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 Ajay Dua, Secretary, Department of Industrial Policy and Promotion, said today. Speaking to foreign delegates at a luncheon session on 'Investing in India', organised as part of the CII Partnership Summit which began here today, he said that despite the saving rates going up in the country, India needed much more FDI in infrastructure and power sectors. ''Poor infrastructure is holding two per cent of GDP growth every year and we need huge investments in this sector. In power sector, the growing needs will call for big ticket investments. We need to add 80,000 MW of power in the next five years, to the existing installed capacity of 1.2 lakh MW,'' he said. Dua said the country was getting increasing FDIs during the last few years, with last year alone accounting for 60 per cent hike in the foreign-based equity inflow. During the first eight months of the current fiscal, it had gone up to 116 per cent at 5.5 billion Dollars when compared to the corresponding period last year. ''We are positive to achieve up to 12 billion Dollars of FDI by the year-end,'' he added. Stating that the youth of the country was its biggest asset, he said it boasted of 40 per cent of its population at less than 25 years of age. The young and qualified workforce would go up to 263 million by 2050, much higher than China's 90 million and 11 million of that of the United States. While other countries would see a decline in workforce, India would have a big advantage in this area. ''The growing workforce and buoyant economy will propel India to become the third biggest economy by 2025. We will overtake countries like Italy and France by 2020, Germany by 2023 and Japan by 2025,'' the official predicted. Dua said the expanding export base was one of the key drivers of India's growing economy. Out of the GDP, which was put at around 800 billion Dollars, export base constituted 250 billion Dollars and it was growing. India was becoming a centre for producing components for re-exports and this should be recognised by exporters, he felt. Noting that automobile and auto auxiliary industry was experiencing one of the fastest growth rates in the world, he said the sector grew by 16 per cent during the last five years, the highest in the world. Auto exports was growing at 45 per cent and this trend would continue, he added. Listing out the other growth sectors, Dua said the Information Technology sector had become a world model, accounting for nearly five per cent of the GDP from two per cent a few years ago. Likewise, the pharmacy industry also had an exponential growth. Though it accounted for eight billion Dollars at present, exports had touched 30 per cent of the total production. The exports were not just to third world countries, but also to developed markets like the US and the EU as medium companies were getting quick market access. Hence, a number of MNCs had either come to India or were finalising their entry. Apart from being a research base, the country had also emerged as a major base for clinical trials. The domestic market was expected to grow from the present eight billion Dollars to 25 billion Dollars during the next three years. Biotechnology and food processing were the other sectors growing at a fast pace and held huge potential for FDI, he added.

News: Saudi Arabia to invest $600 m in India

(UNI 17/01/2007) New Delhi - In a call for invitation of trade and business in India, Kingdom of Saudi Arabia (KSA) today said, it will invest around $600 million for the purpose in the coming years with the help of corporations from both the countries. "We will invest about $600 million in India for the industrial projects like mining, energy, real estate, knowledge-based processes, etc,'' said Saudi Business Delegation to India Co-Chairman Abdul Rahman A Al-Rabiah here. He is also the Managing Director of Al-Rabiah Co, Saudi-Indian Business Council (Saudi side). Minister of Commerce and Industry Hashim bin Abdullah bin Hashim Al-Yamani who was present at the seminar said, this is the right time to forge for the real partnership between the two countries. He also said unlike in the past where getting a business visa was a bit problematic, it should not be a concern now for the businessmen. He hoped that both the countries will now support with their efforts to fulfill the requirements. FICCI President Habil Khorakiwala appealed to the Saudi minister to broaden the interface with Saudi Arabia in areas such asppocessed plant equipment, downstream petrochemicals, fertilisers, infrastructure, construction, machine tools, auto components, electrical equipment, chemicals, engineering and pharmaceutical consultancies. Saudi Arab's economy is liberalising radically and had granted licences to Indian companies for joint ventures or even 100 per cent equity in large number of secrors. Even 90 per cent of the Indian sectors are open for Foreign Direct Investment (FDI) through automatic route requiring no permission, Khorakiwala said. ''These parallel processes of liberalisation of two great nations must be bridged firmly so that seamless movement of two-way investment and significant broadening of the tradable items take place in the next three years,'' he added.

News: OVL to get 40% stake in Venezuelan oil block

(BL 17/01/2007) New Delhi - ONGC Videsh Ltd, the overseas arm of state-run Oil and Natural Gas Corporation, will get 40 per cent stake in an oil field in Venezuela.

"We have taken a decision to award the San Cristobal block to OVL," Petroleos de Venezuela (PDVSA) Vice President E&P, Lois F Vierma said here.

PDVSA is Venezuela's state-owned firm in charge of exploration, production, transport and sale of hydrocarbons. He, however, did not give the percentage of stake being offered to OVL.

Industry sources, however, said OVL would get 40 per cent stake, higher than the previously anticipated 30 per cent, in the oil field. Venezuelan national oil firm PDVSA will hold the remaining 60 per cent stake.

ONGC will partner PDVSA in exploring oil in the onshore field San Cristobal, which has a potential to produce 100,000 barrels per day.

Venezuela, which sells 60 per cent or 1.5 to 1.6 million barrels per day of crude to US, is South America's only member of Organisation of Petroleum Exporting Countries (OPEC).

News: Luxembourg to ease visa regime for Indian IT pros

(PTI 16/01/2007) Luxembourg - Luxembourg, a key financial centre of Europe, has indicated it would ease the visa regime for Indian professionals in certain specific sectors.

"We will look at relaxing visa rules in specific sectors," Luxembourg's economic minister Jeann Krecke said when a group of visiting Indian journalists here said the visa regime in Europe as a whole was not friendly to movement of professionals from India especially in the information technology sector.

"India", he said, "has a big pool of highly-skilled people and some countries of Europe are afraid of competition".

Foreign Minister Jean Asselborn, who will pay a five-day visit to India from February 19 this year, said his government would consider upgrading the Luxembourg embassy in Delhi as it did not have the facility to issue visas.

The curbs on access to European service market to Indian professionals has been a sore point in ties between New Delhi and European Union.

However, there is hope that Luxembourg could take a lead in changing the scenario as the country gets a daily dose of more than 100,000 people from its three neighbours Germany, France and Belgium who come to this country for employment.

News: TCS bags $140 m contract from Ecuador bank

(UNI 16/01/2007) New Delhi - Leading software exporter Tata Consultancy Services (TCS) has signed an agreement with Banco Pichincha, Ecuador's largest private bank, to provide a comprehensive outsourcing solution valued at over 140 million dollars over a period of five years.

TCS will set up a new company in Ecuador, which will comprise over 500 personnel in the country supported by its offshore Business Process outsourcing (BPO) center in Chile and Global Deliver Centers across the world, it said in a statement.

''Our entry in Ecuador is part of a long term plan to invest in and grow in the country. We will retain all of Banco Pichincha´s current staff engaged in these processes and bring in our best human resources and practices worldwide to train our employees in Ecuador,'' said Henry Manzano, CEO of TCS' BPO unit in South America.

The deal would include a complete renewal of the banks core banking solution with a TCS' banks solution followed by IT and BPO outsourcing of the banks operational processes, it said.

Banco Pichincha has over 1.5 million clients, a loan portfolio of over 1.5 billion dollars and over 232 branches spanning Ecuador, Peru, Colombia, Panama, Spain and the United States.

''This initiative will be a critical part of our business strategy as we continue to create excellent results in improving our business efficiency ratios,'' said Antonio Acosta, Joint President of Banco Pichincha.

TCS Iberoamerica (TCSI) is the business arm of TCS operating across Spanish and Portuguese speaking regions of the world.

News: ICICI Bank launches card based remittance product

(BL 16/01/2007) Kochi - In an effort to provide hassle free alternative for receiving remittances, the private sector ICICI Bank on Tuesday launched a card-based remittance product. The remittance card is an Indian rupee (INR) denominated card and can be re-loadable for funding and used at any VISA affiliated ATM and merchant establishment in India, Manish Misra, Head Global Remittances at ICICI Bank, said here. Only remittance-l inked credits are permissible in the card. The product would be targeting the families of NRIs. This facility can also be availed by those beneficiaries who do not have an account with ICICI Bank in India, he said. Misra said the Indian remittance market was growing rapidly with migration of Indians to newer geographies. This card would help in maximising convenience and benefits to both the remitter and beneficiary. The Rs 400 card, with a 10-year validity, can be used at all VISA ATMs in the country with 24- hour access to funds, with a withdrawal limit of Rs 50,000 per day. It can also be used for transactions at over 1,00,000 merchant establishments. With India being the largest remittance receiving country in the world with inflows of $24 billion annually, the bank was targeting about 20 per cent of this segment. The bank has over 25 per cent market share in the Indian remittance segment.

News: Reliance Retail spends Rs 1000 cr on realty

(PTI 16/01/2007) New Delhi - Putting its mega retail plans on full throttle, Mukesh Ambani-promoted Reliance Retail has spent close to Rs 1,000 crore in two days acquiring commercial properties in the national capital. According to sources, Reliance Retail today acquired a property at Vikaspuri in West Delhi valued at around Rs 280 crore. Yesterday, it had acquired seven properties valued at around Rs 700 crore. Of these, six were at Dwarka near the Indira Gandhi International Airport and one at Rohini in west Delhi. "The overall space size of the acquisition is over five lakh square feet," the sources said, adding the company would be taking part in another bid tomorrow for two properties at Vasant Kunj in south Delhi. The two properties at Vasant Kunj are together expected to be valued around Rs 25 crore, the sources added. When contacted, Reliance officials declined to comment. The properties acquired by Reliance Retail were a part of auctions by the Delhi Development Authority, through which it collected about Rs 900 crore. Mukesh Ambani had last year unveiled mega plans for expansion in the retail space entailing an investment of Rs 25,000 crore in the next few years.

News: India to raise overseas borrowing limit to $22 b

(RTR 16/01/2007) New Delhi - India will raise the overseas commercial borrowing limit for firms to $22 billion in the fiscal year to March 2007 from the present limit of $18 billion, a finance ministry official said on Tuesday.

"A formal communication will be sent to the Reserve Bank of India in a day or two," the official, who declined to be named, told reporters.

"In principle, we have decided to raise the limit to $22 billion from $18 billion," he added.

News: Retail boom fuels growth in logistics sector

(BL 15/01/2007) Mumbai - As India's retail sector opens up on a huge scale, domestic logistics companies are planning significant investments to expand their portfolio of services. It is expected that in the next two years, the logistics sector will have undergone major changes, offering a wide spectrum of services. Consider this: Global retail giant Wal Mart announces its entry into India through a joint venture with Bharti. Reliance puts on its drawing board a mega plan of Rs 25,000-crore to create 100 million sq ft of retail space. The Aditya Birla group makes a retail foray with plans to invest Rs 15,000 crore. The Tatas plan to participate in the retail race with renewed vigour. Pantaloon plans to create a retail space of 30 million sq ft by 2009-10. Shoppers Stop may have 6 million sq ft of retail space by the same time. Global retailers from the US, European Union and Australia are all eyeing the retail revolution in India. On the growth path Indian players in the logistics space are keenly tracking these developments, as they suddenly find their services in big demand. Although some retailers, like Reliance, may have their own logistics subsidiaries, most of the others are working with third-party providers. "The Indian logistics sector is at the beginning of a strong growth path. Not only retail, there are other growth drivers like the manufacturing, FMCG and auto components sectors," says an Edelweiss research. Players in the segment are, indeed, ramping up their capital expenditure programme. Edelweiss estimates that the six major players in this sector — Concor, Gateway Distriparks Ltd (GDL), Allcargo, SICAL, Transport Corporation of India and Gati — will spend Rs 3,400 crore over the next three years to cash in on the growth opportunities. These companies together invested about Rs 500 crore in the last fiscal. The companies plan to expand their service portfolios. For example, Concor and SICAL's future growth area is cold chain logistics, GDL and SICAL's is container train operations, while TCI and Gati's is warehousing. Other trucking and courier companies are leveraging on their networks to offer express and supply chain distribution solutions, apart from developing expertise in 3PL (third-party logistics) services. Absorbing investments The different sectors within the logistics segment are also poised to absorb significant investments. Edelweiss estimates that the container train sector (thrown open to private sector recently) will see a capex of Rs 1,600 crore in the next three years, while warehousing will get Rs 200 crore, trucking/XPS Rs 380 crore and offshore logistics Rs 250 crore. Worldwide, the logistics industry is on a growth path, with the global logistics industry estimated to be of the size of $3.5 trillion in 2005 — the US market alone was estimated at $900 billion, almost 25 per cent of the global industry. In fact, about 60 per cent of the Fortune 500 companies report having at least one contract with a 3PL company. "India at present spends 13 per cent of its GDP on logistics, which is much higher than the global average. We believe that this is due to inadequate infrastructure leading to periodic bottlenecks along the routes. Another major reason is the regulatory loopholes, which raise the cost of service and cause delays," the Edelweiss research points out. However, the infrastructure will certainly see brisk development in the coming years, with the Government attaching high priority to this sector. The road sector alone will see investments of about Rs 1,52,000 crore between 2006 and 2012. Airports, which together handled a cargo of 1.4 million tonnes last fiscal, as against 0.65 million in 1995-96, will also see significant expansion and development. The biggest challenge The logistics companies at present provide services from transportation to warehousing and inventory management. But, in the near future, they will have to expand their products basket to include new value-added services, such as packaging, labelling and reverse logistics. The biggest challenge that faces these companies is that they should quickly imbibe latest technologies, such as GPC/GIS tracking of consignments, and uncork new services to cater to corporates seeking to outsource their logistics needs. Also, the Government should come out with a sound policy that facilitates the operations of the logistics companies.

News: 'Head hunting to get tougher for other sectors'

(BL 15/01/2007) Coimbatore - Information technology and the financial sector between them are expected to hire close to 5 lakh people during the current financial year. It is going to be a tough job for the rest of the industry to recruit the people they are looking for, according to Mohandas Pai, a member of the Board of Infosys Technologies. Speaking recently after the publication of the third quarter results by the company, he said the entry level wages in the country were being influenced by only two industries — IT and financial services. While the financial services sector might hire about 75,000 to 1-lakh people this year, the IT sector's head count will nearly be four times of that — about 3,80,000 people. These two industries are driving up the demand for entry- level people and the IT sector was the largest hirer. He said: "They get the best of the crop. And obviously competition is for the best of the best." Salaries Referring to the entry wages, he said: "We raised them from Rs 2,40,000 a year to Rs 2,70,000 a year for the next year. And this could go up by may be 10 per cent a year after that." If the entry-level salary is up by 10 per cent, one could possibly pay slightly more to the middle-level employees. But he said: "Definitely going forward for the rest of the industry in this country, it is going to become very, very challenging to get more and more people in." Pai said: "Right now, the retail industry is hiring. They are not able to get people." The construction industry also was finding it difficult to get the manpower it wanted "because all engineers want to join IT." The manufacturing industry was going to find it more difficult. He expected "right-skilling" to happen in the next 3 or 4 years. Most of the companies would start identifying people for the "right job at the right time" and not getting over-qualified people to do work. This would be in contrast to the current trend where Indian industry has been traditionally a place where over-qualified people are hired to do more mundane work, he said. Nandan Nilekani, CEO and MD, Infosys, observed that "IT spending will go up a few percentage points in this year" and was confident that the trend of Infosys' clients increasing the proportion of the spend on offshore and global sourcing would go up, which would be favourable to Infosys. He said the risk perception of clients about offshoring had come down even further which was a positive sign for the future of the industry. Responding to a query, Kris Gopalakrishnan, COO, President and Joint MD, Infosys, said the company's "target for onsite versus offshore is to keep onsite between 30 and 35 per cent." It looked at services that have significant offshore content like infrastructure management, resting etc. Services such as consulting and package implementation were more onsite-centric. But overall, the ratio was maintained for operating margin. Budgets S.D. Shibulal, Director and Head-Worldwide Delivery and Sales, Infosys, commenting on the demand environment and growth areas in fiscal '08, said the customer feedback was that the budgets would remain stable or slightly up, may be by 2 to 3 per cent. He said: "There is definite indication" that their spend on outsourcing as well as offshoring was "definitely on the rise." He did not see any slowdown at this point from Infosys' customer base. Commenting on Finacle, a bank automation product of Infosys, Mohandas Pai said the company would like "Finacle to grow faster than the rest of the business on a relative basis." It has seen openings in Europe and in South East Asia. The company has got a very large Singapore based bank as customer and was seeing opportunities in Russia, Eastern and Western Europe. There were "first turnings of the need for the Western banks in Europe to open up and look at change."

News: Accounting, for Adam? No, say Eves

(HT 14/01/2007) New Delhi - Seventeen-year-old Dimpy Jindal, a first year student of commerce at New Delhi's Hansraj College wants to become a chartered accountant (CA).

Gunjan Bhagia, a 20-year-old third-year student at Delhi's Sriram College of Commerce wants to become a financial analyst. Both will need to clear a series of examinations to become a CA, and both are off to a start; they have cleared the Common Proficiency Test (CPT), the entry-level examination in the series, which was conducted in November 2006.

Jindal and Bhagia are among the 5664 women who have passed this examination. At 31 per cent, that's a significant proportion of the 18345 who did. It was 15 per cent in 2005 and ranged between 5 and 10 per cent in 2004 and 2003. Although the Institute of Chartered Accountants of India (ICAI), the apex body of the profession that conducts the examination, does not maintain data on the number of women who appeared for the examination, its president, Manoharn TN claims that the proportion of women who appeared for the CPT in November 2006 was significantly higher than the proportion of those who did in November 2005.

Chartered Accountants are in demand in India with ICAI estimating that there will not be enough to go around till 2012. With companies operating in a more complex and global business environment CAs are expected to do more, handle mergers, present financial statements under several standards in accordance with the laws of various countries, and ensure that the accounting is as transparent as can be.

Salaries too have increased correspondingly, with Manoharan claiming that entry-level CAs start at Rs 40,000 a month as compared to Rs 22,000-27,000 even two years ago. "I am particularly attracted by high salary levels and (the fact that) one can occupy good positions in top-notch companies," says Jindal.

The immediate reason behind the growing interest of women in the profession could be the institute's decision, in 2006, to reduce the minimum time it takes to become a CA, from five years to four. "I can be a CA by 24 and can plan my future when I am still young," says Bhagia who insists that her decision to become a CA was partly prompted by the time factor.

ICAI's Manoharan says the proportion of women members of the profession has increased over the past decade. In 1995, 5.2 per cent of the members of ICAI were women. In 2006, this proportion was 13 per cent.

The results of the latest CPT could help that proportion increase faster over the next decade.

News: 'India beats China in regulations'

(BS 14/01/2007) Mumbai - Japan’s Nikko Asset Management Company is all set to debut in the Indian market through a tie-up with India’s Ambit RSM for mutual fund business, becoming the first Japanese fund house to do so. Ashutosh Joshi caught up with Nikko AM CEO Tim McCarthy over cups of tea to know about his India plans. Excerpts:

Nikko AM is entering India at a time when the country is witnessing the fastest growth and large foreign fund inflows. What scope do you see for mutual fund business here?

It’s true that India has registered its highest growth this year. In terms of growth, I think it still has a long way to go. Historically, the growth in mutual fund business picked up after demutualisation or with modern regulations coming into force.

Let’s take an example of America. Mutual funds became popular in the US in 1975, but they began registering real growth since the 1990s.

The same is true for European economies too, the value of whose assets is more than their GDPs. In India, demutualisation materialised around 1999. I think there is a vast scope for the asset management business in this country to grow.

How do you see the two countries faring in terms of asset management business?

Modern regulations are vital for economic growth. Compare the growth of India and China after deregulation took place. In some sense, I am more curious about the regulations here than those of China.

In fact, India is ahead of China when it comes to the type of regulations. But, I think the Chinese made more money just because they had regulations in place earlier than India. Hence, they are seen ahead.

How do Japanese investors look at India as a global investment destination?

First of all, the appetite of a Japanese investor for India is much bigger than what is normally seen for other countries. For me, it is very easy to sell an India-focused product than a Chinese one.

The Japanese, mostly old investors, have reservations about investing into Chinese or Korean funds. But I don't find that for India. Mutual fund business is all about diversification.

If I put all my money into one specific country, the returns are restricted. That’s why you spread into different countries. It’s just like the best players from ten countries easily beating any good team, and by entering India, we are picking up another best player.

What are the sectors in India you find attractive for investments?

India is no more a developing country. I have stopped calling it so, with the rate of growth the country is witnessing. It is very difficult to say which sectors we will be investing in.

At a growth rate of 7 to 8 per cent a year, all the sectors have to scale up their operations. I will again compare China and India. Here, the growth has come from service sectors such as BPOs, call centres, outsourcing businesses, while the Chinese are stuck to manufacturing. India, which would enter the production scene much later, will have an edge over China.

At the end of the last century, the dollar dominated over 90 per cent of the production, while services trailed. At the end of this century, it is expected to reverse. That’s why I see service economies benefiting more.

Don’t you think you have delayed your entry into the mutual fund business here, as around 30 fund houses are already operating?

No, I don’t think we are late here. Take the examples of European countries where 400 to 1,000 companies are doing business. Given the rate at which India is growing, we would not be late even after three years from now.

Here, the demographics are so powerful ... a good number of young population. You have got a growth rate of 7 to 8 per cent and, I tell you, it’s going to be a long story.

News: Emaar does a DLF, set to float Rs 13000 cr IPO

(BS 14/01/2007) Mumbai - Emaar MGF, the Delhi-based real estate major, is set to do a DLF. The company, a joint venture between Delhi-based MGF Developments and Dubai-based Emaar Properties, is planning to raise around Rs 13,000 crore from the capital market to fund its rapidly growing property development business in India.

DLF recently filed a draft red herring prospectus with the Securities and Exchange Board of India for an initial public offer of Rs 13,500 crore.

This is the country's largest IPO till date. Sources close to the development said the Emaar MGF IPO is expected to hit the markets in the second half of 2007. CONCRETE NUMBERS DLF* Rs 13500cr 2007 ONGC** Rs 10160cr 2005 Cairn India Rs 5260cr 2006 RPL Rs 2700cr 2006 TCS Rs 4991cr 2004 * DRHP filed with SEBI ** Disinvestment by the government

Emaar MGF has projects in over 30 cities in residential, commercial, infrastructure, hospitality sectors and special economic zones across India.

According to company estimates, it would require $4 billion to fund these projects, of which $1 billion was brought in through foreign direct investment (FDI) last year. The company is hoping to raise the rest of the capital through the IPO and private placement.

MGF Developments is a subsidiary of the Motor General Finance Group, which has five other companies in its fold.

The group has diversified into areas such as merchant banking, insurance, housing finance, stock brokerage, asset management, corporate advisory services, single-point fund management for corporate clients and extension of factoring to both consumer and industrial debts.

It has other JVs as well — one with the International Finance Corporation, a World Bank affiliate, and the other with Citicorp Securities and Investments (CSIL), an associate of Citibank.

Prime Database CEO Prithvi Haldea expects real estate companies to raise about Rs 25,000 crore from the primary markets this year, with 30 companies expected to hit the market depending on the DLF issue's success.

The companies, which are expected to hit the capital market this year include Akruti Nirman, Omaxe, Gammon Infrastructure, Purvankara, Ansal Buildwel and Ansal Properties, Goel Ganga group, IJM India infrastructure (a Malaysian developer with developments underway in and around Hyderabad), IVRCL and Simplex.

In 2006, real estate companies like Parsvnath and Sobha developers raised Rs 3,400 crore from the market through their public issues.

