News: Four Seasons Wines gearing for brand launch

(BL 31/03/2007) Bangalore - Four Seasons Wines, in which United Spirits holds a majority stake, is in talks with wine companies in Australia for an acquisition even as it is set to launch its first brand next month. The other partners in Four Seasons Wines include Sadanand Sule, Pratap Rao Pawar and Ranjit Pawar and a few farmers from Baramati who collectively hold 49 per cent stake. The United Spirits' Senior Vice-President and Chief Wine Maker, Abhay Kewadkar, told Business Line that the company is also in the process of signing contracts with farmers for nearly 1,000 acres in Baramati in Maharashtra for contract farming. "We have already signed 15-year contracts for 400 acres," he said. He said the joint venture would also look at Bangalore and Nashik for setting up vineyards. Kewadkar, who is also a Director on the board of the company, said Four Seasons is in talks with a few players in Australia and the US for acquisitions. "We are in talks with a few medium-sized players there. The acquisition could happen soon. We are looking at those who have a good brand value as we are keen on a global footprint," he said. The total investment for the next five years is around Rs 75 crore. For the first year of operations, apart from United Sprits' investment, the other partners have invested Rs 20 crore. Four Seasons already owns a 330-acre vineyard in Baramati. There are also plans to take the company public in another couple of years. The first of the wine brands from Four Seasons, Zinzi will be launched next month, Kewadkar said. Zinzi, which is part of the Varital range, will cost about Rs 240 for a 750 ml bottle. Over the next three years, the company will launch seven brands from the Varital range, five in the premium range and a sparkling wine using technology from Bouvet Ladubay, a French wine company, which United Spirits acquired recently. Four Seasons expects to sell between 5 million and 7 million bottles in the next five years, which will give it a market share of about 35 per cent. Kewadkar said the entry of a big player like United Spirits will help the industry grow rapidly. He said with the acquisition of Bouvet Ladubay, United Spirits would be able to offer a complete range of wine brands to Indian customers. Currently, the domestic market size is around 1 million cases per year and is growing at about 35 per cent. Chateau Indage leads the market with over 35 per cent share followed by Sula with 15 per cent and Grover Vineyards with 8 per cent share. India's per capita consumption of wine is about a teaspoon while that of China is about 5 litres and in a developed market like Italy it is about 50 litres.

News: RPG Retail plans 2,000 Spencer's outlets over 2 years

(BL 31/03/2007) Kolkata - RPG Retail has firmed up plans to augment the number of Spencer's retail outlets across the country from 125 at present to 2,000 within the next two years. The company's retail rollout plans would necessitate an investment of Rs 1,200 crore. While most of this amount would be generated through internal accruals, RPG Retail proposes to raise a portion of the funds required by way of "an IPO or private placement or private equity", according to Sanjiv Goenka, Vice-Chairman of the RPG Group. Fund raising Speaking to newspersons shortly after the inauguration of the first Spencer's Daily retail outlet in Kolkata on Friday, Goenka said the "first tranche" of the funds required would be raised "within the next 12 months". He said RPG Retail would provide direct and indirect employment to around one lakh people within the next two years. According to him, the Spencer's retail stores rollout would be spread across five formats - Spencer's Hyper, Spencer's Super, Spencer's Daily, Spencer's Express and Spencer's Fresh. Sourcing for the products that are retailed was being done through the company's "consolidation centres", Goenka said, adding that there were no plans to diversify into any kind of backward integration ventures. A tie-up has been forged with Flurys, the legendary tea room and Swiss Confectionary of Kolkata, whereby 11 Flurys outlets will be launched in the premises of Spencer's Dailies in the city within the next six months. Goenka said RPG Retail, comprising Spencer's Retail, RPG Cellucom, Books & Beyond and MusicWorld, was expected to count for a turnover of Rs 600-700 crore, or around 5 per cent of the RPG Group's turnover, during the fiscal 2006-07. RPG Retail, by 2011, is expected to account for 25-30 per cent of the Group's turnover. Sales from food retail would comprise a major chunk of the revenue of RPG Retail. Plans for Bengal With regard to West Bengal, Goenka said plans had been firmed up to set up 20 Spencer's retail outlets in the State by September 2007. One hypermarket would be opened in Durgapur by mid-April while a few others would be opened at Rashbehari Avenue and South City complex in South Kolkata, among other venues.

News: French luxury brands bullish on India

(BL 31/03/2007) New Delhi - `India is in fashion, and it's a fashion that's here to stay', was the unanimous view of the representatives of the French luxury brands - Chanel, Louis Vuitton, Lanvin and Cartier - who are currently on a visit to India.

"India is a very strategic market, and the market is close to fulfilling its potential," says Damien Vernet, General Manager, West Asia and India, Louis Vuitton.

Equally optimistic about the potential of the Indian luxury market is French luxury brand Lanvin. In fact, while West Asia and emerging markets of China and Russia contribute 25 per cent of Lanvin's worldwide sales, the brand is now betting big on India. "If you look at the number of Indians who walk into our Paris, Dubai and London boutiques, and just extrapolate that, India could easily add a couple of percentage points to our sales in the next five years," says Paul Deneve, Director-General Delegue, Lanvin.

Meanwhile, several luxury brands are in the process of finalising their initial retail expansion plans in India. In fact, Kolkata, Bombay and Bangalore may see exclusive Cartier stores, as soon as Igor Baschet, Area Manager, Cartier, identifies the projects and partners. "The elite in India are growing at 20 to 30 per cent. India already has about 36 billionaires, with 14 of them who are new to the list," says Baschet, whose company sells its watches from 12 outlets in eight cities.

Luxury brands, which have so far only found an environment compatible with their ethos in boutiques located at five star hotels, are now looking at the booming retail market. "There have been a few obstacles, the lack of retail markets is a pressing one. If it weren't, we would have many more shops in India," says Louis Vuitton's Vernet.

Luxury hotels may continue to be the preferred destination, but malls are where luxury retail is headed.

Lanvin's Deneve, who visited India a few years ago, plans to take a recce of the recently evolved mall culture. Chanel, which will be setting up at least seven shop-in shops this year, is planning its next boutique in Mumbai and is open to the idea of tying up with a retailer. FICCI estimates the Indian luxury market at close to $2.2 billion in 2006, and growing at 20 per cent.

News: Indian forex reserves rise $1.789 b

(BL 31/03/2007) Mumbai - The country's foreign exchange reserves surged by $1.789 billion to touch $197.746 billion in the week ended March 23, 2007. The reserves have increased by over $3.3 billion in two consecutive weeks. During the week ended March 16, the reserves had touched $1.547 billion to $ 195.957 billion. According to the RBI's Weekly Statistical Supplement, foreign currency assets increased by $1.789 billion to $190.392 billion. Treasury officials said strong FII inflows would have resulted in the accretion to the reserves. "The RBI was conspicuous by its absence last week. So, the increase could have come only with strong dollar inflows," said a senior treasury official. According to data from SEBI, FII inflows were around $325.5 million. Foreign currency assets, as expressed in dollars, include the effect of appreciation or depreciation in non-US currencies (euro, sterling and yen) held in reserves. Gold reserves remained unchanged at $6.883 billion while SDRs were at $2 million. India's reserve position in the IMF remained the same at $469 million.

News: Indo-Swiss B2B contacts firmed up

(BL 31/03/2007) New Delhi - Indo-Swiss bilateral commercial co-operation got a big boost with high-level B2B contacts that took place at the Swiss Forum for International Business, which concluded in Zurich on Wednesday with India as the focus country.

The Union Minister of Commerce and Industry, Kamal Nath, and the Swiss Minister of Economy and Federal Councillor took part in the event which was preceded by the 10th meeting of the Swiss-India Joint Economic Commission (JEC) on March 26.

Joint study group

The JEC noted with satisfaction the positive development in the bilateral economic relationship and hailed the initiative for setting up an India-European Free Trade Association (EFTA) Joint Study Group to explore the feasibility of a broad-based trade and investment pact between India and EFTA.

Both sides resolved to step up co-operation in the realm of intellectual property rights and geographical indications by forging a formal structure through an MoU to enable dialogue between experts on both sides.

IT, tourism identified

They also appreciated the extant co-operation and progress made in the areas of organic agricultural and marine products, beside agreeing to explore the possibility of enhanced co-operation in the food processing sector covering technological as well as infrastructure aspects.

The JEC identified IT and tourism as having potential for larger bilateral economic flows and both sides agreed that the JEC would meet annually with the next meeting to be held in New Delhi in 2008, an official release said.

News: Tata Power in $1.3 b Bumi coal deal

(RTR 31/03/2007) Jakarta/Mumbai - Tata Power Co. Ltd. has agreed to buy 30 per cent stakes in two coal mines and other assets from Indonesia's PT Bumi Resources Tbk for $1.3 billion, the Indonesian firm said on Saturday.

Tata Power said in a separate statement it has signed agreements to purchase the stakes in PT Kaltim Prima Coal and PT Arutmin Indonesia, two of Indonesia's largest coal mines, and a related trading company owned by Bumi.

Tata is seeking coal supplies for the company's upcoming power projects on the west coast of India comprising 7,000 megawatts (MW) to be developed over the next 5 years.

Bumi has had a chequered record trying to push through deals to sell its coal assets. Last year it failed to sell stakes in PT Kaltim Prima Coal and PT Arutmin coal mines to local investment bank Renaissance Capital for $3.2 billion in what would have been Indonesia's second-biggest acquisition.

Sources said creditors for Renaissance had baulked after one of the mines up for sale performed worse than expected because of heavy rain.

"Tata Power takes a 30 per cent stake in Bumi's coal assets at a price of $1.3 billion, including working capital and closing adjustment," Dileep Srivastava, an investor relations' official at Bumi, said in an e-amail sent to Reuters.

Tata said the funding of the deal would be done through a combination of debt, as well as internal accruals and borrowing from the company.

"As part of the purchase, the company has signed an offtake agreement with KPC (Kaltim Prima Coal) which entitles it to purchase about 10 million tonnes of coal per annum," Tata added.

Prior to working capital and other adjustments, Tata said the deal was worth $1.1 billion .

Bumi is controlled by the family of Indonesia's chief social welfare minister Aburizal Bakrie.

News: Pyramid inks JV with realty co

(TNN 30/03/2007) Mumbai - Pyramid Saimira Theatres (PSTL), the Chennai-based movie theatre chain, has formed a joint venture with Delhi-based real estate firm Baderwals Infraprojects to set up a chain of 200 integrated leisure and shopping destinations with an estimated investment of Rs 12,000 crore.

PSTL will hold 49% stake in the newly-formed company called Baderwals Pyramid Development, while Baderwals will hold the remaining equity.

According to PSTL managing director PS Saminathan, Baderwals Pyramid, besides being the largest chain of its kind in the country, would also develop an array of single largest chain of multiplexes, budget hotels, hypermarkets and shopping malls.

“Out of these 200 destinations, big cities and smaller cities would have 100 each. Approximate construction cost per destination would be Rs 80 crore for big cities and Rs 40 crore for the smaller ones,” said Mr Saminathan.

PTSL has recently formed a special purpose vehicle (SPV) with Shriram Mall Infrastructure, a south India-based firm to set up 100 malls-cum-multiplexes. In the SPV, Shriram holds 70% equity while PTSL holds the remaining.

PSTL, a worldwide theatre chain company, with presence in all categories of theatres including mall, multiplexes, cineplexes and stand-alone theatres, now comes to India with world-class technology, aiming to revolutionise the theatre experience in the country. Pyramid has lined plans to set up 4,000 multiplexes in the US, another 250 in China and 1,500 in Europe.

The Indian entertainment industry has undergone a sea-change in the last few years. The industry is projected to grow at 18% annually and is expected to be around $3.4 billion by 2010. The major driving factor in this growth would be technological advancement in production, exhibition and marketing.

PTSL has tied up with Asian Integrated Industries to set up a theatre chain in Malaysia with 150 multiplexes and single screen theatres spread all over Malaysia.

News: 'Mumbai is second-worst city for operating businesses'

(DNA 30/03/2007) Mumbai - A report analysing South Asia’s most business-friendly destinations has diminished the case Mumbai makes for itself as India’s commercial capital. ‘Doing Business in South Asia 2007’ - a report published by the International Finance Corporation, a World Bank entity - characterises Mumbai as the second-worst city in the region for operating businesses. India, however, has emerged as the top reformer in South Asia, an endorsement of the country’s success in implementing regulations that are conducive to business. Hyderabad takes top position as the entrepreneurial hotspot among Indian cities, while Kolkata is slotted at the bottom. The study, also known as the World Competitiveness Report, was released last month. Devendra Fadnavis, BJP legislator, produced the report in the assembly while participating in a debate on the state budget. Fadnavis pointed out that the state’s industrial growth rate has gone down from last year’s 9 per cent to 7.9 per cent, and its exports have slid by Rs 80,000 crore.

News: 'Merrill to invest $1 b in India expansion'

(RTR 30/03/2007) Mumbai - U.S. investment bank Merrill Lynch plans to invest $1 billion to expand its Indian operations over in the next two years, the Financial Express reported on Friday, quoting unnamed government officials.

Merrill planned to hire more investment bankers, debt and equity specialists and research analysts to meet increasing competition from rivals such as Goldman Sachs, Lehman Brothers and Credit Suisse, the report said.

A Merrill spokeswoman declined to comment on the story.

The newspaper said Merrill Lynch Vice Chairman and Chief Administrative Officer Ahmass Fakahany was recently in New Delhi meeting officials at the finance, commerce and industry ministries.

Merrill's India unit has suffered a number of high-profile resignations since late 2006, including managing director Munesh Khanna, its head of global markets and investment banking Amit Chandra, and Sanjay Sharma, who was head of equity capital markets.

News: Lamborghini to launch Gallardo in India

(PTI 30/03/2007) New Delhi - Italian sports car maker Lamborghini today said it will soon launch its latest model Gallardo Superleggera in the Indian market, with a price tag of at least Rs 20.2 mn

The new car would be delivered on order through its select dealer base in the coutry.

"We are excited to bring this international driving experience to the discerning Indian motor-sporting fans... these great machines will be retailed from our exclusive outlet," Automobili Lamborghini SpA President and CEO Stephan Winkelmann said in a statement.

The Gallardo Superleggera is being sold for 1,26,800 euros (about Rs 76,08,000) in the European markets, but would be costlier in India as the country imposes massive customs duty on foreign cars.

The company had launched its sports convertible Gallardo Spyder and the Murclelago in India last year.

News: AIG's Indian foray sans local partner

(DNA 30/03/2007) Mumbai - AIG Global Investment Group, the world's sixth largest investment manager with $638.1 billion in assets under management, is set to start its Indian operations.

"We plan to launch a diversified equity scheme - AIG India Equity Fund - by mid-April and a liquid scheme soon thereafter," said Saurabh Sonthalia, managing director and chief executive officer of AIG's Indian asset management company, AIG Global Investment Group Mutual Fund.

Tushar Pradhan will head the equity fund management team of five, and Huzaifa Husain the debt team of three.

The fund house's unique value proposition, said Sonthalia, "is that it takes a meaningful stake in the asset class that it offers to its clients". Sonthalia was not willing to divulge how much the AMC or its parent would pour into its first offering, the India Equity Fund.

"Structured products will also be a part of our product offerings," said Sonthalia, who in his previous assignment, looked after the marketing, distribution and sales efforts at DSP Merrill Lynch Mutual Fund.

The other unique aspect of AIG would be that it would be the first asset management company to set up shop in India without a local partner. Since it is 100% foreign-owned, it had to bring in $50 million as equity capital.

News: Tata Motors and Rs 1-lakh car

(Forbes 30/03/2007) Mumbai - An Indian car may soon earn a parking place in history alongside Ford's Model T, Volkswagen's Beetle and the British Motor Corp.'s Mini, all of which put a set of wheels within reach of millions of customers after they rolled onto the scene. Tata Motors is developing a car it aims to sell for about $2,500 -- the cheapest, by far, ever made.

There is a lot riding on its small wheels. If the yet-to-be-named car is a success when it goes on sale next year, it would herald the emergence of Tata Motors on the global auto scene, mark the advent of India as a global center for small-car production and represent a victory for those who advocate making cheap goods for potential customers at the "bottom of the pyramid" in emerging markets. Most of all, it would give millions of people now relegated to lesser means of transportation the chance to drive cars.

It is a hugely ambitious project--rivals have called it impossible--for any company. But it is audacious for one that hadn't even built cars a decade ago.

For decades Tata Motors has been India's largest commercial vehicle maker--the Tata logo appears on buses, dump trucks, ambulances and cement mixers. Sturdy as elephants, they are a fixture of the Indian landscape. Owners inevitably paint the exteriors in a cheerful riot of bright red, green, orange, blue and yellow and line the un-air-conditioned cabs with teakwood to keep them cooler in India's searing heat.

However ubiquitous, Tata's trucks faced a problem after the Indian government began reforms that opened the Indian economy in 1991: the huge cyclical swings in demand typical for commercial vehicles. To diversify, Tata would enter, at great expense, the less volatile passenger car market.

Before the reforms Indian customers had so few choices that Tata was sheltered. When demand tailed off it just worked down a waiting list, and there was never a need to concern itself with customer desires. Sure enough, after the economy slumped in the late 1990s--just when expenses for developing the passenger car hit home--Tata truck and bus sales plunged by 40%, and Tata Motors lost $110 million in fiscal 2000. It was the first red ink seen since 1945, when the company was founded to make locomotives. Executives were stunned. "It was corporate India's biggest loss," says Ravi Kant, managing director of Tata Motors. "The crisis changed us. We told ourselves, 'Never again.'"

