subscriber million by 2011," added Shin.

In 2004 LG Electronics India Ltd (LGEIL) set up its first manufacturing facility in Pune, Maharashtra, over an area of 50 acres. It manufactures GSM phones along with other electrical appliances like colour televisions, air conditioners, refrigerators, washing machines, microwave ovens and colour monitors.

"In India currently the penetration level is 13 percent and the network that we have today covers only 42 percent of Indians while the remaining 58 percent is waiting for the basic connectivity requirements like talking and sms (short message service)," said HS Bhatia, national product group head of LG GSM mobile phones.

According to Bhatia, when the remaining 58 percent will be covered, the subscriber base is bound to increase in leaps and bounds.

Agrees Devinder Kishore, Nokia's marketing director, who affirms: "India is adding six million subscribers in a month, even when the penetration level is a meagre 13-14 percent. So the market is huge and hence the enormous growth potential."

"Also, with the arrival of third generation mobile devices, everyone would want to stay connected and updated."

Nokia's manufacturing unit came up in December last year in Chennai, which is also its export unit. The unit has already manufactured more than a million handsets till now.

Last month Communications and Information Technology Minister Dayanidhi Maran said that third generation (3G) telephony would be in India by the end of this year or early 2007.

"3G mobile devices will bring in more speed and it has more capacity to penetrate in the rural areas; however, pricing will be an issue," said Pankaj Mohindroo, national president of the Indian Cellular Association (ICA), a leading mobile industry body.

However, all leading mobile phone manufacturers are trying to bring in low cost 3G phones into the India market.

"We are planning to launch Rs 10,000 3G mobile phones in India as soon as we get the nod from the government," Bhatia averred.

Today mobile phones have evolved from being just a fashion statement to a product of mass consumption. For many Indians today mobile phones is a symbol of empowerment.

"Mobile phones are no more just phones now. These phones have now become entrepreneurial units," said Sutikshan Naithani, vice president, sales and marketing, Samsung India.

Elaborating his statement, Naithani added: "Today if one has to organise a party, we don't go to the caterers or decorators personally, we just call them in their mobiles and get the things done, so the phones are the only medium for these small and medium entrepreneurs to stay connected.

"Fashion statement, sign of empowerment, need to stay connected - a mobile phone no doubt plays a very significant role in every Indian's life today."

Column: The poor rich NRIs

(BS 14/10/2006) New Delhi - Singapore’s Indians are doing well but they can never hope to head the country.

On the eve — literally — of departing for a third stint in Singapore, I looked up its demographic statistics. They confirmed what a British population survey indicated recently: Indians are on the march.

Yet, as Jews have known throughout history, no ethnic minority can afford obvious prosperity. Only the other day, Singapore’s former prime minister, Lee Kuan Yew, provoked angry protests abroad by claiming that Chinese settlers were being “systematically marginalised” in neighbouring countries. That could be termed as the wages of success.

A Thai diplomat told me gloatingly that Singapore’s Temasek Corporation had gained nothing from paying $ 1.9 billion for Thaksin Shinawatra’s Shin Corp because the share price had nose-dived following the Bangkok coup. Thailand’s acknowledged 8 per cent Chinese (many more Thais have Chinese blood) control 80 per cent of its wealth. Indonesian Chinese (like the Salim group) account for under 4 per cent of the people but control more than 75 per cent of assets. The 2 per cent Chinese in the Philippines own 70 per cent of the riches.

East Africa taught Indians the hazards of wealth. The BBC highlights another dimension in Mauritius. I have heard British interviewers provocatively ask indigenous Mauritians if they don’t think a succession of ethnic Indian prime ministers a tad unfair. British constitution makers tried to ensure that could never happen in Fiji. When it did, Fijian chauvinists staged a coup against the government’s first Indian head.

There isn’t a cat in hell’s chance of an Indian — not even a third generation People’s Action Party loyalist — occupying that position in Singapore. In fact, an Indian in Number 10 is more likely. But it’s interesting that thanks largely to migration from here — not itinerants like me but settlers — Indians, who constituted 8.7 per cent of Singapore’s population last year against only 7.1 in 2000, are better educated than most and are becoming better-off too.

Thirty-one per cent of Indians have at least polytechnic qualifications against 27 per cent Chinese and only 8.6 per cent Malays. The achievement is even more credible when one considers that the previous figures were 20 per cent for Indians, 21 for Chinese and 4.9 for Malays. Faced with frequent Pakistani demos to Capitol Hill, India’s ambassador to the US once wished his community included more demonstrative taxi drivers and fewer highly qualified academics. But that is not a disqualification in Singapore where demos are unknown.

“The increase in proportion of Indian university graduates was partly due to the inflow of Indian permanent residents with university qualifications,” the census report noted. Some 60 per cent of Indian permanent residents in 2005 were graduates, up from 51 per cent in 2000. One meets engineering graduates who have been invited to Singapore and assured of walk-in interviews where they can easily find jobs; they are then given resident status.

Thanks to education, Singapore’s average monthly household incomes rose from $4,940 in 2000 to $5,400 last year. With all races enjoying bigger pay packets, it rose the highest for Indians — from $4,560 to $5,170. The Chinese saw their average monthly household wages grow by $410 to $5,630, while those of Malay households rose from $3,150 to $3,440. If you wish to compare averages, the monthly household income for the Chinese increased between 1990 and 2000 from $3,213 to $5,219. The comparative figures for Malays were $2,246 and $3,148. And for Indians $2,859 and $4,556. A Singapore dollar is now about Rs 30.

Of course, there are many more Chinese billionaires living in sprawling air-conditioned villas with private pools and driving around in swanky chauffeur-driven cars. There are also many poor Tamils with hardly any education. But times are changing and IIT graduates who seek greater opportunities than are available in India, but cannot or will not go to the US, and therefore settle for Singapore, may be the catalyst of change.

Not that Singapore is all bliss. The local buzz is that Indians are welcomed to distract attention from far greater numbers of Chinese migrants and, even more, to balance Malay Muslims with their high birth rate. Some local Indians speak of a glass ceiling. A Tamil girl I knew migrated to Australia because, she said, all the most eligible Indian boys look for Chinese brides. There’s a local variant too, of the pecking order which in Dubai and Abu Dhabi, places Western expatriates at the top and Indian labourers at the bottom. But for all that, Singapore is a comfortable place for an Indian though I am not sure I would like to live there forever. But then, I wouldn’t like to live forever anywhere outside India.

Power play: More on Calcutta Electric Supply Corporation’s shenanigans. My latest bill shows Gross Amount Payable as Rs 140, Rebate at Rs 1.24, but Net Amount Payable also as Rs 140! If that did not stand arithmetic on its head, the note below reads “You will lose the rebate and will have to pay the Gross Amount after Due Date.” The Due Date is today. No doubt CESC’s literary spokesman will have a long and convoluted explanation that will leave everyone even more thoroughly confused but unconvinced. By Sunanda K Datta-Ray

News: Kazakh WTO card tantalises India

(DNA 14/10/2006) New Delhi - Differences between India and Kazakhstan became palpable at the end of the sixth joint commission meeting on Friday after the latter insisted on support for its case in World Trade Organisation as a quid pro quo to let India realise its oil needs.

“If and when Kazakhstan joins WTO, countries will be able to join Kazakhstan on market terms…Early inclusion of Kazakhstan in WTO will have an impact on participation of India in Satpayev block,” said Baktykozha Izmukhambetov, minister of energy and mineral resources, and head of Kazakh delegation.

Izmukhambetov saw no reason to hinder a bilateral agreement with India, but insisted that his country’s equation with ONGC Videsh LTd (OVL) depended to a large extent on the equation it has with world’s largest steel maker Mittal Steel.

Asked specifically if participation of Indian firms depended on partnership with the Mittals, the minister said, “Because of many years of its (Mittal Steel) operation, they are our senior participants. I wish ONGC, after five to seven years, will have the same status.”

Kazakhstan offered 50% stake in the oil block in Caspian Sea to the joint venture of ONGC and Mittal Steel, though to begin with it would want to give only 20-25% share. This proposal was not agreeable to OVL, which wanted a firm indication of 50% share before it started making investment. “It is a risky business and unless a firm indication is made it does not suit OVL to make the investment,” an Indian official said. Nothing has been formally offered on paper, he added.

A Mittal Steel executive said the two partners and Kazakh national oil firm, KazMunaiGaz, would be meeting in November in Kazakhstan to sort out details of the deal. The Kazakh minister was very categorical that nothing would come to India without going through the bidding route.

Petroleum minister Murli Deora’s meeting with a Congo delegation earlier in the day was more fruitful.The two sides decided to do the groundwork during Congo’s presidential visit next month to India. “They have a 1-million-tonne refinery that is working only 30% of its capacity. They want to upgrade it. They are also looking at collaboration in the railway and buses (urban transport) sector,” Deora told reporters.

News: Air Deccan signs deal with European banks

(PTI 14/10/2006) Bangalore - Air Deccan, the country's second largest airline, on Thursday announced it has signed a deal with two European banks to raise $100 million (Rs 450 crore) to help ensure its financial stability and insulate it from the "turbulence" in the domestic aviation industry. India's leading low cost airline, which had reported a loss of Rs 340 crore for the 15-month period ended June 30, has already received the first tranche under the deal with Investec Bank, UK, and HSH Nord Bank AG of Germany, Deccan Aviation Managing Director Capt Gopinath told reporters here. Under the deal, Rs 450 crore including an upfront payment would be payable in four tranches over 15 months to Air Deccan subject to compliance of certain financial covenants, Gopinath, who termed the deal "innovative", said. In turn, Air Deccan has assigned its future aircraft supply contract in favour of a Special Purpose Company, funded by the two international banks, which would carry the transaction, Director Finance Mohan Kumar said. The fund would be used for working capital and to develop the market in future, Kumar said. "This deal would go a long way in ensuring Air Deccan's financial stability and insulating us from the turbulence in the domestic aviation industry," Gopinath said. The first two larger tranches would be received in the first half of this fiscal and the remaining in the next financial year, Kumar said. Hit by fuel costs and addition of new aircraft and routes, Air Deccan with a 21.2 per cent market share, had reported revenues of Rs 1,352 crore from April 2005 to June 2006, with a loss of Rs 340 crore. A company statement described it as a "win-win" deal that would ensure flow of USD 400 million cash straight to the bottomline of Air Deccan and also open up a relationship with international banks, which would help funding of 60 aircraft ordered by it. Air Deccan has already placed orders with Airbus Industrie and IAE, a joint venture between Rolls Royce and Pratt and Whitney, for the supply of 60 Airbus A-320 aircraft with V2527A5 IAE Engines, to be delivered over the next seven years, when the market conditions were "soft". Pre-Delivery Payment (PDP) for the aircraft has been funded by Indian public sector banks, including SBI, PNB and UBI, for which security assignment has been provided. In the event of Air Deccan not taking delivery of the aircraft, SPC would have the right to market the aircraft and satisfy the PDP lenders and recover its investment, the statement said. The international banks, it said, had an investment to give them assured returns irrespective of the airline's performance and to syndicate financing of all 60 Airbus A-320 aircraft amounting to $2 billion. Answering a query, Kumar said the company would not have any stake in the SPC, which would be incorporated outside India backed by the two international banks. Gopinath said the airline would take delivery of two more Airbus aircraft and an ATR aircraft this month that would take its total fleet strength to 41.

News: 'Indian infrastructure financing needs $ 40 b in 5 years'

(BL 14/10/2006) New Delhi - The Infrastructure Committee of the Assocham has projected infrastructure financing requirement of foreign equity capital of over $40 billion in the next five years.

The chamber has suggested that the role of long-term financial institutions such as insurance companies, provident and pension funds and NBFCs be enhanced for financing infrastructure projects.

It has submitted its recommendations to the Planning Commission Deputy Chairman, which mentions that domestic savings need to be supplemented by limited access to foreign savings with priority for foreign equity capital.

This is because the country would need foreign equity of $5-7 billion a year in infrastructure.

Addressing a conference on Friday, Rajiv Lall, Chairman of the committee, said: "In policy and regulation, the committee focused its attention primarily on road, urban and power sectors."

In the road sector, the committee noted that State highways - which constitute four per cent of the network but carry 40 per cent of traffic - are grossly under-funded and recommended that the facilitating framework created by Madhya Pradesh be replicated in other States.

The key components of the Madhya Pradesh model include a special legislation for State highways, a master plan (including a comprehensive database, a schedule for implementation based on prioritisation and identification of corridors for private public partnerships) and creation of a State highway authority.

The Central Government needs to play a more active role in steering development of State highways and formulating a common framework, the chamber said.

News: 'Sensex's new high so soon not expected'

(BL 14/10/2006) Mumbai - On the Sensex hitting a new high this morning, Mark Mobius of Templeton said had not expected a new high for the Indian market so soon.

Mobius further said with the average India P/E at 16x, one needs to be cautious.

He also added that from a global perspective the best returns in the last three months have come from Turkey, Brazil and Russia.

Excerpts from CNBC-TV18's exclusive interview with Mark Mobius

We are at all-time highs in India, you wouldn't have expected that so soon, would you?

Well no, and congratulations. It's a wonderful event that the Sensex is reaching news highs because that's good news not only for India but also for all emerging markets.

You have been a bit sceptical about India and its valuations, does it surprise you that so much money continues to come into this country and we continue to outperform other relatively seemingly cheaper emerging markets?

No, it is not a surprise when one sees it with a view of the very rapid growth that India is now experiencing. Also, it is not surprising because of the momentum that's been building up in the market, meaning that it is quite possible for the Index to move up to very high levels.

But at the same time, the valuations are expensive relative to other countries around the world. So caution is necessary in such cases.

We have just stepped into earnings and they have been quite strong, do you think many fund managers will have to do a rethink in terms of re-allocation to this market, purely because of the sort of returns its delivering?

Yes, if the multiples come down as result of higher earnings, then yes. Certainly, there must be a re-assessment but right now the average price to earning ratio for India is about 16 times.

So, we have to be careful because that is pretty high compared to places like Japan, which is at 17 times and the US, which is at 14-14.5.

So we have to be cautious now and there is no question the high growth rate in India is a very positive factor and could result in revision of earnings but it remains to be seen.

You track a lot of these emerging markets very carefully, across your GEM funds or even your BRIC funds, which market has really delivered the best returns in the past three months?

The best returns have been achieved by Turkey, Brazil and it depends on what stocks you have, but Russia's been very good as well.

News: 'Real estate may outperform Sensex in one year'

(BL 14/10/2006) Kolkata - The Sensex at all-time high fetched different reactions from retail regulars. Some thought it was a non-event in the larger India unfolding context, while certain others chosing to climb the watch tower. There are those who feel opportunity would be relatively low in the large-cap in the near term. But nobody seems to be bearish at the benchmark peak.

Here is a pick of three among several the Business Line talked to during the day across the country.

Sunil Luthria, 46, a self-confessed long-term (read 6 months to one year) investor with high-risk appetite, does not get a high on the Sensex.

"For me, anytime is opportune time, whether benchmark index is the peak or trough. However, a fall in indices excites me more," he confesses.

This Mumbaikar chartered accountant, who has not failed in hitting the bull's eye for the last 18 years, revels in discovering value in stocks with high potential, be it large cap or micro cap.

"Since 2003-04, I have revised upwards my average target return to 40 to 50 per cent in sync with the growth trend. It will remain so for another year or so.

The Sensex may return 20 to 25 per cent in the next one year." Luthria hates `technicals' and prefers options than futures, thinks that in the next 12 months, low-value stocks and the real estate may outperform the Sensex.

Anirban Dasgupta, 38, a cost accountant in Kolkata, would like to be on the sidelines now waiting for the results to pan out for his blue chip dominated portfolio, mostly Sensex members.

During mid-May-mid-June this small investor with a 3-year horizon, made fresh entries. So did Somnath Mitra, a middle-aged teacher from Kolkata.

He is not in a hurry to take profit even after seeing 50 per cent to 100 per cent appreciation in his portfolio of mid and small cap stocks.

He reckons that the Sensex may reach 14,250 around the Budget time keeping the overall sentiment warm.

News: Haier set to start Indian production

(BS 13/10/2006) New Delhi - Haier Appliances India Pvt Ltd, the fully-owned subsidiary of the $12.9 billion Chinese multinational Haier group, is planning to set up a manufacturing facility in India, three years after it began operations in the country. This is in line with the company’s plans for a greater share of the Rs 18,000 crore domestic consumer electronics market.

Haier India, which currently outsources its production to external partners for most of its products on offer in the domestic market, will continue its relationship with its eight partners, while also taking onboard some of the manufacturing itself. This would enable it to be a more serious contender, even as it has set its sights on becoming one of the top three players here by 2010.

“We are in the mode of internal discussion on the manufacturing facility and are currently studying its viability. The concrete details on what we will manufacture and how much will be the investment will only emerge at the end of the present financial year,”

Haier India Director and COO Pranay Dhabhai said.

Dhabhai, however, remained tight-lipped on what would be manufactured in the new facility or by when it would begin production.

By now, the company has achieved 75 per cent content localisation for televisions and air-conditioners, while importing flat panel televisions (plasma and LCD), microwave ovens and parts for washing machines and DVD players. This adds up to a ratio of 60:40 for domestically produced to imported content.

Haier India achieved a turnover of Rs 325 crore in 2005, which is expected to cross Rs 400 crore this year, owing to the consolidation mode that the company is currently on. In order to be on track to achieve its goals, Dhabhai said the turnover should at least double next year. “To be among the top three, we need to have a turnover in excess of Rs 4,500 crore by 2010 (including mobile phone sales),” he said.

The company is also strengthening its retail presence and plans to increase the number of exclusive outlets to about 40 by 2007. Currently, its products are available in 21 exclusive outlets called Planet Haier stores and 4,500 multi-brand outlets.

News: Bank troika forges card, foreign venture plans

(BS 13/10/2006) Mumbai - Oriental Bank of Commerce, Indian Bank and Corporation Bank, which recently formed a strategic alliance (OIC), will set up a credit card venture. The three banks will also set up a common subsidiary overseas.

The CEOs of the three banks met in Chennai last week to formulate a three-stage action plan. They are likely to give a formal shape to their initiative by signing a memorandum of understanding (MoU) in the second week of November.

But even before the MoU is signed, the three banks are set to kick off their common business programme by selling gold coins in the Capital next week under the OIC umbrella. The alliance is also working on a common logo and slogan to market their products.

“The credit card subsidiary will be floated in the second phase after signing the MoU. In the first phase, we are setting up a few working groups to give shape to the new business strategy,” an OIC spokesperson said.

In the third phase, these banks will set up common representative offices in China, Indonesia, Vietnam, Russia and Brazil, and float an overseas subsidiary.

The move is expected to help all three banks expand their remittance business and fund overseas acquisitions on the lines of corporates.

At present, only Indian Bank has an overseas presence with an office in Singapore. In addition, the banks will also explore a common strategy for commodity trading and capital market-related businesses.

An executive committee consisting of the three executive directors of the banks is drawing up the road map for alliance businesses.

This committee will approve products and fine-tune revenue-sharing arrangements. Besides, working groups have been set up to focus on areas like payment, treasury, credit cards, capital markets, knowledge centre for risk management, and also for putting in place products and operational guidelines.

Of the three banks, only Indian Bank currently offers a credit card venture. The credit card venture is part of OIC’s immediate focus on payment products.

“All three banks have different kinds of payment products at different stages of progress and hence it is easy to take these to their logical conclusions. We will look at offering payment products in the next two months,” the OIC spokesperson said.

The alliance plans to leverage the acquirer’s business by rolling out point-of-sale terminals across the country. “We are conceptualising a common information technology backbone and shared delivery channels, including ATMs and point-of-sale terminals. In the next one-and-a-half years, we will set up 60,000-70,000 point-of-sale terminals,” the spokesperson added.

The combined asset base of the alliance partners is over Rs 1.5 lakh crore. They have a 33 million customers, 3,600 branches and 1,800 ATMs.

News: Indian businesses going global

(HT 13/10/2006) Mumbai - When the Tatas emerged as the frontrunner to take over UK-based tea major Tetley in 2000, the global business community was skeptical. Tetley, now a part of Tata Tea, is today picking up global assets for the parent company.

The Aditya Birla group, led by Kumar Mangalam Birla, now owns copper mines in Australia and a BPO company in Canada.

Emerging MNC Bharat Forge has three plants in three continents.

If all goes well, Tata Steel will snap up UK-based steel major Corus for $9 billion. Six years after the Tetley takeover, skepticism is giving way to confidence.

Global business finally accepts Indian companies can acquire and successfully manage global assets. This is based on one premise. “India is slowly emerging as an economic superpower. This builds a lot of confidence. Indian companies have created an enviable track record by improving the prospects of global companies,” says TV Raghunath, executive director, investment banking, Kotak Mahindra Capital Co Ltd.

More acquisitions will happen

Indian Inc’s appetite for global assets is growing daily. Some factors encourage this trend. The availability of assets, especially in Europe and the US, are rapidly increasing.

Galloping costs and declining bottomlines have made promoter families look at divesting their holdings; the Birlas, for instance, recently bought BPO firm Minacs. Private equity funds, which had invested in US and European companies, are increasingly encashing their investments. And in most cases, these funds are finding a preferred suitor in India.

Easy access to funds from overseas banks is reducing the time lag for acquisitions. For instance, Standard Chartered Bank is in the process of arranging part of the $9 billion to be raised by Tata Steel for the Corus acquisition. Globalisation is forcing Western financial systems to fund Indian acquisitions of Western MNCs.

And India Inc is confident of expanding its global footprint. Says Birla: “Nearly 25 per cent of our turnover today comes from overseas businesses and I believe the number will be in the ballpark of 40 per cent by the turn of the decade. And that too, on a larger base because growing across the globe is the corollary of the growth plans of several of our businesses.”

Small steps to giant leaps

Three years back, Indian companies were going for smaller acquisitions with costs ranging between $50 million and $100 million. Things have changed now with mega acquisitions becoming a reality. “Our self-confidence is improving with each global acquisition. India is taking thoughtful and measured steps. We have to build on this,” says R Gopalakrishnan, executive director, Tata Sons.

Ranbaxy is a classic example of how small steps can lead to giant leaps. After taking over small global companies in the beginning, Ranbaxy recently acquired big pharma companies including Romania’s Terapia for Rs 1,500 crore.

Long-term benefits

Nimesh Kampani, chairman, Morgan Stanley feels global acquisitions will lead to technological growth and penetration into new markets. To be precise, India with a low-cost manufacturing base will get access to global markets. He feels a company has to go through a learning curve before it becomes a multinational.

Even cultural integration is critical to achieving long-term success and in this, Indian firms have been successful. “It is better to retain the existing management. Indian companies are doing that and getting results,” says Raghunath.

The roadblocks

While easing of regulations have played a role in accelerating global acquisitions, mega mergers like the one consummated between Arcelor & Mittal Steel will happen only with clearer laws.

Presently, a company gets automatic approval for investing up to 200 per cent of its net worth on global acquisitions. But the law does not permit mega mergers that don’t involve big cash transactions. This will become a reality only if the capital account convertibility regime comes into force. Dilip Choksey, joint MD of consulting firm Deloitte Haskins & Sells, feels the Companies Act is not friendly to all types of cross-border amalgamations. “But it is possible to structure a deal in making a mega merger happen. We need to substantially step up the execution of the law. If this happens, India can become an economic superpower.”

News: IBM sees more growth in India as economy booms

(RTR 13/10/2006) Bangalore - IBM, the world's largest computer services company, aims to increase its share of business in India as banks, retail and small and medium-sized firms spend more on technology in Asia's fourth-largest economy.

IBM's business in India grew 45 percent on the year in the April-June quarter, the fastest for that period of IBM's emerging market business, as telecoms, banks and services ramped up spending on computer hardware and services to spur expansion in the growing economy.

"India is the fastest-growing market we have got in IBM today," Michael Cannon-Brookes, vice president for business development in China and India, told Reuters in an interview at the company's sprawling campus in India's tech hub.

"We look at it (as a) high-growth, hyper-growth market. The industry here is going through dramatic transformation. As a result of this, there are just a lot of changes where you really want an innovative approach."

IBM has bagged big deals in telecoms, like one from India's top mobile services firm Bharti Airtel Ltd. in August, and Cannon-Brookes said he saw growth across all areas, including retail and healthcare.

"We have a large percentage in small and medium-sized businesses. We are spreading out much more by having offices in other cities, working through business partners and getting down to tier two and tier three cities," he said.

India's export-focused software services companies and multinational firms like IBM are increasingly eyeing outsourcing deals in the local market as banks and government departments step up spending to cut costs and improve their efficiency.

Domestic spending on software and back-office services is expected to rise $7-7.3 billion in the year ending in March 2007, from $6 billion in the previous year, according to the National Association of Software and Service Companies.

Analysts say more computerisation and networking of banks, insurance and government departments will accelerate domestic spending on information technology in India, which has made a name for itself as a centre for outsourced financial services.

WAGE HIKES

International Business Machines Corp. of Armonk, New York, employs 43,000 staff in India -- up from 9,000 three years ago -- and 7,200 professionals in China, the world's manufacturing hub and IBM's eighth-largest market.

IBM, which derives about half its revenue from information technology consulting and outsourcing, has made India a global delivery hub for software needs and client services.

Cannon-Brookes said IBM's headcount expansion plans in India would not be affected by sharply rising wages in the booming software and back-office services industry, which expects exports to rise 27-30 percent to $29-31 billion in the year to March 2007 as demand for outsourcing remains strong.

Although skilled workers in India are paid less than in the United States and Europe, wages are rising at 12-15 percent a year compared with a typical 2-6 percent in the West, as big players like IBM and Accenture hire by the thousands to catch up and stay competitive.

"We have to manage it (rising salaries), just like anybody else has to manage it. But still, when you look at the cost of the wages compared to the cost of wages in many other countries, you are still getting high value skills at a competitively low cost," Cannon-Brookes said.

In June, IBM announced plans to invest nearly $6 billion in India over three years, underscoring the country's growing importance as a hub for information technology outsourcing and expertise.

News: German chemicals firm seeks big play in India

(DNA 13/10/2006) Mumbai - BK Giulini GmbH, a major player in chemicals with global sales of $600 million last year, is expanding in India. Alongside planning to launch its products, it is looking to acquire a local chemicals manufacturer.

The company, a 100% subsidiary of the $3-billion ICL, opened a representative office in Mumbai two months back.

BK Giulini will soon start marketing its chemicals Coriagen and Utanit for leather manufacturers.

The local market for leather chemicals is worth $150 million, with 65% of the market in the hands of a few major MNCs like TFL, BASF, Clariant and Stahl.

The company, which has invested $1 million in its Indian operations so far, is looking to make the country the hub of its operations in the region (it has presence in Pakistan, Sri Lanka and Bagladesh). It is eyeing sales of $7 million in India by next year, including local sales and exports to other Asian countries.

Ytzhak Peretz, president and CEO, of BK Giulini, told DNA Money, “We are aiming for a $20 million revenue from our Indian operations in the next 5 years. As part of our expansion, we are exploring opportunities for acquiring a domestic chemicals manufacturing company. We also have the option of setting up our own manufacturing facility.”

Chemicals for leather manufacturing account for $20-million of its global sales.
However, Peretz refused to divulge more on the acquisition plans. “We are yet to finalise the options.” He also declined to give anymore financial detail.

The company had acquired US-based chemicals manufacturer, Astaris, for $250 million last November.

BK Giulini currently sources chemicals worth $2.5 million from 3 Indian manufacturers to various global markets. Going forward, it plans to market chemicals for several other segments including pharmaceuticals, food production, water and paper treatment and industrial cleaning in India.

BK Giulini, which is divided into 6 business units — Bekaphos (for phosphate products), APW (alumina compoundspaperwater), Hygiene, Food, PCG (pharmacosmeticsgypsum), Rhenoflex (inner part of shoes) — has over 20 subsidiaries around the globe.

News: Indian PM lures Europeans to invest in infrastructure, services

(PTI 13/10/2006) Helsinki - Portraying India as an attractive, safe and profitable business destination, Prime Minister, Dr Manmohan Singh, on Thursday invited European firms to invest in the country's core sectors that require a massive $320 billion over the next five years.

"We need to do much more in the field of infrastructure and improve its all-round availability and quality," he told industrialists at the India-EU Business Summit here.

Dr Singh specifically identified areas like infrastructure, manufacturing, knowledge services and retail as opportunities for foreign investors.

"The present level of bilateral economic engagement is far below potential," he told the European business community in the presence of Finnish Prime Minister, Matti Vanhanen, whose country is the current chair of EU.

Though EU remains India's largest trading partner with bilateral engagement of about 40 billion dollars, FDI inflows from the 25-nation bloc was meagre at $375 million in 2005 compared to $451 million a year before.

Dr Singh noted his government was giving thrust on increased private sector participation in public works, including highways, ports, and power sector, besides telecommunications.

