News: India grew at 9%, faster than 8.4% estimated last year

(DNA 31/01/2007) Mumbai - India’s 9.1% growth in the first half of the current financial year, it seems, is nothing to write home about. The country had achieved the 9% growth last year itself.

On Wednesday, the Central Statistical Organisation (CSO) on Wednesday revised its May 31, 2006, estimates of GDP growth from 8.4% to 9%, the highest growth in two decades, closing the gap between India and the world’s fastest-growing economy, China.

The revision comes about largely because agricultural growth was revised from 3.9% to 6%.
“This augurs well for the current financial year”, finance minister P Chidambaram said, “although we will have to see what will be its impact on the growth rate this year as the base figures have been revised.”

What enthuses economists is the fact that the new numbers underscore the strength of consumption-led growth in the economy.
Rajeev Malik, JPMorgan Chase Bank’s vice-president and senior economist, told DNA Money the revised GDP estimate contains new information on expenditure GDP, which is reported only on annual frequency with a year’s lag.

“The production GDP details show that the revision owes mainly to agriculture and industry sectors. Following the revisions, India’s GDP growth has averaged 8.3% in the past three years.”

Malik said the expenditure GDP details “confirm that the strength of domestic demand is powered by private consumption and investment spending.”

Importantly, savings and investment rates have been steadily rising.
Gross domestic saving constituted 32.4% of the GDP at market prices, up from 31.1% the previous year.

The rate of gross capital formation was 33.8% in 2005-06, up from 31.5% the previous year.
This meant that India saved 32.4% of its GDP and invested at a higher 33.8% rate, explaining what was driving the growth of the economy.

Noting that the government had not announced revised quarterly GDP data, Malik said that “for now, JPMorgan maintains its current GDP growth forecasts of 8.5% and 7.5% for 2006-07 and 2007-08, respectively,” but would revisit the forecast following the announcement of GDP figures for Q4 on February 28.

Ajit Ranade, chief economist of the Aditya Birla Group, concurred with Chidambaram on the impact of higher base effect going forward, but he doesn’t feel a need for alarm.

“But in the first half, we have done around 9.1%, we now have the RBI projecting 50 basis points more growth to 8.5%-9%. I don’t see why we why we should not cross 8%, this year - it should be a breeze.”

Interview: Ratan Tata

(DNA 31/01/2007) Mumbai - DNA Money spoke exclusively to Ratan Tata and key Tata Steel executives, including managing director B Muthuraman, shortly after Tata Steel won the Corus bidding war. Excerpts from their press conference have been added to complete the picture.

The markets have not taken the takeover well. Tata Steel share prices have fallen...

Ratan Tata: The markets have taken a very short-term and harsh view. One often makes the mistake of damning a company when it posts a loss in one year and applauds a company that makes an extraordinary profit in a given year. One has to realise that the life of a corporation is much longer.

I believe there’s tremendous strategic value in the acquisition. Without Corus, it would take us several years to establish our presence in Europe and create brand value. We look at synergies — and it will be substantial. Hopefully, in the future, the markets will recognise we took the right step.

Will there be any changes in the Corus board? Will a new CEO be appointed?

The CEO of Corus (Phillip Varin) will remain the CEO of Corus.

Did the Tatas seek any help from the Indian political leadership to secure Corus?

We didn’t seek any support from the political leadership. The Mittal bid from Arcelor faced some resistance from the political leadership of France and Luxembourg. In our case there was no opposition from any political quarter. In fact, when we met some of the British MPs, they were quite supportive of our candidature. In fact, when we spoke to the British government, they were very pleased that Corus remains within the group of Commonwealth nations and not Brazil or any other country.

When did you start talking to Corus?

It is almost a year since we started talking. It was even before the Arcelor-Mittal deal. When we started talking to Corus, we found a human chemistry and very similar operating cultures. It wouldn’t have worked otherwise.

Have you at any point of time, talked to Benjamin Steinbruch of CSN, your rival for Corus?

Yes. In recent times we have touched base on a couple of occasions. But it was done very peripherally, without trying to bring Corus into the picture.

Did the high 608 pence bid for Corus have a consensus within the Tata Steel board?

If you want a company, you have to pay the price that’s the going price of the company. The final price has been higher due to circumstances that existed. However, as a prudent management we could go only up to a point. We did not reach that point, otherwise we would have walked away.

Have you overpaid? And did you take a wrong call when you pre-empted CSN, by upping your bid to 500 pence in December?

The word overpaid is subjective. If I give you a mundane analogy, if you wanted to sell your house to me, that is family-owned, I can’t buy for less than your quoted price. When we first made the bid for Corus group at 455 pence, hedge funds came into the picture and started buying into Corus shares. That’s why we raised it to 500 pence before the second bidder (CSN) came in.

We also learnt from investment banking circles that CSN may not bid upwards of 475 pence. We wanted to close the issue soon and so we made that higher bid. Moreover, the higher price (500 pence) we quoted later was to remain compatible with the prevailing market price. It wouldn’t make sense to quote lower than the prevailing market price.

After being at the helm of the Tata Group for almost 15 years, how would you look back at your group’s performance?

A lot has changed in the 15 years. I think the underlying driver is that if you want to grow, you’ll have look at growth within your national boundaries and also outside if you want grow globally. Those who have enjoyed the sheltered environment will prefer to remain in India. Companies that are less hindered will go out and fight amongst competitors globally.

What are your targets for the future?

We have set several internal targets. In the future, we’ll see much bolder and bigger moves in whatever we do. We need to enable our younger companies to grow faster and become globally competitive. We need to delegate more to our younger managers and give them the confidence to face the future.

Will jobs be secure at Corus?

B Muthuraman: I don’t think there is anybody in the world who says his job is secure.

When will the merger start showing on the bottomline?

Muthuraman: There are synergies. The benefits won’t plonk themselves onto the bottomline in the first year. It will take full effect in three years’ time.

Will the acquisition impact Tata shareholders?

N A Soonawala (vice-chairman, Tata Sons): The whole equity will be raised by Tata Steel. We are very conscious of the fact that kept to a level in relation to the capacity which is acquired. The debt (raised to buy Corus) is ring fenced which is structured to a level that Corus can maintain.

News: RBI may need more tools to tighten money supply

(Sify 31/01/2007) Mumbai - The Reserve Bank of India (RBI) has announced a 25 basis points increase in repo rate to 7.50 per cent. The reverse repo rate has been kept unchanged at 6 per cent, which means that the central bank is now treating the repo rate, the rate at which it lends to the banking system or injects liquidity into the system, as the operational policy rate.

The monetary tightening procedure that began in late 2004 was earlier focused on the reverse repo rate, the rate at which banks park funds with the RBI. The RBI wanted to withdraw excess liquidity from the system.

However, the current money market conditions indicate a shortage of funds, which means that banks will approach the RBI for more funds, making the repo rate more relevant.

As per the policy document for the Third Quarter Review of Annual Monetary Policy for 2006-07, the central bank has laid stress on liquidity management and gone to the extent of saying that it will take precedence over all other policy matters and will use monetary tools such as adjustments in cash reserve ratio to manage the money market situation. Impact of capital inflows into India will also play a key role in determining the future moves of the central bank in this matter.

Though concerned about the rate of inflation, which is currently hovering around 6 per cent, the RBI has not revised its wholesale price index inflation forecast from 5-5.5 per cent while it acknowledged the demand-driven pressure. However, it raised its GDP growth forecast for 2006-07 to 8.5-9 per cent from around 8 per cent.

An interest rate hike is a monetary policy tool often used to curtail inflation in the economy because any interest rate hike will help in mitigating the demand-based inflation on the overall price level in the economy. However, the recent rise in the wholesale price index and consumer prices index is a mix of both demand pressures and supply constraints. Interest rate changes often do not work on the latter.

It is generally perceived that interest rate hikes have an adverse effect on the stock markets and adversely impact borrowings for important infrastructure projects. However, the past few weeks, despite a rise in CRR, corporate borrowings have been on the rise. In the first fortnight of January 2007, corporate borrowing grew by about Rs 24,000 crore. Moreover, rising interest rates over the last year have failed to stem the demand for corporate credit in the country. This may be on account of improved productivity of the corporate sector.

A further tightening of CRR and SLR requirements could be an answer for the central banks and we may see these tools in operation intermittently, as indicated by the RBI.

News: Real estate throws up new careers

(PTI 31/01/2007) New Delhi - A career in real estate was till now limited to brokers, masons and labourers. Not anymore as the industry opens up limitless scope for investment bankers, marketing managers, visual merchandisers and supply chain distributors.

Many are even coming armed with foreign degrees India's total retail market is estimated at Rs 93,0000 crore, of which organised retail is at Rs 30,000 crore and expected to grow at a compounded rate of 30 per cent over the next five years. Currently employing nearly 15 per cent educated Indians, the industry has the potential to employ over two million people in the next five years, says Sanyam Dudeja of TDI.

The real estate industry segment today requires real estate specialists who have knowledge in business, finance and investment & communication skills. There are aspirants who want to make a career in this emerging opportunity, and they need a formal orientation into this conventional segment which is now metamorphosing into a new industry altogether, says Dr Hari Gautam of School of Business & Communication Studies.

Riding the real-estate boom, the real estate developers are hiring big time to scale-up their national operations. The reason for demand has been due to major expansions by developers across the country due to which there is a sudden spurt in the number of commercial and residential projects, says Dudeja.

The real estate market in the country is now opening up and a lot of FDI is coming into the business. With this, every group now needs people at all levels, he says.

News: 'Tata made India proud'

(PTI 31/01/2007) New Delhi - The Government on Wednesday welcomed the acquisition of Anglo-Dutch steel major Corus by the Tata Group saying "Ratan Tata has made the nation proud" and indicated revising the 110 million tonne steel production target by 2020.

"It is the nation's pride. Entire steel industry should be proud of Ratan Tata," Union Steel Minister Ram Vilas Paswan told the media adding that ever since the UPA Government came into power the steel industry has been booming.

The minister said with over 19 million tonne capacity adding to Tata's kitty the production target of 110 million tonnes by 2020 may be revised upward.

Asked about the valuation of the company to be paid by Tatas at over $ 11 billion, Paswan said, "steel is decontrolled and the Government has no role in it... this is between two players."

"I have seen the Corus steel plant. It is one of the best plants, I am happy that an Indian private company has a vision to go for such large scale acquisition," he said adding the acquisition would make Tata Steel world's fifth largest steel producer and this is a matter of pride for the country.

News: Samsonite to open 50 stores in India

(PTI 31/01/2007) Bangalore - Travel solutions firm Samsonite plans to open additional 50 brand stores in India with an investment of $10 million by the year-end, a company official said on Wednesday.

Samsonite has currently 168 stores in India, including the one opened here today. "Sixteen of the upcoming 50 stores are going to be large format stores with a minimum floor space of 3000 sq ft," the company said.

Head of Samsonite's India operations, Ramesh Tainwala said the rollout would be confined to 22 cities. "We are city-focused brand. We will look into entering 'B' and 'C' cities in India in 2009-2010," he said.

Tainwala said the company's business grew by 38 per cent on year-on-year basis in the calendar year 2006.

"We are targeting a 50 per cent growth in India this year," he said, noting that the travel industry is expected to grow by 22 per cent during the same period in the country.

Tainwala said the company is looking to expand its sourcing operations in India.

While the company's India business is Rs 250 crore, manufacturing and outsourcing order is to the tune of Rs 600 crore annually.

The company's plant at Nashik produces hard-shell luggage, having an annual capacity of 10 million units, with almost 80 per cent of production exported to global markets.

Samsonite, he said, has plans to open Black Label boutiques, which cater to the more premium market of travel connoisseurs, in Bangalore, Chennai and Delhi. It already has two such boutiques in Mumbai and one in Secunderabad.

News: 'Tata-Corus deal sign of India's economic strength'

(PTI 31/01/2007) New Delhi - Commerce and Industry Minister Kamal Nath today said the Tata's acquisition of Corus was a sign of India's economic strength.

"The Tata's win reflects India's economic and fundamental strength," the minister said.

Nath had earlier said that the corporate deals should always be determined by business forces taking into account the best corporate practices. He stated that the governments should not have much role in these business deals.

Nath handles Commerce and Industry Departments dealing with the policy issues governing both international trade and investments.

He had been vocally supportive of cross border merger and acquisitions, including the Arcelor-Mittal and Vodafone. He enjoys a good rapport with CEOs of a number of Fortune 500 companies.

News: Snapshot of Tata Group's takeovers abroad

(PTI 31/01/2007) New Delhi - Tata Steel's successful $ 11.3 billion takeover of its much bigger rival Corus Group is the latest in a series of acquisitions abroad executed by India's largest and one of the oldest corporate groups.The acquisitions have meant that 30 per cent of the group's revenues today come from overseas operations.

Following are the major acquisitions by Tata Group companies in the past few years:

Tata Tea acquires 30% in US' Glaceau (Energy Brands) in August 2006 for $ 677 million

Tata Tea buys 33 per cent in South African tea company Joekels through its subsidiary Tetley Group

Tata Tea acquires US-based Eight'O clock coffee company for $ 220 million (Rs 1,050 cr) in June 2006

Tata Chemicals picks 63.5% in UK's Brunner Mond Group for Rs 508 crore in December 2005

Tata Steel acquires Millennium Steel of Thailand in December 2005 for $ 404 million (Rs 1,800 crore)

TCS buys out Chilean BPO firm Comicorn for $ 23 million (Rs 107.02 crore) in November 2005

TCS acquires Sydney-based FNS in October 2005

Tata Technologies purchases INCAT International, UK in October 2005 for $ 91 million (Rs 411 crore)

Tata Tea acquires Good Earth Corp in October 2005 for around $ 32 million

Tata Auto Comp (TACO) takes over German auto components maker Wundsch Weidinger

VSNL acquires Teleglobe International in July 2005 for $ 39 million

Tata Steel buys Singapore's NatSteel in August 2004 for over Rs 1,300 crore.

News: Yunus calls for a stock market for social firms

(DNA 31/01/2007) Mumbai - Nobel laureate Professor Muhammad Yunus has called for a separate stock market for socially oriented companies and a social MBA course. Yunus's Grameen Trust, a micro-credit programme that follows the Grameen Bank of Bangladesh's approach to poverty alleviation, is due to open an office in Mumbai today. The stock exchange would primarily list firms doing social work, allowing investors to put their money in a company that is involved with the kind of social work the investor wants to do, the economist said. The social MBA course would be for people who can be hired by companies that are not interested in making money but in reaching social goals.

News: Will Indian pharma bite the bitter non-generic pill?

(BL 31/01/2007) Chennai - Last week, Pfizer, the world's largest drug maker, announced that it would cut 10,000 jobs, because generic drugs were hurting its sales. The slicing off, of nearly a tenth of the company's global workforce, is expected to save Pfizer $ 500 million-1 billion costs a year.

Meanwhile, Indian companies have been basking in the sales of generic drugs. For instance, pharma major Dr Reddy's Laboratories found that its third quarter earnings more than doubled, because of generic drug sales in the international market. Similarly, Ranbaxy saw its revenues rise by 21 per cent, helped by sales of generic Zocor, which captured more than half of the market during the first six months of US sales.

Pfizer move implications

What are the implications of Pfizer's move for Indian manufacturers? This was the question Business Line posed to Dr Raja B. Smarta, Founder and Managing Director of Interlink Marketing Consulting, which operates in pharmaceuticals, healthcare, wellness and education domains. "A few lessons can definitely be learnt," he says. "Over the last 10-15 years, many companies have enlarged their field-force by launching new divisions. These have served their purpose when there were no patents. However, each company has to perhaps reflect on the environment and opportunity to decide on what to do and how to improve productivity of total organisation."

Decisions

Majority of Indian pharma majors have gone global and these companies cannot afford to rely heavily on one line of business, notes Dr Smarta. "They need to decide what they do. Do they pursue generics, which have opportunities, constraints and limitations? Or do they have a hybrid model, which provides a mix of generic and branded medicines? Or should they look at different kinds of technology or drugs?"

All this depends on what strengths each company has, says Dr Smarta. "There are many successful stories where companies have pursued hybrid business models." Research will have to be strengthened to counter any seasonal and/or business fall in generics, he insists. "Companies can bank on newly developed and patented medicines to improve their business."

Easier said, than done, perhaps. For, the inevitable question will be whether Indian pharma companies are ready to bite the bitter non-generic pill.

News: Actis to set up $300 m realty fund

(BL 31/01/2007) New Delhi - The UK-based private equity firm Actis has drawn out plans to ramp up its investments in India. The private equity firm is in the process of setting up a separate $ 200-300 million real estate fund, Donald Peck, Managing Partner, Actis, said. It is also planning to set up a new fund for investing in the Indian market, he added without disclosing further details.

Actis has till now been investing in India from two separate funds estimated at about $475 million. According to sources, the new fund would be substantially larger than the previous one and combined with the realty fund may take the total quantum of funds, allocated for India by the private equity firm, to close to a billion dollars.

In talks

Speaking on the realty fund, Peck said that the firm is looking to invest in the real estate sector quite actively and is in talks with a couple of players for making investments. "A new team has been set up to look at realty investments. Further, the investors in the realty fund are also different," Peck said.

Recently, Chanakya Chakravarti, Joint Managing Director of Cushman & Wakefield, joined Actis to manage the private equity firm's real estate fund.

News: RBI’s counting on a surge in growth

(TNN 30/01/2007) Mumbai - The Reserve Bank of India (RBI) is expecting a surge in economic activity, with the level of business optimism touching an all-time high. However, most respondents from the private corporate sector expect higher increase in prices of both inputs and outputs in its industrial outlook survey.

According to an RBI’s survey on business outlook, 53.7% of the corporates expect an overall improvement in business environment as against 51.8% in the previous quarter and 49.8% in the same period a year ago. Bond dealers see the report as a negative for interest rates. Bond prices fell late evening following the publication of the report.

Based on its survey, the central bank has noted, “Economic activity is likely to remain buoyant in the near term. Thus, the ongoing momentum in economic growth is likely to remain robust in the remaining period of 2006-07.”

The index is calculated by surveying 1,000-odd corporates, through which RBI has arrived at `net response’. Net response is measured as the percentage share differential between the companies reporting `optimistic’ (positive) and `pessimistic’ (negative) responses. Higher `net response’ indicates higher level of confidence and vice versa.

Among the major parameters for the surveyed by RBI include overall business situation, production, order books, capacity utilisation, employment, and profit margins over the previous quarter. The financial situation is expected to improve, as the higher working capital finance requirement is also expected to be met by improvement in the availability of finance.

Expectations of increase in selling prices, exports and imports have, however, moderated vis-a-vis the previous quarter. Wholesale price inflation (WPI) was 6% as on January 13, 2007 compared to 4.1% at end-March 2006.

Pre-emptive monetary and fiscal measures, along with the moderation in fuel prices, could have helped to some extent in containing inflationary expectations, although underlying inflationary pressures remain, according to RBI. Measures of consumer price inflation remain at elevated levels, mainly reflecting the impact of food prices.

Banks have seen a marginal slowdown in overall loan growth in non-food credit and retail loans. Annual growth (year-on-year) growth rate in housing loans as on October 27 was 32.3% as against 54.3% in June. While real estate loans rose Y-o-Y 83.9% as against 102.4% in June.

RBI has noted that about 34% of incremental non-food credit was absorbed by industry, 12% by agriculture, 15% by loans to the housing sector and another 11% by `other retail loans’. Loans to commercial real estate, which increased by 84%, Y-o-Y, absorbed 5% of incremental non-food credit.

Deposits growth continued to be higher than last years levels which is reflective of Section 80C benefits of the Income Tax Act benefits extended to bank deposits.

News: Reliance, Bharti may storm microfinance

(TNN 30/01/2007) Bangalore - Reliance Retail and Bharti, which has joined hands with Wal-Mart, could storm the micro-credit space as they look to establish rural supply chain linkages to service their mega retail forays.

According to sources, Reliance Retail is likely to move the RBI seeking permission to set up an NBFC arm that will operate as a microfinance institution (MFI). It may also look at partnering existing MFIs as part of its ambitious supply chain with rural and semi-urban markets for which the company is said to have earmarked Rs 8,000-10,000 crore.

The move could significantly pep up the currently under-serviced microfinance sector. Micro-lending to the economically active poor, both urban and rural, is pegged at around Rs 7,000 crore, as reflected in bank outstandings. As against this, back-of-the-envelope calculations put the demand at around Rs 2 lakh crore.

Sources added that Reliance Retail was also exploring the possibilities of leveraging the MFIs for peddling its mass consumption goods into the rural belts, thereby making it a two-way opportunity. When contacted, a Reliance spokesperson declined to comment.

While Reliance has already made its first moves in tapping the potential and is said to be in early-stage talks with some leading MFIs based in Andhra Pradesh, rival Bharti has also shown interest in exploring the MFI route for supporting the retail supply chain, contract farming operations and dairy sourcing.

Sources said Indian retail biggies including Reliance and Bharti are headed to the microfinance summit hosted by the Women’s World Banking (WWB) in Mexico next month. WWB with its knowledge capital and global network experience is poised to unveil a slew of new partnerships in bolstering the base of microfinance entrepreneurs in the country.

Besides, the senior Ambani’s retail juggernaut has also started inducting financial services professionals, another indication of its microfinance interest. Sources said Mukesh Ambani, in recent times, has repeatedly spoken about putting money in the hands of the farmers and working alongside in improving yields.

India’s microfinance movement, including the government-sponsored self-help group-bank linkage programme and MFIs backed by new generation private banks, together service barely 10% of the 80 million households who have appetite for credit. Of this, the southern states account for 70%, with Andhra Pradesh holding 60% of the southern market. Incidentally, the three major MFIs in AP-SKS, Share Microfin and Spandana—together reach about 14 lakh households. Of these, more than 60% would be in agriculture, animal husbandry or related fields.

Besides working with the farming community on improving yields, the retailer is also likely to rely on MFIs to establish and operate the supply chain network, which could subsequently develop into a trading platform for excess commodities.

But it is not just Reliance and Bharti that are warming up to microfinance lending. Even mid-sized regional retail players like Heritage Foods, Trinethra (recently acquired by AVB), Subhiksha and several other agri-business consultancies are hot on the trail, anticipating the big Indian retail boom.

Acknowledging that retail players have been in touch with them, some MFIs say that it is early days yet, but inevitable.

News: Indian food exports to Gulf countries touches US$3 billion

(PTI 30/01/2007) Dubai - Indian food exports to the Gulf region is expected to get a boost with India's high-profile presence at the 'Gulfood 2007', one of the biggest food and hospitality trade shows in the world, to be held from February 19.

Indian food exports to the countries of the region are worth an estimated USD 3 billion a year, with agricultural and processed food exports to the UAE alone accounting for more than USD 273 million.

"Total annual trade between India and the Gulf Cooperation Council (GCC) currently exceeds USD 15 billion, representing 15 per cent of India's total foreign trade", an Indian embassy official in Bahrain said.

'Gulfood 2007' is expected to witness India's largest ever representation from February 19 to 22 in Dubai.

Bahrain imported BD 7.06 million worth of food products from India in 2005-06. "The other imports were mainly textiles and readymade articles, including confectionery items and meat," said an Indian embassy spokesperson.

"Bahrain and the rest of the Gulf region have always relied on imported food products and India is a major supplier," the official was quoted as saying by the Gulf Daily News on Tuesday.

He said the Middle East was a target market for more than three-quarters of India's main export products, including fresh fruit and vegetables, meats including sheep and goat, confectionery and dairy items. "India is an important partner of the Middle East market both in terms of exports and imports," the spokesperson said.

News: India's rating raised by Standard & Poor's

(IANS 30/01/2007) New Delhi - India's sovereign rating has been enhanced by Standard and Poor's (S&P) to investment grade to speculative category as a result of its strong economic prospect, the rating agency said on Tuesday.

"The upgrade on India's ratings to investment grade reflects its strong economic prospects, external balance sheet and its deep capital market, which supports a weak but improving fiscal position," the agency said.

Technically, the ratings stand improved to "BBB-/A-3" from "BB+/B".

India's economic prospects remain not just strong but are also rising gradually with the gross domestic product (GDP) trend growth likely to average more than 7.5 per cent in the medium term, said the agency.

"The service sector is dynamic, while the industrial sector is benefiting from gradual deregulation, trade liberalisation and modest improvements in infrastructure."

According to S&P, India's business environment will also improve in the coming years to sustain private investment and economic growth that is benefiting from higher consumption and demand from growing middle class and favourable demographics.

"Investment is also likely to engender job growth," it said, adding that reforms and steady monetary policy had sustained macroeconomic stability, leading to strong growth prospects and inflows of foreign capital and remittances.

"India's strong institutions have also provided relative stability in policy, politics and business environments against volatility usually associated with lower income levels."

On the flip side, S&P said the ratings on India remain constrained by the weak fiscal profile, especially its high government debt burden and deficit, which is still one of the worst among all rated sovereigns.

"The consolidated debt of India's central and state governments is projected at 85 per cent of GDP and interest payments are likely to consume about 30 per cent of general government revenue," the agency said.

"Inappropriate policy mix that increases the vulnerability of India's still-weak fiscal flexibility, and erodes external and growth strengths could lead to downward pressures on the rating," said the agency's credit analyst Ping Chew.

News: Luxury retail demand boom in Bangalore

(BS 30/01/2007) Bangalore - Large format shopowners look outside malls for spaces with international look & feel.

Luxury or top-end retailing is arriving in Bangalore and those looking for such space are emerging as a well-defined demand segment.

As a result, the commercial space market is getting more and more organised and quality conscious, setting new quality benchmarks incorporating international look and appeal.

