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India's
29th Competitive Nation, US Retains Top
Slot
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India
has moved up 10 notches to the 29th position,
compared with 39th last year, in the global
competitive survey of 61 national and
regional economies. Maharashtra is the
only state to figure in the survey and
has improved its position by bagging the
37th place against 41 last year. "This
shows Maharashtra's importance in the
national economy," said chief minister
Vilasrao Deshmukh. In the World Competitiveness
Yearbook '06, published by Switzerland-based
International Institute for Management
Development (IMD), the US has maintained
its numero uno position but Hong Kong
seems to be catching up fast. The IMD
survey, released last week, analyses and
ranks the ability of nations to create
and maintain an environment that sustains
the competitiveness of enterprises. The
survey is being published since 1989 and
ranks 61 national and regional economies
using 312 criteria. "Although the US is
still number one, other economies, especially
Hong Kong and Singapore, are closing the
gap fast," the survey notes. Hong Kong
and Singapore are catching up with the
US because their governments are more
in synchronisation with the economic performance.
Finland and Denmark also fare well; others
less. A growing gap between governments
and economic performance is always a bad
omen for the future," the study cautions.
The survey notes a striking difference
between the achievements of the US economy
in '05 that grew at 3.5%, and the US'
$318bn budget deficit accumulated by the
federal government and the $8,000bn debt.
The survey has calculated the biggest
negative differences between the contribution
of the government and that of the economy
to the overall competitiveness of a country.
And according to it, the governments of
Venezuela, Argentina, Brazil, Mexico and
Italy show the weakest performance; they
significantly lag behind their economic
performance. They also fail to perform
on several fronts: budget deficits, debt,
taxes, bureaucracy, etc. In some cases,
like Venezuela and Argentina, the economy
still performs well for external reasons,
such as oil prices or exports. On the
other hand, Brazil and Mexico remain weak
for growth.
Courtesy:
Economic Times, May 29, 2006
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India
Gains New Ground at Cannes
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The
Cannes film market ended on a high note
for the Indian contingent with a majority
of the participant companies signing up
a raft of new deals at the world's largest
film market. The India pavilion organised
by the Confederation of Indian Industry
(CII) and National Films Development Corporation
generated high interest and the Indian
cinema buzz was carried throughout the
12-day festival and market participated
by over 70 countries. India will also
be a major attraction at 60th Festival
de Cannes next year as synergies are being
worked out to combine it with the 60th
anniversary of Indian Independence celebrating
cinema and democracy. The biggest attraction
for India at Cannes is positioning the
country as a shooting location, new biz
in post-production, special effects outsourcing
and the wide acceptance of Indian film
content beyond the Indian Diaspora audience.
"We made a real breakthrough this year
at Cannes," said Mr Bobby Bedi, chairman
of the CII National Entertainment Committee.
Courtesy:
The Statesman, 29 May, 2006
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Shareholders
Reap Rich Dividends
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India
Inc lavish in dividend dole-out for '05-06
on strong results. Riding on a strong
performance in 2005-06, India Inc seems
to be in a generous mood over dividend
payouts. Forty companies that had skipped
dividends in the last few years have decided
to open their purse strings for shareholders,
announcing dividends between 1 and 50
per cent for 2005-06. Forty companies
have reported net profit growth of more
than 100 per cent in 2005-06. Their aggregate
net profit more than doubled from Rs 928.66
crore in 2004-05 to Rs 1,907.80 crore
in 2005-06. The list includes Allsec Techno
(50 per cent dividend), India Infoline
and IL&FS Investmarts (30 per cent each),
TTK Healthcare, Kojam Investments, Sherton,
Siel and Vardhman Holdings (20 per cent
each), among others. Overall, the dividend
payout ratio of corporate India has remained
unchanged at 24 per cent. So far, 302
companies have announced a dividend payout
of Rs 18,216 crore for 2005-06, against
Rs 16,342 crore in 2004-05. The rise in
quantum of payout is on account of high
net profit. Collectively, their net profit
stands at Rs 75,762 crore in 2005-06,
up from Rs 66,989 crore in 2004-05. A
Business Standard Research Bureau study
shows that out of 302 companies, 140 firms
have increased their 2005-06 dividend
payout, while another 68 have proposed
to maintain the level of payout at the
previous year's level and 54 have reduced
it. Thirty-six firms including Infosys
Technologies, Wipro, Suzlon Energy, NMDC,
Parry Agro, Finolex Industries, Dabur
Pharma, Gabriel, Hindustan Oil Explorations
and Rallis have doubled their dividend
payouts. On the other hand, public sector
companies like HPCL, IBP, Bongaingaon
Refineries and SAIL have reduced their
dividend payout rates for 2005-06. Infosys
Technologies declared 900 per cent dividend
(Rs 45 on Rs 5 paid up) in 2005-06, against
230 per cent in the previous year. This
included a special silver jubilee dividend
of 600 per cent (Rs 30 per share). In
absolute terms, Indian Oil Corporation
paid the largest dividend of Rs 1,460
crore for 2005-06. In the private sector,
Reliance Industries is the largest dividend
payer at Rs 1,394 crore, against Rs 1,045.13
crore last year. Infosys Technologies
is the second biggest dividend payer in
the private sector, with a payout of Rs
1,238 crore, against Rs 309.80 crore in
the previous year. Among newly listed
firms, Emkay Share, Nitco Tiles, Sunil
Hitech Engineering and PVR have each declared
10 per cent dividend, while the figure
is 20 per cent each for Ramsarup Industries
and Bannari Aman Spinning. The list also
includes Everest Kanto Cylinder (35 per
cent), ABG Shipyard (12 per cent) and
Sasken Communication Technologies (30
per cent).
Courtesy:
Business Standard, May 29, 2006
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India
Targets $12 Billion FDI in 2006-07
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India
expects an inflow of $12 billion foreign
direct investment into the country during
the 2006-07 fiscal, a government official
said on Satarday. Last year, the FDI flow
was 8.4 billion, Secretary in the department
of industrial policy promotion, Ajay Dua
said. He said during the current year,
out of the USD 12 billion, USD eight billion
was expected to come in the form of equity
and the balance from re-invested earnings
and other capital inflows. Speaking at
the Bengal National Chamber of Commerce
here, Dua said countries like Taiwan,
Japan and South Korea would be investing
in India in a big way. According to him,
the three nations would bring huge FDI
inflows in the country. A few Taiwanese
firms were already in the process of setting
up manufacturing units in India, he said.
However, Dua said the US was the largest
contributor, followed by European Union
states and the Netherlands. He said that
the government was also simplifying procedures
as well to boost FDI inflow.
Courtesy:
Economic Times, May 28, 2006
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India's
Exports Grow 27% in April
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India's
merchandise exports showed a record increase
of more than 27 per cent in US dollar
terms in the first month of the current
financial year (April), touching $8,346.79
million. Expressing satisfaction at the
export growth rate over the last two years,
the commerce and industry minister, Mr
Kamal Nath, said the growth rate was not
only being maintained but had accelerated.
Exports during April is 27.08 per cent
higher than the level of $6,567.99 million
(provisional) during April 2005. In rupee
terms, the exports were pegged at Rs 37,518.08
crore, which is 30.59 per cent higher
than the provisional value of exports
during April 2005. The final reconciled
exports figure for April 2005 is $7,627.20
million (Rs 33,362.30 crore). India's
imports during April, 2006 are provisionally
valued at $12,560.93 million, an increase
of 20.52 per cent over the level of imports
valued at $10,422.54 million (provisional)
in April 2005. In rupee terms, the imports
increased by 23.84 per cent. The final
reconciled figure of imports for April
2005 is $10,764.70 million (Rs 47,086.10
crore).
Courtesy:
The Statesman, May 28, 2006
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Exports
have shot up by 27 per cent in the first
month of the current financial year (April
2006), continuing the high growth path
of the last fiscal. A 25 per cent growth
in merchandise exports was achieved in
2005-06, bringing the total volumes to
$101 billion. Commenting on this trend,
Commerce and Industry Minister expressed
satisfaction that the growth rate witnessed
in the last two years was not only being
maintained but also accelerated. According
to the latest official data released here
on Friday, exports are valued at $8.3
billion in April, 27.08 per cent higher
than the level of $6.5 billion during
the same month last year. Imports during
the month are estimated at $12.5 billion,
an increase of 20.5 per cent over the
level of $10.4 billion recorded in the
same month in 2005. As a result, the trade
deficit for the month has gone up from
$3.8 billion to $4.2 billion. Oil imports
in April were 34.6 per cent higher at
$4.1 billion compared to $3.08 billion
in the same month last year. Non-oil imports
were 14.56 per cent higher at $8.4 billion
as against $7.33 billion.
Courtesy:
The Hindu, May 27, 2006
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Now,
Indian IT Cos Challenge EDS, IBM
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The
infrastructure outsourcing market is becoming
increasingly disruptive. Indian IT majors
such as HCL Comnet, Infosys, Wipro Infotech,
TCS and Accenture India are gearing up
to challenge established players such
as EDS, CSC, and IBM in the infrastructure
outsourcing market. While the earlier
trend was to give the entire contract
to a single player, multiple sourcing
is now gaining ground. This will benefit
Indian players who are comparatively recent
entrants. Restructuring the established
$130bn market includes the advent of multi-sourcing,
changes in technology, seperation of assets
from services and newer entrants challenging
legacy players. "The market is restructuring
internally with the larger players looking
at multi-sourcing like their software
and BPO counterparts," says James Harris,
global MD for infrastructure outsourcing
at Accenture. With networks becoming increasingly
commoditised, clients are no longer ready
to pay a mark up on servers but would
rather buy-on-demand in smaller increments
to suit their capacity needs. While the
traditional model of infrastructure outsourcing
meant long term deals with companies taking
over assets to manage them today the appoach
has changed. There is concentration on
short term, selective outsourcing and
consolidations in business is leading
to standardisation in infrastructure outsourcing.
"IT infrastructure is a complex beast
and best practice sharing which was lacking
earlier can come in now," says Anant Gupta,
COO HCL Comnet. Incidentally the remote
infrastructure outsourcing model (RIM)is
the fastest growing segment of the infrastructure
outsourcing pie. According to Nasscom,
the RIM market in India is pegged at $500m
and is expected to hit $7bn by '10 and
this is where newer entrants are expected
to make significant contributions. According
to an Edelweiss IT report, a large number
of multi-billion contracts are coming
up for renewal, and the client organisations
are likely to segregate them into several
smaller deals. Infrastructure outsourcing
will continue to grow as a on-shore, off-shore
mix model with an emphasis on global delivery
systems and disaster recovery management.
The importance of getting best of breed
solutions will continue as India's global
delivery model is maturing. With the likes
of Accenture's Bangalore centre getting
a ISO 20000 certification, the client
faith is only set to increase. With 80%
of the infrastructure the same, companies
will have to differenciate on the basis
of catering to industry segments.
Courtesy:
The Economic Times, May 27, 2006
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'Top
3 Indian Services Cos Way Ahead of Global
Peers'
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The
Boston Consulting Group (BCG) has predicted
that one of the top Indian IT services
firm was poised to become the most valuable
company globally by 2012. The top three
Indian IT services firms are way ahead
of their global counterparts like IBM,
Accenture and EDS in terms of the price
to revenues ratio. "If they could sustain
their growth momentum, there is a possibility
that one of them could break into the
top league by becoming the most valuable
firm six years from now," said Mr James
Abraham, Director, BCG India, at a roundtable
on "The IT Sector - Imperatives and Future
Outlook". Drawing a parallel between the
growth of the Japanese auto industry and
the Indian IT services industry, Mr Abraham
said the Indian IT vendors are well poised
to increase their global market share
the way the Japanese auto companies did
in the mid-70s and 80s by challenging
the incumbent US companies. The Indian
IT firms are also competing with incumbents,
which are predominantly the US firms.
"While the challengers in the auto industry
moved from cost-advantage to other bases
of competition, the Indian IT services
companies are increasing their service
offerings and using the global delivery
model in areas like consulting," he said.
The biggest shift will happen when the
Indian companies will move beyond the
labour advantage to both intellectual
property and labour, he added. Mr Neeraj
Aggarwal, Principal, BCG India, said that
global IT majors are ramping up their
India presence pretty fast. Companies
like IBM are taking the Indian threat
seriously. "Today around 11 per cent of
IBM global workforce is in India and they
plan to add on thousands of people every
year," he said. BCG, Mr Aggarwal said,
estimated that by 2020, India would have
one of the largest workforce surplus of
around 47 million, while countries such
as the US, China and Japan would face
a labour pool deficit of 17 million, 10
million and nine million, respectively.
Courtesy:
www.thehindubusinessline.com, May 27,
2006
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Wipro
Eyes US & UK For Acquisitions
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Wipro
Ltd, India's third-largest software exporter,
is scouring Europe and the United States
for acquisitions and is on track to boost
IT services revenues by one-third this
quarter, its billionaire chairman said
on Friday. Azim Premji, one of India's
richest men by virtue of his more than
80 per cent stake in the $15 billion company,
said in an interview that Wipro aimed
to boost sales in Japan by more than 50
per cent in the year to next March to
$9 million. Japanese and European companies
have aggressively embraced Indian software
services firms, keen to cut costs by outsourcing
key processes such as supply chain design
and payroll accounting to India's army
of low-cost, English-speaking developers.
Wipro has been swallowing up smaller players
to help it remain ahead of the industry's
growth. Armed with about $1 billion in
cash, it has made four acquisitions since
December including Quantech Global Services,
which provides computer-aided design and
engineering services to the auto and aerospace
sectors. It is eyeing more targets in
Europe and the United States. "It is a
string-of-pearls approach. We are not
doing large acquisitions. We are doing
mid- to small-sized acquisitions, typically
companies between $20 million and $70
million in terms of revenue," said Premji,
in Tokyo to meet with clients and staff.
Industry revenue for the year ended in
March 2006 is expected to have surpassed
$23 billion, compared with $17.5 billion
in the previous year, as outsourcing to
Asia's third-largest economy shifts to
longer-term contracts from piecemeal deals.
Against that backdrop, Premji said Wipro
was on track to hit its forecast for IT
services revenues to rise 34 per cent
to $533 million in its fiscal first quarter
to end-June, with operating margins holding
"steady" around the prior quarter's 24.5
per cent.
Courtesy:
The Economic Times, May 27, 2006
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Acquisitions
on The Radar For Ranbaxy's Promoter-Scions
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After
three overseas acquisitions on a trot
in March, one would think home-spun drug-maker
Ranbaxy's appetite for the same would
be a little satiated. But it does not
seem so, with both brothers of the Ranbaxy-promoter
family having acquisitions on their mind
in their respective businesses. "This
is not the end," Mr Malvinder Mohan Singh,
Chief Executive Officer and Managing Director
of Ranbaxy Laboratories told Business
Line, indicating that acquisition-plans
were alive in Europe, the United States
and India. Consolidation is on the cards,
he said, adding that it was "way overdue"
in India. There were several "soft" reasons
for acquisitions not happening in the
domestic market, including the fact that
some companies were family-run, he observed.
However, he added, one trigger would set
the process on the roll, as seen in markets
overseas. In just one week in March, Ranbaxy
acquired Belgium's Ethimed NV, GlaxoSmithKline's
generic business Allen SpA of Italy and
Terapia in Romania. Ranbaxy has got a
green signal for an enabling resolution
to raise up to $1.5 billion through appropriate
securities and had raised $440 million
through the foreign currency convertible
bonds (FCCBs). Inorganic growth is one
of the strategies that younger brother
Mr Shivinder Mohan Singh, too, would adopt
to grow the Fortis network of hospitals
across the country. The junior Mr Singh
is Managing Director of Fortis Healthcare,
promoted by the Ranbaxy-family.
Courtesy:
www.thehindubusinessline.com, May 26,
2006
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500
Million Phones For India by 2010
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Telecom
Minister Dayanidhi Maran today projected
that India would have 500 million telephones
by 2010, to facilitate which the government
was making efforts to release 45 mhz of
spectrum by the end of this year. "The
current subscribers base in the country
is 150 million. The target for 2007, which
has already been announced earlier, is
250 million new phone connections. Now
we are setting a target of 500 million
telephone connections by 2010," he said
at a press conference outlining achievements
of his ministry in the last two years.
He added that DOT along with Ministry
of Defence had already taken up a Rs 1,000
crore project to release 45 mhz of spectrum,
a key resource for the mobile telephone
industry, by the end of this year.y 2007,
mobile telephony will cover 85 per cent
of the country. Maran said the government
will also make spectrum available for
the third generation mobile services (3G).