"I invite European firms to participate actively in the infrastructure boom in India", a sector in which about $320 billion will be required over the next five years.

News: Tesco's India advantage

(Forbes 13/10/2006) London - With a population of 1.1 billion people and a retail industry expected to explode over the next few years, Western store giants like Wal Mart, Tesco and Carrefour can't help but look longingly at India. The foreign retailers are barred from setting up shop there now, but one could soon be getting a foot in the door via a joint venture.

To date the Indian government has only allowed single-brand retailers like Britain's Marks & Spencer (other-otc: MASPY.PK - news - people ) to enter its market. Until the barriers for foreign retailers are relaxed, overseas merchants are reduced to busying themselves in India's wholesale sector, as does Germany's Metro (other-otc: MTAGF - news - people ) or forming joint ventures with the likes of FieldFresh.

FieldFresh, which uses the tagline, "Linking Indian fields to the world," is itself a fifty-fifty partnership between Bharti Enterprises and ELRo Holdings India, an investment company founded and owned by Sir Evelyn de Rothschild and Lady Lynn Forester de Rothschild, of the Rothschild banking dynasty.

Considering FieldFresh's ostensibly British connections, or the fact that it reportedly already supplies some food to Tesco, it already looks likely that Bharti will choose the U.K. candidate over Wal-Mart Stores (nyse: WMT - news - people ) and Carrefour. Shore Capital analyst Clive Black believes Tesco has an extra edge over those rivals because it has a major administrative office in Bangalore, giving it access to middle class consumers through its own employees. "Tesco is very experienced now in trading in very diverse markets, from Ireland to Korea, to the Czech Republic," Black said.

However, research conducted by IGD, a not-for-profit food-industry research organization, earlier this year suggested that Wal-Mart in fact be the first to enter the Indian food and grocery retail market, either with its hypermarket format, or at least with cash and carry operations in the unrestricted wholesale sector.

"Tesco is unlikely to enter India in the short term, while it concentrates on other key markets like the US and China, and Carrefour is currently focused on optimizing the performance of its existing portfolio," IGD said in a press release.

But Shore's Black believes Tesco will still manage. "I think Tesco is over the period of greatest risk. It can keep all its plates spinning, and certainly has done so up until now."

News: Indian firms facing talent crunch

(BBC 12/10/2006) Mumbai - Friday afternoons at the Indian Institute of Technology (IIT) in Mumbai are a time to relax for Ankit Jain, a final-year engineering student.

In between his rigorous exam schedule, Ankit takes some time off from competing with his friends in the classroom to compete with them on the basketball courts.

IIT is one of the hardest schools in India to get into. Every year, 200,000 of India's brightest students try and get into this school. Only 2% of them make it.

Ankit and his friends at the elite institute are considered some of the brightest brains in India. And they have found that they are in hot demand from Indian and foreign businesses.

"There are a lot of recruitment fairs on campus. IBM, Accenture, Google, UBS, Infosys, TCS - all the big companies, Indian and Western are here," Ankit said as he took a break from his basketball game.

"And the salaries they're offering us are amazing. American firms are offering us up to $100,000 (£53,000) a year - and Indian firms are competing to hire us - with higher wages, housing incentives, car loans, the works."

Rush for talent

Ankit is one of 3 million university students that graduate from schools in India every year. Gone are the times when the only jobs in store for them were careers in the Indian civil service.

Prospects for the Indian professionals are on the rise, thanks to the boom in India's economy. The last set of growth figures showed that India's economy grew by almost 8% in the first quarter of this year - beating expectations.

This has led to a rush for talent. ICICI Bank, one of India's biggest private lenders, is planning to hire 40,000 people over the next few years.

Reliance, India's biggest conglomerate, has announced its gargantuan retail plans - it will be setting up a chain of supermarkets Wal-Mart-style across India - and is poaching the best and the brightest employees from other firms.

But the frenetic pace of expansion in Indian businesses is leading to a very real problem: there are not enough bright Indian school-leavers to fill the vacant spots in India's corporate payrolls.

'Not enough graduates'

According to Mercer Human Resource Consulting's country head in India, R Sankar, India is facing an imminent talent shortage.

"Just look at the technology sector," he says. "Look at the numbers they're trying to achieve. Thousands of thousands of employees - Tata Consultancy Services has over 70,000 employees - are being hired in a really short space of time.

"And there just aren't enough skilled graduates in India to fill these jobs."

India's software trade body, Nasscom, says that there could be a shortfall of half a million professionals in the IT sector by 2010.

And it is not just the technology sector that is experiencing a talent crunch. Keeping good staff is a challenge for many other Indian companies too.

The country's top construction and engineering firm, Larsen & Toubro, has seen a 10% drop in employees, losing workers to the fast growing technology and retail sectors.

Those industries are tempting workers with salaries that are a third higher than they were used to. But L&T's Chief Financial Officer, YM Deosthalee, said his firm had found a solution.

"We provide our employees with challenging, dynamic work - work that will keep them interested in what they do," he said.

"It's one of the ways for us to retain competent staff - but it is a challenging environment. Besides the financial ones, 0pportunities to be trained and to travel, though, and work on big projects is what we offer in terms of incentives."

'Curious'

And it is these opportunities that are drawing foreign workers to India's shores. They are being recruited to help offset the challenges of India's talent crunch.

Denis Mercier came to Mumbai a year ago to work for the country's biggest software firm, Tata Consultancy Services. He is one of thousands of TCS's foreign employees, many of whom are from Eastern Europe, Brazil, Germany and the UK.

"Every day when I would read the front page of my newspaper in France, I would read about the Indian economy," 24-year-old Denis said, as he lunched with a mixed crowd of foreign and Indian TCS workers in their canteen.

"I was curious - what is happening in this culturally vibrant, fast-growing country? I wanted to find out for myself. And now, to have Indian experience on your resume looks really good too."

Importing skilled workers may be one way for the Indian economy to solve its talent crunch, but it cannot be the solution for long.

The irony is that there are millions of Indians who remain unemployed, working in the informal economy, on odd jobs in construction and building.

The big question is whether India can solve its growing labour crisis by finding a way to get them trained and into the formal labour market, alongside Ankit and his friends.

News: India's August industrial output up 9.7 pct yr/yr

(RTR 12/10/2006) New Delhi - India's industrial production rose 9.7 percent in August from a year earlier, lower than market expectations as heavy flooding in the month disrupted activity, data showed on Thursday.

Analysts surveyed by Reuters expected industrial output in August to grow a median 9.9 percent from a year earlier. Output grew a revised annual 12.7 percent in July, the highest monthly rise in a decade.

Manufacturing production, which represents more than 75 percent of industrial output, rose 11.1 percent in August from a year earlier, compared with 13.3 percent in July.

News: Haryana, Dutch consortium to build tech park

(PTI 12/10/2006) New Delhi - Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) and Dutch Haryana Business Consortium have signed a Statement of Interest (SoI) in Amsterdam to set up a European Technology Park in Haryana.

The proposed project was expected to catalyse investment of around Euro 2 billion over 10 years generating employment for a large number of people, an official release said today.

The SoI was signed by HSIIDC Managing Director Rajeev Arora and Oedith Jaharia, managing director of Spyker Cars N V, on Dutch Business Consortium yesterday in the presence of Haryana Chief Minister Bhupinder Singh Hooda.

Another memorandum of understanding (MoU) was also signed between Spyker Cars N V and Manav Rachna Education Society, Haryana to upgrade education of engineers and other professionals in India to international standards.

A CII delegation led by Hooda also interacted with the Netherlands-based investors at a session organised by KPMG. Hooda highlighted the facilities being provided to entrepreneurs in Haryana and invited them to invest in the state.

Hooda also saw the famous flower auction at Aalsmeer, near Amsterdam, where around 13,000 varieties of flowers were auctioned and expressed his desire to replicate the model in Haryana, the release said.

News: Indian mall owners flex brand muscle, hike rentals

(TNN 12/10/2006) New Delhi/Gurgaon - Big retailers are losing hold over malls owners, who are no longer in awe or dire need of brand halos to drive occupancy or consumer footfalls to their glass-boxed shopping heavens.

With malls becoming an accepted, even sought-after marketplace for both consumers and marketers alike, an increasing number of mall developers are now realising that it makes little sense in giving out prime mall space to anchor tenants, essentially big brand retailers, at throw-away rentals.

Interestingly, not too long ago, perhaps the most important job for any mall manager was to strike the right anchor tenant deal, for the mall’s survival hinged solely on the big retailer shingles hanging at its doors.

“Low rental offers by anchor stores have also forced developers to try their luck through revenue share agreements where they may earn more,” says Abhijit Das, head, Ansal Plaza Mall Management Company. In fact, a crowding of retailers, and the need to drive up their rental income may be important reasons for mall owners to shun big retailers as anchor tenants, but there is more to it.

Industry observers point to the trend of malls creating and driving a strong brand equity for themselves, in turn decreasing their dependence on big retailers.

“Earlier, the presence of retail chains was the key factor that determined footfalls in a mall. Not any more. Now malls are independently recognised and are marketing themselves aggressively,” says Raman Mangalorkar, principal, AT Kearney.

As mall developers realise the importance of having more than one big anchor tenant and going beyond department store anchors, small format stores — termed as mini anchor tenants — are getting into malls. “New innovative mid-sized formats are becoming popular as they take less space and cater to everyone’s needs,” says Ajay Khanna, executive director, DLF Retail Developers.

Though, not all mall managers agree that big anchor tenants are a thing of the past. “Anchor tenants are the lifeline of a shopping centre, whatever the arrangement may be, purely rent based or revenue sharing,” says Aditya Sikri, CEO, Spice World, a mall-cum-multiplex operator in Noida.

Book stores and food courts are a few new options being explored by mall developers along with pure entertainment formats. “Developers are looking at tapping the leisure and entertainment space to increase footfalls instead of relying on big retailers.

News: Wyndham Hotels eye JV partnership in India

(RTR 12/10/2006) Hong Kong - The hotel arm of Wyndham Worldwide Corp. aims to expand its China business at an annual rate of 40 per cent in the run-up to the 2008 Olympics, spearheaded by its Super 8 and Howard Johnson chains.

"I think it's fair to assume that the very strong growth over the next couple of years will be consistent with the growth we've seen so far," Wyndham Hotel Group Chief Executive Steven Rudnitsky told Reuters.

Wyndham, which also owns the Ramada, Days Inn, Baymont, and Wingate Inn hotel brands, franchises or manages 60 properties in China, up from 35 a year ago but less than 1 per cent of its worldwide total.

Wyndham Hotel Group, with more than 6,400 hotels under its umbrella, most of which are in the United States, counts for approximately 27 per cent of Wyndham Worldwide's earnings.

Wyndham Worldwide, which was spun off by Cendant Corp. and also runs a timeshare business, told Reuters in August it expected revenue to grow 8-11 per cent annually over the next 2-3 years.

"As the economy continues to improve, there's far more travel than ever before in China," Rudnitsky said. "And it's becoming an important feeder market for Hong Kong, Macau and other Asian countries."

The company hopes a strong brand in China will benefit its hotels across Asia as Chinese tourists start to venture abroad.

The Chinese hotel market, worth around US$15 billion in annual gross room revenue, was growing at an annual rate of about 15 per cent, Rudnitsky said.

In comparison, the US market is worth around US$120 billion, and the whole Asia-Pacific market, dominated by Japan, is worth about US$115 billion.

Rudnitsky is also looking to expand Wyndham's businesses in other developing Asian markets including Thailand, Cambodia, Vietnam and India.

Industry experts say India, despite an economy growing at around 8 per cent annually, only has about 20,000 international-standard hotel rooms, compared to 65,000 in tiny Singapore.

Wyndham is looking for a joint-venture partner to manage hotels in India where it runs a dozen properties, but Rudnitsky was cautious about the company's pace of growth in that market.

India opened its construction industry to inward investment in early 2004, but many investors complain of confused property titles and frequent land disputes, fuelled by soaring property prices.

"There are growth opportunities but there's greater complexity by virtue of their infrastructure, by virtue of title and land," Rudnitsky said.

News: 'India a miracle and a blessing'

(PTI 12/10/2006) Washington - Notwithstanding the recent uproar over the UK data theft, a well-known US author has said that America is a huge beneficiary of outsourcing.

"The issue of outsourcing is easy to demonise but what many forget is that the United States is a huge beneficiary of this practice," Thomas Friedman, the Pulitzer Prize winning author of the book, The World is Flat, said during a discussion at the residence of Indian Ambassador to the US, Ronen Sen.

Friedman pointed out that the job of outsourcing has replaced receptionists with microchips carrying voice mail. "It is not easy to demonise a microchip," he said. Terming India a ‘miracle’ and a ‘blessing’, Friedman exuded confidence that the country will get to the technical super highway as ‘it is moving in the right direction both in terms of pace and trajectory of change’.

"It was simply a travesty that media anchors like Lou Dobbs of the CNN network are able to get away with their stances on outsourcing with not even the business community willing to take them on", the foreign affairs columnist in The New York Times, said.

Friedmand was speaking with experts on South Asia, senior government officials, members of Indian American community, diplomats and media persons.

News: RIL topples ONGC as India's largest m-cap company

(PTI 12/10/2006) Mumbai - Corporate behemoth Reliance Industries (RIL) on Thursday replaced state-run energy giant ONGC as India's largest corporate entity in terms of market capitalisation with a more than one per cent surge in its share price.

Shares of RIL jumped about 1.3 per cent in morning trade on Thursday, taking its market capitalisaiton to over Rs 1.61 lakh crore, ahead of the incumbent leader Oil and Natural Gas Corp (ONGC) Ltd.

ONGC's shares were trading marginally in the red giving the company's market cap at about Rs 1.60 lakh crore.

The market observers said RIL could witness continued uptrend in its share price in the coming days on expectations of a robust second-quarter performance, scheduled to be announced on October 19.

IT major Infosys, which replaced PSU power major National Thermal Power Corporation as the country's third largest corporate entity yesterday, maintained its position with a market capitalisation of over 1.11 lakh crore.

Infosys's shares were seen gaining further ground after a jump of about four per cent yesterday, driven by an impressive Q2 results and its plans to launch a secondary American Depositary Share offering of about USD 1.5 billion.

Another IT major TCS was also seen trading with a gain of about two per cent, taking its market cap to over Rs 1.03 lakh crore, the fifth largest among India's listed entities.

NTPC, now the fourth largest in the market-capitalisation league, was trading with a modest gain keeping the company's market cap at about Rs 1.07 lakh crore.

News: DLF likely to file for IPO in Nov

(PTI 12/10/2006) New Delhi - Real estate major DLF is likely to file a draft prospectus for raising an estimated Rs 13,500 crore through a public offer by next month after resolving the contentious issues relating to minority shareholders, which had upset its plans to hit the market earlier this year.

"We will be filing the prospectus for IPO only after resolving the minority shareholders issue," DLF Chief Financial Officer Ramesh Sanka told the media.

He said the company was working toward filing the prospectus by end of November.

However, he declined to comment on how the company plans to resolve the minority shareholders issue, which was one of the major reasons for the collapse of the much-hyped IPO that could have made DLF promoter K P Singh India's richest billionaire.

The new prospectus would be updated with financial as well as other developments that has taken place in the company till September, he said.

DLF is still awaiting the report from Ministry of Company Affairs on the issue of minority shareholders, who had complained of discrepancies in the issue of convertible debentures by the company in December last.

The company had withdrawn its DRHP with SEBI late in August this year after failing to get the required clearance from the regulatory authorities.

The IPO was being touted as the country's biggest ever public issue with total proceeds from the sale of shares in the offer being pegged at as high as over Rs 15,000 crore in the market circles, ahead of Rs 10,500 crore raised through the public issue of PSU oil major ONGC in March 2004.

DLF used to be a publicly traded entity until 2003.

News: India plans transhipment port at Great Nicobar

(RTR 11/10/2006) Port Blair - India has shortlisted 10 firms to study the feasibility for a transhipment port in the Great Nicobar Island that will help cut down time and distance for cargo traffic headed for ports on the mainland, an official said.

Such a port would obviate the need for ships to unload at Sri Lanka's Colombo port for onward shipment and offer an alternative on Indian territory itself, Chief Engineer K. Shekar at Andaman Lakshadweep Harbour Works (ALHW) told Reuters.

It would also contribute to the rebuilding of the Andaman Archipelago hit by the Dec. 2004 tsunami, he said.

"Once it is finalised, the selected firm will conduct a techno-economic feasibility study, which is estimated to take one year," Shekar said. ALHW is the supervising authority for the project.

More than 50 jetties and wharfs in Anadman and Nicobar, a group of islands northwest of Indonesia, were damaged by the tsunami, government data showed.

Transhipment ports help break up cargo from large ships, called mother vessels, into loads for several smaller ships that can dock into shallower ports. They also help connect to road transport.

India has such ports in Mumbai, Kochi and Chennai.

Meanwhile, the Indian Coast Guard expects surveillance to increase once the port come up, as it could increase traffic on a corridor noted for piracy and marine pollution.

The possibility of piracy was particularly noticed along the Strait of Malacca, one of the world's busiest sea lanes, Inspector General S.P. Sharma, Coast Guard commander for the region, said.

"If the transhipment port comes up in Great Nicobar, it would come with threats like piracy and marine pollution, which we are ready to counter," he said.

News: Lobby group sees India-EU trade trebling in 6 yrs

(RTR 11/10/2006) New Delhi - A bilateral trade pact can help treble India's two-way trade with the European Union to 150 billion euros a year by 2012, an industry body said on the eve of a summit between the leaders of the two sides at Helsinki.

Prime Minister Manmohan Singh and Finnish Prime Minister Matti Vanhanen, also the President of the E.U., are expected to address an Indo-EU business summit on Thursday. E.U. trade commissioner, Peter Mandelson, will also be present.

A prominent item of discussion could be a liberal trade pact, being negotiated between India and the E.U. India already has a similar deal with Singapore.

"Greater engagement between India and the E.U. following a decision to negotiate a trade and investment agreement will give an impetus to the current trade and investment flows," the Confederation of Indian Industry said on Wednesday.

India-EU trade could reach 70 billion euro within the next two years from an estimated 48.5 billion euro estimated in 2006, it said.

"If the current growth rates in trade continue then by 2012, when India and EU should have a trade agreement in place, bilateral goods trade could be around Euro 150 billion," the industry body said.

Trade in services could touch 75 billion euro by then, it added.

News: Bharat Forge in talks with Corus

(DNA 11/10/2006) Mumbai - The Kalyani Group, which runs Bharat Forge, the world’s second-largest forging company - the largest is Germany’s ThyssenKrupp — is said to be talking to UK-based steelmaker Corus for possible buyout of some businesses.

Senior management of the Kalyani Group and Corus are expected to hold talks this week, according to a report by Reuters from London.

According to the report, any such deal could happen only after the Tata-Corus issue is settled. The sources said Tata was not in any three-way negotiation currently.

Amit Kalyani, executive director, told DNA Money he was travelling and was not in a position to comment on the issue.
Meanwhile, sources said the Pune-based firm may be talking to the $9 billion auto parts giant ArvinMeritor too for possible acquisitions or joint ventures.

The talks are said to be related to some parts businesses of the US major. Bharat Forge already has an equal stake venture with ArvinMeritor’s trucks parts division.

ArvinMeritor, which has 120 manufacturing facilities in 25 countries and employs 29,000 people, supplies integrated systems, modules and components such as front and rear axles etc to the motor vehicle industry.

The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets. In the trailing four quarters to July, 2006, the company had ratcheted up a net profit of $80 million, though for the year ended September 2005, the company had posted a net loss of $12 million.

Interestingly, ArvinMeritor, based in Troy, Michigan, has among the lowest analyst ratings in Standard & Poor’s 400 mid-cap index. Only last month, Goldman Sachs had downgraded the company to “underperform/cautious” from “in-line/cautious” due to weakening fundamentals.

Standard & Poor’s itself has placed ArvinMeritor on CreditWatch with negative implications reflecting concerns over ARM’s ability to return currently weak credit metrics to levels acceptable for the rating in light of worsening industry fundamentals.

Baba Kalyani, chairman and managing director of Bharat Forge and the Kalyani Group, had said at the company’s first-quarter earnings call that the company will be targeting new avenues for growth in the non-automotive component business.

The company is said to be entering into nuclear energy, hydrocarbon, aerospace, mining and metals, through an outlay of Rs 350 crore.

News: Anil Ambani to re-enter R&T business

(DNA 11/10/2006) mumbai - More than a decade after Reliance Industries vacated the share registry and transfer business, Reliance ADAG is set to re-enter the sector under the aegis of its flagship company- Reliance Capital.

The new foray could be seen as a bid to capture all streams of revenues flowing from the broking business.

Even as R Trade, Anil-Ambani-controlled Reliance Capital’s mega-foray into stock broking is slated for a launch, industry circles reveal that the group is preparing for an entry into the share registry and transfer (R&T) agents business.

It has been reliably learnt that Reliance Capital has hired consultants Ma Foi and Team Lease, among others, to help recruit staff for its R&T business.

“We do not comment on speculation,” is all that was gleaned from a Reliance Capital spokesperson.

Since Reliance Consultancy Services (the R&T arm of the erstwhile Reliance group) wound up operations, Karvy has been acting as R&T agents to all the Reliance companies, including those that come under the Reliance ADAG banner.

The incumbents, Karvy, Intime Spectrum (the latter recently took over the R&T business of MCS, though only around 150 of MCS’ 350 clients have moved to Intime till date) and others, may have to watch out, but it is still unclear as to whether Reliance Capital’s foray into this business would only be to act as registrar for its own asset management arm, Reliance Mutual’s schemes, or would entail a concerted effort to become a full-fledged corporate registry that will include its group companies.

If it’s the latter, it may spell trouble for Karvy since it is the R&T agent for all the listed companies of the Reliance ADAG group. These include Reliance Capital itself, Reliance Communications, Reliance Energy and Reliance Natural Resources. The Reliance ADAG companies boast of a shareholder base of over 20 million shareholders.

The new development comes at a time when the R&T industry is consolidating. Last year, the Tatas decided to move away from R&T business by selling a part of its stake to Darashaw & Company.

“It will be good for the industry if the new entrant, whoever it might be, sets new benchmarks and improves service standards. But since it is a service-oriented industry, existing players are not performing badly, and will give the new player a run for its money,” said Ramnarayan MV, director of Intime Spectrum.

Reliance Capital is registered as a depository participant with National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL). It has also sponsored Reliance Mutual Fund, and operates in the insurance space through Reliance General Insurance Company and Reliance Life Insurance Company.

News: Gulf nations ask India to open financial sector

(PTI 11/10/2006) New Delhi - Six gulf countries have asked India to meet its energy requirement through their huge oil and gas reserves and carry out financial sector reforms to enable their institutions to chip in long term funds for infrastructure growth in the country.

Making a presentation on behalf of the six-nation Gulf Cooperation Council (GCC), Qatar-based Doha Bank Deputy CEO R Seetharaman said at a seminar last night that India should also leverage its human capital in IT, pharma and other sectors to make further inroads in these nations.

That way, the India-GCC trade could be taken to its full potential from the meagre of $6 billion in 2005, he said.

The trade could reach $120-125 billion if the economic opportunities are fully reaped, Seetharaman said.

GCC comprises Oman, Bahrain, Kuwait, Saudi Arabia, Qatar and UAE.

Predicting that international oil prices would not significantly come down in another couple of years, he asked India to meet its energy security by importing oil and gas from GCC which had 45 per cent of world oil reserves and 24 per cent of gas reserves.

Even currently, around 78 per cent of GCC's total exports worth $368 billion comprises oil and oil products.

Pointing to India's massive requirement of around Rs 14,50,000 crore by 2012 for infrastructure development, Seetharaman said the country needs to further open its financial sector to tap long term overseas funds.

News: 'Bangalore is top in business outlook'

(SF 11/10/2006) Chennai - India Inc is on a hiring spree and this hiring momentum is expected to continue in the October-December 2006 quarter as well.

All sectors are expected to increase their hiring activities; main drives being the services and FMCG sectors, according to a study conducted by TeamLease, a leading staffing solutions company based in Bangalore.

The first quarterly Employment Outlook Survey for the quarter tracked the hiring expectations of the private sector in the country. The study covered 490 companies across eight cities including Delhi, Mumbai, Kolkata, Hyderabad, Bangalore, Chennai, Pune and Ahmedabad.

Retail, media & FMCG, followed by IT and financial services are also set to witness recruitments on a higher scale.

Given that the economy is growing at over eight per cent per annum, business outlook index suggests that companies in these above mentioned sectors are likely to hire at a rate which is faster than the growth of its business.

The reason may be attributed to growth of the sunrise sectors. Companies covered across sectors include retail, media, FMCG, IT, financial service, infrastructure, ITeS, manufacturing and engineering.

Bangalore projects the highest "Business Outlook Index" point, followed by Mumbai and Delhi in the next three months with a major contribution from retail, media & FMCG, infrastructure and financial services.

According to Nirupama V.G, Associate Director, TeamLease, "the buoyancy in the market is incredible. Given that 10 million people will be recruited every year (as per the Planning Commission Report) this is just the tip of the iceberg and we will see an unprecedented growth in the job market in the years to come."

The survey also suggests that Mumbai (98 index points) followed by Delhi (93 index points) and Bangalore (84 index points) have the largest employment base indicating that most of the companies would be hiring in these cities.

The national average is at 80 index points, which is followed by Chennai, Ahmedabad and Pune. Even cities with index points below the national average such as Kolkata reflect more companies planning to increase hiring activities as against those who are not.

The geographical trend projects companies favoring hires from metro and class I cities at 78 per cenbt. The type of industries and the nature of job require qualified personnel largely available in urban areas. Since the report covers the organised sector, data interpretation is focused on urban centers as well.

Bulk of the recruitment will be at the junior level at 86 per cent. Hiring trends across functions project marketing highest at 31 per cent, followed by IT at 18 per cent, production at 17 per cent, finance and others (customer service, quality assurance and maintenance etc) at 11 per cent, administration at 8 per cent and HR at 4 per cent.

News: 'India will push through financial sector reforms'

(PTI 10/10/2006) London - Prime Minister Manmohan Singh on Tuesday exuded confidence that India, in the long run, would be able to forge a meaningful political consensus and take forward reforms in key services sectors including legal and finance.

"Our government would like to see a further liberalisation of trade in services, including financial and legal services. I am aware that there is great interest in Britain in our financial sector," he said addressing the India-UK Investment Summit here.

Greater liberalisation of India's financial sector, especially banking and insurance, has been a long-standing demand of US and the European countries, but resisted by the Communist parties that support the UPA coalition in New Delhi.

Singh said: "I do believe we need to promote a widely held pension fund system. We need a much larger insurance sector, with a higher capital base with more diverse products.

"It is these which will generate the necessary long term funds for investing in a debt market and make available resources for investment needs of our country, particularly in the vital infrastructure sector."

He said the country had already removed most barriers to Foreign Direct Investment in the manufacturing sector, but would like to see higher FDI inflows in infrastructure.

News: Walmart, Carrefour or Tesco? Bharti to ally one

(RTR 10/10/2006) London - Indian conglomerate Bharti Enterprises Ltd, which has held talks with the world's biggest retailers, said on Tuesday it was close to picking one for a retail joint venture.

"We are in the final stages of choosing a partner," Chairman Sunil Bharti Mittal said at a conference.

Asked whether Britain's biggest retailer, Tesco Plc, was on the shortlist, he said: "Tesco is one of them".

Bharti Enterprises has had talks with the world's two largest retailers -- U.S. Wal-Mart Stores Inc and France's Carrefour -- as well as Tesco.

Cracking the Indian market remains the holygrail for the big retailers, including Germany's Metro AG which is already active in the wholesale sector.

India's retail industry is estimated at about $300 billion and forecast to grow to $427 billion by 2010 and $637 billion by 2015.

Yet the Indian government has thus far allowed only single-brand foreign companies to own 51 percent of retail joint ventures. Companies such as Wal-Mart and Tesco that sell wide ranges of branded products are still barred at the retail level, though not at wholesale.

On Monday, the secretary general of India's chamber of commerce said Tesco should expand into cash-and-carry wholesale in order to crack the multibillion dollar Indian market.

Amit Mitra said a foothold in the wholesale sector would give Tesco an advantage when the Indian government decides to relax barriers to foreign supermarkets.

News: 'India Inc making waves abroad'

(HT 10/10/2006) London - Prime Minister Manmohan Singh told the Indian community in UK on Monday evening that India was on the move. And India's "high rates of growth on a sustained basis" is not all that he had in mind.

The expansion of Indian business, not just in India but abroad as well, was another.

It has been a point that Singh has been making, right from the time he left early on Monday for his two-nation visit to raise the level and content of India's business links, first with the United Kingdom and then, the rest of Europe.