Such demand is leading to expansion of the list of "Do's and Don'ts" that builders and sellers have to follow.

The prime considerations for buyers are sufficient space for large format stories.

In other words, micro space for boutiques is not what is needed. In addition, buyers want enough parking space for high-end spenders, a good retail mix in the neighbourhood and sufficient distance between shops.

A large luxury store must be near to other such stores but not bang next to one another.

Builders have woken up to this demand and have begun to address issues which have made large luxury shop owners look away from malls and traditional high streets.

This new demand has led to the emergence of non-CBD areas like Koramangala, Indiranagar, Malleswaram and Jayanagar as potential locations for such stores. It is in these areas that new development and fresh construction are taking place.

Such developments are happening despite the commissioning of four malls, Forum, Garuda, Sigma and Prestige Eva, totalling one million square feet of retail space.

All these have come up in and around the traditional prime shopping areas like Commercial Street, Brigade Road and M G Road.

"All these developments are leading to emergence of luxury retailing in Bangalore," said Mayank Saksena of TrammellCrow Meghraj. The city's retail real estate prices across CBD, non-CBD and peripheral areas, have seen an appreciation in rental and capital values of 10 to 15 per cent in 2006, compared to 8 to 10 per cent in 2005. The prime high-street location of Brigade Road, MG Road, Commercial Street (all in CBD) has been stable and witnessed about 15-20 per cent appreciation.

On the other hand, the non-CBD areas like Koramangala, Indiranagar, Malleswaram and Jayanagar have witnessed appreciation of upto 15 per cent.

"The way market is shaping-up in Bangalore, it is hard for CBD to sustain at these levels," said Saksena.

On the supply side, the city witnessed 5,00,000-6,00,000 square feet of leasing activity across all the micro markets in 2006 and an equal amount is expected in 2007, he added.

Supply is rising but at a slow pace. Most of the retail projects are behind schedule because of land conversion hassles.

The emerging non-CBD areas were largely residential till a few years ago and change in bylaws are needed to re-designate them for commercial use, said Shivram Malakala of Habitat Ventures.

The Hundred Feet Road in Indiranagar has been re-designated, resulting in an explosion of new shops.

Where such conversion is taking longer time , most of the retail space which will become available in 2007 will be through re-positioning of office space into retail space, he added.

News: Accenture's largest operations to be in India

(BS 30/01/2007) Bangalore - Accenture, a global management consulting, technology services and outsourcing company, has announced that it will make its Indian operations the largest for the company in the world.

The company, which currently has about 27,000 people in India working across all its 10 delivery centres and all business divisions, has announced it will ramp up its India headcount to 35,000, an increase of 52 per cent, by the end of August 2007.

This will make India Accenture's largest operations in the world followed by the United States, which will have 32,000 people and the UK with 11,500 people.

“India has become an essential component of Accenture globally. The intellectual talent available in India has a huge role to play for our success globally and Accenture by providing them with exciting career path aims to leverage their capabilities as a part of the company's focus on having the best people around the world," said William (Bill) D Green, chairman and CEO, Accenture, who is on his first visit to India.

Accenture which had a revenue of $16.55 billion in the fiscal ended August 31, 2006, employs about 1,46,000 people globally across 49 countries.

Since its opening the first delivery centres in Mumbai in 2001, it owns 10 delivery centres in India located in six cities. , which also houses the first technology lab of the company in Asia, is the largest centre for the company having over 15,000 professionals.

Currently, 40 per cent of Accenture's revenue comes from outsourcing, while the rest comes from system integration and consulting. The company intends to take the share of outsourcing to the total revenue to 50 per cent, added Green.

He said people would continue to be on the focus in the company's overall strategy, since the company believed in providing its clients not just the services, but on how to make themselves differentiated in the market, people would continue to be on the focus in the company's overall strategy.

"One of the most important things about Accenture is that we are able to bring our clients the best people, best ideas and the best solutions, from everywhere we operate. I am deeply impressed by the quality of our people in India and extremely pleased with the nature and quality of work that they are delivering to clients," he added.

According to Basilio Rueda, senior managing director, Global Delivery Network, Accenture, apart from India, the company as a part of its focus on getting right talents, is expanding in Philippines, China, Eastern Europe and Russia.

However, India will continue to be the leader in the company's overall strategy for the next 10 years.

News: Tata team told to go for the kill

(Agencies 30/01/2007) Mumbai - In the end, it boils down to a battle of nerves. Between Tata group chairman Ratan Tata’s grit and the flamboyance of Benjamin Steinbruch, chairman & CEO of Brazil’s Companhia Siderúrgica Nacional (CSN), even as their power-packed teams comprising merchant bankers, lawyers and consultants settle down for the nine-round bid for Anglo-Dutch steel group Corus on Tuesday. The battle royale for what could be the largest foreign acquisition (at anything between $9-13 billion) in Indian corporate history is set to start behind closed doors at 4.30 pm GMT (10 pm IST) at the headquarters of Britain’s Panel on Mergers & Takeovers at 10, Paternoster Square in Central London. The final outcome, however, will only be known by 3 am GMT (8.30 am IST) on Wednesday. Since it is mandatory for the bidders to increase their offer by a minimum of 5 pence every round, the minimum bid, if it runs through all nine rounds, would be at least 45 pence more, or 560 pence a share, against CSN’s last offer of 515 pence a share. Sources said the internal direction to the Tata team is to go for the kill. This is contrary to earlier speculations that the Tatas may be cautious beyond a point.

News: India to work for a successful conclusion of Doha round

(PTI 30/01/2007) London - India has said it is committed to working for a successful conclusion of Doha round of WTO talks despite the setbacks witnessed in the recent months.

"We remain focused on the larger goal of having a multi-lateral trade agreement under the WTO," Finance Minister P Chidambaram said delivering a talk on 'India: The Land of Growth Opportunities' at London School of Economics here on Monday evening.

Ministers from key WTO member-countries had agreed in Davos last week to resume the Doha round of trade negotiations and would be meeting again within the next few days in Geneva.

The talks were suspended in July last year after developing countries led by India and Brazil rejected US' offer for cutting its agriculture subsidy.

"Despite the setbacks witnessed in recent months, we are committed to working for a successful conclusion of the Doha round," Chidambaram said.

Giving a graphic picture of the rapid economic strides made by the country during the last three to four years, he said: "India is poised to witness an investment boom that will take the Indian economy to an even higher growth path."

The current year, 2006-07, has been good so far. The first half has registered a growth rate of 9.1 per cent, with the second quarter registering 9.2 per cent.

"I am reassured by the indicators available to us that growth in the second half of the current fiscal will also be close to 9 per cent.

"If these indicators turn out to be correct, the GDP growth rate for the current year will be the highest since reforms were initiated in 1991. The International Monetary Fund (IMF) seems to share this assessment," he said.

Chidambaram said the government had taken a number of steps to maintain the growth momentum.

Foremost among them was the need to observe fiscal prudence and discipline.

Conceding that the most formidable challenge was in the agriculture sector, which witnessed an average growth of 2.17 per cent in the six years since 1999-2000, the minister said, "this is a deceleration from the average rate of 4.68 per cent witnessed in the 80s and 3.16 per cent witnessed in the last three years."

To salvage the situation, a multi-pronged strategy has been devised that includes rapid expansion of irrigation facilities, extension of credit, introduction of new technologies, offering remunerative prices for farm produce and supplementing farm income with incomes from allied activities such as dairy, inland fisheries, poultry and animal husbandry.

Another important challenge, he said, was in human resources.

"No doubt, the size of our working age population will continue to grow until the year 2040 and we will enjoy a demographic advantage until that year. Nevertheless, it has been estimated that we will face a severe shortage of skilled workers unless we expand capacity and improve quality in our schools, colleges and vocational training institutions," he said.

Therefore, the government was in the process of expanding capacity in all institutions of higher education by 50 per cent over the next three years.

Chidambaram noted that the fiscal side too had witnessed many reforms. "Tax rates are stable and moderate. Customs duties have been brought down to nearly ASEAN levels. In 2005-06, state governments were persuaded to switch over to the value added tax (VAT). Buoyed by its success, we have announced our intention to introduce a nation-wide goods and services tax (GST) with effect from April 1, 2010," the Finance Minister said.

Conceding that the Achilles heel of India's growth story was physical infrastructure Chidambaram said, "we recognize the need to provide world class infrastructure in order to meet the requirements of a fast growing economy. We are therefore employing more than one model to build infrastructure on an ambitious scale."

Chidambaram urged young NRIs to invest and come back and work in India and become part of the development of the country.

Later, speaking at the Golden Jubilee celebration of the UK Operations of Bank of Baroda at the Grosvenor House, the Minister said "In the current year the growth rate is nearing 9 per cent. We must maintain and improve upon it and I have no doubt about it in my mind."

The Governor of Bank of England Mervyn King and Deputy High commissioner, Ashok Mukherjee were the Guests of Honour at the function. The function was also attended by British Ambassador for Overseas Business Lord Swraj Paul, Labour MP Pyara Singh Khabra and a large number of leading NRI and British businessmen and industrialists.

News: 'Indian banking sector driving economic reforms'

(PTI 30/01/2007) London - Finance Minister, P. Chidambaram, has described the country's banking sector as the driving force of economic reforms, though New Delhi is still to fully open the sector to foreign financial institutions. Lauding the incredible reach of its public sector banks, he said: "The success of the economic reforms is there for all to see and the driving force of the economic reforms is the banking sector." Chidambaram, who was speaking at the Golden Jubilee celebrations of the UK operations of Bank of Baroda here on Monday, had earlier assured British investors that New Delhi would soon push through bills pertaining to reforms in pension and insurance sectors. Overseas investors, including in the UK and the US, have for long been seeking access to India's financial markets, but reforms have been slow to come owing to pressures from coalition partners. Chidambaram said in the current year, the growth rate of India is nearing 9 per cent and this could be maintained and improved upon, he said. "India is firing on all cylinders and one can see hunger and drive in every section (to achieve progress) and we must continue this for the next 15-20 years and it is possible," he added. Lord Swraj Paul, British ambassador for Overseas Business, Piara Singh Khabra, Labour MP and a large number of NRI businessmen and industrialists were present on the occasion. Bank of Baroda is among the leading banks in India and currently has 60 offices in 21 countries and within India it has 2,700 branches. The UK operation accounted for 40 per cent of the Bank's global operation.

News: 'FDI hike in insurance'

(IM 30/01/2007) New Delhi - In order to sustain high growth in the insurance sector, the Finance Minister is seriously thinking over raising the Foreign Direct Investment (FDI) to 49%, which at present is capped at 26%. The government has to take this step in order to bring reforms in the insurance sector and boost up further growth.

Besides, the Pension Fund Regulatory and Development Authority Bill may also be in for some changes. It is only when the cat will be out of the bag on the Budget Day, would we come to know of the results and promises made by the government.

News: 'India must open up to FDI'

(PTI 30/01/2007) New Delhi - India must open its economy up to foreign direct investment if it is to maintain blistering growth of nine per cent, the finance minister told the Financial Times on Tuesday.

P Chidambaram told the newspaper in an interview that sustaining an investment rate of close to 34-35 per cent of gross domestic product (GDP) would be key to maintaining growth and argued that foreign investors would not 'take over' the tightly-protected economy.

"This means we must keep the environment very enabling for investment, both domestic and foreign: ample liquidity, good flow of credit, opening up more sectors which are closed or too tightly regulated, opening up to foreign direct investment and looking for innovative financing, especially in infrastructure, where there's a hunger appetite for investment," he said.

Chidambaram said foreign investment in India was currently worth about $9 billion.

"In infrastructure alone, we need to get about $ 20 billion to $24 billion a year. So there is still a huge gap," he said.

"The fear that foreign investors are going to take over the economy is not justified at all. In terms of our GDP, the flow of investment into India is very small at about one percent of GDP," he said.

In January, global credit rating agency Moody's Investors Service said India's economy was unlikely to continue growing at over nine per cent due to its hefty fiscal deficit and creaky infrastructure.

India's economy grew by 9.1 per cent during the first half of the financial year to March 2007, making it the world's second-fastest growing after China.

News: Villeroy & Boch enters India

(BL 30/01/2007) Hyderabad - Villeroy & Boch, the French fashionable tableware manufacturer, has entered the Indian market by opening its first outlet in Hyderabad. The 256-year-old company, through its Indian partner Spa Luxury Lifestyle Ltd, will open boutiques in Mumbai, New Delhi, Gurgaon, Chennai, Bangalore and Kolkata in the next few months.

Talking to reporters here, Sanjana Chauhan, Vice-President (Marketing) of Villeroy & Boch in India, said the stores would bring in the recently introduced `New House' philosophy by the company worldwide, introducing a new ambience and offering Indian customers a world-class experience in retailing. The store also housed a functional kitchen. "We plan to organise events around the kitchen to add a new dimension to shopping," the store manager said.

News: M&As to boost India’s intangible asset value

(DNA 29/01/2007) Mumbai - A recent global survey from Brand Finance reveals that India comes in as runner-up only to Switzerland, garnering the second highest proportion of intangible asset value. What’s more, we should be numero uno on these charts in a decade’s time.

Indian dynamos are stoking the cylinders of global mergers and acquisition, a la headliner sagas involving Corus, Hutch, et al. Naturally, this will further feed the engines that drive India’s intangible asset value.

Caveats and promise

Interestingly, the Brand Finance study shows that countries with the highest levels of “disclosed” intangible assets are European: France (24% of total Enterprise Value); Germany (19%); UK (17%), partly reflecting the high level of acquisitions by companies in those markets in recent years.

There are caveats in italics though, for Indian M&A. Says Unni Krishnan, managing director, Brand Finance India: “It is an exciting time for corporate India, but it has to cherry-pick the acquisition opportunities and carefully review the value of intangible assets like the brand, especially in the light of new accounting standards like IFRS 3 which has been specifically designed to demonstrate to investors how their money was being spent by management on acquisitions.”

The most important step is for companies to stop taking refuge in the previous accounting climate, which said, “goodwill can’t be explained”.

In fact, Vodafone’s announcement last week that it was slicing £28bn of goodwill from its balance sheet relating to its mega acquisition of German telecoms provider Mannesmann in 2000 left observers open-mouthed.

Indian companies are all set to storm global markets on the back of IP driven branded goods and services. There is an urgent need to recognise the value that these strategic assets add to their own businesses and the firms they might wish to acquire globally. Further, the market valuations that Indian companies enjoy today signal the future expectations from investors. The market multiples being attached to firms can be only achieved by leveraging the value brand and intangible assets. CEOs and boards need to recognize this fundamental shift in the underlying foundations of the economy for sustaining the Indian growth story, underlines Unni Krishnan.

Ultimately, everyone’s gung-ho about the intangible India story, even versus China.

David Haigh, chief executive of Brand Finance, sums up: “While China is disciplined and good at manufacturing, India is creative and innovative at developing new products and services. China may become the workshop of the world, but India will become its innovation centre. Far more wealth accrues to innovators than workers — as Silicon Valley in California has clearly demonstrated.”

News: Carrefour to go for Wadia

(DNA 29/01/2007) Bangalore - After the Bharti-Wal-Mart alliance, talks for another retail joint venture seem to be nearing conclusion. If industry sources are to be believed, Nulsi Wadia-owned Bombay Dyeing group is said to be firmly moving towards finalising a pact with the French retail behemoth, Carrefour.

“They have been engaged in serious talks for some time now and should be able to close the deal soon,” said an industry source.

The development, though, could not be confirmed with the Wadia group spokesperson. It is, however, not being denied by company sources either.

“Speculations on Carrefour’s foray into India have gone haywire. At the moment, all the moves on our retailing initiative are being closely guarded, so obviously, I wouldn’t be able to comment on it,” said a Wadia group spokesperson.

Nusli Wadia’s elder son Ness Wadia, who is heading the group’s real estate business comprising of shopping complex and other retail initiatives, is expected to take charge of the business.

“This business will fall in his lap by default as he is already looking after the real estate business of the company,” said a company source.

The world’s second largest retailer, $74 billion Carrefour, which is keen on tapping the emerging opportunity in the retail space in India, has been scouting for the right partner for some time now.

Europe’s largest retailer was reportedly earlier in talks with Sunil Mittal’s Bharti Enterprise, which decided to go with US-based Wal-Mart, which offered better terms and conditions. It has also had talks with Dubai’s lifestyle departmental stores chain - the Landmark group.

Anil Ambani’s Anil Dhirubhai Ambani group (ADAG) is also reported to be in talks with the French retailer to mark its foray into retailing.

Lately, Carrefour, which is present in 29 countries with over 7,000 stores, has been expanding in markets outside France and Europe. At present, Asia (7.7%) and Americas (6.8%) constitute only 14.5% of its business, as compared to Europe, which accounts for the rest. France alone accounts for 47.8% of its business.

Column: Achieving growth and stability

(BL 29/01/2007) Mumbai - The 1990s saw the emergence of central bank independence as a recipe given by financial sector reforms, particularly to developing countries. It was taken as given that central banks in developed countries were independent of their governments. It was believed by financial sector reformers that ensuring the apex bank's autonomy and placing at its head professionals with integrity and inflation-fighting credentials was the only way to go. Various developing countries accepted this advice in the right spirit and enshrined independence in the fiscal responsibility and central banking legislation they enacted in the period. But the tension between the independent central banker and the all-powerful political executive, who placed him at the top of the central bank, was always alive.

The enactment that enshrined the Federal Reserve of the US listed both growth and stability as the tasks of the Fed. The independent Federal Reserve had to operate within these circumscribed limitations. There were, however, episodes when the Fed went far out to squeeze out inflation, as it did under the famous banker Paul Volcker. This led to an incipient recession, although it effectively squeezed out inflation, partly by contracting demands.

We are currently going through a phase in which certain economies, both developed and developing, face a difficult choice. The central bankers instinctively try to squeeze money supply, and raise rates of interest and reserve ratios, while the political executive watches with great concern and tries to nudge the central bank to hold its hand.

Pressure on Bank of Japan

The latest such instance in a developed economy was reported in the media last week, when the Japanese Government expressed its displeasure over the Bank of Japan's reported decision on a rate rise. The fact that Bank of Japan had held its hand for quite a while was not an argument. Government circles were concerned that the Bank's action may snuff out the growth impulses, which were just surfacing. Incipient deflation was considered a greater threat by the politicos. The Financial Times of London of January 18, 2007, carried a front-page story headlined "Bank of Japan under pressure to backtrack on rate rise". This happened even when its policy board began its meeting to consider the interest rate rise. The report noted that, in recent days, Bank of Japan officials, through speeches and background comments, prepared the ground for a possible rise in the overnight call rates from 0.25 per cent to 0.5 per cent.

There was a counter-statement from the office of the Prime Minister, Shinzo Abe, that it is premature to raise rates before Japan has definitely escaped deflation. The Bank itself could not comment on this since it was in a blackout period, forbidden to make any comments.

Spectators went on a rampage, betting on whether Bank of Japan would succeed or the Government. Some economists disapproved of Bank of Japan caving in to Government pressure and giving control of monetary policy to the politicians. The judgment was that Bank of Japan has lost control over policy-making. The participants in the debate included the powerful Secretary-General of the ruling party. He called for a showdown with Bank of Japan, asking the Government's observers at the policy board meeting formally to request a postponement of the rate increase.

Abe has reiterated his formula that while the Bank has independent decision-making authority, it is also committed to support his economic growth strategy.

The debate appears familiar to us in India. Government circles are locked in a dilemma. They have to allow the central bank to independently pursue its inflation-fighting policy, especially now that inflation has reached 6 per cent. At the same time, there is a need to sustain the growth impulses. Growth, however, demands financial provisions in terms of credit for agriculture, infrastructure and industry. I had referred in my piece last week to the EAC's pithy summary of this dilemma. The problem is acute as our Plan strategy depends on credit for the various producing sectors and their growth is needed to fight inflation.

Speculation is rife about whether the RBI will further tighten credit and increase rates in its forthcoming monetary policy announcement. The danger signals are already there. The higher WPI inflation, which is above the targeted percentage rise and the tolerance limit of 5 per cent characterise India's response to inflation.

The political apparatus, on the contrary, would not like to risk a slowdown in credit disbursement or its cost, especially with the background of coming polls in crucial States. The more material point is whether monetary tightening can reduce the price pressures, which come about due to petroleum price rise or commodities' boom, or monsoon variations.

Negotiate with RBI

It seems there is a need for the political apparatus to negotiate with the RBI and reach a workable alternative. It is difficult to realise a sustainable growth pattern if the central bank sticks to slowing down credit disbursements or raising their costs. Supply-side actions are indicated as the better way to handle inflation consistent with growth.

My own surmise is that both Dr Y.V. Reddy, the RBI Governor, and the Finance Ministry are too sophisticated at the game to allow the wrangle to deepen into dissent. I believe the Ministry of Finance will try to reach an agreement with the RBI about possible alternative strategies to depress the inflation numbers, including tax actions and imports.

Cooling the economy can be accomplished in a controlled manner, growth not being sacrificed. Maybe, selective credit controls are needed. But that is not the best of all possible options. In a second best world, it is better than stifling growth in pursuit of inflation management.

Earlier dissent

India has had episodes of dissent between North Block and Mint Street before. One famous, or infamous, incident was when the then Finance Minister, T.T. Krishnamachari had a spat with the then central bank Governor, B. Rama Rau, on interest rate announcement.

The RBI historian is quite clear in his judgment that the Governor was within his rights and TTK was obviously wrong. But Governor Rau resigned in protest at his being not understood, or misunderstood. The mechanism of periodic consultation between the RBI top brass and the Finance Ministry normally works smoothly. But the cracks appear when the two approach the problem from totally different points of view. It is time to correct the rift, if one exists. Turning to the current situation, the omens are not good, if we go by the inflation figures. The solution has necessarily to be a test of the willingness of both sides of the debate to compromise.

The central bank is, of course, independent. But, as the episode between Prime Minister Abe and Bank of Japan indicates, the independence is subject to overall imperatives of growth. Hopefully, Dr Reddy and Chidambaram will resolve this debate. After all, they have a wise leader in Dr Manmohan Singh, who has been a central banker, a Finance Minister, a Deputy Chairman of the Planning Commission and a reformer par excellence.

I am sure his wise words of advice will guide both Dr Reddy and Chidambaram in squaring the circle and solving the conundrum of growth with stability with no decline in central bank independence.

News: 'India emerging as a major centre of auto sector'

(UNI 29/01/2007) New Delhi - Prime Minister Manmohan Singh today assured the auto sector that his government would be a ''partner'' in its development, making India a global centre of automative industry.

Dr Singh announced the support while releasing the Automotive Mission Plan 2006-2016 -- the blue print for the growth of the sector.

The plan has been prepared by the Ministry of Heavy Industries and Public Enterprises in collaboration with the Indian Automotive Industry.

The Prime Minister complimented the Indian Automotive Industry for the steps taken to improve the competitiveness of Indian brands.

He also congratulated Ratan Tata and Brijmohan Lal Munjal for their leadership in this regard.

In the light of growing global concern about climate change, the Prime Minister urged the Indian Automotive Industry to invest in energy efficient and environment friendly technologies.

He said developed countries must accept their due burden in this regard for they have been the biggest polluters.

Developing countries cannot be asked to take on the obligations of developed countries and must be helped in addressing the challenge of climate change, he said.

The Prime Minister urged Indian companies to think ahead and adopt fuel-efficient technologies to reduce the dependence on fossil fuels.

News: Reliance Retail plans 100 stores in NCR

(PTI 29/01/2007) Noida - Having introduced its food stores in the National Capital Region, Reliance Retail plans to open 100 such stores in 120 days, but could face problems finding the right location to do so.

With commercial space commanding a premium following the Supreme Court's order on land use, the company faces challenges in land acquisition, industry sources said.

Reliance Retail's mentor Kamal Nanavati, however, sought to allay apprehensions on this count, saying sites have already been identified.

"We will open 50 stores in NCR and 50 in Delhi," he said at a function to mark the opening of nine 'Reliance Fresh' stores in Noida, Greater Noida, Ghaziabad, Gurgaon and Faridabad.

Sources said Reliance Industries President (Corporate Affairs) Shanker Adawal, credited with putting in place the infrastructure for the retail venture, has been entrusted with the task of sorting out land acquisition problems.

Adawal was also behind the recent acquisition of land in various parts of the national capital, the sources said.

The Mukesh Ambani-promoted company spent close to Rs 1,000 crore in just two days to acquire properties in Vikaspuri in West Delhi valued at around Rs 280 crore and at Dwarka and Rohini for around Rs 700 crore.

"The overall space size of the acquisition is over five lakh square feet," the sources said.

When contacted, company officials declined to comment.

The properties acquired by Reliance Retail were a part of auctions by the Delhi Development Authority.

News: Now, AV Birla wants to buy aluminium multinational

(DNA 28/01/2007) Mumbai - It’s now the turn of the Aditya Birla Group, the fourth-largest business group in the country, to make a multi-billion dollar bid.

Its flagship company and the country’s leading aluminium-maker Hindalco is eyeing Novelis Inc, an aluminium-maker having operations spread across America, Europe and Asia.

Novelis, which was spun out of Canadian aluminium giant Alcan, has a turnover of $8.4 billion (Rs 38,262 crore). Investment banking circles are still not sure whether Hindalco will bid for Novelis lock, stock and barrel or whether it will seek parts of the company.

Novelis shares gained $7.17, at $37.70, a gain of 23.80%, before trading was halted in the counter.

A senior Hindalco official told DNA, “It is speculative, uncorroborated and hence we would not like to comment on it.” Sources also reveal that the Indian company is eyeing a smelter owned by Norwegian aluminium giant Norsk Hydro. Novelis’ performance on the US bourses on Friday was spectacular. But ever since its demerger from Alcan, the company has been making losses.

