InCar News Room

Nieuws: Surinaamse economie trekt KPMG weer aan

2009-03-07T16:37:00.003+01:00

(DWT) 02/03/2009 Paramaribo - Het cliëntenbestand groeit, de economie trekt en de vooruitzichten zien er goed uit. Allemaal redenen waarom KPMG Dutch Caribbean uitbreidt naar Suriname.

Tot enkele jaren geleden had deze financiële boekencontroleur, advies en belastingconsulent al een lokaal kantoortje, maar toen dienden de magere jaren zich aan. “Er is nu veel vraag naar onze diensten,” zegt Victor Bergisch van KPMG Dutch Caribbean, die ook het beheer heeft over het Surinaams kantoor. Haast alle grote lokale en buitenlandse bedrijven, behoren tot zijn cliëntele. Behalve dat hij zicht krijgt in de financiële keuken van zijn opdrachtgevers, kan hij ook adviezen geven over de aanschaf en implementatie van administratieve bedrijfsprocessen of zelfs dat voor de automatisering.

Om het bedrijfsleven alvast warm te maken wordt eind deze maand het seminar ‘Wealth Creation in Suriname anno 2009’ georganiseerd. Op volle sterkte moet het kantoortje werk verschaffen aan vijf personen. “Maar als er meer cliënten zich aandienen, dan hebben we sowieso meer mensen nodig.” Bergisch wil met de komst van zijn kantoor het brood niet uit mond nemen van lokale concurrenten die dezelfde diensten aanbieden.

De KPMG topper vindt dat hiermee de concurrentie onderling wordt bevorderd en uiteindelijk iedereen in die business volgens internationaal geaccepteerde standaarden gaat werken, alhoewel de wetgeving op dat stuk nog niet is geregeld. Met het werven van lokale deskundigen heeft KPMG geen moeite, omdat het niveau wel voldoet. Een minpunt is dat er op de Anton de Kom Universiteit nog geen specialistische opleiding tot Register Accountant (RA) wordt verzorgd. “In feite zou het aantal R.A’s afgestemd moeten zijn op de groei van de economie, wat niet is gebeurd.”

Werken volgens internationaal regels moet, vindt Bergisch. Bedrijven moeten hun jaarboeken kunnen presenteren volgens gangbare normen, ook al is er geen wetgeving op dat stuk. Voor zakenpartners en de consument kunnen ze hierdoor jaarverslagen naast elkaar leggen en die vergelijken en zelf concluderen welk bedrijf alles op een rijtje heeft. Inmiddels heeft de Inter Amerikaanse Ontwikkelingsbank (IDB) US 40.000 dollar geschonken voor de voorbereiding van de standaardisatie van Surinaamse financiële sector. Met het geld moet het concurrentievermogen van de lokale kapitaalmarkt worden versterkt door eenduidige, internationale regels te hanteren in zijn administratief en financieel beheer. Het project 'Improving Skills Standards in Accounting and Financial Management in Suriname' kost totaal 60.000 US dollar.-.

News: Oil palm investment plan Brokopondo in next phase

2009-02-09T17:25:00.000+01:00

(DWT) 09/02/2009 -Paramaribo - After waiting for the Ministry of Spatial Planning, Land and Forrest management (RGB) the Indian oil palm investor Foods, Fats and Fertilizers (FFF) can finally start in Brokopondo. RGB, that according to Minister Kermechend Raghoebarsing of Agriculture, Animal Husbandry and Fishery (LVV) only has to execute the order of the government, seems to have problems accommodating the size of the project. The Indian company, that has an LOI with the government for 40,000 hectares to set up a palm oil plantation, in first instance only received 10,000 hectares from RGB.

After more than 8 months the acreage has recently been raised to 33,000 hectares. FFF has agreed to already start with the environmental impact study, whilst RGB Works on the remaining 7,000 hectares. The Indian company is the fourth largest investment Group of India. Its business plan has, according to Raghoebarsing, the complete approval of the Council of Ministers. Brokopondo appears to be the location that the Ministry wishes to grant to the company, due to the existing infrastructure of the old oil palm companies Victoria and Phedra. Both plantations were destroyed, along with Patamacca, during the Interior War.

With regard to the oil palm project in Patamacca, Marowijne LVV is preparing a last effort to get the local population to agree with arrival of the Chinese investor, China Zhong Hen Tai (CZHT). According to Raghoebarsing initial discussions have been had with high level representatives of A Combinatie [political party of inhabitants of the interior. Ben], whilst a collective discussion is prepared with all parties concerned. The CZHT oil palm deal should have materialised at least two years ago. "It is necessary that we make sure there is alternative employment in Marowijne now the bauxite companies are leaving Moengo. Otherwise the poverty level in Marowijne can rise further", says the LVV Minister. At the same time an alternative location is being sought for the Chinese investor, that is still interested in the project due to the favourable world market prices for palm oil.

Victoria, Phedra and Patamacca, the three old government oil palm companies, used to produce 100,000 litre palm oil per year. This is four times the amount that the joint investments of FFF en China Zhong Hen Tai will generate.

Nieuws: Kredietwaardigheid Suriname blijft stabiel

2009-02-02T20:46:00.000+01:00

(DWT 2/2/2009) Paramaribo - Ofschoon de economische wereldcrisis ook in Suriname voelbaar is, blijft de kredietwaardigheid stabiel. Toch is waakzaamheid geboden. Beleidsverandering vanwege een eventueel onvermogen van de regering om prudent beleid te blijven voeren in een periode van economische neergang, vormt een groot risico.

Ook verandering van het economisch beleid na de verkiezingen van 2010 zou de kredietwaardigheid van het land kunnen aantasten. Zo schrijft kredietwaakhond Standard & Poors (S&P) in haar jongste rapport over Suriname. Wat betreft buitenlandse valuta is de kredietwaardigheid gesteld op B+/Stabiel/B en voor de lokale munt BB-/Stabiel/B. Sterke punten in de economie zijn volgens het ratingsbureau de macro-economische stabiliteit, wat ondersteund wordt door een gedisciplineerd begrotingsbeleid en prudent monetair beleid.

Minpunten zijn nog steeds institutionele zwakten, inclusief voortdurende tekortkomingen bij schuldaflossingen en problemen om de structurele inefficientie van de overheidsgedomineerde economie tegen te gaan. De openheid en kleinschaligheid van de economie, blootgeschld aan externe ontwikkelingen, vooral fluctuaties op de grondstoffenmarkt gelden ook als een zwakte. De afgelopen 4 jaar is de staatshuishouding verbeterd waarbij in 2004 nog een begrotingstekort was van 0.4 procent van het BNP, dat in 2007 oversloeg naar een overschot van 1.3 procent van het BNP. Voor 2008 wordt ook een overschot van 2.1 procent verwacht. S&P voorspelt een tekort van 1.3 procent van het BNP op de betalingsbalans van 2009, wat in 2008 nog ruim 5 procent van het BNP bedroeg.

Door de dalende prijzen van grondstoffen zullen de belastinginkomsten van de staat ook afnemen en zal zeker tot 2010 sprake zijn van een tragere economische groei. “Ondanks dit feit, verwachten wij dat de internationale reserves zullen toenemen en de staatsschuld afnemen”, zegt S&P. De stabiele vooruitzichten reflecteren Standard & Poor’s verwachting dat de regering-Venetiaan haar prudent fiscaal en monetair beleid de komende periode zal continueren en de staatsschuld verder zal aflossen. Voor de middellange termijn ziet S&P wel economische onzekerheden met de verkiezingen van 2010, die een andere regering in het zadel zouden kunnen brengen.-.