"Several Indian companies have expanded their global presence in various sectors across the world, including in the UK," Singh told the community at a reception hosted by the Indian High Commission where he called the "transformation" back home in India as one of the "most far-reaching revolutions of this century".

Singh had noted just hours earlier that "Indian companies are amongst the major investors in the UK".

The UK Trade and Investment's (UKTI) report this year ranked India as the third largest investor in 2005-06, up from the eighth rank in terms of number of projects the previous year. An Ernst and Young report released last week estimated India jumped one more rank in the first six months of 2006.

It isn't the East India Company working the other way yet—Indian companies made up for £1.02 billion of the £219 billion investment into UK in 2005—but the trend has certainly been reversed. "Indian investment into UK is significantly higher than the UK's direct investment into India," Confederation of Indian Industry president R Seshasayee—who led the CII delegation at the UK—India Investment Summit on Tuesday—told Hindustan Times.

Foreign secretary Shivshankar Menon had last week pointed out that more 500 Indian companies have offices in UK. Seshasayee said it is the broad base of Indian companies that is more important than the money per sec.

It isn't just that India Inc is only looking at UK. London is also turning out to be the gateway to Europe; 60 per cent of Indian investment in Europe comes via UK.

Seshasayee sees a major signal in the trend; "that India Inc is turning outward looking, externalisation of India is going in a big way… What makes it better is that the externalisation is broad in scope and approach."

Nothing suggests this better than the fact, the CII delegation leader added, was that "external investment by Indian companies in the first quarter of in 2006-07 is higher than the FDI inflow into India. This is the big story".

But the CII team leader lamented that British business had not yet started focussing on infrastructure development in India. It is in this context that Singh is asking British business to invest in infrastructure projects in India. Delhi estimates the country's investment requirements to be in the vicinity of US $ 150 billion in the next seven to eight years.

British companies, explains Seshasayee, are still "waiting and watching" India, not actually moving in. They seem to be waiting for the perfect market to arrive; quite unlike their traditional self. "British industry has always rebelled and ventured into new territories, right from Africa to South Asia".

News: Last-minute hiccups over Indo-EU trade pact

(BS 10/10/2006) New Delhi - The broad-based trade and investment agreement between India and the European Union, which was proposed to be announced at the India-EU summit in Helsinki later this week, has run into trouble.

Certain sections of the European Commission are seeking a comprehensive agreement which, in addition to trade, will also include political and social issues such as non-proliferation, child labour and the environment.

Indian officials said hectic parleys were on between the two sides to reach an agreement before the India-EU summit in Helsinki on October 12-13, which Prime Minister Manmohan Singh will attend.

The officials added that Commerce and Industry Minister Kamal Nath might meet his counterpart, EU Trade Commissioner Peter Mandelson, before the summit to resolve outstanding issues.

Even if both sides were to announce their intention to have a broad-based trade and investment agreement, as recommended by the bilateral high-level trade group, officials said the negotiations were unlikely to start before March next year.

“Since the European Union has a multi-layered decision-making structure, the European Commission will have to seek the approval of the Council of Ministers before the negotiations can begin. Hence, talks are unlikely to begin anytime soon even if there is a broad-based agreement,” an official said.

There is concern in New Delhi that the EU could be reluctant to immediately kick-start discussions for any bilateral trade pact with India since several new EU members like Turkey, which also have the same competitiveness as India in areas like cheap labour, could raise objections to such an arrangement.

India recently amended its laws concerning child labour and has imposed a ban on it, effective from tomorrow.

Both India and the EU had, last year, established a high level trade group to study and explore ways to deepen and widen their bilateral trade and investment relationship.

The group’s mandate included the possible launch of bilateral negotiations on a broad-based trade and investment agreement.

News: E*Trade open offer for IL&FS Investsmart

(TT 10/10/2006) Mumbai - The US-based E*Trade Financial Corporation has made an open offer to acquire 20 per cent in IL&FS Investsmart at a price of Rs 210 per share. If the open offer is successful, E*Trade will have close to 48 per cent in Investsmart, making it the largest shareholder in the company.

This open offer follows a proposed conversion of Investsmart’s GDRs into equity shares, which will result in a 27.87 per cent stake for E* Trade.

E*Trade plans to acquire over 1.38 crore shares, which would translate into an outgo of Rs 291 crore.

E*Trade will buy these shares through its indirectly wholly owned subsidiary, E* Trade Mauritius Ltd. It also plans to appoint its senior executives in the management team of Investsmart. E*Trade said the offer would result in a change of control of Investsmart and it was “not subject to any minimum level of acceptance by the shareholders of Investsmart”.

It added that E*Trade Mauritius’s larger stake in Investsmart would help expand the operational partnership between Investsmart and E*Trade Financial to increase global trading and investing opportunities for retail and institutional customers of both the companies.

“The two-way global relationship” is expected to provide Indian investors access to international markets and global customers with greater market opportunities to invest in India.

After the offer, E*Trade Financial resources will be deployed in India, allowing Investsmart to leverage the US firm’s technology.

On June 30, E*Trade held a 7.04 per cent stake in Investsmart, while IL&FS had over 29 per cent. The company says as on date, it holds 11,275,007 global depository receipts (GDRs) issued by Investsmart, of which 7,500,000 GDRs were acquired on December 14, 2005; 105,500 GDRs on July 24, 2006 and 3,669,507 GDRs on August 2, 2006.

Each GDR represents one equity share and they are listed and traded on the Luxembourg Stock Exchange. On July 24, E*Trade Mauritius acquired 3,163,570 equity-linked certificates, under the CLSA Group’s derivatives programme backed by an equivalent number of equity shares of Investsmart, which it added, was owned by a Sebi-registered FII belonging to the CLSA group.

E*Trade said it intended to convert all its GDRs into equity shares. Towards this purpose, it passed a board circular resolution on October 6 to convert the current and prospective holding of 14,438,577 GDRs into equity shares comprising 20.83 per cent of Investsmart’s equity. It was due to this proposed conversion of GDRs that the shareholding would rise to 27.87 per cent, necessitating an open offer.

News: Tatas plan to merge group hotels

(TT 10/10/2006) Mumbai - The Tatas-promoted Indian Hotels Company Ltd (IHCL) is looking at merging certain companies of the Taj Group with itself.

In a statement to the bourses today the company said it is looking at a proposed merger of Taj Group companies, namely Indian Resorts Hotels Ltd, Taj Lands End Ltd, Asia Pacific Hotels Ltd, Kuteeram Resorts Ltd, Gateway Hotels & Gateway Resorts Ltd, with itself. “A meeting of the board of directors of the company will be held on October 12, 2006 for the same,” the company said in its statement.

According to reports, the Tatas had increased their holding in Indian Resort Hotels to 52 per cent from 45.04 per cent through a buyback offer some months back. The group had invested Rs 3.96 crore to buy back 5.66 lakh shares at Rs 70 a share. In Indian Resort Hotels, the Tatas hold their stake through Tata Sons, Ewart Investments, Tata Investment Corporation, Tata Industries, Bambino Investment & Trading Company, The Indian Hotels Company and Taj Holdings. Indian Resort Hotels owns the Fort Aguada beach resort in Goa.

Prior to the buyback, financial institutions and insurance companies together held 20.91 per cent in the company. However, their holdings reduced, following the buyback, to 13.97 per cent.

At present, non-resident shareholders hold 0.05 per cent, foreign institutional investors 0.26 per cent and the balance is held by the public.

This exercise was part of the Taj Group’s restructuring to bring down the number of group hotel companies to around 28 from 54 over the next two years. In the first phase, the group intends to lower the number of hotels to 38 and during the second phase, the number would finally come down to 28.

News: Australia's Woolworths eyeing retail in India

(RTR 10/10/2006) Mumbai - Australia's largest retailer, Woolworths Ltd., is eyeing India's retail market for when the government opens it up to foreign firms and has a long-term interest in New Zealand, its former CEO said on Tuesday.

The company has formed an agreement with India's Infiniti Retail Ltd., part of the Tata group, which opened its first store on Monday in Mumbai to sell consumer goods and electronics.

The venture is 100 percent owned by the Tata group and Woolworths will supply it. But the Australian firm will evaluate its options if the government liberalises investment rules for foreign retailers, former CEO Roger Corbett, who is now a Woolworths consultant, told Reuters in an interview.

"If they were to open up, yes certainly Woolworths Australia would be very interested in looking at opportunities in India, but those opportunities would be in partnership with Tata," said Corbett, who retired as CEO at the end of last month.

He said India would attract some of the best global retailing firms if the sector were deregulated and Woolworths itself would look at opportunities beyond electronics and durables.

"Food retailing and general store merchandising are certainly aspects of our business that we would consider bringing to India," he said.

Retail consultancy Technopak Advisors has estimated the size of India's retail industry at about $300 billion and forecast it to grow to $427 billion in 2010.

Presently, branded retail makes up only 3 percent of the market, compared to China's 20 percent and Thailand's 40 percent.

India's top private firm, Reliance Industries Ltd., is investing $5.6 billion in retail and U.S. giant Wal-Mart Stores Inc. is waiting in the wings for the day the government lifts restrictions.

Corbett said Woolworths also had a long-term strategic interest in New Zealand, where it bought 10 percent of the country's top retailer, The Warehouse Ltd., last month.

"That stake is a strategic long-term stake," he said.

"By that we mean to have a position so that we have got a place if you like at the table -- I don't mean at the board table, at the table to participate in anything that unfolds in the future."

News: 'Indian HNI base growing rapidly'

(BL 10/10/2006) Mumbai - The number of rich people (commonly known as high net worth individuals or HNIs) is growing at a rapid pace.

The Asia-Pacific Wealth Report by DSP Merrill Lynch Ltd (DSPML) and consultant Capgemini India puts the number of Indian HNIs at 83,000, up 19.3 per cent over 2004.

These HNIs held $290 billion in assets at the end of 2005, representing 3.8 per cent of the total Asia-Pacific HNI wealth.

HNIs are people with net financial assets of at least $1 million, excluding primary residence and consumables.

India has the youngest HNI population in the Asia-Pacific region, with the club having even 28 year-olds on their rolls.

"India stands fourth in the list of Asia-Pacific HNIs. Strong GDP growth, robust growth in industrial and service sectors, high market capitalisation and steady FII inflows are the factors contributing to the rise in HNI wealth," said Pradeep Dokania, Managing Director and Head (Global Private Clients), DSPML.

The number of HNIs in the region grew 7.3 per cent to 2.4 million in 2005.

The number of ultra-HNIs (with net financial assets of at least $30 million) grew 12.1 per cent to 15,600 over the same period.

The total combined wealth of the region's HNI population touched $7.6 trillion, up by eight per cent over 2004, according to the report.

The report forecasts that Asia-Pacific HNIs' wealth will touch $10.6 trillion by 2010, growing at an annual rate of 6.7 per cent and outpacing the forecast global rate of six per cent.

According to the Annual World Wealth Report, also released by DSPML and Capgemini in June 2006, the number of HNIs globally increased 6.5 per cent to 8.7 million while their combined wealth rose 8.5 per cent to $33.3 trillion at the end of 2005.

ASSET ALLOCATION

Equities made up the greatest portion of India's HNIs' portfolio at 31 per cent.

These individuals placed an additional 20 per cent of their assets in alternative investments such as structured products, hedge funds, managed futures, foreign currency, commodities and private equity.

They parked 17 per cent of their investibles in real estate and 19 per cent in fixed income units. About 13 per cent of their allocation was in cash/deposits, the report said.

Investment in equities is reported to be very low in China (14 per cent) and Indonesia (16 per cent).

News: 'Drug cos bet on India, China'

(BL 10/10/2006) Mumbai - The India and China story continues to be on a roll in the pharmaceutical sector, says Ernst & Young (E&Y) in its latest report on the sector. International pharma companies are increasingly bullish on investment prospects in China and India, with 37 per cent of those surveyed saying that their company investments would reach in excess of $150 million in both countries by 2010, the report said. Several companies have either established or plan to set up research and development and/or manufacturing facilities in these two countries, it added. Though multinational companies are happy with the product patent regime that has become effective in India since January 2005, respondents on the study did consider patent infringement a problem in India. Companies that left India in the 1990s are back in the country, scaling up operations, sales-force and promotion budgets, the report said. There has been an increase in the number of new drugs launched since January 2006, besides the time lag between international and domestic drug launches is reducing, said E&Y's Utkarsh Palnitkar. Research credit has emerged as an appealing financial instrument to attract foreign investment, says the report. However, better tax incentives are required, it added. The report underlined the continued importance of the generics industry. "India will remain a market dominated by branded generics, as patented drugs that account for less than 2 per cent will grow to only about 7 per cent by 2015," it said. The global generics market is expected to grow to an estimated $70 billion, doubling its size by 2010-2011. An ageing population, pressure on Western Governments to contain healthcare costs, pressures on policy-makers in developing countries to increase access to drugs and scores of upcoming patent expirations will contribute to this growth, the report said. Other avenues of growth come from clinical research being sent to India, besides the growing chronic diseases segment. There are concerns on the need for standards to regulate contract research organisations (CRO). "While larger CRO's follow industry standards, accreditation of smaller service providers will reduce the risk posed by unscrupulous players/CROs with limited or no credibility," the report said. "New markets for treatment directed at chronic diseases are growing. Therapies for chronic diseases currently account for 1/4th of the domestic market and by 2015 is expected to increase to nearly 1/3rd of the market," the report says.

News: Disney partners with Indian company

(AP 10/10/2006) New Delhi - Walt Disney Co. has partnered with an Indian company to sell its products in India as part of efforts to expand its presence in one of the world's fastest growing markets, a company official said Monday.

The Burbank, Calif.-based company plans to unveil the details of the agreement with the Jaipuria Group later this week, Disney spokesman K.R. Seshasayee said.

Seshasayee declined to comment on a newspaper report Monday that said the agreement will allow Disney to set up retail stores to sell a variety of its products, from toys to apparel.

The partnership comes three months after Disney bought Hungama, a local children's cable and satellite TV channel, for $30.5 million.

It also appeared to be a response to recent policy changes in India.

Earlier this year, the government said it would allow foreign companies to invest in retail stores for single-brand products in partnership with Indian companies.

Several international brands such as Nokia, Marks & Spencer and Adidas have since moved to set up their own stores. Previously, their products were sold through franchises.

However, multi-product retail companies such as Wal-Mart Stores Inc. are still barred from opening stores in India.

Plans by the government to fully open retail trade to foreign investment have been blocked by opposition from communist parties, whose support is crucial to the ruling coalition's parliamentary majority.

News: Indian car sales up 22.4%; bike sales grow 24.8%

(PTI 10/10/2006) New Delhi - Car sales in the domestic market overcame sluggish demand in the inauspicious 'shradh' period and grew a healthy 22.4 per cent in September this year at 94,734 units against 77,384 units in the same month last year.

Led by the upsurge in the auspicious 'Navratra' period that began on September 23, as many as nine of the eleven car makers saw sales going up in September, General Motors and Hindustan Motors being the exceptions, according to figures released by Society of Indian Automobile Manufacturers (SIAM).

Those witnessing a surge in sales included market leader Maruti Udyog, Hyundai India, Tata Motors, Ford India, Honda Siel and SkodaAuto India.

Car sales generally slow down in the 'shradh' period, considered inauspicious for new purchases, forcing companies to dole out attractive discounts and schemes to pull in customers. However, the demand picks up from the 'Navratra' period that follows it, heralding the onset of the festive season in India where the peak demand is realised in the market.

Car sales in the first half of this fiscal have grown 22.8 per cent at 5,03,249 units against 4,09,681 units in April-September 2005 period, SIAM said.

On the two-wheeler side, Hero Honda and Bajaj Auto led the charge as bike sales in September grew 24.8 per cent at 6,72,570 units against 5,38,889 units in the same month last year.

The growth rate was the highest for Bajaj Auto which saw bike sales rise by a whopping 48 per cent at 2,45,759 units against the 10 per cent surge for Hero Honda. TVS Motors also saw numbers rise in September as sales stood at 99,401 units against 70,652 units in same month last year.

News: 'Indian real estate regulator likely next year'

(PTI 10/10/2006) New Delhi - The government is likely to introduce a bill in the Parliament next year to set up a regulator for the real estate sector to protect the interests of customers and other stakeholders.

The union government will also pursue repeal of urban land ceiling act and reduction of stamp duty with state governments by making them one of the conditions for release of grants, aggregating Rs 50,000 crore, under the Jawaharlal Nehru Urban Renewal Mission in the next six years.

"The bill would be given final shape next year and brought in the Parliament," Urban Development Minister S Jaipal Reddy told reporters on the sidelines of a seminar on real estate here last night.

He said the issue of protection of customers and other stakeholders will figure in the bill.

Pointing out that urban land ceiling act and stamp duties, which drew flak from speakers at the seminar, are state subjects, Reddy said the union government would pursue these issue with states.

While entering into a memorandum of agreements with state governments for release of grants under the mission, the Centre would put conditions for abolition of urban land ceiling acts and curtailment of stamp duties, he said.

News: DLF readies Rs 10k-cr realty push

(TNN 09/10/2006) Chennai - Real estate developer DLF is investing Rs 10,000 crore in Tamil Nadu. The projects include a six-million sq ft IT park coming up over a 42-acre plot in Chennai, a shopping mall in the heart of the city and a residential township spread over 100 acres on the IT Corridor (OMR).

In addition, DLF has offered to participate in infrastructure projects to be initiated in the state by the government. The offer includes participating in creating infrastructure facilities in Chennai airport, besides developing ring-roads around Tier-II cities like Coimbatore, Madurai and Tiruchi. Rajeev Singh, vice-chairman, DLF, called on Tamil Nadu chief minister M Karunanidhi on Sunday morning.

State electricity minister Arcot N Veerasamy and PWD minister Duraimurugan were also present. “We are committed to invest Rs 10,000 crore or well over $2bn in various real estate and infrastructure projects in Tamil Nadu,” official sources in DLF told ET. Construction activity for DLF’s first project in Tamil Nadu — a six- million sq ft IT park at Manapakkam in Chennai, the largest IT park in the state — is already under way.

News: MNCs may get nod to invest in Indian realty firms

(TNN 09/10/2006) New Delhi - The Reserve Bank of India is reviewing its stand on the treatment of FII investment in pre-IPO placements for real estate companies. This follows a high-powered meeting of the officials of Sebi, finance ministry, RBI and commerce and industry ministry. This could finally pave the way for the numerous real estate funds — many of whom have raised billion-dollar funds — to invest in companies engaged in real estate sector at a pre-IPO stage.

RBI feels that FII investment at the time of initial public offer (IPO) of real estate companies would be treated as portfolio investment. However, a pre-IPO placement, even if it is done by an FII, would be treated as foreign direct investment (FDI).

This would imply that such FII investments would have to conform to stringent FDI norms. The sectoral FDI norms have various conditions, including minimum area to be developed under each project, three-year lock in period for the investment etc. This has held back such pre-IPO placement of equity with FIIs. However, other authorities disagree with such a treatment of FII investment.

At the meeting held in the last week of September, the representative of Sebi observed that all FIIs registered with it have to operate according to its guidelines. Any investment and transactions by FIIs would have to be through the portfolio investment scheme and not FDI and hence FII investments in real estate companies would not attract provisions of FDI norms in the sector.

The representatives of DIPP, part of the commerce and industry ministry, felt under the Foreign Exchange Management (Transfer of Issue of Security by a Person Outside India) Regulations 2000, registered FIIs are permitted to invest in shares and convertible debentures of Indian companies through a public offer or through private placement.

There is no distinction made with respect to FII investment through private placement and public offer as both are allowed as part of portfolio investment scheme for registered FIIs. Therefore, the representatives of DIPP felt FII investments in pre-IPO placement should not attract the provisions of FDI norms. This view was also shared by a representative of department of economic affairs which is part of the finance ministry.

As a part of the discussions with respect to provisions of FEMA Regulations, the Reserve Bank of India was requested by representatives of other authorities to reconsider its stand which has been accepted by RBI.

News: Tatas keen to maintain status quo at Corus

(TT 09/10/2006) London - If Tata Steel strikes a deal with British firm Corus, the Indian company would be keen to retain Corus’s management, including chief executive Philippe Varin. The Frenchman is credited with turning around the steel group since taking over in 2003, returning it to the black for the first time in five years.

Senior industry executives said Tata Steel might have to fight to keep Varin as he is already being wooed by rival groups, including mining firms Anglo American and Rio Tinto, both of which are seeking new chief executives.

A substantial shareholder in Corus — he owns close to 2 million shares — Varin would also be in line for a substantial payout in the event of a takeover.

Tata Steel could still face opposition to a bid. Severstal, the Russian mining firm which announced on Friday that it intended to list on the London Stock Exchange next month, is understood to be monitoring the situation.

But those close to Corus say Tata Steel remains the firm frontrunner.

Tata Steel is among a number of companies taking part in a visit to Britain this week by Prime Minister Manmohan Singh to boost trade relations between the two countries. The management of the two companies already know each other well and The Sunday Telegraph has learned that Corus chairman Jim Leng held unsuccessful talks with Tata group chairman Ratan Tata in July about a potential merger.

If successful, it would be the biggest Indian takeover of a foreign company and would be a remarkable coup for Tata. Last year, Tata Group generated revenues of $21.9 billion, the equivalent of about 2.8 per cent of the country’s GDP.

Any agreement would depend very much on price. Shares in Corus closed at 481 pence on Friday, valuing the company at £4.3 billion.

Analysts have suggested that Tata Steel would be reluctant to be seen to overpay for what is still seen as a high-cost operation. “Corus is a high-risk acquisition,” said one analyst. “The company has been looking for a buyer for some time but Tata will not want to over-pay.”

Tata Steel has lined up a $6.5-billion (£3.5 billion) financing package to help fund a £5-billion takeover of Corus.

News: 'India needs $50 b annually for infrastructure'

(RTR 09/10/2006) New Delhi - India needs to reforms its pension and insurance sectors and develop a corporate debt market to raise long term funds of $50 billion annually from domestic markets to improve its rickety infrastructure, the Finance Minister, P. Chidambaram, has said.

Asia's fourth largest economy must also explore ways of attracting foreign private equity in long-gestation projects like power plants, ports, roads, airports, he told a business conference here.

India faces a shortage of long term debt instruments that could raise funds for infrastructure projects.

"We have to raise $50 billion a year from the country. It is not impossible if we put in place a mechanism to tap long term savings," the minister said.

"We need to press ahead pension and insurance reforms."

The government tabled a bill in Parliament last year to allow private pension fund managers to handle long term savings. It also proposed to raise the foreign investment limit in insurance to 49 per cent from the present 26 per cent .

But the coalition government faced stiff opposition from its communist allies lending crucial support in parliament.

"We are working with coalition partners to pave the way for pension bill in the next two few weeks," Chidambaram said.

The government was also discussing with financial regulators to frame rules for corporate debt market, he said, adding Indian firms should try to tap foreign private equity for funding infrastructure projects.

"We must be willing to think out of the box. There is enough private capital jostling around the world and we must tap that."

The minister also said growth in bank loans at an annual 31 per cent was not a cause of concern as long as most of it goes to productive sectors like the manufacturing, farm and services sectors.

News: ICICI Bank mulls to unveil new remittance products

(ACERC 09/10/2006) Mumbai - Buoyed by the robust performance of its remittances business, ICICI Bank plans to launch a slew of innovative products in this segment before the end of this fiscal.The bank also plans to scale up its presence in the Gulf besides exploring alliance possibilities with overseas banks to boost this business, especially in the emerging markets. They have a few innovatively-structured products tailor-made for the remittances market in the pipeline slated for launch before March 2007. The products will be market-specific and possess a plethora of innovative features which will make the modes of disbursing and accepting funds very easy.

ICICI Bank currently enjoys an over 20 per cent market share in the $ 24 billion Indian remittances market. The remittances market has expanded robustly at a CAGR (compounded annual growth rate) of 15-to-20 per cent in the last three years and industry analysts expect the momentum to continue over the next three years as well. A million Indians go overseas annually, adding to the already existing huge stock of NRIs and PIOs. Western economies are ageing and to sustain their growth, they need not only skilled personnel but also an economically-productive work-force which is sourced from countries like India.

News: Disney to set up retail stores in India

(RTR 09/10/2006) Mumbai - Walt Disney Co. is looking to set up a chain of flagship retail stores in India, and will enter into a licencing agreement with an Indian partner later this month, the Economic Times newspaper reported on Monday.

"Initially, it will have just two stores in Delhi. More stores will be set up in other metropolitan cities subsequently," the newspaper said, citing unnamed sources.

The Economic Times identified unlisted Devyani International as Disney's proposed partner.

A Disney spokesman refused to confirm the report, saying it was "purely speculative".

Devyani is part of the Jaipuria Group, a leading bottler for world's top soft-drink maker Coca-Cola Co.'s Indian business, the report said.

Disney, based in Burbank, California, bought Hungama, a local children's cable and satellite TV channel in July this year for $30.5 million.

News: 'Indian realty sector has great potential for growth'

(PTI 08/10/2006) New Delhi - The government has said about 75 per cent of India's population is expected to live in urban areas by 2050, which augured well for the booming realty sector.

"The 75 per cent of the population of our country would reside in urban areas by 2050, while only 28 per cent lives presently in the urban areas," minister of state for urban development, Ajay Maken said at the foundation day ceremony of capital based realty firm Aerens Group here.

About 1.14 billion people was expected to live in urban areas by 2050, which is almost the equivalent to country's current population level, he added.

Highlighting a HUDCO commission study on future level of urbanisation, he said only 3.5 per cent of the total area of the country would be enough to meet the housing needs of 75 per cent of the total population.

"All this needs a proper scientific approach to the issue of urban planning," he said.

Maken also drew attention to huge growth potential of the real estate sector through its wide spread linkages with the rest of the economy.

He said the real estate sector happens to be an important sector at a time when the global investors looking at Indian economy.

The minister said nearly 300 million people live in the urban areas in the country according to the latest available official estimate, which is second in the world.

Sharing its humble bit to the on-going realty boom, the capital based Aerens Group is engaged in developing projects worth nearly Rs 15,000 cr.

News: 'India, EU need to address non-tarrif barriers'

(PTI 08/10/2006) New Delhi - The non-tariff barriers (NTB) in Indian and the EU markets need to be addressed for the two nations to benefit from bilateral trade and investments, industry body Confederation of Indian Industry (CII) said.

The two countries are to finalise a bilateral trade and investment agreement at the India-EU Summit at Helsinki on October 11-12 and the issue of NTBs should be addressed for them to benefit from the agreement, CII said.

Nearly 23.38 per cent of India's total exports to the 25-nation EU are covered by NTBs - especially in the area of carpets (86.2 per cent), textiles and clothing (65.85 per cent) and leather (31.35 per cent).

A recent study by CII Principal Advisor Jayanta Roy said India is one of the countries targeted by EU, affecting 3.5 per cent of the Indian exports as against the global average of 1.5 per cent.

Acting as a hindrance to greater engagement is Mutual Recognition Agreements and negotiations should be undertaken in the area alongside the trade and investment agreement.

India needs to focus on trade facilitation and work with EU nations to ensure time period for goods at ports be reduced to the minimum, CII said.

Implementation of Electronic Data Interchange also needs to be extended beyond customs to all other agencies to ensure a fully automated and paperless system is in place, it added.

News: French footwear Homme enters India, eyes Rs 20 cr turnover

(PTI 08/10/2006) Mumbai - French footwear brand Homme Global is making a foray into the Indian market with its premium brands and is looking to clock a turnover of more than Rs 20 crore in the first year.

Catering to the men's category of footwear in casuals and formal, the two brands -- Homme and Maco -- would be procured by East Face Footwear Pvt Ltd, who have acquired the licence to market it in India.

East Face has made an initial investment of about Rs one crore and is eyeing a turnover of over Rs 10 crore for Homme and an equal amount for the Maco brand, Company Director Sales and Marketing Arun Kumar Vajpayee said.

The footwear market in the country currently stands at more than Rs 4,000 crore and is slated to grow at about 12-15 per cent per annum. The premium segment, in which the Homme brand would be positioned, is expected to grow at about 20 per cent and the mid-segment slated for a 10-12 per cent growth annually, he said.

"Homme is targeted at the upper-income level and is price in the range of Rs 3,000-5,000, while Maco within the range of less than Rs 2,999, is for the mid-segment," he said.

East Face plans to sell 30,000 pairs for both Homme and Maco in the next one year, while it hopes to export nearly 25,000 pairs by the end of the fiscal.

News: Indian FM clears air on special zones

(TT 08/10/2006) New Delhi - Finance minister P. Chidambaram today said there were some revenue concerns over the special economic zones (SEZs), but he did not have any major differences with commerce minister Kamal Nath on the issue.

“Contrary to popular perception, the commerce minister and I share the same views on SEZs. The problems are being exaggerated,” Chidambaram said in reply to a question at a conference on infrastructure.