Courtesy:
The Financial Express, May 25, 2006
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API
Manufacturing: India Set to Overtake Italy
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The
Indian pharmaceutical industry is all
set to overtake Italy as the world's second
largest manufacturer of active pharmaceutical
ingredients (API). The Indian API manufacturing
industry is currently the third largest
in the world and is expected to generate
sales of $4.8 billion by 2010 from $2
billion in 2005, at an average yearly
growth rate of 19.3 per cent, according
to a study conducted by Italy's Chemical
Pharmaceutical Generic Association. Indian
industry officials, however, are of the
opinion that India would achieve this
landmark in 2007 itself, going by the
number of DMF (drug master file) submissions.
According to Mr D.G. Shah, Secretary-General,
Indian Pharmaceutical Alliance, exports
of API from India are expected to touch
$10 billion by 2010, if one takes into
consideration the number of DMF submissions.
"The API sales are expected to grow at
a CAGR of 30 plus per cent in the current
decade, particularly because of the breakthroughs
Indian manufacturers have been able to
make in highly regulated markets such
as the US and Europe," Mr Shah said. Indian
API makers made some 579 DMF submissions
in 2004. Meanwhile, according to the CPA
study, sales by Italian API manufacturers
are expected to increase to $3.3 billion
by 2010 from $3.2 billion in 2005. The
report also said that India, with low
labour costs and focus on innovation,
can hit the margins of not only Europe-based
manufacturers but even Chinese firms.
For example, India's API exports growth
rates are the highest in the world, including
exports to highly regulated markets like
the US. Further, India's API sales in
overseas markets are expected to increase
at a rate higher than domestic sales.
India also has the largest number of US
Food and Drug Administration approved
plants on a worldwide scale.
Courtesy:
The Hindu Business Line, May 25, 2006
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Harting
to Open Indian Operations in Chennai
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Harting
Technology Group, the Germany-based electrical
and electronic technology company that
develops customised solutions and products
such as connectors for energy and data
transmission applications, announced the
opening of its India operations here in
Chennai on Wednesday. The Indian subsidiary
has about 15 personnel manning the operations,
and will look to double the headcount
by the end of the year. The company will
operate sales offices in Delhi, Mumbai,
Pune and Bangalore, and will develop distribution
channels additionally. The India division
of the company would be looking to provide
interconnect solutions in the field of
machinery manufacturing, energy, transportation,
telecommunications and factory automation,
according to a press release. Mr Dietmar
Harting, Founder, Harting Technology Group,
was quoted in the release as saying that
Tamil Nadu's excellent communication and
transport facilities, infrastructure,
peaceful investment climate and availability
of skilled labour are some of the factors
that prompted the choice of location for
the subsidiary.
Courtesy:
The Hindu Business Line, May 25, 2006
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India
Inc. Takes M&A Route For Growth
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Lakshmi
Mittal is not the only Indian on the prowl
who is thinking big. Corporate India at
large, is looking forward to aggressive
growth through the mergers and acquisition
(M&A) route. In an exclusive M&A survey
done by Grant Thornton India, 81% of the
respondents say that their company is
exploring M&A option to grow in future.
With only 30% of the surveyed companies
admitting to having actually undertaken
any M&A in the past, this points to a
sharp surge in M&A activity in future.
The main drivers of M&A, respondents say,
is faster growth as compared to what can
be achieved organically. "M&A had been
rising in India, but it seems it will
only get bigger and better in future,"
says Harish HV, head (M&A), Grant Thornton
India. The Grant Thornton survey reached
out to top and middle management executives
in 200 corporate houses for the survey.
The sample base was evenly spread among
sectors like BFSI, manufacturing & engineering,
media & entertainment, pharma and healthcare.
However, IT & ITeS had a relatively larger
representation of 31% in the sample. In
'05, India Inc undertook M&A transactions
worth $18bn as against $12bn in '04. Grant
Thornton expects it to touch $24bn in
'06. Already in the first four months,
M&A deals worth $8bn has been undertaken.
But these are small numbers as compared
to the global scale - $10bn of M&A transaction
takes place every day. Significantly,
of those who had undertaken acquisitions
in the past, over 70% said it was a cross-border
acquisition? In fact, going forward, this
will get bigger as a resounding 94% expect
to do a cross-border acquisition out of
those who expect to strike a deal in the
next 3 years. So far, M&A activity in
India has been concentrated in the new
economy emerging sectors like IT & ITeS,
telecom and biotech. Going forward, it
is expected to also grow in old economy
sectors like media & entertainment, paper
and banking sector. "Some of these sectors
are fairly fragmented, a legacy of the
licence era. Expect some more consolidation
there," he says. The survey also revealed
a growth in private equity investments.
Around 54% of the respondents who do not
have private equity investment in their
companies, expect to have it in the next
3-4 years.
Courtesy:
The Economic Times, May 25, 2006
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Essar
Steel in Joint Venture With UK's Stemcor
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Essar
Steel has entered into a joint venture
with Stemcor of UK for setting up a plate
mill at Hazira with an estimated investment
of US$ 433 million. The new venture -
Hazira Plate Mill - will be a 76:24 partnership
between the Essar group and Stemcor, one
of the world's largest metal trading groups.
Hazira Plate Mill will have a capacity
of 1.5mt per annum. It will be the first
plate mill of its kind in India with the
capacity to produce ultra wide plates
of five metre width. This kind of plate
is currently produced only by six international
steel companies. The technology for the
mill is being provided by VAI Clecim,
France. Incidentally, ET had reported
on October 21 last year that the Essar
group is planning to set up a new company
for setting up a plate mill at Hazira.
The plates are likely to find application
in varied industries including, manufacture
of large diameter oil and gas pipelines,
ship-building, boiler vessels and construction
industry. The new venture is slated to
come up next to Essar Steel's existing
3mt hot-rolled steel making unit at Hazira.
The new plate mill is likely to add substantial
muscle to Essar's product basket. Plates
command a significant premium over cold-rolled
(CR) coils in the international market,
since there are few players capable of
producing requisite grades for critical
applications. However, details regarding
the capacity of the unit or the required
investment for it could not be ascertained.
The project recently achieved full financial
closure. SBI Capital Markets and IDBI
Capital Market Services have syndicated
the term loan facility. The mill is scheduled
to be commissioned by the end of '07.
Courtesy:
The Economic Times, May 24, 2006
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Gujarat
Alkalies in Deal With Dutch Company to
Sell Carbon Credits
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Gujarat
Alkalies and Chemicals (GACL) is set to
enter into an agreement with the US$ 6.4
billion Netherlands-based energy company
Nuon Netherlands, for selling about 1m
certified emission reduction certificates
(CERs) or carbon credits. The agreement
is likely to create an additional revenue
of about Rs 60 crore or above by '12 for
GACL by selling carbon credits. "We are
in final stages of signing the emission
reductions purchase agreement (ERPA) for
over 0.9m CERs, which shall be produced
from two carbon reducing projects," PK
Taneja, managing director, GACL told ET.
The two projects of GACL, which have been
validated by DNV of Norway, have been
projects involving switching of fuels
from naphtha to gas. "The price of carbon
credit is variable and will depend upon
the prevailing price. The total revenue
through carbon credit could be anywhere
upwards of Rs 60 crore," Mr Taneja said.
So far, GACL has identified four projects
under clean development mechanism (CDM)
for generating carbon credits as per the
Kyoto Protocol agreement, of which two
have been validated. The process of validation
for the two smaller projects totalling
about 0.3m CERs is likely to be by the
end of the year. "After the ERPA with
Nuon is signed, the buying process of
first carbon credit should start by September
or October," sources in the company told
ET. The CDM is one of the two project-based
flexible mechanisms of the Kyoto Protocol.
These mechanisms are designed to make
it easier and cheaper for industrialised
countries to meet the greenhouse gas (GHG)
emission reduction targets that they agreed
to under the Protocol. CDM is also mandated
to assist developing countries in achieving
sustainable development. Earlier, Gujarat
Flourochemicals, a Gujarat-based refrigerant
gas manufacturing company, was the first
company in India to receive project registration
from executive board of CDM established
under CDM. GFL has now successfully commissioned
its project for green house gas emission
reduction and has recently been issued
its first Certified Emission Reductions
(CERs) executive board of the Clean Development
Mechanism. The company expects to produce
about 3m certified emissions annually.
Courtesy:
The Economic Times, May 24, 2006
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India,
Norway Join Spain in Cuba Oil Prospect
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Spanish
oil company Repsol YPF teamed up on Tuesday
with Norway's Norsk Hydro and India's
ONGC Videsh to explore six offshore blocks
in Cuban waters where good-quality oil
was found two years ago, the companies
said. The prospect of finding commercial
quantities of oil in Cuban waters of the
Gulf of Mexico at a time of soaring prices
has set off a political debate over whether
U.S. companies, sidelined by American
sanctions against Cuba, should be allowed
to explore there. At the moment the US
companies have been banned from drilling
in what is virtually next door to that
country. Under the deal signed with Cuba's
state-owned Cuba Petroleo (Cupet), operator
Repsol will have a 40-percent share in
the project, while Norsk Hydro and ONGC
Videsh will each have 30 percent. Exploration
plans include 1,158 square miles (3,000
sq km) of three-dimensional seismic studies
to be completed in June, said Egil Gloppen,
Hydro Oil & Energy international business
development director. But drilling is
not expected to begin until 2008 due to
a tight market for deep-water exploration
rigs as the world's search for oil intensifies
to take advantage of tight demand and
high prices for crude. "2008 is probably
the earliest, unless we come across a
rig that can be used immediately, but
that is not very likely," Gloppen told
Reuters. He said there were only 20-30
rigs in the world than can drill at such
depths. Repsol found good-quality light
oil in mile-deep (1.6-km) waters of Cuba's
economic exclusion zone in the Gulf of
Mexico in 2004, but not in commercially
viable quantities. The U.S. Geological
Survey estimated last year that the North
Cuba basin could contain some 4.6 billion
barrels of oil, with a high-end potential
of 9.3 billion barrels. "Our technical
people see this as a good prospect," said
Uttam Sengupta, senior vice president
of ONGC Videsh, the overseas subsidiary
of Oil and Natural Gas Corp., India's
largest integrated oil and gas company.
U.S. companies are barred from looking
for oil in Communist Cuba under trade
sanctions enforced against President Fidel
Castro's revolutionary government since
1962. Sen. Larry Craig, an Idaho Republican,
last month complained that energy-hungry
China could gain access to oil "within
spitting distance" of the United States.
He introduced legislation that would seek
an exception to the trade embargo for
U.S. oil companies so they could drill
in Cuba. "The U.S. industry thinks it
is too bad they cannot compete so close
to their own turf," Gloppen said. China's
giant oil and gas company Sinopec Corp.
signed an agreement last year to produce
heavy oil with CUPET in Cuba's western-most
Pinar del Rio province from on-shore wells.
Courtesy:
The Financial Express, May 24, 2006
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Business
Headquarters Find New Address in India
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Move
over Singapore and Hong Kong. India is
emerging as the new hub for business headquarters
in the region. A sizzling domestic market,
robust growth in the outsourcing business,
an enviable brand positioning in the tech-led
world, not to mention the stable-democracy-advantage
that is putting the country bang in the
middle of business hubs in the region.
Examples are aplenty and the list is only
getting longer. Naveen Kshatriya is the
regional vice-president of BP's transcontinental
lubricant business and he oversees 20
countries spread across 3 continents and
employs over 1,400 employees including
South Asia, Middle East, Africa and Turkey.
IBM, for which India is the second-largest
operation after the US, has located its
global delivery services business, here,
headed by the VP, Mats Agervi. Adecco,
the global staffing firm, has made India
the regional headquarters for Africa,
the Middle East and India. Arun Tadanki,
president & MD, of Monster Asia, oversees
regional businesses based in India. India
has arrived on the regional map. Big as
well as small, IT as well as non-IT -
global companies are increasingly deciding
to locate their regional headquarters
in India. "It's a welcome shift - A lot
of regional roles are now being moved
to India," says Sridhar Ganesan, country
manager- reward information services,
Hay Group. This is particularly true for
some of the new MNCs, who are exploring
Indian and Asian markets. The biggest
reason behind this shift is India's rapidly-growing
domestic market in size and significance.
For most MNCs like Monster, India business
is the largest or the second-largest business
in Asia. "And most MNCs want their regional
headquarters to be closer to their most
critical market," says Arun Tadanki, MD,
Monster Asia. But there are other reasons
too. With the growth in outsourcing, critical
parts of MNCs global business are being
moved to India. This is particularly true
in the services and IT sector like IBM,
Intelligroup. Ranjit Prithviraj, COO,
Intelligroup Asia operates out of Hyderabad.
"Riding the outsourcing boom, India's
profile has grown from being the HQ for
the subcontinent to now that of the continent,"
says Ajit Isaac who heads Adecco Peopleone.
Calibre and track record of Indian managers
on global platform too have a role. Indian
executives, managing India operations
of MNCs have not just helped the business
grow but have also built good communication
lines with the headquarters. "Indian managers
are a good blend of the eastern and the
western world - making MNCs feel extremely
comfortable," says R Suresh, MD, Stanton
Chase. Even in the past, Indian managers
have been in demand and many of them have
been asked to head regional headquarters
in Singapore or Hong Kong. But now as
the India story gets more exciting, the
country too is getting its fair share
of attention.
Courtesy:
The Economic Times: May 24, 2006
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India
'Lead Country' For New Honda Small Car
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Honda's
small car for India will be an entirely
new model. The product is under research
and Honda will complete the study by 2006-end.
Honda Siel Cars India president & CEO
Masahiro Takedagawa told FE that the new
small car will be developed keeping India
in mind though it will be sold in other
markets as well. "Every car is developed
with one nation as the lead country. India
will be the lead country for this small
car," Mr Takedagawa said. The car is unlikely
to be launched before 2009. "It takes
at least three years to develop a new
model," he said. It was believed the Honda
small car for India would be the Wagon
R competitor in Japan 'Honda Life' or
its hottest-selling car in Japan, the
1.3 litre B+ segment car 'Jazz'. Honda
Motor has decided not to launch 'Life'
and 'Jazz' in India since these models
have been in existence for three to four
years. Compact cars account for a 75%
share in the domestic car market and a
presence in this segment is crucial for
any player to target a double-digit market
share. "The 8% duty cuts announced in
the Budget has given us an indication
of the government's thinking. We are very
serious about the small car plans," Mr
Takedagawa said. General Motors India
and Toyota Kirloskar Motors Ltd, both
gunning for a 10% market share by 2010,
are also planning to launch small cars.
While the former is set to roll out the
Chevrolet Spark in the first quarter of
2007, the latter is still firming up its
plans.
Courtesy:
The Financial Express, May 23, 2006
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More
Global Pharma Sign Deal With India
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Global
pharma and biotech companies, especially
those from US, Europe and Japan, are keen
to sign agreements with Indian companies,
according to experts. Talks of signing
partnership agreements with Indian firms
in the field of research and development
were at the centre of discussions during
the `Opportunities in Life Sciences Molecules:
Global Partnership Summit 2006" held at
Varca near here. "Last year, seven to
eight such partnerships emerged after
the summit in Goa. This time, we expect
more", global consultant company, Frost
and Sullivan president Aroop Zutshi said
at the two-day summit. "Major pharma and
biotech companies in the US, Europe and
Japan download $500 million worth R&D
undertaken in the life science industry
in India," Zutshi said, adding: "The trend
is growing at 20 to 25 per cent and it
will touch the one billion dollar mark
in next five years". Foreign companies
are eyeing India because of the cost efficiency
in R&D. The industry, however faces the
challenge of bridging gaps between demand
and supply, he said. "There is a shortage
of skilled manpower by almost by 50 per
cent," he added. The life science industry
in India is pegged at $2-2.5 billion,
which is minimal compared to the global
size of $75 billion, experts said.
Courtesy:
The Economic Times, May 23, 2006
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Bank
of India Opens Branch in Beijing
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The
Bank of India (BOI) has become the first
Indian bank to set its foot in the Chinese
capital, with its Representative Office
being inaugurated here. India's leading
commercial bank, BOI, which ventured into
China in January 2003 by opening its first
Representative Office in the southern
city of Shenzhen, has become the first
Indian bank to have two offices on the
mainland of China, BOI Chairman and Managing
Director, M Balachandran said. The BOI
Representative Office was inaugurated
by Indian Ambassador to China, Nalin Surie.
The Beijing Representative Office of BOI
will serve as a liaisoning and consultancy
for Indian and Chinese companies but will
not conduct banking operations, official
sources said. The Shenzhen Representative
Office of the BOI has received license
to conduct normal banking operations from
China's banking regulator, China Banking
Regulatory Commission (CBRC), Balachandran
said. The Sino-Indian trade volume reached
18.7 billion US dollars last year and
is expected to jump to 20 billion dollars
this year. China is now the second-largest
trade partner of India. BOI would like
to tap the immense potential of the growing
India-China bilateral trade, Balachandran
said.