News: BHP-Billiton will cease Suriname mining operations by 2010

2008-10-29T17:34:00.000+01:00

PARAMARIBO, Suriname: The world’s largest bauxite mining company BHP-Billiton has announced that it will cease all mining activities in Suriname by 2010. Talks with the Suriname government to acquire a concession of 30,000 hectares and several tax benefits broke down recently, while also the US financial crisis has been taken into account to arrive at that decision, natural resources minister Gregory Rusland told reporters Tuesday at a press meeting.

The Australian-based company anticipates that deposits at its three mines in the country will be depleted by 2010. Effective immediately BHP-Billiton also stopped all its activities and investments into development of the Bakhuys deposits in west-Suriname where nearly US$90 million has been invested in exploration since 2003. With the closure of its mining operations in Suriname 1,100 jobs are at stake.

In a bid to temper concerns, the minister announced that the government is already taking steps to secure all jobs at stake including that of contractors. Bauxite is one of Suriname's top commodities, ranking third after oil and gold. BHP-Billiton holds a 45 percent stake in the country’s Paranam refinery while Suralco/Alcoa holds the remaining 55 percent.

According to Rusland, the BHP-Billiton shares are available to the government but it is still to be decided how the takeover should take place. BHP-Billiton is the first company in Suriname to close its operations due to the current global crisis among other things.

Sources indicate that BHP-Billiton’s managing director John Sew A Tjon has resigned after being informed of the closure by the company’s top official Frank Plantenberg, who came to Suriname to inform the government. Sew A Tjon reportedly resigned since, as a Surinamese national, he was reluctant to lay off workers in the period ahead. Company officials were not readily available to comment.

In an invited comment, Rusland disclosed that the government is examining several options, including cooperation with other multinationals. Just last week a delegation of Swiss company Glencore came to Paramaribo to discuss its interest to invest in Suriname’s bauxite sector.

According to the government official, Glencore will be contacted early next month for “serious discussions”. He also noted that he has extended an invitation to Chinese state-owned company Chalco who recently has also indicated its interest for establishing an integrated aluminum industry in west Suriname.

“We have several options to pursue our ambitions to develop the west Suriname bauxite deposits,” said Rusland.

Nieuws: Canada opent deuren voor handel met Suriname

2008-10-23T20:41:00.000+02:00

(DWT) 23/10/2008 Paramaribo - Canada wil de handelsverhoudingen met Suriname steviger maken. In dat kader waren gisteren ruim 30 Surinaamse zakenlui aanwezig in hotel Krasnapolsky waar honorair consul Anton Smit een ‘Doing Business With Canada’-seminar had georganiseerd.

"Onze deur staat open," zei de niet-residerende ambassadeur voor Suriname, Charles Court, aan het eind van het seminar. Volgens hem is het beleid van zijn land erop gericht om meer handel met het Caribisch Gebied en Latijns Amerika te gaan doen. “Want”, zegt hij, “de afgelopen periode hebben we voldoende surplussen opgebouwd, omdat we geen begrotingstekorten op onze budgetten hebben.”

Ambassadeur Court blijft realistisch en hoopt dat binnen enkele jaren er Surinaamse bedrijven of producten in Canada te vinden zullen zijn. De ruim half miljoen migranten uit het Caribisch Gebied, zouden volgens hem, als springplank moeten worden gebruikt om de warme zonnige regio in het kille en koele noorden te gaan promoten.

Tijdens het seminar werden er een aantal presentaties gehouden, via de telefoon, waarbij de inleiders in Trinidad en Canada zaten. De rode draad hierin was de betere economische basis die Canada heeft ten opzichte van landen van de G-7, de meest ontwikkelde landen in de wereld. De infrastructuur, het banksysteem, kwaliteit van het leven en vooral de hoge ontwikkelingsgraad van de beroepsbevolking. Ook de migratie vertoont een stijgende lijn. Eén op de vijf inwoners is een immigrant. Ook wat de voorraden aan natuurlijke hulpbronnen betreft heeft Canada een gunstige positie, waarbij het ook de technologie en kennis bezit om die te exploiteren.

Veel zakenlui waren verbaasd toen Joshua Hodgson, senior trade commissioner, bekendmaakte dat het slechts vijf dagen duurt om een bedrijf op te zetten. Het bancaire systeem van Canada is ondanks de mondiale kredietcrisis toch stabiel gebleven. Hodgson hoopt dat volgende maand ook Surinaamse ondernemers aanwezig zijn op de Caricom-Canada Business Forum, dat op Trinidad & Tobago wordt gehouden. "Hopelijk zie ik een paar van jullie daar en het is gratis.”.-.

Nieuws: Beleid Centrale Bank Suriname wentelt invloed kredietcrisis af

2008-09-25T17:29:00.000+02:00

(DWT) 25/09/2008 Paramaribo - De Centrale Bank van Suriname heeft duidelijke richtlijnen vastgesteld voor financiële instellingen die in het buitenland willen investeren.

Beleggingen vinden alleen plaats in producten met een laag risicogehalte maar vooral een A- investeringsgraad hebben. Er is hiervoor wel toestemming van de moederbank vereist. In een bekendmaking stelt de bank de samenleving daarom gerust, omdat Surinaamse financiële instellingen “hoegenaamd geen risico lopen op verliezen of schade als direct gevolg van de crisissituatie rond enkele financiële instellingen van wereldformaat in de Verenigde Staten van Amerika.”

Bankier Anne Harmsma van de RBTT noemt de financiële crisis in Amerika, één die niet merkbaar zal zijn in Suriname. Dit schrijft hij onder andere toe aan de strakke controle van de Centrale Bank en het nuchter denkvermogen van de andere banken om niet te investeren in aanlokkelijke en hoge risicoproducten van Amerikaanse banken.

Harmsma is net terug uit Trinidad waar alle countrymanagers van de RBTT en de nieuwe eigenaar Royal Bank of Canada (RBC) bijeen waren en deze krisis ook hebben besproken. “De Royal Bank of Canada heeft daar niets te zoeken en heeft ook niet in de Amerikaanse banken belegd.” Hij is er trots op dat RBC een AA-rating heeft en ook het devies hanteert om liever nu ‘nee’ te zeggen dan later spijt te hebben van genomen beslissingen.

Eerder gaven Fatum en Assuria al aan dat zij geen nadeel ondervinden van de Amerikaanse kredietcrisis en als zodanig niet daar hebben belegd. Bij een andere staatshandelsbank is er, los van de richtlijn van de Centrale Bank, ook een interne risico profielschets die aangeeft in welke producten wel mag worden belegd met zowel eigen geld als met geld van cliënten.

Nieuws: IMF verwacht Surinaamse economische groei van 7 procent

2008-08-28T20:44:00.000+02:00

(DWT) 28/08/2008 Paramaribo - Waar de regering voor 2008 een economische groei van ongeveer 5 procent verwacht, legt het Internationaal Monetair Fonds (IMF) de lat een stukje hoger en voorspelt een groei van 7 procent van het Bruto Nationaal Product (BNP).

De groei zou voornamelijk komen door een snelle toename van de binnenlandse vraag naar goederen, diensten en kapitaal. Dit zal wel bijdragen aan een hogere inflatie, die eind dit jaar 10 procent zal zijn, stelt het IMF in het dinsdagavond uitgebracht verslag over haar Artikel IV consultatie in Suriname. De consultatieronde waarbij besprekingen zijn gevoerd met de monetaire autoriteiten en andere relevante instituten en personen is op 2 juni afgerond.