He, however, admitted there are certain revenue concerns that his ministry has and some issues have also been raised by the agriculture ministry about various aspects of the SEZs.

Chidambaram said these concerns would be taken up by the empowered group of ministers, headed by defence minister Pranab Mukherjee, and if necessary, by Prime Minister Manmohan Singh as well.

“SEZs are a part of government policy and the Prime Minister's statement yesterday has also mentioned that these zones are here to stay,” he added.

Nath put the onus of identifying and acquiring land for SEZs on state governments and said primarily wasteland and non-agriculture land should be utilised for such projects.

Dismissing concerns that SEZs may lead to land scams, Nath said there are guidelines which clearly spells out rules and regulations regarding acquisition and use of land.

“No SEZ projects are approved without state government clearance. The states should ensure that land needed for industrial purposes is not prime agricultural land,” he said.

Nath said housing projects in SEZs are generally limited for 25 per cent of the workforce. He said SEZ is not a new concept as the country earlier had export promotion zones.

To a suggestion from Bengal industry minister Nirupam Sen that the Centre should amend the land acquisition act as it is coming in the way of various projects, Chidambaram said state legislatures are free to amend the act, which falls in the concurrent list.

Chidambaram said while the economy had been growing at a rate of 8.5 per cent, the rapid pace of growth has exposed the deficiencies in infrastructure in the country which were particularly obvious in congested highways, ports and airports.

Chidambaram said infrastructure has long remained in the domain of the public sector which resulted in inadequate development. Hence, there was a need for participation for the private players which are flush with funds to invest in the sector.

News: Mukesh Ambani to build India's biggest port at Navi Mumbai SEZ

(PTI 08/10/2006) Mumbai - The Mukesh Ambani-controlled Reliance Group proposes to build India's largest port "Rewas" as part of its Navi Mumbai SEZ, which would have same draft as of Suez Canal and virtually double that of the deepest JNPT port in the country.

The Group plans to invest more than Rs 3,000 crore in developing the port, which is located about 10 nautical miles south east of Mumbai harbour, and awaits environmental clearances to launch construction.

"We are in the process of planning and seeking environmental clearance from the Central government for Rewas, which we hope to get by the end of the year," a company source said.

A Reliance industry spokesperson, however, declined to comment on the issue.

With a draft (depth of the sea) of 20 metres, the Rewas port has proved to be a clincher for Reliance Group, which is developing two mega special economic zones (SEZs) across 35,000 acres in Navi Mumbai and expect a steady flow of cargo.

The draft (which can be increased to 22-23 metres) will ensure that large ships, possibly even supertankers, to berth here. On the other hand, the Jawaharlal Nehru Port (JNPT) has a draft of 12.5 m and Mumbai Port Trust (MbPT) has a draft of 9.5 mt making Rewas the biggest port in the country.

Notably, the Suez Canal authorities too are currently engaged in increasing its depth, so that vessels with a greater draft such as supertankers can go through. Dredgers are deepening the waterway from 20m (66ft) to 23m (72ft).

News: Taking banking to India's poorest of poor

(BL 08/10/2006) Chennai - The frontiers of financial inclusion is taking banking to the poorest of the poor - the beggars.

Imagine a beggar opening a savings bank account! Twenty beggars in Rameshwaram opened savings bank accounts with the HDFC Bank on Saturday. Next week, they will be given Rs 1.2 lakh, or Rs 6,000 each, so that they can buy gift articles and retail them in the temple town. These people have been begging all their lives, notes K. Manohara Raj, a Vice-President with HDFC Bank.

The proposal came from a Ramanathapuram-based NGO called Cherdi. HDFC Bank has been in touch with a number of NGOs across the country. The NGOs are rated against a list of parameters and those that qualify are used as `correspondent service providers' for micro loans.

Cherdi scheme

Cherdi came up with a proposal for loans to rehabilitate beggars and the bank believes it is a risk worth taking. While this instance of "beggar loans" might be one-off, it so happens that the bank's micro-finance sweep has touched the lives of dacoits and sex workers too.

For instance, in a town near Kodaikanal, the bank helped 140 sex workers join 70 existing self-help groups (SHGs), two in each to ensure that they are well assimilated into the groups and not form a stigmatised sub-group. "These tribal women were into this profession only for survival," notes Manohara Raj.

Five of the 70 SHGs are engaged in buying essential goods from a department store in Kodaikanal and selling them in the far-flung villages spread over the hills.

Tribals programme

HDFC Bank has initiated a programme, which it calls MFIT (Micro Financial Inclusion for Tribals). As the name suggests, it is focussed on tribals. Economic development is inevitable, but when it happens it is the tribals who are the worst hit, observes N.S. Kishore Kumar, senior Vice-President, HDFC Bank, who heads the bank's agriculture-lending and micro-finance activities.

Jhabua in Madhya Pradesh is the place HDFC Bank has chosen to beta-test MFIT. Two months ago, the bank disbursed Rs 60 lakh to 1,500 beneficiaries (through NGO-co-ordinated SHGs). Many of these tribals used to borrow from local moneylenders, as a consequence of which some turned into dacoits.

These tribals had hardly heard of banks and were wary of the lenders' motives when HDFC officials approached them with offer of money. Using a local NGO called Action for Social Advancement (ASA) the bank managed to open accounts and lend.

The tribals used the money for various purposes. Many bought goats and sheep, some got into kitchen gardening. In just two months, the results have started showing. Essentially most of the tribals are getting out of the clutches of local moneylenders.

Kishore Kumar feels that the tribals can be enabled to take up a number of forest-produce and farming related business activities. "They need finance, agglomeration and institutional support," he said. HDFC Bank is also talking to companies for "offtake of the products made by tribals."

News: Multi-million dollar deals with India on the anvil

(PTI 08/10/2006) London - A number of multi-million dollar contracts between British and Indian companies will be signed during the India-UK Investment Summit here on Tuesday, sources said today.

Prime Minister Manmohan Singh and his British counterpart Tony Blair are scheduled to address the Summit following which Trade Secretary Alistair Darling will hold talks with Kamal Nath, India's Commerce minister.

The event provides evidence of strengthening links between the two countries, the sources said.

The same day, British retail giant Tesco is expected to announce plans to enter the Indian retail market in partnership with Bharti Enterprises, the Indian telecom company.

Other companies attending the event are Standard Chartered, and Cairn Energy, which will this week release details of its Indian subsidiary's imminent IPO on the Bombay Stock Exchange.

Because foreign direct investment in Indian retail is outlawed, Tesco is expected to become either Bharti's franchise partner or its supply-chain partner, providing technology and infrastructure support.

News: Ficci suggests ways to finance infrastructure projects

(PTI 08/10/2006) New Delhi - Industry body Ficci has suggested the use of alternative tools to raise long term funds for infrastructure projects, which will require a whopping Rs 13,70,500 crore in the next eight years.

The chamber has suggested that long term saving instruments like pension, provident and insurance could be ideal for financing the infrastructure projects, which have a long gestation period.

To raise terms for the medium term, Ficci suggested floating mutual funds focussed on the sector and developing corporate bond market.

It said an environment for funds should be created for flow in infrastructure projects, policy roadblocks should be removed, which are inhibiting the creation of world class infrastructure.

The government could also offer exit options for the initial lenders to infrastructure projects and increase the viability gap funding.

Ficci said highway bonds with maturities of 15-20 years can be used for financing non-commercial sections of the quadrilateral. commercial banks, insurance companies, provident funds, finance companies and debt funds could subscribe such bonds.

The industry body said specific policy hurdles like land acquisitions, procurement for bidders and contractors, skilled manpower, partnerships to fund the dedicated freight corridor and regulatory mechanism for urban rail based public transport, need to be resolved to ensure successful completion of these projects.

News: FDI in Indian retail - RAI fears predatory pricing

(BL 08/10/2006) Coimbatore - Organised retailers in India are opposing the entry of MNCs in retail trading not because of any fear over competition but because of their predatory pricing strategy that wipes out competition, according to Gibson G. Vedamani, CEO, Retailers Association of India (RAI), Mumbai. He said that when the Government decides to allow foreign players to enter the retail space, it should first restrict them to lifestyle products segment before permitting them to spread their wings into other areas like grocery marketing that has a direct impact on `kirana stores'. He told Business Line in Coimbatore that the industry is aware that it is just a matter of time before foreign direct investment (FDI) in retail space is permitted. The question is how the Government can ensure a `level playing field' for everyone. Vedamani said the entry of foreign players should not affect big or small retailers in India. If FDI in retail is allowed, the stores would stock imported goods that would be detrimental to the interests of local producers and farmers. Protecting farmers Domestic retail industry wanted that the marketing of our own produce in the stores and the interest of our farmers should not be affected. If such retail stores import and stock food and grocery items from abroad, it would affect the interest of the local producers and farmers. Asked specifically as to whether the Indian retail industry is afraid of foreign competition, Vedamani said the industry is not afraid of competition, but is wary of `predatory pricing'. He said, without mentioningnames, that there are instances of companies adopting predatory pricing when they entered other countries. "There wasnothing else to be afraid of," he pointed out. The local retailers have better understanding of the divergent demands of the domestic market than anyone else and it would take time for any foreign company to fully understand the intricacies of the Indian market, he said. Predatory pricing Asked how the impact of any permission given to FDI in retail business would be different from the entry of industrial powerhouses in the business, whichcould also go for aggressive pricing due to volume purchase, he said there was a subtle difference between selling at lower prices because of `purchasing efficiency' and predatory pricing. In the latter, companies sustain losses for three to five years to `kill competition completely' and build their business. He said the entry of large Indian corporate houses into retail space was welcome as there are not enough large formats. He did not expect the Indian companies to resort to predatory tactics as they are responsible to their shareholders and they have the stakeholders' confidence in mind. Vedamani did not expect any problems for the small retailers for the next five years. The small players are trying to `re-discover' themselves and have tried to cooperate with large stores by becoming sources of procurement for vegetables, fruits etc. and have also become more customer-friendly. He clarified that RAI had not asked for any sectoral restriction on FDI and wanted only some restrictions on minimum investment and shop area, and the locations where they could open stores. Vedamani said the business volume of the organised retail business in India was estimated to be about Rs 90,000 crore, constituting approximately 9 per cent of the total retail business. This segment has been witnessing 40 per cent CAGR. When the big corporates enter retail business, its size could grow to even Rs 2,50,000 crore in the next five years. He said the Government should allow the retail industry to function 24x7, 365 days a year. The Government should also give single window clearance for opening shops rather than asking them to obtain a plethora of licences. He added that certain areas must be earmarked as retail zones and extend stamp duty concessions on lease deed registration etc. Vedamani said there was a phenomenal growth in manpower requirement and RAI had tied up with institutions for starting retail management courses that have seen 100 per cent placements. The availability of real estate and growing consumer awareness would see the retail boom spreading to tier II and tier III cities, he pointed out.

News: ING Life keen to partner post offices

(PTI 07/10/2006) New Delhi - ING Vysya Life Insurance is mulling an alliance with India Post, one of the largest postal network in the world, for a foray into micro-insurance business in the country.

"This is an interesting proposal and we may look at a partnership with Department of Post," ING Group Executive Board Member Hans van der Noordaa said here on the sidelines of the launch of the 'Microinsurance Awards 2007'.

ING Vysya Life is a joint venture of Amsterdam-based financial institution ING Group, Exide Industries, Gujarat Ambuja Cements and Enam Group.

He said it was a very good proposal as the massive post office network (numbering more than 1,55,000) will give an excellent platform for micro-insurance, besides reducing the distribution cost.

Noordaa was reacting to the suggestion of former Insurance Regulatory and Development Authority chairman N Rangachary, who said ING should look at partnering with post offices as they have acceptability and reach that no one can match.

According to ING Country representative Naren N Joshi, the sales and distribution costs are very high in India, which need to be reduced drastically to make micro-insurance a viable product for the poor.

"ING offers micro insurance products in many countries. We have plans to enter micro insurance business in India," Noordaa said.

Joshi said the the company is in the process of launching a micro insurance product in India.

Country's largest life insurer, LIC has recently launched 'Jeevan Madhur', a micro insurance for the poor.

News: Reliance to use SEZs to power retail drive

(TNN 07/10/2006) Mumbai - Mukesh Ambani’s Reliance Industries, which is set to debut its retail venture later this month, with its first outlet in Hyderabad, is planning to utilise its special economic zones ( SEZs) as its distribution and stocking hubs for its retail business. Sources close to the development indicated that, each Reliance controlled SEZ would be would be a hub for different commodities.

This in effect would not only make for optimum and synergised use of its SEZs, but more importantly would free them from the tax net, that would be levied on the centralised distribution hubs, if located anywhere else.

The Reliance official spokesperson, declined to offer any comments, however a source close to company confirmed the development stating, "SEZs would be used as a distribution hubs for RIL's retail business.

This would lead to an integration with a world class supply chain, logistics and information technology infrastructure. RIL's SEZ in Haryana will house an international container depot and will provide hinterland linkages."

The RIL's SEZs in Harayana, Jamnagar and Mumbai would be linked by the Western Freight corridor, which has been proposed to be developed at a cost of over Rs 25,000 crore.

The strategy of creating strong and captive distribution hubs is drawn from global major Walmart, whose strength is in its clearing and distribution model.

Reliance retail would at a later stage, look at equity investment to the tune of Rs 10,000 crore. Reliance Retail (RRL), the wholly owned subsidiary of RIL, total investment would amount to over Rs 25,000 crore to spearhead the retail revolution in the country, which includes the setting up of the distribution and stocking hubs.

RIL's agri-retail business, which is aimed at connecting farms and unorganised retail through a distribution system, is planning over 1,600 farm-supply hubs across India to buy high volumes of farm produce and sell seeds. These village hubs will also provide fertiliser, fuel and credit to the farmers.

Reliance retail is planning to create the state agri-distribution hubs, which will be the collection centres in the state. The state distribution hub will then route the bulk produce to the central distribution centre in its SEZs.

From the SEZs, it will then be dispatched to its retail outlets across India as well as be exported. Recently, RRL announced of setting up agro-retail project in West Bengal with investment of Rs 2000 crore. This includes the creation of huge distribution centres. The format would be a mix from neighbourhood convenience stores, supermarkets, speciality stores and hypermarkets.

The Reliance retail outlets will be about 2,000 square feet and will not restrict its retailing activities to just food and grocery but also consumer and electronic items, apparels and footwear, distribution of energy products and services, entertainment and leisure and many more.

News: FM invites pvt players to invest in Indian infrastructure

(TNN 07/10/2006) New Delhi - Pegging a massive resource requirement of $363 bn over the next 5 years for development of infrastructure in india, finance minister P Chidambaram on Satarday invited private sector to pitch in with the support of the government in this crucial area for ensuring over 8 % growth in economy.

Economy is exected to grow at 8 per cent or more in the 11th plan. Unless investment grows at the same pace, it will not be possible to sustain the economic growth, he said addressing the day-long summit on infrastructure convened by the planning commission.

Chidambaram said Infrastructure has long remained in the domain of public sector which resulted in inadequate development. Hence, there was a need for participation for the private players who are flush with funds to invest in the sector.

He said in the 10th Five Year Plan Rs 11 lakh crore investments were required to be invested in infrastructure and by 2012 Rs 2,20,000 crore needed to be invested in national highways, Rs 40,000 crore on airports and Rs 50,000 crore in ports.

Chidambaram highlighted that in the first 20 months of the UPA government the economy grew by an average of 8.5 per cent and expressed confidence that it would grow at more than 8 per cent in the second quarter of this fiscal

He, however, said the rapid pace of growth has exposed the infrastructure deficiencies in the country in particularly obvious congested highways, ports and airports. Chidambaram said infrastructure has long remained in the domain of public sector which resulted in inadequate development. Hence, there was a need for participation for the private players who are flush with funds to invest in the sector.

News: Budweiser may tap Jaipuria for distribution

(TNN 07/10/2006) Bangalore/New Delhi - Beer giant Anheuser-Busch (A-B), maker of Budweiser, is likely to strike a distribution joint venture with S K Jaipuria Group, a key Pepsi bottler, as part of its India foray plans.

A-B is in the midst of giving finishing touches to its India strategy and is expected to unveil a manufacturing joint venture with Hyderabad-based Crown Breweries.

ET had earlier reported that A-B could pick up to 50% stake in Crown, which is coming up with a greenfield brewery 60 kms outside the city.

Sources said A-B has been talking to the Jaipuria camp for some months now, and a final decision on whether it would partner with the latter could come in the wake of a visit by A-B team to India in mid-October.

When contacted, a S K Jaipuria Group official confirmed talks with Budweiser for a national distribution venture. However, details of the joint venture could not be ascertained at the moment.

A-B would be following a dual venture strategy if it decides to ally with Jaipuria for distribution. Sources said A-B was familiar with similar operational structures else where in the world. The S K Jaipuria camp carries a strong Pepsi legacy, which A-B would find hard to ignore, sources added.

Further, the Jaipuria camp has prior experience in alcoholic beverage distribution with the UB Group in the Maharashtra market. It is learnt that A-B will hit the booming domestic beer market with the flagship Bud and a higher alcohol content strong beer sometime in the first half of 2007.

While its expected equity participation in Crown Breweries will provide access to Andhra Pradesh, which is India’s largest beer market, it is unclear whether A-B would look for more manufacturing foot print in other key markets like Maharashtra, Karnataka and Rajasthan.

News: Lladro's Indian retail FDI proposal cleared

(PTI 07/10/2006) New Delhi - A proposal by UK-based Alpha Airports to enter the airport retail segment has not been cleared by the Foreign Investment Promotion Board, while that of Spanish porcelain maker Lladro for opening retail boutiques got the nod.

“Alpha Airports, which had applied for setting up a fully owned Indian subsidiary to carry out retail activities at airports has not got the board’s nod,” official sources said.

According to reports, Alpha had said in its application that the proposed duty-free shops would be considered to be in the nature of trade outside the customs territory of India and the shops will sell only in foreign currency and not in Indian rupee.

The argument has not found many takers in the board as the government has allowed foreign direct investment only in single brand retail and that too up to 51 per cent.

Spanish porcelain maker Lladro, whose application was approved, is, on the other hand, forming a joint venture to open retail boutiques to sell products under its brand in India.

Lladro will hold 24 per cent in the venture, while the rest would be with its Indian distributor SPA Agencies. The venture would be called Lladro India and invest around Rs 22.5 crore to set up retail boutiques.

The Spanish company, however, has the option to increase its stakeholding in its Indian venture to 49 per cent by 2009.

The proposal of Lladro would now have to be approved by the finance minister. With FIPB approval to Lladro, the number of cases where FDI has been allowed in retail sector has gone up to three.

News: Gulf investors primed for Indian real estate sector

(BS 07/10/2006) Dubai - Gulf Arab investors are looking to pour billions of dollars into Indian real estate, as Indian regulators ease restrictions on foreign capital flowing into the sector.

The Gulf’s oil-fuelled current account surplus will hit $227 billion this year, according to the Institute of International Finance, and that money is looking for a home.

With domestic real estate markets saturated and the West seen as increasingly hostile by some, Gulf investors are turning to India’s emerging property market.

“The opportunities in India are immense,” said Rakesh Patnaik, head of real estate investment at Global Investment House, a Kuwaiti investment bank.

“India is still a new market. It is only in the past 12-24 months that it has opened up,” he added. Gulf investors know India well.

The country’s financial centres are a short flight away and many of the professionals managing Gulf money are Indian expatriates. Their intention is to develop the projects in which India’s fast-emerging middle class will live and work.

So far the Reserve Bank of India, the country’s central bank, has restricted foreign investment in property, fearing that an influx of funds could stoke inflation. But the finance ministry worries that stalling investment could stunt India’s growth and the balance appears to be tipping in favour of allowing more money in.

“The regulators are trying to assess the risks versus rewards,” says Shuchita Mehta, an economist with Standard Chartered bank in Mumbai.

“But there is no doubt about the desire to attract more investment flows. The question is, how? Investment flows from the Gulf region are so far not that significant but we will see a quantum leap if they are permitted.”

Dubai’s Emaar Properties has announced a $4 billion scheme to build schools, hospitals and shopping malls in partnership with Indian developer MGF.

They are planning to build these across India, including in New Delhi and Maharashtra, home to the country’s commercial capital Mumbai. Other Dubai-based developers, including ETA Star and Nakheel, are eyeing residential and hotel projects.

But, as prices soar in India’s two booming cities, some Gulf investors are looking at upcoming locations for better value. These included Bangalore, Chennai and Hyderabad in the south, and Pune in the west, said Patnaik.

Global Investment is assessing residential and technology park developments in these “tier two” cities, hoping for an internal rate of return of 20 per cent.

Opinions differ about what ranks as a “tier one” city but some Gulf investors see everything outside Delhi and Mumbai as tier two.

Pranay Vakil, chairman of Knight Frank India, says the country’s most expensive apartments are in Mumbai’s so-called “Golden Triangle” district, where buyers can pay up to $1,000 per sq ft.

In Delhi, the most sought-after homes fetch about $400 per sq ft. Other cities trail in their wake, with Bangalore and Pune, where premium apartments fetch at most $125 per sq ft, competing for third place.

However, the likes of Global Investment and Emaar face challenges. Some regulatory restrictions remain: investment funds must keep their money in India for at least three years and each investment must be at least $10 million.

These measures are designed to keep out speculators, while encouraging more stable, long-term capital. Many investors are using Mauritius, which has a tax agreement with India, to register their funds.

Another Dubai company, state-owned TECOM, faces a different hurdle. Last year, it signed a memorandum of understanding with the state government of Kerala to develop a $1.2 billion technology park in Kochi. However, since then, a communist government has been elected that has voiced reservations about the deal.

The two sides held talks in late September in a bid to resolve the impasse. Other Gulf developers are watching the outcome closely.

Mehta believes that in spite of these challenges, Gulf money will soon start filtering through, because Indian policymakers increasingly recognise the need to build more homes, offices and related infrastructure.

Last year, $6-$7 billion of foreign direct investment entered India, less than 1 per cent of gross domestic product, but that should rise.

“Even $1 billlion from Gulf investors would be significant,” said Mehta.

News: More reforms in the works - PM

(BS 07/10/2006) Mumbai - Prime Minister Manmohan Singh today committed to make the financial markets more efficient, competitive and global and said his government would take reforms forward in the key sectors of debt markets, pension and insurance.

Speaking after inaugurating Sebi Bhavan, the new headquarters of the Securities and Exchange Board of India (Sebi) here, the prime minister stressed the need to attract investments and create more efficient markets to ensure double-digit economic growth.

Sharing the dais with him were the four other original architects of financial sector reforms: Finance Minister P Chidambaram, Planning Commission Deputy Chairman Montek Singh Ahluwalia, Reserve Bank of India Governor YV Reddy and Chairman of the Prime Minister’s Economic Advisory Council C Rangarajan.

Before the Who’s Who of the country’s financial and corporate world, Singh admitted there was lack of consensus on the “needed reforms” but expressed confidence that the government would be able to “forge a consensus and take reforms forward”.

“If we have to achieve our growth ambitions of 8-10 per cent per annum, we need investments of a high order,” Singh said, adding, “These will be possible only by making our financial markets more efficient, more competitive and more global.”

Visibly unhappy with the state of affairs in the debt market, Singh said: “The bulk of capital markets in advanced nations are in debt securities. However, in our experience, the debt market in India has not quite delivered on expectations. We need to make efforts to understand why the debt market has not taken off, and take policy measures to make it deeper, broader and more liquid.”

While regulation may help in this direction to some extent, “we need to reform our financial sector further if we are to have a larger debt market. We need a much larger insurance sector with a higher capital base and more diverse products. It is these which will generate the necessary long-term funds for investing in a debt market and make available resources for the investment needs of our country,” the prime minister said.

Singh, instrumental in making Sebi a statutory regulatory body as finance minister in 1992, said: “In retrospect, the decisions to open the Indian capital market to institutional investors from abroad and the establishment of the National Stock Exchange have turned out to be major landmarks in the evolution of our capital markets.”

Complimenting Sebi, Singh said, “Our systems are among the best in the world, and the Indian capital market is recognised as among the best-regulated internationally.”

The prime minister also announced that an investor protection-cum-education fund would soon be set up through an amendment to the Sebi Act of 1992, in accordance with the 2006-07 Budget proposal.

News: Dollars flood Indian economy

(HT 07/10/2006) New Delhi - Foreign direct investment (FDI) inflows rose 92 per cent on year in the first four months of the current financial year, underlining a bullish outlook on economic growth. Manufacturing industries are receiving a significant share of the inflows, Commerce and Industry Minister Kamal Nath said on Friday.

FDI inflows of $2.9 billion in the April–July period rose from $1.5 billion in the comparable year-ago period, giving room for confidence that the target of $12 billion for FDI inflows in 2006/07 (April-March) would be achieved, Nath told reporters.

A senior Industry Ministry official told Hindustan Times that foreign investments worth $3 billion are in the pipeline, including some from firms such as German steel maker Thysson and Japanese automobile giants Nissan and Mitsubishi.

Investments by these companies are likely to materialise in the next few months, the official added. Industry Ministry officials said that Thysson was likely to locate its plant either in Bihar, Jharkhand or Chhattisgarh, close to iron ore mines.

“The record growth in investments during the first four months would contribute handsomely to the GDP (gross domestic product) growth hovering around 8.5-9 per cent,” he said. “Most of these investments are first mile inflows. So, sustained inflows are bound come in the medium term as projects get executed,” he added.

In July alone, FDI inflows jumped 259 per cent to $ 1.16 billion from $324 million in the corresponding month last year. Singapore-based Barclays Bank emerged as the single largest contributor to FDI inflows, pumping in $ 380 million.

“The healthy growth in investments and FDI inflows would have a soothing impact on the economy that has come under pressure due to an exponential growth in government expenses and inflationary pressures,” said a top Finance Ministry official.

The Reserve Bank of India (RBI) has reported that cumulative FDI since economic reforms began in 1991 have crossed $50 billion, of which $16 billion has come in after April, 2004. These include both equity investments and reinvested earnings, the minister said.

The manufacturing sector received a major chunk of foreign investments, and would help the sector contribute to 25 percent of the GDP against the current 17 per cent, the minister said.Mauritius, US, Japan, Netherlands, UK, Germany, Singapore, France, South Korea and Switzerland are the major investors in the Indian manufacturing sector, especially in areas such as electrical equipment, services, telecommunications, energy and pharmaceuticals.

News: Tatas a step closer to Corus

(TT 07/10/2006) Calcutta - Tata Steel has taken the first formal step to table an offer to pick up a stake in Anglo-Dutch steel firm Corus Group plc by filing a notice with the London Stock Exchange.

Tata Steel’s communication to LSE went out on Thursday night. Corus Steel followed it up with a similar filing confirming that an offer was on its way.

Both companies were complying with Rule 2.10 of the City Code on Takeovers and Mergers and disclosed the number of outstanding shares of Corus that were being targeted by the offer.

The announcement is made to signal the start of the offer period.

Under the code, an offer period indicates that either an offer has been made or it is on its way.

When contacted, a Corus Group plc spokesperson refused to confirm whether the Tatas or other suitors had placed their offers on the table.

Rule 2.10 does not set a specific timeframe within which a firm offer has to be made. However, market sources said the offer would be made fairly soon with some speculating that it would come over the weekend.

The formal start of the offer period will immediately place a set of restrictions on Corus.

An LSE official said the target company, in this case the Corus group, would not be able to take sweeping decisions in the running of the company.

For any major decision, the company has to seek shareholders’ approval, the official added.

Although Rule 2.10 does not spell out a time period for stumping up an offer, the target company can approach the Takeover Panel to ask for the imposition of a time limit on the potential offeror.

If Corus chooses to do so, Tata Steel has to come up with an offer within that stipulated timeframe under Code 2.4, popularly known as ‘put up or shut up’ clause.

Meanwhile, Corus shares continued their good run on the LSE, hitting a year-high 490 pence during intraday trade.

Although there has been speculation that there are other suitors in the fray, the latest announcement under Rule 2.10 pertains only to Tata Steel’s statement indicating that Corus is expecting only an offer from the Indian company.

Going by Corus’ long-term strategy shared with investors and shareholders recently, the company is keen on low-cost steel manufacture. If a merger between Tata Steel and Corus takes place, Corus will achieve this target as the Indian company is one of the lowest-cost producers of steel in the world. Tata Steel will get access to cutting edge technology and finishing mills in developed markets.

News: Indian FDI flow set to change course

(TT 07/10/2006) New Delhi - India Inc is likely to make more investments overseas this year than it will receive.

Experts say the quest for global acquisitions among Indian corporate giants is responsible for the change in the scenario.