But Tata Motors, part of India's largest conglomerate, first had to reset its ways. Like many Indian companies protected for decades from foreign competition, Tata had gotten to 2000 still fat and slow.

Change started with a spring 2000 meeting at the Lakehouse, a bungalow across the street from the company's main factory in Pune, a three-hour drive east of Mumbai. Kant, then in charge of the commercial vehicle division, needed fresh ideas instead of rigid resistance, so in an experiment, he called a meeting of 20 of his most promising young managers--all under 35 years old.

"I have a problem," he said in his matter-of-fact tone. "The company is bleeding." He asked for ideas on how to stop the gush of red ink. Okay, they told him, trim costs.

Girish Wagh was there, just 29 then. He remembers the shock of what came next. "Ravi Kant said that 1% in cost cuts would be a rounding error. He asked for 10%!" says Wagh. "Never had we thought of such a target." Every single year until then costs had gone up, not down. Kant told them to present a basic plan that very afternoon, in front of him and--alarmingly--all their bosses.

They worked frantically. By the 3 p.m. meeting, their wildest ideas were on the table. Taken together, they added up to 6.5%. "A breakthrough!" Kant remembers thinking. But that's not what he said. "Please go back and think again," he told them. He needed 10%, not 6.5%. "You've got three weeks." The young team took some measures even as it scrounged for more. In came benchmarking, purchasing from Internet auctions, outsourcing parts to more efficient suppliers and boosting revenue by selling Tata-made dies to other companies. Meanwhile, the Pune factory's veteran boss bought into the project.

The transformation of Tata Motors had begun with the searing loss in 2000, but it continued with a return to profit in the fiscal year ending March 2003. By then it was producing two car models and selling a bit abroad. Today, after buying or partnering, the company has vehicle projects around the globe and exports 11% of output, mostly to South Africa.

Efficiency is way up: It now takes between 12 and 15 minutes to change a die on the passenger car assembly line, down from two hours in 2000. The company's break-even point for capacity utilization is one of the best in the industry worldwide. Between 2000 and 2006 nearly 6,000 workers left the company with early-retirement deals. Meanwhile, the once radical e-sourcing idea has become routine for Tata, which ran 750 reverse auctions on Ariba in the past year to bring down purchasing prices by an average of 7% for everything from ball bearings to the milk served in the company cafeteria.

Tata Motors listed on the New York Stock Exchange in 2004. After thousands of changes, in the quarter ending December 2006 Tata earned $116 million on revenue of $1.55 billion. Annual revenue grew to $5.2 billion for the fiscal year ending in March 2006. Analysts worry that high product development costs and rising commodities prices could lower profit margins for the next few quarters.

The changes at Tata Motors are coming as India itself is transforming. With economic growth charging along at 9% last year, more and more Indians can afford cars. But on the highway from Mumbai to Pune, the new cars zoom past wooden carts filled with construction materials and pulled by ponies, camels, elephants or even people. Roadside markets offer chickens and geese--those chosen are slaughtered on the spot and usually carried home on motor scooters. Outside the Tata Motors gates in Pune, a woman in a flowing red sari balances a 3-foot-wide basket on her head. It holds snacks and drinks and serves as a roving roadside shop.

Inside the company gates is a modern factory complex. In one building, just past a small statue of the beloved Hindu elephant god Ganesha, robots pick up pieces of sheet metal and feed them into a series of 30-foot-tall stamping presses every ten seconds until the left-side door of a Tata Safari suv is formed. In a building nearby, workers in navy-blue uniforms use computer-aided designs from Tata engineers to create tools and dies used to make those sheet-metal stampings. Tata Motors boosts its revenue by making dies for Jaguar, Ford, General Motors and Toyota, too, just as it does by allowing the made-in-India Mercedes to be run through its paint shop.

Workers at the Tata Motors factory have been trained in Japanese manufacturing techniques that call for continuous improvement. A worker building Safaris noticed that each day on average, one front grille was ruined when a worker leaned over to work on the engine and accidentally scratched the grille with his belt buckle. Cost: about Rs 2,500 --$57--a day, or $17,000 a year. Tata designed a simple protective cover for the grilles, plus a slip-on fabric cover for belts and watches that is now used to cut down on expensive waste at each of Tata Motors' factories. Cost: about 25 cents per vehicle.

News: 34 Indian firms feature in Forbes list

(IBN 30/03/2007) New Delhi - As much as 34 Indian companies have found place on the elite Forbes' list of 2,000 corporate giants across the world. State-owned Oil and Natural Gas Corporation Ltd (ONGC) tops the list of 34 Indian companies, while many of them are from banking sector. There are five oil and gas companies, four software giants, three each dealing in materials and capital goods, two utilities, and one each food, consumer durable, and telecommunications majors in the list of 34. In the ranking based on sales, profits, assets and stock market value, ONGC finds itself at the top of the Indian list, with 239th spot in the overall rankings and is followed by Reliance Industries (258), State Bank of India (326) and Indian Oil (399). Tata Consultancy finds 1047 spot in the overall list but tops Indian companies ranking of software and service outfits. Following it in the category are Infosys Technologies (1130), Wipro (1233) and Satyam Computer Services (1874). Bharti Airtel is the only Indian telecommunications company to find spot among 2000 giants with a rank of 1149. State Bank of India Group finds top spot among the Indian banks and is ranked at 326 in the overall list. It is followed by ICICI bank (536), HDFC-Housing Development (1197), Punjab National Bank (1308), Canara Bank (1360), HDFC bank (1376), Bank of Baroda (1585), Bank of India (1691), Indl Dev Bank of India (1767), Union Bank of India (1772). UCO Bank (1931), Syndicate Bank (1943), Indian Overseas Bank (1946) and Oriental Bank of Commerce (1974). In the materials category, Steel Authority of India, Tata Steel and Hindustan Zinc find slots in the coveted list. ITC is the only Indian company to make the list in food, drink and tobacco category. NPTC, TATA Motors, Gail India, Bharat Heavy Electricals, Bharat Petroleum, Larsen and Toubro, Hindustan Petroleum and Bajaj Auto are among other Indian companies that find spot among 2000 top companies. While Argentina is represented on the Global 2000 for the first time ever, American companies occupy the first seven top spots out of the 2000 companies appeared in the list. Two firms from Netherland and one from Switzerland are among the first ten companies. The top spot goes to Citigroup and following it are Bank of America, HSBC Holdings, General Electric, JP Morgan Chase, American Intl Group, ExxonMobil (all American), Royal Dutch Shell (Netherlands), UBS (Switzerland) and ING Group (Netherlands). The US companies included on this year's list have a combined market capitalisation of $13.9 trillion. Forbes says this year's comprehensive list of global super stars values the world's largest public companies, including the hottest companies and best performers across 27 industries. The 2007 rankings indicate that globalisation is the essential element for business to prosper, the magazine says. China brings 16 new companies to the Global 2000 and the United States has 34 fewer in the list. Among the giants, 116 are oil and gas, which pulled down more revenue than any other industry but banks lead in profits. A highlight of the analysis is that total revenues of the companies headquartered in Switzerland exceed that nation's gross domestic product. The global high performers appeared on the Forbes list are fast-growing, adroit and well-managed companies that help set the benchmarks for their respective industries.

News: Aditya Birla Group to invest $260 m on fibre

(RTR 30/03/2007) Mumbai - Aditya Birla Group, controlled by billionaire Kumar Mangalam Birla, is investing $260 million to expand a textile fibre capacity and meet rising global demand for casual fabrics, a group official said on Friday.

The expansion includes diversified Grasim Industries Ltd., which will spend about Rs 300 crore ($69 billion), and unlisted group companies in Thailand, Indonesia and China.

The group aims to raise the capacity of viscose staple fibre, a raw material for fabrics, to 727,000 tonnes a year by the December quarter from 566,000 tonnes now, group director for pulp business Shailendra Jain said.

There has been a change in consumer preference for cellulosic fabric in the last few years after demand remained stagnant in the 1990s, he said.

"There is a strong indication that consumers want more casual look," Jain said. "It's changing because of the lifestyle products."

Most of Grasim's investment will be funded from internal accruals, he said.

The fibre unit was a drag on Grasim's earnings for many years in the 1990s and many analysts had urged the cement-to-textiles firm to spin off the unit to improve financial ratios.

The fortunes of the unit improved in the last few years and has contributed positively to earnings.

Jain said the expanded capacity would start production after the July-September quarter, and immediately add to earnings of Grasim.

News: Diageo India’s quaffing spirited plans

(DNA 29/03/2007) Mumbai - Clean-cut Joey Bergstein hardly evokes images of a swashbuckling buccaneer. The senior vice-president, global marketing of Diageo Rum, a $1 billion-plus business worldwide, will, however, help us shake hands with a roguish, fun-loving privateer called Captain Morgan.

That’s the international rum brand entering this market via Diageo India, complete with eponymous moustachioed brand mascot.

Priced at about Rs 550 for a 750 ml bottle of CM Original Spiced, this swaggering launch marks Diageo’s debut in the world’s largest rum market. It also spiritedly opens a whole niche in rums here as our first golden spiced rum, which they swear offers the best rum-cola combo over rival brands.

Fascinated by this “frenetic”city with its streetside cameos of intense contrasts, Bergstein is more than hearty about their rum future in this untapped market. There’s a treasure chest full of premium international Diageo rums that he hopes we will swill over the coming years.

Expect to say ho ho ho to other variants of raunchy Captain Morgan in due course like CM Silver Spiced, CM Private Stock, CM Original (Black label), CM Parrot Bay, CM Tattoo Black Spiced. Beyond the helmsman, we should also be saying Salut to Diageo’s prized portfolio of Venezuelan rums - Pampero and Cacique; Jamaican Rum - Myers’s; and the number one Australian Rum - Bundaberg in due course.

Salut soon to Baileys and Smirnoff Ice

For Diageo India, these are heady days indeed. According to reliable trade buzz, their prized liqueur brand called Baileys will flow in next year, with pizazz brand extensions such as Baileys ice creams, chocolates, with coffee and in umpteen other formats. In the ready-to drink segment, the iconic Smirnoff Ice (Smirnoff plus unique flavours) should add proof to our party lives.

It will be sold here in glass bottles, this is the world’s largest ready to drink brand and will take on local RTDs like Bacardi Breezer. Both will open up new categories for Diageo here.

Asif Adil, MD, Diageo India, however won’t comment on such news. He does share, though, that they’re in the process of “activating” various global “Reserve” or top-end brands here such as Johnnie Walker Gold whisky; Ciroc-a nameplate vodka; various single malt whiskies.

Such activation will extend these brands from duty free to select restaurants and retail outlets across metros, though the outside price tag will be 150% more than that of duty free. Full-colour lifestyle events, big on pageantry or scale will help spread brand awareness.

Aspirations are obviously full peg for Adil.

“We want to be the crown jewel in the FMCG industry; we’re about lifestyle and celebration,” he says. Diageo’s entire “bejewelled” collection will soon be showcased at a single flagship store in Bandra, Mumbai which will be called Johnnie Walker, a name well known to Indians. Flagship stores in other metros should open later in phased manner.

As for Captain, my Captain, Adil expects to toast big-volumes ahead for the rum brand, akin to their runaway hit here-Smirnoff. The Indian rum market quaffs 30 million cases per annum and is growing at 10-15%, and mainly concentrated in the South and parts of the North.

Old Monk and Celebrations are the local big-timer rivals, with pricing less than half of CM, but different products in themselves. Globally, Diageo’s rum portfolio is growing at 10%, and Captain Morgan at 18%.

More critically, Captain Morgan as a brand isn’t widely known here. Bergstein has the marketing waterway in place though. We’ll be saying aye to real-life Captain Morgans in various bars with “Morganettes”-their version of mo-lasses-on his arm, as part of their on-premise plans.

The rambunctious seafarer will heft in his treasure chest, hand out keys to customers there, and some may actually open this trove packed with samples.

For Diageo, that’s all part of the booty that this market holds for them.

News: Tata Motors to buy out Hispano

(DNA 29/03/2007) Kolkata - Tata Motors Ltd is likely to buy out 79% stake in Spanish bus and coach manufacturer Hispano Carrocera, in which it already has a strategic holding of 21%, to make it a wholly owned subsidiary within the next financial year.

The stake hike in Hispano Carrocera, a high-end bus and coach manufacturer with 25% market share in Spain, is part of Tata Motors’ strategy to spread footprint in bus and coach segments in Europe, Africa and Latin America.

The beginning was made in 2005 when Tata Motors picked up a 21% stake in Hispano Carrocera for Rs 70 crore consisting of equity, debt and technology licensing fees. This was followed up in 2006 by setting up a joint venture with Marcopolo Brazil, another global leader in bodybuilding for buses and coaches.

Tata Motors spokesperson said: “Our company does not comment on any plans for mergers, acquisitions or alliances.”

However, highly-placed sources in the Tata group said: “Tata Motors has big ambitions of increasing its presence in the bus and coach segment in the geographies it is present, and choose to be in the future. Europe, Africa, India and Brazil are important markets where expansion plans are being worked out. Our associations with Marcopolo and Hispano Carrocera are moves towards creating a web to cater to this segment of the automobile market.”

The shareholders’ agreement between Tata Motors and Hispano Carrocera — signed in 2005 — gives Tata Motors’ the option to buy out the remaining 79% stake within the next five years.

News: 'India to develop SEZ in its own way'

(PTI 29/03/2007) Shenzhen - Amid controversy over the setting up of China-style Special Economic Zones (SEZ), India today said the government recognised SEZs as "an useful tool" in furthering industrialisation but will implement the concept in its "own way".

"We recognise that SEZs are a useful tool for industrial development, especially in areas where infrastructure is lacking. Where infrastructure already exist, it is perhaps not necessary to create SEZs," the Finance Minister P Chidambaram said after inaugurating the first full-fledged branch of Bank of India here.

The one-time fishing village of Shenzhen is the first the SEZ in China. It was China's first major experiment with capitalism after late Chinese paramount leader Deng Xiaoping landmark visit to the southern Guangdong province in 1986.

"Where infrastructure is not existent, a SEZ will be a useful instrument to attract investors to build the infrastructure, to take advantage of the concessions offered by the government and to industrialise that area," Chidambaram said.

"We recognise the validity of that principle and we are trying to implement it in our own way," the Finance Minister said.

The Shenzhen SEZ was originally established in 1979 due to its proximity to Hong Kong, then a prosperous British colony.

The SEZ was created to be an experimental ground of capitalism in "socialism with Chinese characteristics". The location was chosen to attract industrial investments from Hong Kong since the two places share the same language and culture, local officials said.

News: Rise of China and India - Resetting the terms of world trade

(BL 29/03/2007) Mumbai - Think-tanks world-over are agreed that China and India lead the league of performing economies. They foresee China and India emerging the growth engines of the global economy. While China has sustained a GDP growth rate of 10 per cent, India is just a step or two behind, averaging 8-9 per cent the past few years; the global average is 3-4 per cent.

According to the US National Intelligence Council forecasts, by 2020 China's GNP will exceed that of all Western economies except the US while India's national income will be very close to achieving that. Goldman Sachs predicts that China's GDP will race past Japan's in 2016 and the US's in 2041 while India will do that in 2032 and 2050 respectively.

WESTERN CONCERN

The growing economic clout of China and India and their impact on the global balance of power have raised the hackles of the global hawks.

They fear that these developments will unleash strong ripples on the world geopolitical realm. Already, the world trade pattern is changing and the Eastward drift of the world trade can only become stronger.

The inter-dependence of the developed countries is projected to weaken and the trade shift is expected to be, first, between developed and developing countries and, then, among the developing nations.

In 2004, the world trade grew 21.2 per cent - the highest since 1979. Major contributors to this growth were the increased trade between China and the US and the recovery of international trade in ASEAN (Association of South-East Asian Nations) and Asian NIEs (newly industrialising economies).

Despite criticism over China's enormous trade surplus with the US and the mounting pressure on Beijing to revaluate the yuan, it is ironic that it is China's growth that bolstered the US consumerism.

It exported cheaper goods, revived the sagging demand and contained inflation. But, then, the exporters from China are none other than American and Japanese investors in China.

INDIA'S ROLE

Similarly, India reinvigorated the information technology industry in the US with supply of low-cost knowledge services. China and India have changed the rules of the world trade.

While Chinadominated the goods trade, India played a pivotal role in services. In 1995, the US and Japan were the top trading partners. Today, China is the biggest trade partner for both, the US and Japan.

Similarly, since the mid-1990s India has emerged the biggest outsourcing trade partner for the IT services industry in the US and European countries. Over 60 per cent of the American IT services are outsourced to India.

Thus, even if China and India have changed the global trade patterns, they have also proved to be god-send for the developed countries. The concerns over China and India's growing economic muscle and their impact on global realm appear misplaced.

INDIA-CHINA TRADE

Concerns have also been raised over the growing trade between China and India - the two most populous countries - that presages a high demand scenario. China is seeking out India especially for its abundant iron ore and IT skills even as Indian MNCs tap China for cheaper materials, component and parts.

Many global watchers fear the US and Japan getting impacted by the economic development of China and India and also to the growing economic interaction between the two. However, these apprehensions are negated by the dependence of China and India on the US for trade and investments.

China's high growth in economy is led by exports. Export growth was engineered by foreign-funded firms in China. Over half of China's export is generated by these foreign funded firms. The US is the second biggest destination for China's exports. About one-third of China's exports go to the US. Therefore, the US is a catalyst for China's high economic growth.

US-CHINA TRADE

China is not solely responsible for the US's trade deficit, as is alleged. Much of the increase in China's exports to the US was due to a displacement of exports from Asian countries.

The substantial imports from China pushed down prices in the US. The US-China Business Council estimates that these impacted favourably on the priceline and the growth in demand, pushing the US economy up by 0.4 per cent in 2005 besides creating about 50,000 jobs.

