News: Indian economy grows record 9.2% in July-Sept

(HT 30/11/2006) New Delhi - Fuelled by healthy double-digit growth in manufacturing and services, the country's economy clocked over 9 per cent growth in the first six months of the financial year.

During July-September this year, the GDP grew by a record 9.2 per cent. "Let us savour the moment," Chidambaram said.

While inflation at 5.23 per cent continues to be a "worry" for Finance Minister Palaniappan Chidambaram, experts caution on the possible overheating of economy and adverse impact of decline in agriculture growth.

"The growth story so far is okay. But, one has to exercise caution against possible overheating in the economy, especially with glaring mismatch in over-flow of funds into the stock market and under-flow into banks" said former Reserve Bank of India Governor Dr Bimal Jalan.

But the Finance Minister was not willing to buy this argument of overheating in the economy. Terming it "premature", Chidambaram cited a statement of the RBI Deputy Governor.

Briefing newsmen, Chidambaram conceded, "inflation at about 4 per cent is tolerable when the economy is growing at 9 per cent plus". All macro-economic parameters are good, but inflation is the only worrying factor, Finance Minister P Chidambaram said.

Chidambaram said that the robust growth was not accidental. Only twice in the past, the GDP growth was over 9.2 per cent as registered in July - September 2006. During fourth quarter of 2005-06, the economy clocked 9.3 per cent. And, the GDP grew at 11.3 per cent in third quarter of 2003-04 during the NDA regime led by then Prime Minister Atal Bihari Vajpayee.

While the UPA Government is gun-go about the healthy growth, agrarian crisis continues to be an issue the centre will have to deal with. Chidambaram cited the "supply side constraints" that were responsible for the recent price rise especially in wheat, sugar and pulses.

On Tuesday, the Congress President Sonia Gandhi had cited the twin issues of price rise and farmers plight at the meeting of parliamentary party. A day after Sonia flagging agrarian crisis as an issue to be dealt with, Central Statistical Organisation (CSO) reported that farm growth has fallen to 1.7 per cent during July - September 2006. In the first quarter i.e. April - June 2006, the agriculture growth was 3.4 per cent.

Planning Commission has targeted 4 per cent agriculture growth during eleventh plan to sustain the 8.5 per cent GDP growth in the medium term.

Chidambaram said, "second quarter is always a lean period for agriculture." He hoped that farm growth would improve with better rabi crop in the coming months.

"Economy drivers are definitely manufacturing and exports as there would be some problem in rural demand owing to lower farm sector growth" said Dr Shashank Bhide at the National Council of Applied Economic Research (NCAER).

In the medium term, Dr Bhide feels, "it is very important to boost agriculture growth to sustain the 9 per cent plus GDP growth".

Meanwhile, Chidambaram reported a 30 per cent growth in revenue collection so far this year while articulating hopes to meeting the revenue and fiscal deficit targets. "I believe we are on target to budget estimates," he said.

As per Finance Ministry data, the fiscal deficit as on October 31,2006 was compressed to Rs 87,100 crore as against Rs 92,068 crore in the same period last year.

Revenue deficit, during the period has been reported to be Rs 67,299 crore in the first seven months of this financial year as against Rs 70,284 crore in the same period last year.

News: Economy’s on Cloud 9.2, inflation remains the irritant

(DNA 30/11/2006) New Delhi - India’s economic growth unexpectedly accelerated to 9.2% in the quarter ended September 30, 2006, driven by government and consumer spending that may force the Reserve Bank of India to raise its key interest rate a fourth time in a year to curb inflation.

The growth, which equalled a 15-year-high in the first half, reflects rising incomes and near-record bank loans that have made India the world’s fastest-growing major economy after China.

That encouraged finance minister P Chidambaram to predict that the current year would be “one of the best for growth”.

The flipside to this is that such hectic expansion raises anticipations of higher interest rates and inflation.

“Accelerating inflation is a real threat now,” Shuchita Mehta, an economist at Standard Chartered Bank in Mumbai, told Bloomberg. “Demand pressures are strong and we see the central bank increasing rates by at least 50 basis points by March 31.”

Reserve Bank of India governor Yaga Venugopal Reddy in his monetary policy statement on October 31 said demand pressures exist in the economy and that production capacity must match economic expansion to prevent inflation flaring up.

Chidambaram on Thursday conceded that inflation was a concern, though he dismissed interest rates worries saying there was enough liquidity in the monetary system.

Bibek Debroy, economist and PHDCCI secretary-general, said the numbers were as per his expectations. “I have always projected a 9% plus GDP growth for the year as a whole.”

The hardening of interest rates, Debroy said, could be one of the downside risks, but at the same time, he did not see any real possibility of interest rates going up this year.

Rajiv Kumar, economist and ICRIER director, believes the country is in a “sweet spot”, pointing to the current high consumption and investment demand that is spurring the engines. He felt inflationary pressure was not enough to prod the RBI into going for a rate hike.

Chidambaram said “this is a moment to savour”, speaking to reporters soon after the Central Statistical Organisation put out that the GDP estimates for the second quarter of 2006-07.

He sought to drive home the point that “9.1% growth in the first half this year is the highest since economic reforms began in 1991”. This growth was not “accidental,” he said, claiming all economic parameters were in fine fettle. Only twice in the past has the quarterly figure of 9.2% been bettered. GDP grew by 9.3% in the fourth quarter of 2005-06 and 11.3% in the third quarter of 2003-04.

CII president R Seshasayee said the 9.2% second quarter growth, based on the sustained robust performance of the manufacturing and services sectors, is even more impressive as it builds on the high base of 8.4% GDP growth in the second quarter of 2005-06. There were, however, dark clouds around as concerns regarding agriculture remain, he said. The agriculture sector did not perform well at 1.7% growth in the second quarter this year on a base of 4% in the same quarter last year.

News: Vijaya Bank to open overseas branches

(UNI 30/11/2006) Bangalore - Public Sector Vijaya Bank is awaiting clearance from the Reserve Bank of India to open overseas branches in Dubai and Hong Kong and a representative office in China.