Courtesy:
Hindustan Times, May 22, 2006
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Global
Brands Rushing to Groom Indians
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With
Indians seeking newer products and services
as they move up the wealth ladder, upmarket
global brands like Nautica and New Balance
are entering the country to cash in on
the opportunity. The global companies
are playing on the psyche of the brand-conscious
modern Indian, who has no qualms spending
a fortune on overhauling the wardrobe.
Though the market is already teeming with
international brands, new entrants are
dime a dozen, given the Rs 500-crore market
for the premium grooming segment. Estimates
suggest that this market is growing by
45-50 per cent annually. The apparel segment
alone is expected to grow to Rs 300 crore
in the next three years. In May so far,
two new players ~ New Balance shoes and
lifestyle major Nautica ~ announced plans
to set up shop here. Nautica, for instance
would pump in Rs 30 crore in the next
three years to set up 12 stores across
India. "Getting the Nautica brand in India
would be a step closer for us in bringing
world class brands here," said Mr Darshan
Mehta, president of Arvind Brands Ltd,
which would retail Nautica in India. Nautica
would offer its exclusive range of men's
and women's apparel and accessories and
would soon launch its women's sportswear
and home collection in India. Besides
for the fitness freak, US footwear company,
New Balance has just the right "walking
and running shoe". "With fitness mania
gripping the country, we estimate a good
market for running and walking shoes in
India," New Balance Asia head, Mr Darren
Tucker said, adding his company plans
to open 50 exclusive outlets in the country
by 2008. Its not for nothing that these
multinationals are bringing their brands
to India. They are also talking market
shares and eyeing ambitious turnovers.
Mr Tucker estimates that runners and walkers
category would contribute 20-22 per cent
of the Rs 700-crore sports footwear market
in India, of which they were looking at
a market share of 15 per cent. Nautica
on the other hand is looking at a 10 per
cent market share of the Rs 300 crore
premium apparel segment by 2009. Mr Mehta
states the company would also earmark
20 per cent of its topline sales in advertising
and marketing the brand. Even names like
Louis Vuitton have applied for entry in
the Indian market after the government
allowed 51 per cent FDI in single-brand
retailing. Its not just the new entrants
~ even brands that already have a presence
in the country like Revlon are planning
to expand their product portfolio to tap
the potential in the skin-care segment,
especially anti-aging creams, which are
a rage among middle-aged women.
Courtesy:
The Statesman, May 22, 2006
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Global
Car Cos in Fast Lane Here
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The
Indian operations of global auto majors
like Ford, General Motors, Toyota and
Honda are expected to deliver higher returns,
with their parent company tackling saturation
in more mature markets and thus putting
more resources in emerging markets. Low
production costs, skilled but cheap workers,
burgeoning middle class, export potential
and improving infrastructure are some
of the key market drivers for the global
auto majors to increase focus in the developing
markets. The economic power of the growing
BRIC countries - Brazil, Russia, India
and China - is already far more important
than it was a few years ago. These emerging
markets, once seen as risky places to
do business, are now viewed as major opportunities,
mostly because of the rising purchasing
power of their large populations. China
has 1.3bn citizens and its economy grew
at nearly 10% in '05. India, whose GDP
grew at 6.9% in the same year, is gaining
importance in computer software and back-office
processing. In comparison, the euro zone
posted growth of only l.3% in '05. KK
Swamy, Dy managing director, Toyota Kirloskar
India says that auto majors have started
developing car models specifically for
emerging markets, something that was unheard
of a few years ago. Adds Rajeev Chaba,
MD, General Motors India, "to maintain
global competitiveness, we have to be
a major player in emerging markets. Product
development is not the only priority for
us. We are giving component sourcing and
setting up of technical centres in the
country as much importance." The fact
that sales have grown in India, has become
evident in the last two years, when fuel
prices and auto component prices rose
significantly. It is a good sign for automakers.
Similarly, rural demand is also growing,
with rural consumers accounting for over
10% of car sales by the end of the decade,
market sources said. India has emerged
from its long past, with just two players
and only one in 1,000 Indians able to
afford a car, into the world's fastest-growing
major car market among the world's top
15 passenger car producing countries.
Car sales are expected to grow by 10-30%
over the next five years. Commenting on
the country's potential for growth, Arvind
Mathew, MD, Ford Motor India said that
Ford is accelerating growth throughout
Asia, and India is clearly a growth market.
"The automobile industry has been witnessing
steady growth over the past few years
and a healthy economy creates greater
consumer interest in personal mobility,"
he said. Mr Mathew added that as in Brazil,
Ford was the first MNC in India to design
models such as the Ikon and Fiesta specifically
for the market.
Courtesy:
The Economic Times, May 22, 2006
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IT
Shipments Rise 30 Per Cent to Cross 4.6
Million in FY06
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India
continues to be hot for IT and computers.
According to statistics released by IDC,
a global provider of market intelligence
and advisory services firm, the number
of shipments during FY 06 grew by 30 per
cent to cross 4.6 million. Notebooks rose
by 168%, while commercial desktop sales
rose 15%.Consumer desktops rose by 33%
in the April '05-March '06 period, while
desktop PCs rose by 21% as a whole. HP
continued to be the market leader with
a share of 18% followed by HCL at 14%
while Lenovo has a 9% marketshare. For
the first quarter ended March 31, '06
the shipments for the commercial desktop
market grew 14% sequentially with the
small and medium business segment witnessing
a 40% sequential growth. Despite the re-imposition
of the 12% excise duty in Budget '06,
notebook sales zoomed by 177% sequentially.
According to Mr Piyush Pushkal, senior
market analyst-PC Research at IDC India:
"Notebooks are increasingly being bought
for use as second PCs. At the enterprise
level, notebooks are increasingly being
looked at productivity tools, not meant
for the designated few in the organisation's
hierarchy but for the larger workforce."
However, the laggard of sorts was the
consumer desktop segment which witnessed
a measly 3% sequential rise despite the
fact that some of the players like HP
and Lenovo roped in Bollywood superstars
like Shahrukh Khan, Saif Ali Khan and
Soha Ali Khan as brand ambassadors. On
a year on year basis, for the quarter
ended March 31, '06 the consumer desktop
market grew by an impressive 36%.
Courtesy:
The Economic Times: May 22, 2006
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to Index
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More
Global Pharma Sign Deal With India
|
| |
|
Global
pharma and biotech companies, especially
those from US, Europe and Japan, are keen
to sign agreements with Indian companies,
according to experts. Talks of signing
partnership agreements with Indian firms
in the field of research and development
were at the centre of discussions during
the `Opportunities in Life Sciences Molecules:
Global Partnership Summit 2006" held at
Varca near here. "Last year, seven to
eight such partnerships emerged after
the summit in Goa. This time, we expect
more", global consultant company, Frost
and Sullivan president Aroop Zutshi said
at the two-day summit. "Major pharma and
biotech companies in the US, Europe and
Japan download $500 million worth R&D
undertaken in the life science industry
in India," Zutshi said, adding: "The trend
is growing at 20 to 25 per cent and it
will touch the one billion dollar mark
in next five years". Foreign companies
are eyeing India because of the cost efficiency
in R&D. The industry, however faces the
challenge of bridging gaps between demand
and supply, he said. "There is a shortage
of skilled manpower by almost by 50 per
cent," he added. The life science industry
in India is pegged at $2-2.5 billion,
which is minimal compared to the global
size of $75 billion, experts said.
Courtesy:
The Economic Times, May 22, 2006
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to Index
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The
Tatas' African Safari
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Choosing
the right market to make an overseas foray
is perhaps the easiest of the strategic
challenges confronting a business. In
making an overseas foray companies could
adopt one of two possible approaches:
It could be a well-orchestrated mega investment
plan that integrates the whole value creation
process both up and down the stream. Take
the case of its commercial vehicle business
in South Africa. While intra-city public
transport in much of South Africa consists
of vehicles that are nothing more than
an over-sized Maruti Omni, there is a
clear need for buses with seating capacity
in the range of 14 to 35. That Tatas have
a product that is cost-effective and conforms
to basic operational requirements in these
markets is not in doubt. But for all that
Tatas did not respond to this situation
by rolling out mega investment plans in
vehicle manufacture. It is more a case
of one cautious step at a time. The initial
experience has been satisfactory and there
are now plans for upgrading this to a
vehicle assembly plant for which they
are in the process of identifying suitable
land. In time, there might be investments
leading up to the manufacture of various
vehicle aggregates. Who knows, it might
end up mirroring the classical example
of investment by a multinational corporation
bringing with it its own component suppliers.
The Tata telecommunications venture in
South Africa underscores another facet
of strategic planning. The business model
chosen for its telecom foray has provision
for multiple layers of de-risking the
investments committed to the project.
They are in effect saying that, "we think
our plan A should work but even if that
doesn't, plan B should do the trick and
then, of course, there is always plan
C." The key underpinning to the Tata strategy
aimed at attracting retail customers in
large numbers lies in the promise of high-speed
Internet connectivity at an affordable
price. This in turn requires keeping the
investments in building such an infrastructure
as low as possible so that the tariff
need not be pegged at a level that allows
for servicing of a larger equity base.
They have ensured this by co-opting other
strategic local investors who have investments
already on the ground for such a purpose.
Courtesy:
www.thehindubusinessline.com, May 22,
2006
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India
Still Remains a Growth Story: FM
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Finance
Minister P Chidambaram categorically said
that India continues to remain a growth
story, and asked retail investors to take
"informed judgements" while dealing in
the stock market. Addressing a press meet
in New Delhi this afternoon, Chidambaram
said: " Economic fundementals have not
changed over the last four days. Forex
reserves have moved past $163 billion,
and inflation continues to remain below
4%. The manufacturing sector is growing
at 9%. The India story continues to be
growth, and there is no change in that."
Chidambaram said the government had no
intention to reintroduce long-term capital
gains tax for securities traded on the
stock market. The left parties had, on
Friday, demanded the re-introduction of
the tax on account of the Sensex falling
over 800 points. One of the factors behind
the fall were reports that the government
was planning to issue guidelines to check
tax evasion by foreign institutional investors
(FIIs). The left also demanded a review
of the double taxation avoidance agreement
(DTAA) with Mauritius. Responding to a
query on this demand, the Finance Minister
said: "The India-Mauritius treaty has
been debated thread-bare. Due to a host
of economic, political and diplomatic
reasons, we are not proposing unilateral
revision of the treaty. Every political
party is entitled to their opinion," he
said. Chidambaram clarified that the decline
in the benchmark indices was not in any
way connected to the Central Board of
Direct Taxes (CBDT) circular, which was
an update of a 1989 circular incorporating
court judgements of the intervening period.
He said the decline in the stock markets
have been due to the fall in metal prices,
attractiveness of other markets and hardening
of interest rates.
Courtesy:
www.business-standard.com, May 20, 2006
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Mittal
- A Better Manager of Global Dynamics
Than Rivals
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Lakshmi
Mittal, who finally launched his takeover
bid of Arcelor, has been a better manager
of globalisation than his rivals, and
his secret of success lies in his unique
global-local ways of thinking, according
to industry experts. With its success
in turning around sick steel companies
in eastern Europe, South Africa, the United
States, Mexico and the Caribbean, Mittal
Steel has demonstrated a unique global-local
way of thinking and doing business, according
to a feature in the June issue of CNBC
European Business, a leading magazine
on European business. According to an
advance copy made available, Mittal Steel
has assured it will change little at Arcelor
and has stressed that its main focus is
to generate savings from economies of
scale and Arcelor's superior distribution
channels. Mittal has also reportedly assured
that the combined company's headquarters
will be based in Luxembourg, Arcelor's
current base. The feature, by Justin Keay,
includes an interview with Roeland Baan,
CEO of Mittal Steel Europe. The best example
of Mittal's success story was in the former
communist world, where in Kazakhstan in
1995, LNM Holdings, as Mittal Steel was
then known, made the first of what would
eventually be many acquisitions of clapped-out,
former state-owned steel plants, the writer
states. The magazine quotes Chris Beauman,
steel specialist at the European Bank
for Reconstruction and Development (EBRD)
in London, as saying that Lakshmi Mittal
had the foresight to invest in a 'resolutely
un-sexy product' when prices were low
and the rest of the corporate world was
caught up in the dotcom frenzy. "At a
time steel had most businessmen running
in the opposite direction, Mittal quietly
developed a technique of turnaround. Other
firms, especially those created out of
former state-run entities, simply did
not have the techniques, management or
strategy," Beauman says. Beauman says
Mittal's genius was finding a gap in the
market and having this rewarded by the
subsequent rise in global steel prices,
caused largely by India and China's ongoing
economic boom. "His core business has
not been so much in making steel as in
turning steel businesses around," says
Beauman. Another example was Romania's
vast Galati steel plant, which occupies
one-quarter of the area of the town of
Galati in eastern Romania. In November
2001, LNM bought the mill - by then called
Sidex - for $360 million a privatisation
in which it was the only serious bidder.
"Today, despite the inevitable stray dogs
- which are still almost everywhere despite
regular government-sponsored cullings
- and the occasional fog as coke is burned,
the plant bears little resemblance to
the sorry state of five years ago. New
systems and a strong cash flow - facilitated
by a $100mn EBRD loan - enabled much-needed
technological investments, allowing output
to be increased almost immediately. "Losses
of $1mn a day have been turned into profits
of $1mn a day, with the plant now accounting
for three percent of Romania's GDP and
five percent of its exports, new markets
having been found in Turkey, the EU and
domestically, where the plant now has
75 per cent of the domestic flat products
market", the feature says. In Galati,
new restaurants, bars and car dealerships
have opened over the past five years,
reflecting the prosperity the plant has
bought. Mittal Steel paid for the rebuilding
of a whole village devastated by floods
in 2004, built a church just outside the
entrance to the plant and has been an
avid supporter of the local football club.
KAP
Singh, CEO at Galati Steel, told the magazine:
"Wherever
Mittal Steel goes it's a happy story -
we think globally but never forget the
importance of the local context and of
promoting local talent. I don't think
anyone here sees us as outsiders on the
take. Our experience here has been win-win
for everyone." Roeland Baan, CEO of Mittal
Steel Europe, who has been one of the
firmest advocates of the takeover bid
for Arcelor, says that Mittal Steel's
core philosophy is consolidation. "You
need to look at the broader philosophy
of steel, where consolidation really is
key. We saw that these units were run
inefficiently and without proper market
focus, therefore we realised the only
way to turn them around was to change
this. "Kazakhstan was our first purchase:
this was a mill where no one saw potential,
yet it has been a big success. We then
moved on to our other acquisitions, all
of which had the same core philosophy
behind them. "Our core philosophy is consolidation:
this will keep guiding our actions".
Courtesy:
Hindustan Times, May 19, 2006
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to Index
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Mittal
Launches Takeover Bid For Arcelor
|
| |
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Mittal
Steel launched its hostile takeover offer
for rival Arcelor on Thursday, giving
Arcelor shareholders the chance to determine
its future after a months-long war of
words between the steelmakers. Mittal,
the world's largest steel group by volume,
is offering about 18 billion euros ($23.2
billion) of cash and its own shares for
Arcelor, the world's biggest by sales,
having received regulatory clearance for
the bid from watchdogs in Belgium, France
and Luxembourg earlier this week. The
offer is open until June 29. Regulators
have said that the result will be announced
on July 13. If successful, Rotterdam-based
Mittal, controlled by billionaire Chief
Executive Lakshmi Mittal, will create
a global giant worth around $40 billion,
employing 320,000 people and producing
around 10 per cent of the world's steel.
Arcelor has urged shareholders to preserve
the company's independence and has already
promised an increased 2005 dividend and
a 5 billion euro share buyback at a price
above the market level in a bid to convince
them to reject the bid. Arcelor has also
ring-fenced Canadian unit Dofasco, which
it bought earlier this year, inside a
Dutch foundation. The move would prevent
any predator from selling it. Mittal had
a deal to sell the unit to Thyssenkrupp,
which lost a stock market battle for the
unit last year to Arcelor. Lakshmi Mittal
said in a statement that he was pleased
the offer was now being put to Arcelor's
shareholders. "We continue to believe
that our offer is a very attractive one,
structured to enable Arcelor shareholders
to participate in the exciting growth
potential of the combined company, whilst
also receiving a generous cash element,"
he said. Under Mittal's offer, Arcelor
shareholders receive four Mittal Steel
shares and 35.25 euros for every five
Arcelor shares. The maximum amount of
cash paid would be 25 per cent of the
offer value, Mittal has said.
Courtesy:
Hindustan Times, May 19, 2006
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to Index
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ORG
Informatics Bags $5 mn Order
|
| |
|
ORG
Informatics Ltd said on Thursday its subsidiary
ORG Telecom Ltd had got a $5 million order
from a Tanzanian telecom firm to help
roll out a CDMA network in Tanzania. ORG
Informatics is also setting up a subsidiary
in Tanzania, the company said in a notice
to the stock exchange. ORG Telecom has
also won two orders in Maldives, the company
said.