“For the first time outbound foreign direct investment (FDI) is going to exceed inward flow of foreign investment,” said D.S. Brar, chairman of GVK Biosciences, at a seminar on globalisation of Indian companies, quoting a study conducted by the Confederation of Indian Industry and Crisil.

The study estimates foreign direct investment flowing into India to be in the region of $7 to 8 billion during the current fiscal.

According to figures released by the government, FDI into India during the first four months of the current fiscal stands at $2.9 billion, which represents a 92 per cent increase over the first quarter of 2005-06.

However, the Crisil study feels with Indian companies venturing abroad in a big way in search for new markets, technology, low-cost bases and raw material, FDI outflow will surpass inflows this year.

“There is certainly a new dynamism in Indian companies because of globalisation and competition,” said Subir V. Gokarn, chief economist and executive director, Crisil.

“A lot of attention has been paid to foreign investment coming to India,” Brar said. “But what is not so well known is how active Indians have been in the past few years in making investments outside their home base.”

The top investor during the year was the government-owned State Bank of India with an overseas investment of $1.18 billion, followed by Dr. Reddy's Labs with $777 million and Suzlon Energy with $565 million.

Tata Tea has made an investment of $677 million in the US in the current fiscal, while state-run Oil and Natural Gas Corp (ONGC) has invested $410 million in Brazil for a stake in the energy sector.

Other major investments have been made by Aban Loyd in the energy sector of Norway worth $445 million, Matrix Labs’ $319 million in the pharma sector of Belgium and Ballarpur’s $261 million in the Malaysian paper industry.

The study also points out that the US was the largest recipient of investments from India during 2005-06 worth $1.05 billion, followed by Britain with $815 million and Belgium with $799.9 million.

The study shows that as many as 20 Indian pharmaceutical companies have invested in facilities abroad. The study says, “Firms need marketing and distribution assets to access markets and often the optimal strategy for successful penetration is to acquire a local marketing company or set up a subsidiary. Indian pharma companies are following exactly this strategy.”

Investment flows emanate from a large number of sectors and cover a large number of companies.

“Investments span across a large number of continents, finding its way into both developed and developing markets. The size of investments also vary considerably,” says the study.

News: Chidambaram says Indian Q2 GDP growth over 8 pct yr/yr

(RTR 07/10/2006) New Delhi - India's economy, Asia's fourth largest, expanded more than 8 percent in the July-September quarter from a year earlier, Finance Minister Palaniappan Chidambaram said on Saturday.

But the prime minister said growth of 10 percent was needed to make a real dent in poverty in India, and billions needed to be spent on airports, ports and highways.

GDP in the April-June quarter grew 8.9 percent from a year earlier, beating estimates, as demand for everything from phones to cars in billion-plus India surged due to falling prices, rising disposable incomes and attractive financing schemes.

"I am happy to inform you that second-quarter GDP has also recorded a growth of over 8 percent," Chidambaram told a seminar on infrastructure. India's fiscal year runs from April to March.

Expansion has come mainly on scorching growth in the services and manufacturing sectors over the past several quarters, overshadowing the growth in agriculture.

The surging growth has forced the central bank to raise its interest rates three times this year to cool the economy and check inflation. The central bank is due to review rates again later this month.

Prime Minister Manmohan Singh told the seminar the pace of growth needed to be raised further if enough jobs were to be created to pull millions out of poverty.

Improving infrastructure was the key to boost growth and remove bottlenecks, Singh said outlining the need to invest heavily in ports, roads and airports.

"A growth rate in the vicinity of 10 percent is not impossible to achieve," said Singh, who liberalised the economy when he was finance minister in the 1990s.

"We will need to run hard just to stay where we are. Maintaining a growth rate of 8 percent would need a continual improvement in our policy regime. To raise it further, would require sustained effort to boost our agriculture and manufacturing growth."

Singh said he anticipated investments of 2.2 trillion Indian rupees ($48.5 billion) by 2012 in the upgrading of highways.

"On the issue of foreign direct investments, as a safe rule we can expect 2 percent of GDP as inflows. It is within the limits of prudence and key for balance of payments (to be) in good shape."

News: Elite foreign banks embrace the poor

(DNA 07/10/2006) Mumbai - Foreign banks are shedding their elitist contours to embrace the aam aadmi, targeting a market monopolised by loan sharks who sell debt traps by charging exorbitant interest rates.

“These customers usually borrow from friends and relatives at an even higher rate and it fits into the wider theme of financial inclusion which is being discussed me in seminars and discussions now-a-days,” said Naina Lal Kidwai group
general manager and country head, HSBC India.

Kidwai was speaking at the launch of HSBC’s ‘Pragati Finance’ scheme, which is aimed exactly at these groups.
HSBC and other banks emulating micro-finance companies agencies that lend the financially less endowed in the countryside.

Vikram Akula’s SKS Financial, a microfinance agency, has gained international acclaim by catering to the poor. This practically means providing guarantees to get loans.

HSBC officials argue that a majority of the micro-finance groups cater to a rural clientele and the urban cities are virtually untapped.

Large foreign banks which until now were looked upon as banks for high networth individuals are keen to tap the personal loan market especially for low income groups (Rs 4,000-8,000 per month) in the city.

Though these personal loans do not come cheap, bankers argue that they are cheaper than the loans made available by the unorganised sector. The loans will be for typically low amounts ranging from 10,000 to 50,000 rupees with high interest rates of 32%-48% per annum because of the high risks of a payment default attached to the borrower.

Risks for recovering the loans for banks is high, because these loans are mostly unsecured with the borrowers having little or no financial security.

There are some who doubt the whether the scheme will find too many takers. HSBC’s UK peer Standard Chartered Bank already has on offer a ‘small ticket’ personal loan product under the brand name ‘Prime Financial’.

However, the offering is made through its non-banking financial company, Stanchart Investments and Loans Ltd. Bankers explain that getting permission to open an NBFC branch is much easier for foreign banks, which have strict restrictions on the number of branches they can open.

Stanchart Investments and Loans Limited plans to expand its network of branches to 60 by March next year from the current 22 branches, a spokesperson for the bank said.

There are other foreign banks who lend to categories with lesser means. Industry watchers said Citifinancial, a non-banking financial company of the Citigroup and consumer finance major GE Money also disburse low amount loans, but they do not have a specific product targeted at this particular income group.

HSBC’s application for an NBFC is pending with the RBI. HSBC is also likely to go through the NBFC route due to lesser curbs vis-à-vis branches. “India’s loan to GDP is only 3-4% compared to 30% in other Asian countries, so obviously it is a untapped market,” Kidwai said.

“With urbanisation, the demand for credit has increased and attitude towards debt has changed. India is expected to have the largest working population and the loan to GDP ratio will touch 15% very soon,” said Ravi Subramanian, Head HSBC Pragati Finance.

The target audience for such loans would workers like peons, municipal sweepers, or even small shop owners.

These loans are usually taken for petty expenses like buying electronic items, for children’s education or for expansion of small businesses.

HSBC plans to conduct interviews with prospective borrowers to know more about their “income and to gauge how much EMI the borrower can pay,” said Subramanian.

The bank expects to disburse Rs 100 crore each month through this scheme in the next six to eight months and will spend about $1 million on advertising this product on public transport buses, shops and even non-conventional media like tea glasses on roadside stalls.

Other foreign banks in the market refused to give figures about market positions and targets in the near term.

News: Tata in race for Visteon units, too

(DNA 07/10/2006) New Delhi - It seems the Tatas’ appetite for mega overseas acquisitions is far from sated.

Even as the group is believed to be in the running for the world’s seventh largest steel company, the UK-based Corus, it now transpires that the Tatas are in the race for parts of the loss-making US auto parts giant Visteon Corporation, formerly owned by Ford Motor.

The total acquisition cost of the various businesses of Visteon that is on the block is about $2.5 billion, according to sources.

Visteon already has two joint ventures with Tata Autocomp Systems Ltd (Taco), the auto component arm of the Tata Group. While Taco Engineering provides engineering services for Visteon operations globally, the second one, Taco Visteon, is manufacturing lighting products.

Visteon Corp is a $17 billion company, operating in 24 countries with over 170 manufacturing facilities and employs about 49,000 people.

It is into electronics, power train control, lighting, chassis and engine induction besides providing engineering services.
It also provides a range of products and services to aftermarket customers. It is not clear whether the Tatas are bidding for the entire company or for individual businesses.

Reno Raj, vice-president, corporate planning and M&A, at Taco, however, told DNA Money “We are not involved in any deal of this nature. Taco is scouting for opportunities in China and Europe but we are rather sceptical about the US market. We may be looking for acquisitions in the US at a later date but nothing is active right now.”

News: India, China hold BRIC wall as cracks appear

(RTR 07/10/2006) London - Brazil, Russia, India and China have long been the darlings of emerging market investors. Now, though, cracks have appeared among the BRICs.

After generally outperforming broader emerging market equities since January, the big four reversed the trend last month.

At the same time, investors showed a much stronger desire than usual to differentiate between the high-flying countries, eschewing those with more exposure to falling commodity prices and perceived vulnerability to a slowing global economy.

The moves provide yet more evidence that financial markets are poised at a turning point, trying to adjust to a cyclical slowdown of unknown magnitude after some of the most robust economic growth in decades.

The BRICs, which are lumped together because of their size, dynamism and potential as economic powerhouses, are particularly significant because they have been both drivers of this growth and some of its greatest beneficiaries.

MSCI’s BRIC equity index is up more than 22% year-to-date, despite the sharp May-June global correction, while the broader emerging market equivalent has gained only around half that.

In September, however, the broader gauge rose 0.65% — which would bring a modest 7.8% gain if stretched over a year — while the BRICs lost, down 0.35%.

Other MSCI indices suggest, however, that it was what happened among the individual BRIC countries that caused the underperformance rather than as a group itself.China and India continued to rise, while Brazil and Russia fell back.

Flow data from Emerging Portfolio Fund Research (EPFR) confirms the trend. In the week ending on September 27, Chinese and Indian equity funds had a net $377 million in inflows. BRIC funds as a whole had a third straight week of net redemptions.

“Investors may be concluding that they don’t like the Brazil and Russia exposure that these funds contain,” EPFR said.
While there are some specific factors that may have influenced this divergence - Brazil’s elections, a need to cool Russia’s red-hot bourse rally —- it is the differences between the BRICs countries that lie at the heart of the change.

First is the role of commodities, whose prices have been falling after a remarkable five-year rally. Oil, in particular, has tumbled, dropping around 25% since a mid-July peak. This has directly opposite effects on the BRICs.

“The two markets that are seeing the inflows are (those with) demand for commodities. The two that are seeing the outflows are the suppliers of commodities,” said Julian Mayo, investment director at Charlemagne Capital.

Similarly, investors appear to be deciding that commodity-suppliers Russia and Brazil will not weather a slowdown in the US as well as the others.

“The reason why China and India are doing well is because those countries can still do pretty well if the US goes into recession, which is the thing that markets are worrying about,” said Maarten-Jan Bakkum, emerging markets equity strategist at ABM AMRO Asset Management.

To date, however, the impact has mainly been seen in equities. Boosted by a lack of global supply, Russian and Brazilian bonds, among the world’s most liquid external sovereign debt, have held up quite well. China and India are not significant players.

How long the current division lasts is probably — like much else on financial markets these days — hostage to the depth of the US slowdown and the continuing easing of commodity prices.

But investment rotation among the four countries is likely to remain a feature given investors’ different views of their short- to medium-term prospects.

For example, AXA Investment Managers’ WF Talent BRICK Fund — the K is for South Korea — looks for entrepreneur-led companies, but wants to steer clear of those linked to oil.

Guillaume de Corbiac, who is part of the portfolio team, said this makes the fund light on Russia, where entrepreneurs meeting the criteria are thin on the ground. It finds far more opportunities in China and India.

Charlemagne’s Mayo, by contrast, is keener on Russia because of the potential of its population. “Russia is much more than a commodity play. It is a domestic consumption play,” he said.

Meanwhile, Mark Mobius, the influential emerging market specialist at Franklin Templeton, currently finds valuations in China and Brazil particularly attractive and expects stocks there to outperform India. Standard Life Investments, however, prefers Russia and India to Brazil.

Investors on the cusp of a cyclical change, it seems, are as divided about the BRICs as they are about everything else.

News: Kingfisher may fly global if eligibility norms are relaxed

(BL 07/10/2006) Bangalore - Kingfisher Airlines may finally be able to fly international routes on its own as the Civil Aviation Ministry is seriously considering relaxation of eligibility norms for domestic airlines.

Sources close to the Ministry told Business Line that the reduction of eligibility norms was being considered to three years from the current five years for flying foreign routes. In case the norms are relaxed, Kingfisher Airlines will be able to fly international routes by 2008.

As a fallback arrangement, the airline is in talks with American Airlines and MaxJet to use their rights to fly from the US to India.

The airline has in a recent presentation to analysts said that it is in the process of finalising a damp lease arrangement with a US carrier to operate non-stop flights to India.

Services planned

It plans to fly A340-500 between San Francisco and Bangalore and New York-Mumbai by the first quarter of 2008. It also plans to operate A330-200 between London-Mumbai and Hong Kong-Mumbai during the same period. The aircraft will have super first class, ultra business class and the Kingfisher class configuration of seats. The airline has already placed orders for specific aircraft types to fly on these routes.

The UB Group in its presentation said that for pre-delivery payments for aircraft, it has roped in some Indian banks for syndication of loans worth $200 million. It said that for the airline's leading edge service model, the UB Group has invested around $100 million. While it has tied up with some banks for working capital requirements for the next two years, the airline plans to access the primary market in two years' time.

For the financial year 2006, Kingfisher Airline posted a loss (PBT) of Rs 190.8 crore on an income of Rs 584.5 crore. Its EBIDTA was negative at Rs 172.1 crore. While fuel costs were Rs 235.6 crore, total operating cost was Rs 680.6 crore and other costs were Rs 76 crore.

In its first year of operations, it has achieved a market share of 8.7 per cent. It operates 2,200 flights a month.

News: ING, PlaNetFin in micro insurance initiative

(BL 07/10/2006) New Delhi - ING Group and PlaNet Finance India have come together to institute the MicroInsurance Awards (MI Awards) 2007, which aims to build a comprehensive inventory and identify existing best practices in product design and distribution channels implemented by the existing micro insurance schemes in the country. The initiative would also promote the development of new products and delivery models targeted at the rural market. The announcement was made at a ceremony here.

Speaking to media persons, Michel Tilmant, Chairman of ING Group, said: "The development of a stronger micro insurance platform, as an extension of micro finance, is necessary if the rural population is to be protected against the various risks they face on a daily basis, allowing broad segments of the population to escape a continuing cycle of disadvantage and poverty. ING's global expertise in insurance allows us to best understand the specific risks involved in offering such products and afford opportunities to minimise administration burdens which can cripple micro finance platforms."

Insurance Portfolio

Shivendra Sharma, Executive Director of PlaNet Finance India, said: "Although it is not necessary for finance and insurance to be provided by the same institutions, micro finance institutions which share the infrastructure and the outreach can significantly reduce their overall costs of managing a micro insurance portfolio. This encourages more micro finance providers to include micro insurance in their service offering."

Both organisations felt that the joint initiative will evolve over the years in line with the growth of the micro insurance industry.

In its first year, the project aims to build a comprehensive inventory of micro insurance initiatives in India including details of the level and type of risk coverage.

News: MoneyGram CEO sees India as strategic market

(BL 07/10/2006) New Delhi - MoneyGram International Inc, a global payment services company, on Friday said the Indian market was of "strategic importance" to the company and that it would significantly step up investments here to grow its market share in the private money transfer business.

"We are here to demonstrate our commitment to this market. We think India is going to be a very important part of our growth strategy and future," Philip W. Milne, President and Chief Executive Officer (CEO) of the New York Stock Exchange-listed MoneyGram International Inc, told Business Line here.

Milne, who is visiting India for the first time, said the setting up of regional office in Mumbai demonstrated the importance of the market and the company's commitment to it. Senior officials of the company accompanied the CEO for the India visit.

He said that globally money transfer business was driving the financial performance of the company. Milne pointed out that there was lot of room for growth as the number 1 and number 2 players together had less than 20 per cent of global market share. "What is really driving this business is immigration," he said.

Milne highlighted that India was the largest remittance market, estimated at $21 billion annually.

In India, MoneyGram International has, through its UK-based subsidiary, set up a wholly owned subsidiary here under the name MoneyGram India (P) Ltd. This subsidiary is based in Mumbai and started off as sales and support office from April 1 .

To expand distribution network, MoneyGram India is in talks with "lots of parties" who have retail distribution network and who see this as part of their portfolio.

MoneyGram India is particularly enthused over the Reserve Bank of India's move to allow it to open a local bank account (in rupees).

"We have opened the account (yesterday). This is a positive step forward in terms of supporting our distributionMoneyGram India Country Manager, Harsh Lambah, said.

News: Taiwan IT companies to invest in India

(SF 07/10/2006) Chennai - Taiwan now looks forward to Indian shores as a market with huge potential for the ICT sector. Thomas Chang, Director, Taipei World Trade Center announced the growing presence of Taiwan’s top 5 ICT brands in India - Acer, Asustek, BenQ, D-Link and Gigabyte. With the Indian economy surging ahead Taiwanese companies now see India as a market with a huge potential for ICT products. Acer, Asustek, BenQ, D-Link and Gigabyte are some of the top ICT companies that have presence in India. These companies have significantly increased the value of their brands from last year, with Asustek and Acer remaining at the top for the third consecutive year. “India is a big market for Taiwan after China and Japan. Its enormous potential is evident from the fact that 60 plus Taiwanese companies are already operating in India and 100 plus companies will begin their operations by 2007,” he said. He further added, “Foxconn International Holdings Ltd have started on a plan to build an industrial park in Chennai to produce electronic connectors and components. Foxconn has invested $120 million. This is the largest hi-tech investment so far by a Taiwanese company in India and this is bound to attract some more Taiwan companies to follow in this Indian market”. As an early participant in the technology revolution, Taiwan has become the world's largest maker of notebook computers, LCD monitors and motherboards. Taiwan also has maintained its domination in the global production share of Wireless LAN, Optical storage devices, Game Consoles, ADSL modems, Network products and Servers. Taiwanese companies are all set to explore the Indian frontiers with an all new mantra ‘Go South - to India’. According to W.S. Mukund, Managing Director, Acer India, “Taiwan over the years has become a recognised leader in the global IT hardware industry. Acer India has its roots in Taiwan, being global has helped us bring the latest tested technology to the Indian market and establish ourselves quickly as one of the leading IT vendors in India.”

News: ING to scale up life risk operations

(BS 06/10/2006) Mumbai - ING Group, the Amsterdam-based banking and insurance group, has drawn up plans to scale up the operations of its insurance joint venture in India, ING Vysya Life Insurance, over the next one year.

ING’s insurance venture will increase the headcount at the insurance company by 66 per cent to 5,000 by end of December 2007.

The group has firmed up expansion plans for ING Vysya Bank, 44 per cent of which it owns, but the growth strategy is dependent on the regulatory clearances for opening new branches.

ING Vysya Life would be opening new offices at 86 locations to add to its current network of 110 branches. ING Vysya Bank has 490 branches.

“India is a serious business for us and it’s time to focus here. Asia has the fastest growing middle class and we want to create a strong position for ING in this market. India contributed a small portion to our (group’s) first two quarter revenues. we want to increase the share,” ING Group chairman and CEO, Michael Tilmant told reporters here today.

As a part of its new business strategy, ING has introduced a new information technology platform at all branches of ING Vysya Bank, which will totally automated branch operations across the network.

Tilmant said, “At present, there is no need to infuse more capital into ING’s businesses in India. But we are clear that, whenever required, more capital will be infused.”

News: Maharashtra in $2 bn deal with Gulf bank

(BS 06/10/2006) Mumbai - A $2 billion dedicated energy city is slated to come up near Mumbai, with the Maharashtra government signing a memorandum of understanding today with Gulf Finance House, a Bahrain-based investment bank.

Gulf Finance House is also the developer of Energy City Qatar, on which the Mumbai township will be modelled.

The energy city concept involves master planning and construction of an integrated business centre that offers complete infrastructure for leading oil and gas producers, downstream refiners, producers, support services and shipping and energy trading services.

A part of the infrastructure will be an integrated platform for trading energy contracts and derivatives. Gulf Finance House is also launching the proposed energy futures exchange in Qatar.

“The initial investment will be in the range of $300-400 million, which we will raise from strategic investors and our high net worth clients. For the rest we will be looking at debt financing,” Peter Panayiotou, the bank’s chief investment officer, told Business Standard. Some of the debt would also be offered to Indian banks, he said.

The bank will set up a special purpose investment vehicle for the proposed development which, in turn, will float a wholly owned development company for the township.

The bank has identified three different locations around Navi Mumbai and is offering to buy land at prevailing market prices. “We are not asking the government for land,” Panayiotou said. It is looking at acquiring close to 300 acres for the project.

Panayiotou added that the project would offer all the facilities the Qatar energy city offered, including an exclusive data mining platform for energy companies based there. “We would like to offer all these services, but it ultimately depends on what clients here want,” he said.

He added that the company would be open to allowing Indian developers to develop portions of the city. “We would like to have some Indian developers, too, to come in and develop parts of the city, provided they meet the standards we set,” said Panayiotou.

News: Hedge funds want front-door entry

(BS 06/10/2006) Mumbai - Tired of operating in India through participatory notes and as sub-accounts with foreign institutional investors, hedge funds are now looking for an entry into the Indian markets through the front door.

Hedge funds, which cannot get registered in India in the absence of proper guidelines, will discuss the India strategy at a two-day Asian Hedge Forum meeting in Hong Kong on October 17-18.

“The objective is to have codified entry norms for these funds in India,” sources close to the development said.

This marks a shift from the original stance of these funds, which have all along been resisting any plans to regulate them as they do not play with small investors’ money. Hedge funds are “lightly regulated” private investment funds, characterised by unconventional strategies to earn maximum return on investments.

The Hong Kong meeting will also discuss the need for supervision of the global hedge fund industry through a painless process. Pasupati Advani, who is advising Avatar Investment Management, an India-focussed hedge fund, and another executive of an Indian brokerage will speak at the conference.

Avatar has three India-focussed funds: an absolute return fund, which bets on single stock futures; an opportunities fund; and a growth fund investing in less liquid stocks.

“In the absence of clear regulations, it is difficult for even long-only hedge funds to enter the Indian market,” said Anoop Narayanan, partner of law firm Majmudar & Co, which is advising on behalf of a US-based hedge fund for an India entry.

According to him, the Securities and Exchange Board of India (Sebi) should allow the hedge funds entry into India for a one-year period and renew the licence after reviewing their functioning.

The Sebi guidelines on foreign institutional investors (FIIs) do not have regulations relating to hedge funds but applications for new FII registrations are scrutinised to ensure that FIIs are not channelling hedge funds’ money.

Recently, Kuvera Capital, shortlisted for the best Indian hedge fund 2006 by Eureka Hedge, a global hedge fund tracking outfit, received approval to operate from Dubai International Financial Centre.

This development reflected the change in approach by hedge funds, said RE Sandy Shipton, head of asset management at Dubai International Financial Centre.

Hedge funds normally prefer to be unregulated and operate from tax havens such as Mauritius. “Compared to tax havens like Mauritius or the Cayman Islands, we offer an internationally-recognised regulatory regime. There is also zero tax on company profits and repatriation of capital,” Shipton told Business Standard.

Another hedge fund registered with Dubai International Financial Centre, which comes under the regulatory purview of the Dubai Financial Services Authority, is Argent Financial Group.

News: Tatas to float $2 bn bond for Corus buy

(BS 06/10/2006) Mumbai - Tata steel would have to keep a war chest of $8-9 bn ready to fund the Corus takeover.

Tata Steel may come up with a $2 billion bond offer to part-finance the acquisition of Anglo-Dutch Corus Group if it manages to clinch the deal.

Sources close to the development said the country’s second-largest steel maker would have to keep a war chest of $8-9 billion ready to fund the Corus takeover. British laws demand an open offer to all Corus shareholders if the Tata group’s holding in the company goes beyond 30 per cent.

They added that Tata Steel had also lined up a loan of up to $6.5 billion from Standard Chartered Plc, ABN Amro and Deutsche Bank. Tata Steel will refinance the loan later through a combination of instruments, including a bond issue of $2 billion. Tata Sons, the group’s holding company, will chip in with the remaining portion.

The fund-raising programme might include the launch of a special purpose vehicle to conclude the deal — the same route taken by Tata Tea when it acquired Tetley, sources said.

They added that Tata Steel had set the Corus ball rolling in July, when Tata group Chairman Ratan Tata met Corus Chairman Jim Leng in Dubai.

The sources said the Tata bid might be at a premium to the ruling Corus share price. “Corus is not just a steel maker. It’s a process owner as well. It demands premium,” said an analyst with a foreign brokerage.

When contacted on the fund raising as well as Tata’s meeting with the Corus chief, the Tata Steel spokesperson said the company did not wish to comment on speculation.

Earlier in the day, Tata Steel informed the domestic and London stock exchanges that it was considering acquisitions, including Corus. “There can be no certainty that an approach will be made and, if made, that it will result in an offer for Corus,” it added.

However, Tata Steel’s clarification to the stock exchanges sent the Corus stock up by 18 per cent. Share prices of Corus were up 15.2 per cent at 469-1/2 pence by 1205 GMT, topping the FTSE-100 index.

The stock hit a six-and-a-half year high of 482-1/4p.

Shares in other European steel companies, including Salzgitter AG and ThyssenKrupp AG, also rose. Tata Steel today closed 2.68 per cent higher at Rs 537.35 from yesterday’s close of Rs 523.35 in a strong Mumbai market.

Tata Sons has already committed Rs 1,400 crore (nearly $310 million) in Tata Steel through subscription of preferential shares. Chairman Ratan Tata had announced at the last annual general meeting that the company would spend Rs 70,000 crore in the next 10 years to have a 30 million tonne capacity from the existing 5 million tonnes a year.

If Tata Steel manages to wrest control of Corus, it will be the second most valuable takeover bid after Mittal Steel’s $31 billion (16.5 billion pounds) acquisition of rival Arcelor this year.

It will propel Tata Steel to the sixth slot from 56th in global rankings, and will underscore its growing appetite to cut costs by merging with rivals.

Tata Steel has expanded in South East Asia by acquiring Thailand’s 1.2 million tonne Millennium Steel PCL and Singapore’s 2 million tonne NatSteel.

News: 6,500 km of Indian highways to be six-laned

(IANS 06/10/2006) New Delhi - The central government on Thursday decided to upgrade its national highways with plans for converting to six lanes stretches totalling 6,500 km including the 5,700-km Golden Quadrilateral linking the four metros of Delhi, Mumbai, Chennai and Kolkata.

The decision was taken at a meeting of the Cabinet Committee on Economic Affairs chaired by Prime Minister Manmohan Singh in New Delhi.

The approval paves the way for six-laning of 6,500 km of national highways comprising 5,700 km of Golden Quadrilateral and balance 800 km of other sections of national highways under the National Highway Development Programme (NHDP) Phase V at a cost of Rs 412.1 billion, Finance Minister P. Chidambaram told the media.

Of the total, Rs 356.92 billion investment is expected from the private sector and the balance of Rs 55.18 billion as viability gap, cost of land acquisition, utility shifting and consultancy by the government.

"The projects are to be taken up on the build-operate-and-transfer (BOT) mode following a design, build, finance and operate (DBFO) pattern with a maximum of 10 percent viability gap funding (VGF)," the finance minister said.

The construction cost the NHDP V projects is estimated at Rs 63.4 million per km comprising Rs 57.8 million for construction and Rs 5.6 million for land acquisition, utilities and consultancy.

Upgradation of existing roads is expected to further improve traffic safety and provide faster movement of vehicles with improved riding quality and time. This will lead to reduction in vehicle operating costs and a significant reduction in fuel consumption for the vehicle resulting in energy conservation.

News: Shift in Tata Steel strategy

(TT 06/10/2006) Calcutta - Tata Steel will adopt a two-pronged strategy to achieve a production capacity of 30 million tonnes by 2015.

It wants to split the steelmaking process according to locations — primary steel making capacities in raw material rich countries, while setting up finishing lines in growing markets.

The company is also planning to acquire iron ore mines as it feels India does not have enough deposits to sustain future growth.

“We are looking at iron ore mines abroad,” said T. Mukherjee, deputy managing director of Tata Steel.

While the quest for raw material continues, Tata Steel is exploring acquisitions in developed markets as well and it is ready to start thinking really big.

For instance, it is in dialogue with Anglo-Dutch steel maker Corus — five times bigger than it in revenues — for a possible buyout. However, it is not Corus alone that excites Tata Steel. The company is sniffing opportunities in advanced markets in the US, eastern Europe and in Southeast Asia.

“Whatever we do has to ultimately fit into the broad strategy of split production facility,” Mukherjee explained.