Door de sterke prijzen van Surinames exportproducten zal het huidige overschot met ongeveer 3 procent van het BNP stijgen. Aan de andere kant zal de staatsbegroting in vergelijking met 2007 verzwakken, voornamelijk door toegenomen kapitaalsuitgaven. Ook zal de staatsschuld blijven dalen, weliswaar slechts marginaal, stelt het monetair instituut.

Ofschoon het IMF over het algemeen tevreden is met de huidige stand binnen de Surinaamse economie komt het instituut met enkele aanbevelingen. De autoriteiten worden opgeroepen het macro-economisch beleid verder aan te scherpen en wordt onder andere voorgesteld staatsobligaties uit te geven of de kasreservepolitiek te verscherpen. Dit, om kredietgroei naar duurzamere niveaus te brengen. “Een significant strakker fiscaal beleid in 2008 is noodzakelijk om de toenemende vraag naar binnenlands kapitaal te beteugelen”, wordt gesteld.

De IMF-directeuren zijn het er grotendeels met elkaar over eens, dat naarmate versterking van beleid en instituten voortduurt, na verloop van tijd, een grotere flexibiliteit op het stuk van de wisselkoersen is gewenst. Dit zal volgens hen de economie in staat stellen schokken beter op te vangen. De autoriteiten wordt daarom geadviseerd het huidige wisselkoerssysteem te unificeren, omdat dit meerdere wisselkoersen in stand houdt. Ook zijn er aanbevelingen gedaan wat betreft betere beheersing van de staatsbegroting, belastingadministratie en inning, financieel beleid en buitenlandse schuld.

De verbetering van de macro-economie de afgelopen jaren is, zegt het IMF, mede het gevolg van de goede prijzen op de wereldmarkt en een verbeterd economisch beleid. De handelsbalans zou in de periode 2005-2007 zijn gegroeid met ongeveer 30 procent, wat resulteerde in een toename van het reële inkomen met 10 procent. Ondersteund door deze gunstige omstandigheden hebben een verbeterd beleid zoals versterking van de ‘non-mineral balance’, grotere onafhankelijkheid van de Centrale Bank en terugdringing van fragmentatie op de valutamarkt, bijgedragen aan de hogere economische groei, lagere inflatie, omvangrijke ophoping van buitenlandse valuta en een scherpe daling van de staatsschuld afgezet tegen het BNP.

Ofschoon de macro-economische prestaties in 2007 goed waren, werd de inflatie toch meer dan 10 procent, en groeide de economie met naar schatting 5 procent, waarbij zowel de mijnbouw als andere sectoren heel goed hebben gepresteerd. Het ‘external account surplus’ was ongeveer 3 procent van het BNP en namen de internationale reserves toe met meer dan 60 procent. De twaalfmaandsinflatie verdrievoudigde in maart dit jaar naar 13.8 procent, voornamelijk aangewakkerd door de enorme prijsstijgingen voor voedsel en brandstof. Maar ook voor andere goederen is de inflatie sinds november 2007 gestegen. De inflatie stijgt snel, zegt het IMF, omdat de nominale effectieve wisselkoers is gedepricieerd.

Het begrotingssoverschot van 3 procent van het BNP komt vooral door verhoogde belastingen en verbetering bij de inning van inkomstenbelasting, terwijl overheidsuitgaven goed onder controle zijn gehouden. De overheidschuld daalde met 21 procent van het BNP, mede door een vroege aflossing van de NIO-lening bij Nederland, terwijl aflossingsachterstanden bij andere schuldeisers werden weggewerkt.-.

Nieuws: Kredietwaardigheid Suriname stijgt verder

2008-07-14T19:43:00.000+02:00

(DWT) 14/07/2008 Paramaribo - Surinames kredietwaardigheid om buitenlands kapitaal aan te trekken is verder gestegen. Volgens Fitch Ratings zal deze positie verder verstevigen wanneer betalingsachterstanden bij bilaterale crediteurs zijn weggewerkt.

Op dezelfde wijze zullen vorderingen op het stuk van structurele hervormingen met als resultaat versterking het macro-economisch plaatje en een verbeterd ondernemingsklimaat voor de particuliere sector een positieve invloed kunnen hebben op de kredietwaardigheid. Voor buitenlandse valuta is de rating gesteld op ‘B’ en voor de Surinaamse munt op ‘B+’, terwijl de vooruitzichten “stabiel” zijn voor beide ratings.
Fitch Ratings laat echter ook een waarschuwing horen.

Een verkeerde respons op een eventuele daling van de prijzen van exportproducten of stijging van de inflatiedruk zouden de kredietwaardering negatief kunnen beïnvloeden. Een aantal factoren, waaronder slecht financieel beheer van overheidsgelden, heeft door de jaren heen geresulteerd in een opeenhoping van betalingsachterstanden bij verschillende kredietverschaffers. Deze achterstanden zijn voor een belangrijk deel weggewerkt.

Aflossingsproblemen wat betreft leningen bij Brazilië en de VS blijven een beperking vormen voor Surinames soevereine rating, zegt het ratingbureau. De betalingsachterstanden bij deze twee landen bedragen 45,6 procent van de totale buitenlandse staatsschuld. De totale achterstanden zijn gedaald van 7 procent in 2006 naar 5,8 procent van het bruto nationaal product (BNP). Voor een belangrijk deel, omdat het BNP is toegenomen.
De kwalificatie die nu aan Suriname is toegekend, komt onder meer door een proportioneel lage buitenlandse en binnenlands schuld alsook de wijze waarop de schuldaflossingen worden uitgevoerd.

“Desalniettemin zijn Surinames staatsfinanciën en de schulddynamiek gevoelig voor schokken als gevolg van versoepeling van het begrotingsbeleid, misschien vanwege de loondruk of een daling van inkomsten vanwege lagere prijzen van exportproducten”, zegt Erich Arispe van Fitch Sovereign Group. De kwetsbaarheid van het land voor prijsschommelingen op de internationale markt, zwak macro-economisch beleid en trage vorderingen bij het doorvoeren van structurele hervormingen worden gezien als zwakke punten in de kredietpositie.
Vanaf 2000 hebben begrotingsconsolidatie en duurzame economische groei gezorgd voor een stelselmatige daling van de schuldenlast ten opzichte van het BNP. In 2007 was dit zelfs 24,1 procent, ruim beneden de mediaan van 33,4 procent die wordt gehanteerd voor landen met een ‘B’-rating.

Surinames liquiditeitsratio is zelfs meer dan tweemaal het ‘B’ mediaan als gevolg van een sterke accumulatie in 2007 en in vergelijking daarmee een lagere schuldaflossing. De stijging van prijzen van voedsel en brandstof zorgt voor een stijgende inflatie, maar de autoriteiten zullen, volgens Arispe, het monetair en begrotingsbeleid moeten aanpassen om de huidige economische groei, zwaar bevochten macro-economische stabiliteit en daarmee gepaard gaande positieve schuldpositie, niet in gevaar te brengen.

News: Aruba- Gateway to Caribbean and Latin America, Invites Indian Businessmen, Tourists

2007-12-12T23:52:00.000+01:00

(12/12/2007) Mumbai - Mr. Nelson Oduber, Prime Minister of the island nation of Aruba, an autonomous state in the Kingdom of Netherlands, has invited Indian businessmen, investors and tourists to his country.

Mr. Oduber addressed an interactive meeting organised in his honour at Hotel Hilton Towers, Mumbai by the Indian Merchants' Chamber on December 12. The Consul General of the Kingdom of the Netherlands, Mr. Hans Ramaker, introduced Mr. Oduber and other Ministers and officials of his delegation.

Welcoming the distinguished guests, IMC President Mr. Niraj Bajaj complimented Prime Minister Mr. Oduber for leading his country to prosperity in the past 18 years of his office. "With a per capita income of over $28,000, the nation of Aruba has few parallels in the world," he said.