News: Tata may revise Corus takeover offer to top CSN

(PTI 14/01/2007) London - With a deadline set by British regulators approaching fast, the market is abuzz with hopes of a fresh offer from India's Tata Steel for Anglo-Dutch steelmaker Corus this week, a media report said here. The stock market is anticipating a new proposal from Tata Steel that would trump the 5.9 billion pound offer from Brazil's CSN, British newspaper 'The Observer' said. The report cited unnamed sources as saying a new bid was possible this week, although under a timetable set by the UK Takeover Panel, Tatas have until the end of January to decide. "Some observers believe he (Ratan Tata) is preparing to increase his offer to 550 pence a share, well above the 515 pence bid from CSN chairman Benjamin Steinbruch," it said. Tata's advisers are working to finalise a fresh bid, but the decision will rest with Ratan Tata himself, it added. Corus shares have been trading much higher than CSN's offer indicating that the market expects a fresh approach. The shares closed four pence higher at 540 pence on Friday. A deal with either Tata or CSN would create the world's fifth largest steel maker with a combined output of about 24 million tonnes a year. The Indian company had initially offered 455 pence a share for Corus and raised it to 500 pence, aggregating to about 5.7 billion pounds, but was later outbid by CSN with an offer of 515 pence per share (5.9 billion pounds). The paper cited sources close to Corus as saying they expected a further approach from Tata, but it was unclear whether it would come this week or next. The report also quoted unnamed analysts as saying that Tata has large expansion plans in India and Asia, and that it may have less reason to forge a tie-up with Corus than CSN, which is a regional player.

News: Starbucks zeroes in on Delhi, Mumbai

(PTI 14/01/2007) New Delhi - Terming India as a land of 'great opportunities', world's largest coffee chain Starbucks has identified Delhi and Mumbai as possible starting points for its venture in the country with a joint venture partner. "We target opening the doors to our first store in India, with a yet-to-be announced joint-venture partner by the end of 2007 either in New Delhi or Mumbai," a company official told media. While reports suggested that Starbucks has plans to enter the Indian market in partnership with Pantaloon's Kishore Biyani and VP Sharma, Head of Starbucks' Indonesian franchise, the official declined to confirm them. "We do not comment on rumours and speculations. However, we are enthusiastic about bringing the unique Starbucks experience to one of the most exciting growth markets in the world in the near future," the official said. The company plans to target the young adults of the country for expanding its presence in India and also aims to reap the benefits of a growing coffee culture in a traditionally tea-drinking nation. Besides, the company is also seeing robust growth potential in the vast population of the country and an appetite for the western brands among the youngsters here. Earlier, Starbucks' Chairman Howard Schultz had stated that planning and research was well underway for its India plans and the company was holding discussions with potential JV partners. "We are scouting locations, meeting with government officials, all towards gaining additional market knowledge and building critical relationships to make our market entries a success," he said.

News: Puma to add stores, grow quickly in India

(RTR 14/01/2007) Mumbai - Puma will add new stores quickly in India as it makes up for lost time in the fast-growing market, a senior company official said on Friday.

The Bavarian firm, which has a leaping red puma logo, has been in India since mid-2005, first through a licensing deal with an Indian firm and then through a wholly-owned subsidiary.

It plans to add 25 new stores this year and have 90 to 110 stores by 2010, the managing director of the Indian unit said.

"We've done well in the first year of operations, and want to focus now on setting up new stores quickly and making the brand more visible," Rajiv Mehta said in an interview, declining to specify investment or revenue figures.

Puma, which sponsors soccer world champions Italy, has trailed rivals Nike Inc. and Adidas who entered India about 10 years ago and have grown quickly, helped by their associations with cricket, a national passion.

Nike is the Indian cricket team's official kit sponsor, while Adidas and its Reebok unit are endorsed by some cricketers.

Puma has signed on an Indian squash player and would look at signing local cricket clubs and individual cricketers, Mehta said, as well as working with Indian designers in a few years.

"We are using the sports lifestyle peg in India, so we would lean more towards fashion," Mehta said at a newly opened store -- located opposite a Nike store in one of Mumbai's upmarket malls.

Puma has said it expects growth to come from Asia and Latin America, and a quarter of its international revenue to come from China and India by 2010.

Puma, which had invested heavily in its soccer unit ahead of last year's World Cup, was now expanding its sports lifestyle fashion unit and also planned to enter areas such as golf bags and swimwear, which it will launch in 2007.

The sportswear market in India is valued at more than Rs 500 crore, KSA Technopak has estimated, with branded players gaining a larger share of a market that also has private store brands and smaller regional brands.

"We don't really care about the market share ... we want to be the most desirable sports goods brand in India," Mehta said.

News: '2007 may see more Indian acquisitions in Europe'

(BL 13/01/2007) Coimbatore - Market watchers at Indusview predict that bilateral trade between India and Europe will hit $ 100 billion by 2010. "2006 saw Indian companies spend around $ 10 billion on overseas acquisitions, with Europe accounting for 42 per cent of the deals. The country saw investment of almost $ 20 billion, of which at least 50 per cent was private equity. But 2007 is set to put 2006's economic growth in the shade," says Bundeep Singh Rangar, Chairman, IndusView.

Rangar foresees a steep rise in external Indian investments this year, as European companies become targets for organisations looking to strengthen their portfolios. Market analysts at Indusview say the year will see record number of Indian companies acquiring businesses in Europe, while Western companies redouble their efforts to take a stake in India.

"With Indian companies investing $ 2 billion in the UK alone in 2006, 2007 could see European land-grab as Indian prospectors search for ways to improve their footing on the international stage," he added. "With many industries reporting good growth in 2006 - such as 28 per cent in IT, 35 per cent in consumer finance and 42 per cent in healthcare - investment overseas looks certain and the outcome would be more jobs, healthy economies and increased trade,'' Rangar said.

News: Tata takes over Ritz

(PTI 13/01/2007) Houston - Taj Hotels Resorts and Palaces, part of India's premier business house, the Tata Group, with 76 luxury hotels worldwide, unfurled its distinctive white-and-gold flag over the 80-year-old classic Beaux Arts hotel facing the Boston Public Garden.

Taj Group bought the Ritz from Millennium Partners in a USD 170 million deal which officially closed on Thursday. The landmark property is Taj Hotels' second US hotel and is part of the company's highly selective global expansion plan.

In 2005, Taj Hotels entered into a lease agreement to operate and manage The Pierre, the luxurious landmark hotel on New York's Fifth Avenue.

The 273-room hotel officially became the Taj Boston at the ceremonial handover. Attending were Taj Hotels CEO Raymond Bickson, General Manager David Gibbons, numerous business, hospitality and neighborhood representatives, and a large contingent of the hotel's employees.

"We believe this is New England's finest hotel and Boston's premier social address, and we are honoured to continue its 80-year tradition of unrivalled hospitality with Taj's 100-year-plus commitment to elegant hotels and quintessential service," said Raymond Bickson, Managing Director and CEO, Indian Hotels Company Ltd, which operates Taj Hotels Resorts and Palaces.

Gibbons said that apart from new signage, new employee uniforms, and various esthetic Taj touches, guests will immediately notice the legendary Taj service and style. The hotel underwent a $60 million restoration in 2002.

"This is a very exciting time to be entering the luxury hotel market in Boston," Gibbons noted. "The city is experiencing a strong economic resurgence and is attracting new business and leisure travelers. We look forward to providing a tradition of international hospitality and pampering that discerning travelers expect and deserve."

Pat Moscaritolo, president and CEO of the Greater Boston Convention and Visitors Bureau, attended the noon flagging event and welcomed Taj to Boston.

"It is a great benefit for Boston and Massachusetts to have a company as renowned as Taj to be the new stewards of this legendary building. Taj runs some of the most magnificent properties in the world. I can't think of a better fit for the city and state," Moscaritolo said.

In addition to the noon flagging ceremony, Bickson hosted an evening reception for over 200 guests at the Taj Boston Dining Room. With a legacy dating back to the launch of its landmark hotel, the Taj Mahal Palace & Tower in Mumbai, in 1903, the Taj portfolio worldwide today encompasses luxury and business hotels, and distinctive leisure resorts, including the award winning Taj Exotica Resort & Spa at Mauritius and the Maldives, 51 Buckingham Gate in London, and Blue, Woolloomooloo Bay in Sydney, amongst others.

News: Sunil Mittal is Fortune's Asia bizman of year

(PTI 13/01/2007) New York - Bharti Airtel chief Sunil Mittal has been adjudged Asia's Businessman of the Year by prestigious US magazine Fortune for steering his telecom business in the world's fastest growing wireless market.

In a lead article in its latest issue, Fortune said after establishing Bharti Airtel as the country's number one mobile service provider, Mittal is now forging his "most audacious" foreign partnership yet.

"In November, he announced that Bharti will team with Wal-Mart to transform India's under-developed retail market," the report said.

News: Coming soon - The great Indian CEO hunt

(DNA 13/01/2007) Mumbai - You have read the growth story. Here is a rider: India Inc’s existential pangs two years down the line will hinge on an expected acute shortage of captains to drive corporate houses. The country will be short of 1,000 CEOs in the next two years, says a survey by HR consultancy Redileon.

The survey says that as surging demand fuels shortage, corporates are ready to shell out big bucks to hire CEOs. The swelling pay packets have no connection with the percentage rise in profits and are purely market driven.

The median salaries of CEOs in the business process outsourcing sector have jumped from Rs40 lakh per annum to Rs2.20 crore in the past four years. Salaries in the IT sector have almost tripled since 2002. The mining and construction sectors will witness the maximum hiring activity. Retailing is also gaining respectability and becoming modernised.

According to Manpower Survey, though the job market is likely to remain vibrant, the insurance and finance sectors are likely to witness a slowdown. While employers’ hiring expectations are strongest in western India, north India anticipates vigorous hiring activity in the first quarter this year.

News: Ancient silk route set to reopen

(HT 12/01/2007) New Delhi - The ancient silk route that helped boost the trade between India and China centuries ago is set to reopen with Indian logistics major Gati Ltd signing an agreement with China Railway Express International Logistics Company Ltd to carry goods on either side of the border in March. The Chinese firm is the global logistics arm of the state-owned China Railway.

The re-opening of the silk route will help slash time and cost for moving goods from South China to India and vice versa. India-China annual trade is in the region of about $20 billion and transportation costs typically account for 10-13 per cent of the total trade. "The transportation cost will drop by about 20-30 per cent and the biggest beneficiary will be the small and medium players," said Rajeev Chopra, country head, international, at Gati. The time of carrying goods is expected to also be halved, he said.

Typically, the cost of moving a 20-foot container by sea from Shanghai to Nhava Sheva in Mumbai is about $ 950. From the port, it takes another $ 800 for moving the box to Delhi by rail and road. At present, machinery, electronics and textiles are transported by sea from China to various Indian ports at the first stage and from there through a mix of rail and road to inland locations. The entire exercise takes about 40 days.

"This will be halved to 20 days or even less once we starts operations," Mahendra Agarwal, CEO of Gati told reporters after signing the agreement with China Railway to co-operate in freight forwarding, ocean freight, courier and logistics services earlier this week in Mumbai.

China Railway runs dedicated freight trains from five key locations in China to Lhasa on the Tibetan border. Chinese Trucks will cart cargo on the 650 km-stretch from Lhasa to Nathula Pass linking Sikkim.

From March, Indian trucks will go up to Nathula Pass, 30 kms into the Chinese territory, pick-up and move the goods into India. Agarwal said that roads on both sides were not in a good state to move containers on trucks carrying 7-8 tonnes. "But, China is expanding its railway and improving its road network and the situation will improve soon," he said.

"We are re-inventing the silk route that our ancestors invented about 2000 years ago. But, this time, goods will not be moved on camel backs but on trucks," said Qiao Song, vice president, China Railway Express International Logistics.

Song is looking at a market share of $ 200-230 million and Gati hopes to earn $10 million as freight revenue from the agreement with its Chinese partner during the first 12 months of operations. This will help raise its overseas revenues to 15 per cent from 9 per cent of its total turnover. Gati will invest $ 100 million by 2009 to build warehouses, racking systems, material handling equipment and information technology.

News: Rs 80 lakh for area of 425 square feet!

(DNA 12/01/2007) Mumbai - The skyline of the Bandra-Kurla Complex (BKC) will now leap a decade ahead, with negotiations on to clear 3.91 acres of land occupied by at least 496 tenants.

A sum of around Rs 400 crore is expected to change hands to buy these blocks, situated in a cluster called Tata Colony, just behind BKC police station.

BKC, which is the destination for multinationals and leading corporates, will now also house malls which can accommodate thousands of shoppers, according to sources. Tata Colony houses 496 residents from the lower and middle classes. Each occupant is getting Rs 80 lakh for vacating their current 425-sq-foot area.

Late on Wednesday, a meeting between the representatives of the Tata Colony Housing Society and officials from M K Malls and Developers Private Ltd was held, for the buyout of the 496 blocks owned by tenants who have stayed there for 26 years. The developer has offered Rs 80 lakh to each tenant. Each block has an area of 425 sq feet.

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At the meeting, held at the office of the Uttar Bhartiya Sabha in Bandra (E), the developer was ready to distribute cheques of Rs 5 lakh each as the first instalment for the deal. As the developer was not committing to a time-frame by which he would pay the remaining Rs 75 lakh, the 492 tenants refused to accept the token amount. However, four tenants took the token amount after signing the documents.

"A new meeting is proposed soon to come to an amicable solution," said Mohammed Salim Rizvi, one of the tenants. The officials from the M K Malls and Developers Pvt Ltd could not be contacted.

It may be recalled that Reliance Industries created a buzz a year ago by bidding for a 7.5- hectare plot in BKC for Rs 1,104 crore, making the complex one of the most sought after pockets in the city. The bid, priced at Rs 18,104 per sq foot, set real estate prices in the suburb skyrocketing.

News: 'Indian biz owners most confident in world'

(BL 12/01/2007) New Delhi - With robust domestic economic growth and growing acceptance of 'India story' on the global arena, Indian business owners have emerged as the most confident lot worldwide about the prospects of their economy for fourth year in running, a new study shows. Besides higher level of confidence in the overall economy, Indian business owners are most optimistic globally about growth of their business turnover as well, according to an International Business Report (IBR) survey published today by Grant Thornton I nternational. Asian business owners continue to be the most confident in the world with India, Philippines, China and Singapore, taking the top four positions in the IBR survey. "It is remarkable to note the jump in confidence over the Indian economy among Indian business owners," Vishesh Chandiok, Partner & Director- International Business, Grant Thornton India said. "For the fourth consecutive year, Indian business owners are the most optimistic among over 7,000 others in 32 countries globally," he said. This business confidence of Indian business owners is marking the steady stream of global acquisitions by large and medium Indian corporates. The initial findings from the International Business Report (IBR) from Grant Thornton International published showed that medium to large privately held businesses around the world are considerably more optimistic about the prospects of their economies in 2007.

News: Indian nets $100 m via PartyGaming stake sale

(PTI 12/01/2007) London - One of the two Indian founders of online poker company PartyGaming has hit a jackpot of $100 million (about 50 million pounds) by selling more than half of its holding in the company.

Vikrant Bhargva, former marketing director who had quit his position last year, yesterday sold 160 million shares, accounting for about 4% stake in the company, at a price of 30.5 pence a share.

Bhargava, who had co-founded PartyGaming with another Indian and a fellow student at IIT Delhi Anurag Dikshit, now holds less than 3% stake in the company. Dikshit remains the largest shareholder with 29% stake.

Bhargava had left the company in August last year to join a new hedge fund of funds Sirius. He is believed to have invested the proceeds from the sale of his stake in this fund.

The two Indians had founded the company with other two founders, former internet porn enterpreneur Ruth Parasol and her husband Russ DeLeon, who each hold a 15% stake. None of the four promoters are involved with the company's day-to-day operations.

The sale of shares by Bhargava follows a plunge of nearly 60% in the London-listed company's share price after a crackdown on internet gambling in the US, from where PartyGaming's most of the business revenues originated.

Subsequently, the Gibraltar-based company had started focussing on European and emerging markets, while it had sold its US operations for a token amount of $1.

The company had closed down its 800-employees strong call centre in Bangalore after shutting US operations.

News: Reliance Ind to invest $15 b in Gujarat

(RTR 12/01/2007) Ahmedabad - Reliance Industries Ltd. plans to invest Rs 67000 crore ($15 billion) in creating energy infrastructure in the state of Gujarat, its chief, Mukesh Ambani, said on Friday.

Ambani said in addition to a $6 billion refinery, already under construction in a special economic zone in the state, Reliance would set up a polypropylene plant, and a coal and lignite gasification project.

There would also be a port, city gas distribution projects and a natural gas pipeline.

Reliance, which is also the world's top polyester producer, is setting up a 540,000 barrel per day (bpd) refinery through its subsidiary Reliance Petroleum Ltd. next to an existing 660,000-bpd unit in Gujarat's Jamnagar. "Apart from this, we intend to firm up our initiatives in agriculture and farming," Ambani said at an annual investors meet organised by the Gujarat government.

Shares in the company closed 3.5 per cent higher at Rs 1,340.10 in a strong Mumbai market.

"Reliance's investment in Gujarat alone will generate direct and indirect employment opportunities for approximately 200,000 people," Ambani said.

Reliance has a market cap of nearly $ 40 billion.

News: Hyundai India unable to meet demands

(HT 11/01/2007) New Delhi - It is a problem car companies in Detroit would love to have these days: not enough cars to meet soaring demand.

But that is exactly what is happening with Hyundai Motor India Ltd. Insufficient capacity is crimping the carmaker's ability to meet domestic demand as well as serve export markets from its Chennai plant. As a result, the car giant has to revise downward its India sales growth expectations this year to a five-year-low: down 5 percentage points compared with 18.5 per cent last year.

The Indian unit of the Korean carmaker is running at a full capacity of three lakh vehicles at its Chennai plant that makes cars for both the home and export markets. Hyundai is working on adding a second manufacturing facility in the same city that will double capacity. The only catch: the second factory will only be operational 11 months from now, in November.

"On hindsight, we have miscalculated" the demand and capacity match for the cars, said Arvind Saxena, vice president for marketing and sales at Hyundai.

Hyundai, which makes the popular Santro model in India, sells 1.86 lakh cars a year making it the No 2 seller in India. The rest of its production out of India is currently exported.

Market leader Maruti sells half of the passengers cars bought in India's 10 lakh-a-year market. This market is forecast to grow at 15 per cent to 18 per cent in 2007 with vehicle demand hitting two million units by 2010, according to the Society of Indian Automobile Manufacturers.

In a market where 2,740 cars are bought every day, the capacity bottleneck may hurt Hyundai's market share, analysts say.

"Domestic sales (for Hyundai) might get hit unless they have flexibility on export orders," said Ashutosh Goel, auto sector analyst for broking firm Edelweiss Securities.

But Hyundai uses its Indian factory to make all the Santros it sells worldwide. The company is also India's largest exporter of cars, even though the Chennai unit makes only 11.2% of the 2.6 million cars it makes globally. And Hyundai says it already has an export order backlog from Chennai of 18,000 vehicles.

So, Hyundai employees are putting extra effort to get more cars out of its existing factory.

Many Hyundai employees in India are sporting badges that say CC34, for Challenge and Change 34. The internal target: produce 3.4 lakh cars a year from a factory that is built, under normal production conditions, to produce three lakh vehicles. "We will do our best to make sure we won't lose market share" said Saxena.

While India is a strategic market for Hyundai, any decline in growth rates is likely to have a small impact on the parent company, Hyundai Motor Co. That's because India is a small part of overall sales of Hyundai globally, notes Sanjeev Rana, an analyst with Merrill Lynch in Seoul. He currently has a neutral recommendation on Seoul-based Hyundai Motor Co.

News: FDI inflows likely to beat portfolio capital

(BS 11/01/2007) New Delhi - For the first time in several years, net foreign direct investment inflows into the country were projected to be larger than portfolio capital inflows.

The net FDI for 2006-07 would be around $9 billion, up from $4.7 billion last year, the Prime Minister’s Economic Advisory Council said in its update on the country’s balance of payments outlook for this fiscal.

“This comprises in-bound FDI of around $12 billion and out-bound FDI of $3 billion. The portfolio capital inflow is likely to be $7 billion this fiscal,” the council said in its report released here today.

The current account deficit was likely to be 1.5 per cent of the GDP for the year and $22.6 billion would be added to the country’s forex reserves in 2006-07, up from $15.1 billion last year, the report said.

The council has estimated the current account deficit for the full year at $13.4 billion, which is 1.5 per cent of the projected GDP of $900 billion for 2006-07. The figure stood at $6.5 billion for the first half of the current fiscal.

“Of the forex accretion, $8.6 billion has already been absorbed in the April-September period. It is estimated that another $6-7 billion must have come during October-December, leaving a likely amount to be absorbed in Q4 of this fiscal. The monetary policy has to take this into account,” the report said.

With the increase in exports and imports, the ratio of total trade to the GDP, signifying the extent of global integration of the Indian economy, would be 35.9 per cent this year, up from 32.8 per cent last year. If software exports were also included, the ratio this year would go up 39 per cent.

The council, which had earlier expressed concern over divergence of trade data of the RBI and the Directorate General of Commercial Intelligence and Statistics, has noted a significant improvement, as the disparity has narrowed by about 50 per cent.

POSITIVE SIGNS

The net FDI for 2006-07 are expected to be around $9 billion, up from $4.7 billion last year The current account deficit is likely to be 1.5 per cent of the GDP for the year According to the report, $22.6 billion would be added to the country's forex reserves in 2006-07, up from $15.1 billion last year The council has estimated the current account deficit for the year at $13.4 billion, which is 1.5 per cent of the projected GDP of $900 billion for 2006-07. The figure stood at $6.5 billion for the first half of the current fiscal

News: Infy number magic stuns all

(TT 11/01/2006) Bangalore/Mumbai - Infosys Technologies — the country’s second largest software exporter — kicked off the earnings season for India Inc in the third quarter with a sterling 51.5 per cent year-on-year growth in net profit at Rs 983 crore, but the Street walloped the stock in early trading because of the company’s muted guidance for the fourth quarter.

The third-quarter results easily beat the Street’s estimates but the worry was that a surging rupee could skewer prospects in the fourth quarter.

Infosys, which had plunged to a low of Rs 2,100 in early trade, bounced back to settle Rs 14.25 (or 0.66 per cent) higher at Rs 2,183 against previous close of Rs 2,168.75 with over 10 lakh shares traded. It surged to a high of Rs 2,214. The stock, which lost as much as 3.1 per cent at one stage, came off its lows to surge to a high of Rs 2,214.40.

The software giant reported a 44.4 per cent rise in revenues at Rs 3,655 crore even as it added 43 clients and ramped up its overall employee base to 69,432.

The company’s net profit margin stood at 26.89 per cent versus 26.95 per cent quarter-on-quarter and operating profit margin at 32.72 per cent compared with 32.13 per cent last quarter.

Its BPO arm, renamed Infosys BPO, saw a 20 per cent quarter-on-quarter growth.

“Our investments in enriching and synergising our portfolio of services have created compelling value propositions for our clients,” CEO and MD Nandan Nilekani said.

COO and joint MD S. Gopalakrishnan said the company had delivered double-digit revenue growth in dollar terms for the third consecutive quarter during this fiscal.

“We have seen accelerated growth in Europe, which continues to be a key focus market for us,” he added.

But there was a couple of worries for the company: a surging rupee knocked 200 basis points off the operating margins.

The guidance for the full year ended March 31 and the fourth quarter were fairly modest showing less than half a per cent revision over the guidance issued last October. It forecast revenues between Rs 13,910 crore and Rs 13,919 crore for the full year and between Rs 3,789 crore and Rs 3,798 crore for the fourth quarter.