It has no recourse to captive mines and perhaps Hindalco fits into their scheme as it owns vast resources of bauxite and alumina. Novelis is slated to carry a huge debt in its books and depends on the markets to buy alumina and other raw materials. With the ore getting costlier, Novelis has had to pay a heavy price to sustain its business. Novelis is also the largest recycler of aluminium cans in the world. If the bid is for the whole business, it would cost Hindalco at least $5-6 billion, investment banking sources said.

News: Indian real estate funds are now set to rival FII flows

(DNA 28/01/2007) Bangalore/Mumbai - If you think foreign institutional investment (FIIs) in the stock market is big money, you ain’t seen nothin’ yet. The FIIs invested $18.69 billion net in 2005 and 2006 combined, but that kind of money is already visible in real estate - over $ 17 billion, and counting.

Of the $ 17 billion heading towards the Indian property market, $ 7.78 billion has already been raised, and another $ 8.58 billion is in the pipeline (see chart). Domestic investors have additionally contributed close to $ 1 billion to the kitties of real estate and infrastructure companies through initial public offerings (IPOs), and further billions will be raised when DLF and other realty companies hit the markets over the next few months.

A major source of finance is venture capital (VC), with Sun-Apollo Venture Ltd being the latest to raise Rs 2,835 crore ($630 million). A joint venture between the Khemka family-owned Sun Group and global real estate player Apollo Real Estate Advisors, Sun-Apollo has raised the money from investors in the US, Europe and the Middle East.

According to Shahzaad Dalal, vice-chairman and managing director of IL&FS Investment Managers, India will see flows of between $5-10 billion this year from VC funds alone. And the main reason for this rush if higher returns. Sun-Apollo managing director Chetan Dave expects a risk-adjusted return of over 25% on his investments in India.

“I would say this is a very attractive return in comparison to many other markets,” says Dave.

Another recent announcement was the one by Dubai-based real estate company Emaar Properties, which, along with its Indian joint venture partner MGF, has planned an investment of $4 billion (Rs 18,000 crore) in various housing and infrastructure-related projects in the coming years.

The Associated Chambers of Commerce and Industry of India (Assocham) believes that overseas real estate giants like Royal Indian Raj International, Blackstone Group, Goldman Sachs, Emaar Properties, Pegasus Realty, Citigroup Property Investors, Lee Kim Tah Holdings, Salim group, Morgan Stanley and GE Commercial Finance are likely to cumulatively bring in $8 billion of investments into the sector.
Vikas Oberoi, managing director of Oberoi Constructions, says the rush is a good sign. “Real estate is already getting commoditised and the market scenario we are
witnessing, and will continue to witness in the coming years, is a pure demand and supply game. The good thing about all the money coming into the sector is that the funds are getting invested in the right kind of projects,” adds Oberoi.

While venture capital funds may be busy raising money abroad, Indian real estate companies have also been in the thick of action, raising money from the public market.

GMR Infrastructure, Lanco Infratech, Parsvnath Developers and Sobha Developers were the big-ticket IPOs that entered the market towards the end of 2006.

Another source of quick money has been the Alternative Investment Market (AIM) on the London Stock Exchange. Among firms that have already raised funds for India through AIM are New-York based Trikona Capital (around $450 million through its fund Trinity Capital), the CL Raheja-promoted Ishaan Real Estate ($341 million), the Unitech-promoted Unitech Corporate Parks ($710 million) and the Hiranandani-promoted Hirco plc ($750 million). Waiting in the wings is Indiabulls Real Estate, which is raising $624 million through Dev Property Development.

Though all this may augur well for the real estate sector, one school of thought thinks that these huge sums are only going to drive up already soaring real estate prices. A recent survey by global property advisors DTZ Debenham Tie Leung has put Mumbai and Delhi as the fourth and eighth most expensive CBD (central business district) office locations in the Asia-Pacific. The survey revealed that the cost per workstation in Mumbai and Delhi is as high as $11,400 and $8,150 per annum.

However, investment managers and real estate experts disagree. “It’s the rising level of affluence in the country that’s driving up real estate prices. So far, real estate funds have not made a difference to property prices,” says Dalal of IL&FS Investment Managers. “Further, all the money being raised does not get deployed in a single year. It’s spread out judiciously over three to four years,” adds Dalal. For example, Morgan Stanley Real Estate plans to invest more than $1 billion over the next four or five years.
For a project to be compliant with Indian foreign direct investment (FDI) laws, the size of the land to be invested in needs to be a minimum of 25 acres, or the construction area should be in excess of 50,000 square metres. Further, the minimum investment should be $10 million, and investors should be locked in for a minimum of three years.
Moreover, at least 50% of the project should be completed in three years.

“With these guidelines in place, an overseas investor is not someone who is buying and selling property, and thus jacking up prices,” says Pranay Vakil, chairman of Knight Frank. “In a city like Mumbai, where prices have been shooting up, where is the space for such FDI-compliant projects?” he asks.

It’s not just overseas institutions who are getting a slice of the action. Dalal recently closed his IL&FS Realty Fund with $525 million being committed from overseas as well s domestic investors. While ICICI Venture and its partner Tishman Speyer are committed to bringing in around $1 billion, Kotak Realty Funds and HDFC’s real estate division are planning to tap money from both domestic and overseas investors.

India needs 30 million square feet of office space per year, and has a shortage of 22 million dwelling units. Till this gap is narrowed, investors will remain gung-ho on Indian realty.

News: Indian forex reserves up $702m

(BL 28/01/2007) Mumbai - The country's foreign exchange reserves have risen $702 million to $178.128 billion, for the week ended January 19, on the back of an increase in foreign currency assets. In the previous week, the forex reserves had gone up $841 million to $177.426 billion.

Foreign currency assets expressed in dollars include the effect of appreciation or depreciation in non-US currencies (such as euro, sterling and yen) held in reserves. Foreign currency assets have increased by $701 million to touch $171.068 billion, according to the RBI Weekly Statistical Supplement.

Treasury officials attributed the increase in reserves to central bank intervention in the forex market and revaluation. "During the week under consideration, there was speculation that RBI was buying dollars to rein in the appreciating rupee as well as to infuse liquidity in the system," said the chief forex dealer at a private bank.

While the euro edged up to $1.2965 on January 19 from $1.2935 on January 15, the yen fell to 121.25 from 120.45.

Gold and SDRs were unchanged at $6.517 billion and $1 million, respectively. India's reserve position in the IMF increased by $1 million to $542 million.

Forex dealers said the rupee is likely to be in the range of 44.20-44.30 next week. "As per the Real Effective Exchange Rate, the rupee is overvalued by 8.8 per cent. So, the central bank may continue to intervene if the rupee appreciates below 44.20," said the treasury official.

News: Infosys, TCS shining in IT valuation league

(PTI 28/01/2007) New Delhi - Indian IT majors like Infosys, TCS and Wipro may be country cousins of their global peers in terms of turnover, but they still steal the show from likes of IBM and Accenture on the market value verus revenue parameter. The domestic giants carry a market valuation of up to 13 times their annual revenue, as against less than two times for their global peers -- notwithstanding the fact that full-year revenue of IBM alone is over 11 times the combined total of four Indian majors, Infosys, TCS, Wipro and Satyam. India's second-largest software exporter Infosys today carries a market capitalisation of over Rs 1,24,000 crore, which is 13.5 times its FY06 revenue of Rs 9,172 crore. The country's biggest IT firm TCS follows closely with a ratio of about 11 times between market cap of over Rs 1,28,000 crore and revenue of Rs 11,300 crore. While annual turnover has been traditionally regarded as the true size of a company, it is market value or market capitalisation of a firm that becomes a bigger benchmark in deals like merger and acquisitions. Some analysts argue that the higher market cap of Indian companies is primarily driven by the sharp rally in the domestic market over the past few years. But the share price gains have also been driven by huge investments in the Indian IT space and a large number of deals struck in domestic and overseas markets that are boosting the expectations for revenue accretions to be registered by the domestic firms in the years to come. Besides Infosys and TCS, the market values of other two domestic IT giants -- Wipro and Satyam are also over nine times and six times of their respective annual revenues. In contrast, market value of global giants like IBM and Accenture are about 1.6 times their respective revenues. • Newsmakers of the week: View Slideshow While Accenture's current market cap stands at Rs1,28,000 crore -- close to that of TCS and Infosys, the US based IT giant has a whopping revenue of over Rs 82,000 crore. One of the world's largest IT services firm IBM has a market value of about Rs 6,60,000 crore and annual revenue of about Rs 4,10,000 crore -- which still results in a valuation-revenue ratio of less than two times. IBM's annual revenue is over 11 times the combined revenues of TCS, Infoys, Satyam and Wipro, while other global majors like EDS and Accenture also have annual turnover of more than double the combined figure for the four Indian majors, which stood at about Rs 36,000 crore in last fiscal. EDS's revenue stood at about Rs 89,000 crore last year, higher than its market cap of about Rs 60,500 crore. Global technology research firm Forrester said in a recent report that higher valuation-revenue ratio of Indian IT firms is making it difficult for cross-border M&A deals in this space, as global firms might not want to pay a price based on market value that is higher than a firm's revenues. But the analysts believe that while global firms already present in the IT space might not go for strategic deals involving large domestic players, the continuing surge in the market value of Indian companies still make them attractive targets for private equity investments. In the current fiscal, MNCs have already announced investments worth $ 10 billion (about Rs 45,000 crore) to be invested in the next few years. Besides, India will record software and IT services exports worth $ 31 billion in the current fiscal and about $ 60 billion by 2010, country's IT industry body Nasscom believes.

News: India's IT market to grow at 21.5%

(PTI 28/01/2007) New Delhi - Driven by huge investments across various sectors, India's domestic IT market is expected to grow at 21.5 per cent this year at Rs 75,891 crore, making it the fastest-growing segment in the Asia-Pacific region.

"A major wave of IT investments has started to take place across banks, financial services institutions, telecom, manufacturing, government, resources, education and other industries," IDC said in its report on "India Domestic IT market Top 10 Predictions for 2007."

"This is probably why India is the fastest-growing country by IT spending in 2006 at 22.4 per cent and is forecast to remain so in 2007 at 21.5 per cent when it reaches Rs 75,891 crore," it said.

In 2007, Indian enterprises would graduate to the second level of 'Dynamic IT infrastructure', where IT infrastructure would be able to effect changes in response to the changing business scenario, it said.

The key technology components that would come to the fore to attain this state would be virtualization, SOA and application integration.

This year will mark the beginning of an aggressive focus from all major vendors to broaden and deepen their coverage of the SMB sector. Vendors will experiment with new models like On-premise hosted applications, hardware on lease and Software as a Service (SaaS).

Major application vendors like SAP, Oracle and Microsoft will expand their SaaS offerings with a broader range of applications and greater scalability, setting the stage for more partners delivering complementary solutions via the SaaS model.

SMBs will contribute about 50 per cent to the enterprise applications market in 2007 in India.

The market spend on system integration services in 2007 is expected to be around $ 872 million, at a growth rate of 19 per cent and will contribute to 21 per cent of the total IT services market, the report said.

Vendors like IBM have already come to market with such offerings and TCS, Wipro and HP are expected to follow suit this year, the report said adding this trend is expected to gain further momentum through the year.

News: Mobile's 'revolutionising' rural India

(UNI 28/01/2007) New Delhi - Mobile communication is revolutionising economic and social life in rural India, spawning a wave of local entrepreneurs and creating greater access to social services, according to a new study.

The study undertaken by the Center for Knowledge Societies (CKS) commissioned by Nokia identifies seven major service sectors including transport, finance and healthcare that could be radically transformed through mobile technologies.

Mobile phone ownership in India is growing rapidly, six million new mobile subscriptions are added each month and one in five Indian’s will own a phone by the end of 2007.

By the end of 2008, three quarters of India ’s population will be covered by a mobile network.

Many of these new ''mobile citizens'' live in poorer and more rural areas with scarce infrastructure and facilities, high illiteracy levels, low PC and internet penetration.

The study looks at how their new mobility could be used to bridge the growing economic and social digital divide between rural and urban areas.

Veli Sundback, Executive Vice President, Corporate Relations and Responsibility, at Nokia, says, ''Mobile phone ownership in India is growing at a phenomenal pace. This new found mobility undoubtedly has the potential to make a major contribution to socio-economic development, and we recognise the responsibility we have to play a key role in achieving this.'' This report builds on the work Nokia has been doing in developing markets like India for several years to understand how we can deliver on our goal of making universal access to technology and the associated benefits a reality.'' Dr Aditya Dev Sood, the report author highlights how many new adopters of mobile phones have found their incomes rise, he explained these findings as the increased productivity made possible through mobile communications. Dr Sood is the Founder and CEO of the Center for Knowledge Societies (CKS). He has doctorates in Anthropology and Sanskrit Philology from the University of Chicago .

News: Tatas bet big on Corus, expansion

(BS 28/01/2007) Mumbai/Kolkata - It’s not just Corus. Tata Steel will have to brace up for one more battle back home — sourcing iron ore for its ambitious expansion plans. But a successful acquisition of the Anglo-Dutch steelmaker will not spoil the company’s domestic expansion plans.

On the contrary, both are complementary, said sources close to the company.

Tata Steel’s greenfield projects — in Orissa, Chhattisgarh and Jharkhand — were significant for Corus, which incurred high cost on raw materials, said sources close to Tata Steel. They added the company would be able to send slabs from these plants to Corus.

“However, this is not the only advantage that Tata Steel is bringing to Corus. Operational management and other synergies are equally significant,” they pointed out.

With Corus in sight, Tata Steel has raised its production target to 100 million tonne till 2015, more than three times its previous target of 30 million tonne. Tata Steel now produces five million tonne of steel at its Jamshedpur plant.

As of now, the company has enough iron ore to feed its plant in Jamshedpur with a capacity of 5 million tonne. However, more iron ore will be required, once the Jamshedpur plant goes for expansion, as well as for the Jharkhand and Orissa plants.

Tata Steel’s greenfield 12 million tonne Jharkhand project is gathering dust since the rehablitation and resettlement package has not been announced by the government, as yet. Without the policy in place, the company would not be allotted land. The Orissa project for which the company has placed orders worth of Rs 1,000 crore is on track. Once the company invests around 25 per cent of its project cost, it would be allotted iron ore mines.

Tata Steel sources indicated that the 10 Chhattisgarh villages had passed resolutions in support of acquisition of land. The company is eyeing a five million tonne capacity plant in the state.

If Tata Steel’s iron ore plans are seeing some hiccups, rival suitor CSN is somewhat in the same boat. Another Brazilian miner CVRD has challenged CSN’s ability to supply cheap iron ore from Brazil to feed the Corus plants in Europe. CSN, however, dismissed the CVRD claim. However, these would have little significance on the acquisition process of Corus which would be put up for the auction beginning on Tuesday. The winner is expected to be declared on Wednesday or Thursday.

The auction will include eight rounds in which both rivals— Tata Steel and CSN— can submit fixed price cash bids. If none of them withdraws, there will be the final and last ninth round which will give chance to the offerors to outbid the other within a ceiling that has already been informed to the panel.

There has to be a difference of at least five pence for each round of the bid between the two suitors. It means, the Corus shareholders could get as much as 600 pence a share if the fight between the two suitors lasts till the ninth round. At the moment, CSN’s 515 pence a share offer is more than Tata Steel’s bid of 500 pence a share.

News: Seven Reliance Fresh stores open in Andhra

(BS 28/01/2007) Vijayawada - Reliance Retail on Sunday launched seven Reliance Fresh pilot stores, four in Vijayawada and three in Guntur, thus making its entry into coastal Andhra Pradesh.

In Reliance style, the first customers who entered the stores inaugurated them. Every customer who made purchases at these stores was presented half-a-kilo of sugar free.

K Venugopal, chief executive, customer operations, Reliance Industries (retail business), said the company was planning to open 25 more Fresh stores in coastal Andhra Pradesh this year as part of its strategy to have a pan-India presence.

He said the stores, beginning with 250 categories of commodities, would increase the number phase-wise to 1,250 categories. Stores in Vijayawada and Guntur would be expanded in two months basing on customer feedback.

Before opening the stores, the Reliance executives had made frequent visits to a number villages around Vijayawada and Guntur and came to an understanding with farmers on supply of vegetables and other products. Reliance would pay market rates to farmers and lift products directly from them. According to their study, 40% of vegetables and fruits harvested by the villagers were being wasted.

With the stores in Vijayawada and Guntur, the number of Reliance Fresh stores has reached 47 in the country. While Hyderabad has 21 stores, there are 12 in Chennai and seven in Jaipur, according to Venugopal.

The stores were opened at Suryaraopet, One Town, Machavaram and Gandhinagar in Vijayawada and at Arundelpet, Brodipet and Kothapet in Guntur. Each store has on an average 2,300 square feet of space.

News: Triumph scouts for franchise partner in India

(BS 28/01/2007) Mumbai - Triumph International (India) Pvt, the Indian arm of Switzerland based Triumph International, an intimate apparel brand, is scouting for a franchise partner to open its flagship stores.

The company's manufactring facility at Chennai will also start commercial production by November this year.

"For flagship stores we will go through a franchise agreement. We are in talks with a few companies but we are yet to find a partner with the right mindset," Triumph General Manager and Country Head (India) Thorsten Allenstein said.

The company had earlier expressed keen interest in opening its own flagship stores but changed the plans due to the requirement of a joint venture (JV) partner for foreign direct investment.

"We are not willing to open flagship stores through a JV partner," Allenstein maintained.

Triumph, present in India since 1998 through a JV, Intimate Fashion, producing private labels and its own brands, is now coming up with its plant at Chennai.

"The facility at Chennai will produce 12 to 15 million pieces per year of our brands mainly for exports with a small portion for domestic sales which would eventually be scaled up," he said.

The new factory will employ close to 5,000 people, majorty of them women, he said, adding a high-end brand too would be launched at a later stage.

News: China, India achieve $20 b trade goal before target

(BL 27/01/2007) Beijing - Bilateral trade between China and India hit an all-time record at $ 24.9 billion last year, exceeding the $ 20 billion goal two years ahead of target, the Chinese Ministry of Commerce announced here on Saturday. The two Asian giants, both among the world's fastest growing economies, signed an agreement in 2005, pledging to raise the bilateral trade volume to $ 20 billion by 2008. According to the ministry, India was China's 10th largest trade partner in 2006, while Indian statistics showed China was India's second largest trade partner after the US. Trade between two neighbours has soared from $ 2.91 billion in 2000 to $18.7 billion in 2005, an average annual rise of 45 per cent. As a symbol of their closer trade ties, the two countries reopened cross-border trade at the Nathu La Pass in Sikkim in July last year, 44 years after the practice was suspended in the wake of a short border war. According to Goldman Sachs, India will overtake the US to become the world's second largest economy, after China, by 2042.

News: Major retail stores can come with India-specific model

(BL 27/01/2007) Davos - The Government will allow the global retail majors such as Metro, Best Buy Co, Gucci and Tupperware Brand Corporation if they evolve India-specific models at the stage of entry as well as in their expansion plans. "The differentiation would have to be both at the stage of entry as well as in their subsequent operations and would necessarily have to be based on unique country characterisation," Ajay Dua, Secretary in the Department of Industrial Policy and Promo tion said in his session with the retail majors. Though the foreign direct investment in retail is not allowed, FDI can come through single-brand and cash and carry models. The US major Walmart has already announced tie-up with the Bharati Group through the cash and carry model besides the franchisee r oute. According to Bharati Group Chief and CII Vice President, Sunil Mittal the first of the Wal Mart-Bharati stores would open within this year. "If the global retailers expects to get a significant portion of the growing retail pie in the developing countries they would have to adopt different business models for each country, Dua said. • Newsmakers of the week: View Slideshow He mentioned that all markets of any significant size have concerns about safeguarding the existing retailers who, in the case of India, number about 15 million and provide employment to approximately 22 million people.

News: Financial inclusion panel may pitch for microfinance NBFCs

(BL 27/01/2007) New Delhi - The Government appointed Committee on Financial Inclusion may recommend the creation of a new category of non-banking finance company (NBFC) for providing micro-finance services to the rural, semi-urban and urban poor. It is of the view that there is a strong case for allowing such microfinance-NBFCs to take deposits, given that the proposed microfinance legislation would allow thrift taking from the poor by non-governmental organisations (NGOs). MF-NBFCs are expected to be larger, with a stronger capital base and more highly regulated than NGOs. Sources said the financial inclusion committee might recommend that MF-NBFCs be allowed to provide savings services with the safeguard that deposit taking by micro-finance institutions (MFIs) is confined only to its borrowers. The committee is also likely to suggest that the Reserve Bank of India should offer provisional registration to these MF-NBFCs for three years with an entry level capital of Rs 25 lakh and then raise it to Rs 2 crore. RBI's NBFC guidelines currently stipulate an entry-level capital of Rs 2 crore. This entry-level requirement is considered to be rather high for starting an MFI. The Government had in June 2006 constituted a committee on financial inclusion, under the chairmanship of Dr C. Rangarajan, Chairman of the Economic Advisory Council to the Prime Minister. This committee was asked to, among other things, suggest measures including institutional changes to be undertaken by the financial sector to implement the proposed strategy of financial inclusion. The committee has firmed up its draft interim recommendations, sources said. Indications are that the committee would recommend that at least 80 per cent of the assets of the MF-NBFC should be in the form of micro-credit loans of up to Rs 50,000. The committee is likely to suggest that MF-NBFCs should be defined as a company that provides thrift, credit, micro-insurance, remittances and other financial services up to a specified amount to the poor in rural, urban and semi-urban areas. Besides recommending that the MF-NBFCs be permitted to take external commercial borrowings (ECBs), the committee may also suggest that these companies be exempted from State Money Lenders' Acts The Securities and Exchange Board of India is likely to be requested to permit venture capital funds and mutual funds to invest in the equity of such MF-NBFCs. The Rangarajan committee may also suggest that these MF-NBFCs be eligible to be business correspondents.

News: Carrefour in talks with Anil

(TNN 27/01/2007) Davos - Anil Ambani could soon be fighting another battle with elder brother Mukesh but this time it will be in the retail market.

Sources say international retailer Carrefour, which is looking at foraying into the Indian market, is in talks with the Anil Dhirubhai Ambani group (ADAG). Sources said that Carrefour, which was earlier in talks with Dubai's Landmark Group on opening up to 200 stores in India, was talking to a number of players, including the Wadias of Bombay Dyeing and Godrej, and a final decision on the Indian partner is expected shortly. Carrefour was earlier in talks with Bharti too, but the Indian company has tied up with Wal-Mart.

An ADAG spokesperson in Delhi did not respond to a query from TOI.

The retail sector is seeing a lot action with big Indian corporate houses - ranging from the Tatas to Mukesh Ambani's Reliance group, and the AV Birla group - foraying into the sector, while the likes of Kishore Biyani already have a strong presence.

ADAG's entry in the sector will be one instance of the brothers fighting in the same space. At the time of the family settlement in 2005, it was decided that power, financial services and telecom would remain ADAG's exclusive domain, while Mukesh's companies will focus on petroleum and petrochem, life sciences among others.

In fact, ADAG had reacted to Reliance Industries' plans for a special economic zone (SEZ) complete with a power plant saying it violated the no-compete clause in the settlement plan. But retail business seems to be a neutral territory and Mukesh Ambani has already lined up a large nationwide roll-out plan and intends to invest Rs 25,000 crore over the next five years. A French newspaper had earlier this week reported that Carrefour was looking at buyouts to mark its presence in India.

News: Global retailers must adapt to India

(TNN 27/01/2007) Davos - India’s message to global retail giants like Wal-Mart, Carrefour and Tesco is loud and clear: Adopt a different business model so that mom-and-pop stores can co-exist with the big brother. The country will not be able to welcome retail majors at the expense of 15 million kirana stores. “If global retailers expect to get a significant portion of the growing retail pie in the developing countries, they will have to adopt different business models for each country,” said Dr Ajay Dua, secretary in the ministry of commerce & industry.

While participating at a discussion on ‘Innovation in Retail’ at the World Economic Forum on Friday, he said differentiation will have to be both at the stage of entry as well as in their subsequent operations. He said the model “will necessarily have to be based on unique country characterisation and no single global model will be adequate.” All markets of any significant size have concerns about safeguarding retailers who, in case of India, number about 15 million and provide employment to 22 million.

“While organised retail formats in all the emerging markets are growing, given the rise in disposable incomes and rapid additions to the middle class, they will have to co-exist with the traditional mom-and-pop stores which have their own place,” he said.

The global retail chains need to adopt an approach which not only takes care of the national laws and regulations, but also build on the strengths of the small retailers, he said. “The small shopkeeper provides huge business opportunities to organised logistics, processing sectors and retail chains, both domestic and foreign, in terms of their becoming suppliers of better quality goods and services and technology to the traditional outlets,” he added.

News: Indian budget hotels to check in with 2,500 rooms

(TNN 26/01/2007) Mumbai - Budget hotels are set to claim a larger share of the Indian hospitality sector pie. Around 2,500 rooms in the price range of Rs 1,200-2,500 per room will open up in the country in the next two years with the railways having finalised bids for 17 locations (out of 20) across India.

Leading hotel group like the Delhi-based Zoom Developers-Royal Orchid Consortium will build hotels at eight locations (Darjeeling, New Jalpaiguri, Jodhpur, Udaipur, Bikaner, Tirupati, Chandigarh and Nagpur); while Mumbai’s G L Hotels and Pan India Paryatan would be involved in constructing hotels in 5 locations (Mumbai, Vijaywada, Secunderabad, Sealdah and Madurai) and Signet Hotels-California-based Cabana Consortium would take up the assignment in 4 locations (Rameswaram, Ooty, Kanyakumari and Jaisalmer).