If Tata Steel manages to acquire Corus, industry observers pointed out it may also shift some of the plants to locations close to mines and ports. Corus has a capacity of 18.2 million tonnes compared with 8.7 mt of Tata Steel (including two acquisitions — NatSteel and Millennium Steel). Recently, it lost out in a race to acquire Highveld in South Africa.

The Indian steelmaker came out with a statement today saying it was looking at Corus among many others but cautioned that there could be no certainty that “an approach will be made and if made, it will result in an offer.”

Corus will help Tata Steel to reach its target of 30 mt fast since most of its greenfield projects are yet to take off.

News: IDBI has big buyout appetite

(TT 06/10/2006) Mumbai - The Industrial Development Bank of India Ltd (IDBI) is hungry for more acquisitions even though it has snapped up ailing United Western Bank (UWB).

“I am in the market,” V.P. Shetty, chairman and managing director, IDBI Ltd, told newspersons even as he elaborated on how the bank would deal with the UWB merger. The government announced the amalgamation of UWB with IDBI with effect from October 3.

“The banking industry is going through a process of consolidation. If anything comes along, we will look into that,” he said. The buzz in banking circles is that IDBI is largely interested in acquiring a South-based bank in order to strengthen its presence.

Although the acquisition of UWB itself will take the total IDBI branch network to 430 from the existing 200, IDBI is not satisfied with these numbers. The bank has laid a target of having a 500 branch network by 2008.

Shetty said that by that year, the total asset portfolio of IDBI would cross Rs 1,10,000 crore. Moreover, the bank was also looking at an international presence. It has made applications to open branches in Singapore, Bahrain and Dubai to begin with.

For the period ended September 30, total deposits in IDBI stood at Rs 31,000 crore and advances were placed at Rs 54,000 crore. The bank witnessed deposit growth that was in line with industry trends, but the increase in advances was way below its peers.

According to the scheme of amalgamation, IDBI will make an upfront payment of Rs 28 per share to UWB shareholders. While this will lead to an outgo of little over Rs 150 crore, Shetty said it would not have any significant impact on its balancesheet.

He, however, conceded that capital adequacy ratio (CAR), which now stands at over 14 per cent, may dip marginally. One of the options that the bank has is to take this amount from its reserves, which could impact the CAR.

Though UWB had gross non performing assets (NPAs) of less than Rs 500 crore, the IDBI chairman did not foresee any problems on this front. He felt that the bank would look at various options that include one-time settlement or selling them to asset reconstruction companies for these NPAs.

News: People of Indian origin are the largest ethnic group in UK

(PTI 06/10/2006) London - People of Indian origin are the largest ethnic group in the UK, numbering 1.1 million or two per cent of the total population of over 60 million, according to a census-based research.

More than 40 per cent of Indians live in London and 30 per cent in the West and East Midlands, the study published today said. Among the Indian population 76 per cent own homes in Britain while 66 per cent of the Whites own homes.

Hindus are the largest religious group, accounting for 45 per cent of the population, followed by Sikhs, with 30 per cent, the study reported in The Times, said.

Leicester has the biggest proportion of Indians of any local council, more than 25 per cent of the authority's population. In 2001, a third of British Indians came from India, 13 per cent from East Africa and 46 per cent from Britain.

Most British Indians are aged between 20 and 50 years, with only 7 per cent over 65.

According to the latest figures, from the 2001 census, in nine out of the 32 London boroughs, less than 50 per cent of the population was white, with the figure falling to 34 per cent in Newham, East London, and lower still in Brent.

Brent was the most ethnically diverse part of the country with a population comprising 29 per cent white British, 18 per cent Indian, 10 per cent black Caribbean, 8 per cent black African and 9 per cent other white.

Overall, the ethnic minority population in 2001 was 4.6 million or 7 per cent of the total population. More than 41 million said they were Christian, with the second biggest group being 8.5 million who claimed no faith. Muslims accounted for 1.5 million, of whom 60,000 were white British Muslims.

British Pakistanis are the second biggest ethnic group, numbering 746,000 in 2001. They are concentrated in the West Midlands, Yorkshire and Humberside and London, which each have a fifth of the group's overall population.

Fifteen per cent of people in Bradford, 13 per cent in Pendle, Lancashire, and 11 per cent of people in Birmingham are Pakistani.

Many Pakistani immigrants come from rural areas and as such tended to have fewer skills than Indian immigrants. More than 90 per cent of British Pakistanis are Muslim. The population is young, with 35 per cent under 16 years and 4 per cent aged over 65. Two fifths of British Pakistani women have never worked or are long-term unemployed.

Bangladeshis are the largest new minority, numbering 2.82 lakh. Mass immigration began in the 1960s but increased after the formation of the state of Bangladesh in 1971. By 2001, 46 per cent of the Bangladeshi community had been born in Britain.

Half the population lives in London, mainly in the East End, but there are many Bangladeshis in the West Midlands and also in the North West of England. Nine out of ten Bangladeshis are Muslim and almost 40 per cent are aged under 16.

British Bangladeshis are least likely to be in managerial or professional jobs and half of British Bangladesh is women have never worked or are long-term unemployed.

The nearby borough of Harrow had the highest religious diversity, leading to an almost 66 per cent chance that two people at random would belong to a different faith. The major religious group in Harrow was Christian, which made up 47 per cent of the population followed by 20 per cent Hindu, 7 per cent Muslim and 6 per cent Jewish.

News: Reliance Retail gears up for launch

(BL 06/10/2006) Chennai - Reliance Retail's much-anticipated foray into fruit and vegetable retail is expected to be kicked off on October 18 in Hyderabad, despite reports of a delay in the launch, according to a senior official of the group. As the first step of Reliance's Rs 25,000-crore foray into retail, five stores are expected to be flagged off in this format before the group embarks on a furious roll-out phase.

The group expects to have at least 30 Reliance Fresh stores up and running in Hyderabad in the next few months and will sell at least five tonnes of fruits and vegetables a day. The produce, all priced to market, will be sourced from all over the country, as well as the hinterland of Andhra Pradesh and Maharashtra where the group has tied up with many farmers, say sources. While the Fresh stores will span 4,000 sq ft, its Fresh Plus stores, which will retail grocery and consumer goods apart from vegetables, will be larger formats ranging between 4,000 sq ft and 10,000 sq ft. After Hyderabad, Chennai is expected to be the next to see Reliance Fresh stores in a month from the Andhra launch.

To open 6 clusters in AP

Sources in the Hyderabad realty business say that Reliance is expected to open six clusters in Andhra Pradesh, across the major cities of the State, which will be the hubs for its retail operations. Hyderabad was chosen as the launch base as it is among the cheapest cities for rentals and properties are available easily.

Closing following on the heels of these two formats will be Reliance Mart, its planned hypermarket chain, the first of which will open in Ahmedabad in December in 1.5 lakh sq ft of space. The group expects to have at least 20 hypermarkets up and running in a year, says a source. Positioned as `value shopping,' Reliance Mart "will challenge everybody's prices," says an official.

Reliance, according to these sources, is investing substantially in its backroom and supply chain, especially in a cold chain. The group has also tied up with FMCG manufacturers and while negotiating for much higher margins, is looking to take stocks direct from the companies themselves. Industry sources say that the big daddy of FMCG retail, HLL, too, is investing in people and systems to service Reliance as the offtake of consumer goods from HLL is expected to be huge.

News: Indian PM says more financial reforms needed

(RTR 06/10/2006) Mumbai - Prime Minister Manmohan Singh said on Friday that further reform of the financial sector was necessary to attract investment and create more efficient markets so that double-digit economic growth can be achieved.

"If we have to achieve our growth ambitions of 8-10 percent per annum we need investments of a high order," Singh said in a speech at the opening of the new headquarters of the Securities and Exchange Board of India, the capital market regulator.

"These would be possible only by making our financial markets more efficient, more competitive and more global."

India's financial sector is relatively closed to foreign investors. A foreign investor is not allowed to hold more than 5 percent in a private sector bank or more than 26 percent in a local insurance venture.

While foreigners are allowed to freely enter and exit India's stock market, they cannot hold more than $1.5 billion in corporate bonds and $2 billion in federal bonds.

The local bond market is dominated by domestic banks. The market is considered fairly undeveloped due to a lack of sophisticated hedging tools, and investors have to cover any short positions before the close of trade.

"The bulk of capital markets in advanced nations are in debt securities. However, in our experience the debt markets in India have not quite delivered on expectations," Singh said.

"We need to make efforts to understand why the debt market has not taken off, and to take policy measures to make it deeper, broader and more liquid. While regulations may help in this direction to some extent, we need to reform our financial sector further if we are to have a larger debt market."

News: DSP Merrill to come out with feeder funds

(ACERC 06/10/2006) Mumbai - DSP Merrill Lynch Fund Managers will soon launch feeder funds for the high networth Indian investors, who intend to invest in the overseas market.

The fund will, in turn, invest in Merrill Lynch's global sector funds or other vehicles. Soumendra Nath Lahiri, senior vice-president, DSP Merrill Lynch Fund Managers Limited, told mediapersons that the company had filed a draft prospectus with the Securities and Exchange Board of India (SEBI) for first of such funds. According to the present rules, Indian investors can invest in global equity markets up to $ 25,000.

News: India on ING radar

(BL 06/10/2006) Mumbai - For Dutch financial services major, the ING Group, all eyes are on India. Though India still contributes a small portion of the group's total turnover, plans are afoot to make the Indian operations play a larger role in the global scheme, said Michel Tilmant, Chairman of the ING Group.

Tilmant is in India this week along with the Supervisory and Executive Board of the company to get a hands-on feel of opportunities and challenges in the local market.

After Bangalore and Mumbai, the high-level ING team will be going to Delhi for meetings scheduled with top Government officials, an executive with ING in India told Business Line. Subsequently, there will be a wrap-up meeting at Udaipur, he said. Explaining the significance of having the company's Executive and Supervisory Board touring and meeting in the country, the official said that the board meets few times a year. Having a meeting in India is important because the market is of strategic interest, he said.

Tilmant said that while it was clear that the company believed in India, it was also true that as a group necessary resources had not been put to develop (the operations) as much as it should have.

`Funds never an issue'

Pointing out that funds were never an issue, he said that the priority was to pull together the financial strengths of the company and make a meaningful use of the platform available. The company's operations in India are across banking, asset management and insurance. The growth strategy in retail-banking was through having good info-tech platforms and infrastructure, byconsolidating and solidifying strategy in solutions network, he said.

Responding to a query on mutual funds, he said that the group was interested in acquisitions, but the bottom-line was to keep the financial discipline.

On outsourcing to India, he said, that it was important to have a competitive cost structure to stay competitive. Processes in the company were being reviewed and it could be outsourced if it improved prices, he said. However, he added, the company also had a social responsibility to people who worked with it. There are three outsourcing contracts in Europe in the info-tech, IT infrastructure etc. He said that India too was being looked at, but against that backdrop.

News: Indian Railways to make 500 stations wi-fi-enabled

(PTI 05/10/2006) New Delhi - RailTel, a railway public sector undertaking, has signed a memorandum of understanding (MOU) with a U S-based software company to make its 500 stations across the country Wi-Fi-enabled.

"We are in touch with one of the companies to make 500 major railway stations wi-fi. We have signed an MOU in this regard. We are on the job," K K Bajpayee, President and Managing Director of the RailTel Corporation Ltd, said here on Thursday on the eve of a two-day international conference on telecommunications signaling, to be inaugurated by Railway Minister Lalu Prasad on Friday.

The objective behind the Wi-Fi scheme was to connect passengers with the rest of the world through internet and websites, he said.

About the 139 call centers meant for providing railway related information, Bajpayee said two such centers were already in operation at Bangalore (Karnataka) and Patna (Bihar) and tenders have been floated for over 200 such call centers across the country, to be operational within a year.

Observing that since 2006 has been declared as "year of the passenger service with a smile", he said railways were concentrating on providing "touch and feel" items to achieve this goal.

In line with this, he said five stations have been identified in each division (total 69 divisions) for provision of passenger information systems such as train arrival, departure, coach guidance system, interacting voice response system and cyber cafes etc.

News: 'India second biggest investor in UK'

(PTI 05/10/2006) New Delhi - Given its penchant for expanding its footprint overseas, India Inc has emerged as the second biggest foreign investor in the United Kingdom, a latest study shows.

Global consultancy and research major Ernst & Young said on Thursday that India has become the second most important source after the US for inward investment into the UK with nearly three-fold jump in the number of projects announced by Indian companies there in the first half of 2006.

The UK captured over half of all projects announced by Indian companies into Europe in the first six months this year, shows the latest issue of E&Y European Investment Monitor which was released here.

While the US firms announced 145 investment projects in the UK in first half of FY'06, up from 102 a year ago, projects announced by Indian companies nearly trebled to 21 from eight in the year-ago period.

The UK has consolidated its position as the most attractive destination for foreign investment in Europe, with a jump of over 30 per cent in the the number of projects announced in the first six months of 2006 to 315 from 236 in 2005, E&Y said.

The report said that Indian and US investments have been among the primary drivers of the foreign investment in the UK and Western Europe.

E&Y Regional Development Director Nigel Wilcock said, "Indian companies need to gain clients from Western Europe and are therefore putting sales offices and also customer support activities close to their customers as a conduit to helping growth in India."

Some Indian companies are also expanding their core business process activity overseas, he added.

News: Rising demand for rooms fuels Indian hotel expansion spree

(TNN 05/10/2006) New Delhi - The hospitality sector maybe sporting no vacancy signs more often today, but the hotels industry is expanding big time.

Estimates suggest that close to 48,500 rooms are under active development in 10 cities in the country which will help to bridge this huge shortage of rooms. Leading the packs are IT hubs Hyderabad and Bangalore where 60 new hotels, service apartments and mixed used development are coming up with more than 15,000 rooms.

According to consultancy firm HVS International’s annual report, most of this supply will become operational between ’08 and ’10. The traditional markets of the National Capital Region(NCR) and Mumbai are still way ahead. Most of this development is taking place in Gurgaon and neighbouring Noida and amounts to 47 new hotels with 10,800 rooms much of this is due to the Commonwealth Games scheduled for ’10.

Only 50-60% of developments have started in these new projects. Manav Thadani MD, HVS International, says, “The supply of new hotels represents branded properties. The demand for rooms has risen significantly in nearly all cities for the current financial year and since supply has increased only marginally this has led to a sharp increase in average room rates in Bangalore, Delhi, Hyderabad, Mumbai, Chennai and Pune.”

In the Mumbai market, the research indicates that demand grows by nearly 1,000 room nights per day every year. The proposed new supply — which will equal about 36% of the existing 9,000-odd rooms — will be inadequate to meet the city’s requirements, especially keeping in mind that the city will shortly have an upgraded airport and also a new convention centre.

In Pune alone, at least 25 hotels are under development and more than 3,500 rooms will enter this market in the next five years. Says Ranjan Bhattacharya, president, Country Inns & Suites, “Going forward, the biggest challenge, given the present supply scenario, will be the availability of quality sites for hotel projects. Site location, accessibility, visibility and proximity to key demand areas are critical factors for long-term feasibility of hotels and lack of good sites would have a negative impact on the supply front.”

Adds Sanjeev Nanda, MD, The Claridges Hotels & Resorts, “There is no doubt in my mind that for hospitality sector to grow we need better infrastructure and more rooms. Now, big groups are realising this need and expanding to other cities. The real estate market too has seen its best times in the last two to three years, and existing land prices across most cities are somewhat prohibitive, especially for stand alone property developers.”

News: Pantaloon rolls out new retail format

(BS 05/10/2006) Mumbai - Pantaloon Retail India – a Future Group company – has launched one more retail format, Brand Factory, to offer fashion brands at factory prices. The Future Group intends to take this format to all metros and A class towns with 10 lakh plus population.

According to sources, the new format will offer the best brands at discounted prices, without compromising on the shopping experience. "The brands will be presented in a fully air-conditioned, slick environment spanning over 60,000 to 1,00,00 sq ft," a source said.

Vishnu Prasad, president - south and CEO - Central & Brand Factory, said; "Over the years, we have seen that factory outlets have become distinct shopping destinations with distinct audiences. With fashion cycles reducing, larger quantities of stocks are reaching factory outlets. But then, what is compromised here is the brand and its image.”

“The emphasis at Brand Factory is to offer customers the widest range of brands possible at absolutely great prices in an ambience that benefits the brand. We clearly have the first mover advantage in this space and plan to capitalise on this by scaling up fast across key cities," he said. The growth in retail scope and scale has allowed Pantaloon to increase focus on emerging opportunities.

The first Brand factory store will be located in Marathahalli – a hub for factory outlets in Bangalore – and the second at Abids, Hyderabad.

Both these stores will be launched this month. The new format will offer a wide array of products such as men's wear, ladies' wear, infant wear, ladies' accessories ,cosmetics, footwear, sportswear, luggage and home linen.

Brand Factory will host many Indian and International fashion brands, including Arrow, Esprit, Bossini, Van Heusen, Louis Philippe Levis, Lee, Pepe Jeans, Dockers, Wrangler and ProVogue.

Pantaloon Retail has a turnover of nearly Rs 2,000 crore in 2005-06. Headquartered in Mumbai, the company operates through primarily the Lifestyle and Value formats through multiple delivery mechanisms and lines of business.

The company has stores in 30 cities in the country, constituting 3.2 million sq ft of retail space.

News: Indian NBFCs may pen fair practice code

(BS 05/10/2006) Mumbai - The Reserve Bank of India (RBI) has asked non-banking finance companies (NBFCs) to put in place a board-approved fair practices code within the next one month to ensure their customers take informed borrowing decisions.

The RBI said the code should be based on its guidelines concerning loan processing, terms and conditions for disbursement and recovery procedures.

The NBFCs have been told that the code should specify that in the matter of recovery of loans, they would not resort to undue harassment by persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans , and other means.

NBFCs have been told that loan application forms should include necessary information which affects the interest of the borrower, so that a meaningful comparison with the terms and conditions offered by other NBFCs can be made and informed decision are taken by borrowers. The loan application form may indicate the documents required to be submitted with the application form.

NBFCs also need to devise a system of giving acknowledgement for receipt of all loan applications. Preferably, the time frame within which loan applications will be disposed of should also be indicated in the acknowledgement.

The NBFCs are also required to convey in writing to the borrower by means of sanction letter or otherwise, the amount of loan sanctioned along with the terms and conditions including annualised rate of interest and method of application thereof and keep the acceptance of these terms and conditions by the borrower on its record.

They will also need to give notice to borrowers of any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc.

The firms should also ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard should be incorporated in the loan agreement. RBI said any decision to recall/accelerate payment of the loan should be in consonance with the loan agreement.

NBFCs have been told incorporate in their code a principle that they will release all securities on repayment of all dues or on realisation of the outstanding amount of loan subject to any legitimate right or lien for any other claim NBFCs may have against borrower.

If such right of set off is to be exercised, the borrower shall be given notice about the same with full particulars about the remaining claims and the conditions under which NBFCs are entitled to retain the securities till the relevant claim is settled/paid.

News: TeleDNA to raise $10mn for expansion

(BS 05/10/2006) Bangalore - Bangalore-based TeleDNA, a provider of mobile VAS (value-added services) infrastructure products to cellular operators, is currently in the process of raising $10-million venture capital fund to expand its sales and support outside India.

As part of its expansion, the company plans to set up an office in Singapore within three-four months.

Speaking to Business Standard, TeleDNA’s chief executive officer and co-founder, Praveen Nallapothula, said the company was currently in talks with a few venture capital firms, and expected the talks to reach fruition by the end of next month.

“Singapore is a niche player in the mobile VAS infrastructure products and there are a very few companies in that country which are into such solutions. We plan to cash in on this by setting up our office in Singapore and use it as a springboard to penetrate other Asian markets,” he said.

TeleDNA currently has offices in Bangalore and Hyderabad in India, and Dallas and Texas in the US. Its clients in the mobile VAS infrastructure products segment include BSNL, BPL, Airtel and Hutch.

Nallapothula said the company had also drawn up plans to expand into mobile advertising and live TV channels using Wimax networks.

“Mobile advertising, of late, has become an important component for cellular operators to grow. Realising this significant potential that the mobile advertising and live TV channels offers, we are planning to foray into this space soon. We intend to set aside a part of the VC fund for this purpose,” he said.

Besides its core area of mobile VAS products and services, the company had started selling VAS enterprise solutions from this year and added customers like Air Deccan, Standard Chartered Bank, IndusInd Bank and Coffee Day.

Owing to this and expansion plans, Nallapothula said they expected the turnover to touch the Rs 40-crore mark this fiscal, compared with Rs 10 crore last year.

TeleDNA will be launching its new initiative – IndiaMobileTV – an end-to-end, off-the-shelf mobile entertainment platform serving mobile consumers, advertisement agencies, content producers and media channels, in Hyderabad on October 5, 2006.

News: Land cap queers Reliance SEZ pitch

(TT 05/10/2006) New Delhi - Mukesh Ambani-owned Reliance Industries’ plans to establish special economic zones (SEZs) in Navi Mumbai and Haryana could run into trouble with the government deciding to impose a 10 per cent ceiling on the double-cropped land that can be acquired for these projects.

Younger brother Anil Ambani’s proposal to set up an SEZ at Dadri in Uttar Pradesh could be snarled in similar problems as it is also coming up on fertile land where farmers produce two crops a year.

Commerce secretary G.K. Pillai today said under the new norms for SEZs, not more than 10 per cent of the total area of such zones can comprise double-cropped fertile land.

The norm has been introduced as the government wants to protect farmers from being displaced from fertile land and confine the SEZs to non-arable tracts that are not suited for farming.

Just two weeks ago, UPA chairperson Sonia Gandhi had said at a Congress conclave in Nainital that the government would announce measures to ensure that the SEZ projects did not displace farmers from fertile land.

Pillai said he anticipated the RIL proposals for setting up SEZs on huge tracts of fertile land in Navi Mumbai and Gurgaon to run into trouble because of this norm.

He said Reliance had not even applied for clearance for the proposed SEZ near Gurgaon in Haryana which is expected to cover a whopping 10,000 hectares.

The company is reported to have applied for approval for its Navi Mumbai project.

Pillai said even the 10 per cent fertile area was being allowed only in cases where it was absolutely essential to include an extra bit of contiguous land without which it would not be possible to set up the SEZ.

Defending the SEZ projects that have already been cleared, Pillai said, “Not a single farmer had been displaced in the 181 SEZs that the commerce ministry has cleared till now.” He said the state governments had already been informed not to include fertile land for SEZ projects.

Pillai said the hue and cry about farmers being displaced through SEZs was misplaced. The issue has been blown out of all proportion by those with misinformed opinions, he added.

Pillai said he had also written to the deputy governor of the RBI that SEZs could not be equated with real estate projects. He said, “I have asked him if any case of using an SEZ as a real estate project was brought to his notice, action would be taken immediately for violation of norms.”

Recently, the RBI had directed banks to raise the risk weightage on loans to SEZ developers to 150 per cent – on a par with the norms for loans to commercial estate developers. The move is seen as a major deterrent to credit access to build SEZs.

Pillai, who has just taken over as commerce secretary, said he had drawn up a vision plan that would spell out what was to be done to kickstart the process of establishing SEZs, including a drastic reduction in the time required for clearing export and import cargo.

News: Kingfisher may hit foreign turf by mid-2008

(DNA 05/10/2006) Bangalore - Vijay Mallya-promoted Kingfisher Airlines may be able to fly international routes from India by mid-2008 with the civil aviation ministry considering relaxing the eligibility norm for allowing Indian carriers to operate on overseas sectors.

A source close to the ministry said talks on the issue were moving in the right direction and the current five-year flying experience criteria for a carrier to operate international flights may be brought down to three years.

A Kingfisher spokesperson said, “Yes, talks with government are positive. We may be able to start international operations on our own by the middle of 2008. We will complete three years of operations in May, 2008.”

If the government revises the eligibility norm, it would fit Kingfisher’s design of flying overseas by 2008, when it takes delivery of its first wide-bodied aircraft - A340-500. The airline plans to deploy the aircraft on the Bangalore-San Francisco and Mumbai-New York sectors.

It would also be taking delivery of A330-200 during the same time, which will be put on Mumbai-London and Mumbai-Hong Kong routes.

These new generation aircraft will be configured in three classes - super first class, ultra business class and Kingfisher class (economy).

The carrier has not abandoned its backup plan, though. Having registered a company - Kingfisher International - in the US, it is talking to four American carriers for a strategic partnership to begin its international operations out of US, in case the government backtracks on its commitment to ease rules.

News: Tata says evaluating opportunities including Corus

(RTR 05/10/2006) London - Indian steelmaker Tata Steel Ltd said on Thursday it was evaluating various opportunities including Corus.

"Given recent industry consolidation, Tata Steel is reviewing a number of global opportunities," it said in a statement.

Corus shares had opened 12 percent higher at 455 pence in London after Indian newspaper reports that Tata was in talks to buy the Anglo-Dutch steel maker for up to $10.6 billion.

Corus would not comment on the newspaper reports, which also boosted shares in other European steel companies such as Salzgitter AG and ThyssenKrupp AG.

News: Tatas to invest Rs 400 cr in Infiniti Retail

(TNN 04/10/2006) Mumbai - The Tata group on Tuesday said it would invest up to Rs 400 crore as equity in Infiniti Retail, Tata’s new retail venture that will deal with consumer and electronic good sale.

The company has entered a technical and sourcing agreement with Australia’s largest retailer, Woolworths. Infiniti Retail will be a wholly-owned subsidiary of Tata Sons and will operate a national chain of multi-brand outlets of consumer electronic products and durables.

These mega stores — branded ‘Croma’ — would offer the widest range of products across categories and brands, claimed company officials.

Infiniti Retail would initially set up 30 large consumer electronic and durable stores, and planned to have 100 such outlets in the next few years, said R Krishna Kumar, director, Tata Sons.

“The first Croma store covering 20,000 sq ft will be launched in Mumbai’s suburb of Juhu on October 9, ’06. The Croma store will be large format stores spread over 15,000-20,000 sq ft,” said Ajit Joshi, CEO, Croma.

Trent, another retail company from the Tata stable, runs a chain of department stores and hypermarkets across India. “Tatas has always played a key role in identifying and supporting emerging business areas.

The organised retail sector is making a splash in India today. We are sharply focussed on retail, and our foray into consumer electronic items and durables will further strengthen Tata’s presence in the growing retail industry,” said Mr Krishna Kumar.

Retail consultancy Technopak Advisors has estimated the size of India’s retail industry at about $300bn and forecast it to grow to $427bn in ’10. Currently, branded retail makes up only 3% of the market, compared to China’s 20% and Thailand’s 40%.

News: India, China continue to be hot for investors

(TNN 04/10/2006) Mumbai - If you ask fund managers about Indian equities there is a high probability that at least eight out of ten will find India to be expensive vis-à-vis other emerging markets. If you ask them about their views on Chinese equities, most, if not all of them, (perhaps with the exception of commodity investor Jim Rogers), will bemoan the inadequate corporate governance standards in the country.

As the stock market adage goes, it is not what investors say, but what they do that decides the trend.

Global investors continued to pull money out of most emerging markets for the week ended September 27. However, equity funds that invest in India and China continued to see good inflows, according to Emerging Portfolio Research, a firm that tracks fund flows into emerging markets.

“Investors appear to be seeking more targeted exposure to emerging markets that are best positioned to persevere during slowing global growth and declining commodity prices,” the EPFR note to clients on Monday said.

“As such they contributed a combined $377m of net inflows to China and India equity funds, while handing BRIC (Brazil Russia India China) funds their third consecutive week of net redemptions ,” the note added.

Indian gross domestic product (GDP) for April-June beat all forecasts and grew 8.9%, the highest growth in the first quarter since ’00-01. The numbers, which were announced on Friday , could provide bulls with some ammunition just when it appeared that the market had run out of positive triggers to keep the rally going.

With oil prices cooling and the economy running at full steam, market watchers are hopeful that India Inc’s earnings estimates for the current financial year could see an upgrade.

Softening commodity prices appear to have affected appetite for equity funds investing in Brazil and Russia.

“Investors may be concluding that they don’t like Brazil and Russia exposure that these funds contain after the recent decline in commodity prices. Global emerging markets (GEM), Latin America, posted outflows during the week, while the Asia ex-Japan equity funds took in inflows of $336m,” the note said.

In Asia, the worst affected were equity funds investing in Japan, following the change in prime ministership. These funds witnessed an outflow of $709m during the week, the second biggest weekly outflow in ’06.

“Investors are understandably uncertain about Abe’s intended economic policies, especially following the outgoing reformist prime minister, Junichiro Koizumi, who had solid reformist credentials and helped restore growth to the Japanese economy,” the note said.

Global equity funds — funds that predominantly invest in equities of developed markets — continued to see strong inflows during the week. Investors net pumped $1.3 bn into these funds.