Disclosing this to newsmen here, after inaugurating the new premises of the Bank's Malleswaram Branch, Vijaya Bank Chairman and Managing Director Prakash P Mallya said the new offices could be opened during next year. The Bank had a target of total business crossing Rs 60,000 Crores as against the present Rs 52000 Crores during 2007, he added. Answering a question, he said the Bank was also exploring possibilities of striking strategic alliances with other Banks for its back end operations.

The Bank was also thinking about acquisition of a Bank which had its strong presence and network in North and Western parts of the country. However, he declined to divulge details saying that efforts would begin only during next year. On the much talked about consolidation of various Banks, he endorsed the views of Finance Minister P Chidambaram and said it was very much needed as the country had 27 Public Sector Banks and the number of branches exceeding over one lakh.

Too many branches posed a 'unwieldy' picture, he noted. He said the Bank had introduced Core Banking Solution in 380 branches and would ensure coverage of exceeding 500 branches by 2007. The total percentage of business done in CBS then would cross 85 per cent, he added. The total business of Malleswaram branch, started in 1958, had crossed over Rs 100 crores comprising Rs 70 Crores deposits and Rs 32 Crores advances. The Bank had over 10,000 accounts of various categories.

News: ING Vysya Life sets $1 b business turnover target

(BL 30/11/2006) Kolkata - ING Vysya Life Insurance, a joint venture of the ING group of the Netherlands, Exide Industries, Gujarat Ambuja and Enam, is looking at a business turnover target of $1 billion by the end of 2010.

As part of the aggressive growth plan, ING is planning to increase its paid-up equity from the present level of Rs 540 crore to Rs 1,400 crore by the end of 2009. ING Vysa Life is planning to expand gradually the capital to Rs 1,340 crore as it expects a three digit year to year business growth for the next couple of years.

News: Lanka firm plans $100 m India resort spend

(BL 30/11/2006) Colombo - Sri Lanka's biggest hotel chain John Keells Holdings plans to invest $100 million to build resorts in Goa and Kerala. John Keells, which runs nine hotels in Sri Lanka and five in the Maldives, hopes to develop three properties in India, the group's deputy chairman, Ajit Gunewardena, said. "Unlike the Maldives, at the moment, Sri Lanka doesn't look too good for us, because of the security situation," he said. Gunawardena says the Indian investment is part of the group's strategy to foray into South Asian markets. "South Asia has growth opportunities and we want to extend our hotel footprint into the region". In August, Aitken Spence, Sri Lanka's biggest resort operator, announced plans to raise up to $10 million in India, with its partner Floatels India, to fund new hotel projects in Kerala. Arrivals to Sri Lanka have dropped 12% to 38,815 as an escalation in violence between the government and Tamil Tiger rebels keep holidaymakers away. Officials say local hotel occupancy has slumped to about 30%, in what used to be the beginning of the highly profitable winter season.

News: Kotak Bank plans overseas expansion

(BL 30/11/2006) Hyderabad - Kotak Mahindra Bank has sewn up plans to expand its overseas operations, including centres in the West Asia, Far East and Japan. The bank plans to handhold overseas investors and help them tap into the India story. Currently, it is managing a portfolio of about $1.3 billion through its UK subsidiary, which is about five per cent of the bank's overall portfolio; it expects to increase this to about 25 per cent within next three-four years. The bank may raise about Rs 300 crore as Tier II Capital. The Vice-Chairman and Managing Director of Kotak Mahindra Bank, Uday S. Kotak, said India is at an inflection point of major growth phase and the potential has been barely tapped. Like the US market which first built its domestic presence and then expanded, India is at a similar platform that can only get better. Rural market "There may be minor issues of occasional turbulence and short term volatility from market point of view, but if you take a macro picture, the growth story is extremely bullish. A return of 15 per cent over the next five years and beyond is certain for a long-term investor. The financial services market is present only in the metros and confined to some select towns and cities. The rural market is out there to be tapped," he said. However, striking a note of caution with regard to overheated real estate market, Kotak warned of possible correction. The bigger the bubble, the impact would be bigger. Land values have become too exorbitant and there is excessive exuberance. Nikkei bubble The Japanese market as reflected by Nikkei hit a level of 40,000 about two decades ago. But the same market is now at 16,000. This only reflects how an overheated market could dramatically change. He warned investors to be cautious and not get carried away by fast buck makers. With a market capitalisation of about $2.7 billion, Kotak is now the fourth largest private sector bank and continues to expand operations both in the domestic market and overseas. From 84 branches now, it plans to increase this to 110 by March 2007. As the bank taps into the overseas markets, the accent would be on helping global investors to invest in India product, he said. Referring to inorganic options, Kotak said as the market opens up further, it won't be long before you see Indian banks buying into foreign banks. On ISB board The Dean of Indian School of Business, Dr M. Rammohan Rao, welcoming Uday Kotak on the ISB Board, on Wednesday announced that they would set up a trading lab that would provide live interface for students with markets. "Since the ISB is market-driven, we believe that there is immense scope for analytical finance, capital markets, regulatory frameworks, and micro finance," he said. Kotak said that the bank would seek to deepen its association with the ISB through executive and customised training programmes to groom finance professionals.

News: Kingfisher International seeks clearance for flights to India

(BL 30/11/2006) New Delhi - Faced with policy constraints here of not being allowed to fly out of India, the Chairman of Kingfisher Airline, Vijay Mallya, has mandated Kingfisher International Airlines - the new company floated by him in the US - to begin the process to get clearances to start operating regular flights to India.

Mallya told Business Line that a well-known law firm in the US had started doing the paper work for Kingfisher Airlines to begin scheduled operations to India. He, however, refused to disclose the name of the law firm.

"The law firm would be contacting the Department of Transport and other US Government Departments so as to initiate the process of getting clearance for the airline.

"After all, the wide body aircraft that have been ordered by the airline cannot sit on the ground. We will have non-stop operations and will utilise the Airbus A-340-500 aircraft to fly on this route," Mallya said on the sidelines of the ongoing World Economic Forum meeting.

New arrivals

The airline, that is now not allowed to operate in the international skies, has committed to purchase more than 20 Airbus wide body aircraft, including five Airbus A-380, five A-330 and five A-330, which would start arriving later next year. At present, the Indian Government has stipulated that only those airlines that have completed five years of operations in the domestic skies are allowed to fly on international routes. Kingfisher Airlines took to the Indian skies in May 2005.