The weak guidance left analysts a little disappointed. “The fourth quarter implies a 4.9 per cent growth in dollar terms and 3.9 per cent in rupee terms,” said Citigroup analysts.

But the analysts said the biggest positive sign in the results was the fact that offshore pricing had improved 1.7 per cent sequentially while onsite pricing had risen 1.9 per cent.

News: Ashok Leyland unit to set up plant in UAE

(BL 11/01/2006) Mumbai - Ashok Leyland Ltd on Thursday said it has formed a unit in the United Arab Emirates (UAE) for setting up an assembly plant for manufacturing bus body parts.

In a notice to the Bombay Stock Exchange, the Chennai-based bus and truck maker said the plant would cater to the Middle East and neighbouring markets.

News: PayPal to open development centre in India

(RTR 11/01/2006) Mumbai - PayPal, the world's most popular online payment system, is setting up a development centre in India and plans to fill hundreds of technical positions, it said on Thursday.

PayPal, a unit of online marketplace eBay Inc. is setting up the centre in the southern city of Chennai and plans to hire hundreds of professionals for product development, software engineering and other functions, it said in a statement.

It did not disclose financial details.

News: Tesco tries again in India with Tata retail talks

(TB 10/01/2007) Mumbai - TESCO has begun talks with Tata, one of India’s biggest companies, to form a retail joint venture to break into the country’s $300bn (£154bn, E230bn) retail market.

Britain’s largest grocer, the world’s third largest supermarket chain, has urgently been seeking a new local partner in India after losing the race to tie-up with Bharti Enterprises, which was won by its American rival, Wal-Mart. The move will surprise the markets as Tata had previously said it was not in talks about a move into food retailing.

Krishna Kumar, director of strategy at Tata Group, said: “We may have had some exploratory discussions with Tesco but that does not mean we have made any decisions on either strategy or partner.”

The talks are not exclusive and Tesco is in discussions with other potential partners. A source close to the situation said: “Tesco has recently held talks with Tata along with a number of other retailers and wants to move quickly.”

Overseas businesses account for 60% of Tesco’s total floor space and India, along with America and China, are key regions for growth in 2007.

It needs to move swiftly in a market dominated by small one-off family run businesses now being targeted by the world’s retail giants. Tata owns 21 Westside clothing stores through its Trent retailing division. Established in 1998, it is one of India’s largest and fastest growing chains.

India only allows foreign supermarkets to enter if they partner with local firms and operate in the wholesale market. Germany’s Metro is already in India; other big players are Pantaloon Retail and Reliance Retail.

News: Indian hotels upgrading to five-star standards

(TNN 10/01/2007) Mumbai - For an average Indian consumer, a five-star hotel would be a luxury but it is turning out to be a necessity for the Indian hotelier.

Spiralling land prices in India are forcing several hotel companies to upgrade their three-star or four-star hotel projects to fivestar levels. Out of the 300 hotel projects recently approved by the government, 55% is understood to be luxury hotels, accounting for about $1.6 billion in investment.

One of the key reasons for this is the higher profitability and revenues that accrue from higher five-star hotel occupancies compared with low-budget hotels. Also, an upbeat demand for high-end hotels, especially in leading metro markets given the growing traffic of international tourists in a booming business environment, has fuelled the rush for such projects.

“Real estate firms with enhanced financial capabilities are jumping in to get land parcels at unheard of prices and the high land cost component is limiting their focus to luxury hotels. Midmarket and budget hotel projects need either a cooling-off in land prices or an assistance from government in form of lease or sops,” said Mr Saurabh Gupta, senior associate, HVS International, a global hospitality consulting firm.

Globally, land costs account for 15-20% of the total project cost. In India, the real estate component in the total project cost has shot up to 50% compared to 25-30% a few years back, and this has driven them to set up luxury rather than budget hotels. The new hotel properties are expected to add an additional 12,332 rooms in the luxury segment and 15,924 room in the five-star category out of a total 53,333 rooms in the various metro markets across the next 3-4 years.

Despite all the interest generated by mid-market and budget hotel development, developers in India still like to associate with fivestar deluxe brands because of the ‘snob value’ attached to it, say industry sources. The hospitality industry is currently witnessing unprecedented growth and the increase in revenue and profitability of most of the premium hotels is an indication of this, says Binaifer Jehani, analyst, Cris Infac.

A buoyant domestic and global economy indicates a continuous demand for hotel rooms across the country. Hotel companies in the recent past have hiked rooms rates by 20-40% and occupancy rates have been averaging at 74-78%. Interestingly the average room rate for a five- star is up 27% to Rs 7,000 in 2005-06 as compared to a three-star which is up by just 12% at Rs 2,050 a night.

Strong tourist inflows, business as well as leisure, growth in the aviation and real estate sectors on the back of a growing economy have fuelled a very strong demand for hotels. However, running a five-star hotel isn't as easy as setting up one. The luxury hotel segment is also characterised by its higher service orientation, which makes it particularly vulnerable to the manpower crunch, sources said.

News: Indian Railways to sign land deals with retail majors

(TNN 10/01/2007) New Delhi - Railways is all set to sign a partnership agreement with retail majors. It is preparing a draft policy outlining the modalities of partnership with retail players.

“The draft will be ready within a fortnight,” a senior official at Rail Bhawan said. Mukesh Ambani-owned Reliance Industries (RIL), Kishore Biyani’s Future Group, Sunil Mittal’s Bharti, Tatas and Adanis are some of the retail players that are at an advance level of talks with the Railways for setting up agri-retail hubs, cold storage houses, multi-purpose warehouses on excess land in cities and villages.

The Railways have no plans to venture into real estate business, but they would tie-up with retail giants and real estate developers to set up pan-India agri-retail hubs, where they would have land as an equity.

Commenting on the recent agreements with private firms for the container operations, he said, there would be a high-level meeting between the Railways and the new private players who have submitted their expression of interests for the second round of container train allotment on January 15.

RIL, Kribcho and Cargill are among the private players, who have bid for the second round of the container business. The Railways hope to rake in at least Rs 1,500 crore in the second round as licence fees, as compared to the first round where they just managed to earn Rs 540 crore through 14 private operators. This time, they are expecting a turnout of at least 30.

The official said retail and container business would swell the Railways coffer in a big way. “While in containers, we hope to carry at least 100 million tonne in a span of 10 years, the retail would be a de-risking model for us,” he said. Railways, he said, in order to sustain the current profit margins, would have to diversify substantially.

News: MNC profits sent abroad ‘dodging tax’

(HT 10/01/2007) Mumbai - Multinationals, the Income-Tax (I-T) department has claimed, have found a unique way of evading tax. An investigation completed in December 2006 showed that many of them simply adjusted profits made in India against losses incurred in other countries to avoid paying tax. I-T sleuths found that about Rs 1,000 crore of profits were thus never declared and tax on them never paid.

I-T department officials, who declined to be named, said their Assessment Wing was sending out notices to the evaders, demanding that they cough up Rs 1,400 crore in taxes and penalties.

The officers said 140 multinationals had been identified as evaders from the 570 firms investigated in Mumbai.

The overseas transfer of profits detected so far this financial year is double that of last year.

A senior I-T officer said these multinationals comprised 91 per cent of the violators this year, while the rest were domestic. He identified automobiles, pharmaceuticals, banking and financial institutions, logistics, chemicals and information technology as the sectors in which such illegal transfer of profits was rampant. The top defaulting domestic sector was diamond works.

Explaining the modus operandi, an officer said the branches in Mumbai adjusted profits by transferring them to their branches or sister concerns overseas.

"This way, they evade taxes in both countries," the officer said. Some companies transferred profits by "shifting funds to tax havens like Mauritius and the Virgin Islands".

The I-T department, the officer added, is asking the Union Finance Ministry for permission to reinvestigate last year’s records of the defaulters.

News: India to bargain for stake in future Sakhalin projects

(PTI 10/01/2007) New Delhi - India will make a strong plea for Indian firms getting a stake in future Sakhalin projects in Far East Russia when Russian President Vladimir Putin visits New Delhi later this month.

With ONGC Videsh Ltd's 20 per cent stake in Sakhalin-I fields fetching the country 2.4 million tonnes of crude per annum, India, which is 73 per cent import dependent to meet its energy needs, will use the visit of Putin to participate in the country's Republic Day celebrations to push for OVL's participation in the 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.

New Delhi 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 joint venture with either Rosneft of Russian gas monopoly Gazprom to pursue other oil and gas exploration opportunities in Russia.

OVL would also seek an agreement with Rosneft for the development of the Vankor field, in which Rosneft 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."

News: Indian auto industry on the upswing

(HT 10/01/2007) New Delhi - The domestic automobile industry continued to be on the upswing with passenger vehicles sales growing by 20.76 per cent in the nine months of the current financial year (April-December 2006).

The car companies sold 9,7,372 passenger vehicles in the first three quarters of the year compared to 8,09,337 units sold in April-December 2005.

Domestic passenger car sales in December 2006 was 81,026 units compared to 65,853 units in December 2005, a growth of 23 per cent, according to the latest data released by Society of Indian Automobile Manufacturers (SIAM). The growth in December sales is commendable as it bucks the usual year-end decline in the automobile industry.

In the motorcycles segment, sales grew 4.5 per cent at 4,92,288 units as against 4,71,075 units December 2005. Commercial vehicles sales during the month went up 49.6 per cent at 41,952 units as against 28,044 units in December 2005.

Motorcycles and step-through sales posted a growth of 15.81 per cent the first three quarters with overall sales touching 49,59,864 units compared to 42,82,930 units between April and December 2005. Commercial vehicles sales grew 37.15 per cent to touch 3,27,039 units as against 2,38,447 units in the three quarters of 2005-06, SIAM said.

Growth of medium and heavy commercial vehicles was 39.12 per cent with 1,92,336 units being sold in the nine months of the current financial year as against 1,38,251 units in the same period in 2005-06. Light commercial vehicles also performed well with a growth of 34.44 per cent to touch 1,34,703 units between April-December 2006.

Overall automobile exports registered 28.74 per cent growth rate in April-December 2006 over the same period last year. Passenger vehicles grew by 13.97 per cent with 1,48,781 units being sold overseas in the nine months of the current fiscal as against 1,30,545 units in the corresponding period last year.

Two-wheeler exports grew by 25.76 per cent 7,70,309 units as against 5,98,289 units between April-December 2005. Three-wheeler overseas sales touched 1,04,154 units, a growth of 83.22 per cent.

News: 'Indian real estate firms have to be honest to attract foreign capital'

(BS 10/01/2007) Bangalore - Dr Cor van Zadelhoff is no stranger to India and comes here for both work and pleasure. A pioneer in the European real estate business, he has friends among the Indian royal families through the polo circuit.

Brand ambassador for the global real estate adviser DTZ, 68-year-old Zadelhoff is also on the boards of several European firms with specific business interests in India.

He finds India has tremendous scope for foreign investment in the real estate sector. “The Indian economy is growing at a healthy rate. A lot of western companies will continue to offshore their work to various Indian cities. The potential for real estate is visible.”

But the key to hitting it big for real estate firms is honesty and transparency.

“Nearly five dollars are chasing every dollar of real estate product. Eight to 10 dollars are chasing every dollar of a real estate asset. So much capital is on the move. A local partner with knowledge combines well with foreign capital. The Indian real estate firms have no choice other than displaying transparency and honesty to attract foreign capital,” he points out.

The flow of foreign capital can be unending, Zadelhoff feels, if the Indian real estate firms latch on to corporate governance standards.

Zadelhoff is not merely appalled by the “oversupply” in the real estate market, but is shocked with the quality of construction. “This tendency has to be stopped. The quick growth of the real estate market has led to poor construction,” he says.

He intends to cash in on this “poor quality” and “over supplied” market to propel DTZ India’s growth. “Poor quality of construction means few takers. So the options are limited. This is where we step in to ensure a quality product,” Zandelhoff says.

Zadelhoff founded his organisation in 1968. In 1990, an international joint venture was created between five European commercial real estate agencies to form DTZ (Debenham Thorpe Zadelhoff). It has expanded its network to 42 countries. Zadelhoff is also the CEO of his private investment group, which holds real estate valued at approximately Euro 30 million.

In the last two years, the Indian arm of DTZ has grown to a staff strength of 150. In the last six months, the firm has facilitated major firms like Google, SAP Labs, AOL and Aviva in moving to new campuses.

“The intention is to take the staff strength of DTZ India to 1,000 over the next 10 years. At least 35 cities are under the scanner for expansion,” notes Zadelhoff. But that number pales in comparison to China where 4,000 of DTZ’s total staff strength of 10,500 are employed.

“Nearly 40 per cent of our employees are in China. But definitely India is a growing market where we see strong potential for us to make a mark. We are ready to bring in our clients provided the standards are met,” concludes Zadelhoff.

News: Burger King, Pantaloon in JV talks

(BS 10/01/2007) Mumbai - Retail major Pantaloon is in talks with Miami-based Burger King for the latter’s India foray. Confirming the development, sources in the know said that both the firms had been talking on the matter for a while.

A Burger King spokesperson said, “We are at an initial stage of exploring the marketplace. It is too premature to for us to discuss this matter.”

The sources said the proposed arrangement might follow a strong franchisee model in the country as Burger King has been doing franchisee-based ventures across many countries.

Kishore Biyani, chairman of Future group, which owns Pantaloon, did not want to comment on the issue.

According to the NYSE webiste, as on June 30, 2006, Burger King owned or franchised a total of 11,129 restaurants in 65 countries and US territories, of which 1,240 restaurants were company-owned and 9,889 were owned by franchisees.

The company website says 90 per cent of its franchises are owned by independent franchisees — many of them family-owned operations. It operates in three regions: United States and Canada; Europe, West Asia and Africa and Asia-Pacific and Latin America.

In December 2006, Burger King had announced that it would start its Japanese operations in mid-2007.

On Pantaloon tying up with Burger King, a retail analyst said, “Since the group has interests in the fast food business, there is a fair possibility of a tie-up.

As the group runs Chamosa food counters, Cafe Bollywood eatery chain across the country, it is a good business proposition for the company,” he said.

Earlier, there were reports about Pantaloon tying up with the Seattle-based coffee chain Starbucks for its India foray. In October 2006, Starbucks said it wanted to expand in 40 countries including India.

Starbucks had said that it was negotiating the terms of a joint venture in India, with an initial focus on New Delhi and Mumbai. Pantaloon spokesperson denied to comment on the Starbucks issue.

News: NYSE, 3 others take 20% in NSE

(BS 10/01/2007) New Delhi - In the first instance of foreign direct investment (FDI) in an Indian stock exchange, the New York Stock Exchange and three financial investors — General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund — have picked up a 5 per cent stake each in the National Stock Exchange (NSE) for $490 million (Rs 2,205 crore).

This pegs the upper-end valuation of the country’s largest bourse at $2.5 billion (Rs 11,250 crore). The NSE had recorded a net profit of Rs 191 crore on a revenue of Rs 472 crore for the financial year ended March 31, 2006.

The NSE can still offload another 6 per cent (maximum of 5 per cent to a single entity) to any foreign investor barring these four. With this headroom and valuations discovered, it is likely that other shareholders like the State Bank of India may also seek to realise value from their investment in the exchange.

Investors who have sold their stake in the NSE include the Industrial Finance Corporation of India, IL&FS, ICICI, General Insurance Corporation and Punjab National Bank, which sold 7, 5, 5, 2 and 1 per cent stakes, respectively. The entire transaction was co-ordinated by IL&FS.

The NYSE has acquired the 5 per cent stake at a lower price — $115 million — over the $125 million each paid by the other three investors. This is because the NYSE has agreed not to pick up a stake in the Bombay Stock Exchange (BSE).

“The discounted price is to reward the NYSE for agreeing not to pick up stakes in any other stock exchange in India,” a source close to the development said.

The development comes in the backdrop of the BSE having shortlisted the London Stock Exchange, the Nasdaq, the Deutsche Borse and the Singapore Stock Exchange for offloading up to a 26 per cent stake, the maximum permissible FDI in stock exchanges. The NYSE was also on the list but the NSE deal has put it out of the reckoning.

The NYSE, however, is free to pick up stakes in commodity exchanges. Additionally, there is no restrictive clause for the three other investors, General Atlantic, Goldman Sachs and Softbank, which implies that they can pick up stakes in other stock exchanges, including the BSE.

NSE Managing Director and CEO Ravi Narain said the deal was likely to be completed before March after approvals from the Foreign Investment Promotion Board and the Reserve Bank of India. “There is no immediate plan for any initial public offering or capital expansion plan,” he added.

For the NYSE, the 5 per cent stake is strategically important. It will work closely with the NSE to increase efficiency and reduce cost of operations.

“Our interest is totally strategic. This is the beginning of a long-term relationship,” NYSE Group Executive Vice-President and Chief Financial Officer Nelson Chai said.

News: ICICI Bank mops up $2bn via overseas bonds

(BS 10/01/2007) Mumbai - ICICI Bank today raised a record $2 billion of dollar-denominatd debt from overseas markets to fund loans growth in the country and also global expansion.

It raised the funds through floating-rate bonds of $500 million maturing in 2010, $750 million fixed-rate notes maturing in 2012 and $750 million fixed-to-floating rate bonds due in 2022.

With this fund raising, ICICI Bank has raised about $4 billion (close to Rs 20,000 crore) of debt, including Tier 1 and Tier 2 capital, in the current financial year.

Vishakha Mulye, group chief financial officer at ICICI Bank, said $1.25 billion would be used for the bank’s international operations and the third tranche of $750 million is upper Tier 2 capital for domestic operations.

ICICI Bank priced the issues at the tighter end of the price guidance. The three-year bonds are priced at 54 basis points above London Interbank Offered Rate (LIBOR), while the five-year fixed rate bonds at 5.75%. The 15-year subordinated bonds, qualifying as Tier 2 capital, carry fixed coupon of 6.375% for the first 10 years and thereafter, 228 basis points above LIBOR. The six-month LIBOR was 5.24% yesterday.

Citigroup, Deutsche Bank AG and Merrill Lynch & Co managed the sale of the three bonds.

News: A difference of opinion

(TT 10/01/2007) New Delhi - Did top industry houses like the Tatas lack the wherewithal to go global 10 years ago? Or were they constrained by “restrictive” government policies?

Finance minister P. Chidambaram and Tata group chairman Ratan Tata did not quite agree with each other on the issue at a panel discussion at the three-day Pravasi Bharatiya Divas celebrations.

While addressing a session on How to Get $1.5 Trillion of Capital Investment: The Resource Hurdle for Development, Chidambaram asked whether the Tatas would have bid for Anglo-Dutch steel firm Corus a decade ago. According to him, the group would not have “dared” to do so.

“If I were to ask Tata 10 years back if he would have bid for Corus, he would have said, ‘I don’t know’. But in his heart he would have asked, ‘How could I dare to?’,” said Chidambaram.

Tata, however, insisted that he simply could not because of “restrictive” and binding government policies that were prevalent then.

Chidambaram was drawing attention to a spate of mergers and acquisitions (M&A) made by Indian companies, especially in the past couple of years.

According to a study conducted by market research agency Grant Thornton, 480 M&A deals worth $28 billion were made by Indian businesses in 2006, an increase of 52 per cent over $18.35 billion spent in 2005.

According to Chidambaram, corporate India has changed its outlook and broadened its horizon to expand globally. “Today, India has changed, and the Tatas have bid for Corus,” he added.

Tata, however, said, “I have a different view from the finance minister. I would have simply told him that I could not (have bid for Corus)... because of the policies.”

The industrialist said the reforms process in the past few years has now enabled Indian entrepreneurs to go global. “As an Indian entrepreneur, I can say lots have changed and policies are much friendlier now,” he said.

News: Stock twist to Corus takeover tale

(TT 10/01/2007) Calcutta - When no one was looking and all eyes were rivetted on the battle for Hutchison Essar, a quiet development in the Corus saga has added a new twist to the other takeover battle: 47 million new shares (or almost 5 per cent of the equity) have been created in the past month through a sudden conversion of bonds that were issued over three years ago by the Anglo-Dutch steel maker.

The 3 per cent guaranteed convertible unsubordinated bonds that Corus had issued in 2003 did not carry any voting rights. They were due to mature on or before January 11 this year.

The bondholders had the option to convert into shares on or before December 28, 2006. But most bondholders did not rush to convert till December 11 after the Tatas revised their earlier offer of 455 pence to 500 pence, only to be topped by Brazilian rival, Companhia Siderurgica Nacional (CSN), which came up with a 515 pence bid within hours of the Tata offer.

The back-to-back offers set the Corus stock, which was rising from early October after the Tatas made their intentions public, on fire.

Bondholders decided to cash in on the opportunity and started converting their holdings into Corus stock.

The creation of the new stock could play the same role as a swing vote in a tight election. Both the Tatas and CSN will now need to rework their strategies.

The conversion to stock from bond does not, however, mean any proportionate rise in bidding cost by either Tata or CSN as both companies would offer enterprise value, which include both debt and equity, for Corus.

But the creation of the new voting rights will certainly play a crucial role in case of photo finish between two bidders.

John Bennett, head of corporate law at London-based law firm Berwin Leighton Paisner (BLP), said it was possible that the Corus board would put both offers to vote.

This may happen “in the event that the board does not make a recommendation because the offers (by Tata and CSN) are on exactly the same terms,” said Bennett.

The Tatas had opted to mount their bid through a Corus management-backed scheme of arrangement. The Indian steel maker had decided that its bid would succeed only if 75 per cent of the voting rights went in its favour.

CSN has now topped the Tata offer and, willy nilly, secured the support of the Corus management for its scheme of arrangement.

The Tatas can re-categorise their bid as a takeover offer and cut the acceptance floor to 50 per cent.

CSN and its financial advisers like UBS AG, Barclays and the Goldman Sachs Group now hold more than 20 per cent of Corus voting rights.

If both offers are put to vote, the CSN advisers will almost certainly back the Brazilian steelmaker.

In such a situation, these new shares could become a crucial deciding factor to determine who will win Corus.

News: Anil Ambani to pursue Hutch deal

(PTI 10/01/2007) Mumbai - The Board of Reliance Communications, a serious contender for Hutch-Essar, on Wednesday authorised its Chairman Anil Ambani to pursue the acquisition, including raising long-term resources for the deal.

Ambani was given the go ahead to take steps for a possible acquisition of Hutch-Essar Ltd and raise long-term resources in the form of External Commercial Borrowings, the company said after the board meeting on Wednesday.

The Board of Directors approved the issue of Foreign Currency Convertible Bonds in overseas markets worth up to $1 billion.

It, however, noted that there was no certainty either on completion or timing of the proposal related to HEL.

Reliance Communications, along with bankers, will commence due diligence of Hutch-Essar on Thursday, sources said.

Essar's bankers have started confirmatory diligence of Hutch, the sources added.

News: Changes in Indian retail FDI policy soon

(BL 10/01/2007) New Delhi - Changes in the Foreign Direct Investment (FDI) policy in the retailing sector can be expected very soon, with Kamal Nath, Union Minister of Commerce and Industry, saying, "You won't have to wait very long for changes in the FDI retailing policy to come through."

He was addressing presspersons at the launch of the India Retail Report 2007. "We have been looking at various sectors that need both domestic and foreign investments. We are also in discussions with the Prime Minister on various aspects of FDI in the sector that would include single brand as well as specialised goods retailing like sports goods, electronics and stationery." The PM had recently asked the Commerce Ministry to prepare a special Cabinet note to allow retailing.

It was important for the Indian retail industry to integrate the unorganised retail market with the organised and find a way out to strengthen the local kirana stores to the benefit of the consumers, rather than wipe them out. He also said that the retail industry in the future would become one of the largest sources of employment, generating around 15 million jobs within the next few years.