Meanwhile, US equity funds continued to witness outflows for the seventh time in eight weeks, with investors pulling out $1.8 bn out of small cap funds and deploying $559m in large cap funds. The outflow in US equity funds persists despite these funds delivering positive returns in five out of the last eight weeks.

India Bound

Investors contributed a combined $377m of net inflows to China and India equity funds India’s GDP for April-June and grew 8.9%, the highest in the first quarter since ’00-01 Experts are hopeful that India Inc’s earnings estimates for the current fiscal could see an upgrade.

News: India moots $5bn cap on Singapore investments

(BS 04/10/2006) New Delhi - India has suggested a $5 billion cap on investments from Singapore as a precondition to easing the tax treaty with the city-state.

The ceiling on non-portfolio investments over the next 2-3 years was floated by the commerce ministry at a meeting in Singapore last week on a comprehensive economic cooperation agreement being drawn up.

“We have suggested that investment could be capped at around $5 billion in return for relaxing the tax treaty. The intention is to monitor inflows and check round-tripping,” said a commerce ministry official.

Singapore’s double taxation avoidance agreement with India has two clauses designed to weed out investments from shell companies registered in the city-state.

These require Singaporean companies to be listed on a recognised stock exchange and that their total expenditure on operations in the state of residence be above $200,000 for at least two years before they can claim tax exemptions on capital gains in India.

Singapore says these clauses are coming in the way of special purpose vehicles set up by financial services companies. It has pointed out that these restrictions do not apply to companies operating in Mauritius.

Officials said the cap could later be increased if both sides were satisfied that no misuse of the tax treaty had occurred. They added that the impasse over India recognising GIC and Temasek as two separate investment entities was also likely to be resolved in return for Singapore granting full banking status to State Bank of India.

Following Singapore’s demand to amend its tax treaty, India has been asking Mauritius to agree to review its treaty to bring it in line with Singapore’s. India is negotiating an economic cooperation agreement with Mauritius.

News: 'Fitness industry has huge potential in India'

(BS 04/10/2006) Chennai/Hyderabad - The sports and fitness industry in India has not been tapped to its full potential. There are, therefore, great opportunities for new ventures in areas of sports infrastructure, sports management, sports science and fitness clubs and spas, said industry representatives at a session organised on sports and fitness at the TiE-ISB Connect 2006.

According to badminton champion, Pullela Gopichand, there is an increasing demand for sports infrastructure in the country, not just for sports excellence but for fun and recreation as well.

“The government may not be able to spend enough on sports. This, therefore, presents huge opportunities for private players to set up sports academies,” he added.

Anirban Das Blah, vice-president of Globosport, a sports and entertainment management company, said that in India sports management was assumed to include only BCCI rights and cricket endorsements.

“However, globally, it involves sponsorships, broadcast rights, digital rights, endorsements, licensing and merchandising rights apart from infrastructure,” he added.

Blah also said that in international markets, there was typically one major "Gorilla" sport apart from other small “Chimp” sports.

News: India Inc betters appetite for overseas funds

(BS 04/10/2006) Mumbai - Riding high on a booming economy, India Inc is breaking all records in fund raising. Indian corporations and banks have raised Rs 1,54,272 crore in the first nine months between January and September in calendar year 2006 excluding follow-on equity issues.

This is 37 per cent higher than what they had raised in the corresponding period of 2005 (1,12,583 crore). What more, this is also higher than the amount (Rs 1,44,769 crore) raised in the whole of 2005.

“This signifies that despite rise in interest rates, companies are firmly on the growth path. In other words, rising rates have not been able to dent the growth of corporate India,” said a foreign banker.

Since the beginning of 2006, the cost of borrowing for triple-A rated companies has gone by at least one and half percentage points.

Debt raised overseas through loans, bonds and convertible bonds amounted to Rs 70,637 crore, an increase of 41 per cent over a year earlier despite a rise in the cost of overseas borrowings.

Banks accounted for almost half of the debt raised from domestic market as they rushed to to raise money to shore up their capital adequacy ratio (CAR) through issue of bonds qualifying as perpetual Tier-1 and Tier-II capital.

Banks are required to maintain a minimum CAR of 9 per cent and are in need of capital to support credit growth and also to provide for additional capital requirements as a revised capital adequacy framework (popularly known as Basel II) gets implemented from March 31, 2007.

Despite a lull in equity issues following a sharp correction in May, the total amount raised through initial public offers (IPOs) more than doubled to Rs 15,470 crore during January-September 2006 from Rs 7,592 crore a year earlier.

The aggregate of all IPO during the nine months period is also 59 per cent more than the amount raised through initial floats in the entire 2005.

The story of Indian companies and banks tapping the overseas debt markets had begun in the middle of 2003 and since then the amount raised has only been on the rise.

News: Indian microfinance start-up plans Rs 150-crore expansion

(BS 04/10/2006) Chennai/Bangalore - Buoyed by the demand for microfinance from self help groups (SHGs) in Karnataka, the city-based Moksha-Yug Access, a rural infrastructure and services firm, has planned a Rs 150 crore expansion.

The start-up intends to disburse Rs 15 crore to SHGs this fiscal. The target for the next fiscal is Rs 80 crore.

At present, it has a client base of 322 SHGs (7,600 members) covering some 83 villages in Bagalkot district in North Karnataka.

The firm, which started its operations in April this year, has disbursed loans worth Rs 50 lakh to 82 SHGs (800 members) through the ICICI Bank. Following the expansion, the firm intends to reach out to SHGs (5 lakh members) in the neighbouring Bijapur and Belgaum districts.

According to Moksha-Yug Access founder & CEO Harsha Moily, the firm will raise Rs 150 crore for expansion from high net worth individuals, family and friends.

“It will go towards setting up branch offices. Apart from providing microfinance services, soil and water quality testing, it will also disseminate information on farm machinery, processing plants, procurement and marketing of inputs and extension services,” he added.

“We work on an income-generating model. Microfinance will be linked to the SHGs’ capacity to initiate self-employment. For instance, we assist SHGs to market their products like embroidered work and incense sticks. We have tied up with leading retailers for the purpose. We make sure the recovery is done in the simplest possible manner by empowering our field agents (local villagers),” Moily explained.

Moksha-Yug Access has signed a service provider agreement with ICICI Bank on the funding process. The microfinance firm identifies the SHGs eligible for the loan. The bank channels the loan to the SHGs through the firm which deposits a 10 per cent security.

In case the recovery of the entire funding does not happen, the firm will lose its 10 per cent security deposit while the bank will lose its 90 per cent funding. “It is the risk the bank has taken, But one aspect is clear – we do the entire loan recovery work. At no point are the bank staff involved,” Moily said.

By handing over the responsibilities of identification of beneficiaries and recovery of loan, the bank stands to save costs apart from expanding its microfinance portfolio.

The firm is in talks with other banks like HDFC and ABN-Amro to extend microfinance service to SHGs. “At the end of five years, we intend to disburse Rs 400 crore to SHGs,” Moily added.

Moksha-Yug Access, in association with insurance firms, will provide life, medical and weather insurance for the SHG members.

Moily holds an MBA in International Business Management from Thunderbird, The Garvin School of International Management (USA). He worked for four years with a venture capital firm in the US before moving to a private equity firm in the UK.

He contends that microfinance is gaining importance in the third world countries: “It has enabled the rural poor to move from a day-to-day survival to planning for the future, investing in better nutrition, living conditions, health and education.”

News: India Inc’s big appetite for food retailing

(TT 04/10/2006) New Delhi - What’s common between Sunil Bharti Mittal and Mukesh Ambani? Both are in talks with farmers to set up their food retail ventures.

With India Inc realising that there is big money to be made in growing and selling fruits and vegetables, agri retail has become the latest mantra among companies.

Reliance, Pantaloon, Godrej, FieldFresh Foods, Ballarpur Industries, DSCL, the Tata group and Mahindra & Mahindra have drawn up big plans to enter the agri foods sector.

Even multinational companies like Wal-Mart, Tesco and PepsiCo want a share of this food retail market, estimated at Rs 9.9 lakh crore. These foreign firms are looking at entering the market through the cash-and-carry or franchisee model as direct entry is barred by foreign direct investment (FDI) laws.

Big money

Analysts say if organised food retailers can grab even 1 per cent of the market, it would represent a Rs 10,000-crore annual market.

According to estimates, the organised format market would grow 10-fold in five years or to Rs 100,000 crore by 2011.

For any company, this represents a huge opportunity to tap what may become the world’s fifth largest consumer market by the end of the decade, say analysts.

They add that for companies planning a foray into food retail, getting directly involved with agri business helps keep costs under check by eliminating the role of intermediaries.

Firm foray

Bharti Enterprises, which is in talks with Tesco, Wal-Mart and Carrefour for its food retailing business, is looking at deriving synergies from its subsidiary FieldFresh Foods Private Ltd, a 50:50 joint venture with the Rothschild Group-controlled ELRo Holdings India Ltd.

FieldFresh, which started with an investment of Rs 250 crore, could become the supply line for Bharti’s proposed retailing business. Currently, FieldFresh leases 4,200 acres on 78 farms in Punjab, producing beans, snow peas, carrots, okra, baby corn and other vegetables for export to Europe and West Asia.

Reliance Industries has even bigger plans. It plans to foray into the agri business with an initial investment of over Rs 4,000 crore, mostly in Punjab and Haryana.

The company is believed to have tied up more than 900 acres of land in Punjab already.

Links are being established with farms on several thousand acres in Bengal, Maharashtra and elsewhere, with rural centres providing goods for farmers and handling their produce.

Even Pantaloon Retail India, which runs the Big Bazaar supermarket chain, and RPG Enterprises’ Spencer are in the process of partnering with farmers to source food grains, fresh vegetables, fruits and processed foods directly for the food section of their retail chains.

Abhiram Seth, executive director, exports and external affairs, PepsiCo India, said: “What started as an obligation to the government became corporate social responsibility and is now big business.” More so in the fruits and vegetables category because of its potential to churn out big bucks.

Growth path

With 77 per cent of India’s population relying on agriculture for a living, better efficiency and new markets have the potential to benefit a large number of people.

Agriculture secretary Radha Singh supports the big companies’ entry in vegetables and fruits “because of the obvious growth potential and the impact they can have on farmers’ performances”.

Seth said while wheat and paddy crops yield Rs 20,000 per acre a year, the comparative yield from vegetables is Rs 40,000 and from fruits Rs 60,000 per acre per annum.

“Oranges comprise 60 per cent of Tropicana juices in India, and in an 18-month cycle, a sapling of good quality citrus fruit can be developed and sold to farmers,” said Seth.

PepsiCo, therefore, is ready with five greenhouses and will invest Rs 5 crore in the venture.

“We will have the capacity to grow 4.3 million plants, the highest in the world,” Seth added. With 22,000 plants in 2005, the company will have 250,000 plants ready by 2006.

For others like the Thapar group’s Global Green Company, helping farmers in Andhra Pradesh and Karnataka grow gherkins has become a big money spinner.

Over 95 per cent of Global Green’s products are exported to 23 countries through 15 leading retail chains. The company produces 30,000 tonnes of gherkins and has a contract farming arrangement with 12,000 farmers.

“These gherkins give farmers the option of getting into short crops with a cycle of 75-90 days with a 100 per cent buyback arrangement,” said Vineet Chhabra, managing director of Global Green.

The Thapar group, which has been in the agri business for 12 years, has total sales of Rs 100 crore primarily from gherkins.

Global Green is now expanding its basket with salsa, relish silver onion, jalapenos and different kinds of pepper. Modern agronomic practices like raised beds, deep root sowing and laser levelling are are being used to improve land productivity.

Wal-Mart, the world’s largest retailer, is also exploring India as a source of “premium exports”, including items like long-grain basmati rice, spices and fresh fruits like mangoes, said a company spokesperson.

Outsourcing hub

“This opportunity in agriculture is an opportunity which is larger than telecom, which is larger than IT,” said Rakesh Mittal, vice-chairman, Bharti Enterprises.

He also said big players now regard the Indian farm sector as the next outsourcing story after information technology. “If IT is serious business today, agri business will be three times as serious five years from today,” he added.

News: India 2nd largest global cotton producer

(BL 04/10/2006) Mumbai - India has emerged as the world's second largest cotton producer in 2006-07, edging past the US, which held the second rank until recently.

China's is the world's leading cotton producer.

The US had held the position for long; but observers were convinced it was a matter of time before India would push the US to the third spot. Since 2002, India's cotton production has expanded phenomenally and has sustained for four seasons in a row.

Dramatic turnaround

The dramatic turnaround of the country's cotton fortunes means that from being an importer of about 20 lakh bales, India is today an exporter.

In 2005-06, cotton exports totalled over 40 lakh bales and for 2006-07, the volume could further expand to 50 lakh bales.

In no small measure has introduction of Bt cottonseed played a part in this success story. India's cotton production for 2006-07 is currently estimated at over 260 lakh bales (170 kg).

The US Department of Agriculture (USDA) recently estimated Indian output at 4.572 million tonnes, while the US itself will produce 4.430 million tonnes, down from previous year's 5.201 million tonnes. Interestingly, Asia dominates the global cotton sector in terms of both output and use. China, India and Pakistan account for half of the world's cotton production and two-thirds of world cotton consumption. Pakistan is the world's fourth largest producer and third largest consumer.

Global production

World cotton production is projected at 25 million tonnes in 2006-07, with Asian majors China, India and Pakistan combined expected to produce 13 million tonnes or over half of the global output for the first time in history, Washington-based International Cotton Advisory Committee (ICAC) pointed out.

World cotton consumption is expected to continue to rise in 2006-07, but at a slower rate than in the previous two seasons, to 25.6 million tonnes. In other words, world output would trail consumption during the year, making stock drawdown inevitable.

China, India and Pakistan together may consume 16.6 million tonnes or 65 per cent of the projected world cotton use, up from 50 per cent in 2000-01, the ICAC said.

Stable consumption

With consumption in other parts of the world expected to remain stable, world trade in cotton is projected to decline to 9.2 million tonnes (9.74 million tonnes), while ending stocks would be down to 11.6 million tonnes (11.91 million tonnes).

The USDA has projected continued strong imports by China (4.25 million tonnes) to fuel its textile industry needs.

According to the ICAC, the situation is unlikely to improve next year (2007-08) on current reckoning, as output would continue to trail consumption need.

News: India is booming!

(Forbes 04/10/2006) Mumbai - The numbers appear to make for a happy tale: The Indian economy beat forecasts to record a GDP growth of 8.9 per cent in the first quarter of 2006, propelled by growth in the manufacturing sector.

That’s a contrast with past years, when the services sector was the engine of the economy, making India synonymous with the concept of outsourcing and in the process creating a whole new class of professionals and entrepreneurs.

This time, from April through June, the manufacturing sector rose 11.3 per cent, higher than a growth rate of 10.7 per cent reported in the same period last year. But India’s key services recorded a growth of only 8.9 per cent, compared with 8.8 per cent in the last year. And some economists believe the government isn’t doing enough to move these numbers along.

Finance Minister P Chidambaram announced that this was the highest first quarter growth recorded since 2000-01. “My expectation is we can continue to maintain a growth rate close to 8 per cent every quarter provided we continue to follow prudent policies,” he told reporters soon after the numbers were released.

But economists say the government also needs to resolve nagging infrastructure issues and ensure that populist policies don’t hinder growth.

“In some sense, we should start getting used to these growth numbers coming out of India. This is the third or fourth year running that we’ll have about 8 per cent growth,” says Surjit Bhalla, managing director of Oxus Research and Investments, an Indian economic research, asset management and emerging-markets advisory firm.

But Bhalla adds: “What has the government done to bring this about? The short answer is nothing, other than the Central bank maintaining a competitive exchange rate. Though the good news is the capacity of the government to do damage is severely restricted, since the growth momentum is self-sustaining.”

The ruling Congress-led coalition in India is limited in its ability to reform because it needs the support of Communist parties to stay in power. Labour reforms are one area where the government hasn’t done too much to change strict policies that make it difficult to hire and fire based on market demand.

Equally worrying are India’s nagging problems with infrastructure and water, especially with Western companies opening more and more bases in the country.

“One downside [to the growth story] is infrastructure remaining a bottleneck,” says Nagesh Kumar, director general of RIS, an autonomous research body that was set up with financial support from the Indian government.

But Kumar is also quick to point out that with the manufacturing sector booming, India now has two engines of growth—services and manufacturing. And he, too, feels that the momentum in these sectors is self-sustaining.

Former federal minister and economist Dr Yoginder Alagh says India’s growth in the coming years would be sustained by three factors.

“The major big-ticket reform is India’s move towards complete capital account convertibility,” says Alagh, adding: “Most of East Asia is very mercantilist on the exchange rate, but we are creating an environment where any foreign company can bring in any money and take it out almost at the click of a button.”

The other factor for growth is the central government’s control of its fiscal deficit, says Alagh, who also serves on the boards of leading Indian companies. And finally, there’s a turnaround in agriculture after about 10 years.

Rebutting scepticism from some economists over how long India will be able to sustain this growth for, Alagh points out that both domestic demand and export growth are strong and will remain so for a while.

Like China did in the past, India will now ride through the slight slowing down of growth in other Organisation for Economic Cooperation and Development countries, Alagh predicts.

And though the country’s booming growth rates are doing little to bridge the chasm between the rich and poor, the market optimism is evident on the streets of India’s metropolises. Top international brands are wooing consumers with increasingly large pockets, swank new shopping malls now dot city landscapes and India’s real estate market is reported to be growing at about 30 per cent annually.

It now remains up to the government to keep inflation in check.

India’s Central bank, the Reserve Bank of India, has its next review of interest rates on October 31. It’s uncertain whether the bank will again raise the key short-term interest rate. It has already raised the rate three times this year to check inflationary pressures.

News: India world-beater on paying kickbacks

(PTI 04/10/2006) New Delhi - In a global recognition of a different kind, India has been ranked as the worst performer by Transparency International on its global Bribe Payers Index, which is based on the propensity of companies from the world's 30 leading exporting countries in bribing abroad.

The international corruption watchdog on Tuesday said overseas bribery is still common among the world's export giants despite the existence of international anti-bribery laws, while companies from emerging export powers -- India, China and Russia are the worst performers.

India has been ranked at the 30th position in the Transparency International 2006 Bribe Payers Index (BPI), with a score of 4.62. A score of 10 indicates a perception of no corruption, while zero means corruption is seen as rampant.

Switzerland has been ranked at the top slot with a score of 7.81, followed by Sweden, Australia, Austria and Canada at the top five positions on the index. The US and UK have been ranked at 10th and sixth positions respectively.

Transparency International said Switzerland has managed a leading score of only 7.8, which is far from perfect. This indicates there might be variations here but there are no real winners, it added.

According to the report, businesses from India, China and Russia, who are at the bottom of the index, have the most outstanding propensity to pay bribes.

This year's BPI data shows that leading exporters are undermining the development with their dirty business practices overseas, while the foreign bribery by emerging export powers is "disconcertingly high".

Companies from the wealthiest countries have been ranked in the top half, but they still routinely pay bribes, particularly in developing economies, it added.

"In the case of China and other emerging export powers, efforts to strengthen domestic anti-corruption activities have failed to extend abroad," the report said.

"Bribing companies are actively undermining the best efforts of governments in developing nations to improve governance, and thereby driving the vicious cycle of poverty," said Transparency International Chairwoman Huguette Labelle.

"It is hypocritical that Organisation of Economic Cooperation and Development (OECD)-based companies continue to bribe across the globe, while their governments pay lip-service to enforcing the law," Transparency International CEO David Nussbaum said.

"The enforcement record on international anti-bribery laws makes for short and disheartening reading," he added.

"Domestic legislation has been introduced in many countries following the adoption of the UN and OECD anti-corruption conventions, but there are still major problems of implementation and enforcement," he added.

News: Technopak Advisors looks to stack up on retail stake buys

(TNN 03/10/2006) New Delhi - It’s time to practise what it preaches for leading retail consultancy Technopak Advisors. Moving up the value ladder, the consultancy is exploring options to leverage its expertise by acquiring an equity stake in new retail projects.

This could involve an organisational restructuring in future for the firm which is also looking at expanding its presence into new domains of consultancy in India.

“We would like to apply our knowledge of the market, along with some of our retail partners. The most likely way of doing it is by way of picking an equity stake in a retail venture. As far as funding is considered, money can be easily raised from the market. There is a lot of untapped potential in Indian retail market and we would like to utilise it,” said a company official.

When contacted by ET, Arvind Singhal, CEO, Technopak Advisors, confirmed that the company is looking at alternative revenue models and billing options. “A consulting fee is, of course, the most conventional source of revenue for us. In addition, we are now looking at revenue generation from success elements of our clients as well,” he said.

Mr Singhal said that while there are no immediate plans of picking an equity stake in retail ventures, the consultancy is open to the idea. Providing consultancy in the pharma retail space is top on the company’s priority list. It has tied up with a leading global healthcare consultant to provide pharma consultancy services in India.

Technopak is one of the consultants for the Anil Dhirubhai Ambani Group’s foray into pharma retail, sources added. At present, the consultancy’s key expertise is in the areas of lifestyle retail, food & grocery retail and hypermarkets. It wants to expand into areas like retail store design, consumer insights and IT.

News: Biyani pockets Windmill Resorts in Alibaug

(TNN 03/10/2006) Mumbai - Pantaloon promoter Kishore Biyani has bought out Windmill Resorts, a prime hotel property in Alibaug, Mumbai, for an undisclosed amount.

Mr Biyani’s move assumes significance as Kshitij Investment, a property fund floated by the Biyanis, is in the process of acquiring real estate and hotel properties across India. “We’ll be using the hotel property for our in-house training programme,” Mr Biyani told ET. However, he was reluctant to divulge the cost of the acquisition and other details of the deal.

Windmill is a three-star hotel with over 30 rooms spread over 5 acres. It was jointly promoted by Vimal Mehta and Mr Sethumadhavan. It is not known whether Mr Biyani routed the Windmill acquisition through Kshitij Investment or through an investment firm owned by him. This is the second time in a month that the hospitality sector has witnessed a major transaction. Late September, Gibraltar-based private equity fund EurIndia, said it plans to invest over Rs 60 crore equity in a Goa hotel project.

Alibaug has been a favoured weekend getaway for Mumbaikars. It houses bungalows of the rich and famous along its coastline. Companies like Rashtriya Chemicals & Fertilisers, Ispat Industries, Grasim’s sponge iron division and tile manufacturers, have a manufacturing presence at the place. Industry sources said, Windmill Resorts has been used as a training-cum-boarding place for top executives of these companies.

Sources also said that Alibaug, because of its proximity to Mumbai and an unpolluted coastline, is fast emerging as a destination for major hotel groups. Earlier, Radisson Hotels & Resorts and Sahil Spa & Resorts were reported to jointly develop a new hotel in Alibaug.

News: Indian banks scramble for deposits

(BS 03/10/2006) Mumbai - After scorching credit growth in the last two years, banks are bracing themselves to fight it out on the deposit front by jacking up interest rates.

This is set to intensify as banks are left with little leeway to generate resources, since most of them have hit the minimum level of regulatory investments in government bonds, known as statutory liquidity ratio (SLR).

Banks are required to invest 25 per cent of their net demand and time liabilities (deposits) in government bonds which qualify for SLR. Two years ago, in March 2004, the banking system’s SLR holding was close to 42 per cent.

With credit picking up fast, most banks have liquidated their excess SLR holdings to support the credit growth and, in the process, hit the minimum requirement level of 25 per cent.

This means they cannot scale down their investment portfolio any more to generate liquidity. As a result of this, banks need to buy bonds from the market to maintain the SLR level and also aggressively mop up deposits to support the credit growth.

According to banking sources, except for a few banks like State Bank of India, Punjab National Bank and Indian Bank, most have scaled down their SLR level to around 25 per cent.

“The average SLR holding of the banking system could be a little over 26 per cent but this does not give the correct picture, as some of them have scaled it down to just about 25 per cent,” said a bond dealer.

A few are using the Reserve Bank of India’s reverse repo window to maintain their SLR level on every reporting Friday.

This essentially means these banks are borrowing government bonds from the central bank to maintain the minimum investment level they require to report on alternate Fridays. In March, the SLR level was 31.3 per cent.

The RBI infuses liquidity in the system through its repo window and sucks out excess liquidity through its reverse repo window. Banks are required to offer SLR bonds as collateral to avail of the liquidity facility. Conversely, the RBI offers bonds when it takes money from the banks.

The investment portfolios of banks contracted by 3.1 per cent in 2005-06, after a slower 7.4 per cent growth in 2004-04. The investment books of banks had increased by 23.9 per cent in 2003-04.

An increase of over 20 per cent in investments was normal for banks.

Banks are intensely engaged in expanding their deposits kitty with the SLR leeway no longer available to fund credit demand. In the process, they are increasing the demand for government bonds as well as the rates of deposits.

Most banks are now offering over 8 per cent interest on long term deposits. “As the banks grow their deposit base, they need to buy more and more government bonds to meet the 25 per cent SLR requirement,” said a banker.

A note by CLSA Asia-Pacific Markets says at the current pace of deposit accretion (over 21 per cent), the excess SLR cushion at the banking industry level will be exhausted in the next six months.

Assuming a 15 per cent growth in deposits in 2007-08, it estimates that the banking system will need to invest over Rs 1,00,000 crore in government bonds, virtually equivalent to the entire annual net borrowing of the government.

The demand for government bonds has seen yields on government bonds dropping. The yield on the benchmark 10-year bond is 80 basis points down to 7.6 per cent from a high of 8.4 per cent in July 2006.

News: Indian retailers rope in mamas

(BS 03/10/2006) New Delhi - The shortage of skilled labour fluent in English has led to retailers like Shoppers’ Stop, FabIndia and ITC Wills Lifestyle hiring housewives and students to man their stores on part-time basis during peak shopping hours. Nearly two-thirds of purchases are made between 2-9 pm over the weekends.

The customary practice is to hire temporary staff for a few months on all working days. With this new practice, retailers can cut down costs by adding employees only on weekends — when experts say the demand by customers is 200 per cent higher than weekdays.

Retailers have rolled out this system in Bangalore and Mumbai so far, employing 700 people under this scheme for customer service and sales related jobs. There are plans of spreading this practice across the country with Lucknow being the next destination.

“This system also works as a pre-qualification for selecting permanent staff. It allows us to funnel out good employees, thereby saving us both time and labour,” said BS Nagesh, managing director and chief executive officer, Shoppers’ Stop.

TeamLease Services, an HR outsourcing company, had started offering this product to enable retailers to attend to customers during peak shopping time.

“The salary can vary between Rs 200 and Rs 500 per day, based on skills, and reflects a short-term premium over a pro-rated permanent job,” said Manish Sabharwal, chairman, TeamLease.

With retailers operating at margins of 3-4 per cent, they cannot possibly be expected to undertake extensive training services, said Sabharwal. For this very reason, retailers are now eyeing non-traditional labour. The only qualification for these jobs is fluency in English.

News: India shining on global exchanges

(BS 03/10/2006) Mumbai - IT-ITES: Investors are seeing more value in Indian IT-ITES companies. Why is it so?

Indian IT-ITES companies are currently pipping their global counterparts to the post in market capitalisation. Infosys Technologies ranks number one with TCS coming second and Wipro taking the third place.

Accenture ranks fourth, followed by Electronic Data Systems (EDS). Cognizant Solutions ranks sixth, Amdocs, seventh, Computer Sciences, eight and Cap Gemini is ranked ninth. Satyam Computer occupies the 10th position.

The four Indian software majors, with a combined annual revenue of $10.57 billion, aggregated a market capitalisation of $73.44 billion. They are among the world’s top 10 software companies by market capitalisation.

Compared to this, five US-based software companies and Cap Gemini together have a market capitalisation of $65.01 billion as against their combined annual revenue of $66.98 billion.

Why do investors see more value in Indian software companies? For one, Indian firms are growing faster than their global peers in terms of net earnings.

The revenue and net earnings of all four frontline Indian software firms have more than doubled over the last three years while global software companies are registering an annual growth of around five to six per cent.

Morgan Stanley research reports on the global software valuations show a revenue growth rate of around 35 per cent for the Indian software firms while global peers are likely to grow at the rate of around six per cent over the next two years.

The estimates for net earnings for Indian companies is pegged around 25-30 per cent while global IT majors would witness an estimated earnings growth rate of around 15-20 per cent.

Infosys’ net earnings are estimated to grow at two years compound annual growth rate of (CAGR) of 33 per cent while TCS earnings is expected to grow at 31 per cent. Wipro and Satyam Computers earnings growth rate of 26 per cent each will be ahead of Accenture (11 per cent), Amdocs (15 per cent) and Computer Sciences (17 per cent) in earnings growth in next two years. Cap Gemini, EDS and Cognizant Solutions which have low earnings base would outperform their peer with earnings CAGR of over 50 per cent.