Prime Minister Mr. Oduber said that the population of Aruba - 70 sq. mile island - was around 60,000 in 1986 and had now risen to well over 120,000.
"Our tiny country with its beautiful beaches attracts over two million tourists annually," he said.

Mr Oduber said that he aimed to make his country "Dubai of the Caribbean and Gateway of Latin America."

As such, the 19.6 mile long, 6 mile wide island nation had built three major ports, an international airport which could take large aircraft and exclusive airport for private aircrafts, a free trade zone, top class educational, healthcare and hotel facilities and all such modern infrastructure.

Mr. Oduber invited Indian businessmen to set up bases in the Free Trade Zone of his country, add value to their products and re-export them to the US, Latin American and European countries.

Mr. Oduber said his country had its own central banking system, Parliamentary form of governance and an independent judiciary. Aruban island nation, situated off the coast of Venezuela in South America, was engaged in its coastal waters for offshore drilling for oil and was hopeful of finding rich deposits as in Venezuela and Columbia.

Though the backbone of Aruban economy was tourism, it was also a major base for refining and exporting oil. In addition, Aruba also exported huge quantity of coffee, rice, sugar and whiskey to Europe and other western countries.

News: Young Indians say cheers to vodka & gin

2007-06-03T21:13:00.000+02:00

(IANS 03/06/2007) Bangalore - The winds of change and a yearning for variety are making young Indians raise a toast to white spirits like vodka and gin even as the old generation still swears by traditional hard liquors like whisky and rum.

As part of the global trend, the consumption of white spirits such as vodka and gin is fast catching up in the subcontinent, thanks to the changing profile of drinkers, especially in the age group of 25-35 years.

"Changing lifestyle, growing consumerism, increasing purchasing power and the preference to taste something new or different are making young Indians take to social drinking and experiment with a variety of drinks as cocktails," Jayant Kapur, the Bacardi Martini India Ltd president and CEO, told IANS.

"Though whisky, rum, wine and beer continue to dominate the market, the share of white spirits has doubled to 20 per cent over the last seven-eight years."

Of the 120 million cases of total spirits marketed in the subcontinent and valued at around $2 billion, white spirits like vodka account for 24 million cases in volume and 25 per cent in value terms.

"As a social drink that can be had any time or on any occasion, the white spirit has come to stay. Being gender neutral and lighter than hard drinks in terms of alcohol content, white spirits offer a wide choice to sip with mixers such as martini, lime juice and orange," Kapur said, showcasing Bacardi's new Eristoff premium vodka, being launched in the metros this month.

With its 200-year-old original recipe from Georgia in Russia, Eristoff is bottled at Bacardi's production facility at Nanjungud near Mysore, about 190 km from here, and will be priced at Rs.480 for 750 ml.

Prince Nikolai Alexandrovich Eristoff first produced the authentic premium Russian vodka in Georgia in 1806 as a family recipe. With the family origins dating back to 200 BC, the recipe was passed down for generations. The prince was the last surviving descendant.

"The vodka is still made from pure grain. It is triple distilled and charcoal filtered for retaining its purity. As a neutral spirit, its clean taste leaves no after-taste but a pleasant sensation," Kapur pointed out at a preview of the product.

Among white spirits, the vodka category has been outperforming the others in terms of market growth, which stood at 2.8 million cases with a CAGR (cumulative average growth rate) of 47 per cent during 2002-06.

"Thanks to a booming economy, young Indians are getting connected to global trends and are looking for new experiences. In fact, the premium segment offers huge potential for distinct brands like Eristoff," Kapur noted.

With the premium vodka growing at 20 per cent and accounting for 25 per cent of the spirits market, Bacardi plans to produce 400,000 cases per month at its plant, which has a total production capacity of one-million cases a year.

As a favourite drink among young adult Europeans, Eristoff is widely consumed in Austria, Belgium, Chile, France, Portugal and Spain. It continues to gain acceptance as a growing brand even in a price competitive set-up.

"High tariffs and other barriers also deter white spirits from reaching out to discerning drinkers. With import duties, excise and local taxes ranging between 200-450 per cent, the vodka retail price is prohibitive. As a result, the grey market continues to thrive and deprive the exchequer of billions of rupees," Kapur said.

If tariffs are lowered, Bacardi plans to bring Grey Goose super premium vodka into the country, besides Martini and Rossi vermouths. To comply with a WTO ruling, the central government plans to lower the taxes, which are still a whopping 550 per cent on spirits and wines.

Commerce secretary G.K. Pillai was quoted as saying in the media recently that the duty structure was in the process of realigning to WTO rules. According to market research firm Euromonitor International, the spirits market consisting of whisky, rum, brandy and vodka has been growing at eight-nine per cent annually over the last five-six years despite high tariffs and entry barriers on foreign brands.

News: RBI introduces form for overseas investment

2007-06-03T21:11:00.000+02:00

(PTI 03/06/2007) Mumbai - Doing away with the clutter of forms required for different kinds of overseas investments by corporate and individuals, the Reserve Bank of India has replaced six existing forms with a single application-cum- reporting form for all types of investments and remittances.

"As per the new reporting package, all the forms have been subsumed into one form viz Overseas Direct Investment (ODI), comprising of four parts," RBI said in a recent guideline.

The decision to have a single form would make it easier for the Indian corporates to file requisite investment information about their overseas ventures and ensure monitoring of foreign investment in a "dynamic environment".

The central bank also proposes to introduce online submission of the ODI forms "once the system stabilises and the accuracy and timeliness of submission improves".

The central bank has rationalised the ODI reporting form to keep pace with the liberalisation in the policy on overseas investments that has enabled many Indian corporates to establish presence in overseas markets, the guideline said.

"The reporting framework has not kept pace with the developments and does not capture data comprehensively on overall costs of acquisition, funding patterns, performance indicators," RBI said giving reason for the rationalisation of reporting formats.

At present, application for overseas direct investment is required to be made in any one of the three forms viz ODA for direct investments in Joint Venture (JV)/Wholly Owned Subsidiary (WOS) under automatic route, ODI for investments under approval route and ODB for issue of ADRs/GDRs on back to back basis.

Reporting of remittances is currently required to be made through authorised banks in either of the two forms - ODR for remittances made for overseas direct investments and ODG for overseas acquisitions made under ADR/GDR Stock Swap Scheme.

RBI has taken the step pursuant to the annual credit policy with a view to improve the coverage and ensure monitoring of the foreign exchange flows.

The new reporting format, which prescribes same form for overseas investment, either under the automatic route or under the approval route, has four parts including reporting of remittances, annual performance report (APR) and report on closure/disinvestment/voluntary liquidation/winding up of JV/ WOS.

The Reserve Bank, however, said the revised form is only a rationalisation of the reporting procedure and there is no change or dilution in the existing eligibility criteria/ documentation/limits.

In cases of overseas investment under the automatic route the form should be directly submitted to the RBI, while in case of approval route the form should be submitted after scrutiny and with specific recommendations by the designated authorised bank, the monetary regulator said.

Meanwhile, the Reserve Bank also said it proposed to liberalise the procedure for the hedging of 'genuine exposures' with particular focus on small and medium enterprises (SMEs) and resident individuals.

The main objective of the proposed liberalisation is to simplify the documentation requirements as well as 'dynamic' hedging of exposures as mentioned in the annual credit policy. RBI has put a draft circular in this regard on its website for public comment.