IT-BPO SERVICES

India accounts for 65 per cent of the global IT-BPO services market; the US is the key customer, absorbing 60 per cent of work. India's BPO industry has galloped at 45 per cent a year, thanks to a large, skilled and English-speaking workforce.

The Indian Diaspora provides a key underpinning to the development of IT industry in the US. Many of those who have returned are either working in the India support-centres of the MNCs or are providing services much of which goes to the US.

INDIA-JAPAN TIES

A recent development is India coming back strongly on the Japanese investment radar. Till now China has been the main destination for Japanese overseas investments.

A JETRO survey of Japanese corporates having business operations overseas, confirms the shift to India, and the waning interest in China.

This is notwithstanding India being ranked lower in infrastructure and having a complicated bureaucracy.

Japan is fast turning the country of the aged. A serious demographic problem looms over that country. This could give India the leverage in Japan. India has a large workforce, technical as well as managerial.

According to Nasscom, the country turns out every year some five lakh engineering graduates, diploma and MCA holders. Another 2-3 million graduate in arts, commerce and general science streams every year.

LANGUAGE BARRIER

If India has not already taken advantage of the situation, the problem lies with the language. Knowledge of Japanese language is indispensable for working in Japan or for outsourcing. Very few Indians know the language.

However, with the growth of Japanese investments in India, the pool of those knowing that language is increasing. About 13,000 Indians are enrolled with various institutions teaching the Japanese language.

Inclusion of movement of persons in the ongoing negotiations for India-Japan Economic Partnership Agreement should come as a boon to the high labour cost Japanese industry, and also to India, with its large workforce.

Clearly, India and China are the world's platforms of growth. Developing nations such as China and India have not only proven potential to supply goods cheap , they are also massive markets generating demand in the world economy.

News: Biyani plans cash-n-carry battle now

(TNN 28/03/2007) New Delhi - The country’s largest retailer Kishore Biyani is now looking at a presence in the cash-and-carry (wholesale) business to take on Reliance and Wal-Mart on all fronts, The venture, to be called KB’s Wholesale, will be rolled out early next month. Analysts close to Mr Biyani’s Future Group say it’s not without reason that India’s largest retailer has taken the decision. Competition is hotting up with Reliance Retail and Bharti-Wal-Mart putting up their own backend ventures, something that will make their front-end retail ventures competitive on the price front.

At present, Pantaloon Retail sources from multiple vendors. Experts say if Mr Biyani continues with his current sourcing model, he would lose out on the price war in the long run. When contacted by ET, Mr Biyani confirmed plans of entering the cash-&-carry business. He said, “we are looking at about 15 wholesale stores in 18 months.” The first KB’s Wholesale store will come up in Burdwan in West Bengal and the second in Mathura, sometime next month.

Retailers such as Reliance and Bharti have ambitious plans in the hypermarket and hard discount formats, and are likely to roll out dedicated cash-and-carry operations (wholesale stores that would supply to their retail stores) for catering to front-end retail. In fact, Bharti has already signed up with the world’s largest retailer, Wal-Mart, for cash-and-carry business. Though Bharti chairman Sunil Mittal maintains that cash-and-carry would be an entirely separate business from retail, sources say both would be linked. “Wal-Mart cash & carry will obviously sell at a preferential rate to Bharti’s retail business than to say a Pantaloon,” said a source in the retail consultancy business.

In the coming times, cash & carry is likely to see a lot of action, with many international retailers, including Carrefour, Tesco and K-Mart firming up plans in this direction. It’s particularly seen as an interesting business for the global retail community as FDI is not allowed in retail. According to Euromonitor, a London-based market intelligence firm, “when the restrictions on retail in India are lifted, international retailers will be in prime position to easily convert their cash-and-carry stores into highly profitable supermarkets and hypermarkets.”

At present, the Indian cash-and-carry business is dominated by two global players, the German chain Metro and South Africa’s Shoprite.

News: No ban on the entry of new airlines

(PTI 28/03/2007) Kangra - Asserting that there was no ban on the entry of new airlines, Government today said the delay in granting clearance to them has been due to shortage of slots. "There are perceptions in certain quarters that a ban has been imposed on the entry of new carriers in the aviation sector, which is not true. "We have paucity of slots and as and when we have them, the same would be made available" to the new carriers, Civil Aviation Minister Praful Patel told reporters after inaugurating new terminal building of the airport here and flagging off the maiden Air Deccan flight connecting Kangra and Delhi. Tibetan spiritual leader Dalai Lama flew here on the inaugural flight. To questions on the merger of two state-owned carriers, the name of the new entity and its logo and mascot, he said a decision would be taken "soon". Patel also opposed the imposition of congestion surcharge by private carriers and pointed out that state-owned Indian had not imposed the surcharge at all. He said the government was keen to ensure regional air connectivity and was considering extending sops like reducing landing and parking charges for those airlines which would connect small and remote towns and cities. Steps would soon be taken to promote heli-tourism, sea-planes and charter tourism, he said. The proposed Civil Aviation Policy would include the regional air connectivity concept to promote air tourism. On the demand by carriers that airports should have night-landing facility, the Minister said the government has decided to make it available at all airports, including sophisticated radars and navigation systems.

News: Finnair to fly to Mumbai, increase frequency to Delhi

(IANS 28/03/2007) New Delhi - As part of its expansion plans in India, Finnish carrier Finnair is all set to add Mumbai as the second destination and increase frequency to New Delhi to every day of the week.

Finnair, which currently operates three flights from here, will begin its daily flights from mid May. From Mumbai, it will operate five times a week starting June 17.

"India is a very strategic market for us. We have less recognition here, which is why we are trying to promote Finland not only as a viable business destination but also as a preferred holiday destination," Ambassador of Finland Asko Numminen said at a press conference here.

"Indians today have more consumption capacity than Europeans. Last year almost nine million Indians travelled abroad and we want a majority of them to travel to Finland," he added.

With Finnair's latest move, India will be connected by 12 flights a week to Finland. The carrier started its India operations in October 2006 and boasts of running the shortest route between India and any EU country, taking barely six-and-a-half hours.

According to Seppo I. Keranen, head of Finpro India, a Finnish trade promotion body: "Last year, we had a 47 percent increase in visas to Finland. This year we hope that will surge tremendously with the addition of Mumbai, India's commercial hub."

Keranen also said that it plans to add Chennai as its next destination, mainly because Finnish mobile giant Nokia has set up a manufacturing facility there.

"We are constantly trying our best to increase our presence here. Gradually I can see there is increasing awareness about Finland in India," said Taina Tornstrom, Finnair director for the Indian subcontinent.

"Mumbai is India's biggest business city and centre of business and logistics. India's most affluent population lives in the area, too, so there is big potential for tourist traffic to Europe."

News: Foreign tourists spend more in India than France

(PTI 28/03/2007) New Delhi - Despite the problems that plague tourists in India, the country has notched a place above France in terms of average earnings from foreign tourists.

On an average India earned Rs 65,085 from every foreign tourist, which is thrice of the tourist expenditure in France and nearly double of global average earning which stands at Rs 37,570.

However, the earning is more from the fact that an average tourist tended to stay longer because of the size of the country and the variety of attractions, says a recent FICCI study on investment opportunities in hotel infrastructure in India.

But the study cautioned that the hike in earnings may disappear like a flash in the pan if India did not match up to low-cost destination alternatives offered by China and Singapore in the neighbourhood.

Citing the example of Bangalore, the study pointed out that the hotel owners wanting to cash on the tourist rush to this IT hub, steeply increased the tariffs, forcing the professionals and business travellers to scout for no-frills accommodation alternatives.

As a result, the occupancy level in the starred hotels slipped down despite an unabated rush.

Emphasising the need of building budget hotels to make for the swell in demand, the study warned that it will just a matter of time that China and Singapore will gobble up the advantage India if it did not wake up to their aggressively low-priced infrastructure development policies.

News: India, China top Asian FDI list in Africa

(PTI 28/03/2007) New York - India and China are emerging as significant sources of foreign direct investment (FDI) in Africa even as the overall percentage of FDI from Asian countries targeted towards the continent remains low, the United Nations has said.

However, the world body was optimistic that Africa would see increasing amount of FDI from Asia in coming years, provided the African countries pursue proactive policies to attract investments in infrastructure and industries.

A UNCTAD-UNDP study estimates that outward FDI from developing Asian economies reached a record USD 90 billion last year, but Africa could claim only a small percentage.

FDI is a significant source of external finance and a means of integrating into the global marketplace, the study said, adding so far Africa has been left out of this process. This may be attributed to small market size, poor infrastructure, weak regulatory framework, debt problems, and in some cases, political instability, it said. But over the past decade, however, there has been considerable progress with reforms in several African economies, it noted.

Africa, it said, has the potential to become an important investment location for Asian companies, in part because of the complementary nature of economic development between Asian and African countries. Traditionally, FDI flows from developing Asia to Africa were mainly from the Asian newly industrialising economies -- Hong Kong, South Korea, Singapore and Taiwan.

News: Ratan Tata, Mittal among world’s 30 best CEOs

(PTI 27/03/2007) New Delhi - Two Indian steel tycoons - Ratan Tata of Tata Steel and NRI Lakshmi Mittal of global powerhouse Mittal Steel - have made it to the world's best CEOs list compiled by US stock market weekly Barron's.

As per the magazine, Tata and Mittal are among the 30 top corporate leaders from around the world who have top-notch reputations in the financial community and who would be missed by investors if they unexpectedly left their jobs.

"Many chief executives are critical to their organisations. But a much smaller number really matter on Wall Street," the magazine said after assembling its third annual list of 30 top corporate leaders.

The two Indians are the only CEOs from the steel sector to find place on the list. The weekly said that one should read the story of Lakshmi Mittal to know how India became a leading incubator of multinationals.

The 56-year-old tycoon took over Arcelor last year for $35.8 billion creating the world's largest steel company and further expanding an empire he started in 1970s and is now investing in Indian refineries and scouting for energy assets overseas.

While Mittal has retained his position on the list, Tata has made to this exclusive club for the first time along with three other new entrants - James Schiro of Zurich Financial, Franck Riboud of Groupe Danone and Satoru Iwata of Nintendo.

The Tata Group chairman also finds place among the ten overseas CEOs on the list. According to the weekly, Mittal owes his place for "forging a global steel empire," while Tata has reached here "riding the elephant" (the Tata empire).

Tata has been termed as "face of India Inc", who oversees an empire including everything from tea to IT. As chairman of Tata Steel, he recently drove the firm's $12 billion acquisition of Anglo-Dutch Corus Group, four times its size, creating the world's fifth largest steelmaker.

"Not content to operate only in India, he is challenging managers to expand overseas," Barron's said. The list, published in Barron's March 26 edition, is based on financial and stock market performance and assessed intangible factors like leadership and industry stature,

Barron's said, adding that these are the 30 leaders who matter and form a group of the world's most indispensable CEOs.

All the 30 have delivered for the shareholders and the share price of all the companies have outperformed the S&P 500 index during the tenure of these leaders at the top position.

Only those CEOs who have been on the job for three years were considered, although those with at least five years of experience were preferred as it takes time to influence a large company and develop a reputation in the investment world, the weekly said.

The list includes many who founded their company - such as Rupert Murdoch of News Corp, Warren Buffet of Berckshire Hathaway, Jime Sinegal of Costco Wholesale, Fred Smith of FedEx and Charle Ergen of Echostar Communications or have been at the help for a decade or more.

While many investors might not see good in continuing presence of a founder on a company, but patient shareholders have reaped the rewards of having a Buffett, Smith or Sinegal at the helm, it added.

News: ADB's warning on India's growth

(PTI 27/03/2007) New Delhi - Monetary tightening to contain overheating as well as inadequate infrastructure is likely to slow down India's growth to a moderate 8% next fiscal against the expected 9.2%, the Asian Development Bank (ADB) has forecast.

In a report, 'Asian Development Outlook' released today, the multi-lateral agency said the economic growth will again pick up in 2008-09 to stand at 8.3%.

The situation could have been worse if the government had not taken fiscal consolidation measures, Narhari Rao, India chief economist, ADB said.

Even at the current pace of infrastructure, economy could expand at 8%, but 9% and double-digit growth requires infrastructure to expand at much faster rate, he said.

ADB also forecast inflation to come down to a "tolerant" level of 5% in both 2007-08 and 2008-09 from the present over 6%.

This is expected to be the result of tighter monetary policy, a rise in agricultural planting, an expected good spring harvest and cuts in import duties on key commodities.

The report said domestic overheating is raising demand and has been forcing RBI to respond by raising interest rates.

Rising interest rates will first dampen property demand and then have subtle and wide-ranging consequences in other components, the report said.

"These restraints on demand growth from home buyers, manufacturing investors and consumers will be accompanied by fiscal discipline...These forces are expected to moderate growth rates bringing it down to 8% in 2007-08," the report said.

News: Where do funds come for India Inc?

(BL 27/03/2007) Mumbai - The securities market has grown rapidly over the last two decades, especially in the post-reforms period.

The reforms, which included free pricing of capital issues, stringent disclosure norms, conditions for making issues, transparency in offer documents and accountability of merchant bankers in the primary market, provided measures for protection of primary investors.

Capital mobilisation

Book-building also aided the price discovery process and allocation of shares. These steps had a salutary impact as the number of people investing in equity increased at a compound rate of 22 per cent between 1985-86 and 2001-02.

Capital mobilisation, which used to be around Rs 100-200 crore per annum increased to Rs 6,000 crore per annum between 1991 and 1995-96. And from around Rs 7,000 crore per annum between 1995-96 and 1999-2000 to nearly Rs 20,000 crore per annum between 2000-01 and 2004-05.

This surge in mobilisation is the result of primary market reforms. Yet, the capital market has been able to mobilise less than 1 per cent of the total domestic savings. New technologies such as automated and screen-based trading, spread of trading terminals to nearly 400 cities, dematerialisation of shares, modernisation of support infrastructure, and other measures have transformed the secondary market, resulting in shortened trade cycle and safe settlement systems.

The credit for this should go to the Securities and Exchange Board of India which by 2001 also introduced risk-containment measures including setting up clearing houses, clearing and trade guarantee corporations and a strict margin system.

Expectations belied

The primary goal of a stock market is to facilitate capital flows to corporates. However, expectations have been belied. In 1989-90 corporates raised equity and debentures that constituted only 7.8 per cent and 8.8 per cent respectively of their total funds comprising capital, reserves and surplus, borrowing, provisions and current funds. But by 2003-04, these figures were 8.5 per cent, and 5.2 per cent respectively or 13.7 per cent of their funds from the market, which was a full three percentage points lower than in 1989-90. Thus companies appear to have been depending on the market only to a small extent. They have preferred borrowings (30.1 per cent) followed by reserves and surplus (29.4 per cent) in 2003-04. In 1989-90, reserves had contributed only 20 per cent. This is a tribute to the efficiency of corporates that have learnt to retain profits for ploughing back into business. A corollary would be that people's savings in corporate instruments, mainly finance companies are yet to achieve high levels of fund-use efficiency. This is but a small segment as, according to available information, less than 1 per cent of households invest just 1 per cent of their investible funds in shares and debentures.

Ills to investing

The disincentives to investing in the capital market are the risk element, volatility, manipulation and speculation in the secondary market, frauds in primary market, little confidence in brokers, and the frequent booms and bursts that can be hurting. These ills are spawned by over-trading, excessive short-selling and buying long supported by bank credit and margin trading in the name of liquidity enhancement. The question is, liquidity for whom? Is it for investors or traders who often buy and sell the same scrip several times in a day? Unfortunately, the economy's performance is gauged in terms of stock market indices. Thereby hangs a tale.

News: Micro Insurance Agency targeting Indian market

(IM 27/03/2007) Mumbai - Micro Insurance Agency (MIA) is a US-based insurance broking company has found the untapped rural insurance market in Indian very enticing. MIA is holding talks with potential Indian partners and micro finance companies so as to get an entry-point into the Indian market.

Richard Leftley, President of MIA Holdings said that they are looking for a company with a reach of minimum one lakh people. Among others, MIA is holding talks with companies like Tata-AIG, Basix and SKS Microfinance.

MIA is engaged in product designing, pricing and providing back office administration services to the insurance companies. The company already has a presence in 10 countries in Asia and Africa.

News: 'Domestic real estate market is worth $14 billion'

(IANS 27/03/2007) Chennai - Domestic real estate market is worth about $14 billion, experts observed at a conference in Chennai.

Amid the whopping growth in the sector, the experts also suggested that a regulatory authority be in place to enhance transparency in the real estate business in India.

"Currently growing at 30 per cent per annum, the domestic real estate market is estimated to be of the order of $14 billion," said Manoj Vaish, president and CEO, Dun & Bradstreet, India, which provides global business information.

"Last year it was sort of a gold rush for the Indian real estate sector. A massive influx of FDI was witnessed into this sector," he added.

As a part of its ongoing efforts to educate and update market participants in India, Dun & Bradstreet this week hosted an interaction on the 'Dynamics of the Real Estate Market: The Investment Perspective'.

Speaking at the conference, S. Sridhar, Chairperson and Managing Director, National Housing Bank said, "There is a huge funding gap for infrastructure development in special economic zone's (SEZ) commercial and domestic space."

"The financial solutions providers, especially the domestic capital markets, should look into filling this void," he suggested.

Sridhar said the real estate community should think out of the box and needs to offer wide range of products, which suits the pockets of even people in the low-income group.

According to former Planning Commission advisor Tarun Das, housing is an important asset in the Indian economy with strong backward and forward linkages.

"The high volatility in the housing market requires that the price movement is adequately tracked for smooth functioning of the economy," he said.