The UB Group overcame stringent US regulations disallowing foreign nationals setting up an airline there as 75 per cent of the new airline is owned by Mallya's three children, all of whom are US citizens.

At present, American Airlines, Delta and Continental Airlines are the only carriers to offer a non-stop service to India. Air India plans to launch non-stop services to India after it receives the Boeing 777 aircraft that it is to purchase.

News: Pantaloon Retail plans to catch 'em young

(BS 29/11/2006) Mumbai - Pantaloon Retail India, the Future Group’s flagship enterprise, is launching Top 10, a brand exclusively for college students.

Inspired by Top 10 chartbusters or books that normally attract college students, the brand would include the best 10 styles and fashion collections for youth. The company is launching the first Top 10 store in Mumbai within a week.

Zahid Shaikh, chief of marketing, said, “Top 10 brand will have a special collection dedicated to colleges in Mumbai. It is well known that campus rivalry exists among college students and one always takes pride in wearing the college batch on their sleeves.”

Meanwhile, Indus-League Clothing, a part of Future Group, inaugurated the first Mumbai store of Jealous 21, a denim wear brand targeted at women between 17 and 24 years of age, Jealous 21 offers a range of casual, club and denim wear collection in the middle and upper middle segment.

Apart from the department and lifestyle stores, the company plans to retail Jealous 21 through 120-130 stand alone outlets over the next 3 years.

K K Pant, managing director, Indus-League Clothing said, “Jealous 21 focuses on the young Indian women and stand alone stores will give a stronger identity to the brand.

In the first phase the company plans to open 16 Jealous 21 stores by June 2007 in 8 bigger markets such as Mumbai, Bangalore, Hyderabad, Delhi, Chennai, Kolkata, Pune and Ahmedabad.”

News: Indian FII investment zooms past $50 bn

(BS 29/11/2006) New Delhi - Foreign institutional investors’ (FIIs) net investment in India has surpassed $50 billion.

Ever since the government opened the doors for the overseas portfolio investors in 1993, FIIs have invested $49.98 billion in the equities till date.

Taking into consideration their $1.08 billion investments in the debt market, total FII investment, as on on Tuesday, was pegged at $51.06 billion. In rupee terms, their investments were Rs 2,16,048 crore.

Between April 1993, when the FIIs started investing in Indian markets, and now, they have bought shares worth Rs 12,83,336 crore and sold shares worth Rs 10,67,319 crore.

Although their investment aggregated at $50 billion now, the market value of the investment at the current exchange rate of Rs 44.68 per dollar is a whopping $ 117.13 billion (Rs 5,25,280 crore).

This essentially means that apart from the huge dividend that the foreign players have received from the Indian corporations, the value of their investment in India has grown by 135 per cent.

After a decade of lukewarm existence, the FIIs stepped up their investments in Indian market in 2003 when the Indian corporate sector staged a dramatic turnaround, registering net profit growth of over 50 per cent.

The FIIs invested $6.59 billion in 2003 and stepped it up to $8.52 billion in 2004. FIIs’ investment touched an all-time high level of $10.70 billion in calendar 2005, when 170 new FIIs got registered with the capital market watchdog Securities and Exchange Board of India (Sebi).

Despite a $1.63 billion selloff in May this year when the benchmark Sensex lost over 30 per cent, their investment in Indian markets touched $8.88 billion in the current calendar year.

With the valuation of Indian shares becoming attractive post June 14 when the Sensex dipped below the 9000-mark after touching 12,600 in mid-May, the FIIs pored in $6.60 billion between July and November 2006. Overall, 993 FIIs have registered with Sebi and the list has been growing.

However, post May correction, FIIs have become a bit choosy. Almost three-fourth of their investment has been in frontline Sensex and Nifty stocks, while the rest of the investment is spread across 300-odd companies. Sensex comprise 30 stocks and the Nifty basket has 50 stocks.

FIIs currently hold over 40 per cent stake in 12 companies. Their holding in 45 corporations hover between 25 per cent and 40 per cent and in 243 firms it varies between 10 and 25 per cent.

Overall, they hold 10 per cent or more stakes in 300 Indian companies and 5-10 per cent stake in 181 companies.

“Going forward, their presence in India can only get strengthened as there are not too many markets that promise higher returns than India,” said the head of a local brokerage.

News: Tatas' have edge in Corus race

(BS 29/11/2006) Kolkata/Mumbai - Despite the bankers and advisors allied to Brazil’s Campanhia Siderurgica Nacional (CSN) having scaled up their equity holding in Corus Group to about 20 per cent, Tata Steel may have its nose just a bit ahead in the race to acquire the Anglo-Dutch steelmaker.

Investment bankers say Tata Steel is still ahead not only because it has obtained the support of the Corus board and its pension fund trustees, but also on account of the backing of Tata Sons, which controls a market capitalisation of about $50 billion and revenues of about $22 billion.

In comparison, CSN’s controlling shareholder has no other asset. Also, the company is ridden with debt, which stood at $10 billion for the September quarter. This will reflect on the merged entity’s balance sheet if CSN were to acquire Corus.

Corus, on its part, is burdened with over $3.1 billion of debt, against a cash balance of $558 million. The Brazilian company’s debt burden is one of the reasons why its bid to acquire Wheeling Pittsburgh of the US suffered a setback, point out steel analysts.

“Tata Steel’s 455-pence-a-share offer has got the support of the trustees of the pension fund, as well as the Corus board,” said a banker associated with the bid.

On the other hand, the CSN offer of 475 pence a share is subject to due diligence, finalisation of funds, and the support of the Corus board.

Tata Steel has received the nod of the trustees of Corus’ pension fund by offering upfront the deficit on the Corus Engineering Steels Pension Scheme with $241.22 million and to increase the contribution rate on the British Steel Pension Scheme from 10 to 12 per cent until March 31, 2009.

The Brazilian steelmaker has not yet made a commitment on the pension scheme, which may happen when the company makes a firm bid. It is learnt to have started discussions with the pension trustees, details of which are not known.

The buzz in the investment banking circles is that the wardens of the pension fund may not like the CSN offer if it depends more on debt.