Courtesy:
The Economic Times, May 19, 2006
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Harley
Davidson Eyes India
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Harley-Davidson
Motor Company, the US-based maker of iconic
sportster and cruise motorcycles, has
set its eyes on the Indian market. Harley-Davidson
will look at tapping the Indian market
by using the import route. In the first
week of this month, the company's executives
were here, making the rounds of the commerce
ministry. Their agenda was to find out
the government's intent regarding the
emission norms on high-end motorcycles
and to seek a reduction in Customs duty
on the bikes, says government officials.
The company's vice-president (government
affairs), Timothy K Hoelter, along with
the company's Washington DC-based legal
advisor, Susan G Esserman, held discussions
with commerce ministry officials. Harley-Davidson's
concerns over emission norms are understandable.
Although its motorcycles meet the norms
in the US and Europe, the current regulation
in India does not prescribe any standards
for high-end motorcycles. Harley-Davidson,
known for delivering "quality nostalgia",
is adored for its "time warped" designs.
Founded in 1903, the company reported
global revenue of $5.34 billion in 2005
with a net income of $960 million. Motorcycles
contribute around 80 per cent to its revenue,
and parts and accessories 15 per cent,
while the sales of apparel and collectibles
account for the rest. High-end motorcycles
have failed to go much distance with the
Indian consumer.
Courtesy:
www.business-standard.com, May 18, 2006
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India
Provides Highest Return on Investment:
Kumar
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Asserting
that India provides highest return on
foreign investments than any other nation,
Minister of state for commerce and industry
Ashwani Kumar told investors that the
country is poised for a massive expansion
in the manufacturing, infrastructure and
food processing sectors. This century
clearly belonged to Asia and this decade
to India, Kumar said speaking at a function
organised by the India-America Chamber
of Commerce in New York on Wednesday and
asked entrepreneurs to seize this moment
before it is too late. Any investor who
does not seize the opportunity would have
missed the opportunity to make very very
substantial amount of money, he added.
But Kumar warned that India is not a country
meant for short-term investments. It is
suitable for medium and long-term investments
and no well run foreign company has ever
complained of losing money. It is reputed
foreign financial analysts who have concluded
that India provides maximum return on
investments, more than even China, he
told the meeting attending by more than
100 investors including several from major
American multinationals. Introducing the
minister, Chairman of the Chamber Rajiv
Khanna gave facts and figures to underscore
the progress that India is making. But
Kumar said there is a world beyond statistics,
which should not be ignored. However,
even statistics, Kumar added, would show
the success story being witnessed in India.
Currently, India is growing at the rate
of 8.1 per cent and is seeking to increase
it to 10 per cent. Even at the current
rate, he emphasized, its economy will
be grow to $1.6 trillion within ten years.
Seeking investments in manufacturing sector,
he said the government planned to increase
its contribution to the GDP from current
16 per to 24 per cent. Though India is
the largest producer of fruits and vegetables,
less 2 per cent of its produce is processed
and the processing industry itself if
capable of absorbing more than $33 billion,
he said. Referring to the civilian nuclear
deal between India and the United States,
which is now before US Congress, Kumar
asserted that it in the interest of both
the countries. Kumar told the American
entrepreneurs that it is equally important
for the United States for it means billions
of dollars of business for the US as also
European companies as India imports technology
and equipment. Replying a question, he
said India is expanding its economic ties
with the Middle Eastern countries. There
were no complaints for the entrepreneurs
doing business in India whose companies
he said are treated on par with the Indian
entities.
Courtesy:
Hindustan Times, May 18, 2006
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L&T
Acquires Belgian Dredging Subsidiary
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Engineering
and construction major Larsen & Toubro
has forayed into dredging business by
acquiring a majority stake in International
Seaport Dredging, promoted by Belgian
multinational, Dredging International
NV (DI), for an undisclosed amount. L&T
has acquired 61 per cent stake in DI's
Indian venture. Post-deal, DI will hold
the balance 39 per cent in the company.
This acquisition is in line with the L&T's
strategy to strengthen its position in
ports and harbours. Dredging International
(DI) is part of the DEME group (Dredging,
Environmental & Marine Engineering). DI's
core activity is dredging and land reclamation.
At present, DI's trailing suction hopper
dredgers and cutter suction dredgers are
deepening fairways and reclaiming new
land in South America, the Middle East,
Australia, Africa and Europe in addition
to building ports in India. While, L&T
has already played a major role in construction
in several public and private sector ports
in the country, including ports at Nhava
Sheva, Chennai, Mundra (for Adani), Gangavaram,
Hazira (for Shell LNG plant), Seabird
Project at Karwar; private jetties for
Finolex (Ratnagiri), Reliance (Hazira),
Chemplast (Karaikal) and Ballard Pier
in Mumbai. Currently, the public sector
Dredging Corporation of India (DCI) is
the major player in the segment in the
country. In India, the market size for
capital and maintenance dredging is estimated
at Rs 7-8 billion, which is only 2 per
cent of the global market. Earlier, L&T
had forayed into shipbuilding and had
won a key contract for construction of
four ships valued at over Rs 440 crore
from Zadeko Ship Management CV of the
Netherlands. The vessels will be built
at a new shipyard that will form part
of the company's engineering complex at
Hazira, Surat.
Courtesy:
www.business-standard.com, May 18, 2006
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'India
to be Fastest Growing Mkt For Software
as a Service'
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India
is expected to be the fastest growing
market for Software as a Service (SaaS)
in the Asia-Pacific region, according
to Springboard Research, a global IT research
agency. The report says there is strong
growth in adoption levels in India and
across Asia for SaaS in 2005, and even
brighter prospects ahead. India saw revenues
increase over 53 per cent to $7 million
in 2005, and the market is expected to
grow to $48 million by 2008, representing
the fastest growth in the region. SaaS
is an emerging software delivery model
in which application software is delivered
remotely through a subscription-based
fee rather than being sold for perpetual
use. The users do not buy the license
for the software, but only a right to
use it. SaaS is also referred to as On-Demand
Software and On-Demand Application. "The
SaaS market is receiving considerable
focus from software vendors operating
in various spheres of the industry," noted
Dane Anderson, research vice president
at Springboard Research. "Global software
giants, local ISVs and emerging on-demand
software vendors all have a healthy dose
of respect for the power of SaaS to disrupt
the competitive frameworks of the software
industry in the future." A survey of Indian
Small and Medium-sized Businesses (SMBs)
identified cost benefits as the primary
driver for SaaS adoption, but ease of
use and business benefits were also cited
as important market accelerators. Indian
SMBs have the highest level of awareness
of SaaS in Asia. However, SaaS has not
made much headway among them largely because
of low penetration of software application
usage in this market segment. The mismatch
between high SaaS awareness and low penetration
is also because most of the SaaS vendors
are not present in India and large traditional
vendors dominate the Indian enterprise
application software market.
Courtesy:
www.business-standard.com, May 17, 2006
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Infosys
May go in For a $200 mn US Acquisition
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Infosys,
the second largest software powerhouse
in India, is understood to be closing
in on Capco, a US-based $100 million global
financial sector consulting firm. The
deal, according to market sources, is
expected to be in the $200-million range
and if Infosys pulls this off, it will
be its second acquisition in its 25-year-old
history. The company acquired Expert in
Australia for close to $23 million in
2003. If the value of the deal does indeed
close in the range of $200 million, it
will be the largest acquisition by an
Indian information technology firm, surpassing
Subex's recent acquisition of Azure Software
for $140 million. No official comments
were available from either Infosys or
Capco. According to market sources, Infosys
is at an advanced stage of carrying out
due diligence on Capco, which is described
as a big step for Infosys to beef up its
consulting prowess. Capco is a 600-strong
privately held firm and provides integrated
consulting, processing services and products,
engineered by experts, exclusively for
the financial services industry. The company
has an offshore delivery centre in Bangalore
with around 100 employees. Infosys' consulting
arm posted a topline of $32 million in
200506 against a topline of $4.8 million
in the previous financial year, and is
yet to break even. Infosys launched its
consulting arm in April 2004 and has so
far invested close to $20 million. For
Infosys, this will be money worth spending
as it is aggressively seeking to ramp
up its global consulting practice. Infosys
is currently sitting on a cash pile of
around $1 billion.
Courtesy:
www.business-standard.com, May 16, 2006
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Wipro
Buys Quantech Global For $10 m
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Wipro
Technologies is acquiring US-based Quantech
Global Services for $10 million in an
all cash deal to strengthen its competence
in mechanical engineering design and analysis
services. Quantech is a 16-year old firm
with a topline of $12.7 million. The company
in addition to the automotive sector also
has an expertise in aviation design. The
consideration includes upfront cash payment
on closure of the transaction as well
as earn-outs on achieving agreed financial
targets over a three year period. Wipro
with this deal is equipping itself for
the large offset business which is expected
to flow into India from the Airbus deal.
The IT major will absorb Quantech's entire
team of 500 employees in Bangalore and
Hyderabad centres and would serve its
20 clients including General Motors, Daimler
Chrysler and Nissan, among others. Quantech
undertakes design, analysis, development
and program management of products right
from concept to pre-production stage.
This is the second acquisition in this
space for Wipro after it acquired NewLogic,
a system on chip design firm for Rs 240
crore ($56 million) in December 2005.
Announcing this acquisition, A L Rao,
COO, Wipro Technologies said: "The demand
for complete product engineering services
is on the rise. Quantech's key strength
in mechanical design services complements
our core strength of embedded software
and system design capabilities and helps
us strengthen our position as an original
design engineering solutions provider."
Sudip Nandy, chief strategy officer, Wipro
said: "The acquisition is another 'pearl'
added to the 'string' in keeping with
our articulated strategy and is an important
step in our journey to offer a complete
portfolio of engineering designing services."
The product engineering services arm of
Wipro, one of the largest in India, recently
reported $500 million topline with 13,500
people.
Courtesy:
www.business-standard.com, May 16, 2006
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'Sectors
Record Good Growth'
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Indicating
rapid growth in manufacturing, the Ascon
survey carried out by the Associations
Council of the Confederation of Indian
Industry (CII), for April-March 2005-06
over April-March 2004-05, shows that out
of 143 sectors reporting "production",
36 sectors recorded excellent growth rate
of more than 20 per cent, 36 sectors recorded
a high growth rate of 10-20 per cent,
56 sectors registered moderate growth
rate of 0-10 per cent, while 15 sectors
reported negative growth. Stating that
during the period under review, the manufacturing
sector has reported "rapid growth", CII
has pointed out that a larger number of
sectors were in the "excellent growth"
category, shifting from "high growth"
in this period as compared to the Q3 results.
According to the CII-Ascon survey, out
of the 76 sectors reporting "sales", 25
sectors registered excellent growth, 24
sectors registered high growth, and 23
sectors reported moderate growth while
4 sectors recorded low or negative growth.
The survey reveals that cast iron and
spun pipe, auto components, pig iron,
forgings, industrial valves, precision
tubes, boilers, textile machinery, sugar
machinery, air conditioners, microwave
ovens, washing machines, refrigerators,
pulp and paper, cellular services were
some of the sectors in the excellent growth
category. Those in the high growth category
include cement, paints, sponge iron, among
others.
Courtesy:
The Asian Age, May 11, 2006
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Malwa
Makes Two Foreign Acquisitions
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The
Rs 180 crores Ludhiana-based Malwa industries
announced on Wednesday its acquisition
of two overseas companies in Jordan and
Italy and its expansion-cum-modernisation
of its denim fabric manufacturing plant
in India. Malwa Industries, a part of
Rs 540 crores Malwa Group, acquired 100
per cent stake in third dimension apparels
in Jordan, that has duty free access to
US and Europe. It has also acquired 80
per cent stake in Emmetre Tinto-Lavanderie
of Italy, which is involved in dyeing
and finishing of garments, including denim
garments for fashion labels in Europe.
"At present, Malwa manufactures 2.5 million
pair of jeans a year and after the acquisition,
we will produce more than 10 million pairs
of jeans per annum. This will make us
the largest integrated denim player in
Asia," said Mr Rishi Oswal, chief executive
officer and managing director, Malwa Industries.
The company at present caters to customers
in the United States, Europe, India, South
Asia and West Asia. The cost of acquisition
of both the overseas companies is $10
million, which will be funded by debt
and equity. The company will soon be going
public to part finance its expansion project
that would double its denim fabric manufacturing
capacity to 40 million metres from the
present 20 million metres per annum. The
main object of the issue is to fund the
expansion of its denim manufacturing facility
and for the pre-payment of its debt. "Post
the IPO, the company will hold 60 per
cent from the present 95 per cent," said
Mr Oswal.
Courtesy:
The Asian Age, May 11, 2006
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L&T
Plans $110 mn Shipyard
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Larsen
& Toubro (L&T) will invest about $110
million to set up a shipyard to build
huge vessels, including large crude carriers.
The company is looking for a location,
both on the eastern and western coasts
of the country, to set up the shipyard.
M V Kotwal, senior executive vice-president
- heavy engineering, said the project
was part of the second phase of the company's
ship building venture. "We are planning
to build large vessels during the second
phase. There is a growing demand for specialised
vessels and we have proven capabilities
in this area," he said. Also, the company
would think of building very large crude
carriers and highly specialised vessels,
Kotwal said. L&T had won a Rs 440 crore
contract last week from Netherland-based
shipping company to build four heavy lift
container cargo ships. The order marked
the formal launch of L&T's ship building
venture and the vessels will be built
at a new shipyard that will form part
of the company's engineering complex at
Hazira in Gujarat. The production of these
ships is scheduled to commence in July.
"For this, we will be making an incremental
investment of round Rs 50 crore. We have
infrastructure facilities at Hazira and
this investment is to fine-tune the facilities
for ship construction," Kotwal said. L&T
also has plans to foray into defence ship
building. "We have capabilities in both
civilian and military areas. We are looking
forward for some opportunities in the
military space as well," he said. The
company is eyeing orders from the navy
and cost guard for the construction of
vessels as the government has already
put in place necessary regulations to
allow the private sector investment in
defence production. L&T has received licences
from the Union government for defence
production. Recently, along with Tata
Power, L&T bagged Rs 172 crore worth order
from the Indian Army for the production
of Pinaka multi-barrel rocket launchers.
Courtesy:
www.business-standard.com, May 11, 2006
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Indian
ITeS Industry to Touch $26 bn by 2009-10
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The
Indian information technology enabled
services (ITeS) industry is poised to
touch $ 26 billion by 2009-10 and $ 10
billion by 2006-07, according to credit
rating agency ICRA. ICRA said in its latest
research report that with the global ITeS
industry expected to maintain a healthy
growth rate over the medium term, corporations
are expected to continue outsourcing many
of their labour-intensive business process
service tasks to developing countries
like India to gain cost savings and quality
advantages. The report said that demand
growth in the ITeS industry is likely
to be export-led, with the domestic market
also expected to grow at a rate in excess
of 50 per cent. In the report, ICRA said
that the biggest challenge which the ITeS
industry in India was facing was lack
of good infrastructure. It said that the
ITeS sector in the country was facing
the threat of rising labour costs, high
attrition rates and security concerns.
Courtesy:
The Economic Times, May 11, 2006
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Bhel
Bags Rs 80-cr Export Order
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Bharat
Heavy Electricals (Bhel) has secured a
Rs 80-crore order to export transformers
to Egypt. Bhel will supply 14 transformers
of 125 MVA to the state-run Egyptian company.
These transformers will be installed in
eight sub-stations at different locations
in Egypt, a Bhel release said. The transformers,
to be built at the company's Jhansi plant,
will be installed and commissioned under
Bhel's supervision, it added. Bhel had
earlier executed a boiler project at Al
Arish in Egypt. With the order for transformers,
Bhel has also established itself in the
transmission market in the Egypt. Bhel
had earlier reported a six-fold increase
in its export orders booking for the fiscal
ended March 31, '06 at Rs 3,348 crore.
These orders contributed to one-fifth
of the company's total orders booked last
year. "With this Bhel is poised to achieve
a quantum growth in its export business
driven by consolidation in existing markets
and widening its export base through expansion
of existing basket of products and services
and entering new markets," the company
said.
Courtesy:
The Economic Times, May 11, 2006
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India
to Surpass US, Russia in Mobile Phone
Base
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India
is on track to surpass the US and Russia
in mobile phone user base, thanks to the
accelerating growth of the wireless communications
network in the country, says a study by
a leading research firm. "Adding five
million subscribers per month, India will
become the world's second largest mobile
phone market by 2008," says the study
- "India's Wireless Market: Model for
the Next Phase of Global Wireless Expansion".