"For a house price index to be meaningful, it must compare prices of equivalent houses from one period to the next. This is difficult, as no two houses are identical," he added, stressing the need for a system of measurement that allows for differences in the sample houses traded.

"The real estate market is not a bubble and thus I don't expect it to burst. I expect the market to grow for the next 20 years. We need to enhance transparency and build trust," said M. Murali, chairperson and managing director of Shriram Properties Ltd.

News: Magma raises $15 m from Netherlands finance co

(BL 27/03/2007) Kolkata - The board of Magma Leasing Ltd (Magma) at its meeting here on Monday, approved placement of $15 million (approximately Rs 65 cr) of redeemable preference shares to the Netherlands Development Finance Company (FMO), Netherlands.

The fresh investment, as per RBI guidelines, will be treated as Tier-2 capital in the company.

This follows an earlier investment of Rs 21 crore by FMO in Magma Preference shares during February 2006. FMO, with an investment portfolio of 2.4 billion, invests risk capital in companies and financial institutions in developing countries.

Commenting on the transaction, Anjan Mitra, Chief Financial Officer of Magma Leasing said, "FMO's decision to invest an additional Rs 65 crore in Magma is a statement of confidence in the company's strategy and business model and in the growth prospects of both Magma and the Indian retail finance market".

He said the funds raised will strengthen the company's balance sheet, and augment its ability to write higher business volumes.

Magma Leasing, following its merger with Shrachi Infrastructure Finance Ltd, has expanded its branch network to 154 locations across the country and has over Rs 5,500-crore worth of assets under management. The company finances both old and new commercial vehicles, cars, multi-utility vehicles and construction equipment, mainly in semi-urban markets.

News: L.N. Mittal favours land acquisition for projects

(BL 26/03/2007) New Delhi - Favouring land acquisition for large-scale industrial projects in the country, L.N. Mittal, President and CEO, Arcelor Mittal, said that such projects help in large scale manufacturing besides providing employment to people. "The Problem is not with the Government. It is lack of education among people that if the projects come up, they will help in providing employment to their family members." While speaking to presspersons at the convocation ceremony of Institute of Management Technology-Ghaziabad, Mittal said that the world now looks at India differently as changes are taking place at a fast pace. Bullish on the steel sector in the country, Mittal has signed a MoU with the Orissa Government for setting up a 10 million tonne steel plant in the State. He is also in talks with the Jhakhand Government for leasing ore mines for the purpose of setting up another plant of 10 mt capacity. Earlier, the Commerce and Industry Minister, Kamal Nath, said the cement manufacturers have given the assurance that they will maintain the current prices for the next 12 months.

News: Mittal regrets not having an MBA degree

(PTI 26/03/2007) Ghaziabad - World's biggest steel maker Lakshmi N Mittal may be the role model for B School hopefuls, but he regrets of not having an MBA degree in his chequered career. "The biggest regret of my life is not having a MBA degree," Mittal said while addressing the annual convocation of the Institute of Management Technology here. He wanted to go to a B School after completing his graduation from St Xavier's College in Kolkata, but involvement in family business denied him that opportunity. Asking the future managers to be realistic in their goals, Mittal suggested that only those objectives should be pursued which were achievable. He said he did not dream of being the biggest steel makers five years back, but achieving small goals and subsequently setting up higher goals has led to reach his goal. "Being Indian is a matter of pride and so I still hold an Indian passport," Mittal said. He said India was being differently looked at by the world as there are changes happening at a fast pace. "India was among the second fastest growing economy in the world," he said and pointed out that wherever he went, people enquired about India. Mittal said there was lack of education among people and they need to understand that industrialisation would benefit them and their family members getting jobs.

News: Rupee at 20-month high on tight cash supply

(RTR 26/03/2007) Mumbai - The Indian rupee charged to a 20-month high on Monday as banks sold dollars to raise funds to tide over a cash shortage in the money market.

Traders also said a foreign bank exercised a large option contract at around Rs 43.50 per dollar, which caused the rupee to spike in early trade to a high of Rs 43.35, its strongest level since July 22, 2005, according to Reuters data.

At 10 a.m. (0430 GMT), the partially convertible rupee was at Rs 43.37/38, up smartly from the previous close of Rs 43.56/57.

"Call rates are still quite high, and the message from the central bank is clearly that liquidity is going to remain tight, which is driving up the rupee," said a dealer at a private bank.

The interbank overnight rate was trading at 13-14 per cent on Monday, compared to 6-7 per cent when cash conditions are normal, but still well below last week's highs of 70 per cent when corporate tax payments of around Rs 30000 crore ($ 6.9 billion) caused a cash crunch in the system.

To generate funds, dollars were sold in the forex market, which caused a spurt in the rupee.

This week the central bank will sell Rs 6000 crore of market stabilisation scheme bonds, which will keep cash conditions tight and could push the rupee higher.

Still, traders said that the rupee's gains could be limited as month-end demand for dollars from oil importers kicked in. Oil is India's largest import.

News: Allianz plans banking business in India

(RTR 26/03/2007) New Delhi - German insurance giant Allianz is planning to widen base in India with foray in banking business through its unit Dresdner Bank, besides expanding its existing non-banking financial services.

Allianz, which currently offers life and general insurance services through its joint ventures with Bajaj Auto, is believed to have approached regulatory authorities for necessary approval to launch banking business in the country.

The company is upbeat on starting retail banking business here after signing its third joint venture with Bajaj Group earlier this month to sell financial products like mutual funds, credit cards and home loans.

When contacted, an Asia Pacific spokesperson for Allianz said that from Singapore the company was optimistic about India's economic development and given its economic outlook, it was natural for them to take a closer look at asset management and banking businesses as well.

"Customers expect their advisors to offer full range of financial products and Allianz - being one of the biggest financial service providers worldwide, offering insurance, asset management, and banking products in many countries across the globe - is qualified as virtually no other company to provide this range," the official said.

Allianz, which posted revenues of over 101 billion euros and net income of over 7 billion euros in 2006, is currently in talks with various institutions and authorities as part of its plans to enter banking business in India, he added.

News: DLF, Al Nakheel to invest $ 24 b in Mumbai, Delhi

(PTI 26/03/2007) New Delhi - DLF, India's largest real estate firm, is planning to invest about $24 billion for developing two townships over a period of six years in collaboration with Dubai-based Al Nakheel. "DLF and Nakheel have floated a 50:50 joint venture for the investment,"a company official said. The JV plans to set up two townships of 20,000 acres - one around Delhi and the other near Mumbai. The first phase will be completed in the next three years with an investment of about $10-12 billion. Work on the project will start this year, and is expected to be completed by about 2013, the official said. "Some of the land needed for the township would come from the existing land bank of DLF, while the rest is being bought directly from farmers." DLF is planning to raise about Rs 13,600 crore through its initial public offering for which it is awaiting approval from Sebi after it had filed a draft red herring prospectus in January this year. This is the second major partnership for the firm after its agreement with US-based hospitality giant Hilton for its foray into hotel business.

News: 200 cities identified for gas distribution network

(BL 25/03/2007) Mumbai - GAIL has identified 200 cities across the country for supplying Piped Natural Gas (PNG) and Compressed Natural Gas (CNG). It would take about eight years and Rs 12,000-crore investment for laying the city gas distribution system, said Dr U.D. Choubey, Chairman and Managing Director, GAIL (India) Ltd.

Dr Choubey was addressing the media on Saturday in Mumbai. He said that the investment in the city gas distribution would be raised through joint ventures and public-private partnerships. About 20 million metric standard cubic metres of gas per day (MMSCMD) would be the requirement and this will enable about 16 crore people to avail themselves of PNG and CNG services.

PNG consumption by 2 crore households is expected to replace 16 crore LPG cylinders, and this could be utilised to for further penetration of domestic LPG to rural households, he said.

Capacity framework

GAIL's existing network of over 5,600 km of natural gas high-pressure trunk pipeline, with a capacity to carry about 123 MMSCMD of natural gas across the country, is being augmented. GAIL's Dahej Uran pipeline, Dabhol Panvel pipeline and Jagoti-Pithampur pipelines would be commissioned shortly.

Further, based on projected gas availability, GAIL has plans to lay new pipelines from Jagdishpur to Haldia, Kochi to Kanjirkkod to Mangalore, Dadri to Nangal, Chainsa to Hissar and Dabhol to Bangalore.

The Union Petroleum Minister, Murli Deora, who was also present at the media briefing, said a total of eight joint ventures have already been formed for city gas distribution. Foreign participation in joint ventures for city gas distribution is as welcome as participation from private operators in India, he said.

GAIL would have a 22.5 per cent stake in the distribution companies and the respective State Governments would have a 5 per cent stake, Deora said.

News: Biodiesel imports in the offing?

(BL 24/03/2007) Mumbai - If biodiesel manufacturers are deeply disappointed with the Union Budget 2007-2008 for the absence of any policy support, the worst is yet to come. With the peak rate of customs duty reduced to 10 per cent, India as a market is open to imported biodiesel. If the buzz doing the rounds of the industry is any indication, a well-known industrial conglomerate, with energy interests, would soon start importing biodiesel for domestic distribution. Palm oil-based biodiesel is currently on offer at about $750 a tonne cost and freight India. Together with 10 per cent customs duty, the landed cost would be less than Rs 36,500 a tonne. The cost may turn lower if the rupee continues to strengthen and/or overseas prices turn softer. Manufacturers upset Biodiesel manufacturers who have already tied up funds for setting up processing facilities are a worried lot. Contrary to initial enthusiasm and expectation, policy support for the sector has not been forthcoming. While some entrepreneurs have put their investment decision on hold, many others are waiting for the haze to clear. Currently, the easiest source of feedstock is imported crude palm oil and downstream products such as fatty acid distillate. In the absence of an official policy for the domestic market, processors are scouting for export orders, mostly from European countries. Given the poor state of infrastructure in the country, logistics costs would be the crucial determinant of profitability. More important, as and when overseas processing facilities — Malaysia, Singapore, Indonesia — come on stream, India as a processing centre for supply to European market would lose its importance. South East Asian processors would service European customers directly. A long-term comprehensive policy for biodiesel is overdue; but it has run into serious bureaucratic red tape, according to industry players. Far too many Ministries seem to be involved in policy formulation, as a result of which there is no forward movement in policymaking, rued an investor. Alternative sources If biodiesel imports become a reality, it would further dampen investor interest, it is feared. Almost everyone talks about the potential of jatropha and pungamia crops as feedstock for biodiesel in the country, but there is little forward movement in actual plantation taking place because of various uncertainties including land, agronomy, costs and long-term policy support.

News: Dream run for hotels continues

(DNA 24/03/2007) Mumbai - The Indian hospitality industry has been witnessing a strong growth in the past few years and the sector's performance seems to be only getting better year after year. With the hotel room inventory in the organised sector continuing to remain more or less stagnant, the average room rates (ARRs) are only headed northwards irrespective of the cyclical (seasonal) nature of the business.

In fact, hospitality sector analysts are of the opinion that in general the ARRs and occupancies are very much sustaining at higher levels. Despite a high base, ARRs are up 33% year on year and occupancies are at high levels of 72% for the period between April 2006 and January 2007.

"Primary reason behind this market scenario is the fact that demand is outpacing supply and no major change in supply is expected at least for another 16 to 18 months. Thus we expect the trend to continue and this augurs well for hotel sector earnings," said Ashish Jagnani, Citigroup's hotel sector analyst.

Growth in the leisure segment has had a positive impact on leisure hotels business in cities like Delhi, Jaipur, Goa, etc. Tourist traffic in the leisure segment has witnessed a healthy growth of 15% (YoY) for April 2006 to January 2007. The revenue per available room (RevPAR) across most tourist destinations has seen an increase of over 35% during the nine months under consideration.

Adding to the positive business outlook is the strong operating environment and other factors like the all-time high business confidence index and conducive macro environment.

These are being coined as the key growth drivers of hotel room demand in the country. This apart, the efforts to grow the food and beverage business and allied services like spas, service apartments and management contracts are expected to aid the sector's profitability.

Thus the general consensus among industry observers is that the sector's performance is very much as per the predictions being made in the recent past. So while continuing to see increase in the average room rates, the outlook according to industry analysts is that some cities might grow at a much higher rate while others like Bangalore might have to do with more or less the same growth levels.

"Bangalore has already crossed its peak in terms of ARR growth and any further increase will only hamper occupancy levels, something the city has already started to witness.

However, once the new inventory starts pouring into the city two years hence, the market scenario is expected to change considerably, leading to some amount of correction in room rates," said Binaifer Jehani, research analyst with Crisil Research & Information Services. India's organised room inventory currently stands at just over a lakh rooms and the shortage of room supply is estimated to be close to 1,00,000 rooms.

With the country's current demand-supply gap expected to continue until the end of 2009 fiscal and no significant supply expected to come either from domestic or international chains, the markets like Mumbai, Delhi, Kolkata, Pune, Hyderabad, Chennai, etc are likely to enjoy gains in business.

"Cities like Pune, Goa and Jaipur in particular will certainly see a surge in business. The situation in Delhi will, however, not change much considering that city is already short of room supply by over 20,000 rooms. And with Common Wealth Games scheduled for 2010, the average rooms rates there are not expected to come down at all," said Jehani.

According to an international hospitality consulting firm HVS International, there are over 150 hotel projects under various stages of development while the figure from the tourism ministry is 300 leading to over 50,000 hotel rooms.

News: Dabur plans tie-up with 'kiranas'

(BS 23/03/2007) Mumbai/Ahmedabad - In a bid to increase its visibility and counter the growing number of modern retail outlets, Dabur India plans to tie up with kirana stores on the lines of Hindustan Lever Ltd (HLL)'s 'Super Value Store' programme.

The FMCG company is conducting pilot tests with some local kirana stores at three cities - Ahmedabad, Chandigarh and Ranchi.

Declining to elaborate on the programme, Mukesh Mishra, group product manager, Dabur India, said,”We have been conducting pilot tests with local kirana stores to promote our products. It is something similar to the ‘Super Value Store’ programme by HLL but we are not in a position to reveal much. Things are still in the preliminary stages.”

Mishra, who was in the city to promote the new look Dabur Amla Hair Oil, added that the company would also be targeting rural areas where currently unbranded products are sold more.

“We are conducting pilot projects in around 5,000 villages in Punjab, Uttar Pradesh and other northern states. The rural market is still much untapped especially when it comes to hair oil since the unbranded products are more popular there,” he said.

The company recently changed the positioning of Dabur Amla with a new tagline and new look. “We have changed the packaging, which now makes the 57-year-old brand more contemporary and relevant in consonance with today’s lifestyle,” added Mishra.

With a consumer base of 3.5 crore across the country, Dabur Amla's sales is growing at a rate of 18 per cent.

Gujarat accounts for about 6 per cent of the Rs 250-crore turnover of Dabur Amla Hair Oil. Of the total hair oil market in the country, the brand?s market share is just 13.6 per cent. In the heavy Amla-based hair oil market, its share is 70.4 per cent.

Mishra expects more than 18 per cent growth for Dabur Amla once the new pack is introduced in the market from April 2007.

News: Rocher Ellis to open 25 stores by Dec

(BS 23/03/2007) Mumbai/Nashik - Mumbai-based Keval Kaushal Impex Pvt Ltd (KKIPL), a chain of retail stores for menswear under the brand name Rocher Ellis, is planning to open new 25 exclusive stores across the country, including three in Maharashtra by the end of this year.

The company recently opened its exclusive store in Nashik, its third store in Maharashtra and 15th in the country. KKIPL has stores in Mumbai, Ahmedabad, Surat, Jaipur, Jodhpur, Udaipur and Ajmer.

The store provides a unique shopping experience for the fashion conscious male. It is a complete men’s wardrobe fulfiling his fashion needs. The product line comprises three categories - Classix, shirts and trousers for everyday wear, Sports comprising casual shirts, T-shirts, cargos & denims for the trendy young male, and Exotic, a club and party line of shirts & trousers for occasional wear.

Kaushal Gala, director, KKIPL, said, “As part of our expansion plan, we are planning to open 25 exclusive stores across the country, including three in Maharashtra, by the end of the current calendar year. The cities we have identified include, Pune, Aurangabad, Nagpur, Delhi, Chandigarh, Patiala, Agra, Indore and Gurgaon. We are eying a turnover of Rs 18 crore in the current calendar year (2007).”

“With the growing demand for the international styling and quality menswear in the Indian market, the time is ripe for us to launch this brand in the Indian market. We are mainly targeting colleges and institutions,” he added.

News: 'India has great potential to develop Ethernet'

(HT 23/03/2007) New Delhi - Welcome to the new generation of internet users. Finally there is one technology coming to overtake the internet and the LAN. It has been rechristened the Ethernet.

In technical language, it means a large, diverse family of frame-based computer networking technologies that operates at many speeds for local area networks (LANs).

The name originates from the physical concept of 'ether', which defines a number of wiring and signaling standards for the physical layer, through means of network access at the Media Access Control (MAC)/Data Link Layer, and a common addressing format. Originally, Ethernet is the brainchild of Robert Metcalfe who is currently on the board of MEF.

The Metro Ethernet Forum (MEF), with its headquarters at Singapore, is a non-profit organisation which strives to accelerate worldwide adoption of Carrier class Ethernet Networks and Services.

The forum comprises of leading service providers, major incumbent local exchange carriers, top network equipment vendors, test equipment vendors and other prominent networking companies that share an interest in metro Ethernet. The MEF has over 80 members as of July 2006.

In an exclusive chat with HindusanTimes.com, Metro Ethernet Forum president Mr Nan Chen speaks to Priya Rajendran about his journey into the cyberworld, the connection between LAN (Land Area Network) and WAN (Wide Access Network), and the successful launch of MEF in India.