Fast growth

The sector was growing at a much faster rate than was expected and at this rate he expected the sector to be worth around Rs 2,00,000 crore by 2010. "The real strength of the sector lies in the emerging domestic retailing brands," he said.

The Ministry, since giving the go-ahead of 51 per cent FDI in single brand retailing, has allowed foreign brands such as Louis Vuitton, Damro, Lladro, FabInida Overseas and Figurines to set up shop in India. It also has rejected the pleas of three foreign brands to enter through the single brand-retailing route, he said.

News: Israeli firms to invest $140 m in Hyderabad

(PTI 10/01/2007) Jerusalem - Two Israeli companies are set to invest $140 million in a real estate project in Hyderabad, a media report here said.

Property and Building Ltd and Electra Real Estate Ltd are holding negotiations to buy a 35 acre plot in Andhra Pradesh's capital for $23 million with an unnamed Indian partner also joining the project, business daily 'Globes' reported.

The talks are said to be in an advanced stage. The companies plan to build a 280,000-sq m residential and commercial complex on the site.

News: FDI inflows to India increased in 2006 - UNCTAD

(PTI 10/01/2007) United Nations - Increasing attractiveness of India, China and Singapore for investors helped South, East and Southeast Asia maintain their upward trend for FDI inflows in 2006, with India surpassing South Korea to become the fourth largest receipent of FDI in the region, the United Nations has reported.

Overall, FDI grew in 2006 for the third consecutive year to reach 1.2 trillion dollars, the UN Conference on Trade and Development (UNCTAD) said but warned that economic growth is likely to slow down this year because of high commodity prices and other factors.

It said FDI inflows to South, East, Southeast Asia and Oceania reached a new high of $ 187 billion in 2006, showing an increase of 13 per cent over 2005.

India, it said, surpassed South Korea to become fourth largest recipient in the region while China, Hong Kong and Singapore were the three largest recipients of FDI.

"Investments in high-tech industries by transnational corporations are growing rapidly in China. Meanwhile other countries, including India, are attracting increasing FDI for traditional manufacturing," statistics released by UN Conference on Trade and Development (UNCTAD) show.

UNCTAD said that outward investment from this region also increased last year, noting that China had consolidated its position as an important source of FDI, while India is also rapidly catching up.

China and India are challenging the dominance of Asia's newly industrialising economies as the main sources of FDI in the developing world, it added.

News: Govt puts Starbucks' retail plan on hold

(Agencies 10/01/2007) New Delhi - The government has put on hold a proposal from Starbucks Corp to open retail outlets in the country as the company hasn't provided complete information about its plan, a senior government official said.

Starbucks was among some 15 companies that applied to open stores in India after its government last year allowed foreign investment in retailing of single brand products.

Nine of those companies have got the government's approval while three were rejected.

Proposals from three others, including Starbucks, are pending with the commerce and industry ministry, the Industry Secretary, Ajay Dua, told reporters late Tuesday.

"We have sought more details on the nature of the business they want to do and the nature of arrangement they want to have," Dua said. He said it wasn't clear from Starbucks' proposal if it wanted to open only coffee shops or also operate a chain of restaurants.

"Once we have their response, and if we are satisfied, we will move the proposal to the FIPB (Foreign Investment Promotion Board) for clearance," Dua said.

Until last year, India barred foreign investment in any kind of retail stores. Last year, it partially eased the policy by allowing foreign investment in single-brand retail stores subject to an equity cap of 51 percent. That has helped companies like Nokia Corp and Adidas to open their own stores.

But multi-product retail giants like Wal-Mart Stores Inc. and Tesco are still barred from setting up their own stores. In October 2006, Seattle-based Starbucks said it planned to have a presence in 40 countries outside the U.S., including India.

Starbucks said at that time it was negotiating the terms of a joint venture for operations in India, with an initial focus on major cities such as New Delhi and Mumbai.

News: Reliance Retail signs telecom deal with Bharti

(ACERC 10/01/2007) Mumbai - Reliance Retail has signed a deal with Bharti Airtel to source mobile and enterprise communication services (which includes mobile, broadband and leased line services) for its retail venture, expected to have a network of 8,000 stores.

Reliance is also looking at a pan-India Wimax network for back-end communication needs of its SEZs, which may be extended to meet needs of its retail venture in the long run. Reliance plans to invest about $750 million (Rs 3,400 crore) to obtain spectrum and lay out the network.

Reliance Retail has already announced that it would be looking at a GSM-Wimax roll out for its mobile and enterprise communication needs. The Reliance group plans to capitalise on the retail opportunity. The retail market size in India is estimated to be about $300, billion which is expected to grow to $427 billion by 2010. Organised retail currently accounts for only 2-3% of the retail market in India.

News: Indiawide broadband network mooted for 11th Plan

(PTI 10/01/2007) New Delhi - The Knowledge Commission on Wednesday said it has recommended connecting all the libraries, research centres and universities in the country with a broadband network. "The recommendation is for a 100-megabit network with 5,000 nodes," Commission Chairman Sam Pitroda said, adding that the approval from government would come soon and the scheme should be included in the 11th Plan. All the major telecom service providers should be roped in for building the broadband network, Pitroda said. Pitroda was speaking on the sidelines of the signing of a three-year MoU between industry body CII and American Association of Physicians of Indian Origin (AAPI) to promote healthcare sector in India. Broadband connectivity would facilitate telemedicine, which is one of the areas of cooperation in the agreement signed, Pitroda said. "Telemedicine will connect the health centres and district hospitals. It keeps electronic data of the patients and treatment given to them," AAPI President S Balasubramaniam said. "CII has committed to 100 Healthy Villages and the programme will be rolled out in 2007. Companies would adopt these villages. While Hero Honda will take charge of 20 villages, Bharti Airtel will take ten. Infosys and Hindustan Times too would chip in," Chairman of CII National Committee on Healthcare Naresh Trehan said. The 100 villages would be in the states of Bihar, Rajasthan, Haryana, Punjab, Madhya Pradesh and Uttar Pradesh. Trehan said the first pilot project would be set up in Patna

News: India tea productivity seen up 30-50% in 5-7 yrs

(RTR 10/01/2007) Kolkata - Minister of State for Commerce Jairam Ramesh said on Wednesday the country's tea productivity would grow by 30-50 per cent in 5-7 years with the help of a special fund being set up for the industry.

"We hope with the tea rejuvenation package in place, the tea production would increase manifold," Ramesh said.

News: Expand remittances for at least 10 yrs - FM to NRIs

(PTI 09/01/2007) New Delhi - Expressing confidence that the Indian economy would clock close to 9 per cent growth this fiscal, Government on Tuesday promised NRIs of coming out with financial instruments for attracting their remittances for longer duration. Pointing out the NRI remittances to India, on an average are of three-year duration, Finance Minister P Chidambaram asked them to expand their horizon to bring longer term money for at least 10 years, as well as their expertise in various fields into the country. Addressing a Pravasi Bharatiya Divas seminar here, Chidambaram promised NRIs that the government would bring new financial instruments and institutions to help them bring longer term money and their knowledge base into India. He particularly asked them to bring their expertise to put agriculture on a sustained growth path of not less than four per cent in a year so that fruits of growth could reach every section of society. "I am confident this year would end close to nine per cent. I don't know where the decimal would fall," Chidambaram said, adding the government aims to sustain the high growth rate of the economy. This aim was not just imaginary, but what has been demonstrated by south east Asian countries in 1980s and currently by China, he said. Two tools that would enable India sustain the high growth rate is investment and knowledge, he said, asking the NRIs not to limit their remittances for short period and think for the long term. "There is no limited horizon of three years. Captains of industry has unfolded plans for ten to 20 years. For the first time, you find Indian industry acquiring businesses abroad. NRIs should also expand their horizon," he said. If NRIs do that, Chidambaram promised to come out with new financial instruments to receive the money. To a question from the floor, he said whatever political parties may say in opposition, reforms have never been reversed in India which should give NRIs confidence enough to put their money for longer duration in India. Pointing out that knowledge base of NRIs was much more important than physical wealth, he admitted there was no institution in India on the lines of Foreign Investment Promotion Board to attract this pool of expertise. He promised to examine the idea of setting up an institution for attracting NRIs' expertise for the benefit of the country. Pointing out that infrastructure needs close to $ 25 billion from abroad in the next five years, he asked NRIs to help India develop infrastructure like roads, power and so on. "We are in the process of discussing various kinds of instruments and also institutions to attract investments like using forex for infrastructure or establishing special purpose vehicles like IIFC... Many ideas are under discussion," he said. To a question from an NRI about corporate social responsibility, he said it should not be government-driven but should come from within the industry. He said there is no proposal under government consideration to set up an NRI Council for channelising money from the Indian diaspora, though no one would stop NRIs from setting up such a body.

News: Tourist arrivals in India rise 14% in 2006

(TNN 09/01/2007) New Delhi - Tourist arrivals to India crossed 4.47 million in the calendar year 2006, a growth of 14.3% over January-December ’05. December ’06 had the highest ever number of tourist arrivals to India in the past three years, 5.47 lakh, up 18% over December ’05, and is nearly twice the numbers that arrived in India in December ’02.

These arrivals show up in the forex earnings in 2006, which were Rs 29,000 crore for January-December ’06 , up 15.6% over January-December ’05. December ’06 grossed the highest forex- Rs 3,369 crore, up 13% over December ’05 - in the past three years.

2006 has been a good year for Indian tourism, with double-digit growth rates in every month, even during lean months of summer and monsoons. Part of this is business travel, which has been rising all through out 2006 as a result of greater industrial activity and trade. Another key driver is the higher number of airline seats into India, with all the major airlines having increased flights to various destinations in India. In fact, in 2006, it was the airlines of the neighbouring countries like Singapore, Malaysia, Thailand, UAE, Qatar and Sri Lanka that raised their seats to cities like Hyderabad, Cochin, Bangalore and Ahmedabad, opening up new destinations in India for tourists. This coupled with greater awareness of India as a destination, courtesy the ‘Incredible India’ campaign airing on the networks of several countries, drove growth in numbers. The US and UK still remain India’s largest inward markets, but tourists from near-by countries are also growing.

The rising tourist numbers also reflect in hotel parameters. Average room realizations (ARR) have remained higher than ever in the past three years, averaging over Rs 14,000 in cities like Bangalore even through ‘lean’ seasons, where a rise in business travel made up for a drop in leisure travel during the months of June-September. Occupancies in major cities have averaged over 75%, and the 1-lakh odd rooms that India has in the registered category are already falling way short of demand. The hotel stocks reflected this strong demand-supply situation as well. Share prices of all major hotel scrips traded on the Bombay Stock Exchange (BSE) were up between 13% to 32% over the year.

These are good numbers for India, but still lag far behind smaller Asian rivals. Singapore, a city-state the size of Mumbai, got 8.8 million visitors in January-November ’06, up 9% and 0.8 million in November ’06 alone. Hong Kong hosted 22.8 million visitors, up 8%. Even accounting for 10 million Chinese mainland visitors, Hong Kong received over 12 million overseas visitors, and nearly 1 million in November ’06, against India’s 0.5 million in the same month.

News: Barclays Bank to begin Indian commercial operations

(BL 09/01/2007) New Delhi - Barclays Bank on Monday said that it would this year commence its retail and commercial banking business in the country and expressed commitment to bring in at least $100 million into this business in 2007. "We already have $300 million invested here and are committed to bring in another at least $ 100 million this year specifically for retail and commercial banking business. We are willing to invest in India for the longer term," said Samir Bhatia, Managing Director of the Global Retail and Commercial Banking division of Barclays Bank in India. Three branches Barclays Bank has licences for three branches in India, out of which the branch in Mumbai, which is into corporate banking, is already operational. The other two branches — one near Chennai and the other near Bangalore — are to become functional shortly. Bhatia said that these two branches would also offer no-frill accounts and do some rural banking. Asked whether Barclays aspires to emerge as a big commercial bank or as a big retail bank in India, Bhatia said that Barclays Bank would like to be a "balanced bank" in India as is the case in UK and other parts of the world. "All over the world, whether it be UK, Africa, Barclays has been a balanced bank. We have products for every single person and for every single segment. The same will hold true in India. We don't have a specific product for India. We will do everything and over a period of time bring whatever we have in the rest of the world into India," Bhatia said. Right time On the timing of Barclays Bank's entry into retail and commercial banking, Bhatia said that this was still the right time as the next few decades are going to be golden period for India and that the country would soon be ranked among the top three economies of the world. Meanwhile, Barclays Bank announced Jeev Milkha Singh, one of India's most successful golfers, as brand ambassador for the bank in India. Jeev will represent the bank in various communications activities and engagements with clients.

News: Israeli firm bags $3 m contract from India

(PTI 09/01/2007) Jerusalem - An Israeli firm that provides digital video networking products has announced winning contracts worth $3 million from an unnamed large cable MSO in India.

The Indian cable MSO has chosen Scopus Video Networks' broadcast platforms for several projects in connection with one of the first large scale Direct-To-Home digital cable service deployments in India, a company release said.

"The Indian government's new regulation requiring Cable MSOs in large metropolitan areas to move to digital video delivery as part of the digitisation of TV is an important move towards the future, creating significant opportunities in India", Scopus' Vice President for sales, Eitan Koter, was quoted in the release as saying.

"These projects position us as an important digital video system provider in India", Koter said.

The Nasdaq listed Israeli company develops, markets, and supports digital video networking products that enable network operators to offer advanced video services to their subscribers.

Scopus' products support digital television, HDTV, live event coverage, and content distribution.

News: FM assures new fin instruments for NRIs

(PTI 09/01/2007) New Delhi - Expressing confidence that the Indian economy would clock close to 9 per cent growth this fiscal, Government on Tuesday promised NRIs of coming out with financial instruments for attracting their remittances for longer duration.

Pointing out that NRI remittances to India, on an average are of three-year duration, Finance Minister P Chidambaram asked them to expand their horizon to bring longer term money for at least 10 years, as well as their expertise in various fields into the country.

Addressing a Pravasi Bharatiya Divas seminar here, Chidambaram promised NRIs that the government would bring new financial instruments and institutions to help them bring longer term money and their knowledge base into India.

He particularly asked them to bring their expertise to put agriculture on a sustained growth path of not less than four per cent in a year so that fruits of growth could reach every section of society.

News: Bharti, Wal-Mart to unveil its plans next month

(PTI 09/01/2007) New Delhi - Bharti Enterprises, which recently tied up US retailer Wal-Mart, will announce next month the financial details and plans to roll-out the retail stores across the country.

"Complete details, including financial details, about the retail business will be announced next month jointly by Bharti and Wal-Mart," Bharti chairman Sunil Mittal told reporters.

Mittal said the company was planning a cluster of outlets, preferably beginning with north India and Bangalore.

Bharti and Wal-Mart, the world's largest retail firm, had in November formed a joint venture for venturing in the fast growing sector. Although no financial details were given at that point of time, Mittal had said the investments would be in "billions of dollars".

News: Mumbai to have world-class cruise terminal

(PTI 09/01/2007) Mumbai - Mumbai would be a cruising hub, and have a world-class cruise terminal to be set up by the Mumbai Port Trust (MPT).

"Expression of interests will be invited shortly for building the cruise terminal that would have a marina, a convention centre, hotels, entertainment places," Ashok Kumar Bal, deputy chairman of MPT, told PTI. The terminal is to be set up as a joint venture with public-private partnership, Bal added.

"The port has made pioneering efforts to encourage cruise shipping in India. About 67,000 passengers took to cruise shipping last year. And this year, it is expected to cross one lakh," he said. The port receives about 25-30 international cruise ships now, up from 18 in 2004-05, Bal said.

The global scenario for cruise shipping is gaining momentum, with an annual growth of 10-20% in cruise ship fleet and passengers. Mumbai, Kochi and Mormugao are the ports that are seeing an increase in cruise shipping.

Seeing a growth in people opting for cruise travel, the central government is working on a cruise shipping policy.

News: 'Indian retail to touch Rs 100,000 cr'

(TNN 08/01/2007) New Delhi - The Indian retail story is getting all the more jazzy. Organised retail market in the country is all set to zoom to Rs 100,000 crore in next four years from Rs 35,000 crore in 2005.

The projections have been made in a study jointly put together by top global research and consulting firms like AT Kearney, Ernst &Young, PWC, Technopak, KPMG, ICICI, AC Nielsen-ORG Marg, Synovate, Cushman & Wakefield.

As per the report, the organised retail market is surging with an annual growth rate of about 30 per cent.

Not only are newer names set to dot the retail landscape but new and emerging retail formats will drive the diversity of the fast-changing retail backdrop. Many domestic players like Reliance, Bharti Enterprises, AV Birla Group etc have unveiled their retail plans.

India offers the greatest opportunity for retail business. Even global giants have shown keen interest in Indian retail. Wal-Mart recently entered into a JV with Bharti and will soon be setting shop in India. Other retailers waiting on the wings are: TESCO, Carrefour, IKEA, Target, VF brands, etc.

Images F&R Research has roped in the top global research & consulting firms to compile the second edition of India Retail Report 2007 scheduled for release on Tuesday by Union Commerce and Industry Minister Kamal Nath.

Profiling formats and retailers therein, the study, full of facts and figures, is expected to reveal many interesting facets of the Indian retail industry that could open up newer avenues of business both for the established players and the new comers as well.

India Retail Report 2007 will set benchmark figures on consumer spend, retail market size across key categories and segments with scope and also performance of key players and their expansion plans.

News: Play role akin to overseas Chinese - Pranab to NRIs

(IANS 08/01/2007) New Delhi - Minister for External Affairs Pranab Mukherjee Monday called upon overseas Indians to play a role similar to the one being played by Chinese abroad in the growth of China.

Speaking at a plenary on 'Developmental Challenges of the States: Partnership Opportunities' at the Pravasi Bharatiya Divas (PBD) 2007 here, he said: "You have the knowledge, expertise, experience and capital and can contribute in a big way towards not only enabling India to be on the path of development and reforms, but also towards balanced development within India."

He urged the states to take specific initiatives and devise their own strategies to benefit from the creativity, talent and enterprise of the overseas Indian community.

Speaking about the areas in which such partnership opportunities exist, the minister said overseas Indians could play a great role in bridging the digital divide and taking basic services like education, health, drinking water and sanitation to the villages of India.

"Secondly, there remains a large infrastructure deficit in the country," he said.

"According to UN statistics, while FDI (foreign direct investment) inflows to India have risen by more than 20 percent to reach $6.59 billion in 2005, this remains a fraction of the total global foreign investment of $916 billion. There is definitely a lot of scope for investment in infrastructure for our friends from overseas."

The minister also called for investments by the overseas Indians community in irrigation, food processing and marketing of agricultural products.

"I feel many of you have the advantage of understanding better the cultural moorings of the Indian farmer."

Mukherjee also called for a better role from the diaspora for ensuring and enhancing as well as broader coverage of education for all Indians.

Turning to energy security, he said: "Our friends from overseas, having the knowledge, expertise and experience in the area, can contribute immensely in meeting the requirement of energy security in India."

He called upon the states to work out meaningful partnerships with overseas Indians in the course of PBD 2007.

News: Indo-Arabic economic bloc mooted

(PTI 08/01/2007) Dubai - The UAE has proposed an Indo-Arabic economic bloc with a view to ensure prosperity and growth over the long term for the two sides.

Noting that trade between UAE and India witnessed a dramatic change recently, UAE Economy Minister Shaikha Lubna Al Qasimi said "trade exchange between the two countries was limited to spices. This has been replaced by oil, infrastructure materials and hi-tech products."

Speaking at the opening of the 6th Indo-Arab Conference and the Exhibition of Indian Products held in Sharjah, she said on Sunday that India was striding confidently to become one of the world's leading economies as the country posted 8.9 per cent growth in national income during the first quarter of 2006.

She said India and Arab countries should move towards an economic blow uniting the two regions. "I believe such a bloc could result in the outcomes we both seek — prosperity and growth over the long term," she said.

The UAE Minister also noted that Gulf countries host more than six million Indians who transfer about USD 20 billion annually to their country.

Indian minister for company affairs Prem Chand Gupta told the conference that "India is keen that the Arab world plays an important role in India's economic development." "The Gulf countries with surplus resources are looking for investment opportunities. Their joining India can make the partnership ideal in many sectors," Gupta said.

Indian officials at the meet said the country's fast growing economy needs to attract more Arab investment and in return the Arab world could benefit from Indian achievements in medical science, engineering, manufacturing, education and information technology.

News: Cobra Beer plans acquisition, greenfield brewery in India

(PTI 08/01/2007) New Delhi - UK-based Cobra Beer is poised to invest up to 10 million dollars for promoting the brand and distribution network in India in the next couple of years, even as it is shopping for breweries besides setting up a greenfield plant.

"We are in the look out for a brewery... We are shopping around," Lord Karan Bilimoria, Chief Executive of Cobra Beer, told reporters in New Delhi.

The premium beer maker is also looking to increase sales to one million cases by early next year in the market dominated by Kingfisher, which has sells nearly 36 million cases annually.

"If everything goes as planned, in the next five years we are looking at around five million cases," he said.

Bilimoria said the company, which has recently signed a licensing agreement with a Goa-based brewer in addition to one in Rajasthan, was looking to set up its own greenfield plant.

The company is also exploring tie ups with brewers in north and south-east India, he added.

For the promotion of its products and expanding portfolio, Bilimoria said about 5-10 million dollars had been earmarked, which does not include budget for acquisitions.

Stating that per capita beer consumption in India was far too low at 0.7 litre, he hoped that it would increase to 20 litres per person in the next 15 years and it provides a huge potential for more players to get into the market as well as the existing players to expand.

In the next few months, Cobra Beer would introduce four new products in India in addition to its lager, strong and double fermented beers.

News: Indian PM hails remittance role in growth show

(TT 08/01/2007) New Delhi - After a call to turn Mumbai into Shanghai, Prime Minister Manmohan Singh has asked persons of Indian origin in Mauritius having roots in Bihar to help “make a Mauritius out of Bihar”.

Inaugurating the three-day Pravasi Bharatiya Divas here, Singh thanked overseas Indians for their remittances, which helped fuel the 9 per cent growth in the domestic economy and the upswing in stock markets. He lauded the Indian-American community for its help in lobbying support for the civil nuclear cooperation deal with the US.

The call to turn Mumbai into Shanghai was made at an economic conference last year and coincided with a period in which the sensex zoomed and modernisation work for Mumbai’s airport started. Today’s call to turn Bihar into Mauritius comes soon after railway minister and former Bihar chief minister Lalu Prasad said the eastern state needed outside “push” to develop.

Singh thanked West Asian NRIs for their investments into India through remittances. According to World Bank estimates, about 25 million overseas Indians residing in 130 countries remitted $23 billion to India in the last calendar year — the largest for any country.

The Prime Minister said India has emerged as one of the fastest growing economies of the world and urged overseas Indians to invest in their country of origin.

“India’s growth process creates enormous opportunities for cross-border flow of trade, capital and technology. I would like the overseas Indian community to take full advantage of this opportunity,” he said.

Last year, foreign direct investment worth $7 billion flowed into India. Indians lined up around $18 billion in overseas investments.

Travel reliefs

Persons of Indian origin will now have parity with NRIs on ‘inter-country adoption’ and domestic airfares, the government announced today while spelling out plans to allow overseas Indian doctors to practise in their native country.

The government was also likely to sign social security pacts with the Netherlands, France, Sweden and Norway which have significant Indian population to protect their interests.

News: Panel to give NRI funds a push

(TT 08/01/2007) New Delhi - To encourage greater investment from the diaspora, the government is planning a single-window investment promotion council.

“The overseas Indian investment promotion council will undertake investment promotional activity, which entails making extensive contacts with potential investors, lobbying and interacting with individual companies to ensure a smooth investment environment for the overseas Indian,” said commerce minister Kamal Nath.