The report, authored by wireless expert
Chetan Sharma and conducted for Datacomm
Research Company, says India's wireless
boom is largely the result of government
decisions on competition. Its regulatory
mechanism can serve as a model for both
developing and rich nations. "India passed
Japan in total subscribers last month.
In the next few weeks, it will break through
the 100 million subscriber barrier," Sharma
says in the 86-page report released by
the St. Louis, Missouri-based research
firm. "The number of mobile phone subscribers
added each month in India has more than
tripled over the past year," Sharma adds.
Another conclusion of the study is that
India will spend several billion dollars
on wireless infrastructure to accommodate
the subscriber growth, improve rural coverage
and add advanced services. "India's consumers
require low-cost handsets. Handsets are
now available for as little as $40. But
Indian consumers will spend a little more
for enhancements such as the ability to
download and play music and games," it
says. The study says that as a result
of low per-minute charges of under $0.03,
most Indian users pay less than $10 per
month for voice service, while wireless
data yields higher margins with incentives
for affordable text, music and video services.
Courtesy:
The Economic Times, May 10, 2006
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Bharti
to Offer Service in Jersey
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In
yet another niche market foray overseas,
Bharti has won a licence to provide comprehensive
telecom services, including cellular and
international long distance (ILD), in
Jersey, a southern Island of the British
Isles. This is the second foreign country
where Bharti will provide services after
Seychelles, where it entered in 1998.
The licence has been awarded to Jersey
Telenet, a subsidiary of Bharti Global,
an offshore investment company of Bharti
Group. Jersey Telenet will invest over
£20 million in setting up networks and
the services will be operational by October,
Bharti said in a statement. It said the
networks will be set up by Nokia and IT
solutions will be provided by IBM. Jersey
has a population of about a lakh and high
per capita income of $40,000. It in a
tourism and financial hub with 55 banks
and over 33,000 registered firms. The
other private operator in the country
will be Cable and Wireless, which competes
with Bharti in Seychelles also. "Having
spearheaded the growth of telecom sector
in India, Bharti is committed to providing
world-class telecom services now in Jersey,"
said Bharti Enterprises CMD Sunil Mittal.
"The acquisition of telecom licence in
Jersey will be a springboard for other
opportunities that may be present globally,"
Mittal added.
Courtesy:
The Economic Times, May 10, 2006
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India
Corners Huge Chunk of FCCB Pie in Asia-Pac
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India
Inc's hunger for capital for expansion
has resulted in the country accounting
for over two-thirds of the total convertible
bonds in Asia Pacific, outside Japan.
Led by expansion plans and acquisitions,
issuance of foreign currency convertible
bonds (FCCBs) from India is now at 68%
of the Asia Pacific market, ex-Japan.
It is around 10% of the global issuances
of $39bn. In this calendar year, Indian
corporates have raised $3.2bn, while total
issuances from the region, including India,
are to the tune of $4.7bn. The next few
months will see around $2.5-3bn of issuances
from India Inc. Indian FCCB issuances
have picked up in '06, with total issuances
from January till date almost equalling
the $3.3bn raised during the whole of
last year. Last year Indian issuances
were at around 37% of Asia Pacific issuances.
Last year, total issuances from Asia-Pacific,
including India, were to the tune of $8.8bn.
Led by pharma companies, a host of corporates
are using FCCBs to fund overseas acquisitions.
Prospective issuers in the next few months
include Reliance Natural Resources, Aban
Loyd Chiles ($200m), Radico Khaitan ($100m),
Petronet LNG ($100m). Those in talks include
Jet Airways ($500m), Suzlon ($500m) and
Nicholas Piramal ($300m). Incidentally,
Nicholas Piramal and Wockhardt have passed
board resolutions to raise $1.5bn and
$800m, respectively, for funding acquisitions.
Some of the corporates who have raised
money this year include Ranbaxy ($440m),
RCoVL ($500m), Jubilant Organosys ($200m),
Mahindra & Mahindra ($200m) and Larsen
& Toubro ($100m). "Indian issuers are
tapping FCCBs as a source of growth capital.
Issuers with large capex plans and an
acquisitive strategy need financing that
can minimise imminent cash outflow (interest
payments), defer any dilution to the future
and retain a large part of the upside,"
says Achintya Mangla, head of equity-linked
capital markets, Asia, JP Morgan Securities.
Most Indian issuers view FCCBs as a way
to sell equity at a premium, rather than
raise cheap debt, he says. However, Indian
dominance may cease with other corporates,
including some based in Hong Kong, ready
with multi-billion issuance. "No country
has dominated this space for long. Typically,
a country will dominate for two to three
years before retreating as was the case
in Taiwan in '03-04. For the last two
to three years, Indian companies have
been at the ideal stage in their growth
cycle to issue convertible bonds," says
Peter Guenhardt, head of Asian equity-linked
origination, UBS Investment Bank. "We
expect more issuance from elsewhere before
the end of the year. Hong Kong and China
are likely to be particularly active,
including Chinese companies with similar
profiles to those in India. So while issuance
will increase, we expect its current market
share to decline by the year-end," he
adds. "There is some investor fatigue
specially on high premium issues in excess
of 50% and in which investors do not see
a lot of equity value and their investment
mandate is not to invest in straight bonds.
However, there remains a great deal of
demand for issues with a premium of between
30% and 40%. The market has become increasingly
selective when it comes to Indian companies,"
says Mr Guenhardt.
Courtesy:
The Economic Times, May 09, 2006
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Morgan
Stanley May up India Weightage
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Morgan
Stanley Capital International Inc (MSCI)
- the leading provider of equity, fixed
income and hedge fund indices that are
widely followed by fund managers and institutions
across the world - is slated to increase
India's weightage when it announces the
next quarterly revision in its indices
for various markets on May 10. Analysts
maintain that India deserves higher weightage
in the revamped MSCI Asia index. ''India's
total market cap has already crossed the
$700 billion mark. India deserves more
weightage,'' said a fund manager. The
inclusion of an Indian stock in the MSCI
Asia Index will positively affect not
only the foreign holding in that stock
but also India's weightage in the MSCI
Asia Index (ex-Japan). ''We have been
mentioning that despite the fact that
India's market capitalisation is almost
the same as that of Korea and Taiwan,
the weightage of the latter countries
in the MSCI Asia Index is almost double
that of India,'' said an analyst from
Sharekhan. Countries with lower market
cap are given more weightage in MSCI Asia
Index. Taiwan has a market cap of $553
billion but it has a weightage of 19.7
per cent. Korea has a market cap of $745
billion but it has a weightage if 25.7
per cent. However, India, with a market
cap of $700 billion, has a weightage of
only 9.6 per cent. According to analysts,
several stocks like Bharti Televentures,
Reliance Communications, Suzlon Energy,
NTPC, Siemens and Sterlite Industries
are prime candidates for a place in MSCI
Index.
Courtesy:
Indian Express, May 09, 2006
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Lock-in
Goes for QIB Placements
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India
Inc's domestic resource-raising plans
get boost. Listed companies can now make
domestic placements of shares and convertibles
(excluding warrants) to qualified institutional
buyers (QIBs), without these shares attracting
a lock-in period. Retaining the same pricing
formula as applicable to preferential
allotments or global depository receipts,
the Securities and Exchanges Board of
India on Monday announced new rules, allowing
listed companies to raise funds exclusively
from QIBs through placements. The rules
say that the securities can be sold by
QIBs only to recognized stock exchanges,
for a period of one year from the date
of allotment. According to merchant bankers,
it is not clear whether these shares can
be tendered in a buy-back or an open offer
since these are typically off-market transactions.
If an open offer is made within a year
of a placement, QIBs will not be able
to offer the shares, since an off-market
transaction will attract a lock-in. The
move will make it more attractive for
companies to raise resources within the
country. Rather than approaching the overseas
markets either through foreign currency
convertible bonds and GDRs, they can now
tap the same set of investors, since there
is no lock-in period. With QIBs now subscribing
to these issues in the domestic market,
the market will have greater depth. But
merchant bankers say the process could
have been made more transparent with the
inclusion of a bidding process for QIBs,
rather than simply using the pricing formula.
The rules specify that the aggregate funds
that can be raised through this route
in a fiscal year cannot exceed five times
the net worth of the issuer at the end
of the previous financial year. Moreover,
companies will need to maintain a gap
of at least six months between each placement
in case of multiple placements of specified
securities, if they are using the same
shareholders' resolution. Within the overall
allotment to QIBs, which cannot be promoters
or entities related to promoters, a minimum
of 10 per cent of the securities in each
placement have been reserved for mutual
funds. But no investor can be allotted
more than 50 per cent of the issue size.
For every placement, Sebi has prescribed
that there should be at least two allottees
for an issue with a size of up to Rs 250
crore and at least five allottees for
an issue size exceeding Rs 250 crore.
Merchant bankers say that greater disclosures
are being sought for such a placement
to QIBs, compared with those for a preferential
allotment, which may not necessarily make
the procedure less time-consuming. A placement
document is needed to be filed post-issue
and merchant bankers are required to furnish
a due diligence certificate to Sebi stating
that the issue complies with all requirements.
The pricing formula is the same as that
for a preferential allotment. This will
be the higher of the average of the weekly
high and a low of the closing prices of
related shares quoted on a stock exchange
during the six months preceding the relevant
date or the average of the weekly high
and low of the closing prices of related
shares quoted on the stock exchange during
the two weeks preceding the relevant date.
Besides, QIBs cannot have either veto
rights or the right to appoint any nominee
director to the board because that would
also be considered to be related to the
promoter.
Courtesy:
Business Standard, May 09, 2006
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Sensex
Soars 103 to New High of 12462
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The
Party is on. Riding high on the back of
strong FII buying and robust quarterly/annual
numbers, the sensex scaled yet another
high in a firm market on Monday. Brokers
say that the mood remained positive throughout
the session, also on the back of a firm
trend in Asian markets. Blue-chip shares
led by Reliance Industries (RIL) added
further strength to the market with the
sensex climbing 103 points, or 0.8%, to
end at 12462, the level it has never seen
in the past. The broad-based Nifty gained
0.8% to 3,693. Key Asian markets gained
ground amid easing of concerns over rising
Fed rates, after the US released slower-than-expected
jobs growth data. Japan's Nikkei rose
138 points, or 0.8%, to end at 17,292,
while Hong Kong's Hang Seng jumped 307
points, or 1.8%, at 17,321. South Korea's
Kospi was up 11 points at 1,452. In India,
index heavyweight RIL climbed 5.1% to
a new high of Rs 1,156 on the back of
reports that the company is planning to
buy an equity stake in a Pakistan-based
petrochemicals company. Among other major
index stocks, IT behemoth Infosys Technologies
rose 0.5% to Rs 3,228, while SBI was up
0.4% at Rs 957. HDFC, Hero Honda and ACC
also gained substantially on the back
of selective buying. HLL, ITC and ICICI
Bank, however, lost ground on profit booking
after recent gains. According to brokers,
the market has been showing good strength
on the back of strong liquidity support
from institutional investors. FIIs have
been net buyers for Rs 2,617 crore in
the current month so far, compared to
Rs 522 crore in the previous month. Overall,
the market breadth remained strong. Out
of a total of 2,624 scrips traded on the
BSE, 1,687 advanced while 884 lost ground.
The turnover on the BSE stood at Rs 4,732
crore, higher than Friday's turnover of
Rs 4,705 crore.
Courtesy:
The Economic Times, May 09, 2006
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Britain's
BG Eyes Expansion in India
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British
energy giant, BG group is eyeing rapid
expansion in India. As a part of the strategy,
BG energy holdings, the group's holding
company in India is setting up a 100%
arm to develop natural gas transmission
and distribution infrastructure and gas
distribution and sale in the state of
Karnataka. This will be followed by similar
initiatives for the other southern states
of Andhra Pradesh and Tamil Nadu. BG group
is one of the leading players in the global
energy market with £5.6bn in revenues.
The total project cost is pegged at Rs
225-450 crore ($50m-$100m) of which BG
would invest Rs 135 crore ($30m) by way
of equity over the next 3-5 years. Technically,
the proposed project falls under the same
activity as MGL and GGCL, and hence it
attracts press note 1 norms of Foreign
Direct Investment. But there's no overlap
with the existing ventures as geographical
scope of the venture is restricted to
Karnataka. So there would be no overlap
in commercial operations. Natural gas
has emerged as the most preferred fuel
due to its eco-friendly nature, greater
efficiency and cost effectiveness. With
the significant new discoveries of natural
gas off the east coast in India in recent
years and commercial production from these
fields expected shortly, India's indigenous
natural gas production is expected to
go up substantially. This means significant
new investments are required in developing
gas transmission and distribution infrastructure
to place this gas in new and existing
markets. Sources say BG is convinced that
natural gas will become the fuel of choice
in a world increasingly concerned with
the environmental impact of its energy
consumption and India is no exception.
The company projects that the demand for
natural gas in India will more than double
over the next two decades, rising to 13,700m
standard cubic feet per day (mmscfd) by
'25. Current policy allows 100% FDI in
the petroleum & natural gas sector other
than refining, subject to sectoral regulations
laid by the concerned ministry.
Courtesy:
The Economic Times, May 08, 2006
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India
Inc Gets More Leverage Abroad
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With
public sector banks (PSBs) moving towards
financing acquisitions of Indian corporates
abroad, they are finding an unlikely ally-foreign
banks with Indian operations. Increasingly,
foreign banks, including Citi Bank and
Standard Chartered are syndicating with
large PSBs for funding Indian companies
going global. As more Indian companies
go global, this space will only grow.
Public sector banks with a pronounced
presence overseas, including in South-East
Asia, Europe and the US are keen to fund
this growth in association with foreign
banks. Corporates looking to grow inorganically
to attain scale of operations are seriously
looking at big ticket acquisitions that
can't be financed through their reserves.
With deal sizes only getting bigger, PSBs
in association with foreign banks can
fund these big acquisitions. Typically,
foreign currency loans are used to fund
such corporates. For smaller deal sizes,
corporates used rupee loans that were
hedged. Overseas branches of Indian banks
and foreign banks come together in striking
such deals taking into account the strengths
of the acquisitions, risk appetite of
the Indian corporate, among other indicators.
SBI has overseas presence in 34 countries
with more than 50 offices. Bank of Baroda
has as many offices overseas offices in
20 countries. It has got the RBI approval
for opening branches in Sri Lanka, Male,
Bangladesh, New Zealand and Canada. Hitherto,
overseas corporate financing was limited
through select routes, including one under
refinance agreement by Exim Bank of India.
BoB tied up with Exim bank last year.
Since banks are allowed to raise funds
abroad only to lend money to domestic
exporters, any additional lending to companies
for acquiring foreign companies put pressure
on the capital of PSBs. They wanted permission
to raise additional funds abroad to meet
acquisition financing demand. The value
of overseas acquisitions by Indian companies
more than doubled to $9.3bn in '04 from
$4.5bn in the previous year with a 30%
jump in '05, according to industry estimates.
Courtesy:
The Economic Times, May 08, 2006
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Indian
Firms Queue up For $20-bn US Drug Generics
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In
about two months from now, one of the
largest selling drugs in the world Zocor
(Simvastatin) will go off-patent, allowing
companies to sell generic copies of the
$4-billion Merck-owned cholesterol-lowering
drug. This is just one of the $20 billion
worth of drugs that are slated to go off-patent
over the next 20 months, and Indian companies
are aggressively filing for permissions
to sell the bulk drug (API or active pharmaceutical
ingredient) as well as the final formulation
in the US through a conscious strategy
of "vertical integration". According to
the latest report of Banc of America Securities
(a Bank of America subsidiary), seven
of the top 10 DMF filers at the US FDA
are Indian "Vertically integrated Indian
companies are filing ANDAs at breakneck
speed and are backfilling pipelines too.
For ANDA filings that we track, we found
that Teva (the world's largest generic
drug-maker) is vertically integrated on
47 per cent products, Ranbaxy for 61 per
cent and Dr Reddy's a staggering 96 per
cent," says the report. The increased
filings means that typical price declines
for drugs which go off-patent could be
as high as 95 per cent as hordes of generic
sellers descend on the market. "Consistent
with our thesis, the coming wave of patent
expirations is highly competitive, likely
with ample API and, as a result, with
significant pricing pressure," says the
report.
Courtesy:
Business Standard, May 08, 2006
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Punj
Lloyd Close to Acquiring Singapore Firm
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Engineering
construction major Punj Lloyd is close
to acquiring the Singapore-based SembCorp
Engineers and Constructors (SembE&C).
