News: ‘Japanese cos in India upbeat on biz prospects for 2007’

(BL 30/04/2007) Bangalore - Japanese companies in India are upbeat about their prospects in 2007. They find the country favourable for expanding their business, according to a survey conducted by a Japanese Government-related agency.

The comparative survey by the Japan External Trade Organisation (JETRO) shows that between 2006 and 2007, India is top of the list with an index of 67.6, followed by Vietnam and China with 51.5 and 39.9, with regard to the business prospects of the subsidiaries of Japanese companies.

Vietnam also figured high in the ranking after India, while China, along with these two countries, provided better comfort in terms of future prospects than eight other countries in the region.

The stronger preference for the countries compared to the 11 Asian countries — six of whom are Asian members — comes in the wake of cost pressure during 2006 pulling down the business prospects of the Japanese affiliates in the countries. The six members of Asian — Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam — apart from India, China, South Korea, Hong Kong and Taiwan, were covered by the survey.

Response rate

JETRO received response from 1,332 of the 3,337 companies it sent its questions to in the region, with a response rate of 39.9. per cent. According to the survey, 71.5 per cent of the respondents posted a lower operating profit in 2006, down more than 4 percentage points from the previous year, reflecting the struggle the manufactures faced due to rising costs of materials and higher wages, said JETRO.

Regarding the outlook for 2007, the number of respondents projecting worse performance compared to 2006 decreased notably, revealing that firms believed the upward cost pressure would ease in 2007.

According to the survey, those planning to "expand their business scale" in the next few years dipped by 4.2 percentage points from last year's survey to 58.2 per cent while companies planning to maintain the scale of existing business was higher.

China advantage

There was no change in the view of firms with production in China about its cost advantage. China also is seen as the strongest business competitor for Japanese firms in Asian or India, particularly in materials, including plastic. In India, local automobile components and general machinery industries are perceived to be stiff competitions to Japanese companies.

The Japanese companies will target China and India followed by Thailand and Vietnam in the next five to 10 years for marketing their products, with China being preferred for electric and electronic components and India for automobile and motorcycle parts.

Twenty five per cent of the Japanese companies in China felt that the rising Yuan against other currencies would have "large negative impact on their business" (14.5 per cent rise over last year's survey) with almost 60 per cent of the respondents strategising cost reduction to counter any further rise in the currency value.

News: 'Citi, Lehman lead race for IFCI stake'

(RTR 30/04/2007) Mumbai - Citigroup and Lehman Brothers are leading the race to acquire a 26 per cent strategic stake in Indian long-term lender IFCI Ltd, the Hindustan Times reported on Monday.

IFCI, which has reported losses for many years due to high levels of bad loans, appointed consultants Ernst & Young in March to find a strategic partner.

"Offers made by Citi and Lehman are more attractive than others. A decision over the stake sale is expected by the month-end," the newspaper quoted an unnamed investment banker, who it said was directly involved in the deal.

A Citigroup spokesman could not comment immediately, while officials at Lehman and IFCI could not be reached.

Traders see a turnaround in the lender given the profit potential from its equity holdings in companies such as National Stock Exchange, some of which it has recently sold. It also recently sold holdings in rating firm ICRA Ltd.

In April, sources told Reuters the New Delhi-based lender expected to get $250 million by selling a 26 per cent stake.

Other foreign banks such as Barclays were also in the fray for the stake, the paper said.

News: 'Indian CEOs lowest paid'

(IANS 30/04/2007) Singapore - Chief executive officers (CEOs) in South Korea emerged as the highest paid in the Asia-Pacific region followed by their Hong Kong counterparts, a survey said Monday. The average base salary for CEOs in South Korea amounts to $384,123. Cash compensation, including bonuses and other payments, adds another $568,502 on average, reported the Mercer Human Resource Consulting. CEOs in Hong Kong receive $250,707 in average base pay and $352,520 in average annual total cash, making them the second highest paid in the region. "Compensation has long been driven by such factors as historic pay levels, size of economy and competition for talent," the Business Times quoted Mercer's Steve Gross as saying. "As companies become more globally mobile, they can shift some jobs to lower-cost locations. These new considerations will have a big impact on pay levels among countries," he added. Coming after South Korea and Hong Kong, chief executives in Singapore earn an average of $239,866 in annual base salary, but their total can be nearly double that amount, the survey said. Compared with Taiwan, CEOs in Singapore are paid more than double what their counterparts earn - $114,914 in average base pay and $131,834 in direct cash on average. In contrast, CEOs in fast-rising India are among the lowest paid with an average base salary of $89,759 and annual total cash of $111,510 on average. In the Philippines, CEOs receive an average base salary of $44,496 and $51,519 in annual cash on average, about half what CEOs in Indonesia are paid. Mercer's study covered 2,300 companies.

News: India pushes its tea in Pakistani markets

(IANS 30/04/2007) Guwahati - India has launched an aggressive campaign to boost tea exports to Pakistan, Egypt, Iran and Iraq apart from traditional buyers Britain and Russia. A 12-member team of Indian tea officials, planters and traders returned Sunday after touring Pakistan to market the beverage. Pakistan last year imported about 100 million kg of tea from Kenya and 16 million kg from India out of a total annual requirement of 170 million kg. "The visit to Pakistan was extremely encouraging and we hope we are able to increase the market share of tea in that country," said Dhiraj Kakaty, secretary of the Assam chapter of the Indian Tea Association (ITA), the country's apex tea administration body. The Indian team visited the tea markets of Lahore, Peshawar and Rawalpindi. "Some giant steps were made during the recent visit with a proposal to set up a tea container depot near Peshawar. The response has been very positive," said Kakaty. India is the world's largest tea producer followed by China, producing a record 955 million kg of tea last year, 27 million kg more than 2005. Exports have gone up by about 8 million kg to 200 million kg in the same period. "The overall mood is vibrant. The Indian tea industry is beginning to look up with overseas demand on the increase, mainly due to very good quality tea produced by us," the official said. Countries like Pakistan, Egypt, Iran and Iraq figured prominently in the export list. The ITA has set up marketing bureaus in Cairo and Tehran as part of an aggressive campaign to boost sales. "We are getting queries from all these countries and we hope to do some good business," Kakaty said. Spurred by recent successes in drawing foreign buyers once again, the Indian commerce ministry is organising in November an International Tea Festival in Guwahati. Assam is considered the heart of India's tea industry. The state accounts for about 55 per cent of the country's total annual production. "We are expecting delegates from Pakistan, Iran, Egypt, the United Arab Emirates and the United Kingdom for the festival," the official said. India's $1.5 billion tea industry was facing a crisis with prices dropping in the weekly auctions since 1998 and exports plummeting as well. The industry is, however, showing signs of resurgence. A kg of good quality Assam tea sold at Rs 73 in the auctions last week, up from the average price of Rs 65 last year.

News: Pantaloon to launch KB's Wholesale Markets

(PTI 30/04/2007) Mumbai - In a bid to cater to the rural markets, Kishore Biyani-promoted Pantaloon Retail is now coming up with KB's Wholesale Markets for supply of items including fresh fruits and vegetables.

"There are bottlenecks in the supply chain in hinterland which makes transportation of fresh fruits and vegetables expensive," Pantaloon Retail CEO-Foods Arvind Chaudhary said.

The country needs investment in the area of fresh supply chains. Thus, catering to the rural population of the country, Pantaloon Retail is launching KB's Wholesale Markets by the end of the current fiscal, he said.

The wholesale markets would come up at Burdwan in West Bengal and Mathura in Uttar Pradesh at a total investment of Rs 400 crore. "We are going to roll out the first two KB's Wholesale Markets in March 2008 in Burdwan and Mathura," Chaudhary said.

The markets would be at an area of more than 50 acre each. "It will be big one-level set up of 50-acre plus. There is a lot of space in rural area," he added.

These markets would cater to retailers and big families in villages and small towns. "We are starting at these two cities first with the pilot projects," Chaudhary said.

The assortment would be in different categories keeping the domestic market in mind. "It would be on cash and carry format," he said.

News: Made in India PC for just about $100

(PTI 29/04/2007) New Delhi - While global computing giants like IBM and AMD are yet to give shape to their ambitious plans for a computer that costs $100 or less, an Indian company has already set its eyes on 10 million potential customers with its up-and-running PC priced at Rs 4,500 only.

The machine, launched by Chennai-based Novatium Solutions in 2004, costs a little over $100 as of today in the US currency, thanks to the depreciation in the greenback, but it was priced at less than 100 dollars till a few months back.

Novatium is targeting 10 million users in the next five years for this innovative product, said, company CEO Alok Singh.

The company has already started a successful commercial pilot for its NetPC computer in Chennai, he said.

"Since our trial was commercial in nature, we plan to stick to it. Going forward, we plan to expand into 6-7 big cities in the next year. Some of our immediate plans are going into two new cities in this quarter and two more in the next quarter," Singh said.

Novatium was co-founded by US-based Analog Devices chairman Ray Stata, Netcore Solutions managing director Rajesh Jain and Professor Ashok Jhunjhunwala of IIT Madras.

The company's NetPC works on a "thin client" concept. This is a small box and does not contain any software or application. It is linked to a central server, which hosts all applications.

News: FII inflows cross $3 b on Dalal Street

(PTI 29/04/2007) Mumbai - It's raining dollars in the Indian stock market with the overseas investment on the local bourses crossing $ 3 billion mark since the beginning of this year.

Foreign Institutional Investors have put in a net of $ 3.05 billion (over Rs 13,500 crore) in the Indian stocks so far in 2007, while taking their total net investment in the country so far to over $ 52 billion.

However, the net FII inflows in the first four months of 2007 is over a billion dollars, less than the figure invested in the same period of the previous year.

More than half of the net investment by FIIs this year came in the month of April alone after the overseas investors returned to the bourses with positive sentiments as Sensex regained its once-lost 14,000 level.

The bourses had witnessed a herd-like flight of FIIs after a sharp fall in February this year, but with the corporate earnings results meeting or beating expectations, the sentiments have improved considerably, said a broker.

According to the data available with the market regulator SEBI, FIIs purchased stocks worth close to Rs 46,400 crore and sold stocks worth about Rs 39,500 crore in April 2007, taking their net investment to about Rs 6,900 crore (about $ 1.56 billion).

However, the net FII investment for January-April period is estimated to remain around $ 3 billion level, as against about $ 3.3 billion in the same period of 2006, said another broker.

FIIs had purchased stocks worth a net of about $ 8 billion in entire 2006, as against a record high of $ 10.7 billion in 2005. A sharp plunge of about 30 per cent in the May-June period and another major fall in December were the major drivers for the decline in FII inflows last year.

However, if the prevailing positive trend continues on the FII front, the total overseas investment on the domestic bourses could rise to as high as $ 12 billion, while beating the record set in 2005, the broker added.

Besides, the depreciating dollar against the Indian rupee could also propel the net FII inflows in terms of the US currency.

A lot would depend on how the market reacts to further corporate earnings results going forward, the analysts believe. If the benchmark Sensex manages to regain the 14,000 level decisively by keeping above this mark for a couple of weeks, the sentiments could get a significant boost and herald a prolonged uptrend on the bourses.

Last week, the Sensex plunged by more than 320 points on Friday while ending a five-day upward rally primarily driven by strong corporate results.

News: India's global auto hub dream in threat

(PTI 29/04/2007) New Delhi - India's quest to become a global auto manufacturing hub could be seriously challenged by its inability to sustain its low-cost production base, global research firm KPMG has said. A survey conducted by the research firm reveals that the Indian auto component manufacturers are increasingly becoming sceptical about sustaining the low-cost base as overheads including labour costs and complex tax regime are constantly rising. The survey said many executives believe that India's cost advantage is eroding fast as labour costs are constantly increasing and retaining employees is becoming more and more difficult. Increased presence of global automotive companies in the country was cited as one of the reasons for the high attrition rate. One of the auto component company interviewed in the survey said it presently recruits 10 per cent more management level staff than it actually requires, expecting that staff retention challenge would intensify. Another company surveyed by the research firm believes that Indian auto businesses will only prosper if they increase investments in automation. "In the longer term, cost advantage will only be retained if Indian capital can be used to develop low-cost automation in manufacturing. This is the way to preserve our low cost," the survey quoted the company as saying. Survey said that automation system must be low cost - it isn't going to help if India industry imports automation at the same price that the developed world has paid. Global auto majors are also sceptical about India's low cost manufacturing base. The survey quotes a European car maker as saying, "there are some costs which could fall - but don't. India taxation remains a big disadvantage. This is not about tax rates, it is just about unnecessary complexity." But some companies also believe there is scope for reducing the cost of doing business. "There are opportunities to exploit lower costs right across the board," says one component manufacturer. The company says labour costs are definitely increasing but they are still five per cent of the total operational costs. The labour costs can be further reduced if companies are successful in bringing down other costs like reducing power costs. Another vehicle maker asserts low-cost base can never last long. The company said Indian industry has till now relied on very labour intensive model but it would have to switch to a more capital intensive model now.

News: Game on to control Indian gaming market

(PTI 29/04/2007) New Delhi - The ultimate battle for control of the Indian video games market has begun, with leader Sony pitching its new generation gaming console PlayStation 3 against the lower priced X-Box from Microsoft, hoping gamers would go with superior technology than pricing.

The PS3 doesn't just offer gaming, but entire home entertainment features that supports movies, browsing internet and playing songs to name a few.

Microsoft, which launched X-Box in India in October last year, offers two models of its gaming console priced in a range of Rs 19,990 to Rs 27,750 while Sony has brought only the high end model of PS3 priced at Rs 39,990.

"Both the consoles support similar graphic capabilities, but Microsoft's X-Box has a price advantage as our console is being offered at nearly half of PS3's price," said, Microsoft Entertainment and Devices Division Country Head Mohit Anand.

Dismissing apprehensions that 'PlayStation 3' could affect sales of X-Box, he said, the company is ready take competition head-on as it has done in other parts of the world.

"We welcome competition in India as it would not only help in developing a the gaming market here but would also help customers in deciding which console offers better value proposition over the other," Anand said.

Sony would offer only the high-end model of PS3 in India which comes with a 60 GB hard-disk. The company also sells a lower 20 GB model in the global market.

Admitting that pricing is crucial to succeed in the Indian market, Sony computer Entertainment Europe Sales and Marketing Director Tim Stokes said, "the duties in India are too high and the company is absorbing a part of the duties but it is difficult to reduce the prices below this level."

Anand said Microsoft has not only priced its consoles competitively but it is also offering gaming titles at equally reasonable rates.

He said the company has also introduced various India specific gaming titles like 'Yuvraj Singh International Cricket'.

Microsoft sells 55 gaming titles in India priced between Rs 1,499 to Rs 2,510 while Sony would initially sell 12 gaming titles which would be available for Rs 2,790 each.

Sony is aiming to sell 10,000 units of the popular console in the current fiscal and looking to retain the lead in the $100 million Indian gaming market.

"The Indian gaming market, which includes computer games, mobile games and consoles, is expected to grow to $425 million by 2010.

"Sony is a leading player in this market and would work toward retaining its leadership position here," Stokes said.

He said the company was targeting over five-fold jump in its gaming business in India, which would primarily be driven by earlier versions of its console -- PS2 and the portable version PSP.

Sony has sold three million units of PS3 across North America, Japan and Europe since its launch five months ago. It is also developing India-specific gaming content which is expected to hit the market by October this year.

News: Reliance Retail establishing manpower training centre

(BL 28/04/2007) Chennai - Reliance Retail, which expects to take in 20,000 sales staff at its shops in Tamil Nadu alone in the next few years, is all set to open its `manpower training centre' in Chennai soon. The company's Vice-President (Human Resources), B. Venkataramana, told Business Line, it has decided to locate the training centre in the same building which houses the Reliance Fresh store at Madipakkam. According to Venkataramana, the idea is to take in around 250-300 people for training initially. The duration of the course could be around three months. Considering the fact that trained manpower is always in short supply, particularly for the retail industry as the concept of modern retail is relatively new in India, the company has decided to set up its own training centres across the country. At present, it has two such centres — in Mumbai and Kolkata. CSR Reliance Retail aims at recruiting people from the underprivileged community in society. "Hence, we are planning to train students from corporation schools and schools run by NGOs. And, we consider this as a part of our corporate social responsibility," he said. Asked whether the company will take students on an employment basis and pay them a stipend during the course period, he said that actually, it is planning to charge a "small fee" from those who want to join the course "as we want to bring in some discipline and regularity among the students", and will reimburse that once they are inducted into service.

News: Indian forex reserves rise $789 m to touch $203 b

(BL 28/04/2007) Mumbai - The country's foreign exchange reserves rose by $789 million to touch $203.881 billion in the week ended April 20, due to the revaluation effect.

The forex kitty had seen an accretion of $2.772 billion to $203.092 billion in the previous week.

According to the RBI's Weekly Statistical Supplement, foreign currency assets during the week ended April 20 increased by $788 million to $196.632 billion.

Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves.

"The relatively marginal rise in forex reserves would have been due to the revaluation effect. Besides, the RBI had not intervened in the forex market," said a senior treasury official.

The euro gained from $1.35 to $1.36 against the dollar while the pound jumped from $1.98 to $2 during the week under consideration. Foreign institutional investor inflows into the equity market were $625 million.

Gold reserves and SDRs remained unchanged at $6.784 billion and $2 million, respectively. The country's reserve position in the IMF rose by $1 million to $463 million.

News: Indian companies tap global market

(IANS 28/04/2007) New Delhi - Indian companies mobilised $9.2 billion from the global market during 2006-07 (April-December) through External Commercial Borrowings (ECBs) and $1.9 billion through American Depository Receipts (ADRs) and Global Depository Receipts (GDRs), the Lok Sabha was informed Friday.

In 2003-04, the companies had mobilised through ECBs $2.9 billion and $459 million through ADRs and GDRs, Minister of State for Finance P.K. Bansal said.

The earnings in 2004-05 through ECBs was $5.4 billion and ADRs/GDRs was $613 million while in 2005-06 it was $2.9 billion through ECBs and $2.5 billion through ADRs and GDRs, he added.

News: Commercial property rentals in tier-1 cities still rising

(BL 27/04/2007) New Delhi - Rental rates for commercial properties in tier I cities continue to rise, says a CB Richard Ellis report.

"With the Indian IT industry on track to achieve its long-term potential, demand for office space is expected to remain strong in the short to medium term," the report says.

The prime commercial locality of Connaught Place in the Capital commanded rentals of Rs 275 per sq ft per month for grade-A office space in March, up from Rs 250 per sq ft per month from a year-ago period, according to the report.

Similarly, Grade-B office space in Connaught Place saw rentals move up to Rs 175 per sq ft from Rs 150 per sq ft.

The net rent (rent for actual lettable area and interest on the security deposit) in Connaught Place stood at Rs 385 per sq ft and Rs 245 per sq ft for Grade-A and Grade-B office space last month respectively, says the report.

Mumbai's main commercial space locality Nariman Point commanded a rent of Rs 330 sq ft last month, up from Rs 310 a year ago for Grade-A office space. For Grade-B office space, rentals stood at Rs 250 sq ft, up from Rs 225 a year ago. The net rent in Nariman Point was Rs 410 sq ft and Rs 310 sq ft for Grade-A and Grade-B space respectively.

Bangalore recorded marginal increase in rental in the period. The rental for Grade-A space in Central Business District in Bangalore stood at Rs 68 sq ft, up from Rs 66 and for Grade-B at Rs 46 sq ft, up from Rs 44. The net rent for Grade-A and Grade-B space stood at Rs 70 sq ft and Rs 56 sq ft respectively.

Hyderabad did not see significant escalation in rentals either. Grade-A space in the CBD in the City of Pearls stood at Rs 50 sq ft, same as last year. Grade-B space in CBD went for Rs 45 sq ft, up from Rs 40. The net rent for Grade-A and Grade-B space stood at Rs 72 sq ft and Rs 62 sq ft respectively, according to the report.

News: France's Carrefour puts India entry on hold

(RTR 27/04/2007) Mumbai - France's Carrefour, the world's second-biggest retailer, has postponed plans to enter India until policy on foreign investment in the segment was clear, the Economic Times said on Friday.

"We will not be in a position to announce any concrete India entry plan till policy issues on FDI (foreign direct investment) in retail are made clear," Carrefour India Managing Director Gerard Freiszmuth told the newspaper.

Foreign multiple-brand retailers are limited to cash-and-carry and franchise or licence operations in India.

The French firm was also waiting to see the structure of a proposed venture between India's Bharti Enterprises and Wal-Mart Stores Inc. for cash-and-carry and the back-end, Freiszmuth told the paper.

Details of the venture were to be finalised in April.

"We have been looking at India as an attractive destination and hope to have a long-term association with the country. We are studying and understanding the various pros and cons and will not make an announcement in haste," Freiszmuth said.

Indian Trade Minister Kamal Nath had said in February that Carrefour was close to signing a deal with India's Wadia group for its retail foray. Local media have also reported the French retailer was in talks with other Indian companies.

India's fragmented $300-billion retail industry is forecast to more than double by 2015, but the proposed entry of big foreign retailers has triggered political concerns and protests from small shop owners who fear loss of jobs.

News: Retailers get down to basics for profits

(RTR 27/04/2007) Mumbai - At the entrance of Mumbai hypermarket Food Bazaar there is a sign: "Fresh fruits and vegetables at mandi (farmers' cooperative) prices. Do not buy from general store." It is not an empty promise. Food Bazaar, a part of Pantaloon Retail (India) Ltd., is matching prices by buying from farmers' cooperatives and wholesale markets, a model that new entrants are adopting as they rush to tap the growing market.

"Large retailers are disadvantaged at the front-end compared to small shops as they have higher rentals and overheads, so they have to drive profitability through the back-end," said Raman Mangalorkar, head of consumer and retail practice at AT Kearney. "Having an efficient way of sourcing, storing, moving and replenishing products is going to be very critical to profits."

Reliance Retail Ltd., a subsidiary of Reliance Industries, is investing $5.6 billion in stores, of which a fourth will be in its supply chain, while Bharti Retail Ltd. will spend $2.5 billion by 2015 and is firming up a venture with Wal-Mart Stores Inc. for back-end and cash-and-carry operations.

ITC Ltd., the top cigarette maker, has a network of "choupals", rural collection centres for grain, and is sourcing fruits and vegetables from farmers for its grocery stores. Already, small retailers, who control a lion's share of the market for food and groceries, are feeling the heat. "Earlier, people here would buy all their fruits from me, but now they come occasionally," said Heera, a fruit vendor who sits among piles of fruit on gunny sacks on the side of a busy lane.

Food and grocery makes up two-thirds of India's fragmented $300 billion retail market, which is expected to more than double by 2015. But a lion's share of the market is in the hands of small, informal owners like Heera, who says her earnings have fallen as the supermarkets cut their prices. Indeed, at Food Bazaar, mangoes are sold at 300 a dozen, the same price as in the Colaba market, where vendors have typically drawn buyers with cheaper prices than the supermarkets.

"It's cleaner and everything's packed nicely, so I don't even mind paying Rs 1-2 more here," said shopper Vrinda Dalal, as she handed beans to a Food Bazaar attendant to weigh and pack in a plastic bag in the air-conditioned store. Other retailers hope to lure shoppers like her.

Tata Chemicals Ltd. has a venture with Ireland's Total Produce Plc for selling fruits and vegetables, while the AV Birla Group recently bought regional supermarket chain Trinethra, and the Wadia group plans an entry.

Foreign multi-brand retailers are limited to cash-and-carry and licence or franchise operations now, and analysts say the food and grocery segment offers easy pickings for firms, including Tesco Plc and France's Carrefour who are trying to get a foothold in India.

An estimated 40 per cent of fresh produce in India is lost because of poor transport and storage infrastructure, with many retailers resorting to packing regular trucks with blocks of ice. "Sometimes, it is cheaper for farmers to let the produce rot in the fields rather than get it to the market," said S. Sivakumar, chief executive of ITC's agricultural business division, which advises farmers on soil testing, pest control and management.

"There has to be some intervention to make sure firms invest in the back-end and to prevent foreign firms from getting at the low-hanging retail fruit before meeting obligations," he said. Firms like Bharti, whose Field Fresh Foods, a venture with the Rothschild family for produce, and even fast-food giant McDonald's Corp., which sources lettuce and potatoes from contract farms, are already demonstrating greater efficiencies.

Mangalorkar estimates there could be a 30-50 per cent improvement in landed cost with an efficient supply chain, but warned it would be a drawn-out process. "We are talking about a complete transformation in the process from the seed to the spoon."

News: India takes breather from inflation fight

(Forbes 27/04/2007) Mumbai - India’s central bank on Tuesday left key lending rates untouched and introduced measures to counter a surge in foreign funds that is fuelling the rise of the rupee against the dollar.

In an annual report on monetary policy, the Reserve Bank of India predicted that economic growth would slow to 8.5% for the year ending in March 2008, down from 9.2% in the last fiscal year.

Governor Y.V. Reddy left the central bank’s repurchase rate, an overnight lending rate, at 7.75%. It has been raised five times in under a year to suck liquidity out of the system.

He also increased the overseas investment limit for Indian companies to 300% of their net worth, raised the ceiling on mutual fund investments abroad from $3 billion to $4 billion and doubled the current and capital account transaction limits for individuals to $100,000.

The central bank expects inflation to moderate from its current levels of 6% to 5% in this fiscal year. “In the event of demand pressures building up, increases in interest rates may be advocated to preserve and sustain growth in a non-inflationary manner,” the bank said.

The markets responded well to news that the government was taking a breather from aggressively fighting inflation. The Bombay Stock Exchange’s Sensex rose 1.5% Tuesday to 14,136.72. However, the rupee appreciated as well, touching a new high of 41.04 against the dollar.

“The RBI appears comfortable with the slight decline in inflation, but if it moves up they will be ready to raise rates again,” said Bidisha Ganguly, an economist with the brokerage Brics Securities. “This was a good policy and the targets set for growth are very realistic.”