The minister added that it would be necessary to undertake one-to-one dialogue with individual NRI investors at the boardroom level to motivate them to invest in specific industries and sectors.

Stating that enhanced foreign investment is possible only by providing a hassle-free investment route for NRIs, the minister added that “target-oriented efforts are necessary to contact individual companies or investors to persuade them to invest in India”.

He also advocated the need to have an all-inclusive growth in the country. “For India to emerge as a globalised economy, it is necessary to provide a huge boost to agriculture and manufacturing sectors.”

He said the share of the manufacturing sector, which contributes 23 per cent to the country’s GDP, should be increased to 25 per cent. “This would have an imminent effect on employment generation. For every job created in the manufacturing sector, at least three get created in the services sector.”

On the issue of further changes in foreign direct investment (FDI) norms, the minister said the government has already approved sweeping reforms in FDI in various important sectors, such as telecom and retail, to facilitate growth.

FDI in telecom has been raised to 74 per cent from 49 per cent, and 51 per cent FDI is allowed in single-brand products in the retail sector.

News: Essar plans $ 2 bn refinery in Iran

(PTI 08/01/2007) New Delhi - Essar Group, the multi-billion dollar steel-to-telecom conglomerate, is in talks with Iran to set up a $ 2 billion refinery in the oil-rich country's southern region. "Essar is in talks with state-run National Iranian Oil Refining and Distribution Company (NIORDC) to set up a 300,000 barrels per day refinery at Bandar Abbas," an industry source said. Iran has embarked upon an $ 18-billion expansion of its oil refining capacity to meet its rapidly growing domestic fuel requirements. Essar, which is already in talks with Iran for setting up a steel plant, plans to process Iran's heavy crude at the proposed refinery. "The company wants a minimum 51 per cent stake in the project and discussions currently are focused on the shareholding," the source said. When contacted an Essar Group spokesperson said: "We keep exploring growth opportunities globally but we do not want to comment on any specific project." Essar had some months ago begun negotiations with Iran for a foothold in the oil and gas rich OPEC nation. Among the proposals being pursued by Essar include setting up a steel plant, building an oil refinery, importing liquefied natural gas and projects for oil and gas exploration and production. The industry source said Essar was keen on taking a stake in a gas field to not only feed its proposed steel plant but also to ship LNG to India. Essar plans to set up three steel plants in the Middle East, including a joint venture to build a 1.5 million tons a year steel plant in Iran.

News: Tata Consultancy readies $ 2 b issue

(RTR 08/01/2007) Mumbai - Tata Sons plans to raise about $2 billion from a US listing of Group Company, top software services firm Tata Consultancy Services Ltd, the Hindustan Times said on Monday.

Tata Sons, the holding company of the salt-to-software group, plans to offer a part of its holding in TCS "in the near future," the newspaper said, citing highly placed sources in the market.

"The move could be aimed at building a warchest for the Tatas to outbid Brazil's Companhia Siderurgica Nacional (CSN) ... to acquire control of Corus Group Plc," the paper said.

A TCS spokesman denied any immediate plan of an American Depositary Share issue.

Tata Steel Ltd. , India's top private steel maker, is locked in a takeover battle with CSN for Corus Tata Steel has bid 500 pence a share, while CSN has bid 515 pence, valuing the target firm at 4.9 billion pounds.

Britain's Takeover Panel has set a deadline of Jan. 30 for revised offers.

TCS, in which the founders hold nearly 84 percent, listed its shares locally in August 2004. There has been frequent speculation about an ADS issue in the market and the local media, but the company has not committed to a time frame.

News: Brokers turn developers in Indian real estate explosion

(HT 07/01/2007) Bangalore - In the twists and turns of the nation’s real estate boom, bigger city builders are going national, while local brokers are turning into developers.

Bangalore broker Feroze Estate & Properties has become a developer. ‘‘Every builder today was once upon a time a trader or a real estate broker. I am developing my own property and will retain it,’’ says Feroze Abdulla, who has just leased 150,000 square feet to the Reliance group at Prestige Feroze in the technology capital’s plush Cunningham Road, where property prices have risen three-fold in three years.

Delhi-based Parsvnath also started as a real estate broker, and is an idol for many agents. ‘‘Broking is more of liaison. There is no great value addition except bringing the two parties together. In real estate, you need a lot of technical knowhow, say, on how you provide noise installation on floors or tackle the leakage problem,” says an industry expert. Hospitality player Panoramic Universal is now a real estate aspirant. ‘‘These are two different sectors. I can understand when a real estate guy gets into retail – there’s synergy. But moving from hospitality to real estate could be dicey,’’ said Susil Dungarwal of Bangalore-based Prestige group. But such comment from entrenched players does not deter firms like Panoramic, which is planning to raise $12 million through a global depository receipt (GDR) issue, after announcing its foray into real estate and getting listed on the National Stock Exchange in addition to BSE.

"We are not in the valuation game. The money is being raised for the hospitality business. The announcement on real estate was made to inform the stock exchange. We need to get the board approval and amend the MoU, before we get into real estate," says Panoramic’s chief financial officer (CFO) Utpal Parekh.

Not everyone is worried about such furious expansion. ‘‘This is not similar to the IT/dotcom story, where the valuation method was unreal. Real estate is an asset-based business, where the promoter puts in his money to grow the business. It is a mixed bag. You have to examine each case individually,’’ said Jaidev Mody, director, Peninsula Land, a Ashok Piramal Group firm, which recently raised Rs 160 crore for local investors.

News: Tatas planning a tertiary hospital chain

(DNA 07/01/2007) Mumbai - Tata Industries is planning to set up a chain of superspeciality hospitals across India.

They would offer the best in medical treatment and comfort, and would put India on the map of advanced medicare.

A senior Tata official told DNA Money the group was examining mushrooming opportunities in healthcare, but had not firmed up any plan of action as yet.

Nationally, the plan of venturing into a super speciality hospital chain makes sense, as the involvement of corporate and private hospitals as health-providers have completely changed the concept of a modern hospital.

Hospitals have come up as big profit centres and are being recognised as an industry.

With the entry of private players, India is also becoming a significant player in healthcare tourism.

Industry reports suggest that international hospital chains are mulling an entry to stay competitive.

Global health insurance majors are also looking at ways to leverage Indian skills and low costs to increase profitability and stay competitive.

Already, Apollo Hospitals and Fortis Healthcare are in the process of uncorking huge expansion plans across the country to offer a viable alternative to government hospitals. Another big player in this field is Wockhardt which currently runs a cluster of super speciality hospitals in Mumbai and Bangalore dedicated to cardiology, neurology, orthopedics, ophthalmology and minimal access surgery.

In addition to this, some of the state governments have evinced interest in setting up Medicities in the same format as special economic zones.

In recent days, Tata Industries has picked up equity in Indigene Pharmaceuticals, a bio-pharmaceutical company with operations located in Boston and Hyderabad.

The group, with interests ranging from industries as diverse as computer software, steel, tea and salt announced its entry into pharma research last year, through Advinus Therapeutics.

It has, in the past, also picked up some equity in Bangalore-based agri-biotech firm Avestha Gengraine.

Tata Industries’ mandate was recast, in the early 1980s. Its new vision charted the holding company for the Tata group to promote the Group’s entry into new and high-tech areas.

Tata Industries over the last two decades, has initiated and promoted the Group’s ventures into several sectors, including control systems, information technology, financial services, auto components, advanced materials and telecom hardware.

In India cost of health care has increased tremendously in last few decades. Advanced technology, increasing knowledge and awareness among people about health are main factors for this change.

In this era of competition, each health provider will have to be cost-effective like other industries, so that they are able to provide the best service at least cost-attracting more customers.

For the Tatas, an entry into the superspeciality segment would make eminent sense because it has a rich legacy in the hospital sector.

It already runs The Tata Memorial Centre cancer hospital in Mumbai and one of the best cancer treatment and research centres in the country.

Recently, Tata Industries laid the foundation stone for the Rs 120 crore Tata Medical Centre in West Bengal.

News: ‘India continues to be top IT destination’

(PTI 07/01/2007) Silicon Valley - Business transformation will accelerate technology outsourcing in 2007 and India will continue to be the top destination for IT Services, according to a new research report.

NeoIT, a California-based consulting firm, predicts the services globalisation industry to continue to grow at a brisk rate of 25 per cent to 30 per cent in the coming year, as more and more companies ramp up their services globalisation initiatives.

"Business transformation through services globalisation is one of the most important levers that global companies can no longer afford to ignore," NeoIT CEO Atul Vashistha said.

While India will continue to be the top destination for IT services, buyers will look for cities of excellence in other countries where they can leverage employee skills, according to the research, which echoes the predictions of Tholons, a Washington, D.C.-based investment, advisory, and management firm, which released its forecasts last month.

Both firms predict that M&A activity will increase this year, with outsourcing services companies buying consulting firms or those firms that have local knowledge in the countries where their customers reside.

Among the 2007 trends predicted by the consulting firms is that companies from developed countries will buy firms in countries like India, the Philippines, and Russia to gain access to lower-cost talent.

Cities such as Pune, Prague, Halifax, which have already become centres for outsourcing, are becoming more expensive and less differentiated and as a result competition is fast emerging from other cities, including Kolkata, HoChi Minh City, Colombo and Dubai.

NeoIT, however, predicts that the current leaders in outsourcing — Bangalore, New Delhi, and Chennai — will continue to attract new companies in 2007 despite rising costs.

Tholons CEO Avinash Vashistha estimates private equity investors to invest up to $5 billion in the Indian market to fund the expansion plans of business process outsourcing (BPO) and knowledge process outsourcing firms,.

Both firms' reports refer to the coming wave of outsourcing contract renewals. Tholons predicts that many large contracts will be carved into several pieces, with buyers opting for the best-of-breed approach in selecting service providers, Red Herring reported.

The NeoIT research brief also predicts that billing rates by top suppliers such as Accenture, IBM, Wipro, and Infosys will increase by 2 to 3 per cent due to the growing demand for skilled resources, a rise in wages, and increased overhead incurred in maintaining quality or ensuring tight security.

News: Croatia's divestments - an opportunity for India

(BL 07/01/2007) Chennai - Croatia has initiated disinvestments in a wide range of industries including shipbuilding, steel oil and chemicals and tourism, and this is an investment opportunity that Indian companies can look at, according to Boris Suran, First Secretary-Economic and Culture, Embassy of the Republic of Croatia.

Addressing a meeting organised by the Confederation of Indian Industry today, Suran said Croatia would soon be calling for bids to privatise five of its largest shipyards. Its shipyards have order estimated at $2.2 billion. The shipbuilders cater to a wide range of needs including specialised vessels like car carriers.

Tourism is a major revenue earner, he said. Croatia was the leading destination in Europe in 2004-05 and is the preferred destination for adventure tourism. Over 10 million visitors come annually - investors should look at the tourist flow in addition to the population of about 4.5 million when gauging the Croatia market, Suran said. Revenue from tourism is close to $7 billion and the country zealously protects its tourism.

News: The wealth that Indian IPOs hide

(BL 07/01/2007) Mumbai - Imagine if you had invested Rs 9500 (100 shares at an issue price of Rs 95) in the public offer of Infosys Technologies in 1993. After adjusting for all the stock splits and bonuses over the years, your investment would now be worth Rs 29,440,000, an appreciation of a staggering 3,000 times in the 14-year period, not including the dividends that the company has paid.

A host of such successful IPOs such as Bharti Tele-Ventures (issue price of Rs 45), Indiabulls (issued at Rs 19), including recent ones such as Everest Kanto Cylinders (issue price of Rs 160), Educomp Solutions and Tech Mahindra have turned in stupendous returns over the years.

Though investors often look upon initial public offerings (IPOs) as a moneymaking exercise and focus on listing gains, it pays to evaluate IPOs from a long-term perspective. A look at the factors that should be considered while buying into an IPO.

Don't go by subscriptions alone: More often than not, investors base their decisions on the subscription figures received by the offers. Given the IPO stampede that we are seeing now, the subscription figures do tend to influence listing gains, but may not be a good guide to the long-term prospects of a company. Subscription numbers are often a function of market conditions at the time of the offer. Even a good IPO may flounder in a declining market, while a fly-by-night company may rake in the money if the market is in good shape. As a long-term investor, you need to evaluate an IPO from the point of view of whether you would like to buy into the business for which funds are being raised.

Don't go by absolute price: Do you believe that an IPO priced at Rs 10 is a safer bet than one priced at Rs 1,000? Not really. In fact, focussing only on IPOs with a low absolute price may leave you with a portfolio of companies with barely any credentials. Companies with a track record of good financial performance would already have a reasonable level of earnings and are likely to price their IPOs at a high absolute price. When evaluating IPOs, try and get an idea of the valuations, or how the offer price discounts the company's potential earnings, rather than its absolute price. If the overall outlook for a sector and a detailed assessment of the company's prospects vis-à-vis its peers appear positive, even high-priced IPOs could turn out to be a good bargain. Offers of companies such as Suzlon Energy, AIA Engineering or even the recently listed Info Edge or Sobha Developers have been among the top-performing ones in recent times, but none of them would have caused a blip on your radar if you were looking for IPOs priced below Rs 100! In hindsight, these offers were a steal at their issue price, given that they listed at a substantial premium and have never touched the offer price levels again!

The business at a good price: IPO investing is based on the belief that investing during the offer gives you an opportunity to get a bargain price for that company. After all, why park money in the public offer at a fixed price, when the same stock would be available on the tap in the secondary market in about a month's time. Thus, valuations should play an important role in influencing the decision to invest in an IPO.

For instance, consider a company X, which is slated to make an IPO. Assume you are convinced about the company's business model and the management's ability to successfully steer its progress. In other words, you believe that investing in the company could provide good returns. At such a stage, the only factor that might influence your decision would be the valuation of the price. Is the offer priced at a discount, at a par or at a premium to its peers? If at a premium, do you think the business really offers something new or unique that justifies the premium? Answers to questions such as these should influence your assessment. If you feel that the offer is priced stiffly, you can safely stay way and consider investing through the secondary market at a later date.

Don't base decisions on listing performance: Like subscription numbers, a stock's returns on the day of listing are also often a function of short-term factors such as market conditions at the time of listing and the near term results expected from the company. Investing in any IPO locks your money for nearly a month. If during the lock-in period (the time from application until listing), the market crashes, your stock's debut could be lacklustre. If you have bought into an IPO because you believe that the project has the potential to deliver healthy growth over the long term, have the conviction to stick with your choice. Bharti Air-Tel, which saw its stock plunge below its offer price on listing, has turned out to be one of the strongest wealth creators in recent years.

Investing in IPOs, much like investing in the secondary market, requires considerable effort on your part. But if you are worried about missing out on such offers as that of Infosys Technologies, you can be rest assured that the chances of such a miss are now minimal, in the light of an improved market efficiency and the coverage most offers get from various analysts and brokerage houses, which can supplement your own efforts.

With IPOs becoming more frequent and institutions getting more selective in choosing between them, listing gains on every IPO are no longer a given. Therefore, every investor must be aware of the general market trends and the nuances of basic research. For, in the world of investments, if such ignorance were considered bliss, then bliss could be very expensive!

News: $1.5 tn investment needed to achieve 9.5% Indian growth

(PTI 07/01/2007) New Delhi - India requires a staggering USD 1.5 trillion worth investment to achieve 9.5 per cent average growth in the next five years, according to apex industry chamber CII. "Year 2007 should be the 'Year of Investments' and the required increase should be handled carefully with skillful planning and monitoring," CII President R Sheshasayee said. The chamber expects the Incremental Capital Output Ratio (ICOR) for the plan period to deteriorate to 3.8 per cent from the current level of 3.6 per cent. But this decline will be compensated by an increase in investment to GDP ratio to 36.2 per cent from 30 per cent. The study has identified four broad sources of raising the revenue: Public sector, private sector, households and FDI which contributed 29.6 per cent, 27.7 per cent, 39.8 per cent and 2.9 per cent respectively in 2004-05. Particular emphasis needs to be given to the FDI as there is great potential to increase its magnitude and it also brings the required expertise and technology, chamber said. Favourable global environment should see India targeting about 2.5 per cent of GDP as Foreign Direct Investment as against the current 1 per cent, CII said. CII said infrastructure spending by the end of 11th five year plan should go up to at least 10 per cent of GDP. A cumulative of $ 337.5 billion worth investment is required to be pumped into infrastructure in order to achieve an average of 9.5 per cent GDP growth.

News: Pantaloon to expand Big Bazaar network

(BL 06/01/2007) Hyderabad - Pantaloon Retail (India) is planning to increase the size of Big Bazaar network from 41 at present to 100 in the next nine months with an estimated investment of Rs 1,000 crore. The number of Big Bazaars in the South would go up to 30 from the present 11.

Addressing a press conference here on Friday to mark the launch of the 41st mart in the country, Rohit Malhotra, Head of Operations (South), said the company would also focus on Tier-II cities for expanding the `value retailing' format, besides strengthening its presence in major cities. It would open 5-7 more Big Bazaars in the twin cities of Hyderabad and Secunderabad.

Exclusive Outlets

The 52,000-square feet shop, the second one in the city, put on display more than 1.6-lakh products. "It will house the complete range of products that a middle-class household needs," he said.

The Big Bazaar network contributed a turnover of Rs 2,000 crore last year, with the South contributing Rs 800 crore. The second store in Hyderabad was set up at a cost of Rs 15 crore. The company targeted to register Rs 100 crore turnover at the shop.

News: Indian forex reserves rise $1.02 b

(BL 06/01/2007) Mumbai - The country's foreign exchange reserves rose $ 1.018 billion to touch $ 177.251 billion for the week ended December 29, 2006 mainly on foreign currency revaluation.

In the previous week, forex reserves had increased by $ 714 million to touch $ 176.233 billion.

The euro gained from $ 1.3109 to $ 1.3181 in the week under review while the dollar was weak against most global currencies. The rupee too touched a 10-month high against the dollar that week. On Friday, the rupee closed at 44.31.

Foreign currency assets

As per the Reserve Bank of India's weekly statistical supplement, foreign currency assets rose $996 million to touch $ 170.187 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.

In the week under consideration, gold increased by $ 23 million to touch $ 6.517 billion. SDRs were unchanged at $ 1million. India's reserve position in the IMF fell by $1 million to touch $ 546 million.

Next week the rupee may appreciate to 44, as the RBI does not seem to be showing any signs of intervening in the market, said a treasury head.

Foreign exchange inflows would continue to be strong as most corporates are likely to post good third quarter results and the advance tax collections have been better than expected. The Indian equity market is still buoyant with intermittent correction, the official said.

News: 'MNCs in Indian retail will help consumers'

(PTI 06/01/2007) New Delhi - In the midst of a raging debate over allowing multinationals in the retail sector, Infosys mentor N R Narayana Murthy today favoured MNCs in the sector saying consumers will benefit from their entry.

He also felt if Congress had a majority at the Centre, economic reforms would have moved at a much faster pace.

"When we have opened it (retail sector) to large Indian groups, which means that mom and pop stores are likely to suffer anyway, why not open it to large multinationals," Murthy told Karan Thapar on a CNN-IBN show Devil's Advocate.

When asked if he believes foreign direct investment should be permitted in the Indian retail sector, he said, "absolutely".

Murthy said MNCs would bring the best technology and practices, and the consumer benefits at the end of the day.

Talking on economic reforms, Murthy said: "I personally think we have one such leader with the vision, political capacity and courage to force through the change in Dr Manmohan Singh (but) unfortunately he leads a very fragile coalition. If he were to lead a majority Congress party government, I have no doubt at all he would have moved much much faster than he has been able to."

News: Indian mall mania

(TNN 05/01/2007) New Delhi - The domestic retail industry is wearing new clothes. A revolution is set to sweep across the country in the next three-to-five years, as traditional markets make way for departmental stores, hypermarkets and western-style malls.

While penetration of organised retail in India remains slightly below 4%, domestic major retail players have announced aggressive expansion plans even as a plethora of new flashy malls are mushrooming in metros and second-rung cities.

Three ‘big bang’ initiatives are shaking up the retail sector: Reliance Industries’ Rs 25,000-crore mega plan to create 100 million square feet of retail space and a sales target of Rs 100,000 crore by 2011, Aditya Birla Group’s Rs 15,000-crore retail foray and retail giant Wal-Mart’s entry via a joint venture with Bharti.

Dreams unlimited

Existing retail players are also gearing up rapidly to India’s retail opportunity, finds the ET Retail Survey. Pantaloon plans to have an operational retail space of 30 million sq ft by FY10 and is confident of reaching a run rate of Rs 2,500 crore in June 2010.

Shoppers’ Stop is looking at a retail space of 5-6 million sq ft by FY10, while Trent is confident of taking its retail space from the current 600,000 sq ft to 1.5-2 million sq feet by FY10. Similarly, RPG group, Provogue, Brand House (S Kumars), and Max Retail are rolling out ambitious plans across India’s metros, tier 1 and tier 2 cities.

The organised retail industry is estimated at over $7 billion, and is slated to grow to $30 billion over the next four years. There’s a reason for this retail rush. In the retail sector, the turnover is two times of assets.

Even with net profit margins of only 4%, the return on investment is 16-18%. Besides, India’s vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets.

“The current state of the Indian retail sector is primitive compared to the rest of the world. Modernisation of this sector represents a significant opportunity for Indian entrepreneurs,” says Arvind Singhal, chairman, Technopak Advisors, a retail consultancy firm. Of course, there are challenges ahead, like rentals, manpower, supply-chain and back-end organisation. Indian retailing is clearly today at a tipping point.

Head hunting

While there may be droves of young people applying for a spot behind the register, without any tradition of large retail stores in India, there is a paucity of experienced manpower available for mid-management positions. “Meeting suitable manpower requirements and managing human resources in the future will become a challenge as competition hots up,” points out Anshuman Singh, CEO value fashion Future Group.

Most retail players have already taken steps to bridge the gap. “We are tying up with universities to recruit younger people,” says Tarun Joshi, CEO, Brand House Retail, a subsidiary of S Kumars Nationwide. Clearly manpower-related issues are a major concern for retail players. Says Spencers (RPG group) business head, Rajesh Shetty, “Conducting training programmes is also key.”

At a senior level, recruiting people with significant retail experience might not prove an easy task either. “Indian retail players’ ability to attract people from abroad for senior level positions will be critical,” points out Mr Singhal.

Crack the space jam

With some 350-odd malls expected to come up in the next three years, availability of retail space is another major area of concern. Technopak Advisors pegs the gap between supply and demand of retail space at a staggering 400 million square feet.

Given the fact that large pockets of land are more easily available in smaller towns than in the metros, players such as Reliance have announced major retail forays in tier 2 towns. Other players such as Pantaloon and Spencers have already built up significant presence in tier 2 cities. “Tier 2 and 3 cities will be the major growth drivers,” feels Mr Singh.

However, while tier 2 cities represent an immense opportunity, infrastructure remains a major issue. “Building a distribution network to service these areas well will be a considerable challenge,” says Provogue managing director Nikhil Chaturvedi.

There are other problems peculiar to the industry. “There is a lack of storage equipment such as racks, fixtures, and shelves. Some of them are still being imported from abroad,” points out Mr Shetty.

Support systems

Infrastructure problems are not restricted to tier 2 and 3 towns alone. “Logistics, which is a very fragmented market today, is going through a consolidation phase. There is going to be a major change,” says Chintan Tyagi, general manager, IBM business consulting services.

Significant investment in restructuring of the supply chain management is needed. Reliance has already set up its own logistics company by making heavy capital investment. However, there are others, such as Pantaloon, which are still working with third parties and focusing primarily on the demand size.