Punj Lloyd, along with the Essar Global,
were in the race for acquiring SembE&C
last year. Essar has opted out of the
race. According to sources close to the
development, Punj Lloyd may close the
deal soon. The cost of the acquisition
is not known. Punj Lloyd had announced
its plan to float $125 million foreign
currency convertible bonds (FCCBs) in
March. The proceeds from this offering
were to be used primarily to finance the
company's acquisitions outside India and
other ongoing capital expenditure, the
company had indicated in its notice to
the Bombay Stock Exchange in March. Punj
Lloyd had a cash reserve of Rs 444 crore
on March 31, 2005. Punj Lloyd Managing
Director Atul Punj was unavailable for
comments and company executives declined
to make any statement on the development.
Courtesy:
Business Standard, May 08, 2006
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India
to be Part of Asia's Common Currency
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The
Indian government is likely to step up
its efforts to join the league of Asian
countries that are working on a plan to
evolve a common currency unit. This comes
in the wake of finance ministers of Asean
nations making it almost clear that they
would not take India into account while
studying the viability of a common unit,
though there has not been any loud thinking
among the other Asian countries about
it. Finance minister P Chidambaram does
not seem very happy about the 'dancing
elephant' being kept away, though formally
he said, "We are neither happy nor unhappy
about it."Speaking to newspersons on the
sidelines of the annual meeting of the
Asian Development Bank (ADB), he was not
very optimistic about the prospects of
formation of a common currency unit in
the near future. "Asian currency unit
is not going to happen overnight. It will
take a very long long time and we cannot
set a timeframe for that. However, over
a period of time, it may become possible,
"he said. However, on the free trade area
(FTA) proposed by prime minister Manmohan
Singh during his address on Friday, the
finance minister said, "sooner or later
we have to come to terms with the fact
that the world will move towards free
trade. Once, if and when, Doha development
round reaches a successful conclusion,
trade barriers would become fewer." According
to him, the government is also working
on bonding with several other countries
that would help create a free trade area.
"We are carefully working on the proposal.
We are also very selective and careful
in finalising the terms and conditions
of joining other participant countries
in FTA. There is strong support for a
bond with Japan and possibly with China."
Interestingly, the finance minister is
in favour of ADB lowering its lending
rates to pre-2000 days. "ADB's loan charges
as compared to the cost of funds from
other sources are critical for growth
of the bank's business. The financial
parameters of the bank have been robust
for four consecutive years now. Loan charges
should be restored to the lower levels
that prevailed before the year 2000. The
commitment fee should not be treated as
a source of income (for the bank) and
it should be possible either to eliminate
or substantially reduce the commitment
fee through improvements in operations
and internal efficiency of the bank,"Chidambaram
said while speaking at the bank's board
of governors' meeting.
Courtesy:
The Times of India, May 07, 2006
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LINUS
Capital Invests in Indian Website
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LINUS
Capital, a US based boutique investment
and advisory firm, has decided to invest
in social-networking site, 'Sixer'. The
Hyderabad-based website, targets cricket
fans in the country. "We hope that 'Sixer'
will be an online platform where millions
of cricket fans could connect with other
fans in the country. The investment will
help us build 'Sixer' into a leading online
brand. This will also help us make other
acquisitions and investments in the Internet
space, "said, Linus managing director
Sunny Burra. He however, did not disclose
the amount Linus would invest in 'Sixer'.
This will be the company's second investment
in the country. "Our first investment
was Linus Infotech, a Business Process
Outsourcing company," Burra said. Linus
capital is also planning for investments
and buyout in the internet and the BPO
space in India. "We primarily focus on
investments or buyouts in Internet Wireless
Services, and BPO space. Currently, we
are looking for investment opportunities
in mobile content services along with
add-on acquisitions for Linus Infotech
in the BPO space," Burra said.
Courtesy:
The Economic Times, May 07, 2006
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Railways
to Build Hotels in Rajasthan
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Indian
Railways will open hotels in four Rajasthan
cities to meet the growing tourist demand.
These hotels, to be called Rail Ratan
Hotels, are to be opened near stations
at Jaipur, Jodhpur, Udaipur and Jaisalmer,
the four prime tourist destinations. Rajasthan
received over a million of foreign and
two million domestic tourists in 2005.
The railways will provide only the land
for the hotels, which would then be operated
by private firms. These firms are to be
chosen through tender.
Courtesy:
The Economic Times, 07, 2006
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Tourists
Mirror The Changing Face of India
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Ravi
Ghei, director of TRAC Representation
(a company that markets foreign destinations
in India) has his hands full. From Korea
to Mauritius, to Spain, he has signed
up with nine countries to market them
as tourist destinations in India. Tourism
boards are lining up to woo Indian travellers
with special promos and packages. Number
of Indians travelling to these countries
has surged. Indian travellers to Sri Lanka
is growing - in 2005 it received 1,13,323
Indians. Ditto for Mauritius - it saw
close to 30,000 Indian tourists. And even
a not-so-popular Spain is a big draw -
last year it received 83,214 Indians.
Yet barely five years ago, landing business
felt like an uphill task for Ghei. Getting
to meet tourism boards, convince them
about India's potential and then signing
up with them - nothing came easy. "All
that is history. Indian story is well
known and no longer needs to be told,"
he says. Ghei's journey from once struggling
to now rolling in business is in short
the story about changing face of Indian
tourists. Growing incomes, rising aspirations,
changing lifestyle, global exposure-multiple
factors have converged to turn Indians
into globetrotters. Going "abroad"-once
the sole preserve of rich and well heeled
isn't that special any more. This year
7.5 million Indians will travel abroad,
more than a million being pure leisure
travellers. Business for packaged tour
operators is growing at 20-25 per cent
annually. But growing numbers is just
half the story. Its changing composition
is a bigger one. No longer are they just
rich and famous. Nor are they confined
to only big cities. Indian tourists are
getting younger, older, adventurous and
indulgent - all at the same time. As a
result newer offbeat international destinations
like Spain, Vietnam, Korea and Egypt are
becoming popular. Strangely, globetrotting
Indians are also beginning to discover
places within the country. Bitten by travel
bug, encouraged by lowering air tariffs
in domestic sector (with the entry of
low cost carriers) and the need to destress
frequently has sent Indians exploring
off-beat destination like Mandu, Orchha
within the country. Consequently, packaged
tour operators who earlier focussed only
on international travel are selling domestic
packages aggressively. SOTC with 100,000
customers gets 20% of its business from
the domestic sector. It was 10% barely
five years ago. This growth is now spreading
to smaller cities like Coimbatore and
Kanpur. Take SOTC for example - Five years
ago, Delhi and Mumbai provided close to
50 per cent of their business. No longer
- it is more evenly spread now. At Cox
& Kings business in smaller cities is
growing at 30-35%, far outpacing overall
growth at 25%. "Smaller cities hold out
enormous potential for us," says Sunil
Gupta, COO (outbound), SOTC-Kuoni.
Courtesy:
The Economic Times, May 07, 2006
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UK
Varsities May Outsource to India
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After
banks and insurance services, it could
be the turn of leading British universities
to outsource administration as well as
research to Indian companies and institutions
to reduce costs. According to a report
by the Council for Industry and Higher
Education (CIHE), that is the future of
higher education in Britain. Outsourcing
to India and elsewhere was inevitable
if British universities wanted to continue
to attract students and international
investors, it said. The report surveyed
the heads of 45 multinational businesses,
asking them for their views on Britain's
higher education and competitiveness,
and most of them favoured a management-oriented
approach to higher education."So far,
attention has focused on recruiting students,
but research is also crucial. Will British
universities be prepared to share research
initiatives with Indian partners? Or will
this be seen as 'outsourcing' academic
jobs?" In order to succeed in the increasingly
global education marketplace, British
universities need to learn from businesses
that have set up mutually beneficial partnerships
and collaborations with companies in several
emerging economies, mainly India, the
report stated. Noting that partnership
was the theme of a recent India initiative
announced by Prime Minister Tony Blair,
Brown wrote: "If we can attract more mobile
students, they (multinational companies)
will recruit them here, develop them and
send them to help run their expanding
operations around the world. "UK-domiciled
businesses have more diverse leadership
teams than most others and are keen to
recruit the best, whatever their background.
So there is a mutual interest in both
businesses and universities working closer
together to attract the best students
to study here. "Partnering offers one
way for UK universities to offer high-quality
research at competitive prices. It is
not simply a question of outsourcing backroom
jobs. It would involve genuine partnerships
based on complementary strengths. "The
prime minister's initiative, and particularly
the Indian initiative, offers a framework
within which to develop this theme, including
through some pilot projects. Further pilots
could be developed with Singapore and
China." According to Brown, there were
risks as well as opportunities in outsourcing
research to India and elsewhere.
Courtesy:
The Economic Times, 07, 2006
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Indian
Signs MOU With ICICI Bank
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Indian
has signed a Memorandum of Understanding
(MOU) with ICICI Bank, India's second
largest bank, for funding of the pre-delivery
advance payments (PDPs) for acquisition
of its aircraft. The MOU was inked by
Dr. Vishwapati Trivedi, Chairman & Managing
Director, Indian and Ms Kalpana Morparia,
Joint Managing Director of ICICI Bank
in Mumbai on Friday. The signing of this
MOU is a significant step forward in the
tie-up of funding for Indian's aircraft
acquisition programme. This acquisition
will allow Indian to step up growth, expand
its market and further improve the quality
of its product offering besides replacing
some of its existing Boeing 737 and A300
aircraft. Earlier, on February 20, 2006,
Indian had signed an agreement with Airbus
Industrie for the purchase of 43 Airbus
A320 family aircraft - comprising 19 A319s,
4 A320s and 20 A321s - at an estimated
cost of US $ 2 billion. The deal was signed
in New Delhi by Dr. Vishwapati Trivedi,
CMD, Indian and Dr. Kiran Rao, Executive
Vice-President, Airbus Industrie in the
presence of His Excellency the President
of France Jacques Chirac and Hon'ble Prime
Minister of India Dr. Manmohan Singh.
The funding arrangement for PDP would
be a syndicated External Commercial Borrowing
(ECB) of USD 152.0 million, with ICICI
Bank acting as a sole arranger and underwriter
and would be spread over from June 2006
till January 2010.
Courtesy:
The Pioneer, May 07, 2006
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CII
Bets Big on SMEs, Inks MoU With Japanese
Agency
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The
Confederation of Indian Industry (CII)
on Tuesday signed a memorandum of understanding
(MoU) with the Japan Finance Corporation
for Small & Medium Enterprise (Jasme)
to exchange information on economic and
commercial issues. The signing of the
MoU coincided with the visit of a 30-member
Jasme Investment Promotion Mission to
India, led by its president Koichi Minaguchi.
The proposed exchange of information will
be free of charge in principle. Information
will also be disseminated to clients from
both the countries on issues touched by
them through consultations and publications.
Both organisations will also co-ordinate
visiting programmes for delegations to
the other country. This is the second
SME-specific MoU, signed by the CII with
an organisation working towards development
of SMEs in Japan. The CII had earlier
signed a similar agreement with Japan's
Organisation for Small and Medium Enterprises
and Regional Innovation (SMRJ) in February.
These are a few strategic initiatives
being undertaken by the CII for the promotion
of Japanese investments in India, especially
in the SME sector. On the other hand,
Japan will also participate as the partner
country at the IETF 2007, being organised
by the CII in New Delhi, from February
13-16, 2007.
Courtesy:
The Financial Express, May 04, 2006
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MNCs
Pump US$ 120 Million Into Clinical R&D
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Investments
for clinical research projects in India
by global drug companies on an annual
basis has crossed US$ 120 million in 2005-06.
The domestic clinical research market,
which was estimated at about $100 million
in September 2005 by Proximare Inc, a
leading management consulting firm that
specializes in pharmaceutical and related
industries, witnessed a sudden spurt in
investment during the later part of the
year. The increased investment flow in
the clinical research market signifies
the growing interest of global research
companies to conduct drug studies in the
country for data generation as well as
registration. The foreign direct investment
for clinical research in India during
2005-06, according to data compiled by
the industry, has shown about 84 per cent
growth compared with $65 million reported
during 2004-05. The top spenders in the
Indian clinical research space during
the year include global drug research
giants like Pfizer, Eli Lilly, Merck,
Novartis, Aventis, Bayer, Atlanta, Astra
Zeneca and GSK. The global companies have
been spending around $5 to 7 million every
year over the last few years on a number
of studies, which includes both India
specific and global trials. India, as
a country already identified with a wider
genetic pool and also a growing pharmaceutical
market, these companies have also classified
their studies on the basis of data generation
for either global trials or for Indian
registration. Pfizer, which is ranked
at the top in the number of studies, has
about 23 studies initiated in India. The
company, which has established an inhouse
clinical research team in India, has been
doing the clinical studies through this
inhouse team as well as outsourcing arrangement
with leading clinical research organisations
(CROs). The Indianapolis-based biopharmaceutical
major Eli Lilly has about 15 to 20 studies
being conducted in India. GSK Plc with
almost 140 new products at an advanced
stage of clinical development globally,
has identified India as an ideal location
to be tapped into its global scientific
research.
Courtesy:
Business Standard, May 04, 2006
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Indian
IT Companies Top Profit Charts
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Indian
service vendors Cognizant, Satyam, Patni,
TCS, Infosys, HCL Tech and Wipro came
among the ten fastest-growing IT services
vendors in the top 50 rankings last year,
besides those focused on the lucrative
US central government and defense sector,
says a new research by independent market
analyst Datamonitor. Datamonitor puts
the size of the IT services market (including
applications, infrastructure, consulting,
and BPO services) at $513bn in 2005, meaning
that the 50 largest vendors claimed a
share of 51per cent. There was little
change at the top of the rankings, with
IBM, EDS, Fujitsu and Accenture again
placed one to four, although BT Global
Services overtook its German peer T-Systems
to take eighth spot. However, India's
five largest players all made significant
moves up the league table, growing their
combined sales by 35 per cent to $9.3bn.
India's big IT services companies also
ranked as the most profitable suppliers
in the top 50 rankings in terms of both
net and operating profit margin. This
is due to the lower salary costs in India,
which can be as much as 50 per cent lower
for some skills over comparable rates
in the US. Infosys was the most profitable
supplier in terms of net profit margin
with a 26 per cent in its most recent
fiscal year, ahead of Satyam with 23per
cent and TCS with 22per cent. The research
found that the world's 50 largest IT services
vendors booked combined revenue of $262bn
last year, but grew at a slower rate than
the overall market. The combined headcount
of the top 50 vendors grew 18per cent
to 1.58 million last year, driven by aggressive
recruitment in low-cost countries such
as India. Conducted annually, results
from Datamonitor's research "Global IT
Services Top 50 Rankings," add weight
to the belief of many industry watchers
that some of the sector's larger players
are losing out to smaller, more focused
vendors. The vendors, which ranged from
IBM Global Services with sales of $47bn
to Patni Computer Systems with $450m,
increased their combined sales by 1.9
per cent over the previous year. But this
is well below the 8 per growth in the
overall market for external IT services
expenditure recorded by Datamonitor. Datamonitor
ranked the top 50 suppliers based on their
revenue figures reported in their most
recent fiscal years. The numbers used
are the "as reported" figures in annual
results statements, and are not adjusted
for foreign exchange movements, disposals
or acquisitions. The list excludes companies
that make the bulk of their revenues from
reselling products, and captive IT operations
that make the majority of their revenue
from their parent organizations. The study
estimates the size of the global IT services
market at $513bn in 2005, meaning that
the 50 largest vendors claimed a share
of 51 per cent. The largest player, IBM
Global Services accounted for a 9 per
share, highlighting the relatively fragmented
state of the marketplace. For the year
2006, the survey predicts more M&A activity
that is likely to alter the very shape
of the top 50 rankings.
Courtesy:
The Economic Times, May 04, 2006
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Global
Retailers in a Scurry to Sew up Joint
Ventures
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Foreign
retailers are moving faster to cash in
on the Indian retail boom by striking
joint ventures and franchisee deals. Etam
Group, a Paris-based lingerie and womenswear
retailer which has over 3,000 outlets
across 40 countries, signed a joint venture
with Pantaloon Retail on Wednesday, whereby
each side will invest 50% in a new company
called Etam Future Fashion. Both partners
will initially invest Rs 35 crore in the
company and are planning 150 standalone
and shop-in-shops by '08. The deal was
struck through Indus League Clothing,
part of the Future Group. This comes closely
after the retail major signed a 50-50
joint venture deal with Lee Cooper, the
UK-based apparel and footwear company.
Etam Future Fashion will showcase the
Etam Group's lingerie range in the first
six months and will later look at introducing
its women's wear and accessories and will
cater to the SEC-A segment. "Through this
JV (with the Etam Group), we are looking
at a Rs 300 crore turnover in the next
three years," said Kishor Biyani, MD,
Future Group. "We will invest 15% of the
first year sales in advertising, 8-10%
of it in the second year and 6% in the
third." The company is also in talks with
other apparel retailers from France and
Italy for similar deals. "Going ahead,
we are looking at manufacturing for Etam
Future Fashion in the womenswear range.