News: Russia's VTB Bank plans corporate branch in India

2007-06-03T21:10:00.000+02:00

(BL 03/06/2007) New Delhi - JSC VTB Bank (VTB), Russia's second biggest bank, hopes to start operations in India by opening a corporate branch in the Capital by the year-end. The bank aims to address problems of Russian companies operating in India on issues that arise in their foreign economic activities.

Dr Yuri Yakovlev, VTB's representative in India since 2005, told Business Line, "We are in the process of completing the application process, which should be over by the month-end and then we plan to submit it to the Reserve Bank of India. It might take another four to five months for us to get the requisite permission to begin operations."

The Russian bank has had initial talks with the RBI officials and Dr Yakovlev said that all the meetings so far have been very "positive" and the bank expects to begin operations by October or November.

"We have identified the place where the branch would come up in Delhi. And, initially, we plan to recruit around 15 employees from India and three from Russia," he added.

Dr Yakovlev said that the bank identified India as a location because it would encourage development of the bilateral trade and economic partnership between the two countries.

"There are a lot of Russian companies in infrastructure, steel, power, defence and metallurgy sectors that are doing business in India. And they are facing problems on issues that arise in their foreign economic activities. The companies also have to overcome hurdles in getting guarantees, we will address some of these issues," Dr Yakovlev said.

He, however, did not divulge the minimum capital that the bank plans to start operations with. "As per the RBI norm, the minimum capital required is $25 million. But we plan to bring in more than this," he said.

Apart from opening a branch in Delhi, VTB is also looking at opening a back office in Mumbai. "We might open a branch in Mumbai at a later date, but initially will only have a back office there. It will be responsible for getting us new clients," he said.

VTB recently raised $8 billion in an initial public offering (IPO), the largest in the world this year. Post-IPO, the Government of the Russian Federation is the majority shareholder with shares accounting for 77.5 per cent. The assets of the bank as of December 31, 2006, amounted up to $52 billion and it posted a net profit of $1.2 billion.

Apart from opening office in India, the bank is also looking at a presence in Shanghai and West Asia.

News: 'Expatriates adding to realty demand'

2007-06-03T21:08:00.000+02:00

(BL 03/06/2007) Bangalore - Influx of expatriates has resulted in more demand for high-end residential properties in all metropolitan cities, says a study "South India Retail & Realty Report: 2015 and Beyond" by Images F&R Research with real estate services firm Cushman & Wakefield as its knowledge partner.

It says the country's smaller towns and cities would catch up with the "mall culture" prevalent in urban centres.

According to the report, by 2011 roughly 300-million-sq-ft additional retail space would be generated. Currently, there are about 200 malls, which are expected to rise to almost 600 by 2010-11.

Of the new malls coming up, 40 per cent are concentrated in smaller towns and cities.

The total supply of shopping centre space in South India is 14.1 million sq ft (2006-07), accounting for an increase of about five million sq ft over the availability in 2004.

Capital value up

Capital value of residential properties across all centres has seen a rise during the review period, with 2007 witnessing the highest rates (Chennai: Rs 9,300 per sq ft, Bangalore: Rs 7,175 per sq ft, and Hyderabad: Rs 3,875 per sq ft).

Besides the influx of expatriates, other reasons for this exponential growth include increase in rental values by about 25-45 per cent in all prime residential markets across the country; demand shift from central locations to suburbs owing to more supply and lesser rentals; and the long-awaited Comprehensive Development Plan is also expected, which proposes an additional Floor Area Ratio.

Rents to rise

Thanks to more IT companies and foreign banks setting shop in Chennai and the booming retail market in the city, capital values and rentals are expected to rise further in 2007.

Capital values of commercial properties went down between 2002 and 2003, followed by a consistent rise till 2007 across the three metropolitan cities in the South.

Rates were highest in 2007 (Chennai: Rs 4,920 per sq ft; Bangalore: Rs 4,400 per sq ft; and Hyderabad: Rs 3,633 per sq ft) and lowest in 2003 (Chennai: Rs 2,720 per sq ft; Bangalore: Rs 3,180 per sq ft; and Hyderabad: Rs 2,000 per sq ft). Bangalore set the rates in commercial property prices from 2001 to 2005, till Chennai surpassed Bangalore in 2006.

Office space demand

Commercial rentals fell during 2003 and 2004, followed by a rise till 2007. This phenomenon was visible across all metros, except Hyderabad, where there was an incremental rise throughout the review period.

About 70 per cent of demand for office space in India is being driven by the IT/ITeS and BPO sectors. Coimbatore, Thiruvananthapuram and Kochi are benefiting from the marked price increases in the office markets of the top three cities.

Capital values increased throughout the review period across all centres. Rates were highest in 2007 (Bangalore: Rs 17,083 per sq ft; Hyderabad: Rs 16,388 per sq ft, and Chennai: Rs 11,014 per sq ft).

Forecast

According to Cushman & Wakefield, the next decade will see the residential sector continuing to hold the largest pie of the real estate demand, followed by commercial, hospitality and retail, with demand for organised real estate increasing by about 8-9 times.

News: Best Western to develop 100 hotels

2007-06-02T21:27:00.000+02:00

(IANS 02/06/2007) Hyderabad - Cabana Hotel Management Pvt Ltd, the Indian master licensee for Best Western, the world's largest hotel group, will develop 100 hotels in India's emerging business centres over the next seven to eight years by bringing in an investment of $1.2 billion.

After signing an agreement in Mumbai this week, a team of officials from the Mumbai-based Cabana and Best Western are going around the Indian metros and tier II cities to finalise their plans.

The Cabana group will develop 3.5 to 4 star hotels in various cities and 5 star capable hotels in major cities. It would also look at acquiring hotels in tier II cities and converting them into Best Western brand hotels.

Cabana has finalized plans to establish six hotels in Ooty (Tamil Nadu), Bangalore, Jaisalmer (Rajasthan), Kanyakumari and Rameshwaram (Tamil Nadu) and Bhubaneshwar.

The construction of these hotels is likely to be completed in two years.

"We are now looking at Delhi, Mumbai, Chennai, Chandigarh, Indore, Lucknow, Patna, Ahmedabad, Surat, Nagpur, Aurangabad and Hyderabad," Prabhu Goel, co-chairman of Cabana Hotel Management, told IANS.

"Business centres are our priority. We would like to cover all metros and state capitals," said Prabhu, whose group owns and runs eight Western-branded hotels in the US.

The master licensee agreement with Cabana is part of US-based western International's aggressive development plans for India to leverage the country's growing business travel and tourism market.

"The Indian economy is growing at incredible speed and the growth potential in Indian hospitality industry is immense," Anil Wad, CEO, Cabana, told IANS.

There is huge under supply in hospitality industry.

"The airlines industry is growing at 25 percent for five years but there the hospitality industry is not keeping pace with this growth. The hotel tariffs are going sky high and even exceeding the tariffs in the West," said Anil.

India has an estimated 110,000 hotel rooms across all categories, 40 times less than the total rooms in the US. "The number of hotels in India is less than the hotels in Las Vegas," he said.

Cabana says that the hotels it would build in India would offer premier services but at the pricing will be lower than the luxury hotels.

Best Western will not participate in equity while Cabana will finance the investments through a mix of equity, debt and private equity placements.

"The funding will be on our own. There are private equity prospects and we will also do public financing," said Prabhu.

"We are going around the country to see potential sites to invest in. The Best Western people are keen to see the kind of growth India is experiencing. We are taking them to tier II cities like Bhubhaneswar," he said

Cabana hopes that the six properties it was building would break up in the very first year of their operations. "It usually takes two years to break even but we expect it in first year," he said.

The revenues for first few years from each of these hotels are expected to be $2-4 million and they will scale up to $4-5 million. The revenues from the luxury hotels in metros are expected to be $20-25 million.