The strategy is to liberalise capital outflows in the hope that net inflows will drop, she said. Foreign investors are pouring billions of dollars into India’s booming stock markets and to expand operations in the country, encouraged by a strong growth rate and lower costs here. Foreign exchange reserves in India touched a new high of $200 billion this month.

“Foreign exchange inflows can potentially reduce the efficacy of monetary policy tightening by expanding liquidity,” the central bank said in a statement. It wants to reduce the growth of money supply to 17%-17.5% in this fiscal year, below the present rate of around 20%.

Business groups reacted positively to the policy, calling it an acknowledgement of the fact that growth cannot be sacrificed in the fight against inflation.

“The various measures announced in the policy, which also indicate certain degree of liberal approach to outward flow of foreign currency, are most welcome… since they would definitely have a sobering effect on the rapidly appreciating rupee,” R. Seshasayee, president of Confederation of Indian Industry, said in a statement.

News: Hollywood in US to get an Indian cousin

(RTR 27/04/2007) Mumbai - A Bollywood theme park is being built in India along the lines of Hollywood studio parks, allowing fans to go behind the scenes of the world's biggest cinema industry in terms of viewers.

Percept Holdings, a media and entertainment company, is constructing the theme park at an initial cost of $100 million in a sign of the growing taste for merchandising in an industry evolving from family firms to Hollywood-style companies.

"Bollywood is what the Indian masses turn to for entertainment," said Shailendra Singh, a top official of Percept Holdings, which is building the park in Mumbai, India's cinema and entertainment capital.

"Bollywood accounts for over 40 per cent of the total revenues of the overall Indian film industry, but there is no organised format or means to consume this experience."

The theme park, due to open in 2008, will have Bollywood cafes, a hall of fame, museums, Bollywood rides, sets, shoot visits and simulator experiences.

Despite being so prolific - Bollywood makes more than 800 films a year - the industry's revenues stand at half of what the Walt Disney studio made in box office revenues in 2006.

But studios and analysts say the industry is aiming at following Hollywood with "media convergence" - the buzzword for plastering products across an array of media such as television, the Internet, video games and mobile phones - to raise revenues.

Revenues from India's film industry, valued at about $1.75 billion in 2006, are forecast to nearly double to $3.4 billion by 2010, according to estimates by PricewaterhouseCoopers.

News: Nabard Consultancy ties up with Rabo India

(BL 26/04/2007) Mumbai - Nabard Consultancy Services (NABCONs) has signed a memorandum of understanding with Rabo India Finance for advisory and co-financing of projects.

The co-financing will be in agriculture, agro-processing, agri-infrastructure and renewable energy among others, said a press statement from Nabard. The specific areas of cooperation will be in food and agribusiness, rural development and planning, public-private partnerships, storage and warehouses, and rural retailing, the release added.

Rabo India Finance and Nabard Consultancy Services also signed a Letter of Intent (LoI) to share knowledge and market expertise for assisting agriculture and rural sectors in India. The LoI will focus on the core competencies of both institutions.

Y.S.P. Thorat, Chairman, Nabard said, "The Indian agricultural market is opening up to global opportunities. Combining our strengths with Rabo will give us access to a new set of global knowhow. Nabard will also be able to channelise the resources of Rabo towards Indian agribusiness through co-financing."

News: Kotak raising $350 m for Indian property

(RTR 26/04/2007) Mumbai - Kotak Realty Funds is raising $350 million for property joint venture projects in India and to take stakes in developers, who are seeing their funding sources narrow.

Chief Investment Officer Hari Krishna, who has already invested a $100 million fund raised domestically, said the new 7-year fund would close next month.

The unit of India's Kotak Mahindra Bank hopes to attract pension funds and other institutional investors, mostly from Europe, with a internal rate of return target of around 25 per cent.

"They need to juice up their returns," Krishna said of the willingness of investors to dabble in relatively high-risk Indian property.

Speaking on the sidelines of a conference in Mumbai, Krishna said he was looking to take equity stakes in developers and exit through initial public offerings in three or four years time.

Kotak's first fund joined private equity group Warburg Pincus by taking a $10 million stake Lemontree Hotels, a new firm that is building business hotels across India.

The tactic has also been pursued by the property arm of U.S. investment bank Morgan Stanley , which has bought into three small Indian developers in the hope of making them national players.

Indian developers are itching to accumulate land and build at a time when the property market is booming -- to such an extent that many in the industry think a sharp correction is around the corner -- but most are struggling to raise funds.

Initial public offerings have become a drawn out process as regulators pick through applications in response to criticisms that firms are overvaluing their land.

And the valuation issue has hit performances by recent debutants such as Mumbai-listed Akruti Nirman Ltd. and Dev Property Development, which listed on London's Alternative Investment Market in January.

Slowing residential sales in some cities were also squeezing cash flow, Krishna said.

And at a time when the central bank is trying to clamp down on lending for property projects to try to cool the sector, commercial banks would lend to only the best-recognised names in the country. Lending for land purchases is banned.

"Debt financing is increasingly to only those with a strong equity base, so you have to get that equity base on board," he said of the attraction of local developers to foreign capital.

Krishna said many investors were questioning whether investing in India was worth the risk, considering property deals in safer Japan and Australia could give internal rates of returns in the late teens.

In a real estate transparency index drawn up by consultants Jones Lang LaSalle, India is labeled "semi-transparent" and scores just below Thailand and just above "low" China.

Investors are most worried by unclear land titles, corruption and red tape, but they still pour money into the country. Last year, an estimated $10 billion was raised internationally for Indian property.

"There is a certain positive sentiment for India at this time, but the window is not necessarily going to be open forever," Krishna said.

News: Tata Tea buys Vitax, Flosana brands in Poland

(RTR 26/04/2007) Mumbai - Tata Tea Ltd. said on Thursday its subsidiary, the Tetley Group, has agreed to buy the Vitax and Flosana trademarks in Poland from Premium Foods for an undisclosed sum.

The combined turnover of Vitax and Flosana brands is $23 million, Tata Tea said in a statement.

Vitax is a specialty tea brand.

News: 'India needs to beat the overheating economy'

(PTI 26/04/2007) New Delhi - To address the growing signs of overheating in the economy, India needs structural reforms to boost productive capacity so that demand is met and inflation is checked, says global rating agency Moody's.

"The pursuit of macroeconomic stability by India's monetary authorities is at a critical phase and is important not only from a business, policy, and political perspective, but also for ensuring the long-term sustainability of public finances," Moody's Vice President Kristin Lindow said.

"We are cautiously optimistic that deep-seated political hurdles can be overcome to achieve fundamental progress in this area, which is the rationale for our stable rating outlook," Lindow added.

Moody's pointed out the current signs of overheating in the economy include higher-than-acceptable inflation, growing merchandise trade deficit, still-high rates of domestic credit growth and the rapid rupee appreciation mainly driven by strong capital account inflows.

Such trends are neither transitory, coincidental nor independent from one another, rather, they are the result of a structural shortfall in the absorptive capacity of the economy, she said.

The credit policy announcement earlier this week by the Reserve Bank of India has indicated a heightened level of concern about its ability to restrain aggregate demand and avoid exacerbating strains on the economy's output potential.

The central bank also said that supply response to the growing demand would be delayed because of constraints.

Over time, Moody's anticipates that a firmer supply-side policy response would underpin stronger medium-term growth accompanied by less risk of overheating.

To date most of the improvement in government accounts has been cyclical or attributable to ample global liquidity.

The more manageable external debt position and strong external liquidity is reflected, in Moody's investment-grade 'Baa3' foreign currency issuer rating for the Indian government and 'Baa2' foreign currency country ceiling, despite widening current account deficits.

The rating agency cautioned, in the absence of deeper reforms, Indian fiscal policymakers have no option but to rely on stop-gap measures to contain the build up of macroeconomic imbalances and inflationary pressures.

A way to accomplish this is to affect relative prices, including rupee exchange rate, both to encourage greater foreign demand and to discourage domestic demand for restraining growth of external deficit, Lindow said.

Other strategies would rely on monetary and fiscal tools for curbing domestic demand and achieving price stability.

"In India's case, macroeconomic policymaking has lately been deeply complicated by strong capital account inflows that far exceeds current account deficit. The flows have put upward pressure on the rupee which has resulted in considerable foreign exchange reserve accumulation," she said.

Such inflows are partly debt-creating in nature -- commercial borrowings and non-resident Indian (NRI) deposits -- and can be quite volatile, especially speculative foreign institutional capital or yield-seeking portfolio inflows.

In this situation, Moody's believes that the burden of re-establishing macroeconomic stability has increasingly fallen on monetary policy, although the magnitude and nature of capital inflows have blunted the efficacy of policy tools.

News: India is now a $1-trillion economy

(RTR 26/04/2007) Mumbai - India's gross domestic product has topped $1 trillion, thanks to a strengthening rupee, making it the 12th country to achieve the milestone, Credit Suisse said on Thursday.

"Indian GDP at the current price level is Rs 41 trillion. With the rupee appreciating to below 41 against the US dollar, yesterday was the first day for the economy to be a trillion dollar economy," the Swiss investment firm said in a note.

The rupee, which is trading around 40.76 to a dollar, has appreciated about 8.4 per cent this year and is up 15.4 per cent from a three-year low of 47.04 in July last year.

Stock markets in eight out of 10 countries had risen in the one year after their economies first crossed $1 trillion, Credit Suisse said.

However, India's $944 billion stock market should probably drop because of slower earnings growth for sectors such as autos, banks and cement, before picking up as inflows pick up into fast growing economy.

"Given our outlook... it is likely to go down again in the near future before it sustainably stands above this mark," it said, referring to $1 trillion.

The benchmark BSE stock index was trading up 0.4 per cent at 14,278.64 points at 1:05 pm.

It has risen about 15 per cent from its early April low on good quarterly results and a central bank decision this week to leave interest rates unchanged at its policy review.

News: Sony targets $2 b India top line by 2010

(PTI 26/04/2007) New Delhi - Buoyed by the increased buying power of the Indian consumer, Japanese consumer electronics major Sony today said it is targeting a two-fold jump in consolidated revenues from its operations here to $ 2 billion by 2010. "We crossed $ 1 billion consolidated revenues mark in 2006, and anticipate to nearly double our top-line in India by 2010 to touch the $ 2 billion mark," Maasaru Tamagawa, managing director, Sony India told reporters. He said the $ 1 billion top line includes revenues from its mobile manufacturing and marketing joint venture Sony Ericsson and consumer electronics division Sony India. "The consumer electronics division, Sony India, closed the previous fiscal at Rs 2,300 crore. We are anticipating a 30% increase in our revenues from this division year on year," he said. He said the company is consolidating its operations in the country and is also studying the feasibility of setting up a manufacturing facility."We'll study the best option and are exploring the options of a local production base if its would suit our strategy, but nothing has been finalised as of now." The company's mobile phone joint venture Sony Ericsson operates out of a three million units per annum manufacturing facility at Chennai, while having no manufacturing operations for its remaining products here. Sony India sells a variety of consumer electronic products here, including high definition and plasma TVs, DVD players, mobile phones and gaming consoles among others.

News: Indian mangoes finally head for US

(IANS 26/04/2007) New Delhi - The first consignment of Indian mangoes Friday headed for the US after a long ban on the produce imposed on grounds that the production method did not conform to US norms was lifted by Washington. This was followed by a meeting between Commerce and Industry Minister Kamal Nath and US trade representative Susan Schwab in which both the governments reached a consensus of passing the mangoes through a radiation test as per US norms. The first shipment consisted of 150 boxes of mangoes of different varieties. In return, India has allowed to sell US-made Harley Davidson bikes that was earlier not allowed on Indian roads as it does not meet Indian emission standards. India will initially be exporting mangoes of such varieties as Alphonso, Banganpalli and Kesar while other varieties such as Langra, Chausa, Mallika, Dussheri will be exported during the latter part of the mango season, an official statement said. "We have followed through on President Bush's pledge to open US markets to Indian mangoes, an important national symbol in India," said US ambassador to India David C. Mulford. "Bringing Indian mangoes to US is just one step in increasing agricultural trade between US and India," Mulford added. Demand for mangoes in the US is strong, with a market size estimated at about 250,000 tonnes. Currently, Mexico is the main exporter of mangoes to the US. According to the statement, opening of US market for Indian mangoes will enhance the business opportunity for Indian mango producers.

News: 'India property boom would end in tears'

(RTR 25/04/2007) Mumbai - "The grave dancer", US tycoon Samuel Zell, was in a mood to spoil a two-year-long party when he told a gathering of Indian property executives this week they were "on the brink of excess" and their boom would end in tears.

The developers and fund managers could only agree.

The man who earned his nickname, and a $4.5 billion fortune, picking up cheap offices in the 1990s US downturn and packaging them into a property trust sold last year for $39 billion, said it was "mental masturbation" to believe there were endless riches for investors in India's 1 billion person market.

Only a top sliver of the population can afford to buy the homes being built.

"India's greatest asset today is everyone's imagination," Zell said.

Many in the audience nodded in assent.

The only difference of opinion among some of India's leading property professionals at the conference in Mumbai was how far property prices would drop, probably at some point in the next year -- 10 per cent or 40 per cent?

The last time a property bubble burst in India prices slumped by as much as 70 per cent between 1995 and 2001. But this time around, a raft of international funds raised by the likes of Citigroup, Morgan Stanley and Credit Suisse are likely to step in looking for bargains and cushion the fall.

"Our expectation is that sometime in the course of this year you'll see a 30 to 40 per cent drop in prices," said Ajit Dayal, chief executive of fund manager Quantum Advisors.

An estimated $10 billion was raised internationally for Indian property funds last year.

But rising mortgage rates and a doubling of property prices in major cities in the past two years will lift home prices beyond the reach of even the 40 million richest Indians that developers are targeting, Dayal said.

Since 2004, 10-year bonds have risen around 300 basis points to 8 per cent, as the central bank seeks to control inflation in an economy that is estimated to have grown by 9.2 per cent in the year ended March 2007, its fastest pace in 18 years.

Sky High

Young software engineers earning between $700 and $2,000 a month in the country's outsourcing boom could stop buying homes.

The price of a 100-square-metre Bangalore flat has jumped 60 per cent in two years to $100,000. Prime residential prices in Mumbai and New Delhi have doubled in that time to about 20 per cent lower than Shanghai and 40 per cent below Singapore and Hong Kong.

Dayal said that in some cities, such as Kolkata, new housing supply outstripped demand by 5 to 10 times.

"There's nothing culturally or socially in India to force 19-year-olds to leave home and buy a property," he said. "They'll just stay with their parents."

The property boom gathered pace quickly after the government eased rules on foreign investment in the construction industry in early 2005 to help revamp the country's crumbling infrastructure and fill an estimated shortfall of 20 million homes. About 90 per cent of all property investment is in residential development.

"It's very scary, prices are sky-high," said Aditya Bhargava, an executive at fund manager Trikona Capital, which is raising a $400 million fund for Indian property.

"I don't know when the correction will happen, but there's significant overheating."

Nayan Shah, chief executive of township developer Mayfair Housing Ltd., agreed with Zell's outlook for the market, but said the US billionaire's comments would shock many in the industry.

The demographic fundamentals for India's real estate boom touted by analysts appear compelling for many investors.

For example, according to CLSA, disposable income has grown 12 per cent a year for the past five years, and the number of people per household has dropped to 5.1 from 5.52 in the past decade as young professionals move away from their parents.

"I think it's an ice-breaker for our country, it's like someone saying look east when everyone's looking west," Shah said of Zell's comments.

"I've seen three recessions and booms in my life, and he's seen more," he said. "But I think it will stay stable for now, and maybe from 2008 there'll be signs of distress."

Some fund managers are laying plans for when prices fall.

"We'll step up more in 9 to 12 months time when the liquidity crunch hits the market," said Sameer Nayar, the Asia head of Credit Suisse's real estate arm.

Zell said that he had no property investments in the country. His company, Equity Group Investments, is pouring money into mass housing in Mexico and Brazil, selling units for around $20,000. But the model is unlikely to catch on soon in India.

An office delivery boy, employed to scooter through Mumbai's dusty streets lined with crumbling tenements and shacks, would earn about $70 per month, and keep $15 aside for housing. With land prices spiraling, developers do not build for him.

"We may occupy lots of slots on the Forbes billionaire list but we also occupy lots of slots on poverty lists," Quantum Capital's Dayal said. "If someone can make housing and sell it for $2,000, it would be a great market now, and for decades."

News: India eyes $30 billion FDI in 2007-08

(PTI 25/04/2007) New Delhi - The Government today said it is aiming at $30 billion in Foreign Direct Investment this year on the back of huge interest in the country from auto and electronics manufacturers.

"We are toying with the idea of keeping a goal of $30 billion of FDI in the current year, of which $26 billion would be through investments in equity, while the rest will be from reinvested earnings," Secretary in the Department of Industrial Policy and Promotion Ajay Dua said at an ICRIER seminar today.

He said this FDI would constitute 3.3 per cent of the GDP, up from the 2.5 per cent last fiscal. In 2006-07, FDI inflows touched $19 billion, of which $3.5 billion were reinvested earnings.

The sectors, which would see increased FDI inflows in the current year are mainly manufacturing, auto, semiconductor, electronic hardware and services, Dua said.

He said the Asian countries are gradually improving their share of FDI. "Half of the investment being made in Asia is intra-regional and the major contributors to this are countries like Japan, Taiwan, Hong Kong, Singapore and Korea," he added.

Dua said large investments need to be put in to develop physical infrastructure, for which investments currently constitute less than four per cent of the GDP.

"We need to double this and have 8 per cent of the GDP for physical infrastructure. This should be maintained for the next 10 years to sustain an eight per cent economic growth," he said.

News: ICICI Bank gets approval for Qatar branch

(RTR 25/04/2007) Mumbai - Second largest bank, ICICI Bank said on Wednesday it had regulatory approval from Qatar to set up a branch in the country.

The Doha branch would be its fourth office in the Gulf region, the bank said in a statement. It has previously said it wanted international assets to account for 25 per cent of its total assets, from current levels of about 18 per cent.

Many Indian banks are eager to establish operations in the Gulf region to tap both the savings of Indians living there, estimated at more than 4 million Indians, and funds from local investors.

News: Tata Motors launches 'Tata Spacio' for semi-urban market

(UNI 25/04/2007) New Delhi - Targeting the semi-urban market, auto major Tata Motors today unveiled its upgraded range of utility vehicle 'Tata Spacio.' With this, the company aims to increase its penetration in the rapidly growing personal and family vehicle segment. The 'Spacio Gold Plus,' the new range seeks to enhance customer experience in the areas of performance, fuel economy, comfort and convenience. 'Spacio Gold Plus', DI engine gets turbocharged to raise the maximum power and torque ratings to 70 PS (3,000 rpm) and 223 Nm (at 2200 rpm) respectively. The enhancement in power has been accompanied by a significant raising of the fuel efficiency of the vehicle by over 15 per cent. The 'Spacio Gold Plus' delivers class 15 kmpl, enhancing upon a key market requirement. The vehicle is also characterised by a much lower NVH (noise vibration and harshness). The entire Spacio range now comes with best in class turning circle radius of 4.9 metres. 'Spacio Gold Plus' has been launched in two trim levels, both sporting power steering with a soft touch steering wheel, front bucket seats, new decals and refined interiors. The Spacio range is the entry level variant of the widely popular Tata Sumo. Tata Motors sold a total of 47,893 utility vehicles, including 32,007 of the Sumo family, during 2006-07. This represented a growth of 26.4 per cent over the previous year compared to the segment growth of 13.4 per cent.

News: Mittal acquires Kazakh firm for $980 m

(PTI 25/04/2007) Moscow/New Delhi - In his first major oil deal, billionaire Lakshmi N Mittal has acquired Russian oil firm Lukoil's 50 per cent stake in a Kazakhstan oil firm for $980 million (nearly Rs 4,000 crore).

Mittal Investments will also take over half of Caspian Investments Resources Ltd's (CIR) outstanding debt, which is equivalent to about $175 million, Moscow-based Lukoil said in a statement.

CIR has equity in five Kazakh oil fields -- Alibekmola, Kozhasai, Northern Buzachi, Karakuduk and Arman -- in the Aktyubinsk and Mangistau regions. Current production from the fields, which have total proven reserves of some 270 million barrels, is more than 40,000 barrels per day and is set to increase in the coming years.

Kazakhstan is one of the 10 countries Mittal had originally identified for exclusive pursuit of hydrocarbon opportunities in joint venture with Oil and Natural Gas Corp (ONGC).

Some in ONGC see the acquisition as violation of the pact unless Mittal transfers the stake to the joint venture firm, ONGC-Mittal Energy Ltd.

"Mittal had promised us that the stake will be transferred to OMEL once the transaction is complete. Lets see if he keeps the promise now that has happened," an ONGC executive said in New Delhi.

Mittal and ONGC had in July 2005 agreed to participate on an exclusive basis through OMEL in Angola, Azerbaijan, Congo Brazzaville, Democratic Republic of Congo, Indonesia, Kazakhstan, Romania, Trinidad and Tobago, Turkmenistan and Uzbekistan.

News: Young Italian entrepreneurs urged to invest in India

(IANS 24/04/2007) New Delhi - A group of young entrepreneurs from Italy were told about India, its potential to become the world's second largest economy by year 2050, and were invited to invest in the country by Federation of Indian Chambers of Commerce and Industry (FICCI) here Tuesday. Amit Mitra, secretary general FICCI, while inviting investment from the 30 entrepreneurs of Leaders of the Future group, also told them that India was the largest democracy while its present economic growth rate was 8.6 per cent. The group, which arrived April 22 and will be in the country till May 1, are here as part of a study tour programme which enables them to visit various companies and meet influential personalities across the world and hone their business skills. The group has visited Israel, Palestine, Russia, East Europe and America. At an interaction programme, Mitra said: "From an economic growth of 3.5 per cent back in the 60s, the growth rate of India has become 8.6 per cent in the last three years. Now we are targeting the growth rate to reach the 10 per cent mark. "Then the external debt to the gross domestic product (GDP) has come down from 28.7 per cent to 15.8 per cent." Mitra also highlighted the huge manpower resource that the country has. "India produces 50,000 computer professionals and 360,000 graduates every year. That is a large capital base," he said. He said Italy can tap the potential areas of automobile, information technology, pharmaceuticals, biotechnology, metals and mining, tourism, entertainment, food processing, civil aviation and telecommunication. "Italy gave us FIAT (automobile company) but during the years there was no renovation done to suit the changing tastes of people, hence it lost out. The market is now dominated by Hyundai's Santro, a common man's favourite car. But if you want, you can make a big comeback. "We need great Italian competency in cars," Mitra said. Answering queries on how a small Italian company can come to India and benefit, he said that FICCI would be glad to help them by first finding out whether there is a potential market for the product and they could even get into a joint venture. "In terms of the future, this is the time to come to India. We have been in India for the past six years and after the initial hiccups, we are performing decently well now and are happy," said Sanjay Sharma, country head of Swarovski Crystals. The group will be going to Agra and Thiruvananthapuram before leaving homewards May 1.

News: Indians can now invest up to $1 lakh abroad

(PTI 24/04/2007) Mumbai - While further liberalising its overseas remittance scheme, the Reserve Bank of India on Tuesday hiked the transaction limit for individual investors to $100,000 in a year -- a development that would lead to increased participation of Indians in foreign markets. The decision has come as a major boost for companies like Reliance Money, which has already tied up with UK-based online trading platform provider CMC Markets to provide offshore investment products to Indian customers. Besides, a number of other financial services providers and brokerages are expected to soon follow with similar products and tie-ups to tap Indian investors seeking to invest in foreign equity, commodities and derivatives markets. Measures like enhancing the current or capital transaction limit for individuals by $50,000 and increasing the limit of overseas investments by mutual funds are steps in the right direction to achieve the goal of full capital account convertibility, PHDCCI president Sanjay Bhatia said in a statement. Like individuals, mutual funds would also be able to invest funds to the tune of $4 billion in overseas avenues, from an earlier cap of $3 billion. This would benefit the Indian MF industry by providing them with a greater opportunity for investments abroad as well hedge risks of volatile domestic equity markets. According to the liberalised remittance scheme, RBI has allowed Indian residents to remit up to $100,000 per financial year, from $50,000 previously, for any current or capital account transaction or a combination of both. Through its exclusive tie-up with CMC Markets, the world leader in online derivative trading, Anil Ambani Group company-owned Reliance Money provides opportunity to its customers to buy offshore products like foreign equity, commodities and currency under the RBI prescribed limits. CMC Markets claims of providing investment opportunity in over 1,000 instruments, across 18 global markets and 100 countries with total transaction worth over $1 trillion recorded over the last two years.

News: Dutch deal on Himachal hydel project delayed

(IANS 24/04/2007) Shimla - A 960 MW hydel project in Himachal Pradesh's Kinnaur district has been delayed as officials of the Dutch multinational Brakel Corporation have not turned up to sign the deal here.

The memorandum of understanding (MoU) on the Jangi Thopan project was to be signed between the state government and Brakel Corporation Monday but has been put off as the company is busy responding to FDI-related queries from the Reserve Bank of India (RBI).

"The MoU could not be signed yesterday with Brakel as they are in the process of responding to RBI queries," said state Power Minister Vidya Stokes said Tuesday.

Arun Sharma, an official of the Brakel Corporation, said here: "Once we reply to the RBI queries in the next fortnight or so, we will be ready to sign the MoU."

The project is to come up on the Sutlej river in tribal Kinnaur, some 250 km from here.

After global tenders were invited, the state government allotted this hydel project to the Dutch company some nine months ago. But Brakel has yet to deposit Rs 170 crore as upfront money, state government officials said.

Brakel Corporation has shown interest in investing upto $1 billion in the hill state's untapped hydel sector.

News: Fund managers welcome higher foreign investment cap

(RTR 24/04/2007) Mumbai - Asset managers said on Tuesday the central bank's decision to increase overseas investment limit for mutual funds to $4 billion would improve the appeal of funds investing abroad.

India now has two funds with a mandate to invest abroad and a third fund house this month opened its own offer. Half a dozen more such funds are in the offing.