Also, we are in talks with a few international
apparel companies for possible JVs, a
sportswear company being one of them,"
said Jaideep Shetty, chief of new business
and lifestyle retailing. Other apparel
brands such as Zara, Cerruti and Roche
among others are in talks with Indian
retailers to open shop in the country.
"The interest to partner in India is mainly
among the foreign apparel brands. A few
Indian retailers are in talks with brands
like Zara," Devangshu Dutta of Third Eyesight,
a Delhi-based retail consultancy firm.
"Some of the brands that cater to the
mid-segment in their home countries end
up being premium brands here unless there
is a price repositioning. Take for instance,
Orchestra, the children's wear French
brand which caters to the small-to-medium
market in France but is an upper-middle
market brand in India," he added. Mothercare,
the UK-based baby care retailer, recently
signed a franchise deal with Shopper's
Stop, the retail arm of the K Raheja group.
Courtesy:
The Economic Times, May 04, 2006
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Deutsche
Unveils Retail Brand DWS in India
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Deutsche
Asset Management Company (DeAM) today
launched its leading retail brand, DWS
Investments (DWS), in India as a further
step in DWS' official entry to the Asia
Pacific. "DWS India now joins DeAM's retail
operations in Europe and America as part
of a unified mutual fund business, under
the DWS name." said Ed Peter, head of
Asia Pacific and Middle East for DeAM.
Henceforth, all existing and new retail
products of Deutsche will be under the
DWS brand name. "We wanted consistency
across the globe." said Sandeep Dasgupta,
Head DeAM India explaining the reason
for having common brand name. Through
various distribution partners, DWS will
provide retail investors with access to
top performing global and alternative
investment products. "India is a very
important market for us. Our approach
towards India is long term. The biggest
advantage India has is its young and well
educated population which contributed
to higher GDP growth." said Thomas Gerhardt,
head of global emerging markets equities
for DWS explaining the reason for investing
in India. India is the second country
for DWS to pursue in its strategy for
Asia and follows after Singapore, which
marked the entry into the region just
a week ago.Next will be Philippines. DWS
is the leading mutual fund arm of DeAM
and is the largest mutual fund company
in its home country, Germany, with ¤121.2
billion assets under management(as of
31/03/2006). DWS has won the Standard
& Poor's Fund Award as the best German
mutual fund company for the past 12 consecutive
years. DeAM is also planning to launch
Deutsche Green India Fund in the next
month. It is an open-ended thematic fund
where they will focus on the agriculture
and rural theme and not on any specific
sectors. "We will invest in all those
companies that benefits agriculture and
rural India." said Dasgupta.
Courtesy:
Business Standard, May 03, 2006
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Force
in Joint Venture With Neoman Group, Germany
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Force
Motors is tying up with the Neoman Bus
Group, Germany to invest US$ 369 million
for setting up bus and truck manufacturing
facilities in Madhya Pradesh. Abhay Firodia,
chairman and MD, Force Motors and Wolfgang
Fahrnberger, chairman of the board of
Neoman Bus Group, had signed a letter
of intent (LoI) for setting up a JV for
manufacturing chassis, complete buses
and coaches during the Indo-German Business
Summit held in Hanover recently. While
200 million euro will be spent on the
truck facility, 100 million euro will
be invested in the bus unit. Force Motors
and Neoman will have an equity participation
of 70:30 in both the ventures. The JV
will offer the complete range of trucking
solutions, right from long-haul trucks
to tippers, tractor-trailers, multi-axle
vehicles and special purpose vehicles
like concrete mixing platforms and tankers.
These vehicles will be manufactured at
the new facility set up at the Pithampur
plant of Force Motors. The vehicles will
comply with Euro-III and Bharat Stage
III emission norms and will have a built-in
capability to be upgraded to Euro-IV norms,
Abhay Firodia, chairman and managing director,
Force Motors, said. The trucks manufactured
by the new JV will be sold in India and
exported throughout Asia, including China,
South East Asia, Australia, Africa and
the Middle East through the Man channel.
The JV will manufacture 24,000 trucks
per year. "We expect to export close to
10,000 trucks in the next few years. The
value of the exports is likely to touch
Rs 2,500 crore from the third year onwards,"
Firodia said.
Courtesy:
Business Standard, May 03, 2006
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Global
Transmission Firms Eyeing Indian Platform
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World's
leading transmission companies including
PJM (USA), California ISO, RTE (France),
Statnett (Norway), Kepco (Korea), State
Grid Corporation of China, Kema Consultancy
(USA), ONS (Brazil), Terna (Italy) and
Eskom (South Africa) are visiting India
to explore opportunities in the now opened
transmission sector. Besides, these companies
have shown keen interest to study the
transmission system operator (TSO) model
which is currently implemented in India
through the state-run PowerGrid Corporation.
As a beginning, these companies would
participate in the brain-storming session
organised by the power ministry on May
4 and 5 in New Delhi, to discuss the range
of issues relating to transmission system
development and grid operation in a deregulated
environment. PowerGrid CMD RP Singh told
FE said, "Under the Electricity Act 2003,
the central transmission utility (PowerGrid)
will undertake and operate the transmission
system, while other investors will bridge
the investment gap. The TSO model is implemented
in the US, Europe and South Africa. Italy,
which had recently shifted to the integrated
system operator (ISO) model, is in the
midst of shifting back to TSO. Even in
the US, studies are on to go in for TSO
model from the currently used ISO model.
PowerGrid is involved in the development
of the National Grid. Global companies
will not only look for investment opportunities
but also study nitty- gritties of TSO
model." According to the recent World
bank study titled "Transmission system
operators-lessons from the frontiers,"
if a government wants a competitive power
sector, it must recognise TSO as the key
institution. It must create a TSO whose
decisions are not controlled by any one
or more market participants or by the
government itself. The government must
also accept the fact that it must be willing
to give up political power in order to
obtain electrical power, study says.
Courtesy:
The Financial Express, May 03, 2006
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Huawei
Plans to Invest US$ 100 Million in India
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Chinese
telecom equipment vendor Huawei Technologies
will invest US$ 100 million in India on
its R&D centre in Bangalore and set up
a manufacturing facility in India as and
when approval for the same comes. "We
will invest 100 million dollar for expansion
of Indian operations, which will include
60 million dollar for our plans to set
up a manufacturing plant in India for
which we have applied for approval to
make telecom equipment and 40 million
dollar on expanding the Bangalore R&D
centre," Fu Jun, global spokesperson for
Huawei Technologies told PTI here. He
said the Banaglore R&D centre, which is
the second largest centre outside Shenzen,
currently has 1,200 profressionals and
will touch 2,000 by the ned of 2007. The
centre is working on Next geneartion Networks,
broadband, optical and 3G equipments and
is expected to focus on customisation
of equipment. Jun said the company is
aware of the fact that to bid for BSNL
contracts, it needs to set up a manufacturing
base locally and it has sought government
approval for the same. The privately-held
8 billion dollar Huawei is bullish on
India.
Courtesy:
The Economic Times, May 03, 2006
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Sensex
Logs New High of 12,275.44
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The
bull run at the stock markets continued
with the Bombay Stock Exchange benchmark
index reaching a new peak in early trade
today, rising by 232.88 points in the
first 30 minutes on increased buying by
foreign as well as domestic funds. The
BSE-30 shares Sensex which had gained
191 points on Saturday, added 232.88 more
points to reach 12,275.44 in the first
30 minutes of trading today. Similarly,
the National Stock Excahnge index Nifty
gained 54.50 points to set a historic
high of 3612.05. The indices received
a major push from blue-chip stocks particularly
from cement, pharma and banking segments.
Courtesy:
The Financial Express, May 03, 2006
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FIIs
Reap Preferential Harvest
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Value
of US$ 290 million worth shares up to
US$ 535 million. Foreign Institutional
Investors (FIIs) have made the most of
the preferential offers of India Inc.
in the last one year. The market value
of the Rs 1,300 crore worth of shares
bought from Indian companies through preferential
allotments during 2005-06 is now worth
Rs 2,400 crore. FIIs have substantially
increased their holdings in 50 companies
last year. In case of 21 firms, it was
done through the preferential offers route.
India Cement allotted 10.87 million shares
to FIIs at Rs 92, Simplex Infrastructure
offered 1.28 million shares at Rs 716.30,
Spentex 20.25 million shares at Rs 26.54
and Vaibhav Gems offered 7.53 million
shares at Rs 266.80. FIIs also purchased
equity shares of Sujana Universal Industries,
Madhucon Projects, Jain Irrigation Systems,
SSI, Bajaj Auto Finance, Ahmednagar Forgings
and Rico Auto through the preferential
route in the last fiscal. Citigroup Ventures,
Dunearn Investment (Mauritius), Morgan
Stanley India Investment Fund, T Rowe
Price International Inc, Llyod George
Investment Management (Bermuda), Matterhorn
Ventures, Lotus Global Investments, Cortland
Investment, India Star (Mauritius) and
International Finance Corporation - Washington
are among the notable FIIs that acquired
equity shares through preferential allotments.
India Cements issued 10.87 million shares
for Rs 100 crore. The present value of
these shares is Rs 259 crore. Post acquisition
of these shares, the FIIs holdings in
the company increased by 14 per cent to
22.96 per cent at the end of March 2006
quarter, up from 8.92 per cent in previous
year. Jain Irrigation Systems allotted
40 lakh shares at Rs 102.50 each to Dunearn
Investment (Mauritius) last year. Since
then, the market price of the company
has moved up by 164 per cent to Rs 271.
SSI issued 71.50 lakh shares to the FIIs
at Rs 67.82 crore. The chunk is now valued
at Rs 162.66 crore. Institutional investors
and other entities such as Morgan Stanley
India Investment Fund, Morgan Stanley
Mutual Fund, New Vernon Bharat Ltd and
Bessemer Venture Partners acquired 1.54
crore equity shares of Rico Auto through
preferential offers at a price of Rs 67
per share. Vaibhav Gems has allotted 75.27
lakh equity shares to Cortland Investment
on preferential basis at Rs 276.80 per
share. FIIs, which had no stake in the
company last year, were holding 14.27
per cent at the end of March 2006.
Courtesy:
Business Standard, May 03, 2006
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Automobile
Companies Post High Growth in Sales
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Passenger
car and two-wheeler makers kicked off
the fiscal in high speed with most players
recording double digit volume growth in
April. General Motors India has reported
a 66% increase in April sales to 3,662
vehicles led by Chevrolet Tavera. The
newly launched Chevrolet Aveo sold 1,565
units. Skoda India, too, has reported
a 54% rise in April sales to 984 units.
These numbers follow those of Maruti and
Honda Siel on Monday. MUL had reported
a 12.9% increase in domestic sales to
41,574 vehicles in April 2006 and Honda
Siel Cars India a 27.30% in April sales
to 4,551 units. In the two-wheeler space,
Bajaj Auto reported a 37% jump in motorcycles
sales in April at 1.88 lakh units. This
drove overall two-wheeler sales 29% to
1.90 lakh units. Bajaj's total exports
also grew by 67% to 31,715 units. Bajaj
Auto also said its Pantanagar plant would
go into production in the last quarter
of 2006-07. The third largest player TVS
Motor said on Tuesday that its motorcycle
sales grew by 53% last month to 80,862
units. Overall, two-wheeler sales rose
by 35% to 1.24 lakh units from 92,400
units in the year-ago period. On Monday,
the market leader had reported a 6.3%
growth in April sales to 2.5 lakh units.
The company's production was hampered
by a labour strike in its Gurgaon facility
last month.
Courtesy:
The Financial Express, May 03, 2006
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India
Inc to Make History With Numbers
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March
quarter set to see record topline growth,
highest net profit growth in last four
quarters. If the early indications are
anything to go by, India Inc is set to
post record top line growth during the
quarter ending March 2006. Thus far, 750
companies in various sector (excluding
banking and finance companies) have announced
their quarterly results. Collectively,
they have reported 25 per cent growth
in sales during the quarter over the previous
corresponding period -- the highest since
they started publishing quarterly results
in March 1998. Of course, the remaining
companies that are yet to announce their
results also have to post a similar performance
for Corporate India to create history.
The best top line growth thus far recorded
was 23 per cent for the quarter ended
in September 2004. However, the September
2004 data related to 3,000 companies,
while the latest data cover only 750 companies
that have announced their quarterly results.
Since June 2004, for eight successive
quarters, India Inc has been reporting
double-digit growth in topline. The sample
of 750 companies has reported aggregate
sales of Rs 1,71,115 crore in the March
2006 quarter against Rs 1,36,651 crore
in March 2005 quarter. When it comes to
bottom line, the growth is 35 per cent
-- highest in the last four quarters.
The interest burden during the quarter
has declined marginally by 0.26 per cent
to Rs 2,466 crore against Rs 2,473 crore
in the corresponding quarter of the previous
year, while other income has increased
22 per cent to Rs 4,526 crore (Rs 3,708
crore). The operating profit of these
companies has gone up 27 per cent to Rs
32,160 crore (Rs 25,241 crore) and gross
profit 30 per cent to Rs 29,695 crore
(Rs 22,768 crore). Their gross profit
margins (GPM) and net profit margins (NPM)
too have improved substantially. The NPM
increased by 83 basis points to 11.01
per cent in March 2006 quarter against
10.18 per cent in March 2005 quarter,
while the GPM improved 69 basis points
to 17.35 per cent (16.66 per cent) and
OPM by 32 basis points to 18.79 per cent
(18.47 per cent). One basis point is one
hundredth of a percentage point. As many
as 22 out of 111 sectors tracked by the
Business Standard Research Bureau (BSRB)
have posted over 100 per cent growth in
net profit. Eleven others have reported
bottomline growth between 50-100 per cent
and 46 sector between 25-50 per cent during
the quarter. Talking about individual
companies, 125 firms have more than doubled
their net profit while 62 others reported
bottom line growth between 50 per cent
and 100 per cent during the quarter. Cement,
constructions, non-ferrous metals, refineries,
print media, electronic equipment, telephone
cables, domestic appliances white goods
and breweries have posted over 100 per
cent growth, while information technology,
pharmaceuticals, retailing, hotels, sugar,
automobiles two- and three-wheelers and
aluminum sectors have reported hefty bottomline
growth in the range of 40-100 per cent.
The most spectacular show has been staged
by the housing construction sector. The
aggregate net profit of eight companies
in this sector has zoomed seven-fold,
from Rs 10.24 crore in March 2005 to Rs
78.97 crore in March 2006. Lok Housing
and Constructions has posted record net
profit growth in March quarter. The company
has reported net profit of Rs 22.26 crore
during the quarter against Rs 1 lakh in
previous year quarter. The 68 companies
that staged a turnaround have collectively
reported net profit of Rs 222 crore against
net loss of Rs 292 crore in the corresponding
quarter of the previous year. Thirty-eight
firms that slipped into the red posted
net loss of Rs 243 crore against net profit
of Rs 425 crore
Courtesy:
Business Standard, May 02, 2006
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Reliance
Commn Net up 42%
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Reliance
Communications Ventures (RCoVL), a Reliance-Anil
Dhirubhai Ambani Group company, has recorded
a 42 per cent rise in net profit (before
extraordinary items) at Rs 440 crore in
the quarter ended on 31 March 2006 compared
with Rs 310 crore in the previous quarter.
Total revenue for the quarter under review
declined to Rs 2,970 crore from Rs 2,991
crore for quarter ended December 31, 2005.
The deferment of revenue provision during
the quarter under review was Rs 119 crore.
Earnings before interest, tax, depreciation
and amortisation (EBITDA) increased by
23 per cent to Rs 1,042 crore during the
last quarter from Rs 848 crore of the
third quarter. Significantly, the operating
profit margin has risen to 35 per cent
for the last quarter from 28 per cent
during third quarter.The market capitalisation
of RCoVL, as on 29 April, 2006, based
on equity capital post reorganisation,
was Rs 65,000 crore. RCoVL will be included
in the benchmark index of BSE from 12
June 2006. The net worth of the company
was at Rs 11,742 crore and net debt stands
at Rs 3,293 crore. Anil Ambani, chairman
said, "RCoVL maintained its market leadership,
with product offerings best suited to
the requirements of millions of customers
across all segments and in each and every
service area. Our wireless business achieved
the highest ever acquisitions of 3.2 million
customers in a single quarter, with our
total base crossing a record 20 million
customers as on March 31, 2006." RCoVL,
the country's major CDMA-based mobile
services firm, has total assets worth
of nearly Rs 26,000 crore as users surged
in the world's fastest growing wireless
services market. On net debt, a company
executive said, "The net debt stood at
Rs 3,293 crore, reflecting a net debt
to equity ratio of 0.28:1, and providing
a strong platform for leveraging our balance
sheet to raise resources for the future
growth plans. At a conservative net debt
to equity ratio of 1:1, we have capacity
to add over Rs 8,000 crore of leverage
on our balance sheet."