Infosys’ guidance for fiscal 2007indicates a revenue growth rate of 25.2- 27.3 per cent over fiscal 2006 and its EPS is expected grow at 21.4-23.4 per cent. Satyam Computer expects a revenue growth rate of around 29.2-31.2 per cent while its EPS is expected to grow by 27.5- 29.5 per cent. Wipro and TCS have not provided their guidance for fiscal 2007.

Among US software firms, Accenture has predicted its fiscal 2007 revenue growth rate at 9-12 per cent and its EPS to grow by 11.3-11.5 per cent. Amdocs expects its fiscal 2007 revenue growth of 16.5-20.5 per cent and EPS growth of 27.2-33.3 per cent.

Cognizant Solutions’ revenue for the year ended December 2006 is expected to grow 55.2 per cent and EPS, 38 per cent. EDS revenue for year ended December 2006 expected to be up by 4.2 per cent and EPS by 45 per cent.

But will a potential US slowdown impact the earnings and value of the Indian IT services sector? J M Morgan Stanley analysts see no such indicators. They reason that new customer-wins are strong, existing customers are ramping up, and management teams appear to have high visibility.

However, what if the US slows significantly going forward? Analysts opine that this sector can be resilient to an extent, but there will be an impact nevertheless.

The larger scale of the companies, a more diverse revenue base, and widespread acceptance of offshore outsourcing now may be mitigating factors relative to the 2001 slowdown.

Earnings growth expectations are less lofty and valuations relative to the Sensex are lower than those at the time of the 2001 slowdown. Analysts say if there were to be a significant slowdown on the other hand, the stocks may decline in absolute terms, but relative performance may not be at significant risk.

News: Carrefour talks to Dubai group about India stores

(RTR 03/10/2006) Dubai - Carrefour, Europe's largest retailer, is in talks with Dubai's Landmark Group about opening up to 200 stores in India, Landmark Chief Executive Micky Jagtiani said.

Landmark's India unit, Lifestyle International Pvt. Ltd, is in the early stages of talks about acquiring a Carrefour franchise as economic growth in India spurs retail demand, Jagtiani told Reuters in Dubai on Sunday. They could conclude the discussions as early as November, he said.

"We are in India and food retail is a natural extension for us," Jagtiani said, declining to say how much the plan may cost. Landmark is also in talks with as many as two other retail companies about developing outlets, Jagtiani said, declining to identify them.

News: HT Media, Times of India in newspaper pact

(RTR 03/10/2006) New Delhi - HT Media Ltd. has signed an initial agreement for an equal joint venture with the Times of India Group to publish a tabloid-style newspaper in New Delhi, an HT official said on Tuesday.

"It will be modelled on the Mumbai Mirror," chief financial officer Vinayak Purohit told Reuters, referring to the Times of India group's compact newspaper which competes with tabloid Mid-Day.

Purohit did not give exact figures about the investment in the English-language paper and said the companies were yet to draw up a detailed business plan.

"But it will be a very small investment. We will use our existing printing and distribution facilities, so most things are already in place," he said.

With key editorial staff already hired, the paper should be out on the streets before the end of the year, he added.

News: Tatas to launch consumer durables brand Croma

(PTI 03/10/2006) Mumbai - The Tata Group today announced its technical alliance with Australian retail major Woolworths to start a specialised retail chain for consumer durables.

The new venture, Infiniti Retail Ltd, will be a 100% subsidiary of Tata Sons, and will offer more than 6,000 products across eight categories.

"This will be a specialised retail chain for consumer electronics and durables with the brand name Croma," R Krishna Kumar, Director of Tata Sons, said.

News: Tata Motors to outsource job to Fiat

(BL 03/10/2006) Pune - Auto major Tata Motors has approached carmaker Fiat to outsource its painting job to help it tide over the crisis arising from a fire accident in the paint shop at its Pune works. The company is faced with a pile-up of engines and chassis as vehicle shells await painting. The company is keen to avoid a disruption in its production scheduleespecially during the festive season.

Company sources told Business Line that Fiat's Kurla paint shop was likely to take up the job of painting Tata Motors cars even as it had simultaneously pressed the paint shop of its commercial vehicle business unit (CVBU) into 24X7 operation.

A Tata spokesperson when contacted maintained that the car plant's paint shop would begin production over the course of the next week but declined to give a specific date. "We have mobilised the two paint shops of the CVBU to minimise the impact on production but it will still take some time for us to ramp up to full volumes," the spokesperson said.

Replying specifically to a query if Tata Motors is approaching Fiat to outsource painting of its cars to its Kurla facilities, the spokesperson said, "While some of our pick-ups are usually painted by Fiat at Kurla, what we might do is increase the volumes of pick-ups that go there to tide over the situation so that capacities are released at our Pune plant."

The company is also working overtime at speeding up work on the new paint shop for its Ace model which it hopes to utilise to get its production of cars back into normalcy.

"Even with the best efforts, the earliest things are going to be near normal is towards the end of the first week of October," sources said.

If the company's move to head to Kurla goes ahead, it will not be part of the joint venture agreement that the two companies signed recently, but will be a one-off outsourcing job, the sources said.

According to sources, of the 760-780 passenger cars/day that is produced at the Pune plant, the CVBU's paint shop is currently handling around 450 despite working round-the-clock.

Tata Motors had announced after the fire broke out on September 21 that is has an inventory stock of a week in place.

The Pune passenger car plant manufactures the Indica, Indigo and Indigo Marina models.

News: Pantaloon Retail to form JV with UK co

(PTI 03/10/2006) Mumbai - Retail major, Pantaloon Retail India Ltd on Tuesday said it will form a 50-50 joint venture company with UK-based Alpha Airports Group plc, to develop travel retail and food catering business in airports across the country.

The board of directors at its meeting recently approved an Memorandum of Understanding with Alpha Airports Group, Pantaloon Retail informed the Bombay Stock Exchange.

A dividend of Rs 2.50 on shares of Rs 10 each (25 per cent) was also declared by the board, it added.

The company decided to sub-divide every equity share of Rs 10 each to five shares of Rs 2 each, subject to shareholders approval.

After the stock split the authorised share capital of Rs 35 crore would consist of 17.50 crore equity shares of Rs 2 each, it added.

Alpha Airports Group operates over 150 shops in 15 countries with an annual turnover of over 880 million dollar and has been operating duty-free shops at Cochin International Airport since 2002.

Shares of the company were trading at Rs 1,922, up 1.95 per cent at the BSE.

News: More Aussie cos to outsource work to India

(PTI 02/10/2006) Melbourne - Close on the heels of Qantas announcing outsourcing of its IT operations, Australia's St George Bank is also planning to transfer jobs to India.

St George is following the lead of Westpac, ANZ, National Australia Bank and Qantas in shifting as many Aussie jobs as it can overseas, media reports said here.

The bank has already told 80 workers at its Kogarah collections office that their jobs will be moved to India and more jobs are expected to be axed.

Many in the financial services industry are now trying to cut costs by outsourcing back office operations to India.

Meanwhile, despite opposition from labour unions, Australian Qantas has said it will go ahead with the plan to move at least 300 IT jobs to India saying skills needed to upgrade its systems are no longer available in Australia.

Two Indian companies have been short listed to take over the airline's IT development, maintenance and support services, Qantas chief information officer John Willett was quoted as saying by local radio.

"The providers involved in the tender process have the capabilities and depth of expertise that we can no longer source in Australia," he said.

"If people want Qantas to be competitive and successful, and to continue to employ tens of thousands of Australians as we currently do, we need to be able to have the greatest possible flexibility in all areas of our business - IT no exception," Willett said.

The company said Tata Consulting Services Ltd. and Satyam Computer Services Ltd., have been short-listed to take over the technology work.

Qantas plans to sack more than 1,500 staff by December 31 this year, including management, administration and maintenance workers. The company's profit fell 58 percent in the six months to June 30 from a year earlier on employee retrenchment costs and record jet fuel prices.

Satyam has already won a contract to provide payroll technology services to the airline this year, and Tata will work on that project.

"Qantas is finalizing a review of its information- technology development, maintenance and support services," the airline said in a statement.

The review said would be completed within three weeks, involves between 300 and 400 workers providing services such as Internet bookings, frequent-flier programs, financial systems and operational logistics, a media reports said.

Westpac Banking Corp is considering sending 485 call centre jobs to the sub-continent.

Australian Services Union (ASU) has dismissed claims by Qantas that it has to outsource IT work to India because there are not enough qualified people in Australia.

"There are 400 people that are already performing this work, to say that they can't find the capability beggars belief," ASU national assistant secretary Linda White said.

News: India working on uniform accounting standards

(BS 02/10/2006) New Delhi - India is working towards an international accounting standard which can be followed by all countries including the US, said T P Ghosh, director, Board of Studies, Institute of Chartered Accountants of India.

“There should be one uniform accounting standard. It is not just India but even other countries that have problems with the US’ Generally Accepted Accounting Principle (GAAP). We are working towards establishing one uniform accounting standard,” he said.

Till now, the Institute of Chartered Accountants of India (ICAI) has taken a position towards International Financial Reporting Standards (IFRS) and not GAAP.

The need to have a uniform accounting standard arises from the fact that many of the capital markets in the world are globalised today. The New York Stock Exchange has 459 non-US companies and 17 per cent of the companies listed at the London Stock Exchange are foreign.

Changes would also have to be made to the current Indian accounting standards, said Ghosh. Accounting Standard 11, for instance, is not in accordance with IRFS and needs to be changed. “We will have to change it some day,” he added.

Accounting Standard 15, which is ICAI’s new accounting standard, too, poses problems for Indian companies. According to it, companies have to calculate retirement benefits in the form of gratuity, leave encashment benefit, and pension for employees on the basis of the salary last drawn by them.

This is in variance with the present practice, wherein the gratuity and pension payable to employees is calculated on the basis of their current salaries, but the actual payment is made on the salary last drawn by employees.

News: RAK Air ready to fly into India

(BS 02/10/2006) Mumbai - Signalling a stiff competition to Indian carriers, one more international carrier is eyeing Indian skies. The UAE-based full service carrier RAK Airways is planning to fly to five Indian destinations.

The yet-to-be launched carrier is currently in talks with Delhi-based low-cost carrier SpiceJet for a possible interline agreements.

“We will be launching our operations in the first quarter of 2007 with two Boeing 757-200 aircraft. We have applied for the rights to operate in Mumbai, New Delhi, Kochi, Thiruvananthapuram and Chennai,” RAK Airways Chief Executive Officer Jack Romero said.

Romero was speaking on the sidelines of Low-Cost Airline Symposium organised by the Centre for Asia Pacific Aviation (CAPA). RAK, the name derived from Ras Al Khaimah, was formed in February as a private joint stock company.

Industry analysts said the domestic carriers will have a tough time as more airlines such as Nok Air and Air Asia are also planning to start services from India.

“While recently launched Jazeera Airways, Air Arabia and Ettihad Airways are operating in India from the Middle East, Indian carriers will have to wait to complete the mandatory five years of operation to fly overseas. This will adversely impact Indian carriers,” they pointed out.

Romero said the airline will shortly secure regulatory approvals for flying into India, adding “we have already initiated necessary measures.”

He said the airline would deploy aircraft with 200 seat capacity and would increase the capacity gradually.

“We are also discussing with SpiceJet and other domestic carriers for a possible interline agreement. We are scouting for an airline where we can share synergy in the commercial operations,” he added.

He said the operations would be weekly service and would be upgraded into daily service as soon as it acquires aircraft on lease.

“The average flying time to India is only two and half hours. This will enable us to upgrade the service and increase aircraft utilisation,” he added.

News: Africa, India to explore joint undersea telecom cable

(RTR 02/10/2006) Johannesburg - Africa and India are due to explore merging two undersea telecoms cable projects, a forum of Indian and South African business leaders heard on Monday.

African countries are seeking to build the East African Submarine Cable System (EASSy), but squabbling has delayed the launch of the project.

A separate Indian project is bringing an undersea telecoms cable to Europe and efforts are underway to link the two, Andile Ngcaba, chairman of the South African unit of IT group Dimension Data, told the India South Africa CEOs Forum.

"We're trying to put together a project that can bring these two undersea cables together," he said.

"If we can manage to do this, we will probably be the (operator of the) second biggest joint cable in the world, after AT&T."

The EASSy cable, expected to cut Internet costs to nearly one third of current levels over the next five years and to stimulate investment, has been delayed by bickering mainly between South Africa and Kenya over funding and access costs.

Ngcaba did not give details of the Indian cable.

Indian company Reliance Communications Ltd inaugurated its Falcon submarine cable on Sept. 5 as part of its Flag Telecom Global Network running through 35 countries.

Another Indian company, conglomerate Tata Group, owns 26 percent of Neotel, South Africa's recently-launched second national fixed phone operator.

On Aug. 24, Tata said its telecoms unit Videsh Sanchar Nigam Ltd would spend $600 million to build two new submarine cables between India and Europe and Asia. Tata Group Chairman Ratan Tata is co-chairman of the CEOs forum.

Ngcaba is co-head of the information technology committee of the CEOs forum, linked to the visit to South Africa of Indian Prime Minister Manmohan Singh, who began a four-day state visit on Saturday.

India and South Africa, two of the world's leading emerging markets, are keen to boost trade links and expand investments in areas such as telecommunications, textiles and pharmaceuticals.

Bilateral trade between the two countries reached $4 billion during 2005/2006 and both nations say they want to treble that figure by 2010.

News: 'Airbus to tie up with HAL for MRO at Nashik'

(PTI 02/10/2006) Nagpur - US based aircraft manufacturing giant, Airbus, is likely to enter into a tie-up with Hindustan Aeronautics Limited (HAL), for setting up a $100 million maintenance, repair and overhaul (MRO) facility at Nashik in Maharashtra, Union Civil Aviation Minister Praful Patel said.

"They (Airbus) want to have a tie-up with HAL and the latter has two bases, one at Bangalore and in Nashik and we have requested Airbus to select Nasik, which will be convenient to both," Patel said in Nagpur on Monday.

Another aircraft manufacturing major Boeing has already signed a MoU with Maharashtra government and state-owned Maharashtra Airport Development Company (MADC) for setting up a MRO in the city.

Nashik would be an ideal location to decongest the Mumbai-Pune industrial belt, Patel said.

On the progress of multi-modal international passenger and cargo hub (MIHAN), Patel said it was now up to the Maharashtra government to speed up the activities for setting up a dedicated company where Airports Authority of India (AAI) will have 49 per cent share, while 51 per cent will be retained by MADC.

When asked about his dream project, an aviation academy at neighbouring Gondia district, Patel said it was taking shape and things will be clear very soon.

News: Indian demographics assure liquidity flow

(DNA 02/10/2006) Mumbai - The demographic profile of India ensures that it would have a young, working (and consuming) population for decades. China would be a country with an aging population, thanks to its one child policy. This demographic profile would ensure that the Indian economy would grow (it grew at a whopping 8.9% in Q1 of the current year, beating expectations). Little wonder that Singapore is to invest $1billion in two multiproduct SEZs in Tamil Nadu, in a JV with TNIDC. The RBI has cleared venture capital funds to invest $1billion in realty. In stock markets, too, it is FII-driven liquidity, far more than domestic money, which has provided boost to the ongoing rally. The BSE Sensex went up 216 points (1.8%) to end the week at 12447. Of this, ICICI Bank, accounted for 61 points and HDFC for 44. The Sensex is now within striking distance of 12671, the all time peak it hit on May 11. It looks likely to cross it, before correcting itself.

The reason it would correct itself is because of official policies that suggest we are not fully committed to market reforms and we don’t seem to learn from past mistakes. Take the latter. The Telecom Regulatory Authority of India is known by its acronym Trai, but it ought to be the phonetic equivalent, TRY!

When it started rolling out telecom reforms, it had proudly announced that Rs 10,000 crore would be collected by selling license fees to telecom companies. It auctioned licenses to two players in each circle.

Because of the exorbitant license fees telecom firms had to offer mobile services at an unaffordable Rs 16/minute, which, obviously restricted the subscriber base and made the business unviable. Trai then switched, wisely and belatedly, to a revenue sharing arrangement with low license fees. Voila! The market opened up and the telecom story became a success.

What Trai is now doing, for the next generation of mobile services (3G) is repeating the same mistake! It seeks to auction spectrum, (plus keep a 1% revenue share) in a bid to garner Rs 1,500 crore. What this will do is to (a) push up cost of service, since the telecom firms will collect the fees from subscribers and (b) give acquirers of spectrum squatting rights on it, so that even if the business fails they will make more money by selling the company along with spectrum allocation (similar to the landing/parking rights that Jet Airways sought when it made a bid to acquire Sahara). Trai ought to ensure that the auction of spectrum entails only usage rights and not ownership rights.
So if the buyer fails in his business, he has to return the spectrum allocated to DoT. Failure in a business cannot result in a profit from squatting rights! Trai can also explore if it is technologically possible to trade spectrum, like power trading, in order to ensure that ‘white spaces’ or unused spectrum with one operator, can be used by another at a price, through a seamless trade.

Then, there is the evidence that we don’t seem to be fully committed to market reforms. Take the case of airlines. The Civil Aviation minister says that domestic airlines will cumulatively lose some Rs 2,200 crore this year, and probably be in the red next year too. His remedy is to ask airlines to go slow on capacity expansion or face greater scrutiny by his ministry. He cites the ‘90s failure of airlines such as East West, NEPC, Modi Luft and Damania. But these were all private airlines and the ones who lost money were private investors, not the Government. It is okay for you to caution investors, but not okay to try and outguess, or legislate, market growth!

In corporate news of interest, ONGC, despite being milked by the Government to share subsidy burdens, has paid a whopping Rs 2,050 crore as advance tax, thanks to hitherto buoyant crude prices. Now that crude prices have fallen, it may contribute less the next time around, though it is also to gain from the non sharing of cess and royalty on oil blocks where private partners are not allowed.

OIL India, a wholly-owned Government company, plans to divest a 10 % stake through an IPO that ought to be well received. Another interesting IPO is from DCB, which seeks to raise between Rs 157 crore to Rs 186 crore through an IPO in a price band of Rs 22-26, slightly more than the book value. The past losses of this erstwhile co operative bank have been written off and a new management team has been put in place. The AKFED and other private investors have pumped in money at Rs 45/share. So, assuming that the turnaround sustains, the story could be interesting.

DLF whose mega IPO is awaited, has signed a JV agreement with Hilton, to open hotels. DLF will hold 74%, but Hilton would have the right to increase its holding to 49% over time.

The rally continues, driven by strong FII inflows. It could cross its previous peak, but caution remains the watchword. It is, after all, easier falling off a cliff than climbing one!

News: Metro on a 23-city drive

(DNA 02/10/2006) Hyderabad - Even as Bharti and Reliance mull and plan warehousing and sale of agricultural produce, the €57 billion cash-and-carry wholesale company Metro has carried out a study in 23 cities to expand the self-service wholesale chain in India. The group, which has committed an investment of €300 million in India, will kick off its Hyderabad operations in November with a 1 lakh sq ft warehouse on 7-acre land.

While it is also looking at a second centre in the city, Metro, which operates two centres in Bangalore, will launch operations in Kolkata in 2007 and Mumbai in middle of next year, a company official said.

It has identified properties in these cities. The company is also working on plans to launch in cities like Ahmedabad and Indore.

Metro, a B2B wholesaler, stocks and sells 18,000 products to retailers, and other customers like restaurants and hotels. Interestingly, while it has a registered customer base of 60,000 in Bangalore where it started off in 2003, the wholesaler has already notched 60,000 registrations in Hyderabad even before launching.

“We are expecting to touch a customer base of 80,000 before we launch operations in November,” the company official said.

The reason for this pre-launch success is attributed to the fact that Andhra Pradesh has amended the Agriculture Produce Marketing Committees Act, enabling private companies to wholesale agricultural produce in the state unlike Karnatka where it is still the preserve of cooperatives and state-regulated bodies.

While the company can sell only food items like dairy and poultry produce in its Bangalore outlets, it will be able to sell fresh fruits and vegetables and lentils among a host of other agricultural items in Hyderabad. Metro has already trained 12,000 farmers in sheep breeding to international standards and will be setting up procurement centres across Andhra Pradesh for various other agricultural products.

News: ICICI Bank to employ 50,000 people in next five years

(PTI 02/10/2006) New Delhi - The country's largest private lender ICICI Bank is on a hiring spree and will employ 10,000 personnel a year for the next five years to cater to the boom in banking industry, a top bank official said.

The ICICI Bank group, which includes banking, insurance, securities and other financial services, is likely to directly employ 25,000 people and another 15,000 indirectly, every year for the next three to five years, the official said.

The group has some 50,000 employees on its direct payroll and another 1,00,000 are indirectly employed as insurance agents and people working under service providers.

"We get four lakh CVs each year for jobs in the bank," ICICI Bank Senior GM (Human Resources) K Ramkumar said.

This was a good sign and the bank does not face any hiring problem as there is plenty to choose from, he said, adding while most of the hiring happens directly, consultancy firms are used for some of the higher-level recruitments.

"The group may hire about 15,000 each year for the next three years for insurance and securities broking businesses as these sectors are growing fast," Ramkumar said.

ICICI Prudential Life Insurance and ICICI Lombard General Insurance are leaders in the private space in their respective field and are growing by 80-100 per cent year-on-year.

The group's service providers may hire 15,000 people a year for the next three to five years to serve their growing business requirement, the official said.

The ICICI group currently has two captive BPOs to serve its clients, but these employees do not fall under the group's umbrella.

Ramkumar said professional work culture, high salary and faster growth prospects make the group a preferred destination for top business-school students.

Last week, senior bank officials met representatives of the country's top 20 B-schools to discuss changes to their curricula so as to make them reflect the changing business dynamics.

"With retail and rural banking emerging as big areas, we discussed how to forge them in the curriculum and stop relying on age-old western thesis," Ramkumar said.

The nature of internships for B-school students should be changed from those involving mere summer training and data collection to the ones undertaken by doctors and lawyers, he suggested.

Research should be India centric and Indian case studies should be prepared for students, he said.

According to him, the group is not worried about getting skilled people as it has the infrastructure to train the well educated people.

To meet the rising demand of professionals in the banking industry, IT training provider NIIT and ICICI Bank last week jointly launched the Institute of Finance, Banking and Insurance.

India's emerging banking, insurance sector and other financial services would require over 6,00,000 recruits each year in the next five years to match the growth, analysts say.

However, country's banking, insurance, IT and BPO sectors are facing an acute shortage of skilled manpower due to stiff competition and rapid expansion of these industries.

News: 'India will lead in biotech if it maintains growth'

(PTI 01/10/2006) Pune - India would soon occupy the top position in the world in biotechnology if it maintained 40 per cent growth, Council of Scientific and Industrial Research (CSIR) Director General RA Mashelkar said on Sunday.

"As far as IT sector is concerned, the growth was touching all time high. However, it is the biotechnology sector which has begun to come out of the closet, recording an annual growth of 40 per cent for last three years," Mashelkar said while giving a broader view of the two-day conference, 'Hi-Tech Pune: Where IT meets BT', to be held from October 27.

The biotechnology sector's turnover in 2005 was $1.6 billion and India was placed number two among Asia-Pacific countries in the sector, he said, adding if the 40 per cent growth is maintained the sector, our country would soon occupy the top spot in the world.

There is a silent revolution taking place in biotechnology sector in Pune. Cyrus Poonawala's Serum Institute of India has recently displaced Bangalore-based company of Kiran Mazumdar to be number one biotech enterprise in the country, Mashelkar said.

News: YES bank to set up micro-finance subsidiary

(PTI 01/10/2006) Mumbai - New-age private sector banking powerhouse, `YES Bank', plans to set up a micro-finance subsidiary in a joint venture with possibly two US-incorporated institutions with expertise in the segment.

The subsidiary will be in the form of a non-banking finance company (NBFC), for which the bank has applied to the Reserve Bank of India (RBI) for a licence two months back.

The minimum equity investment needed for a NBFC is presently Rs 5-crore and the initial capital infusion would be between Rs 5-to-10-crore, YES Bank's president, corporate finance and development banking, Somak Ghosh said.

The bank's Board has, however, given its approval to raise it up to Rs 20-crore if necessary, he revealed.

"We are now awaiting RBI approval," he said, adding that the two foreign partners will join the JV with minority financial participation if the RBI gives its approval to YES Bank's proposal.

"Both the organisations have tremendous experience in micro-finance in emerging economies, especially Latin America and Africa, and will bring to the table their expertise in the areas of helping in the formation of self-help groups (SHGs) as well as in their capacity-building, as borrowers in this segment are normally first-time borrowers," Ghosh said.

Besides, this class of borrowers is not schooled in understanding the terms and conditions of loans and repayment terms and hence need hand-holding "in which our partners will be of great help," he said.

News: Challenges in achieving India's 8% GDP growth

(BL 01/10/2006) Chennai - Raising agricultural growth and building-up infrastructure are among the main challenges facing the country in achieving eight per cent GDP growth, according to Dr C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister.

Speaking at the Chamber Day function of the Madras Chamber of Commerce and Industry, Dr Rangarajan said the first challenge was stepping up agricultural growth. The critical problem, he said was low yields and inability by farmers to reap the advantages of markets.

Poor infrastructure

The lack of infrastructure particularly in the power sector is the second challenge. He said that in order to mobilise the necessary resources to build quality infrastructure, there is a need to put in place appropriate legal, regulatory and administrate frameworks.

Dr Rangajrajan said the fiscal consolidation was a pre-requisite for sustained growth. He said in an economy with capital controls where investable savings are limited, fiscal deficits crowd out private investments.

The other challenges are building social infrastructure, managing globalisation and good governance, he said.

R. Raghuttama Rao, Managing Director, ImaCS said one of the key points was to focus on sectoral growth rates, getting a consensus on labour reform and overcoming the human resources crunch.

He said more than 700 million persons would enter the job market in the next 10 years. But a large percentage of the educated youngsters coming into the job market every year, are "unemployable".

Rao said intervention was required at different parts of the human pyramid for creating the required human resources.

The Ambassador of Finland in India, Asko Numminen, who was the chief guest at the Chamber Day function, said bilateral trade between India and Finland was growing. Finnair, the national airline of Finland would start operating a service between New Delhi and Helsinki in October.

He said a number of Finnish companies were upping their investments in India this year.

News: India Inc to get a boost with PM's visit to S. Africa

(PTI 01/10/2006) Johannesburg - India's modest investments in South Africa could soon see some impressive progress, with Prime Minister Manmohan Singh's visit to that country providing corporate leaders an opportunity to take forward economic and commercial relationship.

While Singh's visit to take part in Mahatma Gandhi's Satyagraha centenary celebrations primarily aims to strengthen political ties, the two sides would also discuss the possibility of a preferential trade agreement to increase two-way trade to about $ 10 billion by 2010 from just four billion dollars a year ago.

Simultaneously, a team of top corporate leaders would take forward the economic and commercial relationship of India and South Africa, the continent's largest economy.

The India-South Africa CEOs forum, co-chaired by Tata Group chief Ratan Tata, would seek to explore specific business opportunities in various sectors of mutual interest.

Besides the Tata Group, which is the largest Indian conglomerate in South Africa with presence in steel, auto, coffee, IT and hospitality, other aspiring Indian multinational companies such as banking powerhouse ICICI, and drug giant Ranbaxy are part of the team.

The promise of greater trade ties between the two regions was also reflected in a World Bank study last month that said India's foreign direct investments in Africa, though presently modest, was growing very rapidly.

News: DLF to purchase 20% stake in Feedback Ventures

(PTI 01/10/2006) New Delhi - Real estate major DLF, which is reviving its plans to tap the capital market to raise more than Rs 10,500 cr, will purchase 20 per cent stake in an infrastructure development advisory firm Feedback Ventures for an undisclosed amount.

"We have agreed to purchase 20 per cent share in Feedback Ventures," company sources told PTI.

The agreements with existing shareholders have already been signed and the company would complete the transaction within next 10 days, sources added.

The value of the deal was not known as the stake purchase constituted of acquisitions from various shareholders.

"We are buying stake in Feedback Ventures because it has good technical consulting manpower to give advisory services in infrastructure projects," they said.

Through this acquisition, DLF aims to service its infrastructure projects, which includes SEZs and townships.

DLF had floated a joint venture company with UK-based Laing O'Rourke to foray into infrastructure sectors like airports.

The Vinayak Chatterjee-promoted Feedback Ventures offers advisory services for infrastructure projects right from conceptualisation to commissioning in sectors like highways, aviation, ports, SEZs, IT Parks, townships, retail and hospitality.

At present, the promoters own 31.3 per cent share in the company while IDFC has 21.8 per cent stake, Thapar Group 13.3 per cent and HDFC 12 per cent, sources at Feedback Ventures said.