“We got the land at the right price. We will build budget hotels as part of our expansion plans for the next 2 years,” said Royal Orchid CMD Chender Baljee.

The Indian Railway Catering and Tourism Corporation has awarded land to private real estate and hotel players to develop hotels in 17 places on a `build, operate and transfer’ (BOT) basis and renovate Rail Yatri Niwas located at four places. In the first phase only 20 locations are open, the second phase would see another 80 locations, say officials. The private players constructing budget hotels are being given on a 30-year lease period and the 4 Rail Yatri Niwas buildings are being given for 15 years, said a Zoom official.

The hotels would be operational in the next two years and the hotel companies would invest about Rs 15-20 crore to spruce up the place, say railway officials. The Rail Yatri Niwas in New Delhi is being renovated by the Taj Group with an investment of about Rs 8 crore and Yatri Niwas at Ranchi and Puri have been awarded to Chanakya Hotel Group and Meghalaya Hotel respectively.

Budget hotels the`no-frills, self service concept is fast catching up in the country with over 40 budget hotels likely to come up in the next two years with basics like central a/c, TV, Wi-Fi, direct-dial phone, mini-fridge, writing desk etc. Budget hotels are primarily targeting tier-II cities and some metros as well. Deluxe hotel chains are looking at the budget segment. They include Golden Tulip, Sarovar Group, Radisson chain’s Country Inn & Suites, Accor’s Formule 1, Ginger, Lemon Tree and ITC’s Fortune Park.

News: 'India needs to shore up productivity'

(BS 26/01/2007) Chennai/Bangalore - India is expected to up its contact centre seats by 16 per cent (around 40,000 seats) in 2007, according to a study by Asian Contact Centre Industry Benchmarking Report. The number of seats will then touch 312,500 in 2007 compared to 270,000 seats in 2006.

Along with India, the other Asian countries seeing a double digit growth are Philippines and Thailand. Both are projected to grow around 33 per cent per annum while Singapore and Malaysia are both growing around 32 per cent per annum. China’s growth rate is projected to be 22 per cent in 2007, the report said.

callcentres.net has been conducting the Asian Contact Centre Industry Benchmarking Reports every six months since 1997. The report surveyed 747 contact centres across Asia (India, Philippines, China, Malaysia, Singapore and Thailand). This includes 107 contact centres in India.

The study examines contact centre strategy, operations, human resource management, technology, customer service, channel management, outsourcing, key performance indicators and management challenges.

Sharing details of the study, Catriona Wallace, Managing Director, callcentres.net said: “The Asian contact centre industry is in a period of strong growth and it is exciting to see newer contact centre markets like Malaysia, China and Thailand leading the growth rates.”

“The mature markets like India are likely to see the outsourcing sector driving growth in innovation and technology adoption in the region,” she added.

According to Wallace, since there is no sizeable English-speaking population in China, it may take another five years or more for it to rival India. While in terms of productivity China is way ahead of India, India has to shore up its work quality and productivity. Indian productivity suffers from higher absenteeism and attrition, and shorter working hours.

The average level of agent absenteeism in Asian contact centres is 11 days of sick leave per annum. This is highest in India, at 15 days per annum and lowest in Singapore and Malaysia at eight days per annum. Whereas in China it is 11 days, she pointed out.

The mean rates of pay (annual base wage) for an experienced agent in each country is: India $3,334, China $2,558, Malaysia $5,442, The Philippines $3,348, Thailand $3,656 and Singapore $13,677.

Along with the rising wage costs, challenges faced by the Asian contact centre managers are: human resources -- recruitment and agent turnover; technology -- upgrading existing; customer service -- improving customer satisfaction; sales -- business development; finance -- budget constraints and organisational change -- restructuring.

The growth in the industry is also reflected in strong technology purchasing and upgrading plans for Asian contact centres. About 54 per cent of the Asian contact centres plan to purchase new contact centre technology in 2007 and 62 per cent plan to upgrade their existing technology.

In India, the top contact centre technologies to be purchased in 2007 will be Workforce Management, Electronic Records Management Systems, IP telephony and Call Recording systems, she predicted.

A majority of Asian contact centres (56 per cent) are established as customer service centres, 15 per cent are dedicated to outbound sales, 14 per cent to technical support, 12 per cent to inbound sales and 2 per cent to collections.

A majority of Asian organisations’ customer interactions (73 per cent) are handled via the contact centre. This constitutes 62 per cent of contacts handled by phone and 11 per cent handled by email or the web. About 26 per cent of an organisation’s contacts are handled by the branch/retail network or sales force.

The average level of agent turnover in Asia is 22 per cent per annum, with a high of 38 per cent in India and a low of 15 per cent in Thailand.

Of all the agents who left Asian contact centres in 2006, only 38 per cent moved to work in another contact centre. Disturbingly, 62 per cent of agents left the contact centre industry altogether. In Asia, on an average, it costs $1,411 to replace an agent.

News: India set for 10% growth, says Kalam

(BS 26/01/2007) New Delhi - Painting a robust picture of the economy, President APJ Abdul Kalam said in his Republic Day address to the nation today, that India’s Gross Domestic Product is poised to grow at 10 per cent annually, and “enhance the welfare of farmers, workers, professionals and unleash creativity of entrepreneurs, business persons, scientists, engineers and all other constituents of society”.

In the last address of his term, the President emphasised on the need for people from all walks of life to be “guiding forces” and “partners in executing national development programmes”.

Further, Dr Kalam pointed out that the number of people living below poverty line has come down to 22 per cent and literacy rate will soon touch 75 per cent.

The President further stressed upon the country’s improved infrastructure including “affordable” air travel and improvements in Indian Railways.

“Tele-density in the country has gone up to 18 per cent. Mobile telephones are reaching the common man and serving their needs. The one-India plan has made calling across the country easy and affordable,” he said.

He added that “the universities and educational systems should create two cadres of personnel: one, a global cadre of skilled youth with specific knowledge of special skills; two, another global cadre of youth with higher education. These two cadres will be required not only for powering the manufacturing and services sector of India but also for fulfilling the human resource requirements of various countries,” he said.

News: Local ally key to success of global retailers

(BS 26/01/2007) Mumbai - Finding the right local partner and merchandise mix is the key challenge faced by global retailers when they debut in India, according to international retailers.

“Local partner will give you a lot more in terms of expertise in marketing, sourcing and selling. Local partner will be of great help in understanding what product they can sell to Indian partners. If you have strong export base in Brazil, Russia, India and China (BRIC) countries, you can go ahead. But I don’t recommend this,” said Klaus N Hang, editor and publisher, Sportswear International.

Hang said almost all the international brands were waiting to enter the country. Besides restrictions on foreign direct investment (FDI), the process of deciding the right Indian partner and product mix is delaying their plans.

“BRIC countries are the prime target of every international brand. Everyone is jumping at Russia. Obviously, India and China are on their radar, next, due to the sheer size they offer,” said Hang.

For Hang, emerging markets are like global warming, which the present generation was ignoring earlier.

“See, the global warming has already affecting us which we used to ignore, thinking that it will happen only after 50 years. Similarly, international retailers can not ignore India and China which are the biggest markets,” said Hang, who has tied up with Images Multimedia to launch Sportswear International India.

Jeremy Delport Barret, head, international sales, Ansorg GmbH, said local partners will help in expanding business in logistics, finance and stores. Indian market may help Ansorg double its turnover this year, said Jeremy.

In fact, Jeremy is more bullish on India than China. “We are very optimistic on Indian market. Here everybody is talking of expansion in a big way. In UK, everybody is planning of 10 shops, but in India, people are talking of opening 100 shops. Nowhere this kind of opportunity exists,” he said.

Jeremy knows India’s potential better as his company has been supplying light fitting to big retailers like Pantaloon and Shoppers Stop, since last four years.

For Thorsten Allenstein, general manager, Triumph International, a lingeriewear manufacturer, cap on FDI is hindering their growth apart from red tapism.

“It took us one year to set up a factory here, whereas in China we opened a store in less than one and a half months. If FDI comes here everything including supply chain, prices, quality, cold storage will be streamlined. This restriction is preventing consumers from getting right merchandise and prices,” he said.

On the notion of international retailers destroying local mom- and-pop stores, Allenstein said, “Those stores which have found their niche will definitely survive. It is only those who don’t have proper strategy will sink.”

News: Provogue to set up 6 malls at Rs 1,500 cr

(BS 26/01/2007) Mumbai - Provogue India, through its joint venture Prozone Liberty, will set up six malls in the country. The joint venture will invest a total of Rs 1,500 crore (Rs 250 crore apiece) in these malls.

The JV has already finalised locations in Aurangabad, Mysore, Indore, Jaipur and Hyderabad. The malls will have a whole range of retail formats including hypermarkets, speciality stores, supermarkets, multiplexes, book and music stores, exclusive brand outlets, said Provogue Managing Director Nikhil Chaturvedi.

The malls will bear the name of Prozone and the joint venture will follow a lease model while letting out property in malls.

Stepping up discount retailing operations, Provogue will set up six stores, to be called Promart, by the end of this fiscal. The company plans to take this number to 20 by 2009, said Chaturvedi.

The stores will sell as many as 70 brands, both domestic and international, in womenswear, kidswear, and menswear, at a discount. The company will focus on B and C cities and each store will have a space of 50,000 sqft. The first store will come up in Ahmedabad and the company is scouting for properties in Pune, Jaipur, Kolhapur, Nasik, Chaturvedi said.

On the revenue model, he said it would depend on location to location and a mix of fixed rent and revenues. “It will be a distribution medium for brands. Internationally, discount retailing is quite popular and in India also, it is catching up very fast. It will greatly help retailers whose cash is always blocked in unsold inventory. Brands need this and there is a huge opportunity for us. We will invest in the infrastructure and the brands will take care of fixtures,” he said.

As a precedent to its foray into malls and discount retailing, Provogue had entered into a joint venture with UK-based Liberty International called Prozone Liberty through its subsidiary Prozone.

Liberty had invested Rs 202 crore in the venture and owns 25 per cent in the joint venture. Liberty runs one of the largest shopping centres in the United Kingdom.

Provogue also raised Rs 146.25 crore by placing preference shares with six investors at Rs 450 per share. New Vernon, Blackstone, Fidelity, Genesis Capital, Artis Capital and Liberty International bought 32.50 lakh shares of Provogue.

“We will leverage on the Rs 350 crore we raised through private equity and JV,” he said. On the company’s growth strategy, Chaturvedi said, “Now we have a portfolio of brands. We are investing in malls with pure retail play. Provogue will evolve into a consumer-focused retail company,” he said.

News: Savile Row bets big on India

(BS 26/01/2007) Mumbai - UK-based premium menswear brand Savile Row has high expectations from the Indian market. “In next 3-4 years India would be our second biggest market and we expect it to be the leading market in next 8-10 years,” Jeffrey Doltis, managing director, The Savile Row Company, told Business Standard.

Doltis stressed that Savile Row would become an integral part of the Indian high street and that the country has the potential of becoming a global fashion destination.

The UK-based menswear brand entered India in 2005 through a licencee agreement with Forbes Gokak. “Currently Savile Row has 30 stores in India and we plan to open 15 stores this year. The company intends to introduce luxury wear made-to-order suitings and shirting under the luxury brand 40 Savile Row. In the US and the UK the trend is towards luxury tailoring and we see a good growth potential in India too”, said Doltis.

Savile Row would be launching three flagship stores in India that would offer luxury made to order facilities. The company would also introducing ladies wear under the Savile Row brand to tap the growing branded women’s wear segment.

Doltis said that the domestic and international companies have recognised India as one of the growing luxury markets.

On asked about the company’s hopes of India becoming the next fashion capital, Doltis said “India with its rich culture and high standard of education is an exciting fashion market for the future. India is more vibrant as the market offers exquisite materials, creative ideas and scope to experiment with bright colours and local artisans who could define future fashion trends.”

Forbes Gokak, The Savile Row’s India partner has identified fashion students from Mumbai and would be grooming them to offer design inputs for the company’s merchandise.

The UK-based Savile Row operates in 22 countries and this year will be entering the Singapore and Dubai markets.

News: 'Indian economy grew 9% in 2006'

(HT 26/01/2007) New Delhi - The IMF has upgraded its estimate for India’s GDP growth in 2006 to nine per cent, its Executive Board announced on Wednesday. This is one percentage point higher than the estimate it gave in the World Economic Outlook last year.

Charles Kramer, head of the IMF’s Asia and Pacific department, said there was stronger-than-expected real GDP growth for the July-September quarter. The growth was largely across the board, but particularly strong in terms of consumer spending and private investment.

The IMF said that with the new year, the Indian economy still had four major constraints.

The first was the threat of overheating given rising inflation and the credit boom. “The RBI is addressing the issue,” said the department’s deputy direct, Wendy Tseng. However, she said, “a moderation of growth would not be unwelcome” as it would allow India to grow in the medium-term.

Second, though government finances were the best they had been in a decade, the budget deficit remained high. The IMF said the deficit could actually fall below the ceiling set by law.

Third, the country still needed more financial market reform to help develop infrastructure and develop its “embryonic” corporate debt market.

Finally, there were a number of structural reforms that needed to be pursued to ensure India could keep up its growth levels and create jobs. These included infrastructure, trade liberalisation, subsidy targeting and tax reform.

“Overall, we are optimistic about India’s prospects,” said Tseng.

News: Brand India makes a mark on global car market

(HT 26/01/2007) New Delhi - The 'Made-in-India' brand has made significant inroads in the global car marquee. Multinational car manufacturers are using their Indian facilities to cater to the international market.

The growing presence of Indian cars worldwide is clearly visible from the fact that 1,48,781 units were exported in the first nine months (April to December) of the current financial year, a 13.97 per cent increase over the corresponding period in 2005, according to the latest data released by Society of Indian Automobile Manufacturers (SIAM).

Leading the pack is Hyundai Motors India Ltd the Indian arm of the South Korean conglomerate, which exported 87,819 units between April and December 2006, a growth of 14.68 per cent over the 76,571 units sold in the same period during 2005.

Hyundai has announced plans to use its Chennai factory to meet the demand for Santro world-wide. The company is setting up a new facility close to its existing plant to raise its total capacity to 6 lakh units annually. Hyundai hopes to export nearly half of them in coming years.

Curiously domestic industry leader Maruti Udyog Ltd has seen a drop in its overseas market to 23,967 units in the nine months, compared to 25,755 units in the last financial year's corresponding period. But that has not deterred it from drawing up equally ambitious plans to be a global player.

"We plan to export 2.5 lakh cars by 2010. A car targeted at the European market will be unveiled by 2008-09 and we hope to export 1 lakh units,” Maruti managing director Jagdish Khattar stated while unveiling Swift diesel this week.

Ford India Pvt Ltd does not have a big domestic presence. It still exported 20,894 units in April-December 2006, a growth of 86.83 per cent over 11,183 units in the same period in 2005.

Tata Motors plans to be a major player overseas, however, suffered a setback with the company selling 11,517 units in nine months of the current financial year, a drop from 12,891 units in April-December 2005.

Russian President Vladimir Putin told captains of industry on Thursday that India Inc needs to take advantage of an increasingly globalised market economy in Russia by exporting “non-traditional” goods, which included cars.

“Russians are not certain whether India can supply non-traditional goods. I urge you to come to the market and prove that Indian goods are second to none," said Putin.

He added that trade in automobiles between the two countries could give a major thrust to bilateral economic cooperation.

News: Reliance to start Rs 8000 cr retail network in NCR from Monday

(HT 26/01/2007) New Delhi - Reliance Retail, a subsidiary of Mukesh Ambani-controlled Reliance Industries Limited (RIL), will map its footprint in the National Capital Region (NCR) by launching nine stores across various satellite towns in the region next week.

The convenience stores, branded under the Reliance Fresh banner, would offer a host of products, including fresh fruits and vegetables and will come up in Ghaziabad, Faridabad, Gurgaon and Noida.

The first store is expected to be inaugurated in Noida on Monday.

When contacted, a company spokesman refused to comment. Sources in the group, however, said that the average size of these stores would be around 2,500 square feet.

The company plans to open 600 such stores in the NCR including Delhi over the next two-and-a-half years. The stores in Delhi are expected to be rolled out by February as the company is expecting an impending approval of the revised Master Plan for Delhi.

Reliance sources said that during the first phase, the company plans to set up about 30 stores in Delhi in addition to the nine stores in the satellite towns of NCR set to be launched next week.

The roll-out plan in Delhi and NCR, which includes hypermarkets and supermarkets apart from neighbourhood convenience stores, will involve an estimated investment of Rs 8,000 crore spread across about 50 million square feet.

Reliance Retail’s roll-out, which began from Hyderabad in September, has since touched Jaipur and Chennai. The company's larger plan involves a total investment of Rs 25,000 crore over a three-year period.

RIL recently acquired about 5 lakh square feet of commercial space spread over seven locations in Delhi involving more than Rs 1,000 crore in a highly competitive auction of properties belonging to the Delhi Development Authority (DDA).

India has emerged as the most attractive destination for mass merchant and food retailers. AT Kearney's Global Retail Development Index (GRDI), which ranks 30 emerging countries based on a set of 25 variables including economic and political risk, retail market attractiveness and retail saturation levels, has retained India's position at the top for the second year.

Almost all top Indian business conglomerations have firmed up retail plans and global retail giants are also set to enter the fray. US giant Wal-Mart has entered into a strategic alliance with the Bharti group and is expected to roll out its roadmap shortly.

News: Deal clinched on use of Russian rupee fund

(TT 26/01/2007) New Delhi - India has agreed to Russia using the Rs 4,500-crore rupee credit fund in joint ventures in India. On the cards are a project to develop a medium-sized transport aircraft and one to produce 40,000 tonnes a year of titanium dioxide in Orissa.

Prime Minister Manmohan Singh told journalists after his meeting with Russian President Vladimir Putin, “We have agreed to use these resources for the multi-role transport aircraft and titanium dioxide projects.”

The fund, set up in 1993 to liquidate India’s debt to the former Soviet Union, has, so far, not been used for investments in India.

Russia’s attempts to use the fund to invest in IISCO Steel Plant and the Kudamkulam nuclear plant had been thwarted by the Indian government, which preferred purchases of Indian goods and services with the money.

However, the fund will now be used for the titanium dioxide project in Orissa and to develop the multi-role transport aircraft in a collaboration between Hindustan Aeronautics Limited (HAL) and two Russian aviation firms.

Russia will buy three-fourth of the titanium dioxide, which imparts brightness to products such as paints, sunscreen and chocolate wrappers. The joint venture will be between Tekhnokhimholding from St Petersburg and Kerala’s Minerals & Metals Ltd.

The aircraft project is a $700-million joint venture between HAL and Russian aviation companies Ilyushin and Irkut Corporation. The parties will design, manufacture and market the multi-role transport aircraft.

HAL has pegged the demand for the aircraft at 200 in India and Russia. The aircraft can be used for military operations as well as for cargo handling; it can also be turned into a 100-seater passenger aircraft.

News: India is world’s number two in intangible value

(DNA 26/01/2007) Mumbai - I can make a whole lot more money skillfully managing intangible assets than managing tangible assets —Warren Buffet, CEO Berkshire Hathaway.

It’s a wonder that Warren Buffet isn’t managing India Inc. A recent global survey from Brand Finance, which specialises in brand valuation and intangible asset valuation, reveals that India notches the second highest proportion of intangible value. This partly reflects the dominance of the software sector in the Indian stock market. Switzerland leads the pack in the ‘Global Intangible Tracker 2006’ study which covers 5000-plus companies quoted in 25 countries over five years. The headliner: David Haigh, chief executive of Brand Finance says we could easily overtake the leader country over a ten-year period.

Intangibles are not seen and hence often not appreciated. The surveyed companies had a total Enterprise Value of $36.2 trillion end-2005. But know this, 62% of the value of the world’s quoted companies is now intangible. Advertising is the most intangible sector globally, with all of its value being intangible, and sectors with very high proportions of intangible asset value are media (91% intangible value), pharmaceuticals (89%), reveals the study.

Our drivers of intangible power

It’s not Scotch mist or airy fairy. A panoply of categories and brands is firing India’s intangible-value growth. Says Unni Krishnan, managing director, Brand Finance India: Whilst diversified Indian umbrella brands like Tata, Godrej and Reliance make significant contributions, the rise of sectoral specialists cannot be overlooked. From ICICI in banking and financial services to Jet Airways in airlines, Wipro in IT Services and L&T in construction and engineering, Indian brands are poised to make their mark on the global stage. Even smaller companies like a Ritu Kumar in fashion or PNC in Bollywood are making rapid strides in building brand and IP value.

Haigh lists the main intangible asset categories for India as marketing, artistic, technological, customer and contractual. `` All these areas have powered India to its high position. However in absolute terms, areas like IT/ Telecoms/ Software; Service/ Outsourcing; Film/ Media and Medical/ Pharmaceutical are likely to create the biggest gains over the next 10 years.’’

His explanation on each:

Marketing: Companies like Reliance, Hutch, Bharti, Tata and Godrej have strong Indian brands which have generated significant brand value in the Indian market. Most are not well known outside India but this will change organically as Indian companies continue to expand abroad.

The larger, more sophisticated Indian companies are buying brands and marketing intangibles as well as creating home-grown ones. For example, Tata bought Typhoo tea in the UK and Godrej bought Erasmic bodycare products and others. The main difference this will have is that accounting standards require that acquired intangibles are capitalised in balance sheets, so the number and value of disclosed intangible assets will increase.

Artistic: Companies in the film and recorded rights industry create this type of intangible asset. The accounting standard-setters had Hollywood in mind when thinking of this because Disney and other major Hollywood studies generate huge intangible values from their film and artistic rights. There are also huge merchandising rights associated with them. The same value creation opportunity is clearly attached to Bollywood.

Technological: Companies like Ranbaxy have already created huge value in the area of patents and know-how. It is already the largest supplier of prescription drugs in the US market as measured by volume. But volume lags value because most of its products are off-patent generics or contract-manufactured. Ranbaxy has a strategy of creating original pharmaceutical molecules and has thousands of trained pharmacists, engineers and technical people in India to achieve this.

Customer: Companies like WIPRO in the outsourcing business with customers in the developed world have created huge customer relationships which are intangible assets. These will create a long stream of revenue into the future as they are based on intelligent, low-cost, English-speaking service which India is ideally equipped to provide.

Contractual: Companies like Mittal Steel have massive contracts for raw materials and supply of finished steel. These often have huge embedded value. One other intangible asset in this area is ‘assembled workforce’. In the case of India the quality of assembled workforce is one of the most powerful assets for the future. At a national level this is perhaps the most important intangible asset as many of the others come from this source.

News: Essar Group to exit from Indian bourses

(DNA 26/01/2007) Mumbai - The Ruia brothers, promoters of Essar Group, have decided to completely exit from the Indian bourses.

They are delisting the last of their listed companies - Essar Oil and Essar Steel.

The cost of the acquisition of shares will be in excess of Rs 2,000 crore, a back-of-the-envelope calculation showed.

This is small change for the Ruias, who are expected to get around Rs 25,000 to Rs 30,000 crore when Hutch Essar, in which they own 33%, is sold to the highest bidder.

The holding companies that control and own the two Indian entities are based out of Mauritius, the tax haven located in the Indian Ocean.

Analysts said the Ruias are perhaps replicating the strategy adopted by Anil Agarwal’s London-listed Vedanta Holdings, which owns and controls Sterlite Industries, Hindustan Zinc and Balco.

Essar Steel and Essar Oil will seek approval from their boards for delisting on January 29 and 30, respectively.

What’s on offer for investors?

Vishal Chhabria

The new Sebi delisting guidelines suggest the methods for calculating the minimum price. The first of which is to arrive at a fair value (to be determined by an accredited rating agency) plus a 25% premium.

The second method is to arrive at the ‘minimum price’ per share that the Essar group will have to offer its shareholders. It is based on the average of weekly high and low prices for the preceding 26 weeks, or the preceding 2 weeks (based on thirty days prior to the announcement of the offer), plus a 25% premium on each of the two average prices. Here, the higher of the two averages (26 weeks or 2 weeks) will be the minimum price. Under the second method, the price works out to Rs 56.72 in the case of Essar Steel and Rs 73.44 in the case of Essar Oil (inclusive of the 25% premium).

But, if the price based on the first method is higher than the price arrived at by the second method, then the higher (of the two) will be taken as the ‘minimum price’ to be offered. Lastly, the actual price offered could be much higher, if the buyer, in this case the Essar, decides to offer more.

News: Indian industrial growth at decade-high in Nov

(BL 26/01/2007) New Delhi - Industrial growth across sectors hit a decade's high at 14.4 per cent during November 2006, an official news release said. For the first eight months in the current financial year ending November 2006, the industrial growth has been reported to be 10.6 per cent as against 8.3 per cent in the relative period in 2005-06. As per the Quick Estimates of Industrial Production released by the Central Statistical Organisation, the manufacturing sector clocked a 15.7 per cent year-on-year growth in November 2006. The mining and quarrying sector reported a growth of 7 per cent, while the electricity sector has registered a growth of 8.7 per cent. The industry sub-categories performance in November 2006 include the basic metal and alloy industries (25.4 per cent), rubber, plastic, petroleum and coal products (23.2 per cent), transport equipment and parts (21.8 per cent), other manufacturing industries (19.8 per cent), cotton textiles (18.3 per cent), wool, silk and man-made fibre textiles (18.2 per cent), leather and leather and fur products (17.7 per cent), non-metallic mineral products (17.7 per cent), machinery and equipment other than transport equipment (17.3 per cent), textile products (including wearing apparel) (16 per cent) and paper & paper products and printing, publishing & allied industries (15.6 per cent). Among the use-base economic sub-groups, capital goods registered a growth of 25.3 per cent during November 2006. The intermediate goods have recorded a growth of 16.7 per cent.