“Foreign retail players will also bring in some of their own practices to India,” adds Mr Tyagi. According to a recent report by Enam Securities, cutting the number of intermediaries between the farmer and the retailer could reduce costs by almost 7%.

“India is, however, the only country where the cost of intermediation is still relatively low,” points out Subhiksha Trading Services senior president Atul Joshi. An investment of Rs 5,000 crore will be needed to restructure the supply chain.

Big-ticket investments was the one missing link in the retail story. That’s history now as large groups are ready to fork out big bucks. Their entry is likely to focus attention on the industry, especially on the back-end, which is sorely lacking now. The ride ahead may not be very smooth, but will be an exciting one for sure, and the fittest will survive.

News: Shopping for space

(TNN 05/01/2007) New malls are springing up in the country every other day. If the expansion drives of new entrants go as per plans, the total operational retail space will touch around 100 million sq ft by ’08 with about 500 malls across the country. However, availability o land and rising rentals could come in the way of retailers’ mega plans.

Reliance expects to take its retail format to 784 cities and towns, apart from over 6,000 rural ‘mandi’ towns by 2010, while Pantaloon is confident of increasing its retail space to 30 million sq ft by FY10.

Smaller players such as Max Retail, Provogue or Brand House (a subsidiary of S Kumars Nationwide, which handles in-house brands and global brands under licensing agreements), are also gearing up to tap the retail opportunity. Others are playing safe and have already locked in some space.

For example, Pantaloon has already signed up for space in over 100 upcoming malls, while Max Retail and Provogue have already locked in 800,000 sq ft and one million sq ft, respectively. CRIS INFAC estimates that real estate development in the organised retail sector will require investment of Rs 3,100 crore per year over the next five years.

“There will be a significant gap between supply of retail space and demand over the next two years,” says Knight Frank chairman Pranay Vakil. Tier 2 and tier 3 towns represent a major growth opportunity as large pockets of land are more easily available there than in the metros, where rental prices are sky high.

“However, wrong supply of retail space in certain towns is a problem; many malls have not been designed according to consumers needs,” says Provogue managing director Nikhil Chaturvedi. Then, there is over-supply in certain areas.

“Retail players will have to slow down their expansion plans,” says Technopak Advisors chairman Arvind Singhal. Says Mr Vakil, “There is a ‘me-too’ attitude. Anyone who has a piece of land near the road, without any prior study or thinking, builds a mall. Many malls will not be successful. Two years down the road, there will be bloodshed; only the fittest will survive.”

At the same time, he says, “One needs to take into account conversion of industrial estate into malls. There is a lot of scope for growth in areas such as Lower Parel in Mumbai, where some mills are closing. While there may be a shortage of retail space in metros in the short term, in the mid-term, supply should catch up.”

News: Hotels get big PAT from shortage of rooms

(DNA 05/01/2007) Mumbai - The hotel industry has had tremendous room for growth over the last couple of years.

A study of 12-odd hotels shows that they notched up a whopping 85% increase in profit after tax (PAT) year-on-year in the first half of 2006-07, on the back of an increase in average room rates (ARRs) and occupancy rates arising out of significant demand-supply mismatch.

The hotel companies under review were Indian Hotels, East India Hotels, Asian Hotels, Hotel Leela Venture, Royal Orchid, Taj GVK, Oriental Hotels, Viceroy Hotels, Sayaji Hotels, Kamat Hotels, Jaypee Hotels and EIH Associated.

Their PAT rose to Rs 317.20 crore from Rs 171.42 crore in the first half of 2005-06, even as net revenues increased 26% to Rs 1, 805.04 crore (Rs 1,430.73 crore).

Operating profits improved by 52% on an absolute basis to Rs 669.20 crore (Rs 440.45 crore) The hotels also saw a growth of 7% y-o-y in room demand.

This, coupled with better ARRs, led to a 39% improvement in revenue per available room (RevPAR, which is an interplay of ARRs and occupancy rates. RevPAR increased from Rs 3,722 per roomday in H1FY06 to Rs 5,173 per roomday in H1FY07 as ARRs improved from Rs 5,432 per roomday to Rs 7,381 per roomday.

“The PAT rose due to higher cost efficiencies. When occupancies are higher, cost-efficiencies rise, boosting operating margins in the process,” said Pratik Dalal, a hospitality analyst with Emkayshare.

The growth was supported by a 13.8% increase foreign tourists over the same period in the first half of 2006, apart from a sizeable increase in business travel.

But, analysts forecast a 5-7% rise in ARRs for the mid-market segment in the future against an “insignificant rise in ARRs” for the premium sector.

Current five star rates are in the Rs 14,000-20,000 bracket, with hotels in Bangalore commanding the higher end of the price bracket. The mid-market rates average Rs 6,500 across the country.

“Since rates in Mumbai and Delhi did not spiral upwards as much as in Bangalore, ARRs in these two cities have 10-12% room for growth,” said a source.

News: Mumbai builders scout for greener pastures

(DNA 05/01/2007) Mumbai - The ever increasing land rates and non availability of plots are pushing realty developers in Navi Mumbai to cross the creek and travel towards Mumbai or even go beyond the state to invest in projects.

This could be the beginning of a new trend in the city, whereby lack of investment opportunities is pushing them to look for greener pastures elsewhere. Builders feel that the land rates in Navi Mumbai are touching the sky, due to which they are now looking for better options. Bhoomi Group's Managing Director Vijay Gajra said, "Land in prominent locales is being tendered at rates as high as two lakh per metre and much higher and at the same rates there are many prime plots available in Mumbai."

Bhoomi has their first residential project in Santacruz - Balaji Towers in partnership with Mumbai-based developers. Gajra has also invested in projects in other states like Chandigarh where he is developing Defence Enclave, a residential colony for defence employees and a mall in Ahmedabad, both with local developers.

In partnership with Bhoomi for the Ahmedabad shopping mall is Bhagwanji Patel, a Kharghar-based developer who is constructing a shopping mall called Ark in Andheri. Patel said, "CIDCO is releasing few lands and there are very less plots available in Mumbai as well. But when compared life in Mumbai is faster and has its own advantages."

Another incentive to these developers is that sales are acquired easily for Mumbai projects. Gajra said, "In Mumbai, sale is acquired easily and there is not much effort required towards marketing. Mumbai is attractive to us from every medium. So it makes more sense for us to invest in places there."

Devang Trivedi, MD of Progressive Builders said Navi Mumbai builders generally keep a 20-80 per cent ratio with lesser number in Mumbai. He said, "Margins are better in Mumbai but the environment is different there. Here we are habituated to title clear plots and dealings with CIDCO, but in Mumbai we need to go through lot of formalities."

Similar problems are faced by Mumbai builders who come to Navi Mumbai, as they do not earn a huge margin.

With developers from city looking out for investment opportunities in Mumbai and other states, it could mean warning bells for CIDCO. Even Ahmedabad is not too far for some builders from Navi Mumbai.

News: ONGC to buy stake in Turkmenistan oil blocks

(RTR 05/01/2007) New Delhi - Oil and Natural Gas Corp. Ltd. is close to buying a stake of up to 33 per cent in two Caspian sea blocks offshore of Turkmenistan, a top company official said. ONGC's overseas investment arm, ONGC Videsh Ltd., will soon sign a deal to this effect with the operator, Denmark's Maersk Oil, and German oil and gas firm Wintershall, which is also a major stake holder.

"We are waiting for the Turkmenistan government's approval. Once that is obtained we will sign a production sharing contract," ONGC Videsh Managing Director R.S. Butola told reporters late on Thursday.

He said ONGC would pay Rs 150-200 crore ($33.97- $45.29 million) for a stake in two properties -- blocks 11 and 12.

The deal has been delayed due to death last month of Turkmenistan's president, Saparmurat Niyazov, he said.

Maersk Oil with an 80 per cent holding operates the blocks, which cover about 5,663 sq km, while Wintershall, a unit of the BASF chemicals group, owns the remaining 20 per cent stake.

News: India zooms past China in car exports

(TNN 04/01/2006) New Delhi - Here’s where the dragon will have to dig its heels. China’s car market may be double that of India, but when it comes to exports, it clearly lags behind.

China’s auto exports doubled to 340,000 units in 2006 but were less than half of India’s total vehicle export tally of 970,620 units (including two- and three-wheelers). Sedan exports tripled to 90,000 units in China but fell far short of India’s 191,723-unit passenger vehicle export tally.

According to SIAM statistics, India’s passenger vehicle exports, dominated by cars, quadrupled from 46,028 units in 2001 to 164,965 units in 2004, hitting 171,608 units in 2005. India’s total export CAGR in the 01-06 period was 41.72% with cars and jeeps clocking 33%.

China’s total vehicle exports, on the other hand, jumped 120% from 78,000 units in 2004 to 173,000 units in 2005. In terms of value, China’s vehicle exports have hit $1.58 billion while India’s tally is expected to be $2.8 billion, up from $2.25 billion clocked in 2005. Just passenger vehicle exports from India (mostly cars and some jeeps) were worth an estimated $1.4 million in 2006.

Analysts say the reason behind the skew lies in China’s predominant position in parts exports as opposed to vehicle exports. China exports ten times more in value terms of components than India does as global companies use the Chinese scale to source for developed markets. However, China's domestic appetite for vehicles is so big, that the local scale is pretty much consumed locally.

Says Arindam Bhattacharya of BCG: “An overwhelming majority of India’s vehicle exports comprise small cars and motorcycles. In both these markets, India is the second largest player, has excellent quality, competitive costs and enough scale. And in both these markets, India’s cost per unit is very competitive.

Small cars are just beginning to pick up in China as global players work on compact models. In contrast, China’s component scale and investments are very high so they are competitive in that segment. And even though China is the biggest motorcycle market, individual players don’t have scale because the market is fragmented.”

India’s auto parts exports too have been on a growth trot with total cumulative parts exports being worth Rs 6280 crore in the fiscal 2004-2005 which is expected to touch Rs 9700 crore in 2006, as per data collated by ACMA.

As for China, its total exports (vehicles and parts) reached $10.9 billion in 2005, up 34%. India's auto parts have been growing at a CAGR of 39% in the past three years helping the export tally to grow from the Rs 2623 crore clocked in 2001-2002. Parts exports are expected to be up by nearly 54% in 2005-06. India's imports are growing at the CAGR of 39% in the past five years and are expected to touch Rs 8450 crore.

News: Indian realty boom spawns a me-too bandwagon

(HT 04/01/2007) Mumbai - It is not a bubble yet, but it definitely is a bandwagon. Skyrocketing valuations of real estate companies riding on the strength of land banks, an information technology boom, a middle class hunger for apartments and the sprouting of special economic zones is giving rise to a host of newbies in the real estate business.

Some are reminded of the year 2000, when many companies hastily added information technology or Internet-related descriptions to their names or activities to cash in on the bubble.

With established builder companies such as Unitech, Sobha Developers and Parsvnath getting a thumbs-up from the market, the mood has turned upbeat for those that want a quick piece of the action.

So, you have real estate brokers in Bangalore who are turning developers, a hospitality group which is foraying into real estate and a Mumbai builder who is keen to move into Pune, Chennai, and Bangalore and is talking to investors, among others in Singapore, to raise money.

"With the boom in real estate and the availability of easy funding, everyone wants to have a piece of the action and ride the boom," says Susil Dungarwal, head of retail (mall business) of Bangalore-based Prestige Group.

Stock regulators are concerned. As reported by Hindustan Times earlier this week, a panel is trying to fix better disclosure criteria so that investors are correctly informed of details relating to real estate companies.

Industry officials say new firms, expansions and diversifications are hot because returns are high in real estate, and, despite the Reserve Bank of India's (RBI) restrictions on lending to the sector, players are still able to raise funds with ease.

Real estate projects have delivered returns of 20-25 per cent on an average, going up to 30-32 per cent on the higher side, they say.

Skyline Group, which has been building homes for over 46 years in Mumbai's Ghatkopar suburb, now wants to do projects in Pune, Chennai, and Bangalore and is talking to private equity investors. "Banks are not keen to lend. So, we might have to bring in private equity investors," says Skyline's Maulik Dave.

Realty funds and real estate companies investing in India have raised around $2 billion on the London Stock Exchange's Alternative Investment Market (AIM) that allows even smaller companies, without a track record, to raise money. Another $2 billion is likely to be raised soon, estimate capital market experts. This market is enticing smaller players.

Higher valuations are a big draw. Bangalore-based Sobha Developers listed recently at Rs 1,200 after issuing shares at Rs 600 in its initial public offering (IPO), which was over-subscribed 116 times. The scrip closed at Rs 1024.50 at the Bombay Stock Exchange on Thursday.

With bigger players focusing on 50 to 100 acre projects, smaller builders who often focus on standalone buildings in Mumbai suburbs such as Santacruz are trying to fill in the gap by expanding their business.

News: 'Stay invested, believe in India growth story'

(PTI 04/01/2007) New Delhi - Allaying their fears, Finance Minister P Chidambaram has asked investors to remain invested in stock markets which he said are being closely watched to prevent any undesirable movement. "All I can say is markets will rise, markets will fall. To a long-term investor, this should not cause any worry, he should believe in India growth story and remain invested unless there are very dramatic changes in the environment," he said in an interview to news channel. However, he refused to give any advice to punters. "What advice can I give to a punter? I have no advise to give to him," he said. Pointing out that stock market was based on speculation, he said even if there were larger than expected numbers of speculators in the market, it should not cause any harm so long as there was no manipulation. "As long as no one is manipulating the market, if 100 people are speculating on a market, one has to see the fundamental basis of the market," he said. Referring to Price-Earning (P-E) ratio of 20-21 in the markets, Chidambaram said the level is not stratospheric and depends on the people's expectations from the market. "Now, who am I to say the people should not expect price to be 20 times the earnings. People are willing to accept price 20 times the earnings, and that is what they were aiming at when they buy. Why should I second guess that?" he said. He reminded the investors that P-E ratio rose to 35-40 during the scam period. "Nobody paid heed at that time (scam). Today...we watch it very closely to ensure that there are no undesirable movements," he said.

News: Three distinct trends on Indian banking horizon

(BL 04/01/2007) Chennai - While talking to Business Line about banking in retrospect, Robin Roy remembers `Blue Ocean Strategy', from Harvard Business School Press. Any business can adopt a non-combative approach and yet succeed, he says, citing the international bestseller by W. Chan Kim and Renée Mauborgne.

"From, strategic alliances among large sized banks (Bank of Baroda, Oriental Bank of Commerce, Union Bank of India) to leverage on customer bases, to quicksilver takeover attempts (ICICI/United Western Bank) to exchange traded gold bonds, to CDOs (collateralised debt obligations), the banking sector saw it all in 2006," notes Roy, Principal Consultant, Banking & Financial Services, PricewaterhouseCoopers (P) Ltd. To him, we posed only two questions...

What were the most eventful happenings in the year just gone by, in no particular order?

1. While the banking regulator walked the tight rope between moving towards total Capital Account Convertibility and opening up the banking sector, it also introduced perpetual debt instruments, to help banks augment their capital base, already hamstrung with ownership issues.

2. The window of regulatory arbitrage available through NBFCs (non-banking financial companies) was further narrowed and the move was towards activity-based supervision, from entity-based supervision. 3. With the pace of credit growth not relenting and with interest rates hardening over the year, banks had to face both supply and demand pressures. ALM (asset liability management) was becoming a major challenge.

4. After a hue and cry from all quarters on unsolicited marketing calls for all products, ranging from credit cards, home loans to personal loans, a "no call registry" was introduced by many banks and you could actually take steps to put a stop to such calls. 5. Statistics seem to indicate that the number of official billionaires (in $ terms) in India has crossed to well over 100 providing indications of a surge in demand of private banking and wealth management services. 6. Cleaning up of the balance sheet without the crutches of DICGC (Deposit Insurance and Credit Guarantee Corporation) and loan write-offs was possible through `loan actions' where distressed assets were actually purchased through tenders. The days of `vulture funds' seem to be coming with many a distressed asset fund, waiting on the wings.

So, what would 2007 bring in its wake?

Under the shadow of Basel II, Clause 49, and breaking down of conventional business models, banks may turn the value chain upside down, to join hands with retail stores, postal services and telecos to come closer to the customer.

We have seen this happen in Japan, in Germany and Singapore. Three distinct trends are visible on the horizon: One, banks will move towards customer acquisitions more innovatively; two, banks will have to be more transparent with products, services, prices; and three, banks will have to continuously explore ways to augment capital and more importantly, preserve it.

7. Loan factories are the new assembly blocks churning out loan assets with `guaranteed' turnaround times. The retail mantra continued to hold sway with the risk appetite being whetted all the time. To enable `sub-prime' borrowers to avail loans, credit insurance is becoming increasingly important. Word has it that applications have been made to the regulator to introduce mortgage guarantee products.

8. Innovative alliances are being explored. Like telecos partnering for insurance, banks are trying to forge alliances in areas that they understand better: infrastructure financing, project financing and financial product distribution.

9. M&As (mergers and acquisitions) in a sector where PEs (price-earnings) are low and banks are open to inorganic growth, are beginning to look up. Between the Scylla of regulations and Charybdis of a `strategic fit', banks continue to look for the right opportunity.

10. `Financial inclusion' and `micro finance' became an organic part of a banker's lexicon. We could add `financial literacy' to this. How good would it be to have `informed' customers who understand the nuances of financing and appreciate the risks of the market? Credit ratings and gradings would become that much more acceptable.

So, what would 2007 bring in its wake?

Under the shadow of Basel II, Clause 49, and breaking down of conventional business models, banks may turn the value chain upside down, to join hands with retail stores, postal services and telecos to come closer to the customer.

We have seen this happen in Japan, in Germany and Singapore. Three distinct trends are visible on the horizon: One, banks will move towards customer acquisitions more innovatively; two, banks will have to be more transparent with products, services, prices; and three, banks will have to continuously explore ways to augment capital and more importantly, preserve it.

News: Birla group averse to foreign tie-ups in retail

(PTI 04/01/2006) New Delhi - A V Birla Group, which has kicked off its retail juggernaut with the acquisition of supermarket chain Trinethra, has ruled out partnering foreign firms in its bid to be among the country's top retailers.

The A V Birla group aims to become a leading retail player but chairman Kumar Mangalam Birla has categorically denied any intentions to form partnership or joint ventures with any foreign firms, a top group official said.

Birla group's decision to go alone comes contrary to other domestic companies such as Bharti Enterprises joining hands with world's largest retailer Wal-Mart.

The country's retail sector, which is being estimated at about $300 billion, continues to attract foreign players with other companies such as UK-based Tesco and French major Carrefour exploring opportunities in India. However, Reliance Industries, India's top private firm, is also going alone and has chalked out a Rs 25,000 crore retail plan.

Without disclosing any financial details of the group's retail business plans, the official said the funding would not come from any of the listed group companies.

The group would operate its retail business under the name of A V Birla Retail and plans to follow multi-format retail business model, which would consist of both large and small-sized stores, the official said.

The group has acquired a 90% stake in Hyderabad-based Trinethra Super Retail, which operates a total of 170 stores under the Trinethra and Fabmall brands in Andhra Pradesh, Tamil Nadu, Karnataka and Kerala, the official said.

News: Bank of Baroda poised for European link-ups

(BS 03/01/2007) Mumbai - Bank of Baroda (BoB) is poised to sign life assurance and asset management joint ventures with European partners as early as the end of this month.

With 2,700 branches and 27 million customers, the country's fourth largest state-owned bank already had the infrastructure in place to sell its own insurance policies, said Anil Khandelwal, chairman and managing director, Bank of Baroda.

“It is like a railway line which is already there, you just need to bring the bogey and run it,” he told the Financial Times. Although, he declined to name the likely partners for the new ventures, saying only that they are both Europe-based companies.

Foreign companies have been queuing up to enter India's insurance and asset management markets, which is growing faster after being hampered for years by red tape.

“On the asset management side, if you take the top 10 to 15 players from the US or Europe - practically all of them are looking to enter India,” said Sanjay Aggarwal, National Industries director financial services for KPMG in India.

He said in the insurance sector, in addition to existing players there are about 5 to 10 top global firms considering entering the Indian market, in which premium income is growing 70-100 per cent annually compared with the marginal growth in developed markets.

India deregulated its insurance industry in 1999, for the first time allowing Indian private sector institutions and foreign companies to mount a serious challenge to the country's twin state-owned monopolies: the Life Insurance Corporation (LIC) of India and the General Insurance Corporation (GIC) of India, which provides non-life products.

Foreign insurers is already active in India include ING, the UK's Prudential, Sun Life, Axa, Allianz and others. Domestic private and foreign insurance joint ventures have gained a market share of 35 per cent in life and 30 per cent in the non-life sectors.

Foreign asset managers already present in India include Fidelity and Franklin Templeton, with others such as UBS and Credit Suisse believed to be keen to expand in India.

Khandelwal said Bank of Baroda (BoB) would allow its foreign partner in the asset management business to take majority control.

In the insurance business, government restrictions limited the foreign partner to 26 per cent. Baroda and its foreign partner will also invite another Indian company to take stake. This might be a bank or an “industrialist”, he said.

Previously, BoB had been in talks with Nippon Life but these were scuppered by regulatory issues in Japan.

One or both deals may be concluded by the end of this month.

News: DLF offers fewer shares in Rs 13,500 crore IPO

(BS 03/01/2007) New Delhi - Months after charges of discrimination against minority shareholders forced DLF Ltd to postpone its plan for India’s largest initial public offering, the realty major today filed a fresh draft to raise around Rs 13,500 crore, more or less what it planned to raise last May.

Though it has reduced the issue size, DLF’s valuation has gone up on account of a substantially larger land bank and a considerable increase in net profits.

The issue size, which constituted 11.9 per cent of the fully diluted post-issue capital in the previous filing, has now been reduced to 10.27 per cent.

Against the 202 million equity shares of Rs 2 each that DLF had offered last time, the company is now offering 175 million, with a greenshoe option. The reduction in the number of shares on offer is on account of DLF promoter KP Singh (India’s fifth richest billionaire) and his family not selling any shares held by them.

Sources close to the development said DLF could expect to raise around Rs 13,500 crore from fewer shares as it had “grown as a company and its valuation had gone up”. Going by estimates, the share price will be in the range of Rs 825.

Post-dilution, KP Singh and his family’s share in DLF will be approximately 87.5 per cent, which will amount to nearly Rs 1,15,019.45 crore. According to the previous filing, the notional value of the holding in the hands of KP Singh and his son Rajiv Singh was Rs 92,899 crore.

Interestingly, DLF has not retained Cushman & Wakefield and Jones Lang LaSalle for valuing its land bank, as was the case last time.

Since it filed its first prospectus, the company’s land reserves have increased almost two and a half times to 10,255 acres. In the latest prospectus, the company has declared it can develop approximately 574 million sq ft on this land, with 46 million sq ft already under construction.

Of the money to be raised, DLF intends to spend Rs 6,500 crore on land acquisition and Rs 3,493.3 crore on development and construction under existing projects. It also plans to repay at least 50 per cent of its loans from the issue proceeds.

The company has identified and acquired land in and around 31 cities, which it thinks suitable for residential and commercial projects. For building shopping malls, DLF intends to identify and acquire land in 60 cities across India.

Against a net profit of Rs 191.7 crore in fiscal 2006, the company’s net profits for the eight months ended November 2006 stood at Rs 1,830 crore. But, the company’s debt has also doubled. From Rs 3,040.8 crore declared in the first prospectus, DLF’s debt is now pegged at Rs 6,661.1 crore.