On the advantages of being master licensee for Best Wester, Prabhu says: "There is lot of flexibility in operating hotels. They have set of standards but you can exceed that set of standards. It is the largest chain of hotels in the world and the licensing fee is also very low."

Best Western wants to have a strong brand in India to target the large number of Indians going abroad, especially to the US, Europe and China, where the Best Western already has strong presence.

Headquartered in Phoenix, Arizona, the Best Western owns and operates 4,200 hotels in 80 countries.

News: Bank of Baroda set to open in Trinidad

2007-06-02T21:25:00.000+02:00

(IANS 02/06/2007) Port-Of-Spain (Trinidad) - Bank of Baroda and Essar Steel Corp are set to open in Trinidad, according to Minister of Overseas Indian Affairs Vayalar Ravi.

The minister told the media that in addition to these two companies, India's business sector was looking for further opportunities in Trinidad while providing opportunities Trinidad & Tobago businesses to operate in India.

Bank of Baroda (Trinidad and Tobago Ltd) managing director Kishor Kharat said the bank would open in July.

The Bank of Baroda received approval to commence operations in March. It now operates in 21 countries, Kharat said.

Simultaneously, three other branches will open in other parts of the world.

"We are ready to open the doors. The only thing is establishing connectivity worldwide is taking time," he added.

P.R. Dhariwal, managing director of Essar Steel Caribbean Ltd., said he expected the plant to be completed by 2009 with a production capacity of 2.5 million tonnes a year.

Minister Ravi left Trinidad Friday morning on a visit to St. Vincent and will fly out later in the evening to Suriname.

Indian High Commissioner Jagit Sapra Singh hosted a reception for the minister at his residence Thursday night.

News: One retail solution does not fit entire India

2007-06-02T21:24:00.000+02:00

(BL 02/06/2007) Bangalore: - Do not mistake the South for a single market. While the South is no doubt different from the North, retailers must also not make the folly of generalising South as one market - as the customer from Hyderabad is different from the shopper in Chennai or Bangalore.

Drawing from their own experiences, retailers from diverse product spaces and categories, participating at the two-day conference, The Shop, on retail in South India, unanimously agreed that one retail solution does not fit the whole of India.

While putting together their retail strategy, retailers must not only recognise the cultural differences but also go down to the micro-level and dissect each region with its various components, said the speakers, discussing the Rs 2.5-lakh crore retail landscape in South India.

South, North divide

Some of the differences brought out between the South and the North: The value of trust is greater in the South compared to the North; while at the top end, the differences between the South and North are narrow, lower down the differences are more pronounced. While customers down South go in for future value of products, in the North customers prefer current value.

C.K. Venkataramani, COO, Tanishq, said the South is more brand and quality-conscious, which explains why the highest grade of diamonds are sold in Tamil Nadu, and the lowest in Punjab.

Some of the differences can be attributed to historical events as well. Shumone Chatterjee, Managing Director, Levi Strauss, said: "The customer in the South is more stable and more resistant to change than the customer from the North - perhaps, because the North has always been susceptible to invasion and attacks than the South."

Bhaskar Bhat, Managing Director, Titan Industries, said the South market was more mature and organised, which paved the way for several experiments by Titan, such as its foray into jewellery retailing with Tanishq and mass jewellery business through Gold Plus.

The franchisee model especially has worked well in the South, said Bhat, who addressed the inaugural session of The Shop.

While all may seem rosy down South, it's not so, warned Bhat. The growth of retail in malls could be hindered by the lack of adequate infrastructure support. "Unlike in Delhi and Mumbai, malls in the South do not have proper infrastructure. While high-street locations are developing in the South, malls are not. This is a problem in the South where the number of Tier 2 and 3 cities is also large."

Day one saw retailers addressing the issue of ensuring good footfalls in the face of competition. Commenting on the number of reasons created by retailers to attract crowds, like Valentine's Day discount or New Year sale, Bhat said: "For a retailer, everyday walk-in is important. Thus, retailers resort to creating days out of non-days, hours out of non-hours." But the key character in all this is still the customer, he said. A point echoed by Kodandarama Setty, Chairman and Managing Director, Vivek's (Chennai-based retailer of consumer durables): "For the retail business to be successful, the retailer must not lose focus of the customer. Consumers, especially in the South, are knowledgeable and demanding."

News: India likely to be emerging wine destination

2007-06-02T21:22:00.000+02:00

(IANS 02/06/2007) New Delhi - India is fast emerging as the next big destination for wine, thanks to its potential to grow world-class grapes along with other high value produces like orchids and medicinal plants, says a new study.

"There is an additional opportunity to cultivate globally priced crops such as wine grapes, orchids and medicinal plants. This could increase the income of farmers by two to five times," says a report by the Confederation of Indian Industry (CII) on the flagship rural development programme of the United Progressive Alliance (UPA) government -- Bharat Nirman.

The report said there is growing recognition worldwide that India has large tracts of fertile land, low-cost farm labour and multiple seasons that can help the country become the supply and demand centre for several agricultural sectors in the future.

Currently, wine grapes are grown on less than 4,000 acres of land in India, amounting to a mere three percent of total arable land used for grape crops.

The report also said that extending wine grape cultivation to 35,000 to 40,000 acres could help increase rural income by Rs.1000 crore and create over 50,000 jobs for the rural people directly related to the wine industry over the next five years.

It said it could also help in tapping significant tourism opportunities in many wine-growing areas of the world.

News: Indian realty cos hit by AIM less listing

2007-06-02T21:20:00.000+02:00

(DNA 02/06/2007) Mumbai - Despite the boom in real estate, Indian realty companies listed on London's Alternative Investment Market (AIM) have seen value erosions and are generally trading at a discount of 8-20 per cent to their issue prices.

"While this is disappointing, it is not surprising," said Shiv Dayal, managing director of Langham Capital Ltd, a boutique financial advisory firm with a focus on corporate cross-border transactions between India and the UK.

"News is sporadic about these companies and there is a lack of information for the investor to trade on. So, there is a slide," said Dayal.

Hiranandani's Hirco, Raheja Group's Ishaan Real Estate, Unitech, Eredene Capital, West Pioneer, Alpha Tiger and Dev Properties of the Indiabulls Group are some of the Indian real estate companies listed on AIM.

While most of these companies have a huge potential, their stocks are trading down. Most analysts have put the lack of a profile in the UK as the major cause for the slide. "They have to keep investors informed of developments with regular information and education if they want to attract new investors," Dayal told DNA Money.

"Indian real estate should not see AIM as just a one-off way to raise capital," he added, insisting that they should learn investor relations from Wipro. Indian real estate companies also have a lead time of around two years before any profits will show up. "It takes two-three years for the development of projects and there is no real pick-up in equity prices until the properties are close to occupation," said Dayal. Investors need to ride out the lead time.

Analysts also believe that as many of the real estate companies listed are family businesses like Raheja Group, it is a good opportunity for investors to get a stake in them. However, this also has the downside in that there is no certainty about when the returns will come, given the fact that investments may be made at a time of the family's choosing.

Non-family-owned companies tend to deploy their capital quickly and efficiently and so offer returns on investments more enough.

News: GDP figures are proof that India is an emerging giant

2007-06-02T21:18:00.000+02:00

(DNA 02/06/2007) Mumbai - During the final quarter of 2006-07, India's real gross domestic product decelerated to 9.1 per cent from 10 per cent during the same quarter of the preceding fiscal, according to the latest data released by the Central Statistical Organisation.

But the growth rate is still robust and more importantly, it is the manufacturing sector that is calling the shots. For the year as a whole, the economy expanded at the rate of 9.4 per cent, compared with 9 per cent in 2005-06. This rate is also higher than the growth of 9.2 per cent, anticipated in the advance estimates released by the CSO.