In January, India allowed mutual funds to invest in American depositary receipts, global depositary receipts and foreign securities within an overall limit of $3 billion. The Reserve Bank of India now plans to raise that limit by a third. "It is now a meaningful opportunity for fund houses," Rajan Krishnan, business head of Principal Pnb Asset Management Co. Pvt. Ltd., told Reuters.

"It improves the scale and attractiveness of the product," Krishnan, whose fund house launched country's first overseas investment fund said. "More players will look forward to getting into this space now."

Sanjay Santhanam, vice president, BNP Paribas Asset Management Co. Ltd., called the central bank decision "a great thing."

"It's good enough for the time being," Santhanam, whose fund house is planning to launch a fund to invest in overseas funds, said. He pointed out Indian funds were yet to exhaust even the existing limit.

At present, individual mutual fund houses can invest in these securities up to 10 per cent of their assets under management as on March 31 of the relevant year, subject to a maximum of $150 million.

"The RBI would probably have a plan to progressively keep reviewing this limit based on how it is being exhausted," Santhanam added.

News: Now, Reliance eyes consumer electronics

(BL 24/04/2007) New Delhi - Reliance Retail, the subsidiary of petrochemicals giant Reliance Industries, will soon launch its own label of consumer electronics goods to complement its retail appliance stores - Reliance Digital - for tapping the country's $5.6 billion durables market. The company would be investing over Rs 1,000 crore over the next 3-4 years for setting up 150 such stores, the first of which was unveiled in the National Capital Region today. "Reliance will come out with its private label of consumer durables products... that is definitely in the strategy after we open 4-5 stores," Ajay Baijal, President and Chief Executive (Consumer Durables, IT and Telecom), Reliance Retail Ltd said here. Reliance Digital stores would sell everything from TV sets, home theatre, refrigerator, cooking range, dishwasher to computers and mobile phones from across brands. "The stores, typically spread over 15,000-30,000 sq.ft, will have a wide assortment of products to cater to the tastes and requirement of customers," Baijal said. The domestic consumer electronics market, which is expanding by 10 per cent annually, is dominated by South Korean brands such as LG, Samsung and Japan's Sony. But they have tough competition from home grown names such as Videocon and BPL. The first store, located at Shipra Mall in Ghaziabad, would be followed by another pilot outlet in NCR and 3-4 more in the country's south in the coming days. Baijal said the stores, which would be set up at an investment of Rs 4-7 crore each, would also offer post-sales services.

News: Mumbai has miles to go, says FM

(DNA 24/04/2007) Mumbai - Making Mumbai an International Financial Centre may have more to do with the financial system than with the city per se. That was Union Finance Minister P Chidambaram at a conference organised by the Confederation of Indian Industry on Monday. The real challenge in creating a global financial hub, the minister said, was to convince various sections of society the advantages of a free, deregulated financial system. The conference was organised to unveil the high-powered expert committee report on Mumbai as an international financial centre. "It takes a long distance to travel," the minister warned. He said, "I caution you, greater effort has to be made to convince different stake holders of the advantages of a deregulated, liberalised and globalised economy." Chidambaram said if one was convinced about the advantages of the deregulated financial system, then this report was a "do-it-yourself". The minister, it seemed, was more guarded this time. His statement, on an earlier occasion, about the city's need for greater autonomy, drew flak from Opposition party members. The report sets out a roadmap to make the city an International Financial Centre on the lines of London, New York and Singapore by 2020. Admitting the need for better infrastructure, State Minister for Finance and Planning Jayant Patil, said: "We are aware of the need to upgrade infrastructure. The pace of reforms in the last two years is for everyone to see. In the next five years, we will see a sea change in terms of bigger airports, better rail transport, roads, housing and schools." Chidambaram also emphasised the role of better infrastructure. "The city must be a place where people can work, live and play. That's what makes it a life," he said.

News: ‘Tata Motors eyes car plant in Egypt’

(RTR 24/04/2007) Mumbai - Tata Motors Ltd. may build a car manufacturing plant in Egypt, the Business Standard said on Tuesday.

India's top vehicle maker has held talks with a delegation from Egypt, which is visiting India on an investment and tourism promotion drive, the newspaper said.

"Besides the car business, the Tata (group) has also evinced interest in making investments in petroleum and gas in Egypt," Nagui Erian, a member of the delegation, told the paper. A Tata group spokesman declined comment on the report.

Tata Motors, India's top bus and truck maker and third-biggest car maker, has a joint venture with Italy's Fiat to make cars and engines in India and a separate venture to make pick-up trucks in Argentina.

Tata Motors makes the popular Indica hatchback and Indigo sedan. It is scheduled to roll out a low-cost small car in 2008.

News: Budweiser beer set to hit Indian market in June

(BL 24/04/2007) Hyderabad - Budweiser beer will hit the Indian market in June, according to its brewers in the country - Crown Beers, Hyderabad. Meanwhile, the company has announced the launch of a strong beer, Armstrong. Crown Beers is a 50:50 joint venture formed in February 2007 between the Hyderabad-based company and ABI, US. Budweiser beer would be available in 330 ml and 650 ml bottles from June, K.V.D. Prasad Rao, Joint Managing Director, told Business Line. The greenfield brewery near Sangareddy, about 100 km from Hyderabad, is ready and trial runs of the super premium beer are in advanced stage. Special equipment The arrival of special equipment has pushed the launch date to June from the earlier planned April-May, said Prasad Rao. The brewery has a capacity of five lakh hectolitres. Brewmasters from the St. Louis-based ABI and Crown Beers have worked on the product to ensure that Budweiser in India has the same crisp, distinctive taste enjoyed by consumers around the world, he said. Budweiser, an American lager that has been around since 1876, is brewed using a blend of US and European hops and a combination of barley malts and rice. Unveils Armstrong Meanwhile, Crown Beers has launched Armstrong in 650 ml for the Andhra Pradesh market, to begin with. It is being marketed through AP Beverages Corporation and is priced on a par with other strong beers in the country, Rao said. The company is planning sales of 50,000 cases a month. Other States Plans are to launch in Maharashtra and Karnataka shortly and grab a good share of the market in the summer. Crown Beers has firmed up plans for 2.5 lakh hectolitres by undertaking production of Kingfisher Strong of UB Spirits. It would soon tie up with the Thunderbolt brand, he added. For the remaining 2.5 lakh hectolitres, the venture will invest Rs 25-30 crore and complete the expansion by October-November 2007, he said.

News: 'India, China to lead Asian economic growth'

(PTI 23/04/2007) New Delhi - Despite near-term risks of overheating and further rate hikes, India would continue to lead the Asian economic growth along with China in the foreseeable future with a possibility of gains in their respective currencies, analysts say. While concerns are being raised about growth outlook for India and China, the two countries should be able to sustain at least eight per cent of economic growth in the coming decade as they have robust fundamentals and are undergoing continued reforms, global investment banker Citigroup said. It noted that India is already suffering from overheating symptoms like rising inflation, surging asset prices, growing wage pressure, widening current account deficit and spreading infrastructure bottlenecks. These concerns have led to repeated monetary tightening policies by the Reserve Bank of India and some modest rate hikes are expected at the current levels as well, but these should not derail the long-term growth momentum, Citigroup's Asia Economist Yiping Huang said in a report. Besides, the Indian and Chinese currencies are set for further gains in the future. "We expect the real effective exchange rate to improve by 22.5 per cent for renminbi and by 16 per cent for rupee over the next five years," the Citigroup analyst said. The renewed export and policy risks are clouding rupee's near-term outlook after a sharp appreciation during the past weeks that has taken it to highest level in nearly nine years. In case of China, renminbi appreciation has slowed significantly during the past month, after steady gains for several months. However, with narrowing trade surplus as a key policy objective and Chinese central bank People Bank of China's tightening policy bias, steady renminbi appreciation is likely to continue. Moreover, historical trends suggest that these currencies are likely to ride upwards, as long as China and India can sustain strong growth, Citigroup said. Comparing the two neighbouring economies, the analyst said that while India is plagued by the overstretched supply constraints, China's risks are mainly on the demand side. "This is probably the key reason why we see high inflation in India but not in China," he added. India has managed to successfully lift its growth rate from 4.5 per cent in the 1980s to 8 per cent currently and the trend might go on if reforms and investment continue to ease resource constraints and promote productivity growth, the report said. In comparison, the main policy concerns in China are structural issues like over-investment or large trade surplus. Therefore, if demand could not keep pace with supply, it could lead to overcapacity problems. "For this reason, the latest change in the US trade policy toward China should be a serious cause for concern," Huang said.

News: Infosys alive to domestic market potential

(BL 23/04/2007) Bangalore - The CEO-designate of Infosys Technologies, S. Gopalakrishnan, said recently that his focus would be to make the company more competitive, increase productivity, enhance brand equity and attract the best global talent. Business Line spoke to `Kris' as he is better known, to get his perspective on the company and industry in general. Excerpts. There is a feeling that you have not rewarded the equity holders adequately this year. Since you are sitting on large cash surpluses and the markets are down, do you have any idea of deployment/rewarding shareholders? We have already declared dividends for the year. This cash is for strategic reason. In the event of a downturn we should be able to reengineer. We have set certain benchmarks on the return on investments and return on capital employed. If these benchmarks are met, we may look at returning cash. With the rising telecom/computer penetration in the country, projects such as data linking for financial inclusion and national information grid are all being done by large international companies. Infosys does not appear be there at all. Any plans to increase your presence in the domestic markets? Yes. We do have plans for the domestic market. In some sense, we are already present in the domestic market as 70 per cent of the large banks use our software product — Finacle. We are looking at other sectors too. But, we have not come out publicly with our plans like in the case of Finacle. We are definitely looking at the market here. We have certain expectations on the margins front. We may look at only those projects that have some strategy or rationale — a profit advantage in doing things. Logic and profit are some of the crucial decisions for executing some projects. We did sign up some projects, which we have not yet announced. Do you think the recent acquisitions by MNCs in India such as the EDS-Mphasis, Cap Gemini - Kanbay or Caritor-Keane are changing the dynamics of the game? The deals clearly say that mergers and acquisitions are the model for future. Players who feel to catch up through acquisitions or who want to significantly increase their presence here are doing the deals. It is a clear acceptance as a change, clearly demonstrating model for the long-term and everybody agrees to that. We, at Infosys, have never said no to M&A. If we find the right opportunity, we will go ahead. Large MNCs such as IBM, Accenture & EDS are scaling up their India centres pretty aggressively. Do you think it will have an impact on the business dynamics? Of course ,there will be an impact. There will be a significant competition for resources on the market side. Their ramp-up here is the acceptance of the fact that this (offshore) is the long-term model. In that sense, there is a kind of endorsement that this is the way to be done. Have you factored large deals in your guidance? Is the large deal cell at Infy active? No. We have not factored the large deals in our guidance. This is because the large deals are not yet predictable. You haven't won the sufficient number of large deals in the right frequency. Only when such wins are repeatable, you factor them. Our Strategic Global Sourcing team, formed especially to track large deals, is very active and pursuing several opportunities at this point. Are you comfortable with the proportion of wins as they used to be in the past three years? We have one of the best growth rates in the industry. Am I satisfied with this? Of course not and we would love to grow faster. As CEO, what are the variables that you would look up to on a consistent basis to figure out that US is slowing down? Firstly, a set of analysts, thought leaders and economists who talk about the developments. Then look at indicators to monitor growth rates. Then, you have your own set of customers. Most relevant are when customers tell you that they are not seeing any slowdown. Moreover, the global delivery model, which we operate, is recession proof. While the IT budgets are flat, the amount of money spent offshore by the companies is on the rise. Companies are reapportioning IT budgets in the GDM model. Do you see any new set of challenges emerging, apart the usual labour shortage, wage inflation or rupee appreciation? For any business there are relevant sets of challenges both on the technology side and on the market side. Keeping pace with emerging technology trends such as the convergence in the ICT space, mobile technology, Service Oriented Architecture or SaaS (software as a service) are the current challenges. On the business side, challenges are to keep pace with flattening of the world, globalisation among others. What's your take on the lottery system for H1-B visa allotment this year? What would be your strategy if in case you don't get the required visas? We need to wait and understand the results. This year we have visas required for the business. We would be looking at onsite recruitment to compensate if any shortfall. Onsite recruitment is going up in absolute numbers and the proportion is also increasing. Are you exploring other low-cost destinations? Mexico and Manila is where we are setting up our new operations.

News: India outsmarts US with higher investor returns from IPOs

(PTI 23/04/2007) New Delhi - Concerns may have been raised about newly listed companies trading below their issue price, but domestic firms have outperformed their US counterparts in terms of investor returns in the stock markets.

Initial public offers on the domestic bourses have given an average return of about 13 per cent over their issue price so far this year. This is against a lower eight per cent return in the much-mature market of the US, according to an analysis of IPOs in the two countries by PTI Research team.

The study is based on data collected from the US and Indian stock exchanges and covers IPOs from January till April 20 this year.

The analysis allays fears over investors losing their wealth in IPOs due to a large number of stocks plunging sharply after a dream listing with huge premium. This is because the average return at the current levels is actually higher than the return at the time of listing in India.

In comparison, the current average return from the IPOs in the US is lower than the average return on the first day of listing. This indicates that listings have been at overvalued levels and were followed by softening in share prices.

Incidentally, the number of new listings is also higher at 53 in the US, as against 40 at India's two premier bourses -- Bombay Stock Exchange and National Stock Exchange.

"It validates the point that IPOs in India are actually under-priced. All IPOs have been listed at a premium and investors will continue to gain from investment in them," Prithvi Haldea of IPO-tracking firm Prime Database, told PTI.

News: Barclays, ABN to move 10,000 jobs to India

(PTI 23/04/2007) London/New Delhi - British banking giant Barclays will add thousands of new employees to its India headcount following the takeover of its Dutch rival ABN Amro in a cash-and-stock deal valued at over $90 billion. The deal, the biggest-ever M&A in the financial services space, would create the largest institutional asset manager and the world's eighth largest wealth manager, but will result in over 12,000 job cuts at the two banks' operations across the world. India, however, will be a net gainer in terms of jobs as well as expanded operations of the two banks. While the number of new jobs have not been disclosed, sources close to the development pegged the figure at anywhere between 8,000 and 10,000. "Part of the expected staff reduction will be through establishing shared services and off-shoring those positions to low-cost locations such as India where new staff will be recruited at ABN Amor's existing ACES operations," ABN AMRO and Barclays said in a joint statement. The duo said they have identified the possibility of rationalising the number of staff of the combined group through a combination of natural attrition, off-shoring and outsourcing as well as redundancies.

News: Greater FDI in select aviation services proposed

(PTI 23/04/2007) New Delhi - Hinting at changes in policies governing FDI in the aviation sector, Civil Aviation Minister Praful Patel on Monday said proposals have been mooted to enhance the 49 per cent limit on foreign investment in select areas like helicopters, sea-planes and non-scheduled operations.

He, however, ruled out any immediate steps to allow foreign airlines to pick stake in Indian carriers.

Addressing the three-day US-India Aviation Partnership Summit here, he said: "We will ensure that our policies are in accordance with our requirements... Government policies are not frozen, they evolve with time".

Patel said his Ministry had proposed that in areas like non-scheduled operations, sea planes and helicopters, where higher level of foreign partnership was required, the prevailing 49 per cent cap on FDI be reviewed.

Elaborating on the "enormous growth potential" of the Indian aviation sector, he said if 10 per cent of Indians switch to air travel in the next few years, compared with less than one per cent now, the country "will require about 5,000 planes in place of 300 now".

At the conference, India and the US initiated an MoU to establish the US-India Aviation Cooperation Programme (ACP) to provide for unified communication between the governments and private sector entities.

The ACP would focus on supporting activities relating to air traffic, air space management, expanding airport facilities, installing airport security and monitoring systems and enforcing airworthiness certification and regulatory systems.

News: Rupee rises to 9-yr peak on robust inflows

(RTR 23/04/2007) Mumbai - The Indian rupee tested a fresh nine-year high on Monday, as capital inflows surged into Asia's fourth-largest economy, prompting investors to bet the rupee would rise further and build short positions in the dollar.

Traders said strong demand for the U.S. currency from oil refiners to cover their import bills, kept a check on the rupee's gains.

The partially convertible rupee ended at Rs 41.67/68 per dollar, off an early peak of Rs 41.575, its highest since May 1998. It had closed at Rs 41.760/770 on Friday.

"The market is a divided about whether the central bank will impose controls on ECB (external commercial borrowings) in the policy meeting tomorrow," said a dealer at a private bank.

"What they do will dictate the rupee's direction in the short-run," the dealer added.

The central bank caps external commercial borrowings, known as ECBs, at $22 billion per financial year, and companies and banks can bring in $500 million without asking permission.

A large section of the market suspects the Reserve Bank of India will tighten norms for ECBs at a monetary policy review on Tuesday, in a bid stem the rupee's gains.

At its high, the rupee was up 6.4 per cent this year -- the best performing Asian currency against the dollar. The next best performer is the Thai baht, with a rise of about 3.6 per cent.

The rupee had risen 4.5 per cent this month at the day's high, and 13.1 per cent above a three-year low of Rs 47.04 hit last July.

In a bid to thwart the rupee's rise, the central bank bought $19.7 billion in the four months to end of February, and the market suspects it intervened in March as well.

The central bank's persistent intervention has fuelled inflation and money supply, which are both running above its target levels.

Data on Friday showed annual inflation for the week ending April 7 at 6.09 per cent, higher than forecast.

JP Morgan says that trading volumes would remain elevated as the rupee swung between buying by exporters and selling by carry traders and equity inflows, coupled with uncertainty over the central bank's stance on the currency.

News: 'Indian retail to reach $430 bn by 2010'

(IANS 22/04/2007) New Delhi - Indian retail, with the coming in of conglomerates like Bharti Enterprises, Reliance and some foreign players, is set to generate business worth $430 billion by 2010, says a report by a leading industry lobby.

The share of organised retail is estimated to go up to 20-22 percent to become a $90 billion industry while the unorganised sector is set to touch $340 billion in the next three years, according to the Federation of India Chambers of Commerce and Industry (FICCI).

This exponential growth is expected to generate 18 million jobs, thereby becoming the second largest employment-generating sector after agriculture.

However, according to FICCI, the retail sector is currently reeling under the pressure of human resource crunch. Currently none of the educational institutions in India offer a comprehensive course on retail.

FICCI has suggested measures such as introduction of retail as a curriculum subject in schools and universities.

It has also asked for simpler tax laws with a tax holiday for the cold chain infrastructure. It said the amount of investment required in the retail sector and the benefits that would accrue justify giving the industry tax sops.

FICCI has also asked for greater rationalisation of the tax structure and reducing the excise duty from 16 to 14 percent, which would help in making India a common market.

News: India, New Zealand to initiate free trade pact

(IANS 22/04/2007) New Delhi - India and New Zealand have initiated steps to ink a free trade agreement (FTA) but it could be a while before this becomes a reality.

"We have agreed to a study on eventually concluding a FTA. This study will go into issues like how each side can benefit from such an agreement," New Zealand Trade Minister Phil Goff told IANS.

He was speaking after a meeting with Indian Trade and Commerce Minister Kamal Nath.

"We should be able to launch this study by the end of the year. It will lay down the terms of reference for further negotiations. Based on this, we will proceed ahead," added Goff, who also holds the portfolios of defence and disarmament and is also the associate minister for finance.

Geoff was here over the weekend on a two-day visit during which he also met External Affairs Minister Pranab Mukherjee, Defence Minister A.K. Antony, Agriculture Minister Sharad Pawar and Sports Minister Mani Shankar Aiyar.

The minister hoped for greater inflows of tourists and students into his country of four million. New Zealand is home to 105,000 Indians.

India currently has a trade imbalance with New Zealand, with exports of $250 million and imports of $355 million.

"Given our enormous commonalities of democracies and a common language, there is enormous potential for further growth. Our combined trade is only half-a-million dollars compared to $7 billion with China, with which we have very little in common," Goff pointed out.

Food and beverages, commodities like coal and timber and agricultural technologies, as also tourism, were the key areas in which the two countries could improve their interaction, the minister said.

Speaking about the need to reduce trade barriers, Goff pointed out that a bottle of wine that cost $10 in New Zealand attracted customs duties of between 100 and 560 percent in India.

This apart, New Delhi's law relating to the import of agricultural and dairy products and also meats "are far above international standards and need to be lowered", the minister contended.

"Take apples. They attract 50 percent customs duty when we have two growing seasons and we are not in competition with your local produce. I think Indians are well entitled to our very delicious apples!

"In my interaction with (Kamal) Nath, I stressed the need to bring these down to realise the full potential of our economic ties and he promised to examine the issue. It was in this context that we agreed to a study on the feasibility of an FTA," the minister stated.

Speaking about New Zealand's tourism potential, Goff said some 20,000 Indians visited his country but many more could do so.

"Air New Zealand (the country's flag carrier) has shown interest in initially starting a weekly flight out of Mumbai. We hope Air India will also show similar interest," he stated.

On the academic front, some 3,000 Indians are currently enrolled in New Zealand universities where they receive scholarships amounting to 3/4ths of the annual tuition fees - the same as what natives get.

"We are home to three of the top 100 universities in the world. We are a safe, friendly and environmentally conscious country. We hope to see more students - and tourists in New Zealand," the minister said.

News: Wipro Infotech setting up centre in Egypt

(BL 21/04/2007) Bangalore - Wipro Infotech is setting up a development centre in Egypt to cater to its clients in West Asia. The development centre at Cairo would be operational over the next couple of quarters, said Suresh Vaswani, head of Wipro Infotech. The company proposes to hire locally for the Egyptian development centre, which could begin with a couple of hundreds of engineers. "We are in talks with the Egyptian government seeking their help to get the required skill sets," Vaswani said. Traditionally, it is the Egyptian talent that's widely used in the Saudi Arabian market, he said. Further, Vaswani said the joint venture with the Dar Al Riyadh Group of Saudi Arabia — Wipro Arabia Ltd would be operational soon. Wipro Infotech owns 66 per cent stake in the joint venture, which is being floated to tap the local market. Wipro Arabia will offer a range of IT solutions including application development and management, package implementation and system integration services. The JV will have a combined workforce of some 300 people, of which about 220 will be from Wipro Infotech. In fiscal 2006-07, Wipro Infotech garnered a revenue of Rs 138 crore from West Asia, registering a year-on-year growth of 46 per cent. For year-ended FY07, Wipro Infotech clocked a 46 per cent to record revenues of Rs 2,484 crore. The profit before income tax (PBIT) grew 47 per cent to touch Rs 214 crore. The services business, which accounted for 34 per cent of Wipro Infotech's revenues, grew 37 per cent. For the March quarter, revenues grew 38 per cent to Rs 784 crore and accounted for 18 per cent of the company's total revenues.

News: Reliance Retail plans health & wellness stores

(BL 21/04/2007) Hyderabad - After establishing a number of Fresh stores across major cities, Reliance Retail is all set to tap the evolving segments of wellness and health products. The Rs 25,000-crore retail initiative of Reliance is likely to come out with its first set of such stores soon. The retail format is designed in such a way that a spectrum of wellness and health products are available all under one roof. Variety of products Besides selling a variety of wellness products, the all-in-one stores would sell not just allopathic medicines but also medicines from systems such as ayurveda and homoeopathy, industry sources said. Consultant doctors would be available at the stores. Reliance might look at kicking off the new format in Hyderabad and then take it to other cities. The city-based Global Hospitals too has launched a similar initiative called Good Life through Global Consumer Services, a company promoted by it. The company has already set up six stores. It is planning 10 more in the next few months.

News: Biyani pens print history with his story

(DNA 21/04/2007) Mumbai - Maverick retailer Kishore Biyani has created history in the Indian book publishing industry with his book It Happened In India that has already clocked sales of 10,000 copies. The remarkable aspect about the entire chapter is that the book is still to hit the stores in a big way with the exception of a few Big Bazaar and Depot stores in Mumbai and Pune.

Future Group CEO Kishore Biyani told DNA Money that the group has always believed in thinking big irrespective of the kind of business or activity they get into. "It is for the first time in the history of publishing in India that any indigenous book has had a print run of 200,000 copies. And the most interesting part is that we have already sold 10,000 copies (largest ever for an Indian book) on the day of launch," said Biyani.

At this rate, Biyani feels that the 30,000-odd copies made available by the publisher as the initial lot will be exhausted very soon and there might be a shortage if the stocks are not replenished as early as possible.

"We have had retailers from Gujarat and other places buying the book in bulk from our Big Bazaar and Depot stores. And by Monday you'll see the books being sold at the traffic signals too," Biyani said.

The curiosity value is also evident from the fact that over 1,000 copies have already being booked on their e-commerce platform www.futurebazaar.com in a week or so.

An interesting aspect about Biyani's success story is the pricing - Rs 99 for a paperbound and Rs 495 for the hardbound. While the Rs 99 pricing certainly proved to be the winner, there were only a few takers for the higher priced version clearly indicating the price-cautious nature of the Indian consumers - a behaviour/mindset exploited to the core by Biyani through his Big Bazaar, Food Bazaar and www.futurebazaar.com initiatives.

News: Infosys BPO plans facility in Manila

(BL 20/04/2007) Bangalore - Driven by a strong customer demand, Infosys BPO is planning to scale up its presence in Manila by setting up its own delivery centre soon. Infosys BPO currently has a tie-up with Ventus, the call centre company of Philippine Long Distance Telephone Co's (PLDT) unit ePLDT Inc.

"We are looking at setting up a 300-seat facility in Manila over the next two quarters," said Amitabh Chaudhry, CEO and Managing Director, Infosys BPO Ltd. "The partnership with Ventus has worked well for us and we plan to continue with it," Chaudhry said.

`Ideal destination'

Infosys BPO plans to use the Manila facility to serve the US clients in both voice and non-voice processes. Chaudhry said clients are more comfortable with getting serviced from the Philippines because of the availability of better skill sets, especially in areas of F&A (finance and accounting), the familiarity with the US GAAP standards and in customer relationship management.