News: 'Made in India' mobile soon

(BL 26/01/2007) Bangalore - Finally! A mobile that's made in India. Bangalore-based Digibee Microsystems (Digibee) is all set to take this pioneering step in the next few weeks. Announcing the investment of $8.5 million (about Rs 38 crore) by Clearstone Venture Partners and SIDBI in the firm, Vijay Balakrishnan, Vice-President of Marketing, Digibee, said the amount would be used to fund the company's first phase of operations. It will tie up with the top five mobile operators in the country, who have between them around 115 million subscribers, and begin the process of rolling out handsets. The investment will be utilised to obtain licences, IPRs (intellectual property rights) and in strategic deals with the component manufacturing vendors. "The `handset' arena was one area which has not seen much of an Indian presence. We are certain that with Digibee's entry this is going to change and we will see more Indian handset products and solutions in the global market," said Ajay Kapur, CEO of SVCL (SIDBI Venture Capital Ltd). Digibee plans to offer feature-rich handsets to the Indian market, but is ready with low-end phones, too. Details of the price range are not given. The company has developed its own reference design (Mobile Platform Solutions which includea system on a chip and handset software framework) for both 2G and 3G. Customisation From basic mono GSM and CDMA phones to advanced 3G handsets, the company's products will be localised and specifically customised for regional requirements. The various customisations include content modification, user interface customisation, language localisation & several embedded applications for multiple regions and market segments.

News: Nitesh Estates to bring Ritz-Carlton to India

(DNA 26/01/2007) Mumbai - In a market where most of the real estate firms are exploring the bottom and mid-segments of the hospitality pyramid, Bangalore-based Nitesh Estates has its eyes set on the top-end. Starting with Bangalore, the company plans to set up at least five high-end luxury properties across key cities.

Speaking exclusively to DNA Money, Nitesh Shetty, managing director of the company, said, "We are in the final stage of negotiations to acquire real estate for our hotel projects. All the new hotels will be in the high-end five-star luxury category. We are already in discussions with operators of the world's top three hotel brands for a management contract. All I can say at this stage is that we will positively be introducing one of them through our flagship Bangalore hotel."

Going by market buzz, Nitesh Estates is close to or has already signed a management agreement to set up the first Ritz-Carlton hotel in the country. However, when asked, Shetty neither denied nor confirmed the development citing confidentiality clause as a reason. "We should be in a position to confirm anything on this in another 2-3 weeks," he said. To be located in central business districts, the hotels would be set up in the National Capital Region, Chennai, Kolkata and Pune besides the already-planned project on a 3-acre plot on the Residency Road in the heart of Bangalore.

The nature of investment, size and branding of these hotels will depend on the availability of land and primarily on the international luxury brand that will manage the hotels. The total cost of the 250-room hi-end luxury hotel in Bangalore, for example, is pegged at Rs 450 crore ($100 million) and will be positioned to redefine hi-end luxury hotel experience in the country.

In line with its positioning, the promoters have set aside over 20,000 sq ft to create retail space housing some of the most premium global luxury brands. The hotel will also feature a spa, which would be managed by a leading British spa operator. The funding will be through a mix of debt and equity, said Shetty. In fact, the company has already instituted a special purpose vehicle for the Bangalore hotel wherein the US-based Citigroup is pumping in the bulk of the equity proportion.

"Around 35-40% of the Rs 450 crore project cost will be through debt. Citigroup will finance the majority of the equity component and the balance will come from Nitesh Estates," said Shetty. Industry sources say Citigroup has already committed $30 million as the first tranche of investment in the SPV.

News: Escorts to raise $100 mn

(BL 26/01/2007) New Delhi - Escorts Ltd on Thursday announced that it would raise $100 million (about Rs 450 crore) through the issue of equity-linked instruments through Qualified Institutional Placement (QIP).

The company said though its debt levels have reduced considerably, it would like to take more aggressive initiatives in reducing interest cost and improving profits, providing capital for growth and introducing new products into the market.

There is also a need for fund balancing the capital investment, the company said. "This enhancement of capital is at an opportune time to gain more momentum in the business, as the capital is required to support its robust plans of sales growth and profit improvement."

While the company has already begun road shows, the shareholders' approval for the issue of the securities to QIBs is likely to be obtained at the annual general meeting on February 24. It is expected that the subscription of capital will happen in early March 2007. The company expects this to result in improved profits through interest cost reduction by more than Rs 20 crore in the current fiscal year.

News: Carrefour plans 'tactical buyouts'

(DNA 26/01/2007) Mumbai - This should be music to the ears of local retailers who want to partner foreign majors. French retail giant Carrefour is seeking "tactical acquisitions" in India and Russia, CEO Jose Luis Duran told French newspaper Le Figaro on Thursday. The comments come just as Duran is winding up his three-day relationship-building tour of India and clearly show that the company is interested in the Indian market despite its break-up with Dubai-based Landmark earlier for an entry here. Duran told the newspaper that after reorganising the international unit, "we can look to new countries like Russia and India. We favour tactical acquisitions and are no longer considering large transactions like the Carrefour-Promodes merger." Does this mean Duran's current visit is meant to scout for "tactical" acquisition targets? According to industry experts, Carrefour may be interested in setting up operations in India but may not jump in at the first available opportunity. "Yes, Duran has met several industry captains and top government functionaries in India during the current visit. But this may really mean nothing - Carrefour CEOs have made three quiet visits to India over the last 12-18 months and have yet not decided whom to partner for India," said an expert. According to industry buzz, Duran may have paid a visit to top honchos at the A V Birla group and Godrej Industries, besides commerce and industry minister Kamal Nath. Despite several attempts, Carrefour India officials could not be reached for comments. Duran's visit could also be for checking out the small and medium food and grocery retailers, many of whom want to sell off businesses at a high premium in a bullish market. Also, the progress of Reliance Retail couldn't have escaped Duran's notice. Reliance, which launched only on November last year, has spread its network to many cities where it operates not only food and veggies stores but also the cash & carry wholesale format. The world's second-largest retailer after Wal-Mart, Carrefour, thrives on four formats: hypermarket, supermarket, hard discount and convenience stores. In the interview, Duran said Carrefour plans to open at least 100 new superstores this year and operating profit for 2006 would meet forecasts.

News: Indian private labels make it big on retail shelves

(BL 26/01/2007) Bangalore - Private labels have finally found their place in the Indian retail space. Once viewed as `inferior products with suspect quality', private labels are now boldly making it into monthly shopping carts of Indian consumers. In fact, Indian retail chains too are getting serious about private labels, which occupy a good 20-40 per cent of their shelf space. And it's not just traditional grocery items such as rice, dal, wheat and sugar that are being offered. Retailers now have their own brands of sauces, jams, detergents, soaps, apparel and homeware. Garments and accessories are offered as non-food private label merchandise, especially in hypermarkets. Retail Chain "In supermarkets, merchandise SKUs (stock keeping units) without a strong brand orientation will be ideal for private label development," feels Gibson Vedamani, CEO, Retailers Association of India. At Subhiksha stores, a South-based retail chain, private label is restricted to grocery and comprises about 20 per cent of its total sales. At Trinethra Super Retail's recently opened hypermarket in Mysore, about 70 per cent of goods ranging from apparel to homeware and home linen are private labels. Pranab Barua, CEO, Trinethra Super Retail, says: "Retailers have now learned that consumers are not giving up on purchasing `stuff', they are instead trying to reduce the cost of it." Branded Products Trinethra Super Retail has launched a staples private label `Quality First' after investing in a mechanised processing unit that cleans, grades and sorts pulses and grains. Subhiksha sources its private label products from manufacturing facilities that supply to well-known national brands and "we prefer to keep costs down by leveraging the strengths of such suppliers," says its President- Marketing, Mohit Khattar. Consumer attention With increased interest in private labels, retailers have to fight it out with well-known branded products for consumer attention. Apart from pricing which is crucial, retailers also have to apply the other Ps and Qs of marketing: positioning, promotion and quality. "Therefore, in-store brands can only be successful if backed by high standards of quality, design and performance as well as advertising," says Barua.

News: Tatas, CSN said to differ on final Corus auction rules

(DNA 26/01/2007) Mumbai - The UK Takeover Panel is in final consultations with Tata Steel and Brazilian steelmaker Cia Siderurgica Nacional (CSN) before announcing its final rules for an auction of Corus Group.

The highest bid now stands in the name of CSN at 515 pence a share, and the Takeover Panel has set January 30 as the deadline for the takeover process to end.

A Dow Jones report, quoting sources, said that there were differences between the Tatas and CSN on how the bid should proceed, but observers expect a final decision from the Takeover Panel very soon, perhaps as early as Friday.

One possibility could be to invite sealed bids, with the highest bidder getting to keep the UK steelmaker.

"The Tatas are probably keeping any further increases in their offer (they last bid at 500 pence) till the last minute and waiting for the auction procedure to be published," Roy Montague-Jones, solicitor with Reed Smith Richards Butler LLP, told DNA Money.

Explaining the likely procedure based on previous experience, he said the Takeover Panel usually sets a very tight timetable and keeps control over how much time each company has to send in fresh offers.

It may also indicate the minimum on what that offer can be to prevent "an unholy scramble".

He did not rule out a sealed bid auction in which both Tata and CSN would be asked to give their best offers in a sealed envelope with the highest bid winning the company. "We have not had a situation where the Takeover Panel announces a sealed bid so far, but it is an option," said Montague-Jones, who has worked on similar mergers and acquisitions in the past.

• Industrial powerhouses of India: View Slideshow

A CNBC-TV 18 report quotes Arcelor Mittal CFO Aditya Mittal as saying that January 29 will be a very important date. "That's where the panel comes in and all the bits are pieced together. There will be eight open rounds of bidding and the last round is the final round. Whoever has the highest bid in the ninth round is the winner."

Steel industry analysts are sure that Tata Steel will do its very best to acquire Corus, the world's eighth largest steelmaker, which would enhance their production. "Tata has a goal to increase production and has plans to expand. So I can't see why they wouldn't want to enter Europe," says Ioannis Kallinikos, metal analyst with Metal Bulletin Research. "Both Tata and CSN have synergies, and there are pros and cons for both in taking over Corus, but what will finally be important is who is prepared to pay the higher price," Kallinikos told DNA.

A Financial Times report says that a recent legal dispute over CSN's right to iron-ore supply, which is important to the merged business, could blow their attempts to buy Corus off course, leaving Tata Steel with a clear field. The Financial Times report quoted Brazilian ore producer Cia Vale do Rio Doce as saying that under a 2001 accord with CSN it has the right to any extra supplies from the

Casa de Pedra mine in Brazil. That would undermine CSN's plan to supply iron ore to Corus' mills in Europe after a takeover, the newspaper said.

But CSN denied this. "Should CSN acquire Corus, it will exercise its rights to supply iron ore from its Casa de Pedra mine to all its operations, including those in Europe,'' CSN said in an e-mailed statement. "There is no basis for this story. There is no change to our position or our commitment to acquire Corus.''

News: Wanted - a National Metro Authority of India

(HT 25/01/2007) New Delhi - Stray incidents sometimes have deep symbolism. When a little-known Oriya activist attacked national cricket coach Greg Chappell this week because the Indian team had no player from Orissa, I said it is only a question of time before Bhubaneshwar would want a metro railway. The metro, like a cricket player in the national side, is a status symbol for India's aspiring millions, and also a great utility, as the people of Kolkata and Delhi have discovered. Mumbai has its own metro on the make to supplement its famous suburban rail system that works a miracle everyday for the city's millions.

It is quite clear that urbanisation is a mega trend in India, and with it come some other trappings and aspirations.

Both Bangalore and Hyderabad reported progress on their metro projects last week, but how fast they will move in the future is still an open question. Work on the first "reach" of Bangalore's metro will start in February, and Andhra Pradesh's cabinet approved a Rs 8,760-crore plan scheduled to begin by June. All that sounds good, but there are plenty of worries and delays ahead for the nation's creaking cities and aspiring masses if policymakers do not get their act together on building metros.

Kolkata's metro, in the good old days when the city was Calcutta, took a long time coming and Delhi's own was not easy to build either. From acquiring land to facing protests from people opposed to it (where are they now?), the two cities did face major problems, apart from issues related to finance, technology and contracts. Not so long ago, traders in Bangalore's CMH Road were crying foul over a plan to run the metro through their zone. There is a familiar pattern in all this, which calls for a solution that must leap ahead of the problems.

Metros are a crying need due to the rapid growth of urbanisation and also because it is a critical infrastructure for exploding service industries such as retail, software and business process outsourcing. Investment bank Goldman Sachs was bullish on India this week as it looked ahead at economic growth prospects, but some of the statistics it offered could be a matter of serious concern in a nation where policy-makers spend too much time and attention on rural issues or airports, power, roads and telecommunications. Goldman says India has 10 of the world's fastest-growing urban areas and estimates that 700 million people will move to cities by 2050. Even if 10 per cent of that number is concentrated in 10 cities, it means each would have 70 lakh citizens or more.

Consider also the fact that on current reckoning, it costs Rs 155 crore to build one km of elevated rail and Rs 330 crore to build the same length underground. Costs like that need efficient management.

Given that metros involve complex issues concerning the central, state and city-level governments, I think it is time for New Delhi's leaders to think ahead. There is a strong case for setting up a National Metro Authority of India on the lines of the National Highway Authority of India, which can standardise (template, to use that fancy new word) issues related to documents, procedures, financial tie-ups, pricing, technology and social challenges so that the learning curve in this is not steep and costs are contained. Investors, bankers and multilateral agencies will extend funds happily if there is an agency that can handle metros with the clarity that NHAI does. In the 21st century, the scarce resource is management talent, and we need more people like E Sreedharan, the man who has helped build the Konkan Railway and the Delhi metro. A body to replicate knowledge across the nation is vital and a federal authority can make that difference.

Why wait till some protestor does something outrageous to demand a metro?

News: Reliance Retail opens 12 stores in Chennai

(BL 25/01/2007) Chennai - Unveiling its first foray into a metro, Reliance Retail Ltd launched 12 Reliance Fresh stores in Chennai on Wednesday. These pilot stores will sell fresh fruits, vegetables, staples, bakery and dairy products, pooja flowers, top-up grocery and meat in select stores. Gunender Kapur, President and Chief Executive, Food Business, Reliance Retail, said that the Reliance Fresh stores would have pan-India presence. Currently, there are 40 Reliance Fresh stores across Hyderabad, Jaipur and Chennai. He said that each store would cater to about 3,000 households in a 2 km `catchment area'. These stores, ranging in size from 1,200 sq ft to 3,500 sq ft, would also offer home-delivery. . Supply chain The stores are backed by a supply chain, which goes right up to the farm gate to procure the produce for which the company has an exemption from the State Government under the Agricultural Produce Marketing Act, said Sanjeev Asthana, President and Chief Executive, Agri and Food Supply Chain, Reliance Retail. He said the company will approach other State governments for similar exemptions which will allow Reliance to source produce directly from farmers. The company also plans rural business hubs to buy and sell produce. Kapur said that in the cities there would be processing and distribution centres which supply to the stores and from where even a small retailer or pushcart vendor can buy fruits and vegetables. The company has ten collection centres for fruits and vegetables operating in Tamil Nadu at present and ten more are planned in the State, he said. The closest centre to Chennai is at Tiruvallur, about 45 km away. The stores would also stock Reliance's own brand of staples, Reliance Select, which will package commodities such as rice, wheat, rava and pulses. This would also be extended to other categories. Kapur said that sales targets for the city would be determined by the response to the pilot stores. He said that Reliance Retail would provide the farmer with farm inputs and services such as insurance, vet care and health care. It would also provide the farmer with direct market access, both locally and globally. Also present at the unveiling of the first store were S.V. Raja Vaidyanathan, Group Head, South, Reliance Industries Ltd and V.V. Naga Prasad, Chief Executive, Customer Operations, Tamil Nadu.

News: Orascom, Altimo eye Hutch Essar

(RTR 25/0/2007) London - Egypt's Orascom Telecom said it had not ruled out joining the bid battle for Hutchison Essar, and Russian rival Altimo also indicated its interest on Wednesday in India's No. 4 mobile operator.

Orascom Chief Financial Officer Aldo Mareuse told Reuters that if the Egyptian company were to join the bid battle, it would probably look to buy Hutchison Essar's parent company, Hutchison Telecommunications International Ltd (HTIL), in which Orascom already owns a 19 per cent stake.

Hong Kong-based ports-to-telecoms conglomerate Hutchison Whampoa owns a controlling stake in HTIL and has been studying bids for HTIL's 67 per cent stake in Hutchison Essar, which has been valued by brokers at up to $20 billion.

Britain's Vodafone Group Plc and Indian groups Reliance Communications, Essar and Hinduja are in the race to buy Hutchison Essar to gain a strong foothold in the world's fastest growing mobile market.

"We could do it (mount a bid) at the Hutch Essar level," Mareuse said in an interview on the sidelines of a telecoms conference. "But it's probably more interesting to do it at the HTIL level. Frankly speaking, it's the same, because 80 percent of HTIL's value is from Hutchison Essar".

"We're keeping all options open," he added. "We could buy it (Hutchison Essar) or sell it (the stake in HTIL). Depends on the price".

India's Essar group owns a third of Hutchison Essar and claims to have the right of first refusal on HTIL's stake in it.

Mareuse said his company, controlled by Egyptian businessman Naguib Sawiris, was in a "very comfortable position", because partner Hutchison Whampoa could not sell its controlling stake in HTIL until end-2007 without offering it first to Orascom.

The Wall Street Journal reported last week that Vodafone and Reliance were considering buying Hutchison Whampoa's majority stake in HTIL to gain control of Hutchison Essar in order to get around the Essar group's refusal to exit the asset.

ALTIMO IN FRAME

The bid battle for Hutchison Essar got another twist as Russia's Altimo, the telecoms arm of Russian conglomerate Alfa group, said it was in talks with the families behind the Essar and Hinduja groups about a role in the bidding.

Altimo Chief Financial Officer Teijo Pankko told Reuters in a separate interview that his group could look to fund either families' bids in return for a minority stake.

"It's (Hutchison Essar) of natural interest. If there is a structure of transaction where we can, let's say, have a role and we are welcome, we'll do it," he said, adding that the group had not carried out due diligence on the business and had no plans to do so.

Pankko said the spiralling valuation of the Indian firm since the bid battle began last month had caused it some discomfort, but Altimo was not prepared to walk away.

"If the business world believes in it, why shouldn't we," he said, adding that the group would not have any problem raising money for a bid.

"For a good opportunity, we're always able to find cash. Many of our businesses are cash-generative like the oil business. Even at Altimo we have very low leverage," he said.

News: 'India cautious on rupee convertibility'

(PTI 25/01/2007) Davos - India has said it would exercise caution in embracing fuller rupee float since the gradual approach towards liberalising the foreign exchange regime has paid in the past.

"We have not been taking risky steps but still the gradual liberalisation in convertibility has been happening," Planning Commission Deputy Chairman Montek Singh Ahluwalia said at the annual WEF meeting here yesterday. The gradual process of reforms has worked quite well in India, he added.

The Reserve Bank of India-appointed Tarapore Committee had, last year, submitted its report on the issue, and, among other things, recommended a five-year time frame (2006-2011) to move toward fuller rupee float in three phases.

Addressing the session on the prospects for the world economy in 2007, Ahluwalia said the developed world has not been debating enough to see how technology has made the world flat with the result that developing countries are getting increased opportunities.

For India, the concerns relate to making economic growth all-inclusive besides improving physical infrastructure. "We are trying to get investments in infrastructure," he said.

News: FM sees consolidation among rural banks

(BL 25/01/2007) New Delhi - The Finance Minister, P Chidambaram said on Thursday that the regional rural banking network would be consolidated and the number of banks would fall to 96 from more than 100 now in five months.

He also said the Government would take steps to revive 40 ailing regional rural banks.

News: ONGC, Rosneft sign energy cooperation pact

(RTR 25/01/2007) New Delhi - Exploration company Oil and Natural Gas Corp. and Russia's Rosneft on Thursday signed a memorandum of understanding for cooperation in the energy sector, an ONGC official told Reuters.

ONGC Videsh and Rosneft are partners in the Sakhalin-1 oilfield, operated by U.S. oil major ExxonMobil and the two firms are also exploring a joint bid to acquire a stake in the Sakhalin-3 field as and when it is auctioned.

News: Mukesh in talks for TV foray

(BS 24/01/2007) Mumbai - Mukesh Ambani is believed to be in talks with Peter Mukerjea, the outgoing chief executive officer of the Star group, to start an entertainment and news channel.

Sources say Ambani may be financing a part of the project in his individual capacity rather than through any of his group companies.

The duo might also rope in Lachlan Murdoch, the estranged son of media tycoon Rupert Murdoch, for possible help and investments. Top executives from media and publishing might also be roped in.

However, an RIL spokesperson declined to comment on Ambani’s foray into TV broadcasting.

Mukerjea admitted meeting Murdoch but denied plans to enter the TV business, saying he would be joining as chairman of INX Global, an executive search firm run by his wife. Mukerjea is contractually bound against joining a competing news channel for six months.

When asked whether he had taken space for the new venture in Mumbai’s Worli area, Mukerjea said the real estate was for the search firm.

This development is the latest in a trend of leading domestic industrial houses entering the TV broadcasting business. For instance, BBC TV is believed to have held talks with both Mukesh Ambani and the Tatas.

Bloomberg TV reportedly approached the Living Media group and Anil Ambani for a possible foray. Anil Ambani, Mukesh’s younger brother, is already in the entertainment business through acquisition of a majority equity stake in Adlabs and content production house Synergy Communications (owned by Siddhartha Basu), which produces Kaun Banega Crorepati 3 for Star TV.

Reuters TV has already tied up with Bennett, Coleman, publishers of Times of India and promoters of TV channel Times NOW.

News: 'Russian trade with India should touch $80 bn by 2015'

(PTI 24/01/2007) Moscow - Seeking expansion of business with India in a variety of new areas including hi-tech, tele-communication and ship building, Russian President Vladimir Putin says bilateral trade should be up to $ 80 billion by 2015 but feels it is for corporate houses to address issues in the hydrocarbon sector.

"..... Somewhere by 2010, we can achieve the level of USD 10 billion worth of turnover and to increase it by 3.4 times and to double it by 2015.This is quite a realistic task to be achieved," he said in an interview.

Putin, who is arriving in New Delhi on Thursday on a two-day visit accompanied by a strong business delegation, said the two governments would achieve the results by putting efforts from both the ends by cutting the red tape and providing initiative to the private sector.

On the crucial issue of India's keenness to involve itself in the promising hydrocarbon project Sakhalin III, he appeared to be non-committal.

".... Now they (India) are talking about the possibility of the scope of production with Japanese partners and partners from other countries. Once again, the scope of possibilities and projects is very rich. Therefore, it is the corporate business which needs to address those issues.And the state is there to provide assistance," he said.

News: India 2050 - Goldman gets more bullish

(HT 24/01/2007) New Delhi - With the current growth rate of over 8 per cent, which is sustainable, India will challenge the global economic order in the next 15 years and by 2050 it will be second largest economy after China overtaking the United States, according to a Goldman Sachs' Economic Research Report on Global Economics released this week.

The report by the world's leading investment banker says India can sustain the growth rate of about 8.4 per cent till 2020 and on an average basis should be 6.9 per cent until 2050.

"The underlying causes for the increase in efficiency of private firms have been acceleration in international trade, financial sector growth, and investments in and adoption of information and communication technology," it says.

"India's current growth rate of around 8 per cent can be increased 10 per cent, if the efficiency level in term of productivity to capital employed is being increased and also the saving rate increased marginally to sustain the investment.

India needs to boost its investment rate by another 16 per cent of the GDP to achieve and sustain a growth rate of 10 per cent," the report says.

In addition, it says that the labour movement from agriculture to industry will fuel the growth by one per cent. "The movement of surplus labour away from low-productivity agriculture to high productivity industry and services contributes about 1 percentage point to annual GDP growth. India is well positioned to reap the benefits of favourable demographics, including an urbanisation bonus over the long term."

Interestingly, the report, citing the example of the Golden Quadrilateral Highway Project, says it will help India to jumpstart its competitiveness, given the fact that dismal infrastructure has inhibited growth. "The effort echoes the US's construction of its national highway system in the 1920s and 1950s, which fuelled commerce and development, and created suburbs," the report says.

However, it warns that India will need continued progress in reducing the fiscal deficit and in enhancing education at all levels. "We also see threats to the growth process from protectionism, supply-side constraints to doing business, and environmental degradation," it says.

Goldman Sachs has revised its estimates from the previous report on BRICS (Brazil, Russia, India and China). India's growth acceleration since 2003 represents a structural increase rather than simply a cyclical upturn, it says.

"Productivity growth is driving the increase, and explains nearly half of the overall growth. We expect productivity growth to continue over the medium terms. We projected India's potential or sustainable growth rates at about 8 per cent until 2020.

The implication is that India's contribution to world growth will be even greater and faster than implied in previous BRICs research," the report says.