TAPPING THE MARKET

Still looking to raise around Rs13,500 cr Expected listing price to be around Rs 825 Issue size reduced from 11.9% to 10.27% Land bank has increased 2.5 times to 10,255 acres Net profits for eight months ended Nov 2006 was Rs 1,830 cr

News: Apollo diversifies into transport and logistics

(HT 03/01/2007) Mumbai - Delhi-based tyre major Apollo Tyres, is getting into the transportation and logistics business. Apollo International a sister company of the Rs 3,000 crore tyre major, is setting up a cargo container freight station near Mumbai and is also on the prowl to acquire a third party logistics firm to jumpstart its foray.

In the first phase of this diversification plan, Apollo International plans to invest Rs 150 crore to set up a Container Freight Station (CFS) spread over 60 acres at Panvel near Mumbai.

The company will also offer inventory management, distribution centres, cold storage and other logistics related activities from that location.

The Panvel CFS is located strategically near India's premier container port Jawaharlal Nehru Port Trust (JNPT) which accounts for 54 per cent of container cargo transiting through the 12 major ports in the country.

"When fully developed, the CFS will have a capacity to handle 2,50,000 twenty-foot equivalent unit (TEU) boxes in a year and offer all related services," said Capt Kapil Anand, CEO, Logistics Business of Apollo International Limited. A 20-foot TEU box can load up to 20 tonnes of cargo excluding its weight of 2.2 tonnes.

Apollo International Limited is also looking at acquiring an Indian logistics company that will provide synergy to its overall game plan in the field of transportation and logistics space to compete with the likes of Maersk, Sembcorp Logistics and APL which have dedicated logistics arms operating in India in addition to CFS operators like Gateway Distriparks.

"We are looking at a target company for which we are ready to pay between Rs 30 crore to Rs 50 crore. Negotiations are on with a few firms and finances have been tied-up", Anand said.

Apollo plans to leverage the expertise of the company that is being acquired, to overcome its relative inexperience in the business and make it eligible to bid for logistics contracts.

Apollo plans to invest Rs 400-500 crores over 3-4 years to expand the logistics business by setting up CFS's in other locations as well such as in Tughlakhabad near Delhi. The expansion plans will be funded largely through market borrowings leveraging the group’s brand equity and the company’s 12-year profitable track record, said Anand.

The diversification will also help Apollo Tyres cut transportation costs by leveraging on the strength of its logistics affiliate. Apollo currently spends close to Rs 100 crore a year on logistics and transportation of tyres to about 5,000 dealers spread across the country.

"Logistics is a sunshine sector and the domestic market is huge", says Anand. Organised players account for a meager 4-5 per cent of the transport business dominated by single truck owners.

A booming EXIM trade riding on the strength of a growing economy is expected to transform the face of Indian logistics, say industry analysts. India currently spends 13% of GDP on logistics cost, much higher than the 9%-10% spent by the US and European countries.

FDI in manufacturing-oriented sectors and domestic retail expansion are driving demand for outsourced logistics services, says Mumbai based research house Edelweiss Securities.

The firm forecasts express cargo and third-party logistics providers (3PL) to grow at a Compounded Annual Growth Rate (CAGR) of 20%-25% over the next three-five years. New segments like warehousing are likely to grow at a CAGR of over 40%, says the firm.

Apollo also plans to tie-up with a global company to garner technical know-how to offer the latest and best technology and value for money to its customers, Anand adds.

News: Coffee Day opens private label tap with water brand

(DNA 03/01/2007) Mumbai - Café Coffee Day, India’s largest coffee chain, will expand its offerings in the water business and cash in on the potential provided by private label products.

Following its recent entry into the premium-priced bottled water segment under the Coffee Day brand, the company now wants to showcase more products, including flavoured water.

Naresh Malhotra, CEO, Cafe Coffee Day, told DNA Money: “When you are a strong chain with a nationwide presence, promoting private labels make more sense than blocking premium retail space by keeping someone else’s products.”

Cafe Coffee Day also sells other products like cookies, wafers, mints and other merchandise. These products are sold exclusively under the Café Coffee Day brand and only through its cafes.

Café Coffee Day bottled water is priced at Rs 15 for a 500 ml bottle. Malhotra said: “It is not the same as buying a bottle of water from a paan shop or something like that.

Offering an environment like ours is a costly affair. The premium pricing for our bottled water was arrived at after taking all this into consideration.”

Added Malhotra: “We expect at least 10% of the 75 million walk-in customers to buy our private labelled bottled water.” The estimated revenue from the water foray is Rs 7-8 crore in the first year of its operations.

Targeting a pre-summer launch, the flavoured water drinks will be positioned as a cooling-off beverage providing respite form the summer heat.

He however, refrained from divulging further details on the variants, pricing and branding of these new introductions.

Catering to their requirements in south India - primarily Bangalore and Chennai - the coffee café chain has already set up in-house bottling facility at Chickmangloor, Karnataka.

It is outsourcing from third party manufacturers in other places. Café Coffee Day is a division of India’s largest coffee conglomerate, a Rs 300 crore ISO 9002 certified company Amalgamated Bean Coffee Trading Company Ltd, popularly known as Coffee Day.

Its different divisions include Coffee Day Fresh n Ground (which owns 354 Coffee bean and powder retail outlets), Coffee Day Xpress (which owns 341 Coffee Day Kiosk), Coffee Day Take away (which owns 7,000 vending machines), Coffee Day Exports and Coffee Day Perfect (FMCG Packaged Coffee) division. In terms of international presence, CCD has a Café in Vienna, Austria and is planning to open in the Middle East, Eastern Europe, Eurasia, Egypt and South East Asia in the future.

News: Regional retail chains may hold out for more money

(DNA 03/01/2007) Hyderabad/Mumbai/New Delhi - In one big-ticket purchase on Tuesday, Kumar Mangalam Birla has gone ahead of Mukesh Ambani in the retail space.

His acquisition of the South-based grocery chain Trinethra also may be the beginning of a significant M&A story in Indian retail.

And, as the Trinethra deal shows, it will all begin with the food and grocery segment, which accounts for a whopping 55% of the Indian consumer spend of $300 billion a year.

Market sources put the price tag for the 172 stores of the Hyderabad-headquartered Trinethra at Rs 147 crores, give or take a few crores.

Some may feel it is pricey but at one stroke, it gives the Birlas a pan-South India presence, catapulting it to a size bigger than Reliance, which kicked off its retail foray from Hyderabad some days back.

Compared with this, the Rs 110 crores-plus reportedly being paid by Reliance for the 54 stores run by the Gujarat-based Adani group to speed up its roll-out may seem on the higher side.

Industry players, however, point out that acquisitions, if any, will only be an entry strategy for stragglers and an actual consolidation is still some time away.

In fact regional chains may want to hold out longer for better valuations, they say.

“The owners of both Trinethra and the Adani chain were non-serious retailers and any such sellouts will only be distress sales by non-serious players,” pointed out R Subramanian, managing director, Subhiksha Trading Services, who was also in the running to buyout Adani. “Actually it is the time to enter the market,” he said.

While the original promoters of Trinethra sold out to India Value Fund to kick-start yet another retail format Magna Mall in Andhra Pradesh, the Adanis have other interests.

Similarly, the recent sellout of Nilgiris to venture firm Actis was reportedly on account of differences within the family that owned it.

Jaipur-based Gaurav Bardiya, director of Bardiya Group, which is looking to either sell off or go for a strategic association with a retail specialist for its chain of four Big Shopper stores in the Pink City confirms this trend.

“Real estate is our core area of business, not retailing. The current market situation is very appropriate hence we decided to either quit or expand the business through a strategic association,” he told DNA Money.

According to consultant Technopak’s chief Arvind Singhal, the food and grocery segment is perhaps the most likely candidate for consolidation if any. “Everyone chain will sell at the ‘right price’ while the retail market is beginning to separate the boys from the men!”

But clearly nobody sees this as the end of the regional player despite the advent of the big-daddies like Wal-Mart and Reliance Retail.

Raman Mangalorkar, head, consumer and retail at research firm A T Kearney, felt the market will no doubt see consolidation.

“But it will certainly not wipe out the regional retailer as we have seen in the West,” he said. The boom has just begun and the big players are looking to expand at the earliest possible.

While Subhiksha itself was reportedly an acquisition target by Reliance Retail, Subrmanian felt regional players might hang on for some more time.

“I would say no thanks. It is still early days yet and business is good so why should I sell,” he responded when asked if he would sell out if a Wal-Mart came along with a lucrative offer.

Similarly others see value in not just continuing but also entering the fray, particularly the food and grocery segment, more so because the big guys are making a beeline for the sector.

For instance Heritages Foods kicked off its three state retail foray last week with nine stores in Hyderabad with plans of taking the number to a total of 45 by March this year by adding Bangalore and Chennai to the list.

Clearly then while it is not the end of the regional player it is time to build size for many of them in anticipation of better valuations in the months to come.

News: Rents go through the roof in urban India

(RTR 03/01/2007) Mumbai - Up a flight of creaky wooden stairs, young real estate agent Hemant Surve guides a prospective renter around a damp two-bedroom apartment overlooking the sea in the country's financial capital.

Flaking paint and dilapidated toilets leave his client, an American expatriate from New York, distinctly unimpressed but Surve says its dysfunctional plumbing and dour colour scheme is all she will get for her budget of $2,500 a month -- plus bills.

"Many are willing to pay anything for a flat like this," Surve says as he gestures at a bare sitting room, whose arched windows open on to a heap of ugly road construction material and huge cranes.

As global firms and some of their overseas staff flock to India to tap opportunities in its burgeoning economy, premium residential rents in cities like Mumbai and the capital, New Delhi, are going through the roof.

Add a rising number of high-income Indian professionals and a shift to a nuclear family from the traditional extended one, and the number of people looking for good homes is pushing rents to levels seen in the more desirable parts of London and New York.

"Mumbai is drawing big luxury liners and small ships alike," said Sandeep Sadh, chief executive of online real estate firm .

"Be it an expat worker or an Indian professional, the mind-boggling demand for high-end rented homes will continue."

The IT Generation

While residential rents have gone up across the board, they have surged 31 per cent in the last quarter in Mumbai's top-end areas like the financial district of Nariman Point, named as one of the world's 10 most expensive locations in a recent CB Richard Ellis survey.

Tenants drawn from banks, information technology companies, securities traders and headhunters are driving the market in the city of 17 million people, property dealers say.

In New Delhi, upmarket southern suburbs have seen rents appreciate by 30 per cent in each of the last two quarters.

"Values in New Delhi will remain buoyant as there will be no substantial supply in the next 12-15 months," said a consultant with real estate firm Knight Frank. "The demand-supply situation in the premium segment is the same in Mumbai and New Delhi."

In Bangalore, home to major IT firms, property prices have risen as much as 50-60 per cent in the past six months, but have since fallen and stabilised at a rise of about 15 per cent after new construction met part of the huge demand.

The high-end property market in Mumbai is witnessing a bizarre drama, where rents for some two-bedroom apartment can either match those in New York or Tokyo, or cost only a few dollars.

The cause is a six-decade-old rent control law - framed to insulate tenants from unscrupulous landlords - which millions of renters use to hold a large chunk of prime property, paying rents at 1940s prices.

The politically popular law has been extended more than 20 times and currently applies to roughly 60 per cent of the thousands of buildings in the city centre.

Landlords, who cannot raise rents or redevelop their assets without the permission of tenants, have watched helplessly as market prices have soared and their properties have disintegrated.

"A change in the rent laws will free up a lot of premium properties, most of them commercial," said Sadh.

"Thousands of properties could be available but even then it wouldn't be enough to meet the demand in the residential segment."

Poor amenities, infrastructure

Mumbai's high-end rental property mainly comprises decaying once-glamorous Art Deco apartment blocks, lining a seafront sweep in the south of the city.

In many such buildings, where rents can range from USD 2,000-5,000 plus bills, modern amenities are absent and even the lifts can be unsafe, pulley-worked contraptions from the 1960s.

Real estate developers and brokers say a combination of archaic tenancy laws, restrictive regulations for new buildings and shoddy infrastructure underlie many of the problems.

A lot of the properties are so old that their owners are long dead. With property titles unclear, builders avoid getting involved in evicting old tenants.

The pressure on the high-end property market has forced companies and individuals to look at the city's northern suburbs, which are also seeing a rise in rentals and capital values.

But poor infrastructure connecting these northern suburbs to the rest of the city is a problem.

"The government has so far failed to maintain, develop or strengthen infrastructure in a city which has grown by leaps and bounds in the past few years," said an official of mumbaipropertyexchange.com, a leading real estate agency.

Real estate experts say prices will stabilise once the government delivers on a promise to finally build a modern travel infrastructure for the city.

"Once we have the bridges, the roads and the underground railway, we will see prices peak out," said Sadh.

"If we can cut down on travel time, people don't mind living a little further away from town."

News: 'India gaining flavour with US venture capital cos'

(BL 03/01/2007) Chennai - Indian companies are posing a tough challenge to their Chinese and British counterparts in attracting venture capital from American companies.

China was the top destination for US venture capital (VC) in 2006, attracting more than $ 850 million in investment. The UK was second with around $ 825 million followed by India with more than $ 700 million, according to a study done by Thomson Financial, a $ 1.9-billion provider of information and technology solutions.

American venture firms have been steadily increasing their exposure to foreign companies, nearly tripling their overseas investments over the last decade. They are investing around 20 per cent of their money in foreign companies, up from less than 7 per cent in 1996, the research shows.

In the third quarter of 2006, venture capitalists invested $ 6.2 billion in 797 deals, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association based on data by Thomson Financial. American VCs invested $ 221 million in 18 deals in Chinese companies; $203 million in 18 deals in Indian companies and $ 46 million in 11 deals in Israeli companies, says the report.

Record investment

Private equity (PE) firms invested a record $ 7.5 billion over 299 deals in India during 2006, according to a study by Venture Intelligence, a research service focused on private equity and venture capital. The latest quarter ended December 2006 witnessed PE firms investing $ 2.5 billion across 67 deals, the study revealed. The figures do not include PE investments in real estate.

"The amount invested during 2006 was over three times that during the previous year, which itself was a record one," said Arun Natarajan, Founder and CEO, Venture Intelligence.

Mega deals such as Idea Cellular's pre-IPO placement and the KKR-Flextronics Software buyout contributed significantly to the total. There were 26 deals involving investments of over $ 50 million during 2006 compared with nine in the previous year, the study showed.

"I will not be surprised if the investment in 2007 touches $ 10 billion. However, going forward we have to be careful to ensure that this momentum is sustained and does not get derailed by unrealistic expectations," K.E.C. Raja Kumar, CEO, UTI Venture Funds, was quoted in a release.

Preferred sectors

Information technology and IT-enabled services was the favourite industry among PE investors during 2006, accounting for $ 1.5 billion across 87 investments. The manufacturing industry followed attracting 55 investments worth $ 962 million. Other industries that attracted significant PE investor attention during the year included financial services and insurance, healthcare and life sciences and engineering and construction.

News: 7 lakh Indians have $100,000 of wealth

(BS 02/01/2006) Mumbai - The top end of over 7 lakh people out of India’s population of over one billion is estimated to have individual liquid wealth of about $1,00,000 which is likely to go up to $1.1 million by 2009.

This represents a cumulative liquid wealth of $203 billion, estimated to go up to $322 billion by 2009. This are the findings of a recent study done by market research firm Synovate.

A Pan Asia Pacific Cross Media study by Synovate across 11 countries in the region highlights the changing spending patterns of the affluent consumers. The study tracks the changes in the spending patterns of consumers, comprising the top 27.5 per cent of the pyramid.

Overall internet access in Asia has gone by 30 per cent in 2005 over 1997, with access levels in India having gone up 132 per cent during the same period.

While laptop ownership in the region has gone up 225 per cent, for India it is far lower at 10 per cent.

Similarly, desktop ownership has increased 36 per cent in India as compared to 45 per cent in Asia. This discrepancy provides a large opportunity for marketers to tap into, says the study.

News: Pantaloon launches e-retailing portal

(BS 02/01/2006) Mumbai - Future Bazaar India Limited, a subsidiary of Pantaloon Retail (India) Limited, launched its virtual retail initiative – futurebazaar.com – here on Tuesday.

"Leveraging the tried and tested 'brick and click' strategy, futurebazaar.com is the only e-commerce portal with a strong offline presence, quite different from the current e-commerce players who have adopted a 'marketplace' model. Backed by our end-to-end supply chain and the ability to source nearly a million products, our economy of scale gives the customers the lowest prices," Sankarson Banerjee, chief executive officer of Future Bazaar, told mediapersons.

futurebazaar.com currently has on offer the widest choice of apparel, books, cameras, consumer durables, home decor and entertainment, kitchen appliances, mobile phones, watches and accessories, among others, with guaranteed manufacturers' warranty on all products and door delivery.

It also offers customers the facility to return unconditionally within 15 days articles if they are not satisfied. The portal delivers to more than 1,500-plus cities and towns.

"Around 5,000 products under 185 categories and sub-categories are currently listed on the portal, and lots more are being added everyday," Banerjee said, adding that the portal at present was witnessing around 40,000 hits per day with a conversion rate of 1 per cent.

On the logistics front, he said that the company was operating in a multi-logistic mode -- via its Big Bazaar chain and standard logistics like Blue Dart and Gati.

"The online retail business in India is currently pegged at around Rs 180 crore a year, and we are targeting to garner Rs 300 crore in the first year of operations," he added.

News: 'India headed for explosive growth in mobile telephony'

(IANS 02/01/2007) Chicago - India is in for an explosive growth in mobile telephony, the number of users each month equalling the total Indian population in the US, says a leading Indian American CEO.

Satya Prabhakar, founder of Sulekha, which claims to be the largest Indian networking site in the world, says that he sees future growth not in online services as much as among cellular phone users.

The greater growth, he said, would be in India, rather than the US.

"The growth is in mobile telephony," Prabhakar said, "as cellular phones are getting more sophisticated, more and more online users are migrating to the cellular phone.

"Internet growth is dramatically increasing each month (in India). Broadband adoption in India has been showing signs of explosive growth since the mid-2005, and is growing today at a rate of 30 percent a quarter.

"Sulekha's target market is the 50 million online and 80 million mobile users. Their numbers are expected to grow to 100 million and 200 million users respectively in the next few years," he said.

To put it in perspective, the growth of users in India per month would equal the total Indian population in the US, said Prabhakar, whose company is based in the US.

Sulekha provides 250,000 advertisements, addressing 80 percent of Indians worldwide, company officials said.

Sulekha was established in 1999, with a staff of just two - Prabhakar, and his wife. Today the online service has a staff of 275.

In an implicit acknowledgement of Sulekha's growth as well as future potential, Norwest Venture Partners (NVP), a leading global technology venture capital firm, has invested $10 million in it.

Pramod Haque, managing partner of NVP, has also joined Sulekha's board of directors. NVP currently manages more than $2.5 billion in venture capital.

"Sulekha has been a Web 2.0 company even during the Web 1.0 days," said Haque. "It has positioned itself at the vortex of three of the largest Internet mega trends: social media, local commerce, classifieds and yellow pages.

"While the management of Sulekha has done a great job of developing reach and revenue, the real explosive potential, both in online and mobile platforms, is still in front of us.

"I believe our future lies in user generated content," said Prabhakar. "We can now boast of having the largest number of Indian bloggers on Sulekha, the largest network of people's movie reviews and the largest number of photos posted online in the blogs.

"My ultimate ambition for Sulekha is make it the most influential Indian online community and mobile interactive platform," said Prabhakar. "We plan to offer unquestioned value. When it comes to online networking, we want Indians all over the world to think of Sulekha first."

News: Rabo in talks to get Canbank Mutual

(HT 02/01/2007) New Delhi - Dutch Rabo Bank is likely to acquire management control of one of the nation’s oldest mutual funds, Canbank Mutual Fund. Rabo Bank, through its Indian subsidiary – Rabo India Finance Ltd, is in an advanced stage of discussions with the senior management of Canara Bank, highly placed sources told Hindustan Times.

Canara Bank is looking at divesting a minority stake of up to 49 per cent in Canbank Asset Management Company, which was started in 1987 and was the country’s second largest mutual fund in 1992 under the leadership of B Ratnakar with assets under management of more than Rs 4,500 crore.

However, it came under severe scrutiny on charges of misuse of funds in the infamous securities scam of 1992 and has never been the same again.

In fact, after the Unit Trust of India (UTI), in its original avatar, State Bank of India and Canara Bank are two public sector banks that started mutual funds in this country.

According to sources in the financial services industry, the bank has in principle agreed to give complete management control to strategic partners while retaining a majority stake. Other sources, however, said that Rabo Bank is asking for a majority stake in Canbank Mutual.

The deal would be similar to what the State Bank of India did for its mutual funds subsidiary. SBI has divested around 40 per cent stake of its asset management company to Societe Generale of France.

A senior official of Rabo India Finance told Hindustan Times on condition of anonymity that they were in discussions for quite some time with Canara Bank with the intent of forging a strategic alliance. "Canara Bank is looking for some strategic partners," he said.

Sources close to the transaction said the deal is expected to be valued around Rs 150 crore. The valuation is expected to be more than 7 per cent of the total assets under management of the company. Canbank Mutual had assets under management of Rs 2,305 crore as on November 30, 2006. In fact, its assets, which had dwindled after the 1992 scam, have appreciated significantly in the last one year. In 2006, the assets under management increased by around Rs 800 crore.

The fund is currently managing 19 schemes. It has nine equity funds which manage around Rs 380 crore in all.

"Since Canbank Mutual Fund has more than three lakh retail unit holders, it will command a better premium," said the chief executive of a rival mutual fund.

"The induction of private or foreign partners gives the ability to sharpen the focus of its fund managers and increases the confidence of investors," said Dhirendra Kumar of fund researcher Value Research.

News: Wal-Mart shown the red light in Bengal

(HT 02/01/2007) Kolkata - US retail giant cannot set shop in West Bengal, the CPM Central Commitee decided on Tuesday.

This stand of the Central Committee, which is meeting in the city, is in line with the politburo statement issued on November 2006, where it opposed the deal between Wal-Mart and Bharti Enterprises. The party believes that the deal is, in effect, a backdoor entry of foreign direct investment in retail trade.

The Central Committee stand puts to an end speculation about Wal-Mart retail chains in the CPI(M)-ruled states of West Bengal, Kerala and Tripura.

The politburo had already said that FDI in retail trade was not permissible under the existing policy on foreign investment in India. "The Wal-Mart's franchisee agreement with Bharti Enterprises is an attempt to circumvent the existing policy regulations in order to gain a foothold in the Indian market," the politburo had said.

The Central Committee reiterated that the entry of MNCs in the retail trade would lead to massive displacement of unorganised retailers and seriously affect farmers and domestic manufacturers.

"Expansion of Wal-Mart retail chains has led to closure of small stores and affected poor communities in the United States. Given the scale of unemployment in West Bengal and the rest of the country, this is something we can avoid. On the contrary, there is a need for a strong regulatory framework to protect the domestic retail sector," said a Central Committee member.

The Central Committee’s stand is also a clear message to Chief Minister Buddhadeb Bhattacharjee, who has already allowed German wholesale major Metro AG to set up operations in the state.

It is learnt that Wal-Mart officials had earlier met the chief minister at Writers' Building, seeking his help in establish operations in Bengal. But so far, Bhattacharjee had refused to give Wal-Mart the nod.

Buddha clarified that he had no problems with German retail major Metro AG because though they would operate in Bengal, there would be no retail trade. They have told the chief minister that they would be only involved in the wholesale business and sell their products to the hotels.

News: Mumbai Metro project gets lifeline

(DNA 02/01/2007) New Delhi - Finally, there is hope for the first phase of Mumbai Metro project where viability gap funding (VGF) from the Centre goes.

While the finance ministry had rejected VGF through the public private partnership (PPP) route, senior officials said, the Union urban development ministry might provide funds for the project from its own VGF kitty.