With the growth juggernaut maintaining a strong momentum, the per capita income is also sharply up 14.3 per cent to Rs 29,382 last year. This is on top of a spurt of 12.1 per cent in 2005-06. Even adjusted for inflation, the trend in per capita national income is gratifying.

It rose by 7.4 per cent and 8.4 per cent during the last two years (at 1999-00 prices). The tempo of investment too has proceeded at a brisk pace of late. The rate of gross fixed capital formation, which stood at 26.3 per cent in 2004-05, quickened to 28.1 per cent in 2005-06 and further to 29.5 per cent in the just concluded fiscal.

According to CSO, the modest slide in GDP growth rate in the final quarter of 2006-07 vis-à-vis the year ago period was on account of a poor showing in agriculture - the growth rate here had slackened to 3.8 per cent from 6.2 per cent - and in construction to 11.2 per cent from 16.1 per cent.

Assorted financial services and business, community and social services also witnessed a slowdown of sorts. But this was partially offset by a commendable show by manufacturing, which jumped to 12.4 per cent from 9.4 per cent, helped by an improved performance from mining and quarrying, electricity and trade, hotels etc.

A word of caution may not be out of place here. CSO's estimates are very tentative and are therefore subject to revision in the light of more data pertaining to the last quarter of 2006-07 becoming available in the due course. Therefore, it should be taken as indicative rather being definitive.

For example, many figures for the previous quarters have been modified in the latest data released by the agency. The GDP growth for the first quarter of the last fiscal has been reworked to 9.6 per cent from the earlier 8.9 per cent, for the second quarter to 10.2 per cent from 9.2 per cent and for the third quarter to 8.7 per cent from 8.6 per cent.

In the case of manufacturing, the revision has been substantial - to 12.3 per cent from 11.3 per cent in the first quarter, to 12.7 per cent from 11.9 per cent in the second quarter and to 11.8 per cent from 10.7 per cent in the third quarter.

But there is no denying the one overarching reality - we are an emerging economic giant and proof can be had from the growth story portrayed by official national income data. Consider the latest numbers put out by the CSO. Despite the setback in the last quarter of 2006-07 - if the slowdown may be termed a setback as the spurt in real GDP was quite substantial at over 9per cent - the Indian economy has catapulted itself in to a high growth orbit.

There is a qualitative transformation as well in that it is the manufacturing sector that is calling the shots. At 12.4 per cent, the contribution of manufacturing during the January- March 2006 was the highest ever since the system of quarterly estimation of GDP came into vogue just over a decade ago.

Not only does this surge represent a three percentage point improvement over the GDP emanating from the manufacturing activity in the same period of 2005-06, but also it is also a far cry from the poor showing that persisted till 2001-02. Since then, there has been no looking back, with the real output in manufacturing steadily climbing up.

India seems to be entering a phase of manufacturing led GDP growth. In 2005-06, GDP rose by 9 per cent while manufacturing rose by 9.1 per cent. In the advance estimate for 2006-07, the rise in real GDP was envisaged at 9.2 per cent of which manufacturing was projected to increase its GDP by 11.3 per cent.

But revised estimates, now available, indicate that the performance has been more flattering than earlier indicated - a 9.4per cent surge in GDP propelled by manufacturing. During the first three years of the new millennium, India had fared poorly with GDP growth ranging between 3.8 per cent to 5.8 per cent. But from 2003-04, economic advance has been rapid - and sustained.

But, along with this growth story, the officialdom's ability and resources to disseminate key economic data also seem to have improved remarkably. Who would have imagined that, the many key statistics including GDP at market prices, private and government final consumption expenditure and gross fixed capital formation for 2006-07 would be in the public domain barely two months after the close of the fiscal year.

News: Kingfisher + Deccan: Hope trumps reality

2007-06-02T21:16:00.000+02:00

(DNA 02/06/2007) Mumbai - When liquor baron Vijay Mallya and low-fare aviation pioneer Capt GR Gopinath decided to tango on Thursday, the prime reason they gave for the decision was synergy.

Using the your-beauty-and-my-brains logic, the two said that Kingfisher's upmarket full-service carrier (FSC) will complement the no-frills airline's mass market, with infrastructure being shared for cutting costs for both airlines.

History, unfortunately, is not on their side. Full-service carriers and low-cost carriers (LCCs) belong to separate worlds, and their DNAs seldom match. Whenever they have developed the urge to merge or work together under one umbrella, they have almost always failed.

It happened when UK's full-service carrier British Airways got together with budget carrier Go. It was repeated with Delta Air and Song. When Germany's Lufthansa tried to soar high with GermanWings, it crashed, too.

But if Mallya and Gopinath are looking for more cheerful examples, they should look down under. Australia's full service airline Qantas took a shot at running no-frills airline Jetstar Asia and came up trumps. So what clicked with Qantas?

Industry players and experts say Qantas' model has worked because Jetstar's operation was insulated from any Qantas influence. "Earlier examples have not worked because they were not planned well.

But since then the business model of airlines with FSC and LCC operations has evolved. Qantas has been successful because it has maintained a high level of 'strategic distinction' between the two operations," said Centre for Asia Pacific Aviation (CAPA) CEO Kapil Kaul.

And now India has three airlines with similar models (full service and low-cost airlines run by one organisation) ready for take off. Full service carrier Jet Airways is converting the acquired Air Sahara to a low-cost airline - JetLite.

National flag carrier Air India's low-cost subsidiary Air India Express (AIE) will soon be launching domestic low-cost services. Kingfisher chairman Mallya, who has picked up a 26% stake (to be raised to 46% after an open offer to minority shareholders) has also decided to retain the identity of the acquired airline.

Will these Indian models work? "Kingfisher's decision to not merge with Air Deccan and keep it as a standalone operation is very good," says Kaul. Ankur Bhatia, executive director of Bird Group, a travel conglomerate, says the two services have to be kept separate as they have different cost bases and pricing strategies.

"It is not feasible for an FSC to operate a LCC. They have to be run independently. They are two different models and there is no middle path. There can be a sharing of resources for maintenance, ground-handling, engineers and pilots between the two but they cannot switch inventories (seats) because their cost base is different," says Bhatia.

Kingfisher + Deccan

And it's not just economic issues that necessitate an arm's length distance between two. Culture clashes can also cause havoc.

"While one is used to pampering its passengers by totally focusing on services, the other is used to taking out frills from services and saving cost. Apart from engineers and pilots, even the workforce - the cabin crew, airport staff and others - cannot be common as they are tuned to different cultures," says SpiceJet Ltd CEO and chairman Siddhanta Sharma.

There are some who are sceptical of such a model succeeding at all. Says IndiGo president and CEO Bruce Ashby: "There were several of such experiments in the US but they were eventually abandoned." United Airlines started 'Shuttle by United', Delta tried with 'Delta Express' and US Airways tried 'MetroJet'.

"The idea of each was to run a low-cost airline within an airline, with differential rates of pay for some or all of the employees, different branding, and a different product on board the aircraft (typically, no-frills).

These experiments were generally successful as branding exercises, but the FSCs found that were not able to reduce costs sufficiently to create an airline within an airline that was truly cost-competitive with their lean, focused LCC competitors," says Ashby.

Mallya and Gopinath have a lot of history to learn from.

News: Barclays goes to non-metro centres

2007-05-18T21:16:00.000+02:00

(BL 18/05/2007) Mumbai - British bank Barclays launched its retail operations in India, opening three branches, two of them in non-metro centres in the South — Kanchipuram in Tamil Nadu and Nelamangala near Bangalore. The third branch is in Mumbai.