News: 'Indian contact centre biz set to grow at 16%'

(BL 24/01/2007) Bangalore - The contact centre industry in India is set to grow by over 40,000 seats this year at 16 per cent, says the 2006 Asian Contact Centre Industry Benchmarking Report announced by callcentres.net, a Sydney-based call and contact centre research and publishing company, here on Tuesday. The report is based on a research on contact centre industries in India, the Philippines, China, Malaysia, Singapore and Thailand. According to the report, the Philippines and Thailand are leading the growth rate (both projected to grow at 33 per cent per annum), while Singapore and Malaysia are growing at 32 per cent each. China's growth rate is projected at 22 per cent. Releasing the report, Dr Catriona Wallace, President, callcentres.net, said, "Keep an eye on China; they are a powerful source, but not yet ready to take on India." Commenting that the Asian contact centre industry is in a period of strong growth, she said that the outsourcing sector is driving growth in innovation and technology adoption in the region. Strong technology purchasing and upgradation plans also mark the growth in the industry. The report suggests that 54 per cent of these centres plan to purchase new contact centre technology this year, while 62 per cent plan to upgrade. Leading contact centre technologies to be purchased this year by Indian centres include workforce management, electronic records management systems, IP telephony and call recording systems. India-specific Giving specific details on Indian contact centres, report says that 74 per cent of the centres service domestically, while the US and the UK markets constitute 22 per cent and 18 per cent of their operation. Seventy three per cent of the Indian contact centres handle outsourcing operations, 8 per cent for business services and media, 7 per cent for banking, finance and insurance, 4 per cent for the IT sector, 3 per cent for telecommunications/utilities and retail/wholesale each, and one per cent each for manufacturing, hospitality/tourism and management, and government, education and healthcare sectors. One of the challenges that the industry faces is managing human resources. In India, the mean attrition rate of full-time agents is 38 per cent and part-time agents 32 per cent. The report says that the major expense in operating contact centres in Asia is labour at 46 per cent of the budget, while technology and telecommunications constitute 23 per cent and 19 per cent, respectively. Annual salary The report states that the mean annual salary for agents is the highest in Singapore at $ 13,667, while in China it is $ 2,558, India $ 3,334, Malaysia $ 5,442, and Thailand $ 3,656. The research was conducted using a combination of telephone and online interviews with 501 contact centre managers representing 747 contact centres across all industry segments in these countries. In India, 107 contact centres were surveyed. The study examines contact centre strategy, operations, HR management, technology, customer service, channel management, outsourcing, key performance indicators and management challenges.

News: Mallya's United Spirits enters China

(PTI 24/01/2007) Mumbai - United Spirits Ltd will set up a subsidiary in China and has already deputed a representative there to study the market, company Chairman Vijay Mallya said here. "China's market potential is good," Mallya said adding that the company's process of setting up a subsidiary there "has already begun". Addressing analysts while declaring his company's financial results for Q3 FY 07, Mallya pointed out that language was a "big barrier" in the Chinese market. The company clocked a profit after tax in Q3 FY 07 at Rs 3.42 bn as against Rs 17.08 crore in the year-ago period. Its net income from operations for this quarter stood at Rs 773 crore against Rs 3.99 bn in the same period last fiscal. "The reason for the huge jump in profits is because of the USD 300 million-acquisition of Shaw Wallace. The integration process of the Shaw Wallace with UB has been successful," he said. On the Whyte and Mackay acquisition, he said, "We are negotiating with owners but we do not wish to overpay and stress ourselves." He refused to divulge any figures for the acquisition citing the confidentiality agreement entered into with Whyte and MacKay. Mallya sees India as an emerging market for Scotch whisky, which India cannot produce, he said. "Without acquisition we would miss a growth opportunity," he said. If the acquisition goes through United Spirits will fund it through its treasury stock, he said.

News: Retail, real estate plan to shop big at IIM placements

(PTI 24/01/2007) New Delhi - After lining up investment plans of over thousands of crores in the booming Indian retail sector, corporates are preparing for the next big step, hiring the 'very precious' talent, true in every sense of the word. Retail biggies like Reliance Retail, Bharti-Wal Mart, Essar, RPG and London-based Tesco are drawing up plans to tap the top Business school campuses, which is likely to make things tough for regular big-time hiring companies belonging to finance, IT and consultancy and is certain to push up hiring costs. "Almost all major retailers, including Reliance Retail and Bharti Wal-Mart, have evinced interest in recruiting from the campus when the placement process starts in March," IIM Indore student placement secretary Shreyan M L said. The increased demand is going to give a big push to the average salary of the graduates. As Shreyan puts it, "these companies have expressed their interest in recruiting large number of graduates and this is going to push the salary offered by as much as 40-50 per cent, since finance and IT sectors would also be vying for the same graduates." And not only are Indian retail companies coming to the campuses, foreign retailers like Tesco are equally bullish on the Indian brains to manage their operations. The London-based retail giant, which is considering to enter the Indian market, has already set eyes on the B-school campuses and has confirmed its participation in the placement process at IIM Calcutta, IIM Bangalore and ISB Hyderabad. The company has also made a presentation at the top-notch Indian Institute of Management, Ahmedabad, and is believed to be gearing up to participate in the recruitment process there as well.

News: Mukesh Ambani to meet Putin personally

(PTI 24/01/2007) New Delhi - Reliance Industries Ltd (RIL) is keen on setting up a mega petrochemical plant in Russia and its top boss Mukesh Ambani may explore possibilities when he meets Russian President Vladimir Putin here Thursday.

Ambani put off his visit to Davos for the World Economic Forum meeting to be part of delegation-level discussions between India and Russia Thursday, industry sources said.

The RIL Chairman may get to meet Putin personally, but company officials did not confirm the meeting.

Reliance is interested in setting up a large petrochem plant in Russia to tap the market in Europe and Central Asia.

The company is looking at either making petrochemicals from natural gas or refinery products. While it is open to taking up development of a gas field for the purpose, the firm may also modernise an existing oil refinery or even set up a new one to make naphtha for the petrochemical unit, they said.

Reliance officials were tight-lipped about Ambani's interest in Russia.

Moscow has 41 oil refineries with a total crude oil processing capacity of 5.44 million barrels a day. However, many refineries are inefficient, ageing, and need upgradation.

Russia's 2005-08 economic development plan focuses on reconstruction and upgrading of refineries so that the refineries can convert a higher level of crude and increase production of high quality light oil products, catalysts and raw material for the petrochemical industry.

Sources, however, said unlike state-run Oil and Natural Gas Corp, Reliance may not be very keen on participating in oil and gas exploration as Russia was going through structural changes and would like the present 'resource nationalisation' sphere to settle down before venturing into it.

Sources said ONGC wants to use Putin's visit to make a case for its participation in Sakhalin-III project in the Far East Russia as also a stake in the Trebs and Titov exploration blocks in Timan Pechora.

In 2003-04, ONGC had formed a consortium with Reliance Industries and Indian Oil Corp (IOC) for buying out majority stake in Sibneft, the fifth largest oil company in Russia, for about $ 15-billion.

ONGC had also involved Russian state-run Rosneft in the acquisition by offering it 26 per cent stake and joint operator-ship but the acquisition could not be completed due to procedural delays on part of the state-run firm.

Since Sibneft, Reliance has not looked at any oil property in Russia.

News: Carrefour chief to scout for allies, may talk to AVB group

(TNN 24/01/2007) New Delhi/Ahmedabad - French retailer Carrefour’s worldwide chairman and CEO, Jose Luis Duran, is visiting India and likely to meet potential partners after partnership talks with the Dubai-based Landmark group for entry into India fell through.

There’s a strong buzz that Mr Duran may get in touch with the A V Birla group to discuss the Indian retail landscape. While sources don’t rule out a possible alliance, the company spokesperson said “there’s no truth in it.’’

Mr Duran met commerce and industry minister Kamal Nath as well as industry secretary Ajay Dua on Monday, presumably to understand the government’s long-term view on FDI in retail. The minister has already announced his intention to allow up to 51% FDI in speciality retail of consumer durables, sports goods and stationery. As of now, Indian laws allow up to 100% FDI in wholesale formats (cash and carry) and 51% in single brand retail.

Like all foreign retailer, Carrefour is pinning its hopes on India to grow the Asian business which accounts for only 8% of its $94 billion global revenues. It has already got a foothold in China where it recently opened its 90th hypermarket.

Meanwhile, Mr Birla is set to announce his first high-profile hire for his retail venture. Former head of Carrefour China, Russel Bermen, is likely to join A V Birla Retail as head, hypermarkets. Talking about A V Birla Retail’s first recruitment for business operations a source said, “Mr Bermen has worked for around 8-9 years in Carrefour, and is known as a hypermarket specialist. His experience in a similar market like China will help the company iron out bottlenecks which most retail start ups face in the initial phase,’’ he said. “The fact that he’s joining as an employee and not as a consultant will ensure his commitment to set targets,’’ he added.

Carrefour, the world’s second largest retailer, thrives on four formats: hypermarket, supermarket, hard discount and convenience store. Of this around 60% of its revenues come from hypermarkets. China, where Mr Russel has spent considerable time, is one of the company’s largest hypermarket operations in that country. After Carrefour China, Mr Bermen briefly headed the largest Chinese retailer Lian Hua.

While Reliance’s retail juggernaut is a multi-vertical, multi-format structure, the A V Birla group is restricting itself to supermarkets and hypermarkets. Supermarket and hypermarket are complex businesses to operate with innumerable suppliers and thousands of SKUs. “The Birlas would rather concentrate on these two formats first,’’ said a source. A typical Carrefour hypermarket, for instance, deals with around 1 lakh stock keeping units (SKUs)

It seems Mr Birla has now expedited head hunting for the head of the supermarket business. Apparently, a senior expat executive who was scheduled to join, didn’t come on board in the last minute. The process has begun once again and Mr Birla is a hurry to recruit a head for the supermarket business as he already has a business in place through the acquisition of South-based grocery chain Trinethra, which has 170 plus stores.

The two business unit heads would report to Sumant Sinha, the CEO designate of AV Birla Retail. According to sources, Mr Kumar Mangalam Birla is likely to launch his retail venture in November for which a leadership team of 30-40 executives, largely expats, is being formed.

News: Confident India bats at Davos, having walked its talk

(HT 23/01/2007) New Delhi - A year after the launch of its "India Everywhere" campaign at the World Economic Forum (WEF), Commerce Minister Kamal Nath will be addressing global business and government leaders again at Davos this week in the backdrop of not only the Swiss alps, but also of new heights reached in the previous year, when there was a consummate execution of the theme by India Inc through a series of big ticket acquisitions in the lucrative American and European markets.

'India is on the world radar as never before, thanks to the current robust economic growth. No investor wants surprises, but (they want) improvements. And that is what we promise to deliver,' the minister said last week while addressing top business delegates at the annual Partnership Summit organised by the Confederation of Indian Industry (CII).

"There could not have been a better time to engage with India", said Nath.

India's economy is expected to grow 9 per cent in the current year, higher than previous expectations. Though doubts remain on the sustainability, almost no one doubts that the growth trajectory is on a high. A string of acquisitions by industrialists once disparaged as protection seekers also puts a new mark on India.

Then major overseas acquisitions by Indian companies last year include that of Jeco Holding AG by Mahindra and Mahindra for $120.45 million, the Ritz-Carlton Hotel by the Tata Group's Indian Hotels for $170 million, Tata Tea's acquisition of a key stake in Energy Brands Inc of USA for $677 million, Dr Reddy's acquisition of Betapharm for $570 million, Suzlon Energy's acquisition of Hansen Transmissions International NV for $565 million, and Ranbaxy Laboratories' acquisition of Terapia for $324 million.

Mittal Steel's merger with Luxembourg's Arcelor technically is not an Indian one because of its incorporation abroad, but Lame Metal, the tycoon who drove it, put India firmly on the global corporate map as he stitched up the world's biggest steel maker through the deal. Tate Steel's ongoing attempt to acquire Anglo-Dutch steel maker Cores Group ply added to the momentum.

Foreign investment inflows into India, including portfolio investment, were estimated to touch about $15 billion by the end of the current fiscal (2006-07), with more overseas firms eyeing good returns from the subcontinent.

Between April-November, equity inflows totalled $7.3 billion, a 117 per cent growth over the same period in the last fiscal at $3.5 billion, registering the fastest growth rate of foreign inflows into the country.

Global research and consultation firm Economist Intelligence Unit (EIU) also backed the optimism. The EIU's fifth annual CEO briefing survey found that nine out of 10 top global executives rated business prospects during the next three years as "good" or "very good", with the dynamism in emerging markets, especially India and China, driving this optimism.

News: FIIs lie low in first 2 weeks of new year

(BL 23/01/2007) Chennai - FIIs have taken a tepid approach towards Indian equity in the first two weeks of January. There have been net FII outflows to the tune of Rs 552 crore between January 1 and January 15. A study of net FII inflows into India from 2001 onwards shows that inflows have always been positive in the January 1-15 period. Even in a year like 2001, when the preceding year saw the great technology-led slide in stock markets, FIIs had taken an optimistic view in the beginning of the following year. The cautious approach being taken by FIIs this time around can be attributed to two factors. The unrelenting bull run in the markets since 2003, which has led the Sensex to appreciate by 388 per cent, and the relatively stretched valuations of the markets could have been the reason behind FIIs slowing down on fresh investments and taking some profits off the table. What is of greater concern is the fact that most of the other major Asian equity markets have had positive net inflows in the same period. The Japanese markets have seen inflows aggregating $ 2,041.3 million. The Bank of Japan's decision not to hike interest rates in a bid to keep economic growth on track seems to have gone down well with FIIs, with the Nikkie Average scaling a nine-month high earlier last week. Even the equity markets in Thailand recorded positive inflows in spite of the bomb blasts that rocked the country on New Year's Eve.

News: Accelerate financial reforms to rev up Indian economy

(BL 23/01/2007) New Delhi - With a heady economic growth of 9 per cent plus in the first half of the current fiscal, expectations about sustaining the trend have mounted; the Government has reassured investors, both domestic and foreign, about its commitment to economic reforms.

Only recently, the Finance Minister, P. Chidambaram, spoke about the United Progressive Alliance Government's intentions on the pending pieces of legislation pertaining to the Pension Fund Regulatory Development Authority (PFRDA) and the amendment to the Banking Regulations Act in the Budget session scheduled next month. The Minister in the Prime Minister's Office (PMO), Prithviraj Chavan, emphasised the same in Mumbai last week.

The Prime Minister, Dr Manmohan Singh, has hinted at more reforms, particularly in the financial sector. Indeed this is imperative, if the flagship schemes of the UPA's National Common Minimum Programme, seeking inclusive growth, are to be implemented and funds found to overhaul the rickety infrastructure and build new ones.

Moody's report

In its annual report on India, released in New York on January 16, Moody's Investors Service cryptically notes: "India's robust economic momentum seems to defy the constraints posed by its inadequate social and physical infrastructure and an extremely inefficient government sector. Coalition politics have recently hindered the implementation of needed reforms on the labour and capital market and the public sector, which could make it hard to sustain progress on fiscal consolidation."

Moody's Vice-President and one of the report's authors, Ms Kristin Lindow, in response to whether the fiscal consolidation targets of the Fiscal Responsibility and Budget Management Act should be relaxed to meet the infrastructure shortfall, said, "Any such easing would signal undue complacency about the government's large debt and debt service burden, potentially exacerbating the overheating economy and spurring higher inflation and interest rates."

The report has drawn attention to the fact that India's domestic credit growth has outpaced nominal GDP growth by a factor of two for the last three years, reflecting demand that, coupled with crude oil import costs, had driven the trade and current account deficits to high levels.

It is also interesting to note that in a special comment on the need for more varied debt markets in India, brought out by Moody's Investors Service and ICRA Limited, economists have made out a forceful case for further financial market reforms to expand the sources and availability of credit for the maintenance of high rates of economic growth, notwithstanding current concerns about excessive credit growth, a overheating economy and inflationary pressures.

Development fallout

They point out that the fallout of India's accelerating economic development is its escalating demand for credit. Indian companies are expanding at home and abroad, and a large and growing middle-class is ready to utilise credit for purchases.

Domestic credit has been growing at about 30 per cent per annum — more than double the rate of growth of nominal GDP — while the bank deposit growth has been about 20 per cent. The high rate of credit growth has resulted in banks finding some of the funds by liquidating assets.

Besides, the current favourable conditions for global liquidity, including a high appetite for emerging market risk, will not persist indefinitely. Setbacks in the equity market — for example, the corrections seen in mid-2006 — could negatively impact the foreign currency convertible bonds (FCCB) markets.

Hence, an alternative would be to prioritise the deepening and broadening of the private sector's access to capital, including debt funding.

However, a constraining factor on the development of the domestic corporate debt market is the government's own financing need, which it implements primarily through local financial institutions. Stating that such an approach potentially prunes the capacity of these institutions for more productive lending, the report says the gross general government debt is equivalent to over 90 per cent of GDP at today's exchange rates.

The government's need to finance its deficit and massive debt-service obligations coupled with its social policy agenda mean restrictions in the local debt market. These include:

Mandating banks to buy government-related securities to fulfil statutory liquidity and cash reserve ratio requirements;

directed lending, wherein all locally incorporated banks must lend 40 per cent of their total advances to `priority sectors' — agriculture, exporters, and small businesses;

restrictions on investment guidelines for insurance companies and pension funds.

Pointing out that the domestic corporate bond market is essentially undeveloped, the report contends that the immature status of debt capital bond market largely reflects the historical crowding-out triggered by the government's gargantuan borrowing needs.

Other factors include robust competition among banks — in the absence of notable banking sector consolidation or a broad-based risk/return ethos — to lend to better-rated companies; this has curbed primary market development.

Here, according to the report, the undeveloped status of debt capital market is at odds with the conservatism of Indian retail investors. Notwithstanding publicity on gains in the equity market, much of the household saving is in gold, bank deposits and government savings scheme.

Given the consistent uptrend in the savings rate — it is now almost 30 per cent of GDP — the key challenge is to deploy these funds to greater effect within the domestic formal financial system.

Strengthen banking

Hence, the report makes a case for strengthening the banking sector. But neither the government nor the regulators has promoted consolidation. But given the very large amounts required for physical infrastructure projects, the government has little option but to go the whole hog in financial sector reforms.

On the demand front, such reforms, the report says, would include easing investment guidelines for pension funds and insurance companies; current rules hobble them from investing in non-governmental paper and this prevents the emergence of a deeper and broader credit culture through the financial system. On the supply side, reforms could facilitate the domestic corporate bond market as a viable alternative to bank lending.

Additional reforms could encourage development of the structured finance market, which would enhance the capacity of banks to lend; a further easing of restrictions on foreign currency borrowings may be necessary, especially to meet the infrastructure sector's long-term funding needs.

The report rightly highlights the dangers of complacency in not going ahead with the financial sector reforms.

News: India to seek stake in Sakhalin fields

(PTI 23/01/2007) New Delhi - India will seek a stake in future Sakhalin oil and gas projects in far-east Russia during the visit of President Vladimir Putin here later this week. With ONGC Videsh Ltd's 20 per cent stake in Sakhalin-I field fetching the country 2.4 million tonnes of crude per annum, India will use the visit of Putin to participate in the country's Republic Day celebrations to push for OVL's participation in Sakhalin-III fields, a top official said. Sakhalin-I and II projects have already been decided and Russia is planning to invite bids in future for Sakhalin-III, IV, V and VI projects in the vast energy-rich region. India, which imports 73 per cent of its crude oil needs, wants an agreement between OVL and Russia's Rosneft for joint bidding for the Sakhalin-3 project. Also on OVL radar are the Trebs and Titov exploration blocks in Timan Pechora region, for which a partnership with Rosneft will be sought. The official said India also wanted OVL to form a 49:51 joint venture with either Rosneft or Russian gas monopoly Gazprom to pursue other oil and gas exploration opportunities in Russia. OVL, the overseas arm of state-run Oil and Natural Gas Corporation, would also seek an agreement with Rosneft for the development of the Vankor field, in which the Russian firm is seeking new partners, and a stake in the Kurmangazy field. Besides, New Delhi wants to convert Sakhalin-I gas into liquefied natural gas (LNG) for shipping it back home. "We want to use the Russian President's visit to push for an agreement on the issue," the official said.

News: Tatas, CSN in a Catch-22 situation

(PTI 23/01/2007) London - The UK Takeover Panel is close to deciding a process to pick the winner in the battle for Anglo-Dutch steel maker Corus and an announcement could be made as early as in a day or two.

The regulator, over the past few days, has been holding discussions with Corus as well as its two suitors -- India's Tata Steel and Brazil's CSN, who have made their submissions to the panel.

But a consensus on the mechanism to resolve the competitive situation has been elusive with both the suitors expressing themselves against certain terms mooted by the Takeover Panel, sources close to the development said.

However, the panel is set to announce its decision whether or not there is agreement on the process between the parties concerned, as it has already been quite some time since Corus received the first bid in October last year.

The bidders are apparently uneasy with certain terms of the process, such as a sealed bidding and a prescribed gap between the two bids in case of an open auction.

Late in December, the Panel had set a deadline of January 30 while ruling that an auction process could be started "shortly before" this date if the competitive situation continues to exit.

The Panel has conveyed to the two suitors that it would start the auction process only if Tata Steel was keen on raising its bid.

Currently, CSN has offered 515 pence a share for Corus, compared to Tata's 500 pence a share

While a CSN spokesperson declined to comment, officials of Tata and the Takeover Panel were not available.

While Tata Steel is believed to be opposing the auction process on the grounds that it could take the valuation much higher, CSN says that it has already placed a higher bid on table and therefore there was no need for an auction.

In the recent past, various media reports have suggested that both Tata Steel and CSN are gearing to hike their respective bids, despite their reservations against it.

While some reports claimed that Tata Steel was close to announcing a new offer, a Brazilian financial daily had said that CSN has convinced its bankers to increase the loan commitments to fund the deal by up to 20 per cent.

However, investment bankers close to the deal say that Tata and CSN are in a catch-22 situation over their Corus bid -- both are eager to clinch the deal and also seriously believe that their current offers more than fairly value the Anglo-Dutch steel maker.

Even if the two suitors decide to go for higher bids, none is in a hurry and would like to wait till the last minute to cut the reaction time for the rival bidder. However, at the same time, none of the two might like to delay any increase in the bid to a point when the regulators step in with their auction process.

Sources close to the target company said that both the bidders have expressed their apprehensions against the auction process as the UK Takeover Panel could ask for a minimum increase of anything between 25 pence and 50 pence between each offer if the battle is resolved under hammer.

If the takeover drama goes the auction route, even one increase of 50 pence in the offer would take the bid to 565 pence a share, which would represent over 10 per cent hike in the price.

Shares of Corus are trading at nearly 550 pence level on expectations for higher bids.

News: 11 Indian retailers readying Rs 2000 crore IPOs

(BS 22/01/2007) Mumbai - As many as 11 retail companies are gearing up to hit the primary market to raise an estimated Rs 2,000 crore in 2007.

According to Prime Database, a market-monitoring firm, the list includes Vishal Retail, Ebony Retail, Great Wholesale Club, Hidesign, Hotspot, Koutons, Landmark, Maheshwari Mega Ventures, Multiple Zones, Radhakrishna Foodland and Talwalkars.

Domestic retail story is so attractive that companies cannot give it a miss. The country’s organised retail is estimated to be $7 billion and this, according to Ernst & Young, is growing at a whopping 400 per cent a year and is expected to touch the $30-billion mark by 2010. The sector contributes 40 per cent to GDP of the country.

In 2006, there were no significant IPOs barring Gitanjali Gems and Kewal Kiran Clothing which raised capital in the first half of the year. Many domestic corporates and global retailers have already announced or are planning sector forays. Year 2005 had witnessed a series of IPOs from the retail sector, with Shoppers Stop, Provogue, Piramyd Retail, Bombay Rayon Fashions and Celebrity Fashions raising money from the market.

PRIME Database Managing Director Prithvi Haldea believes that there is the primary market has still scope for more retail players. “Basically the performance of these IPOs will depend on the market conditions. Otherwise, there is a lot of interest among investors in good stocks. If the issue is good and the price is correct, collecting money is not an issue,” said Haldea.

KSA Technopak Chairman Arvind Singhal says the new entrants need huge money to fund their expansion and growth strategy. “Smaller players now have to compete with bigger players entering the market. When they realise their own funds and bank credit is insufficient for expansion, they go for IPOs. The existing retail companies are giving handsome returns. That would be another driving factor,” Singhal says.

Some analysts, however, caution that the new entrants to the stock market must take care of their performance as well as the accountability on capital to be raised from the market.

“Most of these firms are either family-promoted or venture capital/ private equity funded and in the second and third stages of their growth. Most of them do not focus on the quarterly performance and lack accountability on capital. People with good performance will succeed and other will get struck,” said Pankaj Joshi, assistant vice-president, Singhi & Associates.

Joshi said the performance of a retail company in the stock market without having a well-structured retailing record in place may not attract investors’ intention.

On the other hand, a retail company with a sound production background as well as having venture capital or private equity funding may do wonders on the bourses, he says.

News: Planet Retail brings foreign brands to Kolkata

(BS 22/01/2007) Mumbai - Planet Retail has set a new trend in Kolkata with its all-international brand mall with Body Shop, Marks & Spencer, Guess, Next, Accessorize & Planet Sports occupying 30,000 square feet and three floors on Chowringhee Road, in the heart of Kolkata, in the new commercial complex called Avani Heights.

Arun Bhardwaj, MD of Planet Retail, said, "Each brand has its own unique positioning and exclusive value for the globally travelled Indians."

The 12,278 sq ft M&S store was its eleventh in the country, sharing space with a 6455 sq. ft. Next store, the 3,426 sq ft. Guess jeans outlet and the 4,163 sq ft Planet Sports shop, and the upmarket British brand Accessorize with a 2398 sq. ft. retail zone and the first Body Shop sales counter.

News: $102 billion Indian realty market by 2010, says developer

(BS 22/01/2007) Mumbai - Indian real estate market is expected grow from the current level of $14 billion to $102 billion in the next 10 years, according to Shyam Prasad Reddy, managing director and chief executive officer of Indu Projects Limited.