Moreover, the Philippines has emerged as an ideal offshore destination for BPO firms because of the English fluency and familiarity with American culture. The Manila facility would also double up as a business continuity centre for Infosys BPO, Chaudhry said

Infosys BPO is also planning to ramp up its operations in China. "We currently have 70 people in China mainly servicing global clients, which we plan to expand rapidly in the coming years," Chaudhry said. Besides China, Infosys BPO also has operations at Brno in Czech Republic.

Mexican subsidiary

The upcoming Mexican subsidiary of Infosys would also include the BPO delivery facility. "About 50 per cent of the seats in Mexico would be for BPO operations," he said. The Mexico facilitywould be operational over the next two quarters.

News: Philips India eyeing buyouts for growth

(BL 20/04/2007) Kolkata - Philips India Ltd is eyeing acquisitions in sectors such as lifestyle electronics, healthcare and medical systems, according to K. Ramachandran, Managing Director. The likely acquisitions would be funded from internal accruals and borrowings. According to S.M. Datta, Chairman, the company was building up a "cash war chest" to fund likely acquisitions. Speaking to newspersons at the conclusion of the company's 77th annual general meeting here on Thursday, Ramachandran said the idea was to secure growth in the years ahead. It also sees growth from its luminaires, compact fluorescent lamps, medical products and domestic appliances businesses. In the current year, Philips India would make a capital expenditure of Rs 50 crore. The current reserves of the company stand at Rs 697 crore.

News: Simplex Projects, Dutch co join hands for parking solutions

(BL 20/04/2007) Kolkata - The city-based Simplex Projects Ltd (SPL) has joined hands with EWW Verenigde Bedrijven B.V. of Holland for developing integrated total solutions for automated car parking, also labelled as "EcoSafe Parking'. SPL on Thursday signed an agreement with the Dutch company for transfer of technology and technical information and specifications relating to design, construction, commissioning and installation of parking systems for projects in India and other South East and South Asian countries such as Singapore, Sri Lanka, Nepal, Bangladesh and Maldives. Under the agreement, SPL will have the exclusive right for such systems. Briefing newspersons here after the pact signing ceremony, R.D. Mundhra, Director, SPL, said EWW EcoSafe Parking, which has installed 32 underground systems in Holland itself, besides many more in other European countries, is a global player in this field. The 20-million Dutch ToT partner, he said, has in-house technical expertise for technology upgradation on a continuing basis. B.K. Mundhra, CMD, said SPL's agreement with the Delhi Municipal Corporation, involved setting up of automated car parking systems in as many as six locations in the first phase, on a consultancy basis (involving a fee) for most of the projects. These are Mehrauli, Lajpat Nagar, Ramlila Ground, Kamala Nagar and Hamilton Road. Three other locations have been identified for construction in the second phase. Hand-over of land, however, is yet to be completed. Pointing out that no single entity can on its own execute all the projects, Mundhra said the work, involving civil engineering and related work, is estimated to cost around Rs 90-100 crore. The company expects to add at least Rs 3-4 crore to its bottom line on each of the projects at different sites. He said SPL was also in talks with New Delhi Municipal Corporation and Delhi Tourism Corporation for installation of such hi-tech parking systems in the National Capital Region. Talks with other municipal bodies of Mumbai, Bangalore, Chennai, Hyderabad and Jaipur are also.The company is now working on various models of financing and execution of work at each of these locations, and the total cost outlay is estimated at around Rs 500 crore. Mundhra said the company is also expecting some 3 to 5 more projects to come up in Kolkata, after the Loudon Street and New Market underground parking systems, with a facility to park some 200 to 300 cars at each location. The number will, however, be much more in big cities such as Mumbai or Delhi, where the car-parking requirement at each location could be between 800 and 1,200.

News: IndianOil eyes Turkey Petkim stake

(DNA 20/04/2007) Mumbai - Indian Oil Corporation plans to bid for a majority stake in state-owned Turkish petrochemicals company Petkim. The Turkish government has announced the disinvestment of its 51% stake in the company.

IndianOil is likely to tie up with Calik Enerji of Turkey for the bidding process.

BM Bansal, director (planning and business development), IndianOil, told DNA Money that they were examining the feasibility of the sale and a decision would be taken only if it is found viable.

"We are examining the condition of the plant and the economic viability," he said.

Petkim stock is currently held by Privatisation Administration (88.86%) and the Turkish Pension Fund (7%). Privatisation Administration now wants to sell 51% of the shares to a strategic partner under a block sale.

The Turkish government had twice cancelled the bidding process for Petkim, which accounts for 35% of Turkey's chemical production, as the bid price did not meet the desired level. The privatisation attempt has been on since 2001.

On other projects in Turkey, Bansal said the ground-breaking ceremony for the 660-km Samsun-Ceyhan pipeline would be held on April 24.

News: Millionaire beggars in India's financial capital

(IANS 20/04/2007) Mumbai - Should you be shopping or dining at one of the upmarket shopping malls or high-end retro bars and restaurants at the Lokhandwala Complex in suburban Mumbai's Andheri any evening, there is a good chance that you could meet Massu.

Barefoot, squint-eyed, somewhat emaciated and wearing filthy clothes, Massu begs for alms. His working hours start at 8 in the evening and he calls it a day in the wee hours of the morning after the last diners have headed home. His takings average between Rs. 1,000 and Rs 1,500 on a good business night.

Yes, Massu is one of the many "millionaire" beggars in India's financial and entertainment capital.

Dressed in spotless white clothes, 60-year-old Malana Khan, Massu to his acquaintances, takes an auto-rickshaw from his one-bedroom-hall-kitchen (BHK) flat in middle-class Andheri West in western suburban Mumbai and heads towards upmarket Lokhandwala complex every evening.

He changes into his "begging attire" in a lane near Adlabs and is ready for the night.

Calling it a day at around 3 a.m., Massu takes an auto-rickshaw back home. He stops near Yashraj Studios close to his home for a change of clothes.

And Massu holds total sway over the area he is operating in the evenings, say local restaurateurs.

"Massu simply lords over the area like a king. You will never find any other beggar in his vicinity. But you must give him credit, for he is polite to the core. He never raises his voice at anyone," said a manager of a high-end restaurant in Lokhandwala.

Besides his BHK flat at Amboli in Andheri West, Massu also owns a similar flat in neighbouring Andheri East.

Massu humbly brushes aside his sway over the area with a weary smile. "I have been operating in the area for over a decade-and-half. And people (read fellow beggars) know me and respect me," Mannu told IANS.

"Begging for me is a full-time carrier option like any other job. On a good night I take home Rs.1,500. You see, TV actors, film stars and other well-heeled Mumbaikars frequent the joints where I beg. So the taking is usually good."

Although very guarded about his "assets" accumulated over the years, he is proud to admit that he lives with his wife and two married sons at his Amboli flat and has rented out the other flat for Rs.8,000 a month.

Though unwilling to reveal details, conservative estimates put his property assets alone at over Rs.300 million.

"I have money saved in a couple of bank accounts, beside the two flats that I own," was all the soft-spoken beggar was willing to divulge.

But Massu is not the only millionaire beggar in Mumbai.

Meet 45-year-old Bharat Bhagat, who operates around Chhatrapati Shivaji Terminus (CST) and the adjacent Azad Maidan in south Mumbai.

Bhagat begs during the morning and evening rush hours.

His assets: two adjacent BHK flats in central Mumbai's Parel where his family - who deal in school stationery and other study materials - stays.

A school dropout, Bhagat refuses to give up begging and join the family business.

"I just don't have the knack for business. Begging fetches me a steady income. I have been able to set up my father and brother in business and have purchased two flats where my entire joint family stays. So why give up this 'profession'?" asks Bhagat.

"With prevailing real estate rates in Parel, a middle-class residential area, two BHK flats would be worth over Rs.70 crore," said sources.

"I make between Rs.300 to Rs.450 per day. The family has also rented out a shop in Bhandrup to a fruit juice centre and we get Rs.7,000 a month. My wife collects the rent," said Bhagat, who speaks impeccable English.

"I have two sons, one studying in Class 10 and the other in Class 8. I am happy and content."

News: Hyundai to invest $40 m in India R&D centre

(RTR 20/04/2007) Hyderabad - Hyundai Motor Co. plans to invest $40 million in its research and development centre in southern India by 2009 and ramp up staff by eight times, the managing director of its Indian unit said.

The investment by Hyundai Motor India Ltd., a wholly owned unit of the South Korean car maker, will double the number of engineers to 200 by the end of the fiscal year to March 2008 and have 800 engineers at its Hyderabad centre a year later, H.S. Lheem said late on Thursday.

Hyundai, India's second-biggest car maker, sold 299,513 vehicles in 2006, up 18.5 per cent over the previous year.

Hyundai, which has a plant in the southern city of Chennai, is building a second plant in Chennai to double capacity to 600,000 units a year by the end of 2007.

News: Kingfisher in talks with Abu Dhabi firm

(PTI 20/04/2007) New Delhi - Domestic carrier Kingfisher Airlines is holding talks with a Abu Dhabi-based engineering firm to start a private maintenance, repair and overhaul (MRO) facility in the country.

"We are discussing with an Abu Dhabi based firm to establish an MRO in the country," Kingfisher Airlines promoter Vijay Mallya said here today.

Both sides, he said, had agreed to set up this facility, but the venue, costs and other issues were yet to be finalised.

Mallya, who has been trying to start overseas operations but is unable to do so in view of government rules, said his airline would shortly apply for starting an airline in the US to enable it to operate flights into India.

He said an application was being "compiled by our attorneys and it will be submitted (to the American authorities) in the next six to eight weeks".

Maintaining that he was "cautiously optimistic" that the Indian government would permit it to fly abroad in the near future, he said, "if for some reasons, they don't, we may think of flying into India from the US and back."

Under the present rules, a domestic airline can launch global operations only if it has a fleet of 20 aircraft and has put in five years of operations within India.

Hoping that the Civil Aviation Ministry would review its policy, Mallya said "otherwise, the current position is that only one private airline, Jet Airways, is operating abroad".

Meanwhile, the domestic airline, which has ordered Airbus A340-500 aircraft among others, planned to start long-haul international operations once the plane is inducted. "It will be delivered to us in a year from now," he said.

If the government was permitting foreign carriers to operate in India and grab the Indian market, it was "logical" that new Indian carriers are allowed to operate abroad, Mallya said.

"Hopefully, the government will agree because it is a compelling case for it to rethink the policy", the liquor baron said.

Asked about Jet Airways' plans to convert Air Sahara into 'Jetlite', Mallya said low-cost carriers would have to worry because it would eat into their market "but our's is a full-service value airline".

Mallya maintained that the low-cost model was "unviable and not sustainable".

Maintaining that fiscal year 2008-09 would be the "break- even year" for Kingfisher, Mallya said while cash-burn for the full-frills carrier was coming down, its passenger load factor was "consistently high".

Kingfisher would induct as many as 20 planes 11 ATR turbo-props and nine Airbus this year. It would induct wide-bodied aircraft like A-330s and A340-500s from January 2008.

News: Reliance Communications to cover 40,000 villages

(UNI 20/04/2007) New Delhi - In line with the Government's initiative in increasing the rural teleldensity, Reliance Communications had rolled out a massive Rural Direct Exchange Lines (RDEL) Project, providing telephone connections to over 7.37 lakh new subscribers.

The Project will cover over 40,000 villages till March 31, 2007 under the Universal Service Obligation Fund (USOF), the company said in a statement.

The agreement signed with the Department of Telecommunications (DOT) in 2005 for subsidy support toward Rural Household Direct Exchange Lines (RDEL) in specified Short Distance Charging Areas (SDCAs) entitles the company to receive subsidies for providing telephone connection to every subscriber.

About 912 Base Transceiver Station(BTS) Towers built by the company dot the landscape in these SDCAs.

Among the states, Karnataka topped the list with 1.28 lakh new subscribers followed by Tamil Nadu, Kerala and Andhra Pradesh with over one lakh fresh subscribers each.

However, SDCA-wise, Kerala Circle achieved an impressive figure of 21,000 subscribers per SDCA.

''The rollout clearly indicated the vast untapped potential and the huge virgin market prevailing in these remote and rural places.

Customers wanted the phone facility, but so far could not get one due to the non-availability of any operator or network.'' Sanjeev Govil, Head-National Rural Marketing, Reliance communications said in the statement.

The schemes included a three year free incoming with New Fixed Wireless Phones (FWP) at Rs 1,299, a Two Year Free Incoming with New FWP at Rs 999 and a Two Year Free Incoming with renewed FWP at Rs 699.

The tariffs were applicable to both two and three year incoming products.

Reliance Communications has made local calls very rural-friendly at just 80 paise for three minutes for Fixed Line and WLL (Mobile) and Reliance Phones and 80 paise per minute for mobile phones.

Intracircle calls attract Rs 0.80 paise per minute on Fixed Line and WLL (M) and mobile phones while they are charged at 80 paise for three minutes on Reliance Phones.

However, intercircle calls carry a flat rate of Rs 0.80 paise for 30 seconds for all the categories like Fixed Line and WLL (M), Mobile Phones and Reliance Phones.

News: 'Indian economy to grow at 9% in 2007'

(PTI 19/04/2007) New Delhi - India's economy is expected to grow by 9.0 per cent in 2007 as against 9.2 per cent in the previous year despite concerns of overheating, rising rupee and slowdown in US, according to a UN report.

Aiding India's growth will be low oil prices, control on inflation and lesser reliance of its economy on exports, the UN Economic and Social Survey of Asia and the Pacific said.

Presenting the findings of the report, UN Under Secretary General Kim Hak-Su said services and industrial production would be the key growth drivers.

Despite the prospects of good growth, the Indian economy is overheating a little bit and the surplus in Balance of Payments was not there to provide cushion from external shocks, he said.

He said while oil prices were expected to be $60 per barrel as against $65 per barrel in 2006, inflation in India would come down to 5.0 per cent this year from 6.0 per cent.

Kim said while the US slowdown and uncertainty over sustainability of Japan's revival would represent a downside for other economies of Asia-Pacific, India would be isolated as its economy was less dependent on exports.

Even the decline in value of dollar against the local currencies of Asia-Pacific would have an impact on them but India would be spared the shocks, the report said.

Agreeing with this view, Commerce and Industry Minister Kamal Nath, who was present at the launch of the report, said India's growth was domestic market driven.

News: Finnish oil major eyes Indian jatropha

(IANS 19/04/2007) Helsinki - Jatropha, a wonder plant grown in India, might soon fuel cars in Europe with Finnish oil and refining major Neste Oil considering importing it for its upcoming bio-diesel plants. "We are continuously looking for ways to expand our raw material base for NExBTL (the second generation bio-diesel developed by Neste), and in this search the non-edible jatropha is very interesting," said Neste Oil president and CEO Risto Rinne here. "Currently, Neste Oil has no ongoing projects in India but with its vast population and proactive bio-fuel targets, India is an attractive future market opportunity for Neste Oil's NexBTL renewable diesel," he told visiting Indian journalists. Neste Oil, the third largest company in Finland with a 50.1 per cent government stake, is coming up with its first bio-diesel plant in May this year and aims to emerge as the world's leading bio-diesel company besides running its traditional oil refining business. "India is a rather new thing for us but we can buy Jetropha Curcas from India to begin with," said Osmo Kammonen, senior vice-president, communications, Neste Oil. Jatropha Curcas is the wonder plant that produces seeds with an oil content of 37 per cent. The oil can be combusted as fuel without being refined. It burns with a clear smoke-free flame and has been tested successfully as a fuel for the simple diesel engine. "More than 50 per cent of new European Union (EU) cars are diesel cars and so we want to gear up to produce more diesel," said Kammonen. "India has potential to be a market and for sourcing our raw material. I am sure that our people are looking at the Indian market. We need to find a good supplier. "New diesel vehicles are better than gasoline ones. For producing bio-diesel we use animal fat and vegetable oil as feedstock and jatropha is a good option," he said. Neste Oil's NExBTL renewable diesel is a second generation bio-diesel which is pure hydrocarbon and according to its properties and quality is similar to fossil diesel. Wider feedstock - raw materials like jatropha - base can be utilised in the production process for Neste Oil. The higher the NExBTL content, the lesser the emissions. The first NExBTL production at a Neste Oil unit will be on-stream in Porvoo, Finland, this year. Neste Oil´s Porvoo and Naantali refineries have a combined refining capacity of about 14 million tonnes a year. "Neste Oil is involved in developing third generation bio-diesel technology. Though it does not significantly differ from NExBTL, the technology enables one to exploit the whole plant (biomass) and thereby widens the feedstock base since Finland is the most extensively forested country in Europe with 86 percent of its land area falling under forests," said a Neste Oil official. In 2006, the company supplied 8.1 million tonnes of petroleum products to Finland and exported 6 million tonnes. It imports crude oil mainly from Russia (48 percent in 2006). Neste Oil has some 900 Neste service stations, diesel fuel outlets and other sales points in Finland, and some 240 Neste stations and outlets and diesel fuel outlets in the Baltic states, Russia and Poland. Jatropha is a valuable multi-purpose crop to alleviate soil degradation, desertification and deforestation and can be used for bio-energy to replace petro-diesel besides for soap production and climatic protection. According to Abhishek Maharishi, CEO, Centre for Jatropha Promotion and Bio-diesel, Rajasthan, if the Indian government implements its policy on jatropha cultivation in right earnest the country could be a leading exporter. "Since 2003, the policy has been adopted to promote the cultivation, yet there are hurdles. A bio-diesel board formed in Rajasthan is yet to function. We think that if at least 10 percent of the 33 million hectares of wastelands in India is made available for jatropha, it could turn the fortunes of the rural poor and work wonders," Maharishi told IANS.

News: ONGC, Mittal JV gets first right over Nigerian block

(PTI 19/04/2007) New Delhi - Billionaire Lakshmi N Mittal's joint venture with state-owned Oil and Natural Gas Corp, ONGC-Mittal Energy Ltd, has won preferential rights to bid for a Nigerian exploration block after promising to invest two billion dollar in the African country's infrastructure. OMEL has been given right of first refusal on Block 250 in return for a pledge to carry out a feasibility study into a new railroad, industry sources said. Ten foreign and local companies were given preferential rights for 20 blocks under Nigeria's right of first refusal (RoFR) system in the country's latest bidding. Under the terms of the right of first refusal deals, bidding companies pledge to invest in new infrastructure in exchange for choice exploration blocks. Sources said Nigeria has given China National Petroleum Corp (CNPC) RoFR for at least one block, and possibly four in total, in exchange for a pledge to become a major investor in the Kaduna railway project. China's CNOOC Ltd has RoFR on up to seven blocks in return for a $ 2.5 billion loan from the Export-Import Bank of China for a railroad project in western Nigeria. Nigeria is auctioning a total of 45 exploration blocks - 11 in deep water offshore, 10 shallow water on the continental shelf, 13 onshore in the Niger Delta and 11 in inland basins. In May 2006 auction, OMEL agreed to spend six billion dollar on building a new 180,000 barrels per day refinery, 2,000 MW power generation, and a railway running East-West across Nigeria in lieu for right of first refusal for three blocks - 279, 285 and 291. It did not submit any bid for Block 291 but managed Blocks 279 and 285.

News: JPMorgan launches India equity fund

(UNI 19/04/2007) Mumbai - JPMorgan Asset Management India Pvt Ltd (JPMAMIPL) today announced the launch of its maiden domestic fund, JPMorgan India Equity Fund.

This open ended, equity growth scheme aims to generate income and long term capital growth from a diversified portfolio of predominantly equity and equity related securities including equity derivatives. Open for subscription from April 19 to May 18, units in the fund will be priced at Rs 10 during the new fund offer.

In addition to the usual distributor linked activities, JPMAMIPL will provide additional value to the distributor's overall business model by making available a number of educational programmes to distributors and their staff and associates.

Krishnamurthy Vijayan, CEO, JPMAMIPL, said at the launch, ''We are set to grow the Indian business rapidly, providing Indian investors with the same levels of investment expertise and service that our clients in other parts of the world have come to expect. We see the JP Morgan Equity Fund as the first step to doing this.'' Globally, the JPMorgan asset mangement business manages USD 6 billion of assets which are invested in a select group of about 45 Indian stocks.

Harshad Patwardhan, Investment Manager-Equity, JPMAMIPL said, ''With our collaborative framework, India equity Fund will be able to leverage off the experience of our investment professionals elsewhere in Asia, in addition to the expertise of the four member fund mangement team based in India.''

News: Praj to set up European JV, eyes Brazilian mkt

(PTI 19/04/2007) Mumbai - Brewery machinery manufacturer Praj Industries today said it will set up a joint venture with Aker Kvaerner of Netherlands with an investment of Rs 40 crore in a bid to expand the market opportunity for biofuel plants and to commence operations in Brazil. The board has given in-principle approval for initial investments of up to Rs 40 crore to establish the JV in Europe and to commence operations in Brazil, the company engaged in manufacturing distillation equipment and brewery machinery informed the Bombay Stock Exchange. The JV would offer European customers access to the complete scope of services required for license, plant design and construction with seamless integration and application of Praj Industries' technology, it added. In the proposed European JV with Aker Kvaerner, Praj Industries would hold 60 per cent stake and AK Process would hold 40 per cent of the shareholding. AK Process is a trading name and a wholly-owned subsidiary of Aker Kvaerner. The proposed JV would combine Aker Kvaerner's execution capabilities and extensive European market knowledge with the technological expertise of Praj Industries. Praj is also examining certain acquisition proposals with a view to entering Brazilian biofuels technology, plant and equipment market and establish an operational base. Ethanol production in Brazil is poised to double by 2010 and Praj sees an opportunity to serve these changing requirements, it said. Praj is also planning to enter into the bio-diesel technology domain and has created a separate division for the purpose. The company would offer in-house developed turnkey solutions including technology, engineering, plant and equipment and project management services. With its superior engineering expertise and understanding of agri-based raw materials, Praj Industries has on offer a robust plant which would have the capability to process a wide range of feeds stocks. Earlier, in 2006, the company and Aker Kvaerner had entered into an alliance for strategic cooperation on bio-ethanol projects in Europe. In a bid to expand the market opportunity for bio-fuel plants, the two firms commenced discussions to extend their association by forming a JV. Aker Kvaerner Netherlands BV, part of the Aker Kvaerner Group, would be the legal entity entering into the proposed JV with Praj Industries. The JV would be located in the Netherlands.

News: IBM announces Goa operations

(UNI 19/04/2007) Panaji - IBM India today announced its Goa operations as part of its expansion plans to enter 14 new cities across the country. This would enable IBM to cater specially to the unique requirements of the various small and medium business (SMB) clients spread in Goa and neighboring markets. With over 3000 SMB customers in India, IBM’s operations in Goa will target various clients in Government, healthcare, retail, pharmaceuticals, construction and process industries. In this connection, IBM India director (Global SMB) Ramesh Narasimhan said here today that till recently, small-to-medium size businesses had been ignored in smaller cities. ''There is an untapped market here to help these businesses gain a competitive edge and catch up with their larger counterparts,'' he noted. Opening operations in Goa is an example of IBM’s continued commitment to working closely with SMBs throughout India to provide them with products, solutions and value added offerings that will give them a boost to succeed, he stated. IBM’s portfolio of clients in Goa includes Sesa Goa, Chowgule Industries, Government of Goa, and Pentair Water, among others. It plans to work hand-in-hand with locals to provide new and existing clients with additional value-added solutions that are specifically tailored to the local market. IBM has invested in the development of products and services specifically priced and designed for the SMB marketplace under the brand name ''IBM Express Portfolio''. IBM's Express portfolio comprises hardware, software, services, solutions and financing and is designed to meet specific criteria for SMBs.

News: Merger of associates with SBI not in near future

(BL 18/04/2007) New Delhi - The Ministry of Finance has ruled out any immediate plans for a merger of four associate banks of the State Bank of India with the parent bank.

Officials said that contrary to speculations, there was no such proposal pending before the Government or SBI at present.

"There is no proposal with the Government to merge some of the associate banks of SBI. There is also no such proposal before the board of directors of SBI," said a senior finance ministry official, who is also privy to the deliberations of the SBI board.

Recent reports had suggested that the Government and the SBI were considering a merger of four unlisted associate banks of the SBI while letting the three other listed subsidiaries untouched.

The unlisted associate banks are State Bank of Hyderabad, State Bank of Indore, State Bank of Patiala and State Bank of Saurashtra, while those listed on the stock exchanges are State Bank of Bikaner & Jaipur, State Bank of Travancore and State Bank of Mysore.

Speculation of a possible merger of the banks has met with stiff resistance from the SBI staff.

Expressing their opposition to any such proposal, the All-India State Bank of Officers' Federation had recently said that such a move would be "retrograde step".

It had pointed out that each of the bank serve a particular region of the country and a merger would lead to reduction in the number of branches and "other undesirable effects."

Banks in talks

Officials, however, said that at a broader level, merger of state-owned banks remains on the agenda of the Government. They pointed out that public sector banks are holding talks between themselves to assess the synergies in the event of a possible merger.

"At present, several banks are talking among themselves. They are also trying to explain their point of view to sections within the banks that are opposed to merger of banks. However, no firm proposal has reached the Government yet," the official said.

Though the Government had expressed its desire to see consolidation among public sector banks, political pressures have forced it to go slow in taking any decision on this regard. The Left parties are vehemently against mergers. They also have considerable influents over some of the powerful unions of the public sector banks.

News: Runaway rupee alters India Inc's profit equations

(DNA 18/04/2007) Mumbai - As the rupee earns the distinction of being the world's best performing currency in April, India Inc's finance heads are bringing out their calculators to assess the damage. Or count the gains.

Companies with a high export orientation are recalculating potential revenue losses and the cost of hedging, while import-intensive sectors are rubbing their hands in glee.

Among the vulnerable industries, infotech stands out. So does pharmaceutical. As for gainers, refining companies, which use imported crude, are looking forward to exchange gains.