What is the MEF and Ethernet?

The Metro Ethernet Forum originated in the 1990s in Silicon Valley. At a time when even internet as a medium was not popular, the concept of Carrier Ethernet was yet to establish itself.

As a medium, it is an infrastructure for the next generation of internet as it is low cost and by far the cheapest and fastest. Ethernet is mainly being used by ISP (Internet Service Providers), Cable operators and Vendors. It is meant to provide standardised services globally.

Your interest in Ethernet?

In the late '90s, when I was working in the Silicon Valley, I got interested in the concept of Ethernet. At that time, our team was working on 100 MB/sec Ethernet.

This was connecting all PCs, systems and the building with data cable wires. These wires carried valuable data which was being transmitted to all the systems.

Eventually in the mid-1990s, we found that the capacity of ethernet could be increased and could be converted into a standardised service which could transmit data across the globe. Thus MEF or the Metro Ethernet Forum was born.

What are the MEF priorities and scope of work?

This is mainly carrier service. Ethernet services defined by the MEF are transport-oriented. The Metro Ethernet services can be communicated using two umbrella service types 'Ethernet Line Services'(E-Line Services - point-to-point services) and 'Ethernet LAN Services' (E-LAN Services - multipoint-to-multipoint services).

As part of the E-Line Service and E-LAN Service definitions, the MEF has defined the service attributes and parameters recommended for successful implementation of these services.

This means that for each service-based on these Service definitions, there are associated service attributes that have parameters, which must be set accordingly, so as to meet the customer service expectations.

Its typical service attributes include performance, bandwidth, speed, mode and class of service. Within each of these attributes parameters are recommended that provide interoperability between metro Ethernet Service Providers and vendors who implement the services.

What sets the WAN-based MEF apart from the LAN-based Ethernet?

Ethernet has been a part of internet, but a very minute one. Internet uses the Land Access Network and Ethernet is used in Wide Access Network (WAN). The MEF has defined five attributes for its Carrier Services: Standardised services, Scalability, Service Management, Reliability and Quality of Service. This sets it apart from the LAN-based Ethernet.

Top market sectors targeted by MEF...

Health Care, Finance, Education, Government, Media

How do you value Ethernet in the market?

Globally, Ethernet's service revenue was $5.9 bn in 2005 and is expected to grow by 280% in 2009. While cumulative services revenues from 2005 and 2009 are expected to be $69.2 bn, of which $2.9 bn will be Asia Pacific. The Asia Pacific market will account for $18.9 bn of a worldwide cumulative 2005-09. Metro Ethernet equipment market is worth $49 bn.

What is the MEF certification?

It certifies services for Carrier Ethernet systems and equipment that deliver MEF compliant Ethernet services and in turn assures enterprise and residential subscribers of the same. Presently, we have 80 registered users of Ethernet Carrier services of which VSNL is a part.

MEF is targeting Indian metros for its campaign…

Quite soon, we are joining Indian Ethernet users VSNL and a couple of other organizations involved with MEF in roadshows to make IT companies aware of the benefits of Ethernet and MEF too.

And this is mainly because India has great potential to develop Ethernet technology as it is still a raw ground in terms of internet usage. We are expecting a great boost to MEF in the near future.

News: India Inc may help set up African grid

(HT 23/03/2007) New Delhi - India could lead in setting up a pan-African satellite, fibre optic and wireless network connecting 53 countries.

A proposal to set up such a network was mooted by President APJ Abdul Kalam during his visit in 2003-04 to African countries like Sudan, Tanzania, Zanzibar and South Africa. Communications Minister Dayanidhi Maran, speaking at a Commonwealth e-partnership summit on Friday said, "The Indian ICT industry has not only managed to catch up with its more technology savvy global peers, but is also being actively sought out by companies worldwide for on-site, offshore expertise and wealth of manpower resources."

The two-day summit organised by the Ministry of Communications and Information Technology, the Confederation of Indian Industry and the Commonwealth Business Council, will explore opportunities for Indian companies to collaborate in sectors like telemedicine and tele-education.

Mohan Kaul, director-general of the Commonwealth Business Council, urged Maran to take the lead, "Our President has shown a vision we can emulate and I am sure all countries will look to bridging the digital divide."

Stressing the importance of public-private partnership, Maran said: "It is our firm belief that progress in the modern world requires a strategic relationship among the government, civil society and the business community. By bringing benefits of IT to the masses, it is our endeavour to ensure that all Indians have equal access to economic opportunities within the country and outside."

News: Indians plumping for the premium tipple

(DNA 23/03/2007) Mumbai - The Indian Made Foreign Liquor (IMFL) market is set to witness a far more fierce battle with the entry of newer brands in the premium and semi-premium segments. Enamoured of the attractive growth rates, several players — old and new — are trying their luck by launching new brands.

The IMFL market, which is growing at rate of 9-10%, is valued at around 125 million cases.

Interestingly, most of the new brands launched are in the whisky category, which has a volume of 65 million cases/year and growing at 8%.

McDowell’s is the leader in this segment with 45% market share. McDowell’s Royal Challenge and Seagram’s Royal Stag, priced between Rs 300 and Rs 400 for a 750 ml bottle, are the much-sought-after brands in this sector.

Raju Vaziraney, president, sales & marketing, Radico Khaitan, told DNA Money: “There is a huge potential in the segment as the consumers are ready to spend more money for premium and high premium brands.”

“The boom in the Indian economy reflects well in the consumers’ shift towards premium brands. For the past one year, there is about 40% growth in the premium segment.” According to him, the sales in IMFL segment will cross 200 million cases within the next 4-5 years.

The major brand which was launched among others was Masterstroke Deluxe Whisky, from Diageo Radico Distilleries Pvt Ltd — the joint venture between Diageo and
Radico Khaitan Ltd. Masterstroke is priced at Rs 300- Rs 400 per bottle (750ml).

Asif Adil, joint managing director, Diageo Radico Distilleries Pvt Ltd and managing director, Diageo India, said: “Consumers are getting more choices nowadays as the industry grows. We are looking for a 15-20% market share with Masterstroke Deluxe Whisky.”

He added that the JV will be launching 2-3 more brands this calendar year.

Beam Global Spirits & Wine Inc, which has launched its established whisky brand, DYC, in the IMFL category in January, is eyeing a major chunk from the IMFL segment with the launch of new brands. The fourth-largest premium spirit company in the world, as part of strengthening its Indian made foreign liquor (IMFL) portfolio, is looking to launch more brands in the same category.

Whisky DYC, which is priced about Rs 370, is mainly aimed the slot between the premium and semi-premium IMFL brands.

Whisky DYC, launched in Maharashtra, costs around Rs 385 for 750 ml bottle in the state.

Harish Moolchandani, CEO & managing director, Beam Global Spirits & Wine India, said: “We are exploring the possibility of launching more brands in the IMFL segment. All is depend on the turnover from the brand DYC. However, our first aim is to establish the brand DYC. Once it is established, we will launch other brands in IMFL.”

However, he refused to divulge the details of the brands to be launched, saying, “It could be whisky or white spirits. It is too premature to say about it.”

The company is the market leader in the Scotch whisky segment with its flagship brand, Teacher’s whisky. Teachers’ brands hold around 45% of the Scotch whisky segment in India with a CAGR of 22%. The IMFL whisky segment, which has a volume of 65 million cases per year, is growing at a rate of 6-8% per annum.

News: Shift to India saves Bosch 30% in costs

(BL 23/03/2007) Bangalore - Bosch's move to shift production of certain parts to India has started yielding results, with the company being able to save costs up to 30 per cent. In a related development, Bosch officials told Business Line that Eastern Europe and South America have emerged strong contenders as low-cost locations for shifting work from high-cost regions such as Western Europe. "India and China are not the only options available for the company," said Ferdinand Allerkamp, Joint Managing Director. He said that India was part of the international network of production bases and hence, there was a possibility that more work could come to India. Lakshminarayan, Joint Managing Director, said that production of some of the parts out of India has now started yielding results. "There has been a cost savings of 20-30 per cent." He also said that Bosch expects the return on investments into common rail injection system production by 2010-11. Bosch has invested close to Rs 600 crore in the production of common rail diesel injection systems. In mid-2006, the first common rail pump rolled out of the Bangalore plant, while the Nashik facility started the manufacture of common rail injector components in December 2005. Some of the products whose manufacturing has been shifted to India are single cylinder pumps from the Czech Republic, multi-pumps from Austria and KCA injectors from France to Mico's Bangalore plant. Production of injectors and nozzles has been relocated to Nashik from Europe, while production of regulators has been shifted to the Nagnathapura plant from the UK. Production of cylinder VE distributor pumps has been shifted from Germany to the Jaipur plant. As per the forecast made earlier, Mico's exports was expected to grow at 30 per cent CAGR till 2006, while the export contribution to total sales is expected to improve to almost 20 per cent by the end of 2006. As per the results declared last week, Mico's CAGR growth rate in exports during the last five years was 26 per cent, while sales grew 21 per cent.

News: India has an edge over China for Germans

(PTI 23/03/2007) Kolkata - Intellectual Property Rights (IPR) protection and sound legal framework puts India at an advantage against China over German company looking for investments in the region. "India has an edge over China. It offers IPR protection and a stronger legal framework against China. Many German companies are planning to invest in India," a member of a visiting German delegation Satish Batra told PTI. "Many German companies in China are facing problems in business due lo lack of IPR and they are even planning to relocate," he said. Batra said China was known only for as a low cost producer, but quality was not good. India was a quality producer and costs were moderate compared to the international level. "Companies that are looking at quality and not cheap products," are strongly considering India," Batra added. He said now the German SME sector also looking at India to set up their second manufacturing facility as well as for joint ventures. "I am keen to sell products and want to form a JV in India with a local partner," Batra, who is also managing director of Horizon GmbH, said. A similar view was given by Wulf Christian Ehrich, delegate and an official of a German chamber. Trade data showed that German companies operating in China were not only facing stagnation in growth, but also experiencing slowdown, while, trade with India has grown almost 50 per cent to 10 billion Euros in 2006, another German delegate said.

News: ICICI Bank boosting UAE presence

(BL 23/03/2007) Dubai - ICICI Bank is keen on starting commercial banking operations in the UAE as it builds its presence in the Gulf. With non-resident Indians (NRIs) sending home some $6 billion annually in remittances from the GCC, the region is attractive to Indian banks.

"The Middle East is an area where so much is happening. We want to participate in this growth," K V Kamath, Chief Executive Officer, ICICI Bank, was quoted as saying in Gulf News. Kamath said India received $25 billion in remittances last year and they are growing 25 per cent annually.

In Bahrain, ICICI conducts full banking operations, which accounts for one-third of the bank's international business (17 per cent of the bank's balance sheet). ICICI Bank manages $2.5 billion in private NRI wealth originating from the GCC.

In Dubai, ICICI has an advisory office at the Dubai International Financial Centre (DIFC). The bank employs 60 people at the DIFC office, which offers wealth management services to clients with more than $1 million in liquid assets.

A representative office is being opened in Abu Dhabi to serve a growing customer base, Kamath said.

This week, Qatar Financial Centre Regulatory Authority granted authorisation to the ICICI Bank, to carry out regulated activities in the Qatar Financial Centre.

News: 'Time not ripe for common Asian currency'

(BL 23/03/2007) New Delhi - India on Friday said a common currency for Asian countries, similar to the Euro for European nations, was still a few years away and would require more coordinated efforts on part of all the participants. "I do not believe that time has arrived for the common ASEAN currency like Euro," the Prime Minister, Manmohan Singh said at the India Today conclave here. A common Asian currency would require more coordinated efforts and may become a reality in near future, he said. Apart from ASEAN members, the Asian Development Bank has also considered a plan to create a regional currency unit - before introducing an actual currency - that could bring down exchange rate volatility among member countries and give a momentum for the regional bond market. Despite its potential benefits to ASEAN members and Japan, China, South Korea as well as countries such as India, the idea of common Asian currency has not made much progress due to various technical and political obstacles. Singh pointed that common Asian currency would require coordinated efforts and removal of various obstacles. Responding to questions on exploring Asian funds for infrastructure, he said: "The Government is confident that rising levels of savings will largely meet fund requirements for infrastructure." Referring to rising domestic investment and savings, he said: "Five years ago, I could not imagine that investment rate will reach 34 per cent of GDP while savings reached 32 per cent of gross domestic product."

News: Imported liquor to become cheaper

(PTI 23/03/2007) New Delhi - Imported liquor is all set to become cheaper with the government likely to bring in a bill in Parliament next month to scrap additional customs duty on wines and spirits, a move that will also pacify the country's top trading partners - the US and EU.

"The Finance Ministry has agreed to the proposal which will soon be taken to the Cabinet for approval. The Bill is likely to come when Parliament meets after a three-week recess," highly-placed official sources told PTI.

At present, India imposes a basic customs duty of 100-150 per cent and additional customs duty (ACD) of 25-150 per cent on wines and spirits. The total incidence of tax is between 250-550 per cent depending on the import price of products.

The proposed legislation would retain the basic duty but abolish the ACD. It will also empower states to impose an extra levy equivalent to the excise on domestical wines and spirits. This will bring imported and domestic products on an equal footing, the sources said.

As the ACD is much higher than the maximum of 60 per cent excise on Indian Made Foreign Liquor (IMFL), the retail price on imported wines and spirits would fall drastically.

The move is aimed at addressing the concerns of the US and European Union, which have complained against India at the World Trade Organisation (WTO) on high level of duties.

India fears if the cases in WTO are investigated, many more taxes apart from ACD may come under the scanner.

However, with WTO process taking five to six months, India would have its new duty structure in place and the required legislation passed.

The decision to introduce a legislation for abolishing additional customs duty came only a few weeks after the US followed the EU to approach the WTO on the issue. EU had moved the WTO in November last year, while the US approached the global trade body early this month.

Both the US and the EU argue India imposes an additional duties on top of basic customs duty, making imported wines and spirits much costlier compared to locally-made liquor.

EU Agriculture Commissioner Mariann Fischer Boel had also raised the issue during her visit to India on March 6. Commerce Minister Kamal Nath had then hinted at a possible cut in tariffs on imported wines and spirits in view of the growing demand from trade majors.

Meanwhile, though India is addressing the concerns of the US and EU, the concerns of manufacturers of Indian Made Foreign Liquor (IMFL) have not been addressed as the US and EU continue with their stand on not recognising Indian spirits as 'whiskey' because they are made from molasses and not grain.

The genesis of the problem lies in the definition of whiskey as laid down by World Customs Union more than two decades ago.

"At that point of time when the WCU was categorising as whiskey only those spirits made from grain, India did not object," the sources added.

News: Tatas eye stake in German IT firm

(HT 22/03/2007) Mumbai - With Corus in the bag, the Tata group is already looking at fresh pastures. Tata Consultancy Services (TCS), a Tata group company and India’s largest IT firm, is in talks to pick up a stake in German IT major T-Systems. T-Systems is a division of Deutsche Telekom.

International news agencies on Thursday quoted a German magazine as saying that the Tata group is evaluating options to acquire stake in T-Systems. Sources close to the Tata group said TCS may pick up not less than 25 per cent in the German firm. If it manages to acquire 25 per cent stake, the valuations will be close to Rs 20,000 crore ($4 billion). The company’s total turnover is about Rs 73,609 crore. T-Systems employs about 56,000 people in over 20 countries.

Sources said the Tata group’s M&A team has commenced due diligence at T-Systems’ office. A TCS spokesperson said the company does not want to comment on market speculations. “The proposed deal is beneficial for T-Systems as TCS can develop more software for the German company at reduced costs,” said an analyst in a Mumbai-based brokerage firm.

"TCS can get a huge foothold in consulting in the automotive sector since T-Systems does a lot of IT-related work for DaimlerChrysler," said the MD of a Mumbai-based software company. As a service provider, it offers the entire range of information and communication technology from a single source in a way that distinguishes it from the other businesses in its sector.

News: Reliance, Rohm to set up chemical unit in India

(HT 22/03/2007) Mumbai - Mukesh Ambani-controlled Reliance Industries and the Philadelphia-based Rohm & Haas will jointly invest $250-300 million to set up a facility that makes chemicals used in paints and plastics.

The facility will have a capacity of 200,000 tonnes at Jamnagar in Gujarat, which will be jointly owned by Reliance Industries and Rohm & Haas.

“The companies signed an agreement today. They will be investing something $250-300 million in the plant,” sources close to the development said. The new facility is expected to spur development of super absorbent polymers used primarily in the manufacture of diapers.

“While the key objective would be to serve the domestic market, the complex could also export acrylic acid and derivatives,'' a Reliance Industries statement said. Chemicals make up about 45 per cent of the company's earnings.

Rohm & Haas is the world's biggest producer of acrylic monomers for paints and plastics with a capacity to produce 1.22 million tonnes.

The output from the Jamnagar plant will be used mainly for paint production. Being an environment-friendly product, the demand is expected to grow,” a Reliance Industries executive said.

Reliance Industries is also planning to build a $3 billion chemical plant near its Jamnagar refinery, which will make ethylene and propylene, used in plastics. It is planning to spend close to $12 billion to buy a majority holding in US-based Dow Chemicals, according to industry reports. Reliance Industries has reportedly created a Rs 1 lakh crore war chest for potential buyouts in the petrochemicals and oil businesses.

News: 'India leads global offshore market'

(BL 22/03/2007) Chennai - India continues to be best global offshore destination for software offshore services while China is a close second, Sri Lanka and Pakistan are emerging as alternative destinations in Asia, according to a study done by global consultants A.T. Kearney.

The study identified the top 40 global outsourcing destinations for 2007, and India was on top of the list in the 2005 version, followed by China.