Courtesy:
Business Standard, May 02, 2006
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Emirates
to Set up a 450-Seat Call Centre Here
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Emirates
Airlines is the latest airline to expand
its back office operations in India in
the quest for lower costs. The Dubai carrier
has firmed up plans to start a new 450-seat
call centre in Mumbai. It already has
four other such centres in New York, Manchester,
Australia and Dubai, but the centre in
Mumbai will be the largest. "Lower costs
and increased efficiency of operations
have led to a faster shift of back-office
work to India, Nabeel Sultan, senior vice-president
(west Asia and Indian Ocean), Emirates,
said. The new centre will begin operations
in a year. The airline is also drawing
up plans to start a training college in
India. The institute will service the
airline's staff training requirement for
its employees in functions ranging from
ticketing to fares and management, Mr
Sultan said. Emirates Airlines already
has a similar college in Dubai that caters
to its training needs. "The attempt is
to move such activities from the region
to India," he said. Emirates is one of
the largest international carriers operating
to India with about 63 flights a week
to eight cities. The airline declared
its results for '05 last week. It has
closed the year with a 5% increase in
net profit of $762m. The sub-continent
contributes to about 8% of its total revenue
and 17% of the total passenger numbers.
Hemmed in by high fuel costs and increased
competition, airlines around the world
are looking at outsourcing several activities
that were earlier considered core to their
business.
Courtesy:
The Economic Times, May 02, 2006
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ICICI
'Touch Point' Every 10 km
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ICICI
Bank wants to paint India's rural landscape
maroon. It is through a "no white spaces"
strategy, ensuring an ICICI Bank "touch
point" within 5-10 km from customers in
hinterland. Each touch point will be a
full-service banking centre, offering
services ranging from routine banking
transactions to trading in shares and
commodities, availing of loans and buying
life and general insurance policies -
the services urban customers enjoy at
bank branches. "The touch points will
not be just referral points. A person
entering a touch point will come out having
availed of all the services he wants,"
says Nachiket Mor, deputy managing director
of ICICI Bank. The touch points will be
managed and operated by local entrepreneurs,
be it pharmacists or tractor dealers.
It plans to complete the implementation
in these districts and cover 50 per cent
of 200 more districts by the end of the
current year. The touch points strategy
eliminates fixed costs involved in maintaining
own branches and the recurring costs are
only a fraction of the fixed costs entailed
in having branch presence. Also ICICI
Bank cannot have branches in all the 400,000
villages where its wants to do business.
"If we want to open a branch each at the
four lakh villages, we will require commercial
space and an average of six employees
per branch, which translates into a staff
strength of 2.4 million. This is simply
not viable," says Mor. ICICI Bank will
open at the most one or two branches at
the district centre and serve the villages
through the touch points. The branches
would be more of processing centres for
the respective districts. The non-branch
channels will include credit franchisees,
a network of originator franchisees, rural
internet kiosks, a network of micro-finance
institutions and non-government organisations
(NGOs) and technology-based initiatives
like biometric (fingerprint) enabled ATMs.
The credit franchisees will also be sharing
the business risk with the bank. ICICI
Bank is working with technology partners
like IIT Chennai for developing ATMs which
can dispense even soiled notes and automated
cash dispensers which would allow customers
to see the bundles and decide which one
they want to have.
Courtesy:
Business Standard, May 02, 2006
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India
Inc to See Topline Growth
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March
quarter set to see record topline growth,
highest net profit growth in last four
quarters. If the early indications are
anything to go by, India Inc is set to
post record top line growth during the
quarter ending March 2006. Thus far, 750
companies in various sector (excluding
banking and finance companies) have announced
their quarterly results. Collectively,
they have reported 25 per cent growth
in sales during the quarter over the previous
corresponding period -- the highest since
they started publishing quarterly results
in March 1998. Of course, the remaining
companies that are yet to announce their
results also have to post a similar performance
for Corporate India to create history.
The best top line growth thus far recorded
was 23 per cent for the quarter ended
in September 2004. However, the September
2004 data related to 3,000 companies,
while the latest data cover only 750 companies
that have announced their quarterly results.
Since June 2004, for eight successive
quarters, India Inc has been reporting
double-digit growth in topline. The sample
of 750 companies has reported aggregate
sales of Rs 1,71,115 crore in the March
2006 quarter against Rs 1,36,651 crore
in March 2005 quarter. When it comes to
bottom line, the growth is 35 per cent
-- highest in the last four quarters.
The interest burden during the quarter
has declined marginally by 0.26 per cent
to Rs 2,466 crore against Rs 2,473 crore
in the corresponding quarter of the previous
year, while other income has increased
22 per cent to Rs 4,526 crore (Rs 3,708
crore). The operating profit of these
companies has gone up 27 per cent to Rs
32,160 crore (Rs 25,241 crore) and gross
profit 30 per cent to Rs 29,695 crore
(Rs 22,768 crore). Their gross profit
margins (GPM) and net profit margins (NPM)
too have improved substantially. The NPM
increased by 83 basis points to 11.01
per cent in March 2006 quarter against
10.18 per cent in March 2005 quarter,
while the GPM improved 69 basis points
to 17.35 per cent (16.66 per cent) and
OPM by 32 basis points to 18.79 per cent
(18.47 per cent). One basis point is one
hundredth of a percentage point. As many
as 22 out of 111 sectors tracked by the
Business Standard Research Bureau (BSRB)
have posted over 100 per cent growth in
net profit. Eleven others have reported
bottomline growth between 50-100 per cent
and 46 sector between 25-50 per cent during
the quarter. Talking about individual
companies, 125 firms have more than doubled
their net profit while 62 others reported
bottom line growth between 50 per cent
and 100 per cent during the quarter. Cement,
constructions, non-ferrous metals, refineries,
print media, electronic equipment, telephone
cables, domestic appliances white goods
and breweries have posted over 100 per
cent growth, while information technology,
pharmaceuticals, retailing, hotels, sugar,
automobiles two- and three-wheelers and
aluminum sectors have reported hefty bottomline
growth in the range of 40-100 per cent.
The most spectacular show has been staged
by the housing construction sector. The
aggregate net profit of eight companies
in this sector has zoomed seven-fold,
from Rs 10.24 crore in March 2005 to Rs
78.97 crore in March 2006. Lok Housing
and Constructions has posted record net
profit growth in March quarter. The company
has reported net profit of Rs 22.26 crore
during the quarter against Rs 1 lakh in
previous year quarter. The 68 companies
that staged a turnaround have collectively
reported net profit of Rs 222 crore against
net loss of Rs 292 crore in the corresponding
quarter of the previous year. Thirty-eight
firms that slipped into the red posted
net loss of Rs 243 crore against net profit
of Rs 425 crore
Courtesy:
Business Standard, May 02, 2006
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Mexican
Giant Cemex Headed Here
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With
its entry, the world's top five players
will be in India. Cemex, the world's number
three cement manufacturer, is looking
at India as one of the opportunity markets
for future growth. As and when the move
materialises, the world's top five global
cement manufacturers will be present in
the burgeoning Indian market. In a forward-looking
statement after announcing the company's
results last weekend, the chairman of
the Mexican company, Lorenzo Zambrano,
said that along with China, Russia and
Brazil, India had a "great future potential
" because of its enormous size. He added,
"We have no presence (in India), so that
is an opportunity for us in the future."
The other three top multinationals that
have already started operations in India
are France's Lafarge, Holcim from Switzerland
and Italy's Italcementi. "The Indian market
of about 150 million tonnes per annum
is the biggest in the world after China.
With a growth of 10 per cent per annum,
it is also one of the fastest growing.
It is obvious that if Cemex wants to expand,
it has to set up shop here," said a senior
executive at a leading Indian cement company.
It is not that the Mexican company, whose
net income in 2005 was $ 2.1 billion,
has not tried to enter the Indian market.
In fact, between 2002 and 2004, Cemex
had twice opened talks with the BK Birla
Group to acquire the latter's Mangalam
Cement. However, differences over valuations
hampered the talks. Post the Holcim-Gujarat
Ambuja Cement (GACL) deal earlier this
year, valuations are running high in the
Indian cement sector. "It is only after
a decade that the Indian industry is seeing
good times with record prices and high
demand. So though there might be willing
sellers, it won't come cheap for Cemex,"
pointed out an industry expert. In 2000,
Italcementi entered into a joint venture
with Zuari Cement. Swiss player Holcim
formed its base in India after taking
over ACC in 2005 and later GACL this year.
Heidelberg was the latest to join the
race, with a joint venture deal with Indorama
Cement in March. Cemex has operations
in 50 countries across the world. Last
year, it produced 80.6 million tonne of
cement and 69.5 million tonne of ready-mix
concrete.
Courtesy:
Business Standard, May 02, 2006
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More-The-Merrier
India Has MNCs Vying for Foothold
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For
Once, India is stealing the thunder globally
with her status as an over-populated nation.
Investment bankers, analysts and strategists
are egging multinational companies to
put out an India strategy in their company
presentations to get higher valuations
on the international bourses. Global companies
across categories such as financial services,
durables, FMCG, automobiles and others,
are actively playing up the India card
to switch the spotlight away from their
poor performance in saturated markets
and push up their stocks on the bourses.
Companies like Unilever, P&G, LG, Samsung,
Suzuki, Ford, GM, Deutsche, and ANZ Grindlays
are cases where the valuations went the
right way with an India strategy. Andrew
Holland, head of Asia strategy of DSP
Merrill Lynch, said companies are not
seen as happening without an India plan.
"This phase happens every 10 years. Across
categories, global majors are selling
the India consumption story aggressively
to gain brownie points with the investing
fraternity and send scrips soaring on
the exchanges. Highlighted as the foremost
emerging market in the world today, India
and China represent more than 37% of the
global population and consumer base. "With
personal income growing in China and India,
the continent is on the verge of a real
consumer revolution," Mr Holland said.
"With the US and European markets getting
saturated and growth rate stabilising
at around 3-4%, India is far more promising
with a double-digit growth rate of 15-20%,"
says Mukul Nag, VP, ICICI Securities.
For manufacturers like Suzuki, India has
been a very big success story. The Indian
operations have been able to generate
volumes and profitability. The CEO of
a leading MNC revealed how not having
an India strategy was given a big thumbs
down at one of its routine analysts conference.
"Every sector in the country is on an
upward trend fuelled by domestic consumption.
India is clearly the most favourite topic
for discussion anywhere," he said.
Courtesy:
The Economic Times, May 02, 2006
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Kingfisher
Eyes Buyout Abroad
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Liquor
baron Vijay Mallya is close to uncorking
a major acquisition deal in the international
airline space. As part of his plans to
spread his Kingfisher Airlines' wings
in the overseas market, Mallya is now
sewing together plans to acquire an international
airline - a move that would take his year-old
full-service airline global Mallya is
in advanced negotiations for buying an
international carrier, which would give
his Kingfisher Airlines the right to mount
flights into India, sources close to the
development told ToI. "The move is aimed
at cruising past the Indian regulation
that restricts international flights only
to airlines that have a five-year domestic
flight track record,"the source said.
Mallya, when contacted, confirmed the
move but refused to divulge details. "I
have a plan in mind and acquiring an international
airline is part of that plan. I will make
a formal announcement once the deal is
signed,"Mallya said. Kingfisher, Mallya
said, plans to fly non-stop on Bangalore-San
Francisco and Mumbai-New York routes.
"A lot of American carriers are facing
trouble and cruising into bankruptcy.
Even larger airlines like Delta has decided
to discontinue the low-cost subsidiary
Song. This is the ideal opportunity to
acquire one of these smaller airlines,"an
analyst said. Mallya said he has already
floated an airline company in America
under the name Kingfisher International
Inc. "But we need to have aircraft and
other infrastructure to start operations,
for which I am also exploring a tie-up
with one of the local airlines,"he said.
Mallya is planning to take his airline
international by the end of 2007 or early
2008, which will be the time when he starts
taking delivery of the long-haul planes
ordered from Airbus.
Courtesy:
The Times of India, May 01, 2006
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Tatas
to Raise Bangladesh Investment to $3 Billion
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The
Tata group offered on Sunday to increase
a proposed investment in Bangladesh to
$3 billion and to set aside a 10 per cent
stake in its Bangladeshi business for
the government, a senior official in Dhaka
said. Also, Tata has offered to buy natural
gas in Bangladesh at $3.10 per thousand
cubic feet, more than double the previous
offer, and to list its Bangladeshi business
on the country's stock exchanges, Mahmudur
Rahman, executive chairman of Bangladesh's
Board of Investment, said. In October
2004 Tata proposed to invest $2 billion
in Bangladesh, but it made no headway
over a dispute on the price of gas. Later
the investment offer was raised to $2.5
billion, Mahmudur said. Tata's proposed
projects in power, steel, fertiliser and
coal would constitute the largest single
foreign investment ever made in Bangladesh.
The country has 14 trillion cubic feet
of gas reserves, according to the energy
ministry. Mahmudur said Tata's price went
up while the required guarantee period
came down to 10 years. ''They have requested
us to say yes or no by end of May and
want to sign a final agreement by July,''
Mahmudur said. ''Negotiations are over,
and now it is time to take decision.''
Tata has asked Bangladesh to give it a
10-year tax holiday for its steel and
coal projects and strong infrastructural
support, Mahmudur said. The company says
the current five-year tax holiday for
foreign investors is too short for such
large-scale projects. ''We have placed
a comprehensive report to the Bangladesh
government on the basis of just concluded
negotiations,'' Rosling said. ''We consider
our investment proposals viable and offer
potentially significant economic benefits
to Bangladesh,'' he said. ''Our investment
proposals will also boost Bangladesh's
image outside and create job opportunities
in less developed areas.'' The Tata proposals
were five times the foreign direct investment
proposed to Bangladesh last year.
Courtesy:
The Indian Express, May 01, 2006
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$1.3
b Business From Hannover
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The
just-concluded Hannover Messe 2006, the
world's largest engineering technology
fair, has generated total business to
the tune of $1.3 billion, besides serious
enquiries amounting to $100 million, the
Engineering Export Promotion Council (EEPC)
today said. This includes a large number
of business deals and joint ventures concluded
between Indian engineering companies and
their German counterparts, including joint
ventures between Kingfisher Airlines and
Airbus, Mann Age and Force Motors, Deutsche
Bann and Indian Railways, EEPC chairman,
Mr Rakesh Shah, said in an official communique
here. Spot orders were booked to the tune
of $15 million and serious enquiries worth
$85 million generated at the Hanover Fair
in Germany. India was the partner country
in the 24-28 April trade fair after a
gap of 21 years. Agreements were signed
between Indian Council for Medical Research
and Helm Hotz. for Research and Cooperation
in bio-technology and other medical areas.
Energy was one of the focal areas in the
Fair and a bilateral Indo-German Energy
forum was formed. Earlier, at a seminar
'Industrial Sub-Contracting in India',
minister of state for industry, Mr Ashwani
Kumar, projected India as a potential
global sub-contracting hub and said the
competitive advantage of India's manufacturing
sector was increasingly driving the world's
leading multinational corporations either
to shift their manufacturing bases to
India or source supplies from their partners.
Courtesy:
The Statesman, May 01, 2006,
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Indian
Reaches High, Targets 50% Growth
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Unperturbed
by the competition from private airlines,
Indian (Airlines) is expecting to register
an ambitious growth of over 50% in profit
in the current fiscal ending March 2007.
In 2005-06, the net profit is estimated
at around Rs70 crore, which will cross
Rs100 crore figure in the next current
fiscal, said highly placed sources. "These
assumptions are based on the fact that
the company will remain standalone. In
case the merger of two public sector airlines
is being completed in the next three months
then its contribution in the overall business
and profitability would be much more,"
they added. The revenues of the company
are expected to jump 12.5 per cent in
FY'07 to Rs7,000 crore from Rs6,048 crore
in FY'06.To augment its fleet, Indian
will take two A319 and one A320 aircraft
on lease, which will be delivered in the
coming weeks.In November, the company
is also expecting to get delivery of the
first of the 43 planes it has placed orders
for with Airbus. Of the 70 planes that
Indian has, 20 are on lease. Market factors
have led to the gradual erosion of Indian's
share. In 2005-06, its market share was
down to 32.8%from 41.7% in 2004-05. In
2005-06, the expendiure of the company
on aviation turbine fuel grew to Rs2,300
crore from Rs 1,750 crore in 2004-05.
In 2006-07, the expenditure on fuel is
expected to be Rs2,440 crore. In this
fiscal, Indian is also targeting growth
of 16%in the revenue passengers to 9.2
million and an increase in seat factor
by three per cent to 69.
Courtesy:
Hindustan Times, May 01, 2006
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