Taking part in a panel discussion at the Indian School of Business (ISB) recently, Reddy said that reforms initiated by the government, favourable demographics, increasing purchasing power, emergence of customer friendly banks and housing finance companies would fuel the growth rate of the real estate sector in the country.

ISB, in association with Ernst & Young Private Limited, conducted its first real estate and urban studies panel discussion here.

The session, titled 'Real Estate in India - the Research Imperative', is a research initiative by the students of the Real Estate Club and the Wadhwani Centre for Entrepreneurship Development ( WCED) at the ISB.

Explaining the current real estate scenario in the country Reddy said that the shortage of 19.4 million housing units, including 6.7 million units in urban India, and mushrooming of retail projects would provide a huge opportunity for domestic as well as global infrastructure players in the country.

He, however, pointed out that Indian real estate industry was ailed by lack of transparency and credibility, an acute shortage of data and academic research and a lack of uniform laws and regulatory systems.

The other participants in the panel discussion also emphasised the need for more clarity and professionalism, particularly in the light of foreign funds and investors eyeing the Indian real estate market.

Those who took part in the discussions included Ganesh Raj of Ernst & Young, Arvind Pahwa of JP Morgan Asset Management, Nayan Shah of Mayfair Housing, Kishore Gotety of ICICI Venture Funds Management, Suresh Maramreddy of Citigroup Property Investors, KG Krishnamurthy of HDFC Property Ventures, Neel Raheja of K Raheja Corp., Ramesh Sanka of DLF, Luv Shah of Deutsche Bank REOF, Ramani Sastri of Sterling Developers, Mohit Singh of Shipra Group, Balaji Rao of Starwood Capital India and William Kistler of Urban Land Institute ( Europe).

The discussions were geared to fuel the top five list of research areas at the ISB Real Estate Research Lab and define ISB real estate research goals for the year 2007.

News: Birlas get expat retail head

(HT 22/01/2001) Mumbai - The Aditya Birla group has roped in former Carrefour executive Razal Barman to head the hypermarket (discount stores) business.

Barman, who was with a state-run Chinese retail giant after his long stint with Carrefour, is expected to take charge shortly, according to retail industry sources.

Sources said that Barman, the latest to join the ranks of expats who are now moving to Indian retail companies, will be responsible for launching the hypermarket operations.

The Birla group's retail venture, headed by Sumant Sinha, is forming an independent team for the hypermarket operations.

More than 100 executives have already joined, which include the heads for various sections. After making the first round of top-level recruitment from Shoppers' Stop, the Birlas are now hiring people from various rival retail chains.

Darshan Mistry has recently joined the company as vice-president (projects) from Lee Copper International. Another senior executive is tipped to join from retail chain Planet M Vijay Kashyap was the first to join from Shoppers' Stop.

Industry sources said that the Birla's retail venture is now filling up middle-level vacancies.

"Specialists like merchandisers and designers are being hired. More executives are joining from companies like Shoppers' Stop," said an industry source.

The Aditya Birla group has set the ball rolling for the retail play through the takeover of Andhra Pradesh-based Trinethra Super Retail Ltd, which runs a chain of over 100 food and grocery stores in South India.

Retail chains like Reliance Retail, Pantaloon Retail (India) have already recruited many expats. Indians, who had spent long years in the global retail industry, are also making a beeline to participate in the booming retail sector.

News: India wakes up to energy serious conservation

(HT 22/01/2007) New Delhi - Energy hungry India is finally waking up to the need for serious energy conservation as well. Tube light and frost-free refrigerator manufacturers have been given an April 2007 deadline by the Bureau of Energy Efficiency (BEE) to put in place an energy-cum-efficiency rating system for their products. Other home appliances companies are now also moving in the same direction. Consumers will have the option to choose appliances based on their energy consumption levels, which will be clearly specified on their labels.

"Nearly 90 per cent of tubelights and 70 per cent of frost free refrigerators are today compliant with the new 'star rating' system. We will bring similar notifications for direct cooling refrigerators, air conditioners, ceiling fans and motors very soon," says Ajay Mathur, Director General, BEE.

The move is crucial since much of the growth in energy demand today occurs in large Asian countries like China and India. The demand in the region is expected to rise nearly three times between 2003 and 2030, according to the International Energy Outlook 2006.

This week BEE will be launching a campaign to educate consumers on the benefits of the labeling. Products with heavy energy consumption will carry a single star. A five-starred appliance will work out to be 27 per cent more energy efficient for the end user as compared to the one with a single star, according to Mathur.

"We fully support the government's initiative towards implementing the star rating. The rating not only gives the consumer a clear idea of the energy efficiency of the unit but also allows him to budget in the cost saving," says R Zutshi, Samsung's Deputy Managing Director.

Beginning January, Samsung has achieved four-star rating for all the frost-free refrigerators that are being produced at the company's Noida unit.

The difference in power saving between a 3 Star rated and 4 Star rated refrigerators would be an average be 100 electricity units over a period of a year.

"It is a step in the right direction for an energy starved country like India where energy prices only seem to be going up. The industry is totally supportive of the move," says Suresh Khanna, Secretary General of the Consumer Electronics and Television Manufacturers Association (CETMA).

The home appliances industry's only concern so far is that the deadline for each product category to switch to star rating should be reasonable because inventory and technological changes are involved in the whole process.

News: Tatas, CSN set for Corus duel

(TT 22/01/2007) Calcutta - With less than 10 days to go before the deadline for submitting revised bids for Anglo-Dutch steelmaker Corus, the stage seems set for an auction for the world’s eighth largest steel maker.

Neither contender — India’s Tata Steel nor Brazil’s Companhia Siderurgica Nacional (CSN) — has revealed its strategy. As of today, CSN has its nose ahead with a higher price bid (515 pence a share), but the Tatas are expected to come back into the game with a higher bid.

It could go down to the wire with CSN’s top management publicly vowing to acquire Corus at any cost and the Tatas equally determined to fight till the end.

On December 19 last year, the UK Takeover Panel had said an auction process would be initiated if “the competitive situation continues to exist shortly before January 30”.

The auction method — never used till now in UK’s rich, fable-ridden corporate history — will be employed if neither bidder chooses to leave the high-stakes table.

The Takeover Panel has said its executives will determine how the auction process should proceed. The exact auction process will be decided by the panel in consultation with Corus and the two bidders.

The Telegraph learns that if both bidders remain in the fray at the end of deadline, the Tatas and CSN could be given three more days after January 30 to make revised offers as part of the auction process.

John Bennett, head of corporate law at London-based law firm Berwin Leighton Paisner LLP, said, “The parties (Tata and CSN) will then typically be given the opportunity to revise their offers once only on Wednesday, January 31. If neither bidder does so, the auction procedure will end and no new or revised offers may be announced.”

If either bidder announces a revised offer on Wednesday, each bidder will be given a further opportunity to announce a revised offer (once only) on Thursday, February 1. If either bidder announces a revised offer on Thursday, they will each typically be given one last chance to revise their offers on Friday, February 2.

But no new or revised offers will be permitted after that date.

Bennett reckons that the Takeover Panel may lay down a condition that any revised offer “must represent a minimum increase in the consideration offered by the relevant bidder”.

If two Corus management-backed schemes of arrangement remain on the table at the end of the auction procedure, the Corus board will typically recommend one of them and put this to the vote at the scheme meeting.

If this is approved, that will be the end of the matter and there will be no need for a meeting to decide on the second scheme.

“It is also possible for the board of Corus to put both schemes to the vote. But this would only arise in the unlikely event that the board did not make a recommendation because the offers are on exactly the same terms,” said Bennett.

News: Tata Motors sales cross half a million mark in 2006

(UNI 22/01/2007) Mumbai - Tata Motors sales, for the first time, have crossed half a million mark in a calendar year 2006. The company registered total sales of 5,55,065 vehicles (including exports), a growth of 30 per cent over 4,25,901 vehicles sold in 2005. Cumulative sales of commercial vehicles in the domestic market for the calendar year 2006 were 2,83,170 nos, an increase of 43 per cent over 1,98,607 vehicles sold in 2005, said a Tata press release. M&HCV sales stood at 1,65,362 nos, an increase of 35 per cent over 2005. LCV sales were at 1,17,808 numbers, an increase of 55 per cent over 2005. As part of its on-going launch plan, the Tata Ace, India's first mini-truck, is being extended across the country. The company retained its leadership position in the commercial vehicle sector with an overall market share of 64 per cent in 2006, compared to 59 per cent in 2005. The market share for LCVs increased to 66 per cent, compared to 56 per cent in 2005, while M&HCVs registered a 63 per cent market share compared to 62 per cent in 2005. The passenger vehicle business reported total sales of 2,18,355 vehicles in the domestic market in 2006, an increase of 20 per cent over 1,81,593 vehicles over 2005. The Indica had its highest ever yearly sale at 1,38,537 nos, an increase of 30 per cent. The Indigo range registered sales of 35,483 nos, a decline of 8 per cent. The Sumo and Safari accounted for sales of 44,335 nos., the highest in any year since launch in 1998 and registering a growth of 21 per cent against 36,700 numbers in 2005. During the year, the company introduced the Indica V2 Xeta, face lifted Indigo and Indigo Marina range, CNG versions of the Indica and Indigo Marina and a new Safari range. The company's overall market share in passenger vehicles has improved to 16.7 per cent in 2006 from 16.4 per cent in 2005. The market share for the Indica increased to 20 per cent in the compact segment, compared to 19.2 per cent in 2005, while the Indigo family registered a 36.3 per cent market share compared to 31.4 per cent in 2005 in the Entry Midsize segment. The market share for Utility Vehicles increased to 21 per cent in 2006 from 20.1 per cent in 2005. On exports-front, the company said it exported 53,540 vehicles in 2006 as compared to 45,701 vehicles in 2005, an increase of 17 per cent.

News: L&T signs JV pact with Saudi firm

(BL 22/01/2007) Dubai - The Indian construction conglomerate Larsen & Toubro has signed a joint venture (JV) agreement with Saudi Arabia's A A Turki Contracting and Trading Corporation, which will focus on electromechanical construction for the hydrocarbon and power sect or. The new venture will be known as Larsen & Toubro ATCO (Saudia) LLC.

Ziad Ali Al Turki, Executive Vice-President, ATCO, said the joint venture would enable the two companies to benefit significantly from the boom in the oil and gas and infrastructure fields.

L&T has completed many projects in Saudi Arabia. "Saudi Arabia is one of the biggest markets in the GCC, and as a part of its strategic plans, L&T has taken important steps in the region by establishing engineering and project management centres in Abu D habi and Sharjah," L&T said in a release here.

News: Air France invites Indian to join SkyTeam

(BL 22/01/2007) New Delhi - Even as the proposed merger of Air India and Indian gets under way, both are being wooed by global aviation alliances to join.

On Saturday Indian was invited to join the 10-member airline grouping SkyTeam by the President and Chief Operating Officer of Air France, Pierre-Henri Gourgeon. Air France is the largest member of SkyTeam.

At a meeting with the Chairman and Managing Director of Indian, V. Trivedi, Air France proposed that Indian was a "suitable candidate" for joining the alliance as it provided synergy not only within India but also in the Gulf region where the European airline has a strong presence.

The SkyTeam has as its members Air France, KLM, Continental, Northwest and Aeroflot among others that together operate more than 14,600 flights daily to 728 destinations in 149 countries.

The Indian side explained that a decision on the invitation could not be taken immediately not only because of the proposed merger but also as the airline was undergoing a safety audit being done by the International Air Transport Association.

The invitation, interestingly, comes close on the heels of an expected announcement on Air India joining a global airline alliance. Earlier, the airline Chairman and Managing Director, V. Thulasidas, while refusing to name the global aviation alliance that the airline would be joining said that a decision on joining a global alliance was expected at the end 2006.

Air India officials maintain that a final announcement was delayed only due to the Christmas and New Year holidays in Europe, where a final decision on the airlines membership was to be taken.

News: India Inc’s flying, the market bull is on steroids

(DNA 21/01/2007) Mumbai - There are some very encouraging corporate results for the quarter ended December 2006. led by the largest private sector company, Reliance Industries, which stunned analysts with unexpectedly a refined performance (net profit for Q3 up 57% to Rs 2,799 crores), thanks to an incredibly healthy $11. 3/barrel gross refining margin.

Technology firms have shown topline growths around 40% and bottomlines have improved between 41% for Wipro to a slurpy 58% for HCL Technologies.

Ranbaxy showed a 169% jump in PAT to Rs 186 crore, while metals major Sterlite increased its PAT by 227%.

The market moved up in anticipation of good results, with the BSE Sensex hitting an all-time high of 14325 and the NSE Nifty an all-time high of 4140 before profit-booking brought them down to 14182 (up 0.9%) and 4090 (up 0.9%), respectively.

Investors may well ask quo vadis? to Dalal Street.

The longer term trend is up. At some point, there may be a downward correction which would provide a buying opportunity. This could be triggered, perhaps, by the Reserve Bank of India’s monetary policy review on January 31, and which may, perhaps, tighten money to curb rising inflation. More worryingly, it may be triggered if, with approaching elections, politicians succumb to votebank politics.

There is evidence that this is already happening. The government has asked the Indian Bank Association to suggest a quota for loans for minorities. Now a minority cannot be defined regionally, since a person who is in a majority in his own state would be a minority in another. This suggests that this is only based on religion. This is lamentable and an attempt to continue with the British policy of divide and rule. Affirmative action is fine, but on economic considerations. When it is sought to be used on the basis of either religion or caste, it is motivated by the basest of political motives and perpetuates differences.

Despite a booming economy leading to buoyancy in tax collection, the government continues to be short on funds because its propensity to spend far exceeds its ability to earn. This leads to contorted money-raising, or shifting of a part of the expenses away from the budget. A few years ago, in order to boost the spend on education, the government had floated schemes such as the Sarva Shikshan Abhiyan (universal education) and mid-day meal scheme. This burden is now sought to be shifted to the 2% education cess account, so that the fiscal numbers do not seem to have slipped.

The booming economy is helping the government raise resources. The Railways have sold a smallish, well-located plot for Rs 900 crore in Mumbai. Not only does this free up resources, it can also improve productivity. Productivity of both labour (in heavily overmanned government departments and companies) and capital is criminally low in the public sector. Any such transfer to a more efficient use in the private sector would, in itself, drive up growth. The potential for economic gain by the government simply stopping wastage and behaving foolishly is unbelievable and is the actual India story.

MTNL is also likely to similarly gain from unlocking of value in unutilised land, which has appreciated considerably. The government plans to sell more in public sector undertakings such as Power Grid Corporation.

An example of the type of foolish behaviour by government is in the decision to treat spectrum as a scarce resource and to auction it for 3G applications. Instead, spectrum should be treated like the ‘commons’ and priced attractively to encourage its widespread usage.

Another foolish behaviour is to treat all PSUs, even those with minority shareholders, as their personal fiefdoms, and issue diktats that circumscribe management.

Buying on any dip that occurs would be recommended. The Indian bull is on steroids and can only be halted by an Indian politician behaving like an ostrich with peptic ulcers.

Buy on dips

The longer term trend is up. At some point, there may be a downward correction which would provide a buying opportunity

This could be triggered, perhaps, by the RBI’s monetary policy review on January 31

Keep an eye on the impact of votebank politics as polls near

News: ICICI Bank Q3 net up 42%

(BL 21/01/2007) Mumbai - Higher interest income, coupled with a significant rise in fee-based revenue, enabled ICICI Bank to report a 42 per cent growth in net profit in the third quarter.

The largest private sector bank in the country earned an after tax profit of Rs 910 crore for the quarter ended December 31, 2006, against Rs 640 crore in the year-ago period.

The bank appears to be well ahead of its peers in the third quarter performance considering 32 per cent and 40 per cent increase in net profit reported by HDFC Bank and UTI Bank, respectively.

According to Vishakha Mulye, Chief Financial Officer, rise in net interest income (32 per cent) and fee-based revenue (53 per cent ) largely contributed to the profit.

Total income increased to Rs 7,805.24 crore from Rs 4,891.65 crore.

"The bank has posted better than expected results due to a rise in fee income and investment gains. The bank's net interest margin has also gone up to 2.6 per cent due to an improved mix of deposits and assets," said Vishal Goyal, Banking Analyst, Edelweiss Research.

Although the cost of funds has gone up in the last quarter, the bank could pass it on to the customers, Mulye said.

Treasury income has shown a sharp growth of 131 per cent to Rs 310 crore (Rs 134 crore) and a large portion of it has come from selling investments in the BPO company, First Source.

The total deposits registered an increase of 47 per cent while savings deposits alone show an increase of 53 per cent.

Advances have grown by 41 per cent and retail assets increased by 50 per cent to Rs 1,17,914 crore and constituted 68 per cent of advances and 65 per cent of customer assets.

"On the home loans front, investment demand has shown a slowdown (unlike the consumption demand) due to rising real estate prices," she said. In the nine-month period ended December 31, 2006, home loan disbursements were about Rs 21,300 crore.

Provisions and contingencies increased to Rs 890.95 crore (Rs 395.07 crore) which includes provisions of Rs 85.05 crore for potential losses from frauds pertaining to warehouse receipt-based financing product for agricultural credit, the bank said in a press release.

The bank's rural portfolio grew by about 43 per cent on a year-on-year basis.

The net profit rose by 31 per cent to Rs 2,285 crore for the nine-month period ended December 31, 2006, against Rs 1,750 crore a year ago. Its capital adequacy is at 13.37 per cent as on December 31, 2006.

The total assets of the bank's international branches increased to about Rs 40,300 crore (Rs 25,180 crore). It has whollyowned subsidiaries, branches and representative offices in 16 countries, and an offshore banking unit in Mumbai.

The bank added 35 branches and 345 ATMs during the quarter, taking the number of branches and extension counters to 667 and ATMs to 2,681.

News: Sensex, Nifty hit new peaks amid concerns

(PTI 20/01/2007) Mumbai - Robust corporate Q3 earnings boosted the stock markets, which scaled new peaks in the week under review amid consolidation above the 14K level and concerns over high inflation.

The markets also witnessed stock specific action on the back of better-than-expected third quarter financial results announced by some major corporates.

Capital goods, small-cap, mid-cap, refinery and banking sectors hogged the limelight on good buying support, while front-line IT, metal and auto counters came under pressure.

In high volatility during the week, the Bombay Stock Exchange (BSE) 30-share index, Sensex, touched a new trading high of 14,325.92 but later pared the gains and ended the week at 14,182.71, a rise of 126.18 points or 0.90 per cent over last weekend's close of 14,056.53.

The Sensex has gained 710.97 points or 5.28 per cent in the last successive four weeks.

The broader S&P CNX Nifty of the National Stock Exchange (NSE) too set an all-time trading high of 4,140.25 before finishing the week at 4,090.15 from last weekend's close of 4,052.45, netting a gain of 37.70 points or 0.93 per cent.

Petro-chem giant and trend setter RIL was the key attraction among investors on speculation about share split followed by the company's announcement of impressive Q3 performance with a 57 per cent growth in net profit.

Easing crude oil prices, which fell below USD 50 a barrel during trading some time mid-week continued to provide underlying support to the refinery sector.

News: Tata Motors enters Pakistan through Korean subsidiary

(BL 20/01/2007) New Delhi - Tata Motors on Friday announced its entry in Pakistan through its subsidiary Tata Daewoo Commercial Vehicle Co (TDCV) with the commissioning of a new truck and bus assembly unit in Karachi.

The company said in a statement its South Korean venture TDCV has entered into a technical assistance pact with Afzal Motors (Pvt) Ltd of Pakistan to assemble trucks and buses.

The plant has a capacity to produce 3,000 vehicles a year and would assemble heavy-duty trucks of TDCV and buses from the Daewoo Bus Company, South Korea. Afzal Motors has already begun sourcing knocked down sets of TDCV trucks, it said.

In 2007-08, TDCV trucks are expected to garner a market share of about 30 per cent in Pakistan, it said.

The Prime Minister of Pakistan, Shaukat Aziz, formally inaugurated the plant, in the presence of senior management of TDCV and Afzal Motors.

TDCV is a 100 per cent subsidiary of Tata Motors and is the second largest manufacturer of heavy-duty trucks in South Korea, with a modern manufacturing facility at Gunsan.

It is also the largest exporter of heavy-duty trucks from South Korea, accounting for about two-thirds of the export of such vehicles from the country. In 2005-06, TDCV posted a turnover of Rs 1,584 crore, a growth of 34.5 per cent and a profit of Rs 58 crore, a growth of 160 per cent, the statement said.

News: Indian forex reserves up $841 mn

(BL 20/01/2007) Mumbai - The foreign exchange reserves rose by $ 841 million to $ 177.426 billion for the week ended January 12, because of an increase in foreign currency assets.

The forex kitty had seen a dip of $ 666 million in the previous week, which had closed with reserves at $176.585 billion.

According to Reserve Bank of India's weekly statistical supplement, foreign currency assets increased by $ 845 million to $ 170.367 billion for the week ended January 12. Foreign currency assets expressed in dollars include the effect of appreciation or depreciation in non-US currencies (such as euro, sterling and yen) held in reserves.

Treasury officials said foreign exchange supplies to the market during the week as well as the revaluation effect could have contributed to the spurt in the reserves.

The sterling rose to $ 1.9490, buoyed by Bank of England's hike in interest rates. The dollar, however, strengthened against the euro, to $ 1.2906, from $ 1.3007 at the beginning of the week. The European Central Bank decided to keep interest rates untouched during the week in question.

The weekly statistical supplement said that gold and SDRs remained unchanged at $ 6.517 billion and $ 1 million, respectively. The country's reserve position in the IMF fell by $4 million to $541 million.

News: Pantaloon plans jt ventures with European cos for apparels

(BL 20/01/2007) Mumbai - Pantaloon Retail is planning to forge two new joint ventures with European manufacturers in clothing for men and kids this year. These would be separate mass premium brands which the retailer would initially bring into the country with intentions of manufacturing them at a later stage. Speaking to Business Line, Jaydeep Shetty, Head, New Business, Pantaloon Retail, said, ``We intend having two joint ventures with European manufacturers this year in the area of men's and kids clothing. Our target is to reach Rs 100-crore turnover within three years of launching them.'' Having forged ventures with international companies such as Etam and Lee Cooper in the past, Pantaloon is now planning to stretch them into new areas. For instance, the lingerie brand of Etam would get into the ready-to-wear category while Lee Cooper would soon be re-launched in the market and pitted against brands such as Levi's and Pepe in the premium end of the denim market. Pantaloon is already targeting Rs 200-crore turnover from the Lee Cooper brand within the next two years. The retailing company has reduced its manufacturing operations over the years and has been outsourcing its apparel brands over time. Pantaloon Industries, its associate company, which had been engaged in manufacturing, has negligible operations today. ``Today we are focussed on being a retail company and have been outsourcing from other manufacturers and also the overseas markets,'' Shetty said. For instance, in the case of its French lingerie brand, Etam, the retailer would continue to import the brand considering the lack of technology available in making lingerie in the country. Besides, apparel may also get added as new category to be part of its duty-free businesses once it wins more bids for airports. Apart from the usual duty-fee categories such as liquor, chocolates and confectionary, the retailer may bring in apparel as a new category at its Alpha Future stores. ``If we win the bids for the Hyderabad airport, we might bring in apparel,'' says Shetty. Pantaloon is targeting a Rs 500-crore turnover from its duty-free business and is expected to start operations at the Delhi airport within the next few weeks. The retailer is also eyeing the travel business. It has recently tied up with Mumbai-based travel agency Travel Port at its central brand of stores in Pune. ``Presently we are in a supplier-based relationship but we might look at investing into the travel business later,'' says Shetty.

News: Baskin Robbins plans more Indian outlets

(BL 20/01/2007) New Delhi - The Indian arm of premium ice cream retailing chain Baskin Robbins said it had aggressive plans to expand its presence across the country.

"We currently have 200 outlets in India, mostly in major cities. We plan to hike our presence to almost 275 outlets in 2007-08," said Pankaj Chaturvedi, CEO, South Asia. The company plans to focus on tier-II cities such as Jaipur, Jabalpur and Chandigarh among others. Baskin Robbins plans to add 75-100 outlets every year from 2008 onwards.

"We have also tied up with every possible modern food retailer, be it Food Bazaar, FoodWorld or Hyper City," Chaturvedi added.

He reiterated the company's strategy to maintain its premium status. Chaturvedi said, "Our competition is mainly in the quick service restaurant sector, with the likes of Café Coffee Day and Barista. To deal with it we are launching several lounge store formats in the bigger cities, starting with Hyderabad to be followed by Bangalore and Mumbai."

Some of the lounge stores would be company owned, where employees would also be trained for other franchisee outlets.

On marketing initiatives, Chaturvedi said the company would focus on field initiatives such as the recent Baskin Robbins Junior Cricket 7s tournament in keeping with its premium brand status.

Baskin Robbins entered the domestic market in 1993 in a joint venture with the Ghai Group. The company clocked a turnover of around Rs 40 crore from retailing in 2005-06 and expects the amount to go up by 30 per cent. It also garners around 35 per cent of its total revenues from institutional sales through tie-ups with hotels, restaurants and airlines.

News: Baskin Robbins plans more Indian outlets

(BL 20/01/2007) New Delhi - The Indian arm of premium ice cream retailing chain Baskin Robbins said it had aggressive plans to expand its presence across the country.

"We currently have 200 outlets in India, mostly in major cities. We plan to hike our presence to almost 275 outlets in 2007-08," said Pankaj Chaturvedi, CEO, South Asia. The company plans to focus on tier-II cities such as Jaipur, Jabalpur and Chandigarh among others. Baskin Robbins plans to add 75-100 outlets every year from 2008 onwards.