The board of the world’s eighth largest steel company will have the last word in recommending a bid. It will recommend only one bid for shareholders’ approval.

In making the choice, the trustees of the pension fund will play a crucial role. Corus has three pension schemes with about $19.3 billion of assets, to cover payments for its 47,000-strong workforce and many more retired workers.

Tata Steel’s Achilles heel could be raw material, of which Corus has none. In fact, Tata Steel Managing Director B Muthuraman has repeatedly taken the stand that India must stop exporting iron ore.

Of course, Tata Steel has maintained that the synergies extend beyond the raw material advantage. Yet, CSN has claimed to be the better fit on account of its iron ore mines.

News: International universities waiting in the wings

(BS 29/11/2006) Mumbai - Stanford University, Georgia Tech University, British Columbia University, McGill University, Simon Fraser University, Cubec University, and Montreal University are some of the international universities awaiting the government’s nod to set up campuses in India.

As many as 40 international universities have sought land from the Maharashtra government in the Mumbai-Pune-Nashik belt for the purpose. The investments lined up by these institutions are substantial.

For instance, the UAE-based Higher Colleges of Technology’s Centre of Excellence for Applied Research and Training plans to pump in around $300-350 million to establish a campus in India.

The institution is looking for a huge plot of land in Maharashtra or Karnataka.

Georgia Tech University of the US also wants to set up a global research hub and is keen on land in Maharashtra.

The university is said to have made a pre-sentation to Maharashtra Chief Minister Vilasrao Deshmukh.

News: India okays FDI in higher education

(BS 29/11/2006) New Delhi - Days after Congress President Sonia Gandhi said that she personally favoured private sector participation in education, a Group of Ministers (GoM) today cleared a proposed legislation that will allow foreign universities to set up campuses in India.

Once approved by the Cabinet and passed as law, the Foreign Education Providers (Regulation) Bill will grant deemed university status to such institutions.

According to the proposal, the universities will have to set up campuses on their own and will not be allowed to adopt the franchisee route.

Prior approval of the University Grants Commission would be mandatory for such a project and the embassy of the country of its origin would have to certify the antecedents of any institution, sources said.

Making the announcement here today, Commerce Minister Kamal Nath said: “A consensus has been achieved on the ingredients of the Bill. It looks into all aspects of education in India, and the need for quality education. The details, including the foreign direct investment limits, will take a month or so to be finalised. The intent is to create more educational opportunities. A number of safeguards will be incorporated, including government supervision.”

The commerce and the human resource development ministries have been at loggerheads over the role of the private sector in higher education. Gandhi’s remarks were seen as having tilted the scales in favour of reforms in higher education.

Earlier this year, the commerce ministry had come out with a 24-page document — Higher Education in India and GATS — supporting FDI in the sector.

Commerce Secretary G K Pillai had then said the idea was to evolve a consensus on opening up higher education to foreign investment, even 100 per cent FDI.

He had pointed out that India incurred an annual outgo of $4 billion on education and this money could be saved by allowing foreign institutions to set up shop in the country.

In contrast, the Arjun Singh-headed Ministry of Human Resource Development has proposed a tougher stance on FDI in higher education. In fact, answering a question in Lok Sabha today, Singh said the GoM had not concluded its study yet.

The private sector, on its part, has been stressing the need for being allowed into the sector for some time now. Bharti Airtel Chairman Sunil Mittal recently said there should be a role for the private sector in the education sector.

News: TCS aims for $4-bn revenue

(PTI 29/11/2006) New Delhi - Tata Consultancy Services (TCS) aims to end this fiscal with a $4-billion revenue, which will require a 30 per cent growth rate over the next two quarters.

“We have a target to achieve $4 billion revenue by the end of this fiscal, growing at 30 per cent. For the last five years, we have been recording a compounded annual growth rate of over 30 per cent,” TCS managing director S. Ramadorai said on the sidelines of a Nasscom conference.

The TCS scrip closed at Rs 1149.60 on the BSE today against Rs 1157.75 on Monday.

TCS, a Tata group company, ended 2006 with a revenue of $3 billion. Consolidated revenues of the company for 2005-06 was Rs 13,386.23 crore ($3 billion). The company expects to achieve the vision 2010 target of $10-billion revenue. “The year 2010 is still sometime away … We have had a CAGR of over 30 per cent. We can achieve it,” he said.

The company had earlier won a $90-million Qantas deal. It is a seven-year deal and the largest ever for an Indian IT company in Australia. Satyam also won this contract along with TCS. But with Qantas being approached for takeover by the Australian investment bank Macquarie and Texas Pacific, it is still early for a clear picture to emerge and to take a final call on this deal, said an analyst.

TCS earlier said it would raise its billing rates for existing contracts, up for renewal, by 3-5 per cent; while for fresh contracts, the rates will be higher by 5-10 per cent. The move, depending on the nature of the contract, will have an impact on its topline.

The company, which recently bagged a $100-million outsourcing deal from US-based healthcare firm Kimberley Clarke, is close to bagging a multi-million-dollar deal from the IMF. However, it’s still awaiting confirmation.

Ramadorai declined to comment on the sustainability of the margins, which improved 300 basis points in the second quarter. The company also bagged a deal from Eli Lilly to establish a medical information science centre in India to advance Lilly’s clinical research and development. The deal is believed to be a multi-year engagement worth $35 million.

In one of the largest-ever outsourcing deals last year, TCS had won a contract from ABN Amro. The company improved its margins by over 300 basis points by ensuring revenue growth matches with profitability benchmarks.

News: India plans 50 food industry complexes

(RTR 29/11/2006) Mumbai - The government plans to set up 50 food industry complexes with a grant of 500 million rupees for each complex, Subodh Kant Sahai, minister of state for food processing industries, said on Wednesday.

The policy might be finalised in December and the government expected each complex to generate revenues of 10 billion rupees, he said.

News: Taqa to invest up to $1 bln in Indian power plants

(RTR 29/11/2006) Abu Dhabi - State-controlled Abu Dhabi National Energy Co. (Taqa) will invest up to $1 billion over three to five years in a joint venture to build power plants in India, the chief executive said on Wednesday.