The bank had applied for branch licences across the country but was given these three for the time being, said a bank official.

Expanding Operations

The bank on Thursday announced a range of retail services including credit cards, personal loans, business loans and investment services products.

Samir Bhatia, Managing Director-India, Barclays Global Retail and Commercial Banking, said: "With branches in places like Nelamangala and Kanchipuram, we will be catering to local customers. We will also be offering no-frill accounts."

The bank has already invested $300 million and a further $70 million would be pumped in to expand the retail operations, he said.

Barclays has also applied for more licences from the RBI. "We would like to have as many branches as we get. But we intend to use alternative channels like the Internet, telecom and feet-on-the-street (direct sales agents)," he added

Barclays had launched its commercial banking operations in November 2006. The bank has presence in India since the late 1970s, through Barclays Capital, an investment bank.

Ahmed Khizer Khan, Chief Executive, Emerging Markets, Barclays, said, "To ensure that we are a global player, we would want more than 50 per cent of our profits to come from outside the UK." He added that the bank would like to achieve this by 2009-2010. "Retail credit is growing at 30 per cent in India and the market is ready for innovative products," Bhatia said. He said that Barclays had 276 employees, which would be in due course increased to 700.

News: Spanish firms rope in Indian entrepreneurs

2007-05-18T21:15:00.000+02:00

(IANS 18/05/2007) Bangalore - Two Spanish firms Electronica ITEL and DigiProces have roped in two Indian serial entrepreneurs Anil Gupta and Alok Garg to set up an electronic manufacturing services (EMS) joint venture (JV), with an upfront investment of $10 million (Rs 41 crore).

The joint venture - Indic Electronics Ltd, to be commissioned by August, will provide end-to-end customised solutions, including functional testing and simulation to vendors outsourcing their product requirements.

"The manufacturing facility will come up on a two-acre plot in Doddaballapur industrial area, about 30 km from Bangalore. The joint venture will give a fillip to the growth of the hardware sector in Karnataka, attracting more investments," Indic vice-chairman Anil Gupta told IANS after the partners signed a tri-partite pact for the venture late Thursday.

Gupta and Garg are also co-promoters of CIPSA-RIC India Ltd, a joint venture, set up at Doddaballapur last year to manufacture printed circuit boards and membrane switches for domestic and export markets.

To be built on a scalable modular, the facility will have the latest technology and skilled manpower to provide design, development and start-to-finish products under one roof.

"We will employ about 100 people initially to commence production. In view of the growing demand for EMS from domestic and overseas vendors, we estimate a turnover of $20 million (Rs 82 crore) in the first full year of operations," Indic managing director Alok Garg said.

Electronica director Beatriz Serrano said her $120-million Spanish firm had decided to begin sourcing its requirements from India due to the advantages the country had to offer in terms of cost, quality, availability of talent pool and strategic partners.

"India has been on our radar for quite some time. Though we have been getting printed circuit boards (PCBs) from China, we have noticed India was equally consistent in delivering quality products," Serrano noted.

DigiProces CEO J. Batet said the JV would cater to diverse verticals such as automotive, energy, industrial automation, telecom and peripherals.

"We have already tied-up with S.A. Sistel, a European firm, dealing in elevators, for assembling its products, including functional testing tools," Batet affirmed. DigiProces posted a turnover of $18 million in 2006.

Sistel director-general B. Jordi said his firm would in future shift its entire business to India from China where it had been sourcing its requirements (sub-assembling) for long.

News: TCS in race for $2 b deal

2007-05-18T21:14:00.000+02:00

(ACERC 18/05/2007) Mumbai - Tata Consultancy Services (TCS) is chasing the biggest IT deal worth $2 billion from Britain's Prudential Insurance. However the race is not yet over with IBM and Accenture also chasing the deal along with TCS. The bids originally started with 24 bidders but the field has narrowed down to three and a decision is expected by July this year. The Prudential project will last for seven years.

TCS is bidding through its UK BPO arm Diligenta which had executed the Pearl deal worth $800 million recently. TCS management would not comment on the deal but told NDTV that they are expecting large deals from Diligenta and at least 10 deals worth $50 million each are in the pipeline. "Large deals are the order of the day, TCS is a large volume player and will look for big deals," said Jignesh Shah, Head of Equities, ABN Amro private banking.

TCS has focused strategically on UK to reduce its dependence on the US market. The revenues from Europe grew from 37 per cent to 45 per cent (YoY) in 2006-07.

The percentage growth from the US was down from 35-30 per cent in the same period given the relatively lower base in Europe. Currently the revenue from Europe is about 30 per cent and US accounts for 60 per cent, with big deals kicking in from UK this could soon change.

TCS is logging in the big league where its global peers like IBM, Accenture and EDS dominated till a year ago. Last year it made waves with deals from Bank of China, Quantas and Sommerfield the one from Prudential could just be the mother of all deals for TCS. At a time when multi vendor contracts seems to be the norm, bagging a $2 billion order will be quite an achievement for any Information Technology giant.

News: Aditya Birla to invest $2 b in retail

2007-05-18T21:13:00.000+02:00

(RTR 18/05/2007) Mumbai - Aditya Birla group will invest Rs 8000-9000 crore ($2-2.2 billion) in its retail venture in the next three years, the group's chairman, Kumar Mangalam Birla, told reporters on Friday.

Aditya Birla Retail Ltd, an unlisted firm of the group, plans to launch the first store in Pune, in western India, this month, he said.

"We are really going it alone, without a joint venture partner," Birla said.

News: Indian energy industry needs $150 b investment

2007-05-17T21:05:00.000+02:00

(IANS 17/05/2007) New Delhi - Power and upstream energy sectors such as coal, oil, gas and nuclear power need funds to the tune of $120-$150 billion over the next five years, says a study released Wednesday by KPMG, a leading consultancy.

"Tariff reform in the energy sector and distribution reform in the power sector are two important steps that need to be successfully carried out," says the study - India Energy Outlook 2007 - that outlines the medium-term strategy for the sector.

According to it, India's energy consumption is rather low by world standards and the robust growth rate targeted by the country should entail a four-fold rise in energy requirement. "This is a significant challenge for the country."

The study says in 2004-05, the total energy consumption for India was estimated at 572 million tonne oil equivalent (MTOE), and the per capita consumption was placed at 531 kilograms oil equivalent (KTOE).

"However, with the targeted gross domestic product (GDP) growth rate of over 8 per cent and an estimated energy elasticity of 0.80, the energy requirement of the country is expected to grow at over 6.4 per cent per annum."

The study says given the fact that India has one of the largest deposits of thorium, nuclear energy had tremendous potential in the country.

"But the envisaged growth of nuclear power in India is possible provided robust technologies are developed for both the front-end and the back-end of the fuel cycle."

"If the Indo-US nuclear deal goes through, there will be a boost to nuclear energy and private participation in this sector would be expected," the study says, adding that till new technologies come in, the sector will be mainly uranium-based.

In the case of hydropower, the study says India is endowed with a potential for 150,000 megawatt but just 17 per cent of it is harnessed. To achieve the target of 45,000 megawatt in 10 years, private sector participation will be important.

Some of the other highlights of the study are:

-India to exhaust extractable coal reserves in next 45 years

-Only 10.6 per cent of installed electricity capacity in private sector

-India has the world's lowest per capita natural gas consumption

-Theft, pilferage, non-collection result in losses of over $6 billion annually

-Railways can contribute in major way to energy savings

-38 new coalfields with reserves of 800 million tonnes need $2 billion investment

-Discovery of new gas fields in India point to potential in the area