Both Sri Lanka and Pakistan offer many of the same advantages as India, with similar labour costs, widespread use of English, strong education systems and increasingly open and well-regulated business environments. However, both countries have only recently woken up to the `enormous' opportunity of the offshore services sector and therefore lack India's breadth and depth of experience. Both countries are also disadvantaged by their relatively smaller population-base and obvious concerns over internal security, says the study.

Sri Lanka and Pakistan entered the A.T. Kearney Global Services Location Index for the first time at 29th and 30th places respectively, says the study that is available in A.T. Kearney Web site.

Latin American countries - Brazil, Chile and Mexico - are collectively the biggest gainers in this year's index. Spurred on by India's success, governments in the region have begun to recognise the potential of the export services sector, particularly in the context of providing near-shore support to North America and Iberia.

China catching up

India maintains a wide, albeit slightly shrinking, lead over China, confirming what industry surveys and visiting executives repeatedly find - for all the concern about overheating, wage inflation and service levels. India still offers an `unbeatable' mix of low costs, deep technical and language skills, mature vendors and supportive government policies, the study said.

In both India and China, double-digit growth rates have fuelled wage inflation, with average compensation costs for `sample functions' rising by around 30 per cent in China and around 20 per cent in India. But these cost escalations have been matched by corresponding increases in skill supply and quality indicators.

Southeast Asian nations continue to do well with Malaysia, Thailand, the Philippines, Indonesia and Singapore occupying five of the top 12 spots and Vietnam entering the top 20. Singapore has been overtaken by larger, lower-cost countries now competing to establish themselves as service centres - in the same way that Singapore itself did 20 years ago. In the Philippines' case, growth in the sector and currency appreciation have driven up wages in US dollar terms by as much as 30 per cent, reducing relative cost advantage.

Nevertheless, the Philippines remains one of the lowest wage locations in the Index and now offers the lowest telecom costs of any country in the Index.

News: Volkswagen reconsiders model range for India

(IANS 22/03/2007) Wolfsburg (Germany) - Volkswagen is reconsidering its range of models to be launched in India but it denied a magazine report that it had frozen plans to build a factory in Pune.

To date, Volkswagen has spoken of introducing its Passat family saloon, which has done well in China, the longer Jetta derivative of its smaller European mass-market Golf hatchback and a bare-essentials version of its Polo minicar for emerging markets, a company spokesman said.

Company's new chief executive Martin Winterkorn had ordered a review of which models were most suited to be made at the company's first Indian manufacturing site. The review was only to consider anew which models were best suited to the Indian market, he said.

A German business weekly had earlier said it would be appearing this week with a report that the plans to set up the plant at Pune had been put on hold. The spokesman said this was untrue and Volkswagen viewed India as a very important market.

News: Rs 1 lakh car a global case study

(PTI 22/03/2007) New Delhi - The much-touted people's car from Tata Motors could create a major dent in the top-end motorcycle sales with its lucrative price tag, which has become a global case study, global consultancy firm J D Power said today.

"If Tatas are able to get quality and customer satisfaction parameters right, People's Car could shift buyers from a top-end two-wheeler on account of its safety and convenience factors," it said.

"The two-wheeler market in India could see a dent at the top-end because of the Rs 1 lakh car, but how far reaching will it be will depend on the product's performance, after-sales service and overall customer satisfaction," Mohit Arora, director (India), JD Power, said.

The progress of the car is being monitored by automobile industries across the world for possible replication in different markets. "Rs 1 lakh car is a case study the whole world is watching. If successful, the car can spark demand in a new segment. Brazil and China are looking for similar products," Gerrit Kuyntjes, managing director (Asia Pacific), J D Power, said.

The firm, however, cautioned that Tatas would need to get the product right at the first shot as the dynamics of the Indian automobile market have changed over the years. "Unlike Indica, in which Tata Motors got a second chance, it is doubtful if it would get a similar one with the Rs 1 lakh car as consumers have become more discerning and demanding," Arora added.

News: Nakheel, DLF form JV for $12-b core projects

(TNN 21/03/2007) New Delhi/Mumbai - In one of the biggest real estate FDI flow into the country, UAE’s largest property development company — Nakheel — is set to enter India through a joint venture with Delhi-based DLF Group for two mega infrastructure development projects at an estimated cost of $10-12 billion.

Each of the project — one near National Capital Region and the other in Maharashtra, along a coastal region — would be spread over 20,000 acres, and would involve the development of industrial infrastructure and township components, including residential, commercial, retail and recreational centres. Sources close to Nakheel said that an MoU to this effect would be signed between the two companies later this week during the forthcoming India visit of UAE ruler Sheikh Mohammed bin Rashid al Maktoum. Each partner would bring around $3 billion to the table while the remaining would be financed through debt, sources added.

Though the DLF Group did not confirm the development, sources in the company indicated that there could be 50:50 JV between the two partners. Sources close to the deal said that there would be no government involvement in land acquisition for the two projects. Expected to get rolling by end-2007, the first phase of the project would be spread over three years. This would involve development of integrated industrial and transportation infrastructure, including setting up of commercial, residential, retail, hospitality, leisure and entertainment centres.

Nakheel is behind some of the most iconic projects such as The Palm, The Dubai World and Dubai Waterfront. Nakheel currently has 17 major projects, worth more than $30 billion under development. After attracting global attention through their towering projects, many Middle East real estate giants are now moving to Indian shores. Arab investors are tying up with major Indian real estate firms to grab a share of the billion-dollar industry.

News: Israel asks India Inc to help build infrastructure

(HT 21/03/2007) New Delhi - As Israel prepares a Master Plan to bring its transport infrastructure up to the standards of developed countries, a delegation led by the Deputy Prime Minister Shaul Mofaz is in India seeking participation of the Indian private sector.

Accompanied by Israel's Director General in the Ministry of Transport and Security, Gideon Siterman, Mofaz, during his two-day visit, held meetings with the ministers of Railways, Civil Aviation, Road Transport and Highways and Shipping, apart from the GMR Group.

“Our Master Plan has been given a budgetary support of $5bn,” Mofaz told a business gathering today, “There is immense scope for Indian companies to take advantage of this opportunity.”

Inviting Indian companies to compete for tenders in Israel, Mofaz called for greater collaboration in research and development. Transport secretary Siterman said Indian and Israeli companies could explore joint ventures to tap third-party markets.

News: This Indian firm shops big abroad, talks less

(HT 21/03/2007) Mumbai - In the age of global takeovers by big banners like the Tatas and Birlas, an unlisted, little-known speciality chemicals firm based in Taloja has bought US-based ExxonMobil Chemical’s component additive business for an undisclosed amount. The deal was announced on Wednesday.

And this is not the first time that the homegrown Dorf Ketal Chemicals India Pvt Ltd has made a global acquisition.

Much before Indian businesses developed an appetite for global assets, Dorf Ketal had acquired another US-based company UOP’s refining chemicals and plastics additives businesses in 2001 and 2003 for undisclosed sums (it is bound by confidentiality terms).

“These acquisitions gave us the brand image we needed to sell in the US and the Middle-East markets,” said Subodh Menon, the 36-year-old founder CEO of Dorf Ketal.

What is interesting about the acquisitions is that Dorf Ketal just acquired the product lines (the brands, the customers, the know-how), minus the liabilities of old plants and high-cost manpower. Many Indian firms acquiring assets abroad are beginning to think along on these lines now.

Founded by five chemical engineers and chemists 13 years ago, the unlisted firm boasts of a sales turnover of nearly Rs 500 crore with operations in Brazil, offices in the US (where it sources products from contract manufacturers) and Europe, and plans to soon set up shop in China. It is working on three more acquisitions.

Dorf makes process chemicals used in oil refineries and petrochemical plants, fuel additives and additives to make polyurethane and poly urea, which are used to make dashboards with a leather-like finish for luxury cars. The buy will help it grow revenues by $43 million (Rs 189 crore).

News: Mallya finally buys Whyte & Mackay

(DNA 21/03/2007) Bangalore - Finally, finally, finally, a done deal. After months of speculation and acres of reportage, liquor baron Vijay Mallya is acquiring Glasgow -based scotch maker Whyte & Mackay in the next few days.

A K Ravi Nedungadi, United Breweries Group chief financial officer, told DNA Money, “Yes, we will close the deal in some days.”

Mallya will be buying out the Scottish whisky firm in an all-cash deal, the valuation of which has been a contentious issue for both the buyer and the seller since months.

“The due-diligence is over, and we have pretty much arrived at a price. We cannot disclose it now due to confidentiality clauses in the deal. Also, the figure keeps moving,” said Nedungadi. Whatever be the valuation (reported at around £550 million), Nedungadi said more than half would be for W&M’s inventory of scotch.

Currently, UB imports 12 million litres of scotch to meet its blending requirements. Besides the scotch inventory, Mallya would also be getting the Scottish firm’s manufacturing assets and brands which include Whyte & Mackay scotch whisky, Dalmore Single Highland Malt, Vladivar vodka and Jura single malt.

Analysts said the deal, the biggest of its kind for an India firm, will push up Mallya’s share in the global and domestic spirits market considerably.

Nedungadi said United Spirits’ total domestic sales will touch 66 million cases of spirits by this fiscal-end out of an industry total forecast of 120 million to 130 million cases. This will give UB a market share of around 49%.

With W&M in its stable, United Spirits’ volumes will shoot up considerably, giving it a big lead over players in the Indian and overseas market. It would also improve its product-mix and expand current margins. Nedungadi said Mallya has already tied up funds for the acquisition in the form of debt from banks.

United Spirits has told investors that the takeover would be funded through debt, of which only 50% will be on its books, while the remaining will be through non-recourse debt on White & Mackay’s books.

News: IBM more than doubles headcount in India

(IANS 21/03/2007) New Delhi - Expanding its presence in India, US-based global IT major IBM has more than doubled its headcount to over 50,000 employees in the country in two years, the firm said. "IBM has more than doubled the number of staff it employs in India over the past two years, to more than 50,000 workers," said a statement here. "This investment means that one in six of IBM's workers is now based in India," it added. The firm, which recently opened a research and development centre in Bangalore, has also announced upgradation of its India research laboratory based in New Delhi, as part of its expansion plans. "IBM Research has been in India for about 10 years, and we are committed to innovation that matters, for our company and for the world," said Dan Dias, director, IBM India Research Laboratory. "This is evident from the fact that no other company has the resources committed to innovation that IBM does - $5-6 billion a year invested in R&D," Dias added. He said the company now has more than 3,000 scientists in its eight research labs across the world.

News: ‘Indian investment in Britain poised to rise’

(IANS 21/03/2007) London - Indian investment in Britain is poised to outstrip British investment in the subcontinent, reversing the flow of capital for the first time since the days of the Raj, says a new study.

According to exclusive research by Close Brothers Corporate Finance for The Sunday Telegraph, by 2010, Indian companies will buy up 150 British businesses a year, while British companies will acquire just 138 in India.

India's booming companies are increasingly willing to spend money abroad with Britain being a favourite target. Of 12.4 billion pounds in deals announced in the last five years, more than half - 6.8 billion pounds - was spent in Britain.

The research showed that other European countries lagged far behind for Indian investment with the next most popular, Germany, picking up just a billion pounds worth.

Close Brothers Corporate Finance managing director Richard Grainger, who recently signed a deal to add Bangalore boutique Allegro Capital Advisors to Close's international network, says the still-strong cultural ties between Britain and India encourage investment.

He told the Daily Telegraph: "We have a linguistic advantage here and in the US, while in countries like France and Germany there are employment issues around investing."

Grainger points to Tata's 2005 acquisition of British technology business INCAT as a turning point in the investment trend. "That was the first sign of the wall of money coming out of India," he said.

Tata eclipsed its own deal earlier this year when it won the 6 billion pounds battle for Corus, formerly British Steel and a one-time bastion of the FTSE's industrial core. Indian tea company Apeejay International also picked up Britain's Typhoo in 2005, taking tea back to India.

The research showed that if India's acquisition spree continues on trend, it will buy 31 British companies this year, almost double that to 52 next year, then push up to almost 90 corporate raids in 2009.

In the same period, British companies will also increase investment in India, but by nothing like the same rate. From 50 acquisitions this year, British firms are expected to pick up 99 companies in 2009.

Grainger said: "There is a tipping point where things could start to move the other way again. India is growing rapidly and will soon need serious investment in its infrastructure. I can see at that point that British companies will start buying up assets there to be part of that investment."

News: Malaysian Govt arm buys 9 % stake in IDFC

(BL 21/03/2007) Mumbai - Khazanah Nasional Berhad has acquired 8.97 per cent stake in Infrastructure Development Finance Co. Ltd, data on the Bombay Stock Exchange Web site showed. Khazanah is an investment holding arm of Malaysian government. Swiss Finance Corp. had sold 8.9 per cent in IDFC on March 12.

News: Bahrain opens embassy in India, seeks tech ties

(IANS 21/03/2007) New Delhi - Bahrain Wednesday opened a new chapter in its relations with India by inaugurating its embassy here and sought Indian cooperation in developing the technology sector in the Gulf country.

"This visit marks the opening of Bahrain's embassy in India. It's truly a valuable opportunity to reach out to people and businessmen here," Bahrain's Crown Prince Shaikh Salman Bin Hamad al Khalifa said in his address at the Indian Council for World Relations - India's premier think tank.

"I am surprised why we didn't have a full-fledged embassy in India all these years," Shaikh Salman said after opening Bahrain's embassy in the upscale Vasant Vihar area here that houses many other embassies.

"We can learn a great deal from India when it comes to the transfer of technology. The technology sector is a significant opportunity for cooperation between the two countries," he said.

Tracing ancient ties between India and Bahrain, Shaikh Salman said the two countries have exchanged goods and services for generations. He lauded the 260,000-strong Indian diaspora for its "substantial and much recognised contribution" to the growth and development of Bahrain.

Describing his country as "a pioneer and outward looking nation" with a business-friendly culture, Shaikh Salman sought intensification of trade and investment with India. "Bahrain is ready for rolling out the red carpet and cutting down on red tape," he said.

Enunciating his country's perspective on major regional issues and the Middle East peace process, Shaikh Salman called for "an equitable solution" to the Palestinian issue, which he described as the most "emotive issue" in the region.

"The way forward is through dialogue and discussions," he stressed as he called for the development of a "more integrated, productive and prosperous Middle East".

The crown prince, who began his four-day visit to India Monday, spoke of the "intense change" his country is undergoing and ongoing efforts to implement democratic reforms as he conjured the picture of a vibrant nation confident of playing its due role in the region.

"You must be the change you wish to see in the world," he quoted Mahatma Gandhi to illustrate Bahrain's approach to domestic and regional issues.

The crown prince and his delegation left for Agra in the afternoon to see the Taj Mahal. He will fly to Mumbai in the evening where he will have meetings with the city's business elite.

On Thursday morning, Shaikh Salman will visit aircraft carrier INS Virat at the Naval Dockyard. He will also visit the Bombay Stock Exchange and IT major Tata Consultancy Services' office before returning to Bahrain Thursday evening.

India and Bahrain Tuesday signed two pacts in the area of media and cultural cooperation. The crown prince held talks with Prime Minister Manmohan Singh and his senior ministers and discussed with them a wide array of bilateral and regional issues.

News: Tatas to raise $1 bn fund for core sector

(HT 20/03/2007) New Delhi - India's largest corporate house, the Tata group, is exploring the possibility of venturing into the private equity business. The company is in talks with leading investors in the US and Europe to raise a $1 billion fund for the Indian infrastructure sector.

According to highly placed sources, the group will also contribute to this fund, which in all likelihood will be registered in Mauritius.

The Tata group spokesman, however, denied any such development. "This is completely incorrect and speculative," he said.

The new venture, headed by Kishore Chaukar, managing director of Tata Industries, has already started talking to major investors in the US and Europe.

In the first phase, the Tatas are expecting to get a commitment of around $300 million. "Once they get commitments for this amount they will start investing in Indian projects. Simultaneously, they will start raising the second tranche," the sources said.

The Tata group has been considering such a venture for a while now. According to the original plan, the fund was expected to be registered in India. However, due to tax changes in the latest budget, the sources said the fund would now be registered in Mauritius, which has a tax treaty with India and where the long-term capital gains tax is zero if the investment is for over a year. Under a year, the tax rate is 10 per cent.

Finance Minister P Chidambaram, in the budget for 2007-08, restricted the pass-through tax benefits for venture capitalists to select research areas, among which infrastructure is absent.

News: Dell sees $1 bn India sales

(HT 20/03/2007) New Delhi - The Indian tariff structure may not be tailor-made for Dell Inc’s strip-down business model, but the company sees its India revenues double to cross $1 billion, sooner than later.

With the addition of a manufacturing facility, expected to be up and running in Chennai by July, the company will have a most comprehensive presence in India outside of the US.

The company, which has announced plans to invest $30 million in Chennai, will dovetail the degree and size of future investments to the regulatory environment and the flexibility in the tariff structure that the country has to offer.

"The government needs to figure out how it can attract capital investment to make sure that at least 500 million of the next billion PC users come form India.

" A tariff structure that adds more than 20 per cent to the cost of a typical PC helps neither the consumer nor the vendor,” said Dell Inc Chairman and CEO Michael Dell.

Responding to the requirements unique to developing markets like India, Dell Inc. plans to experiment with different ways to go to market. “We opened our first store in Dallas, Texas, and have also set up some demo shops in China. In India, too, we will reach out to the customer in many ways,” he added.

After a strong presence in the enterprise market, Dell is now planning to focus on the consumer and small business segment in the country. "India will see a lot of action in the consumer space with lots of initiatives under Dell’s global consumer business being replicated here," he added.