United Arab Emirates-based Taqa signed a joint venture agreement with India's Infrastructure Leasing & Financial Services Ltd to build power plants across India with a total capacity of as much as 7,000 megawatts, Peter Barker-Homek told Reuters in an interview.

Abu Dhabi is the largest of seven emirates in the oil-exporting UAE federation.

News: Marriott in talks to start budget hotels in India

(DNA 29/11/2006) Mumbai - Marriott International is seriously looking at the budget hotels space in India. With a network of 700 Courtyard brands worldwide, of which 500 alone are in the US, the hospitality major feels, India, along with China, are the two best budget hotels markets in the world.

Marriott is already in talks with various partners in Amritsar, Kochi, Thiruvananthapuram and Chandigarh.

It is not only looking for a presence in some 20-25 major cities in India but also weighing options of starting at least 50 Courtyards (Marriott's full-service four-star category) over the next 3-5 years in the country.

Five new Courtyards are in the pipeline in Pune, Hyderabad, Kolkata, Gurgaon and Noida.

In fact, Pune will see heightened activity in the form of three Courtyards, adding 1,000 rooms over the next few years. The first Courtyard opened in Chennai recently.
Navjit Ahluwalia, vice-president, Marriott International, told DNA Money: "The only deterrent is the cost of land, which is very high in India and does not thus merit a mid-market hotel."

Marriott claims to be the largest international hotels operator in India with 1,534 rooms across its six properties in the country. It will be adding 11 hotels by 2009, taking its room count to over 4,200. It is also scouting for land in Delhi, a 300-room Renaissance.

Another five-star Marriott brand, is coming up in Bangalore, a JW Marriott in Pune and Chennai respectively. Marriott worldwide follows a business model of management contracts for its premium hotels and franchises out its brands in the mid-market category. In India, it already manages a JW Marriott, Renaissance and Marriott Executive Apartments in Mumbai, a Marriott each in Delhi, Goa and Hyderabad and a Courtyard in Chennai.

Column: India isn’t quite the open society some say it is, yet

(DNA 29/11/2006) Mumbai - How open is India’s economy? Many economists believe that India is quite open. But sociologists disagree. They believe that the openness of a society is best measured by other parameters like access to justice, education and statistical data.

Access to justice is very hard to quantify. Hence, even though this remains the most critical parameter, it may make sense to look at the other benchmarks first; which makes it necessary for us to take a harder and critical look at education.

Education, say sociologists, comes through two means - one through the formal schooling system, and the other through informal information systems like newspapers, radio, television, periodicals and even other well-informed people.

That is why the data presented before the world by an organisation called ‘Reporters without borders for Press Freedom’ become extremely relevant (). The website shows that even the US currently ranks 53rd in freedom of the press, far behind Panama, El Salvador, Chile and a number of former Soviet bloc countries. But, it is way ahead of India, which stands at a sad 105 of the 168 countries surveyed. Of course, India stands ahead of other countries like Thailand (122), Mexico (132), Sri Lanka (141), Singapore (146), Russia (147), and Pakistan (157).

That is why it may be necessary to look at formal education as well. And this is where alarm bells start ringing.

First, notwithstanding the government’s claims of having achieved over 65% literacy, it must be remembered that the government defines a person as being literate if he can read and write the alphabets of his (or her) own name. Thus, if Ram knows to read and write just the three alphabets of his name, he is considered literate. The definition is absurd. That is why many believe that actual literacy may be well below the 25% level.

Look at some more alarming data (table 1). In 1999, the total number of all graduates accounted for just around 2.43% of our population. This is far too small a number for any country to sustain a healthy economic rate of growth year after year. Unless this percentage goes up, India’s economic growth could falter. So is the government doing something about it?

The next set of data (table 2) is even more alarming: Clearly, while enrolment in higher education institutions has increased to 10.5 million, it has not kept pace with the growth in India’s population. Thus, while India’s population growth of 2% annually adds at least 22 million people each year, we manage to churn out just 10.5 million graduates.

What is worse, the quality of these graduates has been slipping alarmingly, causing the industry to reject at least half of them as being unemployable.

And yet, India’s ministers continue to talk about reservations on the one hand, and becoming a world power on the other! Something is horrifyingly wrong with our governance and planning. If some of these numbers do not change, India’s bid to become a world power might end of being just a joke.

By R N Bhaskar

News: TBWA toasts entry of Tequila in India

(DNA 29/11/2006) Mumbai - Salut to this potent launch. Tequila Worldwide, the $1.5-billion-plus global marketing services network, 100% owned by global ad network TBWA, has now rolled in here.

Awanish Kumar, who brings over a decade experience in the field with innings at Solutions Integrated Marketing Services and Euro RSCG, will head the unit. To begin with Tequila will operate out of three branches of Bangalore, Mumbai and Delhi.

TBWA India is looking at an 80 growth in billings, which is currently Rs 250 crore-plus, with the entry of Tequila.

Like its global parent, Tequila India will operate in non traditional advertising areas like direct marketing, customer acquisition and relationship, lead generation, events, promotions, direct marketing, interactive, retail channel development and management, activation and audience development.

Tequila’s major global clients include Adidas, Canon, Nissan, Sony PlayStation, Nivea, HP, and it is speculated that some of these may align with the new outfit here for some of the above areas of communications. Tequila’s India roster already includes Standard Chartered Bank, Bajaj Allianz, and all the clients of TBWA India. The unit will be looking at acquiring a client base beyond the captive client list of TBWA India.

Says George John, CEO, TBWA India, “Tequila is fully owned by TBWA and hence it shares the same P&L (profit and loss) sheet. We did set up a representative office of Tequila in India in 2001, primarily to coordinate local activities for a regional client of Tequila. This was increased to a team of four people in 2005 to support BTL activities of Standard Chartered Bank.’’And now a full-fledged Tequila India has just opened its doors here.

Global marketing communications networks are tapping the fastest growing engine of the ad business-non traditional and integrated. John and TBWA are obviously on similar track; “TBWA has been our jewel in this space,” says John.

The marketing network of Tequila was launched in Paris in 1986 by Jean-Marie Dru, the world’s father of creative disruption and president & CEO, TBWA Worldwide, and has since become one of the world’s fastest growing marketing networks with 48 agencies in 34 countries.