Early calculations show that companies like Tata Consultancy Services (TCS) and Infosys Technologies may post slower growth in profits and sales during fiscal 2007-08 if the rupee continues to remain strong.

On Tuesday, the rupee closed at 41.97 to the US dollar, well above the psychologically important threshold of Rs 42.

While TCS's chief executive S Ramadorai said on Monday that his export earnings were hedged to the extent of $1 billion, that's less than a quarter of the company's 2006-07 revenues of $4.3 billion.

Bloomberg, in fact, quoted Ramadorai on Tuesday as being a worried man.

"The way the rupee drastically appreciated in the last couple of days is definitely (a cause) of concern.'' Jayesh Shroff of SBI Funds Management agrees that the appreciation of the rupee is the biggest threat to the IT industry's profits.

According to an Edelweiss Capital study of sectors and companies in the Nifty 50 index, pharma and IT top the list of losers from an appreciating rupee, followed by aluminium companies like Hindalco and Nalco.

Says Shriram Iyer, head of research, Edelweiss: "All those who have their revenues linked to the dollar will be hit badly."

The export-oriented textiles sector could also be negatively impacted by the rupee. Says Ranjit Kapadia, head of research, Prabhudas Lilladher:

"The Indian textile industry generally operates on thin margins and the appreciating rupee has compounded its worries."

Sectors that are neutral to the rise or fall of the rupee include large segments of the construction and FMCG industries.

On the other hand, high import industries like oil refineries will be positively impacted by the rupee's rise. Companies like Zee Entertainment, capital goods companies like ABB and Siemens, and Suzlon Energy - which imports key windmill compoents - are also seen as gainers.

Says Vasudeo Joshi, head of research, Man India: "Apart from IT and other export-oriented sectors, everything else will be favourably affected by the rupee's appreciation."

Such a favourable impact will not only be in the form of lower import bills but also correspondingly lower duties. Consider: Finolex Industries imports ethylene for making its PVC pipes and the annual bill is Rs 440 crore.

The company will now benefit from the appreciation of the rupee. "How much the benefit will be depends on whether the company has taken positions in the forex market," says Angel Broking's midcap analyst Girish Solanki.

To figure out the full impact of the rupee's rise, however, one needs to figure out the import intensity of a company's operations. Import intensity is the quantity of imported raw materials used per unit of finished product. Adds Joshi of Man India: "The unqualified benefit from rupee appreciation will go to pure traders."

While it's obvious which sectors and companies will feel the heat, brokerage houses are in no hurry to revise their earnings estimates for companies right now.

They are waiting for the credit policy on April 24, which will indicate whether interest rates will rise further, causing the rupee to rise further. Says Kapadia of Prabhudas Lilladher: "You cannot change the model every now and then, in bits and pieces.

We will factor in the rupee appreciation and rework our profit estimates only after the 2006-07 results are out fully."

Analysts are busy predicting that the rupee will settle down at Rs 43 by the end of 2007. Says Man India's Joshi: "Some depreciation in the rupee should happen in the third or the fourth quarter of the calendar year."

News: Reliance m-cap surges above Rs 2 lakh crore

(BL 17/04/2007) Kolkata - After a few months, Reliance Industries on Monday regained the top slot in terms of capitalisation and pushed ONGC down to the second position. RIL's market capitalisation at the end of the Monday's session stood at Rs 2,03,400 crore, way above ONGC's Rs 1,92,500 crore.

On the S&P CNX Nifty it earned the highest weighting of 9.8 per cent and the second slot on the BSE Sensex with 11.6 per cent weighting, next to Infosys.

In fact, Reliance Industries had crossed the Rs 2-lakh-crore mark in market capitalisation in February this year. IT major Wipro and ONGC were the two other companies to have achieved this milestone. While Wipro crossed the Rs 2-lakh crore mark in 2000, ONGC achieved the feat last year. Since then, their capitalisation has fallen below the mark.

According to Arun Kejriwal, market analyst, the development in oil and gas exploration activity and better refining margins have of late been driving the stock. "The market players expect RIL to spring positive surprise in terms of exploration and Jamnagar refining activity," he added.

The average crude procurement price for RIL - primarily Arab heavy crude - is understood to have been lower $4-5 per barrel than the mix of heavy and light crude basket relied on by other Indian refiners in the 4th quarter of 2006-07 at a time the global crude price ruled strong. The RIL's refinery technology allows cheap heavy crude as feedstock.

"This alone should have a positive impact on the profits of the company. It is expected that RIL is likely to report an 8 per cent growth in the net profit year-on-year in 2006-07," said a sector analyst with an institutional brokerage.

In fact, industry analysts said in the Q3 Reliance managed to extract much better refining margin than its PSU counterparts in the country as it could source crude at a much lower rate.

At the current price of Rs 1,412, it is ruling at 19 times its FY2008 earnings. "There is still room for further upward movement," said V. K. Sharma head of research at Anagram Stockbroking. The RIL counter today gained over 3 per cent. The traded quantity on the NSE was 17 lakh shares and on the BSE, it recorded a volume of 6.46 lakh shares.

Offers ESOPs

For the first time, RIL today floated its employees stock option scheme for a total of 2.87 crore options, exercisable into equal number of fully paid-up equity shares. The group's other petrochemicals company, IPCL, however, had issued sweat equity to its employees earlier through stock options. According to V.K. Sharma, this move would also improve the sentiment for the stock.

The vesting period for RIL stock options would range between one year and seven years from the date of the grant and the exercise period would extend up to five years from the date of vesting. The options would lapse if they are not vested within the specified period on account of not meeting the specified criteria, and if vested, but not exercised, within the exercise period.

News: Indian Railways Inc beats Reliance

(IBN 17/04/2007) New Delhi - The Reliance Company doesn’t lose often and for that matter neither do the owners, Mukesh and Anil Ambani. However, stealing their thunder is Railway Minister Lalu Prasad.

The Indian Railways has borrowed $125 million or about Rs 540 crore from the US markets though private placement, and at an interest lower than anything Reliance Industries of Reliance Energies have ever managed.

"The rate was 6.35 per cent and 6.3 per cent for Reliance Industries and 6.5 per cent for Reliance Energy. We have succeeded in borrowing at 5.94 per cent," says OSD, Railway Ministry, Sudhir Kumar.

Rail Ministry officials say Indian Railways has come of its own as a credit-worthy corporate entity, and the money will be put to good use.

Says Kumar, “The money will be spent on the rolling stock programme and also the capacity expansion programme of the Railways.”

And the attempts by the Rail Ministry to become a viable and efficient corporate entity aren't going entirely unnoticed.

US business schools like Harvard and Wharton have already come down to study this great Indian turnaround story. And it is now the turn of the US establishment.

India's biggest employer is on the chugging along the path of recognition, and this time it is a kind of international recognition that public sector navratna are yet to receive.

News: Jet makes Lite of Air Sahara

(IBN 17/04/2007) Mumbai - Goodbye Air Sahara, welcome JetLite, the new name of the latest acquisition by Jet Airways.

The new airline will operate as a separate entity and would be priced lower than a full service airline to take on low cost carriers in the country. By this model, Jet Airways hopes to bring back air travellers who want facilities of a full service carrier but at a lower price.

Says Jet Airways Chairman, Naresh Goyal, "We will come out with the pricing, but our average yield will be higher than what the so called low cost airlines are making."

Jet Airways has also dismissed reports that they have paid a high cost for acquiring Air Sahara. Jet say that the benefit of the acquisition would be seen in the long term with huge savings in manpower, infrastructure and engineering costs.

There are 600 engineering people so the unit per cost will go down. Then we don't have to run separate offices. The network will be merged, which will be very good for customers," adds Naresh Goyal.

Jet has also undertaken a multi-million dollar re-branding exercise which would involve a change in logo and a complete new look of its crew.

This new corporate identity has been adopted keeping in mind its new global aspirations of flying more international routes in future.

News: Pantaloon riding high on new stores sales

(DNA 17/04/2007) Mumbai - Kishore Biyani-promoted Pantaloon Retail has added close to 450,000 sq ft of retail space during March 2007. In fact, the country's leading retail company added seven new Pantaloon stores, which according to J P Morgan analysts Vijay Chugh and Latika Chopra, have contributed to almost half of the humongous growth being witnessed by the retailer in March 2007.

According to the JP Morgan report, total year-on-year sales of Pantaloon Retail for March 2007 was up 84% at Rs 260 crore. While the company's value retailing sales (66% of the total share) grew by 74% from a year ago, lifestyle retailing (24% share) witnessed a year-on-year growth of 70% thanks to the new additions being made during the month. Contributing approximately 10% to the company's topline was its home retailing sales that stood at Rs 28.6 crore.

While addition of new stores lead to increased business a downslide was observed in the growth rate of the retail company's same-store sales (SSS).

The report pointed that same-store sales (SSS) growth slowed down to 13% from over 20% growth rates witnessed over past three months. "This was largely on account of low 10% SSS growth for value retailing. Lifestyle retailing registered 21% SSS growth during the month," said the analysts.

Over the next month, Pantaloon plans to launch the second such store at Ahmedabad. In terms of its over all expansion, Biyani in the coming 1-2 months is targeting to close FY07 with over 6mn sq ft of retail space under is retail business portfolio.

News: 'Lehman unit close to deal with Indian firm'

(RTR 17/04/2007) Mumbai - Lehman Brothers Holdings is close to signing a partnership deal to invest over $100 million in a hospitality venture with India's Future Capital, the Economic Times reported on Tuesday.

It quoted the head of the real estate arm of Lehman Brothers India, Raj Sundaram, as saying that the company was looking for investment opportunities.

"We are looking at investments in the hospitality sector. But I will not be able to comment on specific deals," he told the paper.

"We are building hotels in India. But at this stage, I cannot comment on who we are partnering with for investments in the business," he told the paper.

Future Capital is the financial arm of India's Future Group, which controls Pantaloon Retail Ltd.

The spokesman for the group could not be reached for comment.

News: L&T, Mitsubishi Heavy in boiler-making JV

(BL 17/04/2007) Mumbai - Larsen & Toubro Ltd said on Tuesday that it had entered a joint venture with Japan's Mitsubishi Heavy Industries to manufacture super-critical boilers in India.

The venture, which follows a technology agreement between the two companies, will have a capital outlay of about Rs 300 crore ($72 million), L&T said in a statement. The facility will cater to plant capacities ranging between 500 MW to 1000 MW and start production in the latter part of the fiscal year to 2009, L&T said.

News: TCS signing new deals above average rate

(BL 17/04/2007) Mumbai - Tata Consultancy Services Ltd on Tuesday said that it is signing new deals at 5 per cent-10 per cent above its average billing rate.

"All our renegotiations (for existing deals) are coming in at about 3 per cent-5 per cent (above average billing rate)," a top official said. The company's average billing rate is at $30 per person per hour.

TCS on Monday posted a 44 per cent on year rise in fourth-quarter net profit to Rs 1,195 crore on revenue of Rs 5,162 crore, up 39 per cent on year.

News: Goldman Sachs ups stake in Indiabulls to over 5%

(PTI 17/04/2007) Mumbai - Joining the beeline of global financial majors who have recently bought shares in Indiabulls Financial, investment bank Goldman Sachs has upped its stake in the domestic brokerage firm to over 5 per cent by buying 3.76 lakh shares. Goldman Sachs Investments Mauritius Ltd (GSMI) acquired 3.76 lakh shares for an undisclosed amount in open market transactions that were executed on March 30, a regulatory filing on the BSE shows. Post-transaction, GSMI holds 90.93 lakh shares or 5.06 per cent in Indiabulls. The leading domestic brokerage firm has recently allotted shares representing 3 per cent stake to US-based fund Farallon Capital for Rs 186.3 crore. Foreign fund house Citigroup Global Markets has also bought 14.85 lakh shares in the company worth Rs 73 crore through market-purchase route. As per the latest shareholding pattern of the brokerage firm, foreign investors like Merrill Lynch, Lloyd George Investment and Fidelity Funds have significant interests in the company. Merrill Lynch Capital Markets Espana has over 8 per cent stake in the company, while CLSA Mauritius 3.3 per cent stake. Meanwhile, Goldman Sachs too has been actively pursuing interests in Indian companies as it has along with a clutch of other private equity investors has invested $ 25 million in IT software and technology support firm Cybernet-SlashSupport (CSS). A few days ago, Goldman Sachs subscribed to a $ 24 million (Rs 106 crore) FCCB issue from ICSA, an embedded technology and electrical infrastructure solutions provider.

News: Essar buys Canada’s Algoma Steel for $1.58B

(PTI 16/04/2007) New Delhi - Ruias owned Essar Steel on Monday announced that they have agreed to acquire Canadian Algoma Steel for an aggregate value of 1.8 billion Canadian dollars (about $1.58 billion or Rs7,000 crore) to be paid in cash.

Commenting on the deal Shashi Ruia, chairman Essar Global, an arm for Essar Groups' international operations, said "We believe Algoma is an excellent addition to our existing steel business and also offers growth potential. This acquisition fits in with our global steel vision of having world class low cost assets with a global footprint."

Benjamin Duster, Chairman of Algoma's Board of Directors said, "The Board of Directors unanimously supports the Essar proposal as it reflects a significant premium to the historical share price of Algoma."

Algoma Steel is an integrated steel producer based in Sault St Marie, Ontario with steel shipments of 2.4 million tonnes in 2006. It has a revenue of C$1.9 billion which are primarily derived from the manufacture and sale of rolled steel products, including hot and cold rolled steel and plate.

The offer price of C$56 per share represents a premium of 48 per cent to Algoma's stock price for the 20-day period ending on February 14, 2007 when Algoma confirmed that it was in discussions regarding a potential transaction, a joint statement by the two companies said.

The arrangement must be approved by Algoma's shareholders by the affirmative vote of at least 66 per cent (2/3rd) of the votes cast, in person or by proxy, at a shareholders meeting, and is subject to customary closing conditions including necessary regulatory approvals.

The support agreement provides for payments to Essar in the event that the acquisition is not completed under certain circumstances.

News: 'India's pharmaceutical industry to be global player'

(IANS 16/04/2007) Berlin - India's pharmaceutical companies are gearing up to become a major global player, not only in producing low-price generic medicines but also as innovators in drugs and vaccines, according to a study.

"India is innovating its way out of poverty," said Nature Technology study co-author Peter Singer of the McLaughlin-Rotman Centre for Global Health in Toronto.

India could revolutionise biotechnology on the basis of its large and increasingly well-educated workforce, just as it did information technology, Singer believes.

The costs are considerably lower for companies operating in India, the study published in the April 9 issue of the journal says, citing as an example the way the 1997 launch of an Indian hepatitis B vaccine cut prices to one-thirtieth.

"The biotech industry is globalising rapidly," Singer said, adding that the world market for generics was expected to increase significantly in the next few years as several major drugs lost patent protection.

India is well placed to take advantage of this, according to the study that looked at 21 Indian firms.

The authors caution, however, that the lure of profits on the world market could distract attention from research into illnesses typical of developing countries.

The study was published ahead of a conference in Toronto May 2-4 of biotech firms from the US, Canada, India, China, Brazil and Africa.

News: Sir Peter Burt to head new India equity fund

(IANS 16/04/2007) London - As part of the growing western interest in Indian economy, Sir Peter Burt, the former chairman of ITV, is to chair a new private equity fund focused on investing in India.

Sir Peter will become chairman of Promethean India, a spin-off of the Promethean private equity vehicle run by his son, Michael. Like its sister fund, Promethean India will be listed on London's Aim market and it is understood to have investors lined up including Bank of Scotland, where Sir Peter was once chief executive, and Alliance Trust.

Promethean India, which will become the latest in a string of companies to tap the London markets for cash earmarked for India, will be run by Mohit Burman, a member of the family that runs the Dabur Group.

Mohit's brother, Gaurav, who has a senior role at its sister fund in London, will also be involved in the running of Promethean India, which will be based in offices in Delhi and Mumbai.

According to The Daily Telegraph, the fund is understood to have a pipeline of potential deals, which will include, but not be limited to, the financial services sector. It will also target Indian firms in need of operational or financial restructuring and others which are domestically focused but which have potential for international expansion.

Among Promethean India's non-executive directors will be James Hauslein, the majority shareholder of the speciality retailer Sunglass Hut.

News: How Jet Airways landed Air Sahara

(BL 16/04/2007) Mumbai - Thank God for mobile phones and the short messaging service (SMS). But for this facility, reporting on the Jet Airways buy-out of Air Sahara would have been next to impossible. That is, of course, till the Jet Airways Chairman, Naresh Goyal, and the airline counsel, Harish Salve, came out to say that both the airlines had resolved all their disputes amicably thereby ending an acquisition process that began in January 2006.

At 1-53 p.m. on April 12, a cryptic SMS `done' gave the first inkling to Delhi journalists waiting at the Air Sahara office that the deal had finally been concluded. Curiously, a number of journalists got the same SMS from different sources at about the same time.

And, when journalists wanted details of the deal, again, it was SMS that came to their rescue. While basic information about the deal was made available through the statement made to the BSE, the finer nuances were communicated through SMS messages.

Enterprise Value

Five days, countless SMS messages and a few official statements later, what finally emerged about the deal is that Jet Airways will make a lumpsum payment of Rs 1,450 crore to Air Sahara. In Delhi, the Air Sahara President, Alok Sharma, said the enterprise value of his airline was close to Rs 2,000 crore.

While he did not offer details about the deal, yet again SMS messages filled in with the data that the enterprise value for Air Sahara had been fixed at Rs 1,950 crore, including the Rs 680 crore that Jet Airways had already paid to Air Sahara; Rs 950 crore remains to be paid. The deal also will see some assets, such as the four helicopters and the personal business jet of the Sahara Group Chairman being sold back to Sahara.

According to sources monitoring the deal, what has been finalised now is no different from what was initially agreed to in January 2006. That deal, however, did not happen and in June the share purchase agreement between the two airlines lapsed. Since then both sides have been trading charges on why the deal failed. Then, in November both parties moved to arbitration to finally settle the deal.

Now that the deal has the stamp of the arbitration panel, any deviation would attract contempt of court charges. In January 2006, the agreement Jet Airways had inked was to purchase 100 per cent equity in Air Sahara for $500 million (Rs 2,217 crore). The agreement was for Jet Airways to acquire 27.6 crore equity shares (with a face value of Rs 10), five crore preferential shares and Air Sahara's loans.

Under the agreement, the entire aviation business of Air Sahara, including some aircraft leases, the lounges run by it and assets such as auxiliary power units and engines, being taken over by Jet Airways.

The Impact

What impact will the latest buy-out have on the Indian skies and the travelling public? Speaking to newspersons, the Air Sahara President said the agreement was good not only for the public, but also the industry and the promoters of the two airlines. "Not only does Jet Airways get to operate on our routes, it will also get the existing fleet and the 10 Boeing 737 aircraft that are being delivered to us. Besides, Jet Airways will also get a larger market share and more loyal customers," said Sharma.

A section in the industry, however, feels that the buy-out could mean an end to low fares on some routes and the possible cutting down of some flights on the same sectors on which both Jet and Sahara operate within a short time of each other.

While there is no official word from Jet on its plans for Sahara, one thing that is clear is that brand Air Sahara will continue for another six months after which it would revert to the Sahara Group.

The thinking in some quarters is that Air Sahara could be operated as a low-cost airline under the Jet Airways brand name, especially as it has a fleet with largely all-economy configuration.

No 1 Private Carrier

The buy-out will make the new entity the largest domestic private carrier, with a market share of 42 per cent and a fleet of 88 aircraft including Air Sahara's 27. Incidentally, the entire fleet of Air Sahara that includes Boeing 737 and the smaller CRJ aircraft is on lease. For Jet Airways the buy-out is likely to help in its plans of going international. The airline has applied for rights to connect India to more international destinations including those in the United States, South Africa, Kenya, China and South-East Asia.

However, the question that still begs an answer is whether the sale would mean the exit of the Sahara Group from the aviation sector. In January 2006, the thinking within the Sahara Group was that the focus should mainly be on three ventures — para-banking, real-estate and media. The thinking within the group has not changed, with sources indicating that the funds generated from the sale are likely to be pumped into the real-estate development business.

In keeping with the developments of last week, the Sahara Group is officially not saying anything more than "wait for a few days, we still have some announcements to make."

Perhaps journalists need to keep their mobile phones fully charged and wait for SMS messages that may offer information on the plans, not only of the Sahara Group but also Jet Airways.

News: ONGC to invest Rs 18,000 cr in FY 2007-08

(PTI 16/04/2007) New Delhi - State-run Oil and Natural Gas Corporation (ONGC) will invest Rs 18,000 crore for exploration and production of oil and gas in financial year 2007-08.

Of the Rs 18,000 crore, about Rs 5,000 crore would be for exploration and the remaining would be for improving recovery from existing fields and developing new ones, company chairman R S Sharma said.

Last year the capital expenditure of the company was Rs 15,000 crore.

News: Rupee at near 9-yr high, past 42/$

(RTR 16/04/2007) Mumbai - The Indian rupee jumped to a near nine-year high on Monday, strengthening past 42 per dollar on big capital inflows and absence of central bank intervention.

The rupee's rise was also aided by higher overnight cash rates, which forced banks to sell dollars for rupees to meet funding requirements.

The partially convertible rupee ended at 41.85/86, up 1.6 per cent from the previous close of 42.51/52.

It has gained more than 12 per cent from a three-year low of 47.04 in July, including a 5.6 per cent gain in 2007 making it Asia's best performing currency.

V. Rajagopal, head of FX trading at Kotak Mahindra Bank, said strong inflows were putting upward pressure on the rupee.

"The rupee may take a breather around 41.70 as the market positions for the next move," he said.

Domestic deposits by overseas Indians increased by $4 billion in 2006/07 while foreign borrowings by companies rose $14 billion, JPMorgan said in a note on Friday.

Foreigners have bought more than $1.5 billion worth of shares so far in 2007, compared with nearly $8 billion in 2006.

India's foreign exchange reserves rose above $200 billion for the first time in early April, which analysts said reflected capital flows and central bank intervention.

Analysts believe the rupee's rally has been partly fuelled by the central bank's near-absence in recent weeks from the currency market, to help fight inflation pressures caused partly by high money supply.

Cash in circulation is running at nearly 21 per cent fueling inflation, which has stayed above above central bank projections of 5.0-5.5 per cent.

The Reserve Bank of India (RBI) bought a record $11.9 billion in February to prevent the rupee's overvaluation on a trade-weighted basis.

"RBI is increasingly facing the complex task of trying to pursue an independent monetary policy, a relative open capital account and a managed exchange rate," JM Morgan Stanley analysts Chetan Ahya and Mihir Sheth said in a recent report.

"Its ability to prevent appreciation of the rupee is limited."

News: Indian FDI inflow trebles; new target at $25 b

(BL 15/04/2007) New Delhi - The Government has set a target of $25 billion for foreign direct investment into India for the ongoing fiscal.

"We have consistently been getting higher FDIs and last fiscal was the highest at $15 billion compared to just $5.5 billion in 2005-06. The target for the current fiscal is $25 billion," said the Commerce and Industry Minister, Kamal Nath, at a meeting organised by the Confederation of Indian Industry here on Saturday.

News: SBI Funds, Citibank tie-up

(BL 15/04/2007) Mumbai - SBI Funds Management Pvt Ltd - investment managers for SBI Mutual Fund has tied-up with Citibank, to increase the reach of investors across the country, an official release said. In the initial phase, the SBI MF - Citibank tie-up, shall offer an opportunity to invest in two of SBI Mutual Fund's equity funds — MSFU Contra Fund and Magnum Global Fund and its fixed maturity plans - liquid funds.

News: 'India has to develop domestic capital mkt'

(PTI 15/04/2007) New Delhi - India needs to develop its capital market as the primary source for long-term funding as foreign investment alone will not be enough to provide $ 300 billion the country requires for developing infrastructure in the next five years.

Actual provision of foreign currency debt had been relatively limited to some large projects with strong sponsors and foreign currency revenues, said a report prepared jointly by rating agencies Moody's and ICRA.

"The reasons (of limited foreign funding) include generic difficulties existent in the emerging markets, over use of long-term foreign currency debt to finance projects that generate local currency revenues," Moody's Representative Director for India and author of the infrastructure report Chetan Modi said.

The report evaluates the challenges facing the development of project finance in India and the risk factors involved therein.

The challenges include concerns over uncertainty of completion, lenders ability to implement remedies for projects not performing as projected, risk of failure by government bodies to deliver on their contractual obligations and the credit quality of key project enterprises.

Although the move to competitive bidding has many benefits, it can also present additional risk issues over the long duration of project agreements, when selection is based essentially on the lowest-period bid, the report said.

News: ITC to invest Rs 15,000 cr for expansion

(PTI 15/04/2007) New Delh - ITC Ltd, the country's biggest cigarette maker, plans to invest about Rs 15,000 crore in the next 5-7 years in other areas such as hotels, agri-business and FMCG as it seeks to transform its image to a diversified corporate conglomerate. "The company is giving impetus on segments such as FMCG, agro business, paper and packaging, hotels and the infotech business, for which it has earmarked an investment of Rs 15,000 crore in the next five-seven years," sources said. As part of ramping up non-tobacco divisions, ITC plans to rev up its social farm forestry projects in states like Andhra Pradesh and Karnataka, which will involve 12 lakh farmers by 2012-14, up from current three lakh. With almost 60-70 per cent of its raw materials coming from its social forestry projects, ITC has already embarked on a capacity enhancement programme for paper production. Its Bhadrachalam paper manufacturing plant would produce 4 lakh tonnes annually by April 2008 from the current 3 lakh tonnes and the total Elemental Chlorine Free (ECF) pulp production would increase to 2.2 lakh tonnes annually by the last quarter of 2007, from the current 1 lakh tonnes. Sources said ITC is focusing on taking modern retail to rural India and plans to enhance its reach through e-choupals (direct marketing channel for farmers) and Choupal Sagars (rural retail stores). At present, ITC has about 6,500 e-choupals covering 40,000 villages and 40 Choupal Sagars. Sources said the company's investments would be mainly funded through internal accruals. Investments on the different non-tobacco divisions, which account for 51 per cent of its total revenues, would be on a need-base basis. ITC has already announced Rs 5,000 crore investments in its hotels division in the next three-four years to add 3,000 rooms in addition to the current 5,500 rooms. Recently, it had tied up with Starwood Hotels & Resorts to bring the latter's premium brand, the Luxury Collection to India. Sources said ITC's increased focus on non-tobacco divisions was also aimed at doubling its revenues in the next five-seven years. In the nine-month period ended December 2006 ITC's net sales stood at Rs 8,902.96 crore, while profit after tax was Rs 2,049.28 crore.