Earlier in the day, speaking at the CII-CEO’s forum, Dell said, "It’s important for companies like Dell to help the second billion people worldwide, many from India, to get online so that they can participate and compete in the economy today and tomorrow."

News: Indian aviation schools fly abroad

(BS 20/03/2007) New Delhi - To cash in on the rapidly growing demand for pilots, Indian aviation academies are setting up training facilities abroad, where they can churn out pilots as quickly as in eight months, compared to almost two years that it takes in India.

While Mumbai-based Indian Aviation Academy has set up a facility in Dubai, Indore-based Yash Air, the largest pilot training academy in India, is planning to set up shop in Australia or UAE.

At least another ten academies are looking at a similar option, industry sources told Business Standard.

The phenomenal growth of the aviation industry in India has created a huge scarcity of pilots. There are 4,100 pilots currently available, along with 580 expats, though there is a total requirement of 5,200 pilots. By 2010, the demand is expected to climb to 10,500 pilots and the supply could fall short by up to 1,500, according to aviation experts.

Rules laid down by the Directorate General of Civil Aviation say 200 hours of flying is required to get a commercial pilot’s licence. While that can take 14-18 months in India, on account of shortage of parking bays, aircraft etc, it can be completed abroad in just 6-8 months.

Also, while the Indian course has five exams, there are just three abroad. The three exams can be taken online at any time of the year. In contrast, the exams are held at a fixed time of the year in India.

According to Yashraj Tongia of Yash Air, training pilots abroad also works out cheaper than in India because of the lower cost of spare parts, aviation turbine fuel and training staff. Aviation turbine fuel is almost 50 per cent more expensive in India than abroad.

At the same time, flying instructors cost 60 per cent less abroad. With most instructors having become commercial pilots, there are only eight chief flying instructors in the country at present.

Operating out of duty-free zones, these academies can also save on taxes.

“It is the perfect time to venture out. The booming Indian industry has already bought big names like Airbus and Boeing to set up their institutes here. So we have gone abroad to set up an international flying training school in Dubai, which would later be developed into a full fledged aviation university,” Rizwan Qadri, the chairman of Indian Aviation Academy, said.

News: Dutch stake in Canara unit

(TT 20/03/2007) New Delhi - Canara Bank plans to sell 49 per cent equity of asset management firm Canbank Investment Management Services Ltd to Dutch money manager Robeco NV for about Rs 115 crore.

Canara Bank and Robeco have also signed an agreement to form a joint venture and expect to start operations after getting regulatory approvals this year.

“The total valuation of our asset management entity is Rs 230 crore and a 49 per cent stake sale will bring about Rs 115 crore,” Canara Bank chairman M.B.N. Rao said.

The Reserve Bank has already given its assent to the proposed venture, he said, adding that an approval from market regulator Sebi and the Foreign Investment Promotion Board would be sought soon.

Robeco has assets under management worth 139 billion euros worldwide and posted operating profits of 233 million euros in 2005.

“We are targeting 5 per cent of India’s mutual fund market in five years,” said George Moller, chief executive officer of Robeco Groep, which is part of Dutch banker Rabobank Group.

Canbank Investment Management Services, which has assets worth Rs 4,000 crore under management, will be renamed Canara Robeco AMC after the deal is completed.

Robeco’s entry follows other Dutch companies such as ABN Amro and ING Group as well as a number of other US and European players such as HSBC, Franklin Templeton, Prudential, Standard Chartered and Fidelity.

Moeller said, “We are positive in the long-term about the stock market.”

The joint venture will float five products, especially equity-based, in the coming months, Moller added.

News: Shoppers’ Stop goes shopping

(TT 20/03/2007) Mumbai - Shoppers’ Stop Ltd is picking up a stake in HyperCity Retail (India) Pvt Ltd, a group company. It will acquire 19 per cent of the 51 per cent stake it can pick up in HyperCity.

Shoppers’ Stop, while informing the stock exchanges of the move, did not disclose the amount to be paid for the stake. HyperCity, which is largely into the hypermarket format in the organised retail sector, is part of K Raheja Corp of the Chandru L Raheja group. It has a 120,000-sq-ft store at Malad, Mumbai, which stocks groceries, fresh foods, home needs, garments and consumer durables.

The acquisition of this stake has been a matter of speculation since the past few months. Shoppers’ Stop had entered into an option agreement in August 2004 with Inorbit Malls Pvt Ltd, the promoter of HyperCity.

News: Trinity buys more Fortis shares

(TT 20/03/2007) Mumbai - Trinity Capital (Eight), a London Stock Exchange-listed entity that invests in real estate and real estate entities, is acquiring 6 million shares of Fortis Healthcare for Rs 87 crore in a pre-IPO allotment. Trinity had acquired 2 million shares of Fortis early this year.

Ranbaxy group’s Fortis is a private healthcare company. It had signed two pre-IPO agreements in December last year and another in January to allot 4 million shares for Rs 56 crore.

Fortis said, according to Sebi regulations, the equity shares issued after the pre-IPO agreement will be subject to a lock-in after the completion of the public issue. Fortis today said the number of shares to be issued to the public will be reduced after this agreement.

Shivinder Mohan Singh, managing director of Fortis Healthcare and Escorts Heart, said, “We are happy that an existing shareholder like Trinity, which had bought two million shares in January this year, has increased its shareholding in the company.”

Fortis has a network of 11 hospitals, primarily in north India, and 16 satellite and heart command centres.

The hospitals include multi-specialty and super-specialty centres providing healthcare to patients in cardiac care, orthopedics, neurosciences, oncology, renal care, gastroenterology and mother and child care.

Last year, Fortis had issued shares to Quantum, Blue Ridge Ltd Partnership and Blue Ridge Offshore Master Ltd Partnership (Blue Ridge) for an aggregate amount of up to $33.33 million.

News: Fourth-quarter results expected to be robust

(DNA 20/03/2007) Mumbai - If the weak-kneed markets are looking for support, here’s one: Consensus estimates for India Inc’s fourth quarter (Q4) results - due in April and May - show that analysts are bullish on most sectors and sector leaders.

A Religare Securities analyst bets, the Q4 results should be better than Q3 for most sectors and companies.

Look at the auto sector first. Good volumes, both domestic and export, are expected to make toplines robust. For instance, the passenger car segment has grown by 24%, medium-heavy commercial vehicles have grown by 35% and light commercial vehicles by 36%. Though the two-wheeler segment seems to be subdued with just 13% growth, motorcycles are growing faster at the rate of 15%. Says Dipesh Sohani, auto analyst with Investsmart Securities: “The indications are that toplines of leaders like Tata Motors, Maruti and Ashok Leyland will be better during Q4.”

However, analysts expect operating margins to come under pressure, thanks to sharp rises in input prices, high depreciation and bulging staff costs. Says Sohani: “The two-wheeler segment may see more pressure, which will see a margin impact.”

As far as the media sector is concerned, Q4 is expected to be decent for broadcasters. Says Priyank Sinhgal, media analyst for Edelweiss Securities: “With the cricket World Cup on, advertising revenues of industry leaders like Zee Entertainment should perk up.” The poor performance of the Indian cricket team may dent that somewhat, but few analysts expect Q4 profits to be dented too much. Adds Ashish Gupta, media analyst with KR Choksey Shares and Securities: “For the media industry, this Q4 is going to be the best part of the season.”

Analysts are equally bullish on the FMCG sector. The consensus is that FMCG companies should do well in Q4 since a few festivals fall during this period. Analysts expect FMCG companies to report mid-teen to high-teen growth.

The consensus is equally bullish on the power sector, which is expected to churn out improved figures for Q4. However, Q4 may not be as good as Q3 for the power sector. Consider: bottomlines of power industry leaders jumped up during Q3 because of tax refunds and that will surely not happen in Q4. Says Emkay Share’s power analyst Mehul Mukati: “However, Reliance Energy should report higher profits for Q4 because of other income.”

The big divide is about banking sector’s performance. Though private sector banks are expected to show improved operating margins, public sector banks might come under pressure. That is because of standard asset provisioning. Says an SSKI Securities spokesperson: “With bond yields moving up, there could be some surprises on the negative side as far as public sector banks are concerned.”

However, most analysts expect the Q4 growth of pharma companies to be stable at 15%. But, year-on-year growth for major pharma players is expected to be around 25%. Says Manoj Garg, pharma analyst, Emkay Share and Stock Brokers: “Quarter to quarter, major pharma companies will show an average growth of 8-10%.” That is because March is a low quarter for pharma companies.

Moving over to infotech sector, analysts expect a sequential growth of 7% for most large IT companies, both in topline and bottomline. Says Krupal Maniar, IT analyst for Emkay Share and Stock Brokers: “The Q4 performance of IT companies will be in line with market expectations.” Moreover, IT companies should report quarter to quarter improvement in margins.

Even cement is expected to fare better in Q4, despite the budget hiccups. The consensus here is that Q4 figures should be better than Q3. Says Manish Balwani of Emkay Share & Stock Brokers: “Since demand is higher in Q4, this quarter will naturally be better than the previous quarter.” Another reason is that prices have been fairly stable across the country. So, you can expect a volume growth of 8%. Though it sounds good, it is lower than the 17% growth seen during the last quarter.

Even the oil and gas sector should perform better, though upstream companies like ONGC are expected to be slightly subdued because of higher subsidies. Since there was a price cut in November and February, net realisation is expected to be lower.

As far as telecom is concerned, most telecom analysts are bullish, particularly on players like Bharti and Reliance, as their Q4 figures are expected to be better. Says an industry analyst: “Quarter to quarter, I expect all the telecom companies to come out with heartwarming performances.”

In capital goods, analysts are gung-ho. With most projects coming on stream as scheduled, the sector is expected to do better. Says Mukul Jain, capital goods sector analyst for Prabhudas Lilladher: “The payback period will be longer for future projects, but growth should continue.”

Q4 is generally the best quarter for the capital goods sector. Reason: much of the revenue accrues during this quarter. Moreover, with the costs of inputs beginning to moderate — excise and customs duty have been slashed on steel and copper —there is no reason why Q4 should disappoint.

Finally, hotel industry analysts expect a better Q4. Demand is growing at 8% per annum and new supply is not coming up fast enough. Hotel capacities are not expected to move up at least for another 18 months. Says Pratik Dalal, hotels analyst for Emkay Share and Stock Brokers: “You should particularly expect hotels with diversified properties to do well.”

News: Coke to open 'red lounges' across India

(IBN 20/03/2007) New Delhi - The summer months are here and Cola giants are pulling out all the stops to keep you cool. Coca Cola gets ready to paint the town red with its lounges and Pepsi puts its money on fitness. So, what’s bubbling under the fizz?

Frequent management changes may have taken the fizz out of Coke's India plans but the company is ready to hit back. Coca-Cola will soon paint the town red with its experiential lounges, and India will become the second market after the US to adopt Coca-Cola's experiential marketing strategy.

Vice President, Marketing, Coca-Cola India, Venkatesh Kini was quoted by moneycontrol.com, “We are test marketing it in Pune, it should launch nationwide soon.” It will have a nationwide presence but only mall-centric.

Coke's red lounges will be open air youth corners with comfortable couches, iPod stations, gaming options and your ticket to lounge in luxury will cost you a bottle of coke!

Coca-Cola is also hoping to tap the high-end water market with the nationwide launch of Shweppes and arch rival Pepsi, is obviously not sitting pretty!

Executive Director, Innovation & Business Development, PepsiCo India, Geetu Verma said, “There will a spate of innovations from February to July - new themes will be aired soon and there will also be consumer promotions.”

Both Cola giants will hit screens with new commercials for their carbonated drinks, but with fitness occupying consumer mindspace, companies are pumping in significant investments towards juices this year.

Pepsi has doubled the investment in Tropicana and Coca-Cola will launch Minute Maid across the country in the second quarter.

News: Essar wants Virgin for mobile retail

(DNA 20/03/2007) Mumbai - The Essar Group is likely to forge a tie-up with British billionaire Richard Branson's Virgin Group for technical support and store design for its mobile retailing venture.

Highly placed sources said both parties have agreed to a strategic pact, which is likely to be signed this week. The Essar Group had recently announced a Rs 1,100 crore investment in its mobile retail venture.

Apart from selling multi-brands mobile phones in Essar's 'MobileStore', it will also sell Virgin mobile phones in India.

Industry experts said Essar will get an edge in mobile retailing business as Virgin has prior experience in this segment. Also, tying up with Essar is part of Virgin's strategy to expand its telecom business in India.

In the UK, Virgin Mobile phones are available in more than 5,000 outlets, including Virgin Mobile Specialist Stores and Virgin Megastores. It runs chains of stores selling music, electronic products and Virgin mobile phones in the US, too.

Virgin had designed its concept stores in the UK, US to create an urban, entertainment focused destination that embraces the Virgin Mobile brand showcasing all of Virgin Mobile's products and services have a bold, youthful and interactive design.

Essar is expecting revenues to the tune of Rs 500 crore and is aiming to garner about 15% market share in this space in next three years. The company would also increase its head count by tenfold to 10,000 in the next three years from the current 1000.

The country's mobile market stands at Rs 35000 crore and is growing at an annual rate of 60%. The Essar's MobileStore would offer handsets, mobile accessories, new connections, value added services, after sales support and bill payment facilities. The company currently has 60 MobileStore across India, including 21 in Delhi.

Analysts said country's mobile retailing is getting bigger and now a very lucrative sector for corporate houses. Mobile and IT retailing market will be getting competitive with the entry of big corporates like Essar and RPG.

As the margins are thin in this business, it's the volume game. The more aggressively companies will roll out their stores across the country, the more revenue they get from it.

At present, there are retailers such as RPG Cellucom, Pantaloons ConvergeM, Spice, Mobile Magic, MobileNXT are Cell World competing in the space. These retail outlets are offering customers a wide range of hi-tech and technology products ranging from mobile phones, accessories, various other products.

News: India Inc shaken but not stirred

(BL 20/03/2007) New Delhi/Mumbai - Grief! That in one word spells India Inc's mood after the Bangla Tigers slayed the Men in Blue in their first World Cup match. However, India Inc preferred to keep a stiff upper lip and wait and watch rather than go into a state of panic and begin counting their losses. "There is no reason to get concerned since there will always be viewership for cricket. We have been associated with the ICC for the past seven years. Historically the game has always got TRPs and even if India is not there in the finals, we will still be with them," said Girish Rao, Vice-President, Marketing and Sales, LG Electronics, one of the principal sponsors of the series. Endorsing these views, yet another key sponsor of the event, PepsiCo India's Vipul Prakash, Executive Vice-President, Marketing, Colas, said, "Pepsi has a long term association with cricket, and losing one match is not going to change Pepsi's strategy." Telecom service provider, Hutch's Marketing and New Business Director, Harit Nagpal, too voted with his feet. "Advertising is not dependent on whether India wins or loses. Any game could go either way... If you are looking at the World Cup as a media opportunity to highlight your products and services, like we do, then I don't think anyone should be nervous. If you are advertising your products based on their merits, then you look at it as a media opportunity," he said. A view endorsed too by sportswear brand Nike's marketing manager for India, Sanjay Gangopadhyay, who said, "Our association with Team India is part of a larger gameplan for cricket. It is a long-term view that we have of the game and just one match or tournament is not going to make a difference. Even in our TV campaign, we are not highlighting the World Cup. In fact, for Nike, we are not just looking at cricket as a sport." However, advertising agency JWT India's V-P, Rohit Ohri, said the loss had brought a lot of grief. He emphasised that time slots have been pre-sold, thereby not having much impact on ad revenues for the channels at this stage. "Right now, the industry is willing to wait and watch. If India does not make it to the Super 8 there would be heavy losses." Adds Ravi Naware, Divisional Chief Executive, Foods Division, ITC, "We would be affected if India does not make it to the Super 8. It is only then will there be a drop in Indian audiences and it is to that extent that our ROI will be less. We are hoping that India will play for an extended period." According to Manish Porwal, Executive Director, Starcom Media Vest Group, "Advertisers will be getting the jitters but it would be too early to pull out. Sentiments keep changing and the India-Bermuda match might determine the future course of action for advertisers. We as media buyers/planners have to address the jitter of advertisers." Gopinath Menon, Vice-President, Media, TBWA, however, says that cricket as a property is not as hot as it used to be and ROIs from the game for advertisers has been going down. Also supporting corporate India in its concerns over the fate of the Men in Blue are the TAM ratings from the last World Cup in 2003, which suggest highest viewership during matches played by India. For instance, the match played between India and Australia on March 23, 2003 saw ratings of 25.15 per cent and the one played between India and Pakistan on March 3, 2003, saw ratings of 22.88 per cent as against dwindling ratings during matches played between West Indies and Sri Lanka (1.25 per cent) and between Zimbabwe and Kenya (2.23 per cent) in the same year. India Inc is hoping that this won't be the case.

News: Pantaloon to double stores' number, invest Rs 400 cr

(TNN 19/03/2007) Kolkata - Close on the heels of spinning the flagship Pantaloons chain of stores into a strategic business unit (SBU), Kishore Biyani’s Future Group is all set to scale up its presence across the country. Expansion plans will involve doubling of the number of Pantaloons stores by December and entail an outlay of nearly Rs 400 crore.

Speaking to ET, Pantaloon Retail India (PRIL) CEO-Pantaloons Sanjeev Agrawal said: “By December 2007, we will have some 50 Pantaloons outlets across the country. The focus will be on tier II and tier III cities. However, the stores located in the metros will continue to contribute nearly 75% to the company’s topline.”

PRIL is the retail arm of the Future Group. Following this, total square feet area covered by Pantaloons stores will increase to 2 m sq ft from 0.5 m. A Pantaloons store typically on an average occupies 20,000 sq ft and entails an investment of Rs 2,500 per sq ft. The group operates 26 stores across the nation.