Tequila’s Asia network includes regions like Singapore, Japan, Taiwan, China, Malaysia, Hong Kong, Australia, Thailand, Philippines, New Zealand Indonesia and South Korea.

News: Where Brazil scores over India

(BL 29/11/2006) New Delhi - The Nasscom in association with Indian Institute of Management, Ahmedabad, the University of Sao Paolo and London Business School on Tuesday released a report stating the impact of ICT penetration on small and mid sized firms in India and Brazil.

The study found out that Brazilian firms used more ICT than their Indian counterparts. In Brazil small as well as large firms used ICT, while in India mainly large firms used ICT intensely than small firms. Further, in Brazil, older firms have higher ICT usage per worker and per unit of sales.

The report states that reduction in organisational hierarchies is associated with higher returns to ICT in Brazil and directly linked to productivity growth in India.

The findings acknowledged that impact would be felt after certain threshold level of adoption and in both the countries there still remained a major portion of small firms with low ICT usage.

In India, both weak institutions and infrastructure had resulted in lower adoption and lower returns among small and mid sized firms. Auto components, soaps and detergents, electrical, machine tools, apparels, plastic are the sectors that have the potential to increase output and employment in the manufacturing sector with greater ICT penetration.

In India these verticals account for nearly 17 per cent of total manufacturing employment and over 20 per cent of value added. In Brazil, it accounted for around 30 per cent and 32 per cent respectively, stated a release here.

News: India's powerful dilemma

(Forbes 29/11/2006) Mumbai - Over the past quarter of a century, India's energy consumption has tripled. The rate of growth is faster than China's, albeit from a lower base, though the causes are the same: rapid economic development, a large and growing population and increasing urbanization. So is the potential threat to air quality and water supplies.

Even under conservative estimates of growth, India's energy requirements are likely to increase by a further third in the second half of this decade, driven by industry, transportation and domestic electricity consumption as living standards rise. Yet India's ambition to grow its economy at a long-term annual rate of 8% is running up against an energy constraint.

Solving it will require continued reliance on fossil fuels--notably coal--greater energy imports and root-and-branch reform of electricity generation, which in India is an inadequate, insufficient and insolvent provision of power that is already causing environmental damage to water supplies.

India currently uses coal for about half of its energy needs. Few see that share changing much over the next two decades, even as overall energy use grows. The country risks creating the same environmental problems for itself that now confront China? India already has energy-related water shortages. The country's legions of small farmers are heavily subsidized to pump water for irrigation. This not only drains an unreliable and insufficient supply of rural power but also depletes water tables across the subcontinent. This creates a vicious cycle. Lower water tables require farmers to consume more energy to pump ever-deeper water supplies with ever larger pumps. This, in turn, puts more strain on power supplies and contributes to higher levels of greenhouse gases. Electricity reform is central to both India's economic development and its environmental protection. India produces a lot of electricity, but 30% to 50% is lost along the delivery chain. Utilities that collectively lose $7 billion a year not only fail to deliver the power needed but are soaking up billions of rupees in bail-outs--money that could otherwise be spent on education and health services. The government has been liberalizing the sector for the past 15 years, but progress is slow, despite the priority given to distribution reform. Thousands of villages are still off-grid, and power shortages in cities are common. Power generation accounts for most of the coal consumed in India, with heavy industry a distant second. Most electricity is generated from pollution-generating, high-ash coal. The government is promoting a switch from coal-fired to natural-gas plants for power generation and cutting subsidies for low-quality coal--part of a general move to market pricing for energy and anti-pollution measures. That is happening slowly, too. Replacing existing coal-fired plants is a capital-intensive and time-consuming process. Many of India's highly polluting, low-efficiency coal-fired power plants will stay in operation for years to come. The most feasible alternative, natural gas, has seen its share of India's energy consumption rise from 1.4% in 1980 to only 7% today. While natural gas is at the heart of the government's policy for cleaner power generation and fertilizer production for the country's huge farm sector, India faces potential problems. Its natural gas imports come from Turkmenistan, Bangladesh, Iran, Miyanmar -- all places that raise questions about the reliability of supply. India's own untapped natural gas fields lie under deep seas. Renewables are not seen to be feasible on a commercial scale in the foreseeable future. India has one of the largest national programs to promote the use of solar energy, but unlike many developed countries that have turned to solar energy mainly out of concern about the environment and energy security, solar power in India is seen as a cost-effective way to provide energy to small villages and remote areas off the national grid where there is a shortage of electricity. Nuclear power may by the long-term alternative to coal, but for now, there is little that will check the rapid growth of India's carbon emissions--rising faster than even China's. India has not made the same progress in energy efficiency as China. Its ability to wring economic growth out of each unit of energy it consumes has remained flat for two decades, whereas China has improved markedly. A big reason is the lack of energy efficiency and conservation measures in most industries at the local level. Ever since the Bhopal disaster in 1984, India has had strong environment protections enshrined in law. However, their effectiveness diminishes due to a lack of enforcement that grows laxer the closer administration gets to the local level. Thus, air pollution has become India's most severe environmental problem, and one that is likely to continue to worsen. India's per capita carbon emissions are relatively low, at 1.2 metric tonnes of carbon per person in 2003. (China's emissions were 3.2 metric tonnes per person, and the U.S.'s 19.8). But India's emissions are forecast to triple by 2020 due to the rapid pace of urbanization, increased use of cars and trucks and the continued use of older and more inefficient coal-fired plants for power generation. As in China, continued urbanization has exacerbated the problem of rapid industrialization. Cities are frequently unable to implement adequate pollution control, and some India cities--including New Delhi, Mumbai, Chennai and Kolkata--are among the world's most polluted. Urban air quality ranks among the world's worst. Also as in China, sheer population growth and urbanization make it all the more difficult to pull off the balancing trick of continuing to generate economic growth without destroying the quality of life in both the cities and villages. But unlike China, India has a strained power generation, transmission and distribution infrastructure that is already hampering growth.

News: ONGC wins oil block in Brazil

(PTI 29/11/2006) New Delhi - ONGC Videsh Ltd, the overseas arm of state-run Oil and Natural Gas Corp (ONGC), has won an oil exploration block in Brazil.