A provision for this is likely to be made in the Union Budget for 2007-08.

A special purpose vehicle (consortium), led by Anil Ambani-controlled Reliance Energy Ltd (REL), is implementing the Rs 2,356 crore first phase of the metro that is likely to have daily ridership of 5-6 lakh a day.

“Though the VGF under PPP route was denied to the first phase of the project on the ground that the bidding for the project was finalised before the VGF scheme was finalised, it has been decided that this funding route will be available for other corridors of the metro project,” said an official.

Sources said the urban development ministry was now in the process of opening its doors to the first phase.

As in the case of VGF under PPP route, the urban development ministry can provide funding up to 20% of the project cost that works out to be about Rs 471 crore though the contractor for the project had quoted Rs 650 crore as VGF. The remaining funds could come from the Maharashtra government.

The Union urban development minister can approve funding up to Rs 500 crore on its own without having to go through the Cabinet Committee on Economic Affairs, said an official.

“We have circulated a note for the purpose and have sought views of the ministry of finance in order to process the funding for the project,” said a ministry official.

A VGF provision was always available to the urban development ministry under the Union Budget but the ministry had never used it.

The current Budget has even made an allocation of Rs 30 crore under this head but it had remained unutilised.

The first phase of Mumbai metro will become the first project to get the VGF from the urban development ministry.

The project under the concession agreement is expected to be constructed in five years.
The debt:equity ratio for the project would be finalised once the financial appraisal process was completed. Currently, lenders have been mandated to carry out te appraisal process.

News: Mercedes will set up a new Indian plant

(DNA 02/01/2007) Mumbai - The state government on Thursday will sign a memorandum of understanding with DaimlerChrysler for a production facility in the state.

Two board members from DaimlerChrysler AG are expected to fly down for the signing ceremony. The plant is expected to be set up in the vicinity of Pune, which is fast becoming an auto hub.

DaimlerChrysler India, a wholly owned subsidiary of the German auto major DaimlerChrysler manufacturers Mercedes Benz brand of luxury cars.

The company currently has a manufacturing facility in a compound which borders Tata Motors facility.

According to sources, the said plot belongs to Tata Motors and has been leased to DaimlerChrysler India which hasn’t been renewed.

Hence the company was looking for a new facility to set up a Greenfield facility.

The existing plant is expected to be moved lock stock and barrel to the new plant.

News: Ruias corral stunning $25bn credit line

(DNA 02/01/2006) Mumbai - The Ruia Brothers of the Essar Group is going for a biggie indeed. Foreign media reports on Monday said they have lined up pledges for an eye-popping $20 to $25 billion from a slew of investment banks.

The group, with a collective networth of $15 billion comprising a bulk of its telecom assets, wouldn’t need so much though, as it already owns 33% of the trophy firm Hutch-Essar.

A Financial Times report said on Tuesday Essar has received comfort letters from as Morgan Stanley, Standard Chartered Plc, Lehman Brothers Holdings Inc and Citigroup to arrange for the funds.

Sources at Essar declined to be quoted, saying the group is still in the process of organising the lead consortium and in all probability a few more banks are expected to join to help it mount the offer for buying out the Hong Kong billionaire Li Ka-shing’s stake in Hutch Essar.

On the flip side, the Ruia brothers are comforted by the fact that even if they lose the bid, they are bound to win.

This is because, the Essar group’s 33% stake will fetch them rich valuations from investors winning the bidding war.

For the moment though, the Ruias are busy lining up a huge tranche for making what is the most audacious bid ever in the history of Indian M&A.

“Our cards are open. We have an option to buy out, sell out or stay with the existing partner,” an Essar source said.

“It’s for Li Ka-shing’s Hutchison Telecom International to decide on the future course. Needless to mention, we have the right of first refusal,” the source added.

The net assets of the Essar Group are in the region of $6 billion, while its turnover excluding Hutch Essar is pegged at a more modest $3 billion.

And this is the very reason for the group to prepare for the eventuality of stake sale by Li Ka-shing.

When the shrewd Hong Kong tycoon gets the bid approach, the Ruias hope to be ready with their own counter.

“So far, Hutchison has not given any feelers or made its intentions public,” reveal Essar group sources.

News: Reliance Fresh to open 75 stores in MP

(PTI 02/01/2006) Bhopal - Reliance Fresh, the vegetable and fruits store brand of Reliance Retail, will open as many as 75 outlets in Madhya Pradesh starting April this year, the Industries Minister, Babulal Gaur, said .

The stores, which represent the front-end of Reliance's farm-to-fork project, would be opened in cities like Indore, Bhopal, Gwalior and Jabalpur under the first phase, he told reporters, giving details of an interaction with company official Farhan Ansari during his recent Gujarat visit.

The retail initiative will help farmers as they would be able to sell their produce directly to Reliance thus saving on transportation expenses, Gaur said, adding that Reliance would also provide farmers valuable tips on new techniques.

Reliance Retail had launched the first Reliance Fresh outlet in Hyderabad in November, and plans to roll out other format stores this year as part of its Rs 25,000 crore retail initiative.

News: Jet Airways buys 10 Boeing 787 aircraft

(RTR 02/01/2007) Mumbai - Jet Airways Ltd. said on Tuesday it had purchased 10 Boeing 787-8 aircraft to support its international operations.

The wide-bodied 787 Dreamliner planes are scheduled for delivery between July 2011 and December 2012, Jet said.

Jet had executed the order for the aircraft "in late 2006", a senior company official said, in a deal valued at $1.48-1.58 billion at the current list price.

Jet flies to destinations in south and southeast Asia and Britain, and expects to fly to New York from August. It is also looking to add destinations in China, Europe and the Middle East.

It expects half its total revenue to come from international operations by March 2009.

Boeing Co. has said it expects India would need 856 new jet aircraft worth more than $72 billion over the next 20 years because of a booming economy and greater travel.

News: Pantaloon to dilute stake in arms

(TNN 01/01/2007) New Delhi - Kishore Biyani has begun preparations for the great retail war of 2007 and beyond. He’s planning to dilute equity in Pantaloon Retail’s subsidiaries such as Future Media, Future Capital, Future Logistics and Central to fund his expansion plans. The equity dilution could be in the form of IPOs, preferential allotment or strategic sale.

Equity analyst Edelweiss Securities estimate that of PRIL’s total requirement of Rs 4,500 crore, equity dilution would get the company Rs 1,000 crore. Quoting the company’s internal projections, the research firm says that in all Mr Biyani’s company needs approximately Rs 2,300 crore from external sources of which Rs 1,300 crore will come in the form of debt.

When contacted by ET, Mr Biyani confirmed plans for raising more capital in the coming months through stake dilution in some subsidiaries. “We have aggressive expansion plans and looking at raising capital through investments in Future Capital, Future Media and Future Logistics,” he said.

According to reports, ICICI Ventures and Kotak SEAF India have picked 15% and 6% stakes respectively in another PRIL subsidiary, Home Solutions Retail, bringing an investment of about Rs 120 crore.

Future Capital is another PRIL subsidiary that focuses on asset management and consumer finance. It manages two real estate investment funds (Horizon and Kshitij) and consumer-related private equity fund, Indivision.

It has plans to get into insurance, consumer credit and other consumer-related financial products and services in the near future. Future Media, for which PRIL is in talks with WPP for a strategic partnership, is a recently-launched venture that targets developing retail space and malls as an outdoor media option. Future Logistics deals in management of supply chain and distribution.

According to an internal research report on the company prepared by Edelweiss, Pantaloon’s expansion plans are targeted at taking the group’s total retail space to about 30 million square feet by the end of 2011 from the current 3.5 million square feet.

By the end of FY10, Mr Biyani is looking at 80 Pantaloon stores in various parts of the country from the current number of 23. Similar expansion is in the pipeline for Big Bazaar and Food Bazaar, where the company aims to take the number of stores to 225 and 250 respectively, growing from the current 35 and 53 respectively. Central is a chain of lifestyle retail stores.

News: Indian organised retailing set to come of age

(BS 01/01/2007) Mumbai - The new year could well end up being the year of organised retailers. Wal-Mart has announced its plans for India in partnership with Bharti, Reliance Industries has already rolled out its first outlets in Hyderabad and Jaipur, and others are expected to join the party: the Aditya Birla and Munjal groups among them.

Among the big international players, Tesco on the rebound from failed negotiations with Bharti is sure to try again, and Carrefour too might finally find the right partner.

Says B S Nagesh, managing director of Shoppers’ Stop: “Almost all the big international food retailers should have established a presence of some sort in India by the end of 2007.”

Also on the cards for the new year is possible policy change, allowing multi-brand foreign players to bring in foreign direct investment (FDI) into this space for select categories of products.

AT Kearney estimates that the penetration of organised retailing in the country is barely 3 per cent of the total estimated pie of $320 billion (Rs 14.4 lakh crore). The untapped potential is large enough to attract more players to the retail bandwagon.

Says Deepankar Sanwalka, executive director, KPMG: "There are several business groups that want to be in the retail space. And we could see them wooing mid-sized foreign retailers. A real estate player or even an FMCG firm may look to work with a not-so-big foreign retailer, so that it can retain control over the venture, yet benefit from the expertise."

As Kishore Biyani, chairman of the Future Group, puts it, “The way things are going, people might sell their existing businesses to get into retailing.”

With incumbents ramping up and new players coming in, the market will get more competitive. Says Neeti Chopra, marketing head at Trent, the Tata group’s retailing enterprise: “For some time, before the market grows, everyone will be fighting for the same set of customers. And that will mean more sweet deals for buyers.”

That’s possibly why Shoppers Stop’s Nagesh is hoping that buying trends, which today are skewed towards the festive and marriage seasons, change.

"We believe there should be more fashion and lifestyle buying next year, rather than just festival and wedding shopping," he says. Retailers are also likely to do more homework on the rural market this year, in an attempt to expand their footprint in areas where there is purchasing power.

Says Ranjan Biswas, a partner at Ernst & Young: "While they may not have a presence in these areas, by mid-or end-2007, there will be a definite roll-out plan in place."

Meanwhile, those trying to scale up will continue to battle the twin challenges of people and property. Players like Trent, which has teamed up with real estate companies, are looking forward to getting more property next year.

Says Chopra, “We have tied up with DLF for 21 properties, so we should be able to set up quite a few stores in the new year.”

The rolling out of malls will continue—approximately 35-40 million sq feet of retail space is expected to be ready for use in 2007, adding to the existing 40-45 million sq feet.

Sanwalka believes that the increasing presence of modern trade channels will compel FMCG suppliers to use them more than they have been doing so far.

Says he: "FMCG firms will start thinking of ways in which to sell more through organised retail." Not that this will hurt the kiranas. With players like Reliance planning to rope in kiranas, possibly through a franchisee model, they’re unlikely to become an endangered species.

As a spin-off benefit of large companies entering the business, 2007 is sure to see increasing spends on infrastructure and supply chain management.

The Future group, for instance, has decided to set up a company to handle logistics. Biswas says that the benefits of the increasing spends on warehousing and cold storage will start to be felt in the new year, whether it’s in lower wastage, better availability of products or lower prices.

Meanwhile, all the new players want more states to amend their agricultural product marketing laws, so as to allow the private sector to directly purchase agricultural produce from farmers: today only 13 states and three union territories permit that.

All in all, 2007 promises to be exciting for the retail sector. Biyani, however, believes that "The retail battle will be fought more in the media and on the party circuit in 2007, the battle on the ground will be fought in 2008.”

News: Retail, commercial space demand to lead real estate growth

(BS 01/01/2007) Mumbai - Real estate development in India, focused on the three primary segments of demand for residential, commercial and retail uses, was expected to report strong and sustained growth at least till 2010.

According to reports released by the global real estate consulting group Knight Frank, the real estate segment of India was growing at 30 per cent per annum overall. In the retail space, Knight Frank ranked India fifth in the list of 30 emerging retail markets and predicted 20 per cent growth rate for the organised retail segment by financial year 2012 (FY10).

It indicated that the retail industry will witness investment over Rs 100 billion upto FY10.

Presently available mall space of about 30 million square feet (mn sqft) in India was expected to increase to 100 mn sqft by FY10.

Out of this total mall space to be developed, around 75 per cent will be developed in cities like Mumbai, Pune, Bangalore, Hyderabad and NCR cities.

The rest will be in tier-2 and tier-3 cities like Nagpur, Ahmedabad, Chandigarh and Ludhiana.

The number of malls to be developed in the country over next three years will be above 300. According to a report on real estate trends by Merrill Lynch, the number of malls in the five cities Mumbai, Bangalore, New Delhi, Hyderabad and Pune itself was expected to reach to about 250 by FY10.

Recently, Reliance Industries has announced its retail venture with pan-India footprint covering 1500 cities and towns involving investment outlay of Rs 25,000 crore.

In the commercial space, business opportunity is led by the unprecedented outsourcing activity in the country driven by the information technology (IT) or IT-enabled services.

Many global companies are setting up their back offices and outsourcing their work to India.

As the trend gathered pace, commercial space requirement would expand to 100 mn sqft by FY08 according to research done by Knight Frank.

Out of this, almost 75 to 80 per cent will be contributed by IT/ITES industry.

Industry feedback and business associations indicate that a large number of of companies have evinced interest in setting up special economic zones (SEZs).

Growth in this sector was being fuelled by incentives from Gol and was attracting foreign investment.

For example, the Dubai-based real estate major Emmar group was setting up SEZs at Haryana at an estimated investment $1.5 billion.

Investment in the residential segment is estimated to be above Rs 9,000 billion over next five years.

Number of households estimated to be built was above 5 millions over next five years.

All this real estate construction was expected to create a surge in demand for the raw materials of growth and the greatest growth was likely to be in demand for cement.

The cement consumption projections by National Council of Applied Economic Research (NCAER), on a conservative basis, have placed the cement demand at 225 mn tonne by the FY11.

If the government went ahead with infrastructure projects in a big way as planned, consumption was pegged to be at the much higher level of 291 mn tonne.

News: Anil richer by $2 bn after Hutch talk

(HT 01/01/2007) Mumbai - If you were wondering from where Anil Ambani was going to fish out that extra billion or two of dollars needed to buy out Hutchison Essar, you may do well to look at the performance of his Reliance Communications (RComm) scrip. Its robust recovery, after the market’s double jolts on December 11 and December 12, has already made Ambani richer by more than $ 2 billion, or nearly Rs 9,250 crore.

The stock’s recent run has left the Sensex way behind and has also significantly outperformed rival Bharti Airtel in the recent weeks. The RComm scrip has bounced back 16.8 per cent between December 12 and December 29, while the 30-share Sensex rose 6.1 per cent and Bharti Airtel 9 per cent.

A Reliance Communications spokesman refused to comment stating that the policy is not to comment on share price movements.

According to National Stock Exchange data, Anil Ambani controls 66.75 per cent of the company, which accounts for more than 136 crore shares of the company. The Rs 68-rise in the share since December 12 increases the value of the promoters’ stake by Rs 9,248 crore, or more than $ 2 billion, a sum that can play a critical role in the battle that Reliance is facing with British Vodafone to control Hutch Essar.

Reliance Communications’ market capitalisation will be one of the crucial factors that will be considered by financiers when they extend cash to Anil Ambani and his ADAG (Anil Dhirubhai Ambani Group) for the Hutch Essar bid.

The RComm closed 2006 at Rs 471 and is now 3.2 per cent higher than where it was on December 6, before the market faced a correction. The plunged laid everyone low, but RComm’s jump may have been aided by the news of its strong interest in buying out Hutch Essar, whose GSM mobile network fits strongly with Reliance’s desire to offer both GSM and CDMA based mobile services.

The Sensex is still to reach back the 13,972-point level reached on December 7 and is 1.3 per cent below it. Bharti Airtel, despite its 9 per cent recovery since December 12, is currently at 2.8 per cent below the Rs 646 it recorded on December 6.

The first hint of Reliance Communication eyeing a Hutch stake appeared around December 8, which was a Friday. After dropping to Rs 403 on December 12, as the news of Anil Ambani being in the fray got confirmed, the scrip raced up to Rs 466 over the next three days.

The fact that Ambani’s personal fortune has grown by $ 2 billion since the markets got a jolt in early December is expected to help in the fund raising. The prospect has got even tougher, with reports suggesting that Vodafone is pricing Hutch Essar at $ 20 billion.

VK Sharma, research head at Anagram Stockbroking said "The telecom sector will see 30 per cent year-on-year growth in the near future. If Reliance does take over Hutch, that will further change the valuations of the entire sector. The current price increase of the scrip is reflecting that, as well as the synergies that the two companies can enjoy."

News: Nissan to launch auto production in India

(AFP 01/01/2007) Tokyo - Japan's second largest automaker Nissan Motor reportedly plans to invest some 840 million dollars in construction of auto factories in India.

Nissan is considering two or three coastal cities in western and southern India as possible locations and plans to negotiate with local governments before making a decision, which could come as early as this month, the Nikkei business daily said.

Construction on a main assembly plant will begin this year, the business daily said, adding that Nissan expected to launch operations in the latter half of 2009 with an annual output capacity of around 200,000 units.

With about 10 auto parts manufacturers that supply Nissan also slated to start local production in India in line with the move, the group's overall investment is expected to total 840 million dollars, it said.

The factory will turn out one-liter-class subcompacts, the daily said. Some 30 per cent of the vehicles will be sold in India with the remaining 70 per cent to be exported to Europe and other markets.

The number of models produced will be gradually expanded, with plans to eventually bring total output to around 400,000 units, it said.

Nissan, which currently only exports some 200 vehicles to India from Japan a year, will work on developing a dealership network and eventually open about 100 branches in major urban areas by 2010, the Nikkei said.

Nissan's top shareholder Renault SA has separately drawn up plans to jointly produce vehicles with midsize Indian automaker Mahindra and Mahindra Ltd. in India.

News: MTNL starts full-fledged services in Mauritius

(PTI 01/01/2007) New Delhi - State-run MTNL has started full-fledged telecom services — basic, mobile and ILD - in Mauritius, with the launch of countrywide mobile services last month, a move which is expected to shore up its top line.

“We have now launched all the telecom services — mobile, fixed line (Fixed Wireless Terminal) and International Long Distance in Mauritius, R S P Sinha, CMD, MTNL said.

The company’s prepaid mobile services has been named — Mokoze — giving it a local flavour. It has also started post-paid mobile services. MTNL is the second operator in Mauritius.

Country-wide mobile services was the last service to be launched by MTNL after it had started the ISD services in June 2005 and thereafter Fixed Wireless services in certain areas, which later covered the entire island.

Even its cellular services had also started on a soft-launch basis on some pockets earlier. But the full-fledged country-wide mobile service was commercially started on December 15.

MTNL was granted licence to offer fixed line, cellular and ILD licences in Mauritius in 2004. Other than Mauritius, MTNL has a presence in Nepal, along with partners such as Telecommunications Consultants India Ltd and Videsh Sanchar Nigam and a Nepali company in a joint venture called United Telecom, where it is offering WLL CDMA based mobile and ILD services.

The company had earmarked an investment of Rs 100 crore for rolling out networks in Mauritius.

News: Tata, CSN may announce revised bids by mid-Jan

(DNA 01/01/2007) New Delhi/London - The uneasy lull in the takeover battle between Tata Steel and CSN for Anglo-Dutch steelmaker Corus may end soon, with experts anticipating revised bids from the suitors by the middle of this month.

Legal experts as well as investment bankers expect the two bidders to sweeten their offers, if any, by that time so that the situation could be factored into the terms of the auction process mooted by the UK Takeover Panel.

The panel has set January 30 as the deadline for submitting revised bids, albeit with a rider that if the competitive situation continues "shortly before this date" auction process would be initiated to decide the winner.

If the revised bids are in by mid-Janaury, it would give the Takeover Panel time to factor in the development into the auction process that would be announced by the end of this month, Roy Montague-Jones, Partner and Joint India Head of UK-based international law firm Richards Butler said.

Jones said the panel could announce an auction a few days before January 30 if the final bids are placed on the table by that date.

On the panel's reference to a competitive situation "shortly before January 30," he said it probably means that this is the date by which matters should be resolved.

If Tata Steel and CSN have bids on the table, the panel will announce an auction procedure, which has generally lasted two-three days in the past, he said.

The exact terms and conditions of an auction are set by the Takeover Panel in discussion with all parties involved, Jones said.

However, it is rare that the competitive situation continues until the late stages of a bid, particularly when both bidders are offering cash for the deal, feel experts.

They anticipate one of the bidders to withdraw from the battle ahead of the auction exercise.

The chances of the process not reaching the level of auction are also high due to a possible clause in the auction terms that could force the bidders to add a significant premium over the previous offer.

If the panel rules for a hike of 20-25 pence a share in each revised bid during the auction, the bidders might decide against going for the auction, as experts believe CSN's 515 pence a share is already on the higher side.

In previous auction cases, the panel has ruled that any revised offer from a bidder should represent a certain increase in the price per share of the target company.

Jones said the auction for Corus deal could be similar to one used for acquisition of an online auction firm QXL Ricardo Plc in 2005, to resolve a takeover battle between Tiger Acquisition Corp backed by a US private equity fund, which was advised by Richards Butler, and Florissant, an acquisition vehicle backed by a Norwegian private equity fund.

In the QXL Ricardo case, the panel had announced the terms and conditions of the auction process three days before the start of the exercise. The panel ruled on March 4, 2005 that the bidders were permitted to announce a revised offer, other than in accordance with the auction procedure, by March 7, after which the auction process would start.

Under the auction, one bidder was given a day's time to submit a revised offer and the other bidder given time the following day to better it until one drops out.

News: IndiGo to add more stations next year

(BL 01/01/2007) New Delhi - The low-cost airline IndiGo plans to add five-to-nine new stations to its existing network of 13 stations in 2007, the Chief Operating Officer, Steve Harfst, has said.

"We will look to add frequency to select markets instead of just focussing on opening new sectors during 2007 when more of the purchased aircraft are scheduled to join our fleet. We have been very satisfied with our experience during the first six months of operations. There have been no unexpected surprises and we have met the targets set. The airline is looking for similar results during 2007," Harfst told Business Line. The airline started revenue flights in early August this year.

Fleet

The airline, which has already announced its decision to acquire 100 Airbus aircraft, currently has a fleet of six Airbus A-320 aircraft. Officials were, however, unwilling to name just yet the new cities to which the airline would operate flights during 2007.

"We have a five-year business plan which is being firmly implemented. There are a number of cities that we plan to operate flights. However, the market is dynamic and all airlines have to adjust their plans about cities to which they should launch new flights and to which they should expand capacity," a senior official said.

Asked on the airlines preparedness to operate in foggy weather conditions, Harfst said that about 40 per cent of the airline's pilots were trained to operate in low visibility conditions.

"We expect some more pilots to be ready for fog flying in the coming days that should also help us and the passengers," airline officials said. The entire fleet of the airline is equipped with CAT-III equipment and CAT-III training is part the airlines standard training for pilots, official added.

News: Demand for Indian phone cards high in Dubai

(UNI 01/01/2007) Dubai - Indian telecom companies are giving UAE state-owned phone monopoly Etisalat run for their money by providing cheaper calls to India.

There is unprecedented demand for calling cards of BSN, Airtel and Tata Indicom, shop owners say.

Instead of making phone calls from here, Indian expatriates buy these cards and pass on the card numbers to relatives because of the longer talk time they offer even during peak hours.

Although the face value of phone cards are almost the same, there is on an average about 14 minutes more talk time on India phone cards than what Etisalat provides.

A regular user of Airtel international calling card said that a Dh48 card would last him almost an hour.

Those who go to India on vacation come back with a large number of India phone cards and make smart profit selling them to groceries and supermarkets.