"We have also tied up with every possible modern food retailer, be it Food Bazaar, FoodWorld or Hyper City," Chaturvedi added.

He reiterated the company's strategy to maintain its premium status. Chaturvedi said, "Our competition is mainly in the quick service restaurant sector, with the likes of Café Coffee Day and Barista. To deal with it we are launching several lounge store formats in the bigger cities, starting with Hyderabad to be followed by Bangalore and Mumbai."

Some of the lounge stores would be company owned, where employees would also be trained for other franchisee outlets.

On marketing initiatives, Chaturvedi said the company would focus on field initiatives such as the recent Baskin Robbins Junior Cricket 7s tournament in keeping with its premium brand status.

Baskin Robbins entered the domestic market in 1993 in a joint venture with the Ghai Group. The company clocked a turnover of around Rs 40 crore from retailing in 2005-06 and expects the amount to go up by 30 per cent. It also garners around 35 per cent of its total revenues from institutional sales through tie-ups with hotels, restaurants and airlines.

News: Mukesh's cash & carry format is spreading across cities

(DNA 20/01/2007) Hyderabad - Here's a little-known secret: Mukesh Ambani's Reliance Retail push had actually kicked off much before the official launch on October 30, 2006, in Hyderabad - with the Ranger Farm.

The cash & carry format, which pitches it in direct competition with German major Metro AG, had started operations, with no fanfaronade, at least a month before the launch of its first official format Reliance Fresh.

Ranger Farm wholesells fresh fruits and vegetables to push-cart vendors and other bulk customers. These outlets open at an unearthly 2 a.m. and shut shop at 11 a.m. everyday.

The Ranger Farm in Hyderabad was soon followed by another in Jaipur. Many more are in the pipeline.

At least three more will open later this month in Vijayawada, Guntur and Visakhapatnam where at least a dozen Reliance Fresh stores are slated to kick off early February, a company source said.

"Ranger Farm will be the precursor to Reliance Fresh in every city," the source said. "Neither will we brand the format nor will we publicise it much."

The initial response to the format in Hyderabad has been very encouraging with upwards of 4,000 push cart vendors and small shopkeepers picking up food and vegetables in bulk.

While the group is gearing up to launch specialty stores and hypermarkets over the next two months, Ranger Farm, which is in the same mould as ITC's Choupal Sagar, is already being seen as a success.

Meanwhile, Reliance Fresh which has been in operation for almost three months in Hyderabad now has been witnessing average footfalls of 1,500 per day with a 70% conversion rate, according to K S Venugopal, chief executive, customer operations, Andhra Pradesh.

The chain opened up three more outlets on Friday taking the total to 21 in the city where it is looking to set up a total of 50 Reliance Fresh stores.

News: Insurance FDI move likely in budget session

(DNA 19/01/2007) Kolkata - The government is likely to take a call on increasing the foreign direct investment in insurance from 26% to 49% in the budget session of the Parliament.

The opening up of this sector to FDI promises to unleash a multiplier effect, which is expected to generate a capital inflow of $3-4 billion in 3-4 years. Also, there is a huge potential for direct and indirect employment that the sector will provide. The insurance industry is already said to have employed around 2 million in six years since it was opened up to private players.

Industry sources close to the developments said that the issue of hiking the FDI along with amending the various provisions of the various insurance Acts will be actively considered in the forthcoming session of the Parliament.

Meanwhile, after an hour-long meeting with P Chidambaram on Thursday, Britain’s finance minister Gordon Brown said: “Finance minister P Chidambaram indicated that a bill will be introduced in Parliament next month to increase foreign direct investment limit in insurance to 49% from 26%”.

Sunil Mehta, country head and chief executive, AIG, told DNA Money: “The government should be in a position to take this forward. There are different levels of caps permitted in the financial sector and at times the FII ownership comes to the fore. Artificial caps in the insurance sector are not conducive as this limits the long-term domain capital as against short term FII ownerships”.

A higher cap would also increase the appetite of the foreign insurers and newer ones to make an entry. “When you bring in more capital, there is a multiplier effect which is estimated to generate premiums upto almost 10 times, which again can be reinvested. It is estimated that $3-4 billion would come in the next 3-4 years incase the FDI cap is increased”, Mehta said.

A leading insurer, with a strong Indian partner said: “There is no question of shying away from higher FDI. The protectionist desire is no longer acute with Indian promoters who have deep pockets. The higher the capital, the ability to take risks is higher too”.

The proposed change in FDI cap is part of the comprehensive amendments to insurance laws - The Insurance Act of 1999, LIC Act, 1956 and IRDA Act, 1999.

News: ONGC ties up with Russian firm

(PTI 19/01/2007) New Delhi - State-owned Oil and Natural Gas Corp (ONGC) has signed an agreement with Russian oilfield service provider TGT for sourcing technology to increase production from its matured and ageing oil and gas fields. A memorandum of understanding (MoU) was signed by ONGC Director (Exploration) D K Pande and TGT Managing Director Roustam Khamitov on the sidelines of Petrotech conference. "The agreement aims to put the ageing fields back on production and also arrest decline from matured fields with TGT's state-of-the art enhanced oil recovery (EOR) and improved oil recovery (IOR) technology. The technology, as assured, would enhance oil production from old and ageing fields and tight reservoirs," Pande said. One of the oilfields in Cauvery, Krishna Godavari or Cambay basins would be chosen to do a pilot project this year. "In the current oil prices scenario the two most important activities for any oil company in development and production front are sustainable production from ageing fields and enhancement of recovery factor. TGT has technology to increase recovery factor up to 45 per cent," Pande said. Average recovery rate from ONGC's oilfields is between 28 to 30 per cent. This rate is very low in old oilfields. Kalol in Cambay basin has a recovery rate of around 14 per cent. Petroleum Minister Murli Deora said the MoU would go a long way in helping ONGC increase its production, thus aiding in country's energy security. TGT has expertise in providing new life to old fields by enhancing ultimate recovery and reducing operating spending, ONGC Chairman and Managing Director R S Sharma said.

News: India's outsourcing market share soars over 14 times

(BL 19/01/2007) New Delhi - While globally IT firms witnessed an overall drop in new outsourcing contracts in 2006, Indian companies - such as Infosys, TCS and Wipro bucked the trend with a sharp jump of over 14 times in their market share in the past four years, a new study shows. In contrast to the massive gains registered by Indian service providers, the market share of 'Big Six' global outsourcing majors - Accenture, IBM, HP, ACS, CSC and EDS declined to 46 per cent last year, from 71 per cent in 2002

News: Global inflows set off Indian FM radio boom

(BS 18/01/2007) New Delhi - Even as Rupert Murdoch’s STAR TV prepares to acquire a 20 per cent stake in Music Broadcast Pvt Ltd, which runs Radio City, a large number of global FM radio companies are jockeying hard to forge alliances with their Indian counterparts by either acquiring a stake in them or by sharing content with them.

US-based WVRM Inc, which runs the 89.3 Dhoom FM station in New Jersey, is learnt to be in talks with top Delhi- and Mumbai-based FM radio companies.

Canadian broadcaster Hitz Radio, which offers both English and Hindi music, Fairchild Radio (a western classical FM channel) and Birmingham-based BRMB and WBHE, too, are scouting for partners in India.

Sunrise Radio, the first Asian FM station in the UK, and Radio Broadcast Netherlands have expressed their interest in content creation for Indian FM stations. BBC Radio was already creating radio shows for Radio One and was open to creating radio content for other players, industry sources said.

The new-found interest of international companies has been caused by the government’s decision to move from a very high annual licence fee regime, which increased by 15 per cent every year, to a revenue share model where operators need to give 4 per cent of their annual revenues to the government.

This has, in one stroke, made FM radio a viable business. And, with a booming economy, most operators expect local advertising revenues to grow substantially in the days to come.

The opening up of the sector has led to investments of Rs 1,200 crore towards the acquisition of over 280 frequencies.

“Additional investments in excess of Rs 2,000 crore have been made towards operational expenses and equipments,” Rajiv Mishra, Radio Masti CEO and the head of Association of Radio Operators of India, said.

At the moment, there is a 20 per cent cap on foreign direct investment in private FM radio.

However, the ministry of information and broadcasting has told the private FM radio players that the government may re-examine the FDI policy on FM radio after April.

News: FDI inflows to touch $15 bn, says Nath

(BS 18/01/2007) Bangalore - Foreign direct investment (FDI) into India is expected to touch $15 billion by the end of the present fiscal, with more overseas firms eyeing good returns from the sub-continent.

“While FDI will account for $12 billion, retained earnings (earnings ploughed back into investments) will be to the tune of $3 billion,” said Commerce and Industry Minister Kamal Nath.

Speaking to reporters on the sidelines of the CII Partnership Summit here today, the minister said the overall FDI was expected to go up by 120 per cent as compared with the previous fiscal.

“Between April and November, the FDI inflow was $7.3 billion, which is 117 per cent higher than that for the corresponding period last fiscal ($3.5 billion). The inflow is expected to touch $12 billion by the end of the present fiscal,” he added.

According to him, this was the fastest rate of growth in foreign investment inflows into the country. “It reflects the confidence foreign firms and companies have in India, which is emerging as a major player.”

On the controversy surrounding the acquisition of land for Special Economic Zones (SEZs), Nath said prime agricultural land should not be acquired for such projects.

News: Indian real estate market to touch $100 bn in a decade

(BS 18/01/2007) Mumbai/Hyderabad - The Indian real estate market is expected grow from the current level of $14 billion to $102 billion in the next 10 years, according to Syam Prasad Reddy, managing director and chief executive officer of Indu Projects Limited.

Taking part in a panel discussion at the Indian School of Business (ISB), Reddy said reforms initiated by the government, favourable demographics, increasing purchasing power, emergence of customer-friendly banks and housing finance companies would fuel the growth rate of the real estate sector in the country.

ISB, in association with Ernst & Young Private Limited, conducted its first real estate and urban studies panel discussion here recently. The session, titled ‘Real Estate in India - the Research Imperative', is a research initiative by the students of the Real Estate Club and the Wadhwani Centre for Entrepreneurship Development ( WCED) at the ISB.

Explaining the current real estate scenario in the country, Reddy said the shortage of 19.4 million housing units, including 6.7 million units in urban India, and mushrooming of retail projects would provide a huge opportunity for domestic as well as global infrastructure players in the country.

He, however, pointed out that the Indian real estate industry was ailed by lack of transparency and credibility, an acute shortage of data and academic research and a lack of uniform laws and regulatory systems.

The other participants in the panel discussion also emphasised the need for more clarity and professionalism, particularly in the light of foreign funds and investors eyeing the Indian real estate market.

Those who took part in the discussions included Ganesh Raj of Ernst & Young, Arvind Pahwa of JP Morgan Asset Management, Nayan Shah of Mayfair Housing, Kishore Gotety of ICICI Venture Funds Management, Suresh Maramreddy of Citigroup Property Investors, KG Krishnamurthy of HDFC Property Ventures, Neel Raheja of K Raheja Corp, Ramesh Sanka of DLF, Luv Shah of Deutsche Bank REOF, Ramani Sastri of Sterling Developers, Mohit Singh of Shipra Group, Balaji Rao of Starwood Capital India, and William Kistler of Urban Land Institute ( Europe).

The discussions were geared to fuel the top five list of research areas at the ISB Real Estate Research Lab and define ISB real estate research goals for the year 2007.

News: Mukesh now controls 50% plus in Reliance

(HT 18/01/2007) Mumbai - Around a year after the demerged Reliance Industries scrip debuted on the Indian bourses, the promoters of the company have announced through a declaration to the stock exchanges that they now hold more than 50 per cent in the company.

The process needed mopping up around five per cent of the company's equity over a period of little more than a year. At today's price it would be worth Rs 9,300 crore. However, since the acquisition happened over a long period it must have cost a lot less.

The stake in control of Mukesh Ambani at the time of the split was estimated at 38 per cent. Now he controls 43.11 per cent. He controls another 7.51 per cent through the Petroleum Trust and the total promoters' holding is at 50.62 per cent. It was at 49.92 per cent at the end of September 30, 2006.

While the Mukesh Ambani camp has invested in the company, the scrip has also richly rewarded the promoters as well as other shareholders of the company.

The demerged Reliance scrip had closed at Rs 713.93 at a special trading session on January 18, almost exactly a year back. Since then the scrip has climbed up to Rs 1,346.95 at a close on Tuesday. Mukesh Ambani's 43 per cent direct stake in the company alone is worth more than Rs 80,000 crore today.

The promoter's stake in Reliance had been at 46.75 per cent for a long time until the split. Thereafter the holdings of Mukesh's brother Anil Ambani and his family and companies controlled by him are not shown among the promoters. The stake has now been consolidated under 48 entities unlike the more than 138 companies and individuals who used to own the Reliance promoter stakes in the past.

After Anil Ambani's exit, the promoter's holding went down by around two-three per cent. Even before the split was official the Mukesh Ambani camp had started untangling the maze of cross holdings in the company and also slowly increasing the stake.

Currently, the trust is still the largest shareholder with promoter-group companies like Eklavya Mercantile, Bhumika Trading and Ekansha Enterprises all holding a little more than four per cent each.

Reliance officials refused to comment on the issue.

News: 'India is recognised as a success story'

(PTI 18/01/2007) Bangalore - President of Portugal Anibal Antonio Cavaco Silva on Wednesday said India was now recognised as a success story, a place where "the future is being shaped".

"A few years ago, India could be perceived as a rural country, with widespread scarcity and in need of development assistance", Silva said in his inaugural address to the Partnership Summit 2007, the Confederation of Indian Industry's flagship event.

"Today, India is recognised as a success story, where millions of people have been lifted out of poverty, through the efforts of India national and state governments, as well as efforts of its increasingly assertive companies", he said.

Silva, an economics professor, said "India is today regarded as a place where the future is being shaped: a land of bright people, of new technologies, research, innovation and cutting-edge industries. It is this India that I would like to get interested in a closer cooperation with Portugal.

"India is, of course, a land of contrasts and diversity. Still, the idea that emerges when we now think of India is one of hope and success," the Portuguese President said.

Silva said an increasing amount of foreign direct investment taking place in the world today comes from companies based in India, China and Brazil.

CII President R Seshasayee said 1,800 delegates, including 750 from 26 foreign countries, were attending the three-day summit, which has the theme "Emergent India: New Roles and Responsibilities".

CII said the event was a platform to promote India as a profitable and stable investment destination.

News: Morgan fund invests $152m in Oberoi realty firm

(HT 18/01/2007) Mumbai - In one of the largest FDI deals in Indian realty, Morgan Stanley’s Special Situation Real Estate Fund has invested $152 million in Mumbai-based developer Oberoi Constructions.

While officially there was no statement on the equity size picked up by the Morgan Stanley Fund save that it was a ‘minority stake’, it is reliably learnt that it is a 10.75% stake.

Anand Madduri, the Hong Kong-based executive director of Morgan Stanley’s Asia-Pacific Property portfolio, claimed the Oberoi deal was the single largest foreign direct investment (FDI) in India’s real estate sector so far. Oberoi Constructions is a fast-growing firm in the financial capital, and has no connection with the hotel group of the same name.

"The closest is Farallon Capital’s investments in Indiabulls at around $143 million. However, these were in several tranches spread over 24 to 30 months," Madduri added.

US-based hedge fund Farallon Capital has taken a 60% stake in Indiabulls Property which has in turn picked up two NTC textile mills in Mumbai in separate public auctions.

The Morgan Stanley realty investment of $152mn for a 10.75% stake implies that Oberoi Constructions has derived a valuation of a little over $1.4 billion.

Since Oberoi Constructions has a turnover of a little over Rs 600 crore per year, the high valuation by international investors is largely a derivative of the high asset value given to the land banks built up by the company.

Four major property projects are being developed by the company - 8 million square feet in Goregaon in a mall and a residential project on what used to be Novartis land, two million sq feet each at Jogeshwari’s Fantasy Land and Mulund’s Glaxo SmithKline (GSK) land and an additional 8 lakh sq ft at Andheri’s Excel Industries land.

"All these projects are FDI-compliant, and we have taken care to buy property titles that are FDI compliant," Vikas Oberoi, the company’s chief promoter, told HT.

He clarified that the joint venture with ICICI Venture at Worli on what used to be Glaxo’s land, is not FDI compliant, and was part of a separate SPV (special purpose vehicle).

Madduri said there were no plans to ramp up Morgan Stanley’s investments in Oberoi Constructions in the future. "The company will continue to acquire land, and these can be leveraged for future funding," he added.

News: Indian banks ride on growth story

(DNA 18/01/2007) Mumbai - Banks are finding it easier to raise money abroad as news of the economy’s growth catches up overseas, boosting demand for Indian paper.

State Bank of India (SBI), India’s largest bank by assets and deposits, was the latest one to take advantage of this route for raising capital, raising $200 million through floating rate bonds at 45 basis points above the three-month Libor. It is paying 5 basis points lower interest compared to the $300 million five-year bonds it had issued in Singapore in December 2006.

“SBI thought of taking advantage of the momentum in the market after the $2 billion ICICI issue. SBI didn’t really need the money but they wanted to set a benchmark rate looking at the opportunity. This rate is the best any Indian bank has ever borrowed at,” said an official involved with the deal. Deutsche Bank was the sole arranger for the deal. “Investor interest is strong for a SBI paper because investors believe that SBI has the full support of the government and the RBI and it is too big to fail, the official added.

“The price is better than last time when the bonds were priced at 50 basis points above Libor,” added another official from a UK bank based in Singapore who is familiar with the deal details. SBI is not the only bank keen on tapping the international market. ICICI Bank, the country’s second-largest, UTI Bank, a middle level private sector bank and state-owned Canara Bank have also tapped the overseas markets recently.

Analysts say that urgency among Indian banks to raise money has increased due to the tough Basel II capital requirements likely to be implemented from March 31, 2008.

Floating rate bonds are priced when the issuing bank (in this case SBI) expects interest rates to drop so that the interest it pays on the bonds lessens over a period of time. These bonds come under Tier II capital which is subordinate debt. “The capital being raised is primarily to add to the banks capital base and may be used for lending purposes,” said Robin Roy, principal consultant, PricewaterhouseCoopers.

Banks are struggling to keep up with the robust credit growth as the economy maintains a scorching pace of growth. “Indian banks have done a very good job of tapping the overseas markets and, with expectations that the country’s ratings would be upgraded to investment grade, demand for papers from the country is expected to be strong,” the Singapore based banker said.

India’s economic growth accelerated to 9.2% in the third quarter, a pace only China exceeded among the 20 largest economies.

Successful issues like this one are also likely to benefit other Indian banks to raise money from abroad. SBI benefited from the strong response to ICICI Bank’s $2 billion issue last week, which saw a demand of $8 billion.

News: All SEZ approvals on hold - Kamal Nath

(BL 18/01/2007) Bangalore - All special economic zone (SEZ) approvals are on hold until the January 22 meeting of the empowered group of Ministers, which will also take stock of how the States have been following up the clearances and addressing land acquisitions and related issues, according to the Commerce Minister, Kamal Nath.

At a news conference during the CII Partnership summit here, Nath said State Governments have been asked to give reports on their own clearances, land acquisition for road and infrastructure, methods of acquisition, compensation and displacement-related concerns.

News: Pantaloon Retail teams up with Staples

(DNA 18/01/2007) Mumbai - Kishore Biyani’s Pantaloon Retail is all set to form yet another joint venture, this time with US-based company Staples. The agreement is expected to be signed within a week, industry sources have said.

Rakesh Biyani, director, Pantaloon Retail India Ltd (PRIL), indicated that an initiative was in the pipeline but refused to disclose any details. “I am not in a position to say anything,” Biyani told DNA Money.

Meanwhile, Pantaloon Retail has made a headstart in the $10 billion office products market in the country by acquiring a “fairly new” company operating in the online B2B space. “It is a business-cum-management buyout of Officedge for an undisclosed sum,” Biyani said. In November 2006, PRIL instituted a wholly owned subsidiary called Future Office Products Pvt Ltd for its foray into the office products space. Taking the inorganic route by acquiring Officedge, industry experts say, will give PRIL an instant market reach.

Instituted in 2004, Officedge provides contract delivery services to corporate customers across the country. Co-founded by Shailesh Karwa and Sharad Dalmia (previously consultants with TCS and Accenture respectively), Officedge currently serves more than 80 large corporate customers across six cities offering close to 1,200 office products on a proprietary e-procurement solution. Besides continuing to run the show for Future Office, the original promoters of Officedge will also be responsible for chalking out an aggressive expansion for the company in this space.

“We are completely open to acquisitions and will pursue it very aggressively as industry today is largely fragmented and the business potential out there is huge,” Biyani said.

Talking of the reasons behind acquiring Officedge, Biyani said its operations were backed by an efficient supply chain infrastructure and offers ease of ordering, next-day delivery and an ongoing savings programme that can be rolled out on a national basis.

News: Ericsson to invest $100 million annually in India

(BL 18/01/2007) New Delhi - Swedish telecom equipment giant Ericsson on Thursday announced an investment of $100 million (nearly Rs 450 crore) every year in India with an option to enhance it depending upon the growth in the telecom sector.

"We will be investing $100 million annually for the next five years. The figure could go up depending upon the growth in the sector," Mats Granryd, Managing Director, Ericsson India, said here.

Asked about Ericsson's projections of growth in the Indian telecom sector, he said last year GSM cellular mobile telephony grew by 100 per cent. "This is growing phenomenally and I do not see an end to it," he added.

Carl-Henric Svanberg, Ericsson's Global CEO who is here to attend CII-CEOs forum, said: "Indian telecom market has grown more than double in last five years and we have a lot of activity here."

Asked about BSNL's mega 45 million line GSM tender, in which Ericsson emerged the lowest bidder, getting into legal wrangle after US telecom giant Motorola challenged the process in the Delhi High Court, Carl-Henric said: "Faster the solution the bett er it is. Delay is not positive for BSNL."

He also said the company was working with various operators on the next generation (3G) mobile services, saying the trial runs were on but did not name the operators citing the company's policy not to declare the names.

News: Luxury living: Middle class looks to Tier II & III cities

(PTI 17/01/2007) New Delhi - Italian marble floors, bar, modular kitchen, a state-of-the-art bathroom and a swimming pool in the backyard: luxury has just got redefined, and that too for the middle class as far as housing is concerned.

With real estate prices in the NCR region soaring, developers are looking at greener pastures in tier II and tier III cities: infact, the boom has just begun in Kundli, Sonepat, Panipat in Haryana and Rudrapur in Uttaranchal, where luxury apartments, affordable even by the middle class, are fast coming up.

"All roads today lead to tier II and tier III cities that are around two to three hours drive from Delhi where these luxury apartments are coming up," says Kashif N Usmani of Taneja Developers and Infrastructure Ltd (TDI).

"The last decade saw the transition of sleepy towns like Gurgaon, Noida and Faridabad into enviable addresses. But today, these tier I towns, as they are called, are all saturated and far beyond the means of the middle class," he says.

"The focus is now on other closer-to-Delhi cities of Haryana as the development policies there are very conducive for real estate development. For around Rs 20 lakh, a middle class person can get a luxury apartment," says Sunil Anand of Anand Properties & Infrastructure Ltd.

The catch is that these apartments come with a luxury tag. A 2-3-bedroom apartment comes with attached state of the art baths, modular kitchens and wooden flooring in the master bedroom. "If this is not enough to lure the buyer, there is also a fountain at the entrance," says Anand.

News: Yemen invites ONGC to set up $1 b refinery

(PTI 17/01/2007) New Delhi - Yemen has invited Oil and Natural Gas Corporation (ONGC) to set up a $1 billion refinery on its Arabian coast.

"We have proposed to them to partner in one of the two 1,00,000 barrels per day (bpd) refineries being planned. They have said they will think of partnering in the refinery projects when they get an oil block in Yemen," Yemen oil minister Khalid Mahfoudh Dahah said here today.

News: Virgin Mobile mulls tie-up with Tatas

(PTI 17/01/2007) London - British billionaire Richard Branson's Virgin Mobile plans to enter India's fast growing telecom market through a tie-up with the Tata Group company Tata Teleservices, media reports said here.

Tata Group Chairman Ratan Tata is understood to be in talks with Virgin for granting the British firm an exclusive franchisee of Tata Teleservices, the British newspaper The Times reported on Wednesday.

The venture could begin operations as early as April and is expected to involve creating a business owned partly by Tata Teleservices, the report said.

Spokespersons for Virgin Mobile and Tata Teleservices were not available for comment.

Reports about talks between Virgin and Tatas mark the latest development in a race by British mobile operators to cement their presence in India.

UK giant Vodafone is also eyeing a controlling stake in India's fourth-largest mobile operator Hutch-Essar and is expected to announce a formal bid early next month.

Tata Teleservices, which offers CDMA services under the Tata Indicom brand, has 8.6 million subscribers with a seven per cent market share.

Virgin Mobile, a virtual operator which does not have its own network, already operates in the US through a joint venture with Sprint. It is also present in Australia and France through a tie-up with Carphone Warehouse, the high street chain founded by Charles Dunstone.

India has a population of 1.1 billion but a mobile phone penetration rate of over 17 per cent or 189.93 million users. The country is one of the world's largest untapped mobile phone markets, and usage could triple in the next four years, The Times quoted analysts.

News: India can absorb $ 60 bn FDI every year

(UNI 17/01/2007) Bangalore - With its burgeoning investment needs, mainly in infrastructure and power sectors, India can accommodate an annual 60 billion Dollars of Foreign Direct Investment (FDI) in the next few years, Dr A