OVL won the offshore S-M-1103 block in the Santos basin paying 1.5 million reais (0.68 million dollars), a company official said.

The company was among the host of global energy giants that were awarded six blocks in Brazil's eighth annual auction of oil and gas concessions.

"S-M-1103 has potential for natural gas and light oil," he said.

Italy's ENI paid nearly 140-million dollars to outbid Brazil's state oil company Petrobras, a consortium comprised by Norway's Norsk Hydro and Sapin's Repsol YPF, and a separate bid by Shell to win the S-M-857 deep-water block.

The minimum bid for the block was 2 million reais while ENI agreed to pay 307.4 million reais ($ 140 million).

Petrobras one block S-M-982 on its own and three in consortia with Hydro and Repsol.

News: Indian exports to grow at over 20%

(RTR 29/11/2006) Mumbai - India's Commerce Secretary, Gopal K. Pillai, said on Wednesday he expected Indian exports to grow at little more than 20 per cent in the financial year to March 2007.

Exports in October rose 11.3 per cent from a year earlier to $9.62 billion, while imports rose an annual 36.8 per cent to $15.83 billion. The government's full-year export target is $126 billion, a rise of 22.3 per cent over the previous year.

News: Indian IT trio may join global top 10 m-cap league

(PTI 28/11/2006) New Delhi - On the back of growing clout of Indian IT sector, domestic giants TCS, Infosys and Wipro may soon join the league of top 10 most valued firms globally in terms of market capitalisation in the next 2-3 years.

Painting this rosy picture for the domestic IT space was none other than Wipro Chairman and India's richest tech titan Azim Premji while speaking at the India Economic Summit here today.

"Currently, Infosys, TCS and Wipro come in the top 16-17 companies globally in terms of market capitalisation," he said.

We are growing three times faster than our foreign counterparts, so in the next 2-3 years, the difference will be very less, we will be in the league of top 10 companies, he added.

Earlier in September this year, global financial services major Morgan Stanley ranked the three Indian companies in top five firms in global IT services space.

Infosys was ranked even above US-based IT major Accenture, while all three Indian tech giants were placed above US-based EDS and Computer Sciences Corporation as well as European giants like Cap Gemini and Logica Plc in the market cap league.

The three majors are continuing their leading positions in the global IT services space on the basis of their current market values.

Infosys and Wipro have a market cap of $29 billion and $22 billion respectively based on their ADR prices.

While TCS has a market cap of around $25 billiion based on its share price on the Bombay Stock Exchange, the most valued non-Indian IT services firm Accenture has a market cap of $27.4 billion which is below that of Infosys.

However, in terms of turnover Accenture is far bigger than Infosys and other Indian companies, while US firms' lower market cap is also due to slower price-to-earnings ratio, analysts said.

This could be also attributed to Accenture's lower profitability and growth rates compared to Indian companies, they added.

News: Now Indian investors eye Fiji Islands

(TNN 28/11/2006) Kolkata - A number of Indian companies have expressed interest in Fiji as a potential investment destination. According to the Fijian delegation currently down in India, potential Indian investors are slated to visit the Fiji Islands in the next two weeks.

"The Taj group is willing to set up an Exotica property in Fiji. This apart, there are certain pharmaceutical companies which are conducting feasibility studies while a number of IT companies have also shown interest in setting up base in Fiji," said Ms Adi Sivia Qoro, minister for commerce and industry, Fiji.

She was speaking at an interactive session at the Bengal National Chamber of Commerce and Industry (BNCCI) that was also attended by other members of the Fiji delegation. The Fijian government is working closely with the private sector to promote exports as well as attract investments. Currently, it is encouraging investment from countries like China and India.

Fiji is especially looking to promote bilateral trade with India, which was a mere Rs 132.40 crore in 2005-06. The country will now be focusing on areas like ICT (information and communication technology), forestry, fisheries and tourism.

"Tourism is one of our major foreign exchange earners and we are looking particularly at promoting health and ecotourism. For this, we have already begun talking to Apollo Hospitals to set up a hospital in Fiji. We are especially interested in retirement villages," said Ms Qoro. According to her, Apollo will begin construction from next year. This is part of the Fijian government's efforts to promote development of infrastructure in the country.

News: TNT to invest 100 mn euros in India

(HT 28/11/2006) New Delhi - TNT NV CEO and Chairman Peter Bakker is something of a 'Highway Man' for even though his company runs a fleet of 46 dedicated aircraft for running the express delivery business in Europe, he likes to put all his future bets on a network of highways enabling inter-border trade in the ASEAN region.

"Last year, we started a daily truck service connecting Thailand, Singapore and Malaysia to Vietnam. Next in January, we will connect Vietnam to China.

"And if all goes well with road connectivity between India and Pakistan, we would become market leaders in providing cross border road solutions to facilitate trade in the region," he told Prerna K Mishra on the sidelines of the World Economic Forum.

Indian market seems to have a unique set of challenges and opportunities for the express delivery market? How different is it from China?

The Indian market is very different vis-à-vis the Chinese market since the growth in China is export-driven contrary to India where it is driven by domestic consumption. Unlike our competitors in India, who are basing their business on running wide-bodied jets in and out of India, we are trying to make a dent into a reliable scheduled road services network.

In 2006, with the acquisition of Speedex, we took the strength of our depots from 20 to 614 and acquired a decent fleet of sub-contracted road liners. We will spend the next couple of years in integrating and upgrading the Speedex network into our global network.

What are your plans for India?

We have an investment of 100 million Euros pledged for India for the next couple of years and we see ourselves as a leader in the Indian market. We have a dedicated fleet of 46 aircraft in Europe and we have ordered two Boeing 747s to connect China to Europe. We will have to make similar plans for the Indian market given the upswing in Indian trade with Europe. Till then, we will be entering into partnerships with domestic aviation players.

What are your expectations from the Indian government?

The Indian government is doing a commendable job in heralding progressive policies. But it needs to keep an eye on investment in infrastructure. Specific to the express business, India needs to become a single market.

To me India looks akin to the European Union where there are 25 countries. The only difference is that all the countries there have become a single market. We hope the Indian government also pushes in this direction as there are many hurdles in inter-state movement of commercial liners.