News: Bangladesh to decide soon on Tata's $3b plan

(PTI 15/04/2007) Dhaka - The caretaker government in Bangladesh is expected to take a decision soon on the $3 billion investment proposal by the Tata group, a media report said today. The revised proposal of the business conglomerate will be sent to chief of the caretaker government, Fakhruddin Ahmed, along with the evaluation committee's recommendations for a final decision, the mass-circulated Prothom Alo daily said quoting Investment Board officials. "The government will take the final decision on the fate of the investment proposal," Investment Board chairman Nazrul Islam was quoted as saying by the Bangla language newspaper. The report came two weeks after Foreign Affairs Adviser Iftekhar Ahmed Chowdhury said authorities were "thoroughly examining" the proposal for setting up two power plants, a steel plant, and a fertiliser factory under the single biggest foreign investment in Bangladesh. The Indian conglomerate last month hinted that it might shelve the plan if Bangladesh authorities further delayed a decision on the proposal. Major development partners had advised Dhaka to accept the proposal as the country was desperately trying to attract foreign direct investment.

News: India to export mangoes, import bikes from US

(BL 14/04/2007) New Delhi - In an admittedly odd exchange of sorts, India would be exporting its exotic mangoes to the US this season in return for allowing motorcycles from the Milwaukee-based Harley-Davidson Inc's (HOG) of the US to India.

At a meeting on Indo-US Trade Policy Forum here, the Union Commerce and Industry Minister, Kamal Nath, said, "The good news is that our mangoes are going to America and Harley Davidson is coming here."

For Indian fruit growers, the good news has come after 18 years since the US banned mango imports from here on concerns about Indian farmers were using too many pesticides. Instead, the farmers now irradiate the fruit to kill any pests, rendering the mangoes fit for consumption and in keeping up with sanitary standards of US agriculture administration.

Meeting norms

On the motorbike, the Minister's remarks were followed up by the Directorate General of Foreign Trade (DGFT) who issued a notification promptly, permitting import of motorcycles of engine capacity 800 cc or above. The DGFT said the imported motorcycles must meet Euro III emission norms.

At the time of import, the importer has to submit Type Approval Certificate, copy of an international accredited agency from the country of origin. Individuals, companies and firms, and original equipment manufacturers who have manufacturing and service network in India could import these machines.

Addressing the gathering, the US Trade Representative Susan Schwab said, "In a few short weeks, Indian mangoes will enter the US market. In return," she said, "we have received indications that the Indian government will accept Euro 3 (emission) standards for heavy motorcycles, creating an opportunity for a niche in the market."

No agreements yet

Though no agreement was reached on tariffs, Schwab said, "If tariffs were to come down, trade in this sector would steadily begin to flow." She said total bilateral trade in goods and services could hit $50 billion this year.

Both sides deliberated infringement of intellectual property rights, with India pleading with Washington to crack the whip on those plying in pirated versions of popular Indian films in the US market. "We raised the issue of widespread availability of pirated Indian films and music in the US. They could be found in any grocery store. The US has assured us it will look into it," Nath said.

Schwab said more Indian organic produce would now be going to the US as Indian agents could certify them. She asked Nath to further bring down tariffs to boost trade and "generate a win-win" situation.

Advisory group

Both sides also announced the formation of a private sector advisory group of eminent American and Indian trade experts to provide strategic recommendations, and insights into the US-India Trade Policy Forum.

While US representatives include Ambassador Carla A Hills; C. Fred Bergsten, Director of the Peterson Institute for International Economics; John J. Castellani, President of the Business Roundtable and Ron Somers, President of the US-India Business Council. Indian experts include: Dr V. S. Krishnamurthy, Chairman, National Manufacturing Competitive Council; Dr Isher Judge Adularia, Chairman, ICRIER/alternatively; Dr Rajiv Kumar, Director, ICRIER, R. Seshasayee, President, CII/alternatively; Lt. General S. S. Mehta, Director General, CII; Habil Khoraikiwala, President, FICCI/ alternatively and Dr Amit Mitra, Secretary General, FICCI.

News: Post Jet-Sahara deal - Changing dynamics of low-cost carriers

(BL 14/04/2007) Bangalore - Will the Jet-Air Sahara deal change the dynamics of the entire aviation sector? It may, feel the low cost carriers.

Ajay Singh Director of SpiceJet, believes that there is a definite trend towards consolidation in the industry and the market share of low cost carriers could go up further. "With at least one player removed from the market and some more reducing their operations, the well-entrenched LCCs can only do better," Singh says.

"With the market growing at 30 per cent, we believe that it is the LCCs that are driving the growth and they will be the ones to benefit most once the consolidation starts happening," an analyst from a brokerage firm says.

Another analyst is, however, sceptical about the way some LCCs were trying to grab shares by pricing tickets cheap. "In a price-sensitive market, it is easier to grab market shares if an airline starts pricing fares at as low as Re 1," another analyst who does not wish to be named says.

He adds Jet Airways might have rescued itself out of a rather sticky situation. "Air Sahara had a better chance of winning compensation from the tribunal," the analyst says, adding it is early days yet for the airline industry to start moving towards consolidation.

Re-look at valuations?

Some also contend that the money forked out by Jet Airways for buying out Air Sahara (Rs 1,450 crore) calls for re-assessment of valuations for low cost carriers. For instance, SpiceJet, commands the same market share of 8 per cent and similar valuation of Air Sahara but the similarities stop there, says the SpiceJet's Director, Ajay Singh. "We have a better brand, far better performance record financially as well as operationally. Hence our valuations should be far higher," says Singh.

The other low cost carrier, Air Deccan with 21 per cent market share has a total market capitalisation of about Rs 1,000 crore. If one takes the same parameters into consideration, the stock of Deccan Aviation, which owns Air Deccan, appears to be undervalued, some analysts say. With just its charter business, higher margins from lease back operations and with the valuation of Airbus aircraft itself going up, the total valuation should, in fact, be much more than what is reflected in the market, says one of the analysts.

However, there is an alternative view that the sum forked out by Jet Airways for the Air Sahara deal may be on the higher side and therefore it may not be an appropriate benchmark to value low cost carriers.

News: '$200 b forex no reason to rejoice'

(BL 14/04/2007) Chennai - "You can't eat foreign exchange! Accumulation of forex reserves is not bliss. It is a curse," says K.P. Geethakrishnan, former Finance Secretary, with just a touch of acerbity, when asked to react to the news of India's forex reserves touching $200 billion.

Citing the parallel of bumper crops and reaping a huge mountain of foodgrain, and then coping with the resultant problems of storage and disposal, he said: "We are used to problems of deficit. We don't know how to handle problems of plenty."

True enough. But having a stockpile of $200 billion is a far cry from having almost nothing in 1991. Government officials and the then RBI governor, S. Venkitaramanan, had to run from country to country to seek help and stave off a default in payments. Only a pledge of gold saved the country's reputation then.

The situation has changed, and the change has been slow at first and more rapid over the past few years. Reforms helped fuel increasing portfolio and direct investment over the last few years and bring more foreign money into the country.

Fiscal 2007 alone saw reserves go up by nearly $50 billion.

Let rupee firm up

While expressing delight at reaching this landmark, Venkitaramanan said: "Affluence can be too hard to bear. Accumulating reserves is now only injecting more liquidity and helping fuel inflation. Maybe it is time to allow the rupee to appreciate a bit more. Accumulation of reserves is not an end in itself. There is no point in giving a return of 30 per cent to FIIs and earning only about five per cent on the investments of these reserves."

Geethakrishnan advocates using a part of the forex stockpile for infrastructure projects; this will not lead to an immediate increase of consumption expenditure that would be inflationary. He also suggests letting the rupee appreciate to reflect improved fundamentals. (The rupee has appreciated about four per cent over the last year and nearly 10 per cent from its low of 47 against the dollar in July 2006.)

K. Subramaniam, retired civil servant, differs on this issue.

"There is always a trade-off between the exporter and the importer. The appreciation of the rupee may not hurt IT companies much; but they will certainly affect manufacturing exports where margins are much smaller."

Volatile inflows

On the issue of forex reserves accumulation, he said: "With regard to the composition of these reserves and their volatile nature, it is a matter of concern. These are not trade flows or FDI that would be here for a longer duration. These are fairweather remittances, which will flee either in a crisis or a perception of a crisis. Given global imbalances and mobility of capital, Asian countries have to be on guard and fight the flight of capital."

Repeating an observation he had made many years earlier, RBI Governor Dr Y.V. Reddy, said at Singapore couple of months ago: "The reserve accumulation could also be seen in the context of the availability of abundant international liquidity following the easing of the monetary policy in industrial countries.

"The resultant excess liquidity flowed into the emerging markets.

"In the event of hardening of interest rates in industrialised countries, this liquidity may as quickly dry up; in that situation, emerging markets should have sufficient cushion to withstand such reverse flows of capital."

He added: "Now, with the global rise in the interest rates, there is always a lurking fear in the emerging market economies, that the level of capital flows may not be maintained. Thus, the comfort level of reserves should not be viewed with respect to the current situation alone but should also reckon the assessment of the emerging risks.

"Moreover, at this moment the global economy has not been tested on the eventuality of a not-so-orderly correction of the current global imbalances. In that eventuality, as the experts caution, disruption in financial markets in the form of large cross-currency volatility and sharp rise in interest rates are not unlikely in the global economy."

News: Mumbai as international finance hub

(BL 14/04/2007) Mumbai - Developing nations seeking to benefit from financial globalisation should create the ground conditions to benefit from it. They cannot hope to reap gains merely by creating an International Finance Centre. Driven by bankers' dreams, the Percy Mistry panel report seems to expect the tail to wag the dog, says K. SUBRAMANIAN. A VIEW of the BSE and RBI buildings in Mumbai... Turning the megapolis into a financial hub will call for bridging many a gap. It is a dream that excites the imagination of Mumbaikars, especially if they are bankers. Not surprisingly, last March, in an address to a business audience the Prime Minister, Dr Manmohan Singh, had said: "Mumbai with all its inherent advantages in terms of human capital and commercial acumen can be positioned as a viable regional financial centre." It was not an original idea, but what added glitz was the prevailing mood that India, as an emerging giant, should reach out to the financial universe. In the same speech, Dr Singh requested the Reserve Bank of India to study the feasibility of Capital Account Convertibility (CAC). Even as the RBI appointed a committee to study CAC, Bombay First, a city-based NGO, stepped up its campaign to elevate Mumbai into an International Finance Centre (IFC). It gave a `wish list' to the Maharashtra Chief Minister seeking amendments to three Central Laws — the Banking Regulation Act, the Foreign Exchange Management Act and the Reserve Bank of India Act and to scale down stamp duty and property tax and to provide infrastructure. Somewhere along the line, the Finance Minister P. Chidambaram, entrusted the study to a High Powered Expert Committee (HPEC). It was headed by Percy Mistry, a former World Bank economist, and included 15 top names in the financial sector. As press reports suggested, Chidambaram had high expectations from the report and spoke passionately in his Budget speech (2007-08) about Mumbai emerging a global financial centre. On April 2, the HPEC released its report on making Mumbai an international financial centre. It got wide media coverage, though mixed. Bloomberg's Andy Mukherjee (April 5) went on to say: "The emphasis of this report is on redesigning the architecture of the Indian financial system." Though he called it a blueprint for India to take the leap, he doubted if Dr. Singh would back it. It is not the case that Mumbai does not have the potential to play a bigger role in international finance. The issue is over its current status and the ability of financial system to cope with the global market. Over time, Mumbai may truly be transformed into an IFC even as the economy touches higher levels and financial market deepens. It is equally important that the regulatory framework undergoes changes in tandem, both to facilitate this transformation and to shield it from the buffeting foreign winds. The regulatory framework has to be dovetailed with the politico-economic compulsions of the main (or real) economy and the strategies required to promote and sustain growth. It should meet the demands of all the constituents and not just the financial class. Hence there is `gradualism' in the reform process. In recent years, this approach has been applauded by many economists, including those from the IMF, and cited as a model for others. The HPEC is not amused. It proposes nothing short of a "shock therapy." It takes it as an axiom that Mumbai should become one and goes about creating a structure to bring it about. Economists have studied the history of IFCs and the factors that promoted them. Historical Process A leading economist noted: "The location of international centres is not random. They are where they are because of a historical process that has resulted in certain places offering a cluster of attraction to the banks that have established their activities there." Many countries and cities within them have competed for the role. The list is long and includes most developed countries. Among the potential centres, Hong Kong, Shanghai and Singapore are mentioned but not Mumbai. PricewaterhouseCoopers published a survey in partnership with New York City ranking cities in nine categories. (Cities of Opportunity? March 20, 2007). They included nine indicators and 32 variables. The major indicators were a) intellectual capital, b) technology IQ and innovation, and c) financial clout. It ranked in all 11 cities but not Mumbai. New York dominated under the financial clout categories and London came second. In other categories such as intellectual capital, London ranked first. Low Rating Last month, the City of London Corporation published "The Global Financial Survey" evaluating the competitiveness of 46 centres. It suggested that London was ahead of New York in all five competitiveness categories: People, business environment, market access, infrastructure and general competitiveness. Though the Survey mentions Mumbai in passing, it dismisses it with a low rating. On its part, the HPEC takes note of seven key factors that provide competitive advantage to an IFC. Sadly, unlike other surveys, it fails to study the candidacy of Mumbai giving weight to the attributes. It avers that Mumbai cannot be an artificial centre like some of the tax havens or offshore centres. Nor can it hide as a special zone. It wants it to be rooted in (and serve) India's financial system. As it proclaims, "the call for creating an IFC in Mumbai at this time is implicitly a metaphor for ... deregulating, liberalising and globalising, all parts of the Indian financial system at a much faster rate than is presently the case." It proceeds to plead for an intensive phase of deregulation and liberalisation and looks upon the IFC as a "device to accelerate movement in that direction." On this premise, it suggests a ten point agenda or what it calls "A temporal roadmap for reform." It is not practicable to exhaust all the items in the agenda or deal with them at length. Briefly, it includes total capital convertibility. It recommends removal of the Securities Transactions Tax. It suggests revamping fiscal and monetary management. It aims to downsize (or cut to size!) the RBI and expects it to function independently as a central bank in charge of monetary policy a la the US Federal Reserve and not meddle with the exchange rate. The rupee should float freely. (The HPEC appears unaware of the requirements of the Humphrey-Dawkins Act of 1978 and Congressional hearings.) It wants rule-based regulation to be replaced by principle-based norms. It is not clear how this will work in practice in a democracy. It suggests a Financial Services Modernisation Act (FSMA) as an omnibus Act encompassing all securities trading, banking, insurance and commodity-finance. Significantly, the HPEC advises the government to disinvest all its shares in banks and financial institutions. In short, it seeks to create a paradise for private bankers with no regulator peeking over their shoulders. By and large, it is a bankers' view of globalisation and does not take into account recent theoretical developments on the nature of relationship between capital and economic growth in the context of globalisation. There are doubts about the earlier view of benign relationship between capital and growth. In a seminal study (Financial Globalisation: A Reappraisal, IMF Research Department, No.WP/06/189, August 2006), four leading economists have examined the relationship. One of the major findings is that there is a fundamental tension between the costs and benefits of financial globalisation that may be difficult to avoid. "Financial globalisation appears to have the potential to play a catalytic role in generating an array of collateral benefits that may help long-run growth. At the same time, premature opening of the capital account in the absence of some basic supporting conditions can delay the realisation of these benefits, while making a country more vulnerable to sudden stops of capital flows." They argue that various threshold effects play an important role in shaping the macroeconomic outcomes of financial globalisation. These are broadly: "the level of development of domestic financial markets, the quality of institutions and corporate governance, the nature of macroeconomic policies (including the exchange rate regime), and the extent of openness to trade." Countries meetings these conditions are better able to gain from financial globalisation. The moral is that developing countries wishing to benefit from financial globalisation should create the ground conditions to be able to benefit from it. They cannot hope to reap those gains merely by creating an IFC and dismantling the regulatory framework. Driven by bankers' dream, the HPEC expects the tail to wag the dog.

News: US firms to sell clean-energy solutions to India, China

(IANS 14/04/2007) Washington - As the Indian and Chinese markets continue their rapid growth, 17 American companies embark on a mission from Apr 18 to 25 to offer the two countries innovative solutions to their energy needs.

The mission will aim to match US companies with opportunities in these fast-growing markets, where American clean technology goods and services can help improve the environment, US Commerce Assistant Secretary David Bohigian announced Friday.

"The companies participating in the Clean-Energy Technologies Trade Mission range from startups to multi-billion dollar enterprises," said Bohigian.

"As the Chinese and Indian markets continue their rapid growth, they will encounter unprecedented energy and environmental challenges. US companies of all sizes have an opportunity to take a leadership role in providing innovative solutions to energy needs in an environmentally responsible way," he said.

The 17 high-technology US companies specialise in the renewable energy, energy efficiency, clean coal and distributed generation sectors, Bohigian said.

They represent innovative solutions to China's and India's energy and environmental challenges and are potential partners to the countries' business and government leaders. The companies range in size from fewer than five employees to thousands of employees.

All companies belong to industries promoted by the Asia Pacific Partnership on Clean Development and Climate (APP). The APP is a Presidential initiative to achieve a reduction in the intensity of carbon dioxide and other greenhouse gas emissions and enhance energy security, in the context of sustained economic growth.

The APP is a public-private partnership including six partner countries, representing half of the world's economy, population and energy consumption: Australia, China, India, Japan, South Korea and the United States.

Member countries work together to break down policy barriers and facilitate commercial deployment of technologies that reduce greenhouse gas emissions and enhance energy security.

News: Deloitte launches Indian private equity practice

(BL 13/04/2007) New Delhi - Deloitte Corporate Finance Services India Pvt Ltd has announced the launch of a dedicated Private Equity practice in India, which will work closely with the Asia Pacific regional practice, UK and US member firms of Deloitte Touche Tohmatsu (DTT) and the rest of the DTT network, a company release said.

The new company will address the needs of the growing Private Equity market and provide investors with transaction-related services across the complete deal cycle, from origination to completion.

News: Citi may shift 9,500 jobs to India

(DNA 13/04/2007) New York - India would be one of the biggest gainers of Citigroup’s move to hand out pink slips to 17,000 employees, close small retail brokerage offices and shipping thousands of back-office jobs to cheaper overseas locations.

In addition to the 17,000 layoffs, the world’s biggest bank on Wednesday said it will ship 9,500 jobs to “lower-cost locations” with about two-thirds of those jobs being moved as the positions become vacant.

The cost-cutting effort launched under pressure from shareholders affects 8% of the bank’s work force of 327,000 employees. “17,000 plus 9,500 is the amount of jobs we’re really impacting,” Citi’s chief operating officer Robert Druskin, who spent the past three months devising the cost-cutting plan, told analysts on a conference call.

A Citigroup executive familiar with the restructuring plan told DNA Money that India would gain a major portion of the consumer banking jobs that were being relocated from high-cost New York, London and Hong Kong to low-wage countries.

“All our transaction processing back-office work is being done in India, Penang and Poland. Beyond customer services, we have been successfully outsourcing credit analysis, investment banking and equity research to India,” said the executive who did not want to be named.

“Citi’s consumer banking division still has back office work being done out of New York and London. These jobs could be moved to India.”

Citigroup chief Charles Prince had visited Mumbai barely three weeks ago and signaled that the bank was going to sharpen its focus on operations outside North America.

“We will continue to consolidate and simplify our back offices around the world,” Prince had said during his visit to Mumbai last month. “Traditionally India has been a beneficiary of that.”

According to Prince, India has been the single biggest driver of growth for Citigroup’s international operations. “High-growth markets like India and China will not be affected negatively by the restructuring,” a Citi executive told DNA Money. The US bank employs 22,000 people in India and they are unlikely to face cuts.

Citi’s international consumer operations netted $4.95 billion in revenue in the fourth quarter of 2006, against $7.96 billion realised from US consumer operations. Similarly, international operations in investment banking brought in $4.66 billion in revenues out of a total of $7.08 billion. The company’s net income declined 13% to $21.5 billion last year from $24.6 billion in 2005.

The “Wall Street Journal” reported that Citi had already handed out pink slips this week to more than 1,000 employees. About 7,300 of the layoffs will be in the US. The bank said it expects savings of $2.1 billion this year, $3.7 billion next year and $4.6 billion in 2009 from the job cuts.

“This is the beginning of a change in how we manage expenses in this company,” Prince said Wednesday about the cost-cutting. “You will see a more efficient, more tightly managed and more tough-minded Citigroup than you’ve seen in the past.”

News: Karan Bilimoria to launch wines in Indian market

(IANS 13/04/2007) New Delhi - After registering sales of one million cases of Cobra beer in India, London-based Lord Karan Bilimoria is setting up two new breweries in the country at an investment of $20 million and entering the wine business.

The group has also finalised plans to launch the stronger version of Cobra beer in India from this summer under the King Cobra brand after the soft launch in November last year proved to be a success.

"We were initially planning one greenfield brewery in Hyderabad, which happens to be my birthplace. But it looks like we will have one in the north up and running before that," Bilimoria, a chartered accountant by training, told IANS.

"If we start construction say by June or so, the new unit in one of the northern states, which I cannot disclose now, will be ready before next summer. We will, of course, also build the proposed brewery in Hyderabad," he added.

Last month, Cobra beer had added another two breweries under contract licenses - one in Uttar Pradesh on the outskirts of the national capital and the other in Patna in Bihar, to take the installed capacity to four million cases.

Prior to this, the company was brewing from two locations in Goa and Rajasthan and had planned the expansion after the target of logging one million cases in India was achieved a year ahead of target.

"We already serve 12 states and we intend to have a pan Indian presence in the months to come."

Bilimoria, who was nominated to Britain's House of Lords last year, said King Cobra was doing well in Britain and felt the same success can be replicated in India. "Seventy percent of the Indian market is for strong beer."

Speaking about his plans to enter the Indian wine industry, Bilimoria said his group was producing 10 varieties of reds, whites and rose from Spain, France and South Africa.

"We will launch one white and one red in India in October with locally sourced grapes. Both these wines will be linked to our global General Bilimoria brand. We are initially targeting 30,000 cases," he said.

Bilimoria, who is also co-chair of the Indo-British Partnership Network launched by the two governments a few years ago, said he saw a huge potential for wines in India and hoped the high duty structure would be rationalised.

"Even in Britain, which is one of the most expensive places, wine can sell for as low as three pounds - less than Rs.250. I see no reason why it should not sell for the same or even lower price in India," Bilimoria said.

"A growing wine industry will prove good for Indian agriculture and farmers."

News: Jet-Sahara - Look at the fineprint, it’s the same price

(DNA 13/04/2007) Mumbai - In June 2006, when Jet Airways abruptly pulled out of the acquisition deal with Air Sahara, it was Alok Sharma, president of the Subroto Roy-promoted airline, who kept the airline airborne. Thursday, he spoke to Praveena Sharma after a deal was signed. Sharma spoke on the valuation, his future and the impact of the deal on the industry. Excerpts How has the deal shaped out? We are happy with the enterprise value (EV) of Air Sahara. The EV on the 'where-is’ basis (current state of the airline including all liabilities and assets except for helicopter and some immovable properties) works out to around Rs 2,000 crore. If you look at the fineprint, the price that Jet paid is much the same they quoted last year. How do you view this deal? It’s a win-win for both Jet and Air Sahara. You will see the contours of the game change in another eight months or so and deal will prove beneficial for Jet. I firmly believe Jet will gain immensely from this. Why did Air Sahara settle for staggered payment? There was some concession that could have been offered to Jet. So we agreed to the staggered payout of Rs 550 crore. What about the talk of Jet converting Air Sahara into its low-cost subsidiary? would have continued to run Air Sahara as a full-service airline. According to me, it should remain as a full service carrier. Do you think we will have a seller’s market following this merger? Let me tell you this deal is very good for country, the aviation industry, consumers and promoters of both airlines (Jet and Sahara). It is unlikely that we will have a seller’s market for some time because of the industry is operating at 69% capacity. So we will continue be buyer’s market for some more time. However, this move (Jet-Sahara merger) is a step in the right direction for better health of the industry. Would you continue to be on the board of Air Sahara after the acquisition? It is one thing me and my wife have been talking about. I have yet to take a decision on that. It would depend on what I want to do, there is no rush. There are enough opportunities in the Indian economy.

News: Infosys targets $4 b revenue in FY 2008

(IANS 13/04/2007) Bangalore - Riding on the outsourcing boom, IT bellwether Infosys Technologies Ltd has set a revenue target of $4.02 billion for the current fiscal (2007-08), projecting a year-on-year (YoY) growth of 30 per cent under the US GAAP. In a notification to the stock exchanges here Friday, the company said topline revenue growth was estimated to be about Rs. 17308 crore ($4 billion) for FY 2008, indicating YoY growth of 25 per cent under the Indian GAAP (generally accepted accounting principles). For the first quarter (April-June) of this fiscal, consolidated revenue is expected to be about $908 million, a YoY growth of 38 percent under the US GAAP and Rs.3913 crore, YoY growth of 30 percent under the Indian GAAP. Similarly, the earnings per share (EPS) for the entire fiscal (FY 2008) is expected to be Rs. 81.58, YoY growth of 22 per cent under the Indian GAAP. Earnings per its American Depositary Share (ADS) is estimated to be $1.89, YoY growth of 28 per cent.