You have in recent times moved your corporate social responsibility initiatives away from sports to fighting global warming? What inspired the move?

When you run a fleet of 48,000 trucks and vans that are in a way contributing to global warming, you need to have the social consciousness to be proactive in doing whatever is required to reduce the problem and not wait for people to hold you responsible for it.

We want to be a solution and not a problem. In India, too, as a part of this initiative, we are starting a pilot from December 15 wherein we will move the four-wheel commercial liners plying between Bangalore and Mumbai from diesel to bio-feul. After studying the success in this region, we will roll it out nationwide.

News: 'Microfinance in India needs more commercial funding'

(IANS 28/11/2006) New Delhi - Microfinance in India, one of the largest emerging markets for it, is growing exponentially but needs more commercial funding to grow, says Vikram Akula, winner of the coveted Social Entrepreneur Award.

Hyderabad-based Akula, founder and chairman of SKS Microfinance Private Limited, shifted to the US at the age of three. However, he returned after his education in some of the top American universities, driven by an urge to do something to address the issues of poverty back home.

"Microfinance in India is a growing sector but it has a long way to go and much more needs to be done before we can successfully help our poor with the support of credit and microfinance," Akula said in an interview.

He was honoured as Social Entrepreneur of the Year 2006 in India award by Congress president Sonia Gandhi Monday. This is the second award being given by the Schwab Foundation and the Nand and Jeet Khemka Foundation in association with the Confederation of Indian Industries (CII) and the UNDP.

"The regulatory environment created by the Reserve Bank of India (RBI) is unfavourable for the growth and proliferation of microfinance in India," Akula, a Fulbright scholar and a product of Tufts, Yale and Chicago universities, pointed out.

India is one the largest emerging markets in microfinance in the world, but has been able to penetrate to only one-fifth of the country's poor. For the last two years, many public and private sector banks have been aggressively eyeing the market along with various overseas retail banks.

"It is true that all the major domestic and foreign banks have been actively involved in India's microfinance, but we need more commercial funding which is somehow not pacing up," Akula emphasised.

Known as the 'Starbucks of Microfinance', SKS automates microfinance through user-friendly back office and field technology reducing manual processing with minimal labour costs. The organisation has witnessed a growth rate of 300 per cent and has provided over Rs 3.2 billion in loans to 3,22,000 poor women in 11 states.

According to some experts, the microfinance model in India is slowing down due to lack of repayment loan capabilities by the poor who take loans to start up their own enterprise.

But Akula disagrees. "This is not true. This may happen in very rare cases. The current repayment rate is 90-95 per cent. Across the country, poor people do have the capability to repay their loans."

A former consultant with McKinsey, Akula was named by Time magazine as one of the world's 100 most influential people.

"Do you know washers, barbers and tailors contribute more to the country's GDP (gross domestic product) than the IT sector?," asks Akula.

The firm has elaborate future plans in its effort to create entrepreneurs from poor people.

"Our goal is now to reach out to 10 million households in the Indian hinterland and disperse funds over Rs 50 billion to them," he said.

Would he compare himself with Mohammad Yunus, who won the Nobel Peace Prize this year for his role in alleviating poverty in Bangladesh through microfinancing?

"They have a different model, and we have a different model," is all that the debonair Akula will say.

According to M-CRIL Microfinance Review of 2003, there are over 100 established microfinance institutions (MFI) in India that have been credit-rated. These MFIs have a combined outstanding portfolio of Rs 5.07 billion with cumulative disbursements of Rs.16.36 billion ($365 million).

News: Rivals ready to beat Wal-Mart heat

(BS 28/11/2006) Mumbai - Domestic retail majors have their scripts ready to counter the Bharti-Wal-Mart juggernaut.

Both Pantaloon and Shoppers’ Stop are eyeing opportunity presented by airport retail. Shoppers’ has signed a joint venture with the Nuance group, while Pantaloon has tied up with Alpha.

The Future group (Pantaloon), the biggest retail player at present, has announced plans to diversify into hospitality, contract farming, healthcare and even outdoor media.

The Pantaloon Retail board has also okayed an increase in borrowing limit from Rs 1,000 crore to Rs 2,500 crore.

The K Raheja group has diversified beyond the departmental store format, Shoppers’ Stop, through which it earned its spurs.

The group, which now has a presence in various speciality retail formats like home (Home Stop), books and music (Crossword) as well as hypermarkets (Hypercity), is banking on licensing agreements with international brands to bring in the differentiation in a fast changing retail scenario.

The company has already introduced brands like Mothercare and MAC to India and is said to be looking at increasing the number of licensee and high end brands in its portfolio.

“We have a number of operational formats, with a existing loyal base,” Shoppers’ Stop CEO Govind Shrikhande said.

The company plans to increase its floor space coverage from 1 million sq ft to more than 3.6 million sq ft in the Shopper’s Stop format, by 2010.

Similar growth is planned for all other formats as well. “We believe that there is space for at least 5 to 6 large players in the market,” Shrikhande said.

Over the past year, the Future group has diversified into several unrelated categories such as insurance and other non-banking financial services, in addition to launching its own real estate fund and mall management company.

This, says Kishore Biyani, chief executive officer, Future group, is his way of ensuring that he manages to get the largest share of the customers wallet – both the spending and the savings.

The company is also rolling out several speciality format outlets such as Home Town, Collection i and Depot. The group recently entered the hospitality sector through an agreement with Blue Foods to set up its own restaurants as well as food courts.

Piramyd Retail, which has so far been present in lifestyle retail (Piramyd) and food and grocery retail (Tru Mart), has said it is evaluating entering other retail formats through partnerships.

So far, the group has been largely focused on the western part of India and is moving closer to a more pan-India presence.

Trent, which is a Tata group company, has a network of department stores under Westside and hypermarkets under Star City along with a presence in books and music retail through Landmark.

The Tatas recently tied up with Australian retailer Woolworth to launch Croma, an electronics retail venture.

Reliance, which set up its first food and grocery outlet last month, is believed to be targeting a presence in 67 cities by June 2007 across formats ranging from hypermarkets to speciality retail to convenience stores and luxury retail.