News: Infosys to invest $2 m in Mexico centre

(RTR 13/04/2007) Bangalore - Infosys Technologies Ltd., India's second-largest software exporter, said on Friday it would invest $2 million in a new development centre in Mexico.

The centre will be operational in the second quarter and initially have 300 seats, S.D. Shibulal, head of worldwide customer sales and delivery, said at a news conference.

Infosys earlier reported a 70 percent rise in consolidated quarterly profit to Rs 1144 crore ($267 million) in the three months ended March.

News: Porsche set to drive India crazy

(IBN 12/04/2007) New Delhi - It’s the car that drives rockstars globally and it came into India two years ago. Now Porsche has launched the second generation Cayenne SUV in India.

The new Cayenne has a more powerful Direct Fuel Injection engine and has additional features like the Porsche Dynamic Chassis Control (PDCC) stabiliser which keeps the car grounded in almost all driving conditions.

“We have a country allocation for India at 130 to 140 cars. I must admit we are trying to get more cars in India,” says MD, After Sales Manager of Porsche Middle East and Africa, Deesch Papke Mohamed Rahman.

Porsche has sold about 300 cars ever since it began operations in India in 2005. Out of this, Cayenne has been the best-selling model. It sold 100 models last year and hopes a similar response with the launch of the second generation Cayenne in India.

Porsche is opening up more dealerships in Hyderabad, Chennai and Bangalore apart from one in Mumbai which will open in May this year.

The company is looking at setting up an Indian subsidiary Porsche Cars India Pvt Ltd.

Porsche will also bring in the Panamera model by 2009 and also look at setting up an assembly line in India in future.

News: L&T to expand operations in China

(PTI 12/04/2007) Coimbatore - After commissioning its $11 million switch gear manufacturing facility in China, construction major Larsen & Toubro is all set to start operations at its other two plants in the neighbouring country by the end of this quarter. "The company has already commissioned its switchgear manufacturing facility in Wuxi province of China while its plans to start operations at its valve and tyre manufacturing equipment facilities sometime during the present quarter," L&T President Operations (electrical business group) R N Mukhija told reporters. He said including three manufacturing facilities, L&T operates five broad businesses in China including sourcing raw materials and supplying coal gasification equipment. "We are supplying coal gasification equipment to China and have already supplied machines worth Rs 300 crore," Mukhija said. The electrical business contributes 10-11 per cent to L&T's overall revenues. L&T has presence in 52 business areas including software, infrastructure development and finance.

News: US realty firm to invest $6bn for hotels in India

(PTI 12/04/2007) New Delhi - US-based real estate developer Royal Indian Raj International Corporation (RIRIC) will invest $6 billion in India over the next seven years to develop hotels and residential resorts. "Initially, we would develop three types of projects in India - Royal Garden City, Royal Garden Villas as well as hotels chains, for which we have planned an investment of $6 billion," Manoj C Benjamin, CEO of RIRIC, said. There is huge shortage of hotels and housing infrastructure and this needs to be addressed, he said. According to a study, India's hotel sector is facing a shortage of 1,10,000 rooms. The government has allowed 100% foreign direct investment in the hotel sector. "Institutional investors have shown interest in funding our projects in India and we are planning an IPO in New York or London. The projects would be funded both through debt and equity," Benjamin said. RIRIC has commenced work on some of the projects. "We have acquired 3,000 acre of land for Royal Garden City in Bangalore and contracted 4,000 acre for Royal Garden Marina City and Financial Harbour in Mumbai," he said. RIRIC has completed Phase I of the Royal Garden Villas and Resorts project in Bangalore. Phase II and III would be undertaken in the third quarter of 2007.

News: Rich Indians chase high-end properties in Britain

(IANS 10/04/2007) London - The number of prosperous Indians seeking to buy high-end property in London and elsewhere in Britain is growing exponentially, and most are willing to pay well over 1 million pounds for a place under the British sun. Thanks to a growing economy and globalisation of enterprise, more and more Indian companies are opening offices in London to leverage its geographical, historical and financial advantages. This has resulted in swathes of prime property being bought by Indian entrepreneurs either for themselves or their companies. Indian businessmen now rival Chinese and Russian plutocrats in chasing prime property in London, according to leading estate agents. Joining the chase is Shilpa Shetty, winner of reality show "Celebrity Big Brother", who is reported to be buying a home in the trendy Hoxton area of north London. The record for buying the most expensive property in London so far stands in the name of Lakshmi Mittal, who bought numbers 18-19, Kensington Palace Gardens, for 57.1 million pounds in 2004. The Indian buyers do not only come from India but also include the British Indians who have settled here for several years. And having done well, they are keen to move upwards on the property ladder. Estate agents say that such is the interest from Indian buyers that many agents have now set up a separate desk to deal with Indian buyers. These include Savills, a top-end estate agency, Hamptons and Knight Frank. London has a unique place in the Indian imagination. The capital is seen as a safe investment destination that includes all cultural and other accoutrements attractive to the globalised Indian entrepreneur. Owning property in London or having a London address is seen as a key statement for this growing class. London is said to be particularly attractive to the global super-rich because of its accessibility, stability, low taxation and global standing of its financial institutions. It is seen as a magnet to the world's billionaires. According to Sheetell Halai, who runs Savills' India desk: "The question (for Indians) used to be, 'How big is your house?' Now it's, 'How many do you have?'" She says the majority of her clients are looking for flats, with a budget of 1 million to 6 million pounds. She told local media that Indians in search of houses were prepared to pay 7 million to 8 million pounds. Savills is also planning to target expatriate Indians based in Hong Kong, Shanghai and the US, keen to invest in London. Such is the pace of acquisition by Indians that estate agents are already talking of a new 'Asian arc' stretching from Watford, Hertfordshire, through Beaconsfield and Gerrards Cross in Buckinghamshire to St. George's Hill in Surrey. Jaideep Singh of Knight Frank said: "2007 is going to be very big for Indian buyers. The rich are getting richer and now the middle-class Indians are coming here to set up offices and buy a place - but they are shocked that their 2 million pounds will buy so little." London has been consistently ranked by independent studies as the best place to locate a business in Europe. A third of the Fortune Global 500 have their European headquarters in London. Foreign-owned companies account for one quarter of all businesses in London. London is seen as the world's best gateway to international markets, including the 450 million people in the European Union, the biggest single market in the world. Many of the international companies who locate in the capital use it as their launch point for European or global expansion.

News: Suzlon ups REpower offer to 150 euros/share

(RTR 10/04/2007) Mumbai - Suzlon Energy Ltd. said on Tuesday it had raised its takeover offer for REpower Systems AG to 150 euros a share after its subsidiariy bought 7.7 per cent in the German firm at that price.

Last month, French nuclear reactor maker Areva raised its offer for the German wind turbine maker to 140 euros a share, topping Suzlon's earlier bid of 126 euros a share.

News: ABN Amro deepens micro-finance exposure

(BL 10/04/2007) Mumbai - ABN Amro Bank is training NGOs to make the transition to micro-finance institutions (MFIs). The Dutch banking major is focusing on micro-finance enterprise development in India. "We are building the capacity of seven MFIs spread over Assam, Bihar and Uttar Pradesh. We hope to build capacities of around 50 start-up MFIs over the next three years," said Moumita Sen Sarma, Head-Microfinance, ABN Amro Bank (India). Since 75 per cent of the micro-finance activity is concentrated in four southern States, the bank is looking at the north and northeastern States to develop this programme. ABN Amro had set up a foundation in Amsterdam to focus on global poverty alleviation in 2005, which invests 5 million every year on projects focused on helping communities and individuals create sustainable livelihoods to improve their standard of living. This foundation has committed 30 per cent of its funds to ABN Amro Foundation India set up earlier this year for projects in India. As part of the initiative of developing micro-finance enterprise in the country, the bank identifies NGOs and provides them training, management and information systems as well as an 18-month business plan. "The idea is to deepen our existing exposure in micro-finance. For capacity building, we are also looking at NGOs, which already work in the area of health, education, environment conservation and are looking at introducing micro-finance to address local needs," said Sen Sarma. ABN Amro has an outstanding micro-finance loan portfolio of around Rs 170 crore. The average size of loans is about Rs 6,000. "We have around 4 lakh borrowers and hope to expand that to around 10 lakh by 2009. The bank has partnered with around 27 MFIs and we plan to add 15 more this year," she said. In the area of environment conservation, the bank is working in the Melghat Tiger Reserve for rehabilitating displaced tribals. "We plan to expand the rehabilitation work beyond the three villages we are currently working with in the Melghat area. Together with our project partners, BASIX, we are designing `livelihood projects' - a package of activities for these tribals- which will help them survive and in turn bring about regeneration of the forests," she said. ABN Amro operates through an MFI partnership model to disburse loans. Some of the major MFIs the bank has tie-up with include BASIX, SKS Micro Finance, CASHPOR, Bandhan, among others. While the bank lends at an average of 10 per cent, most of the MFIs price their loans at 24-28 per cent. "The operating cost of MFIs can come down by using technology. Increasing the scale will help drive down operating costs - for instance, the operating costs of old and stable MFIs is around 8 per cent while that of the new ones is about 20 per cent," she said.

News: Raymond to nearly triple retail shops by 2010

(PTI 09/04/2007) Mumbai - Apparel and suit maker Raymond Ltd plans to nearly triple the number of retail stores it has in the country by 2010, it said.

Raymond, which makes fabric and apparel, will have 950 stores by 2010 up from 350 now, its chairman said in a statement.

"Retail is intrinsic to our business and we continue to push aggressively on this front," Gautam Singhania said. A booming economy and rising incomes are boosting the expansion of organised retailing in India.

News: Mumbai is lighted - at Maharashtra's cost

(IANS 09/04/2007) Mumbai - Mumbai has heaved a sigh of relief as the bulk power suppliers in the metropolis have been given time till next Monday to procure extra power to ensure that India's financial capital avoids outages, though the move comes at the expense of the rest of the state. The Mumbai utilities - Tata Power Company (TPC), Reliance Energy Ltd (REL) and state-run Brihanmumbai Electric Supply and Transport (BEST) - Monday said they have enough electricity to avoid outages in the city and its suburbs, even as the state distribution utility Mahavitaran recorded a statewide shortfall of 5,500 MW - the highest in recent times. The Maharashtra State Electricity Distribution Company Ltd or Mahavitaran has however warned that the situation in the state would worsen as the summer peaks. An official said that although TPC, the bulk power supplier to Mumbai and its suburbs, is only drawing 30-40 MW power from the state power grid, the scenario would change once the summer demand grew. Earlier TPC was "overdrawing" 250-300 MW from the state grid to save the megapolis from power cuts. Mumbai needs 2,600 MW of power daily, while the present supply is only 2,270 MW. TPC supplies 1,770 MW and REL pitches in with another 500 MW for the city. Maharashtra's daily demand of power is 15,000 MW. With a daily shortfall now reaching to over 5,500 MW, it is presently drawing 700 MW of power from outside the state. To keep Mumbai shining, the state utility has increased load shedding by another 30 minutes. "This will affect the suburbs of Bhandup and Mulund, who will now face outages of four-and-a-half hours. Areas like Thane and the satellite city of Navi Mumbai which are already facing outages of four-and-half to 12 hours will feel the additional burden of load shedding," said a senior Mahavitaran official. "Areas like Dombivili and Kalyan will have load shedding up to eight hours. In rural Maharashtra, outages would go beyond 14 hours daily," the official told IANS Monday. But consumers in Navi Mumbai are not amused. "Why should we suffer for Mumbai? We are already reeling under six to eight hours of load shedding daily and now it has been increased by another 30 minutes. How does one justify this?" said exasperated housewife Krishna Pol from Panvel in Navi Mumbai. "In the Vashi-Virar western suburban region, the official time for power cuts is eight hours, but lights often go out for up to nine to 10 hours," complained Seema Bose, a housewife in Vasai. "The power goes off at 6.30 a.m. And comes back at 10 a.m. before shutting off again at 2 p.m. only to return at 8 p.m. And with summer yet to peak, I just don't know who we will cope with the situation," she said. Caught in the power muddle, Mahavitarn has taken to sending SMSes to consumers extorting them to economise. "Save Power, Save Money. Save Power for Our Better Future" say SMSes sent by the Mahavitaran executive engineer to consumers in Panvel Urban Division. "The use of compact fluorescent (CFL) tube lights as against tube lights and bulbs, reduced use of TV, AC, washing machine, etc, will help reduce the use of power and eventually save money on electricity bills," the SMSes advise consumers. With the threat of an imminent power cuts now looming large, desperate Mumbaikars are also looking for ways to economise power. "There is a vulgar wastage of power in luxury hotels and city malls. Why on earth do they need elevators for one or two floors?" asked Satish Mahajan of Dadar in central Mumbai. "Power-guzzling malls should be asked to arrange for their own power supply. No new malls should be allowed in the city till the power situation in the state stabilises."

News: Industry divided over fallout of rise in rupee

(PTI 08/04/2007) New Delhi - India Inc is divided whether the Reserve Bank should take steps to protect exporters from the appreciating rupee that will adversely affect their profits.

While leading business chamber CII says the domestic industry would have to accept a strengthening rupee in the short term, FICCI, Assocham and exporters' body FIEO want RBI to intervene and check the sharp rise in the currency.

The rupee closed at an eight-year high of 42.90/92 on Thursday against the US dollar, raising concern the profits of exporters, particularly software companies, could be hit.

"While the supply side measures take effect, industry might have to accept appreciation of the rupee in the short term, even if it means that exports are hurt a bit," CII President R Seshasayee said in a statement.

However, Federation of Indian Export Organisation President Ganesh K Gupta said: "We are terribly disturbed because of the rise in rupee."

He said while large exporters can protect themselves by hedging, the smaller ones would be hit hard. RBI must buy dollars to protect the country's exports, he added.

Echoing similar sentiments, FICCI and Assocham insisted that exports, especially in the IT sector and labour-intensive sectors such as textiles and leather, must be protected.

"Rupee has been hardening for a long time and even in a short run of three to six months, exports have to be taken care of," FICCI Secretary General Amit Mitra said.

Exports from labour-intensive sectors are growing at 8 per cent against the overall growth of 20 per cent, he said.

Assocham also said RBI should keep a close eye on the situation and ensure the exports do not suffer.

"RBI should not be a mere spectator and intervene at appropriate time to take corrective measures," Assocham Secretary General D S Rawat said.

Expressing concern over the appreciating value of rupee over the US dollar, exporters from North India said similar slips of the Indian currency will drastically impact their business in the near future.

In a survey conducted by industry body PHDCCI, exporters from north India said the upward movement of rupee against the US dollar would make their goods more expensive in the overseas market, hence adversely impacting their future exports.

"Strengthening of the rupee is particularly detrimental for the low import intensive and price sensitive terms such as textiles especially when competitors such as Pakistan has not witnessed a similar currency appreciation," the chamber said.

News: Over 2.5 lakh students appear for IIT entrance exams

(PTI 08/04/2007) New Delhi - Over 2.5 lakh students across the country on Sunday appeared for the Joint Entrance Examination (JEE) for admission into the IITs in the country.

Adequate arrangement have been made in the Delhi Zone which consists of National Capital Region, Jammu and Kashmir, Himachal Pradesh and Punjab, IIT Delhi Director Prof Surendra Prasad said.

"There are 48,000 candidates in the Delhi Zone, including 33,000 in the NCR itself. In this zone, we have set up 104 centres, including 74 in the capital," he said.

The test comprises two papers of 200 marks each.

"We have informed the police authorities that in case of need, we may seek their help," he said.

There are seven zones with one zone under the supervision of each IIT where the entrance was conducted.

To ease the exam blues for students, the IIT JEE has decided to change the pattern of test this year, making provision for two papers in place of three.

Each paper consists of questions of Physics, Chemistry and Mathematics.

Earlier, the students had to appear for three papers, one each dealing with physics, chemistry and mathematics. The papers earlier were of two hour's duration.

The questions are of objective type and there is negative marking for incorrect answers, Prasad added. There are over 4,000 seats in these institutes.

News: Now, foreign cos looking at India for complex jobs

(BL 07/04/2007) Chennai - While IT and BPO businesses have made India the world's back office, non-IT businesses are now paving the way to make India the world's think tank.

Foreign firms are increasingly looking at non-IT companies in India to do some of their complex and core business processes.

UnitedLex Corporation based in India is a legal counsel for many fortune 500 companies.

It works on commercialising patents filed by its clients at the US Patent and Trademark Office (USPTO). "There is an acute shortage of professionals in the US to handle high volume complex work such as patent analysis and business analytics," says Ajay Agrawal, Chief Solutions Officer, UnitedLex.

That patent filings have grown manifold (3.75 lakh patents were filed at the USPTO in June 2005) while the intellectual property (IP) departments of companies have not, makes it necessary for companies to outsource such work, he says.

UnitedLex devises licensing policies for clients, besides handling patent litigation. It started offering contract management services about a year ago and today drafts, negotiates and closes dealer contracts for a Fortune 10 client.

Designing

Tesco Hindustan Service Centre (HSC) started as an Indian back office to the UK-based retailer.

Today, it designs almost all Tesco stores in the UK with its team of 35 architects and engineers. Aspects such as customer purchase pattern, store segmentation, retail planning, furniture, ambience and wall colours are considered before coming out with a store drawing.

The drawing is then contracted to local construction companies in the UK who build the store.

"India has a unique talent mix of architects and engineers who can optimise investment and space. We have been able to reduce store construction time by 15 days. For a retailer this means 15 more days of business," says Rajesh Sehrawat, Head of Business Services, Tesco HSC.

Through the last year and a half, the Centre has designed over 100 stores across three formats--Metro (10,000 sq ft), Super (30,000-60,000 sq ft) and Extra (80,000-1 lakh sq ft) and is now looking at the 3,000 sq ft format.

Designing a logo for an Indian restaurant planning a US launch is what led advertising company Brand Portrait to start making ads for US companies. "Foreign companies want to tap the Indian market by making ads that Indians can relate to. This is where we fit in," says Venu Gopal Nair, Director of the company.

Indian companies are increasingly handling all aspects of advertising such as production, post- production and distribution. For instance, the recent Nike ad featuring a cricket match played atop bus roofs in a traffic jam was almost entirely done by an Indian ad agency. "Ad design was always done by the US company. But now we are seeing enquiries for creatives and design to be done in India," says Nair.

Unlike costs being the primary driver for IT-based outsourcing, it is the availability of skills that is driving non-IT outsourcing. Though, cost savings in outsourcing non-IT processes are comparable to that in IT/BPO businesses, non-IT business opportunities remain largely untapped by Indian companies.

For instance, India has tapped less than one per cent of the over $13.5 billion legal outsourcing business that includes patent prosecution, litigation support, immigration support and contract management. The Indian ad spend market is estimated at $2 billion while the US market that Indian companies can target is estimated at $200 billion.

News: 'Allow mills to process sugarcane into ethanol'

(BL 07/04/2007) New Delhi - The decision to create a 20 lakh tonnes (lt) sugar buffer on the Government account has come as a welcome respite to the beleaguered industry. But measures such as this offer only short-term palliatives. If the problem of episodic gluts in sugar is to be addressed on a sustainable basis, there is no alternative to evolving a coherent policy vis-à-vis ethanol, feels M. Manickam, Managing Director of Sakthi Sugars Ltd. "The buffer move is helpful to the extent it relieves the industry from the burden of interest and storage costs on the sequestered quantity. But it does not ride the system of surplus sugar. For that, mills should have the flexibility to process their entire cane into ethanol rather than sugar," he points out. The best thing about ethanol, Manickam adds, is that "you can simply burn it by blending with petrol". This is unlike the sugar accumulating in factory godowns, for which the Centre is now bearing part of the financing cost. Alcohol output Mills currently produce alcohol from molasses generated as by-product during crushing and constituting 4.5 per cent of the cane. Alcohol production essentially involves fermentation of sugar or sucrose. Molasses contains roughly 40 per cent recoverable sucrose and it is precisely this sugar that gets fermented into alcohol. One tonne of sugar can — assuming 100 per cent fermentation efficiency — yield 660-odd litres of alcohol. But since distilleries operate only at around 89 per cent efficiency, only 587-588 litres alcohol gets actually produced for every tonne of sucrose. Thus, if a mill were to crush one tonne of cane of say, 13 per cent sucrose content — of which 11 per cent is recovered in sugar manufacture and 1.8 per cent from molasses — it would end up producing 110 kg sugar and some 10.6 litres of alcohol. Compensation Alternatively, if the entire 13 per cent sucrose in cane were used for fermentation, it would yield over 76 litres of alcohol. Thus, while there will be no sugar, mills would produce an extra 66 litres alcohol. The basic issue, then, is what would be the appropriate alcohol price that compensates for the loss of business from sale of sugar. Cost-wise "For us, the cost of procuring cane and its conversion (inclusive of taxes and overheads) adds up to Rs 1,600 a tonne. If this cost is recovered on 110 kg of sugar, the effective realisation works out to Rs 14.54 a kg. But if no sugar is made and the Rs 1,600 per tonne cost is to be recovered on the extra 66 litres of alcohol, we need to be paid Rs 24.24 a litre. As against this, the oil companies are only paying Rs 21.50, which means there is no incentive to stop sugar production and convert the entire cane into alcohol," says Manickam. According to him, paying Rs 25 a litre for ethanol is not much, when petrol is retailing at Rs 42-48 a litre. "We are not asking for any subsidy. It is just a question of foregoing some revenue from taxes, which form 50 per cent or so of the consumer price for petrol," he adds. Importantly, this route will not entail the Centre forking out money on buffer creation or providing sops to sugar exports, as is the case now.

News: Indian forex reserves pushing $200 b mark

(BL 07/04/2007) Mumbai - India's foreign exchange reserves have vaulted by around $45 billion during the just ended fiscal 2006-07 to $199.179 billion — nearly kissing the $200-billion mark. The reserves stood at $154.209 at the beginning of the last fiscal.

The forex kitty has seen a surge of $1.433 billion to $199.179 billion in the week ended March 30. During the previous week, the reserves expanded by $1.789 billion. Forex reserves have seen an accretion of around $4.7 billion in three consecutive weeks.

K. Harihar, Head, Treasury, Development Credit Bank, said there had been strong dollar inflows in the forex market during the week under consideration. "While there have been FII inflows, companies have been repatriating External Commercial Borrowings parked abroad due to year-end considerations," he said.

Treasury officials said companies may have also been repatriating funds and locking it in Indian deposits to take advantage of the high interest rates.

The FII inflows during the week have been around $244 million.

Treasury officials said that strong FII, FDI and ECB inflows would continue to shore up the country's forex reserves and the $200-billion mark was well within reach.

The Indian rupee, which has been consistently gaining against the dollar, closed at an 8-year high of 42.92 on Thursday.

Foreign currency assets during the week increased by $1.532 billion to $191.924 billion during the week under consideration, said the RBI's Weekly Statistical Supplement.

Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves.

Gold reserves dipped by $99 million to $6.784 billion. SDRs and the country's reserve position in the IMF remained unchanged at $2 million and $469 million, respectively. Forex reserves have seen strong accretion since November as the RBI has been intervening to rein in the appreciating rupee. The RBI is believed to have bought $8 billion from November to January and around $12 billion in February.

News: Tata Motors targets to double Fiat sales this year

(PTI 07/04/2007) Ludhiana - Tata Motors, the country's top automobile firm, expects to sell over 3,000 Fiat branded cars in India during the current fiscal.

"In the last fiscal, we sold 1,500 Fiat branded cars and this year we hope to sell more than 3,000 cars through our distribution network," Tata Motors, senior manager (passenger car unit), Mudit Gupta said.

Gupta was speaking to reporters after launching the Fiat Palio Stile here.

Tata Motors distributes Fiat cars in India and also has a joint venture with the Italian company for manufacturing passenger cars and engines for Indian and overseas markets.

When asked about any adverse impact on sale of cars due to rising lending rates in view of RBI's monetary measures for containing inflation, he said the company had not observed any impact on sales volume so far.

News: RIL, DLF, others forced to alter SEZ plans

(DNA 06/04/2007) Mumbai - The freeze on SEZ approvals since December is now gone. About 1,000 proposals, currently at various stages from drawing board to implementation, can now move forward. But politics following violence in Nandigram and farmers' protests elsewhere has taken their toll. SEZs can now come up but by complying with more stringent rules. Some of the mega projects belonging to developers such as Reliance Industries, Mahindra & Mahindra, Korean steel giant Posco, DLF, Omaxe and the Salim Group of Indonesia, which have land-related issues to tackle, may be forced to be modified or abandoned in the wake of the tightening of rules. The empowered group of ministers (EGoM) on Thursday decided to stop land acquisition for SEZs by state governments, and prescribed a ceiling on the size of SEZs at a maximum of 5,000 hectares and restricted the use of land for purpose other than "processing" inside a zone to maximum 50% from earlier 35%. In addition to fending for itself in "buying" land from the farmer, the developer will also have the extra burden of providing job to at least one person from each displaced family under a "comprehensive rehabilitation policy" being finalised by the Centre. While the Centre has now fixed upper limit of area for multiproduct SEZs at 5,000 hectares, the state governments may prescribe a lower limit, commerce and industry minister Kamal Nath said. The minimum processing area limit will be fixed uniformly at 50% for multi product SEZs as well as sector specific SEZs. Earlier, the minimum processing area requirement for multiproduct SEZs was 35%, with a provision for relaxation up to 25% by the Board of Approvals; and it was 50% for sector-specific SEZs. In respect of pending applications for SEZs, these may be processed for in principle, formal approval and notifications subject to the condition that the state governments would not undertake any compulsory acquisition of land for such SEZs, Nath said. Notification in respect of the 83 cases of formal approvals, documents for which have been submitted by the developers will be issued by the department of commerce after verification, including issues concerning any dispute relating to land. In respect of other formal approvals, notifications may be issued as and when the proposals are received and verification procedures are completed. The ministry of rural development has been asked to reformulate a comprehensive Land Acquisition Act to address all relevant issues. A resettlement and rehabilitation policy will be worked out ensuring livelihood from the project to at least one person from each displaced family. Regarding the decisions on processing area and minimum size requirement, Nath said "the decisions will be applicable to all SEZs, including 63 which have already been notified.

News: Indian cos invest $23 b abroad in Jan, Feb

(BL 06/04/2007) New Delhi - Indian companies have made foreign direct investments (FDI) worth $23 billion in January and February of the current year, higher than $21 billion made in the whole of 2006, said Dr Ajay Dua, Secretary, Department of Industrial Policy and Promotion.

Speaking at a meeting organised by the Confederation of Indian Industry, Dr Dua said, "The small and medium enterprises are increasingly acquiring companies to gain theadvantages of quick scale-up, technology acquisition and benefits of innovation."

Moreover, a large number of SMEs have approvals to invest abroad, thus making the process of acquisitions faster, he added.

Dr Dua said the size of company was no longer valid in relation to mergers and acquisitions. "Going forward, what will be more important is your bona fides, your products and your entrepreneurial ability. India's growth in the future will be influenced by a range of mergers and acquisitions," he said.

News: Govt lifts freeze on SEZs, caps size at 5,000 hectares

(BL 06/04/2006) New Delhi - The Government today lifted the freeze on special economic zones (SEZs) while simultaneously tightening rules by prescribing a ceiling on the size at 5,000 hectares for multi-product SEZs and increasing the processing area from 35 per cent to 50 per cent for both multi-product and sector-specific zones. The Empowered Group of Ministers on SEZs, headed by the Union External Affairs Minister, Pranab Mukherjee, met today to arrive at the decision. After a lull of two-and-a-half months, since the last meeting of the Group froze SEZ approvals on January 22, today's decision has come as a clear signal to developers and units in these zones that they could go ahead with their business plans. Fixing of the upper ceiling of 5,000 hectares and raising the processing area uniformly would also allay any apprehensions about possible misuse of land for purposes other than the prime one of setting up manufacturing activities, generating exports and creating dedicated infrastructure amenities within these enclaves. With the SEZ issue turning into a political hot potato, the Government has also given States the freedom to fix a lower ceiling on the size of the SEZ. It has also been said that there would not be any compulsory acquisition of land for SEZs. The Commerce and Industry Minister, Kamal Nath, told newspersons that the meeting also gave nod to notification for 83 applications that were formally approved. This takes the total number of notified SEZs from 63 to 146. This leaves 88 cases to be notified out of 234 approved by the Board of Approvals so far. The Minister clarified that the decisions taken today would be applicable to all SEZs, "including those which have already been notified." On pending applications for SEZs, he said that they may be processed for in-principle, formal approval and notifications subject to the proviso that the State Governments will not undertake any compulsory acquisition of land for such SEZs. He also said that the Ministry of Rural Development would formulate a comprehensive Land Acquisition Act. A broader resettlement and rehabilitation policy would be worked out to ensure livelihood from the project to at least one person from each displaced family, he added. Later, the Commerce Secretary, G.K. Pillai, told newspersons that out of the 83 applications of formal approvals that would be notified now, 54 have been cleared by the Law Ministry; the others are in the process of getting notified. The major SEZs whose notifications are pending include Brandix Textiles City at Visakhapatnam, Kakinada SEZ at Kakinada, Infosys SEZ at Pune, Ascendas's ITPL SEZ at Bangalore, Jindal Stainless Steel SEZ at Kalinga Nagar (Orissa), Lotus Footwear SEZ at Cheyyar, Suzlon Infrastructure SEZ at Coimbatore and Wockhardt Pharma SEZ at Aurangabad. Officials said that once all the 234 formally approved SEZs become operational, investment would be of the order of Rs 3 lakh crore and four million jobs would be generated. They also said that exports projected by all notified SEZs numbering 82 so far (19 old plus 63 new) in 2007-08 would be Rs 67,300 crore.

News: Wine board to uncork fizz of Indian brands

(TT 05/04/2007) New Delhi - After tea and coffee, it’s time for a wine board. The government, which has been hit by demands of European nations to lower duties on wines and spirits, now wants to set up a board to encourage wine making in India and promote them abroad.

Rising incomes, changing social values and global exposure have seen the Indian middle class taking to wine drinking in a major way with sales increasing by up to 30 per cent annually. Local brands have also started making an appearance on global tables.

Sangli and Nashik regions in Maharashtra, Bangalore in Karnataka and Kulu region in Himachal Pradesh have emerged as Indian wine-making districts and the government hopes to not only promote these areas but also find new geo-climatic zones for wine making.

Minister of food processing Subodh Kant Sahai has already forwarded a note on this issue to other ministries. The government’s plans to set up a wine board follow recommendations of an inter-ministerial joint working group set up to look into the issue of de-linking wine from hard liquor.

Rukn Luthra, assistant vice-president of Seagrams India, said: “The timing of the Wine Board is right as wine business is expanding in India.”

At present, the size of the wine market is around Rs 250-300 crore, and in five years it is expected to grow to around Rs 500 crore.

However, India still consumes just about 3.5 million bottles a year, which translates into a pathetic half teaspoon per head against France, which consumes 60 litres per head, while Italy's per capita consumption is 59 litres, Spain’s is 37 and UK’s is 24 litres.

Luthra said, “If we promote Indian wines abroad, the wine business would certainly expand.” The board, industry hopes, will also help regularise and maintain the standards of Indian wine. “All the stakeholders are going to benefit — right from the farmers, to the wineries and also the consumers,” Luthra said.

Taking advantage of the boom and the possibility of India joining the likes of Chile, South Africa and Australia as emerging wine exporters, Indian spirits companies are planning to enter the wine market, which is dominated by niche players.

The industry is dominated by three players — Indage, Sula Wines and Grover Vineyards — and enjoys more than 90 per cent of the total market share.

United Spirits will set up a winery in Baramati, Maharashtra, in collaboration with a French company, said Abhay Kewadkar, senior vice-president of the company. The capacity is going to be 3.5 million bottles and by the next five years it is going to produce 5-7 million bottles.

Kewadkar said, “It (the Board plan) is a welcome gesture from the government and it is very encouraging for the wine industry.”

But questions abound. Kewadkar asked, “Are professionals from the industry going to be included in the board? What is their involvement going to be? Will they be allowed to form policies and list key areas? How will it be ensured that the proposals are implemented?”

Globally, the wine industry is worth $15 billion or Rs 65,000 crore. In contrast, Indian wine business is just worth about Rs 200 crore. However, India is the fastest growing market in the Asia-Pacific and possibly in the world, reporting consistent growth rates of 25-30 per cent.

News: InterContinental may bring in Holiday Inn

(BS 05/04/2007) Mumbai - InterContinental Hotels and Resorts, which has been operating in India for the past 40 years with brand names —- InterContinental Hotels and Resorts (luxury brand), Crowne Plaza Hotels and Resorts (upscale brand) and Holiday Inn (mid-scale brand) — plans to bring in its another hotel brand, Holiday Inn Express, to India.

Holiday Inn Express is one of the fastest growing brands, opening on an average two hotels a week.

“We may introduce our Holiday Inn Express brand in India in future,” said Paul Logan, VP, development, Southern Asia and Singapore.

The group is also looking at expanding its Holiday Inn brand in India.

“We have great opportunities for Holiday Inn brands in tier-I and tier-II cities,” said Logan.

The group, which has only one Crowne Plaza Hotel in India so far (in New Delhi), will be announcing plans for three more Crowne Plaza hotels in the country shortly.

News: Bharti plans 3-tier retail model

(BS 05/04/2007) New Delhi - In a model that will fundamentally differ from its partner Wal-Mart's, Bharti Retail has finalised a three-tier retail format that will provide customers access to a store 1.5 to 7 km from their homes.

Bharti Retail, a subsidiary of the Delhi-based Mittal group, has tied up with Wal-Mart for back-end and logistics support. Foreign direct investment in retail is currently prohibited in all but single-brand retail stores.

Based on customer research, Bharti Retail is planning a small-format convenience store within 1.5 km of the customer home, a mid-level store 2-3 km distant and a hypermarket within a 5-7 km drive.

This is in sharp contrast with the Wal-Mart retail model in the US which is dominated by large-format stores on city outskirts. The world’s largest retailer has a few small convenience stores in countries like Mexico to cater to neighbourhood demand.

Bharti’s model, on the other hand, will have more convenience stores and fewer hypermarkets.

“In India, our studies have shown we require a multi-format store structure, and for large store formats we have to consider the challenges posed by our poor infrastructure. The distance has to be convenient for customers to go to the store,” explains Bharti Retail President and Chief Operating Officer Vinod Sawhney.

The small stores will range from 2,000 sq ft to 5,000 sq ft in size and will mainly stock food, grocery and household items that have a high purchase frequency of seven to eight a month.

The company plans to build a majority of the stores within this format under a model that will franchise existing mom-and-pop stores.

The hypermarkets will range from 75,000 sq ft to 1.5 lakh sq ft in size and a mid-level store will be 25,000-50,000 sq ft in size.

The new retail entrant, which hopes to have over 10 million square feet of retail space by 2015, is also considering shop-in-shop formats (under which it would rent space to a jewellery or pharmacy chain), and a private label for food, grocery and even consumer electronics.

It is also studying the possibility of introducing free home delivery services and an online format, should customer demand exists.

News: India Inc presents wish list to boost exports

(IANS 05/04/2007) New Delhi - India Inc has sought development of infrastructure, easier export-import norms and bilateral trade agreements with other countries to enhance exports.

Bureaucratic hassles in obtaining visas to travel abroad are a major deterrent for Indian exporters to enter the global market, said a survey by the industry body Confederation of Indian Industry (CII).

The Indian exporters have demanded simplified procedures in obtaining visas for larger markets such as the US and Britain.

"High inland haulage charges, long turnaround time in the Indian ports and long delivery periods have been identified as main factors affecting cost competitiveness of Indian exports," the survey said.

"Inland haulage costs from Delhi to Mumbai is estimated to be approximately 30 percent of the freight charges from India to Europe," it added.

The CII survey also said, quoting a study done by the World Bank, that the cost of imports is very high in India as compared to China.

As the Indian exporters increasingly gain access to the wider markets of the US, the EU and the Gulf countries, they urgently need a more efficient infrastructure in the domestic market.

The leaders of the Indian industry have also asked for a more effective implementation of the South Asian Free Trade Agreement (SAFTA) to facilitate higher exports.

News: India still a hot spot for global services

(DNA 05/04/2007) Mumbai - The world continued to view India as the favourite global services location when collectively measured on parameters such as financial attractiveness, people skills/availability and business environment.

But when judged on the same parameters separately, the sub-continent's rank slips to second on people skills/available and to the sixth position for financial attractiveness, lower than even Pakistan (5th) and Ghana (3rd).

When it comes to business environment, India sinks to 34th position, with even Estonia, Latvia and Lithuania beating it.

On the A T Kearney's Global Services Location Index 2007, India remained steadfast at top of the heap with an overall score of 6.9, with China at close second and fast catching up.

While India's score has remained unchanged from what it was in 2005, China's has moved up 0.4% from 6.2 in 2005 to 6.6 in 2007.Going by China's advancing score, the perception of the dragon as a serious threat to India could possibly be real.

Like India, the occupant of third position - Malaysia's score is also constant at 6.1 for both years. These three countries have held on to their top position since 2005 and have consistently surpassed countries like Singapore (5th), Canada (35th) and Russia (37th).

However, when taken on individual strengths, all the three countries slip down the rank.

Vietnam excels in financial attractiveness followed by Indonesia.

At sixth position, India's score on this count is8.1, which is not toodistant from Vietnam's 8.3. China is at number 16 with a score of 7.3.

In terms of talent pool, India (7.8) is only second to the US (tier II) (9.2), but with a big gap of 1.4. It is being tailed China by just 0.2.

India and China are blown away to 34th and 37th slots respectively on business environment front with scores of 4.9 and 4.6. They are not perceived very highly when rated on economic/political milieu, infrastructure quality, cultural exposure and IP security.

News: Mumbai a heaven for hotel investors

(DNA 05/04/2007) Mumbai - The country’s commercial capital has jumped one level up to achieve the top position in the list of top eight cities for hotel investment in India. According to a report released at the two-day Hotel Investment Conference-South Asia (HICSA) 2007, last year’s most promising destination, Hyderabad, has slipped to the third place this year as leisure destination Goa claimed the second slot. Delhi, Chennai, Jaipur, Bangalore and Kolkata, in that order, followed. “Mumbai has bounced back and shows very strong signs of a very attractive hospitality market in the country and we are quite bullish on it. While there is considerable supply coming into the city in the next 3-5 years, the room rates will continue to increase,” said Manav Thadani, managing director of HVS India, the Indian arm of global hospitality consulting firm HVS International. He said HVS’ view of the market is that there will be short supply despite the additional properties in the long run. “There are close to 100 hotels under various stages of development in the Delhi market and we estimate these developments to add between 22,000 and 30,000 hotel rooms in the National Capital Region. The said inventory will be up on time to meet the demand for Commonwealth Games in 2010. The aspect of oversupply might start surfacing post 2010 and that is something hoteliers will have to keep in mind before setting up properties in Delhi,” asserted Thadani. Amitabh Kant, joint secretary, Union tourism department said the target should be to achieve 150,000 hotel rooms in the next 5 years. “However, keeping in mind the kind of developments we are seeing in the country, I still foresee a short supply of over 50,000 hotel rooms. Thus, there is a huge opportunity for Indian and international hotel companies.” Growth, though, will have to be matched up with inflow of equity and employment generation, he averred. Besides bridging the demand-supply gap, delegates identified infrastructure development, human capital, brand availability and positioning, and land value among the key challenges for the hospitality sector. Also, “increasing interest rates is an area of concern and hoteliers will have to keep this in mind and plan for its impact in advance,” Daniel Thorniley, senior vice president - corporate network, EIU, Australia said.

News: Renault's Ghosn has Rs 1.35 lakh car in mind

(DNA 05/04/2007) Nashik - Carlos Ghosn, chief executive of French carmaker Renault and also Nissan Motor Co, Japan’s third-largest car-maker, has hinted that his company may co-produce a small car with Mahindra & Mahindra that would cost $3,000 or about Rs 1.35 lakh.

That will pit it directly with Ratan Tata’s dream small-car project, which is expected to cost about the same in the buyer’s hand.

“For the Indian car market, it would be crucial to enter the volume segment. And for that a $3,000 price-tag (Rs 1.5 lakh) would be the threshold limit,” Ghosn said — hinting at the thinking process in the alliance.

Nissan will build two small-car platforms at Mahindra Renault’s Nashik facility in two years time. The small cars produced here will be sold overseas initially.

The Japanese major will later introduce a wide range of vehicles from its portfolio in India, Ghosn said. He did not elaborate on the timeframe or specific models.

Nissan will follow rivals such as Suzuki Motor Corp and Hyundai Motor Co in making small cars in India, a segment that makes up more than two-thirds of the 1 million-plus cars sold in the country each year.

Low-cost countries such as India, China, Thailand and Brazil will become major players in the global automotive market, Ghosn said.

Nissan, which cut its profit forecast on lower-than-expected demand in US and Japan, is betting on emerging markets such as India, Brazil and China for growth.

The Nissan-Renault-Mahindra venture expects to start the Chennai plant in the second half of 2009 and reach annual production capacity of 400,000 vehicles within seven years, the automakers said on a conference call on February 26.

The venture has yet to be allotted land by the state government for the factory, which will include a power-train plant for Renault and Nissan.

Ghosn will travel to Chennai on Thursday to hold discussions with state government officials on the project, he said.

Mumbai-based Mahindra has an alliance with Renault, France’s second-largest automaker, to make and market Logan sedans in the country. The Logan, introduced in India yesterday, is the first product of the venture.

Mahindra last year agreed to build the Logan that Boulogne-Billancourt, France-based Renault designed.

The Logans will be built at Mahindra’s factory at Nashik that can produce as many as 50,000 cars a year.

News: Hershey takes 51% in Godrej Beverages for $60 m

(BL 04/04/2007) Mumbai - The US-based Hershey Company has acquired 51 per cent stake in Godrej Beverages & Foods Ltd for $60 million (Rs 270 crore). This includes the 40 per cent equity held by IL&FS in the company, five per cent of Godrej Industries and 6 per cent from A. Mahendran, Mentor and Director of the company. Godrej Industries will now hold 43 per cent and Mahendran six per cent in the company, which will be renamed Godrej Hershey Beverages & Foods Ltd. At a press conference, Adi Godrej, Chairman, Godrej Group, said, "This joint venture is a strategic fit in our growing portfolio of foods businesses and gives us ready access to a strong portfolio of confectionery brands. The global brand equity and experience of Hershey and GBFL's understanding of the Indian consumer and distribution strength will complement each other well." The $5-billion Hershey Company is America's largest chocolate and sugar confectionery player. In the recent past, it has announced a joint venture with Lotte to manufacture confectionery products in China. Its other key markets include Canada and Mexico. Added Richard H. Lenny, Chairman and Chief Executive Officer, The Hershey Company, "Today almost 10 per cent of our annual turnover comes from outside the US. We would like to look at long-term opportunities in other global markets." Hershey intends bringing in some of its iconic brands such as Reese's, Kisses and Special Dark chocolates. "We are exploring the products from our global portfolio and these will complement the existing brands of Godrej," said Lenny. However, the company has yet to decide on its sourcing strategy, although in the long term it would locally manufacture the Hershey brand. Mahendran said, "We are at exploration stage but in the long term the brand will be manufactured locally. There may be partial imports initially or we may even bring in some raw materials and technology to make the brand here." GFCL has two manufacturing facilities at Chittoor in Andhra Pradesh and Mangaldeep in Madhya Pradesh. It is adding a third manufacturing base at Himachal Pradesh. "Our existing plants have enough capacity to add a new category like chocolates as well," added Mahendran. With per capita consumption of chocolate at 0.14 gm in India, Godrej expects to grow the market rather than pose a threat to market leader Cadbury. As Mahendran emphasised, "Our purpose is to build the category and this is an opportunity to increase per capita consumption in the country." Observes Nikhil Vora, Partner, SSKI Securities, "Hershey is a strong global brand and in India, it already has a presence through imports. The company will bring in product innovation and there will be significant growth in category. At the same time, the market shares of the existing Indian players will be under threat."

News: 'Aurobindo Pharma eyes buys in Europe'

(RTR 04/04/2007) Mumbai - Drug maker Aurobindo Pharma Ltd. plans to acquire up to three small drug firms in Spain and Portugal in the next four months to expand its approved drugs basket there, the Mint newspaper said on Wednesday.

"We are primarily interested in acquiring companies with turnovers of 5-10 million euros and significant product registrations," Chairman P.V. Ramaprasad Reddy was quoted as saying.

Aurobindo was expecting 30-40 product approvals in European countries in the next one year and was keen to expand its product basket there to about 90 products, Reddy said.

Company officials could not be reached for comment.

Aurobindo still had $130 million left from the $200 million it raised through foreign convertible bonds last year and could use the money for these acquisitions, the paper said.

Last year Hyderabad-based Aurobindo acquired two European drug firms, the Dutch Pharmacin International B.V., and UK's Milpharm Ltd.

Aurobindo's shares were trading 1.8 per cent higher at Rs 683 in a firm Mumbai market.

News: India visit an 'eye-opener', says New Mexico team

(IANS 04/04/2007) Washington - A US trade delegation from New Mexico state, back after "an eye-opener" visit to India, is eager to forge multi-sector business alliances in India.

The New Mexico trade delegation, which was in India March 20-31, was part of a series of trade delegations facilitated by Washington-based US-India Business Alliance (USIBA) for multi-sector dialogue between businesses in the US and Indian states.

As the Indian economy continues its torrid pace with an almost double-digit rate of growth, various states in the US are interested in participating in this phenomenal success, a joint business lobby committed to strengthening commercial, economic and financial ties between India and the US said.

USIBA chairman Sanjay Puri said, "The New Mexico delegation is part of USIBA's commitment to improving America's trade relations with India. We believe that while the Bush administration and Congress have encouraged ties with India, it is up to individual states and businesses to take the vision forward."

"As India becomes a key strategic partner to the US, increased trade will contribute heavily towards making the alliance even stronger," he said.

The New Mexico delegation had specific interests in sectors such as aerospace, bio-technology, food processing, manufacturing, renewable energy, nano-technology, hydrogen fuel technology and film.

The mission, led by New Mexico's International Trade Coordinator, made visits to New Delhi, Mumbai, Chennai, Bangalore and Agra. It included leading executives from New Mexico representing various sectors such as IT infrastructure, software services, aviation, health care and government services.

Executives from the IT infrastructure and software services sector met with leading Indian corporations such as Tata Consultancy Services, HCL, CMC and Solar, a business processing outsourcing company.

Aviation sector leaders had meetings with the Airports Authority of India, the Directorate General of Civil Aviation and Hindustan Aeronautics Limited. "With the aviation sector booming, I see a lot of synergies between our business and the major privatization drive in India," one executive said.

USIBA's earlier trade delegation from Alabama in February had also met with similar success with leading business executives building several alliances during their stay in India.

News: Rupee at 8-year high, breaches 43 mark

(RTR 04/04/2007) Mumbai - Rupee climbed to its highest level in nearly eight years on Wednesday, breaching 43 to a dollar as banks sold the US unit to raise funds to meet statutory reserve requirements.

At 10:15 am, the rupee was at 42.925/935 per dollar, off an early high of 42.84, its strongest since June 1, 1999, when it traded at 42.83, according to Reuters data. The rupee ended at 43.065/075 on Tuesday.

"With cash in the system remaining so tight, the market was expecting the rupee to go past 43 today," said a dealer with a private bank.

"And it's becoming evident that the RBI no longer considers any particular level sacrosanct," the dealer added.

The RBI is suspected of having sold rupees regularly since November to thwart its rise.

The local currency has gained about 9.5 per cent since hitting a three-year low last July, and the central bank is thought to be uneasy with the rupee's pace of appreciation.

Still, the RBI's recent intervention has fuelled money supply growth and inflation, both running above the central bank's comfort band.

In a bid to tame inflation and credit growth, the RBI has increased the Repo Rate and the Cash Reserve Ratio.

Traders said the move had compelled banks to sell dollars to generate funds to meet the statutory requirement.

Overnight inter-bank loan rates traded at 9-10 per cent, above 6-7 per cent when cash supplies are adequate. The rates had hit 80 per cent on Friday, their highest in more than a decade.

News: Tata Power secures 260 MW to reduce power shortage in Mumbai

(PTI 04/04/2007) Mumbai - In a bid to prevent loadshedding in Mumbai this summer, Tata Power has secured an additional 260 MW of power from various sources reducing the deficit substantially in the city.

The city faced a shortage of 400 mw of power. The balance 160 mw would be secured from Jojodera (60 MW) in Jharkhand, Lanco (50 MW) and Adani (50 MW), official sources said.

Tata Power's captive plants at other locations would supply additional 50 MW of electricity, the sources said. They added that last night the company had tied up with various other sources for 50 MW more.

News: No cut in Reliance SEZ size, says Maharashtra govt

(PTI 04/04/2007) New Delhi - The Maharashtra government has turned down the Centre's proposal to scale down the size of Reliance Industries' Maha Mumbai Special Economic Zone, even as the ruling Congress in the state has warned of a flare-up like Nandigram in West Bengal. "The Centre has received the reply from the Maharashtra government stating it was not possible to reverse the decision of the state Cabinet which had approved the size of the SEZ," an official source told PTI. The Centre had written a letter to Maharashtra government suggesting that it should reduce the size of the SEZ coming up in Raigad district from 10,000 hectares to 5,000 hectares, which it said should be sufficient. As per the rules, a multi-product SEZ must be spread over a minimum area of 1,000 hectares but there is no upper limit. After protests in West Bengal, even the Communist Party of India (Marxist) has demanded there should be a limit to area that an SEZ can occupy. A fact-finding panel by Maharashtra Congress had in a report warned of farmers' unrest brewing in Raigad, where large-scale land acquisition was in progress by Reliance. Chief Minister Vilasrao Deshmukh had earlier said: "First the buyers will have to strike a deal with the sellers. Then the issue will come up before the Cabinet Sub-Committee. Its only after the Committee gives the go ahead the land will be acquired."

News: Currency spot market key to making Mumbai global hub

(BL 03/04/2007) New Delhi - If Mumbai were to become an international financial centre, the Government would have to put in place a slew of measures ranging from allowing foreign investments in Government securities to creation of a currency spot market and an exchange for trading in currency derivatives. In a report on `Making Mumbai an International Financial Centre', a high-powered Expert Committee set up by the Government has also suggested that foreign clients be allowed to buy unlimited rupee-denominated corporate bonds and those issued by sub-sovereign entities such as States and metropolitan administrations. "The internationalisation of the rupee-denominated bonds would accelerate the emergence of Indian international financial centre (IFC) on the world stage," says the report, which has been submitted to the Union Finance Minister, P. Chidambaram. In a far-reaching suggestion, the panel has made a case for immediate creation of a currency spot market, with a minimum transaction size of Rs 1 crore and accessible to all financial firms. The committee, largely comprising bankers, has suggested the creation of a rupee-settled exchange-traded currency derivatives market, with trading in futures, options and swaps on currencies. The report, however, seems to be silent on repatriation of profits made through transactions in bonds, but analysts suggest that an international financial centre would assume repatriation of profits. Incidentally, the Committee has made a case for full capital convertibility to be achieved within a time-bound period of the next 18 to 24 months and by not later than the end of calendar 2008. Moreover, the policy problems that have held back interest rate futures need to be rapidly resolved, the committee said. It has also said that the currency spot market and the exchange-traded currency derivatives market, along with the spot market for bonds, need to be merged into the existing securities exchange ecosystem for equity. The committee has also said that the function of a public debt management office should be placed in the Finance Ministry rather than in a regulatory institution to avoid perceptions of conflict of interest. On macroeconomic management, the committee has suggested progressive reduction of the total public debt to GDP ratio from the existing 80 per cent of GDP to significantly less. It, however, did not reach a consensus on any particular debt-GDP ratio as a ceiling.