Incidentally, the Future Group has just completed restructuring its retail business. Each of the retail formats, including the likes of Pantaloons, Big Bazaar, Food Bazaar and Central will now operate as separate SBUs within PRIL and have separate management teams led by separate chief executive officers.

Elaborating on the growth plans, Mr Agrawal said the Pantaloons store already has operations in second-tier markets like Mangalore, Vadodara, Pune, Lucknow and Kanpur and has already identified properties for expansion in Agra, Surat, Bhubaneswar and Siliguri.

In line with the new positioning as Fresh Fashion, the stores will target the upper-middle class (SEC A and B1) consumers. “Unlike in other cities, Pantaloons stores in the east will continue to have a different lineage. It will maintain a departmental store format with substantial non-apparel merchandise as well,” he added.

News: Indian art is big business in the West

(IANS 19/03/2007) New York - The booming Indian art market has developed into one of the fastest growing in the West with wealthy non-resident Indian (NRIs) collectors and western gallery owners vying for the works of noted Indian painters.

This week, Christie's is holding a modern and contemporary Indian art sale here that is expected to attract several wealthy international buyers.

Prices of Indian art have risen to more than 20 times their value since 2001 in the European and US market. Last year, the total sales of Indian art in England stood at around 106 million pounds, and the figure is expected to double this year.

Sales of Indian art at Christie's and Sotheby's have soared in recent years, and paintings that would have sold for a few thousand pounds half a decade ago are now edging towards the 1 million pound-mark, according to the Independent newspaper.

"Indian art is one of the hottest, fastest growing area in the market. It started with non-resident Indians, many of whom work in technology or banking, who turned towards their cultural heritage, and then it broadened out with more and more interest from Western collectors," said Yimini Mehta, head of Modern and Contemporary Indian art in New York.

Aicon gallery, a permanent exhibiting space in central London, is showcasing the works of Kerala-born Riyas Komu, while Tate Modern is showing those of eminent Indian painter Amrita Sher Gill.

"I have seen a surge in interest from collectors, museum curators and art critics, in contemporary Indian works. The top-selling works have increased in value by 550 percent since 2000," said Prajit Dutta, a co-founder of Aicon gallery.

News: Tata launches eco-friendly car batteries

(UNI 19/03/2007) Chennai - Tata AutoComp GY Batteries here today launched 'Tata Green' eco-friendly car batteries based on Calcium-Calcium technology. The company would manufacture these batteries at its state-of-art facility in Pune with the capacity production of two million per year at the investment of Rs 150 crore, Tata AutoComp Managing Director D S Gupta told newspersons here today. "The 'Tata Green' batteries do not require top-ups or even maintenance for the first one lakh kilometer", he said. "The distinctive design of calcium-calcium battery minimises water loss, reduces self-discharge, increases storage time and provides best protection from acid spillage and sparks", he claimed. Gupta said "the product has several unique features like longer battery life and shelf life (more than 90 days) compared to traditional batteries, high levels of vibration resistance on all types of Indian roads, ability to withstand extreme temperatures, higher cranking power for instant starts and and hassle free performance. "The company will introduce the new product in all the key markets of the country over the next six months in a phased manner", he said adding "the marketing operations of Tata AutoComp will be backed up by an extensive national level sales, service and distribution network, comprising of CFAs, direct dealers, distributors, franchisees and service centres". The official also said "Tata Green is manufactured using stringent global quality standards and processes, with care being taken to ensure highest levels of eco-friendliness at every level, special emphasis on retrieval and appropriate disposal of used batteries through organised smelters".

News: Biyani sees a Future without Planet

(DNA 19/03/2007) Kolkata - Relationship between the Kishore Biyani-controlled Future Group and V P Sharma-promoted Planet Retail Holdings seem to be in choppy waters. It is rumoured that the Future Group, which holds 49% stake in Planet Retail Holdings, is likely to offload the entire stake and come out of the joint venture.

Future Group officials were not available for comments. Planet Retail’s officials declined to comment. However, sources close to the matter said that the joint venture is not working out to the advantage of both parties and that Future wants to offload its entire 49% stake.

Sources indicated that when Future had taken up stake in Planet Retail, it was looking for a good international partnership and Planet Retail seemed to fit the bill - it was based out of Indonesia, had a strong product line and brands (Pantaloons then had no international brands in its portfolio) but without the experience to penetrate the Indian retail scene.

The Future Group, on its part, brought to the table good quality real estate, right mall partners, a strong administrative team, etc.

But now, the Future Group is aggressively following an expansion plan of its own and is interested in focusing on international brands from various parts of the world.

After having sewn up three crucial joint ventures - with Lee Cooper, Etam of France (for women’s lingerie) and Alpha Airports of UK - the group is in talks with companies in the US and Europe for forging more such ties in the mass and premium retail space.

It is also gearing up to launch Starbucks in India.

Planet Retail, which brought to India, among others, high-profile names like Marks & Spencer, Guess, Next, Body Shop, Speedo, Converse, Debenham departmental stores and Callaway golfing gear, is primarily focused on European brands. And herein could lie one of the reasons for a likely parting of ways in the future. Planet Retail, meanwhile, has expanded rapidly in India with 55 stores spread across one lakh square feet and so its dependence on the Pantaloons network has also lessened over the past few years. Moreover, said a source, Planet Retail seems more interested in bringing to India the brands it has access to while Future is scouting around for newer labels.

Planet Retail, which was originally known as Planet Sports, a sports lifestyle company, but changed over to its present branding about a year ago, also offers Planet Sports, Sports Wearhouse and The Athlete’s Foot in the sports lifestyle space.

News: Private equity to power Indian realty firms

(BS 18/03/2007) Mumbai - Real estate developers are increasingly looking at private equity firms as banks are turning off the taps due to the Reserve Bank of India’s stringent guidelines on funding commercial and retail developments.

In the first two months of 2007 alone, nearly Rs 1,500 crore worth of private equity deals have been forged by developers all over the country.

Industry sources estimate that as much as $4 billion (Rs 18,000 crore) could have been invested in domestic real estate by private equity players this year. Of this amount, $2.4 billion was invested in the last year alone, says Mridul Upreti, head - capital markets, Jones Lang Lasalle, a real estate consulting firm.

“In fact, deal sizes are expected to be double that of last year’s, especially in entity level investments. This year average deal size is pegged at $250 million as against last year’s $100 million,” Upreti said.

Said a fund manager with an Indian realty fund, “Another reason why developers resort to private equity funding is that these funds offer assistance even in the early stages, including for land acquisitions. Banks step in only at the construction stage. As more and more developers get into large-scale land acquisitions to attain the scale of operations that is financially viable, they will have no recourse but to come to PE funds.”

The largest of the deals till date is the 10 per cent stake that Morgan Stanley picked up in Mumbai-based Oberoi Constructions for Rs 675 crore in January. Citigroup committed Rs 135 crore in Bangalore-based Nitesh Estates’ hotel project with a commitment to invest a similar amounts in four more projects.

Mumbai-based hotelier Shahid Balwas has sold a stake to US-based private equity fund Trinity Capital to fund his upcoming five star hotel project in south Mumbai for an undisclosed amount.

Emaar-MGF, the Delhi-based joint venture between Dubai’s Emaar group and Delhi’s MGF group, is in the process of making a pre-IPO placement with the Deutsche Bank for an undisclosed amount.

Indian developers are also looking to raise as much as $2 billion from the Alternate Investment Market (AIM) of the London Stock Exchange this year, industry analysts said. Lining up investments are builders like Surrender Hiranandani of Mumbai.

India Bull has already raised Rs 1,200 crore from AIM in January this year, through its wholly owned subsidiary De Properties. Hiranandani is expected to raise Rs 500-600 crore. Other Indian real estate investors on the AIM include Unitech, the K Raheja group and Niranjan Hiranandani.

Said Anuj Puri, CEO Trammell Crow Meghraj, “This year we will see a lot of PE activity in Indian real estate as the banks have begun to reduce their exposure to real estate sector as RBI is making lending norms more stringent. Funding by private equity players and listing on the alternative markets like London’s AIM are becoming attractive for Indian real estate developers.”

Added Kumar Gera, chairman of the Confederation of Real Estate Developers Associations of India, “The RBI becoming stringent means that debt is now difficult for developers to access, so more of them will look at external equity participation and the PE route is a definite possibility especially on a project by project basis.”

News: For India Inc, it's time to create huddles

(DNA 18/03/2007) Mumbai - After footballers, it's the Men in Blue who are being used by the tech industry to inspire employees and enhance their performance at work. IT companies in Bangalore are busy with a host of cricket-related activities - from setting up giant LCD screens in offices to organising quizzes and tournaments, all in the name of improving camaraderie among workers. "The World Cup is an excellent opportunity to create excitement among employees," says Tapan Bhat, vice president, HR, Talent transformation and Strategic Resourcing at Wipro. The organisation will have a contest on the eve of every match to "encourage bonding" among workers, and also reiterate Wipro's credo of working hard and playing hard. According to Sanjay Kamlani, co-founder and chief executive officer of Pangea3, a legal Business Process Outsourcing (BPO) company in Mumbai, contests at his company include predicting the World Cup winner and runners up, the highest runs-scorer, the best bowler and the 11 batsmen who will rack up the maximum runs. The winner will be rewarded with a free dinner for two at Moshe's and Salt Water Grill. Intelenet Global Services, Wipro, Office Tiger, Hutch, Infosys, Genpact and Sulekha.com are all getting into the World Cup game, by naming office teams after participating nations and hosting intra-office meets. "Cricket is almost a religion in India," says S Nagarajan, co-founder and chief people officer of 24/7 Customer. "To simulate the World Cup, our client teams have been divided into groups and named after participating nations. They even wear the team's colours to work on days their team is playing." Office Tiger in Chennai, with over 800 employees, has begun an intra-office tournament with 29 teams. The companies have, however, not rescheduled their work hours around the matches. "People who are always at work tend to become lethargic, and World Cup is the right time to infuse some energy into the teams," says Benny Dayal of the welfare and events team at Office Tiger. Infosys BPO is putting up a giant screen on the common floor. Sulekha.com has its Chennai office decorated with World Cup paraphernalia. Definitely smells like team spirit in ITs hallowed halls.

News: Merrill Lynch to double Indian pvt banking biz

(PTI 18/03/2007) New Delhi - Global financial services major Merrill Lynch is planning to double its private banking business in the country, with an aim to provide financial services for the growing wealthy population. Merrill Lynch, which provides wealth management advisory service to High Networth Individuals (HNI), is aggressively building the private client business in India with an aim to double the number of its financial advisers this year and is also planning to expand into tier-II cities. "Merrill Lynch is aggressively building the private client business in India and will invest in people, technology and infrastructure to support expansion plans. We plan to double the number of financial advisers this year, which already doubled from the year before," Merrill Lynch head of India Global Private Client Rahul Malhotra said. The company said they would be doubling the number of financial advisors this year serving Indian clients both within the country and living abroad. "We plan to grow the client assets under management for both onshore and offshore India by 8-10 times in the next three years," Malhotra said. With 36 of the world's richest calling it home, India has emerged as Asia's biggest home to billionaires as per the latest Forbes list. Targeting this segment the global consulting firm is expanding its base in the country. The company is building up the operations significantly in the five Indian cities -- Mumbai, New Delhi, Kolkata, Chennai and Bangalore and is planning to grow into the second-tier cities, Malhotra said adding that "we will more than double the number of cities we operate in". The Merrill Lynch Cap Gemini World wealth Report in 2005 identified South Korea (21.3 per cent) and India (19.3 per cent) as the two fastest growing markets in the High Net Worth wealthy segment globally. However, Merrill Lynch did not disclose the exact amount it is planning to invest in its expansion plans but said, talent would be the main focus area for the company. "It will be a significant sum which will include investments in strategic areas such as infrastructure, technology and also clearly building out geographical reach. Rolling out a robust product platform and continue to strengthen out talent is also a key focus area," Malhotra added. Globally, Merrill Lynch has 16,000 financial advisers and the global private client team at DSPML is amongst the largest team of private bankers in India. As part of private banking services, the company beside providing wealth management advisory service, has also launched the Global NRI business targeting Non Resident Indian across the globe and Trust services for resident Indians.

News: 'Reliance eyes Sainsbury, Carrefour stakes'

(RTR 17/03/2007) London - Reliance Industries Ltd is considering buying stakes in British supermarket group J. Sainsbury Plc or French retailer Carrefour, the Financial Times newspaper said on Saturday.

"With both of these companies we'd definitely get a good supply chain and we would benefit from their experience," the newspaper quoted an "insider" at Reliance as saying.

Sainsbury is already the subject of a bid approach from a consortium of private equity firms led by CVC Capital.

A source close to the matter told Reuters on Friday that U.S.-based buyout groups Bain Capital and Apollo were also considering a joint offer.

Carrefour has been the subject of bid speculation recently as well.

Separately, the Daily Mail newspaper cited unnamed sources as saying Sainsbury's pension trustees were seeking 600 million pounds ($1.17 billion) for the group's pension fund as a condition of their support for a bid from the CVC group.

None of the companies mentioned could immediately be reached for comment.

News: DLF IPO's will hit market soon

(HT 17/03/2007) New Delhi - Hopes of DLF IPO hitting the market soon have been revived after the management made presentation to potential institutional investors in Mumbai on Thursday. “To asses the potential price band, the company made a presentation to LIC, GIC and several mutual funds and other institutional investors,” a source said.

DLF is awaiting SEBI approval for the revised prospectus it filed on January 4. There have been no indication on the issue pricing so far and the latest research report of Macquaire Research on India Property has pointed out the hitch DLF might face on issue pricing.As per the SEBI circular dated May 28, 2004 any company with a par value of less than Rs 10 cannot price it below Rs 500. “This circular reduces DLF's flexibility to price below Rs500 unless it wants to restructure its share capital once again. Also it has the option of valuing the company at $19.2bn without any capital restructuring,” says Macquarie report.

The par value of DLF shares at present is Rs 2 and it has proposed to raise 175,000,000 (17.5 cr) shares. Sources say DLF had paid fees to SEBI based on an issue size of Rs 6000 adding to the speculation about the issue size and price. As the company can always go back and pay additional fees in case the size of the issue is higher, issue size of over Rs 8000 cr as per the Rs 500 or above a share cannot be ruled out.

Comparing the current prospectus with the earlier one, Macquaire observes that DLF’s land bank as well debt levels have doubled and there are no land valuations in the offer document. The DRHP filed in May, it carried valuations by independent agencies – Cushman & Wakefield value of Rs 77,450 cr to Rs 85,000 cr and Jones Lang LaSalle at Rs 85,000 cr for 4,265 acres. The land bank stands at 10,255 acres as per the new prospectus and the debt has grown from Rs 4130 cr in FY 06 to Rs 9450 cr as of November 2006.

The size of the issue too stands reduce as per the current prospectus from 202 million shares to 175 million shares. The promoter and promoter group’s offer for sale has also been withdrawn. In the interim period, the company had inked joint venture with US based hospitality firm Hilton for a few of its hotels and also announced expansion of multiplex cinemas. Net profit of the company for eight-month period ended November 2006 stood at Rs 1830 cr as against Rs 1150 cr for the financial year 2006. “This is mainly due to one-time sale of commercial assets from DLF to DLF Assets Ltd which accounted for Rs 2160 cr and Rs 1740 cr in revenue and profit before tax respectively,” says Macquaire report.

News: Uniform Indian FDI cap on the way

(TT 17/03/2007) New Delhi - The government today said it is considering a uniform foreign direct investment cap across different businesses in each sector.

India is in the process of reviewing its FDI regulation policy for necessary amendments, commerce minister Kamal Nath said on the sidelines of a seminar organised by the Confederation of Indian Industry (CII).

According to the minister, the government is focusing on those areas that have employment generation potential. “Based on our experiences we will see how it (a more liberal FDI policy) can generate employment,” he said.

A uniform FDI limit within a sector will reduce complexity arising out of caps going up in different business areas within a single sector. For instance within media, technical journals attract a different investment cap, while newspapers and news magazines attract a different investment cap.

Within aviation, airlines attract different rules, while airports attract another set of FDI caps.

“We will see that,” said Nath on whether the government plans to have a single FDI cap for an entire sector.

The FDI policy review has been postponed by a month due to the ongoing budget session of Parliament.

News: Vodafone to invest $1.5 b in India this year

(BL 17/03/2007) New Delhi - Having settled the deal with its partner Essar Group, Vodafone is all set to invest $1.5 billion this year in rolling out cellular network in the country.

The company is geared up to accelerate this investment over the next few years, spending as much as 50 per cent of Vodafone Essar's revenues on capital expenditure, according to sources close to the company.

Apart from taking its network to the rural areas, Vodafone is also bringing its low cost handset in the second half of 2007.

Systematic change

While the company plans to introduce the Vodafone brand in place of Hutch, the company will undertake consumer research to ensure that the change is done in a systematic way. The company is also planning to rollout services in six new circles by the end of this year.

Vodafone had recently announced that it had acquired 52 per cent held by Hutchison Telecom International Ltd in Hutchison Essar. The acquisition can be formalised only after the Foreign Investment Promotion Board gives its approval.

Following completion of the acquisition, Vodafone will own a 42 per cent direct interest in Hutch Essar through its acquisition of 100 per cent CGP investments (Holdings) Ltd (CGPIL). Through CGPIL, Vodafone will also own 37 per cent in Telecom Investments India Private Ltd (TII), which in turn owns 20 per cent in Hutchison Essar.

Stakeholders

TII has 38 per cent in Omega Telecom Holdings Private Ltd (Omega), which in turn owns 5 per cent in Hutchison Essar.

Both TII and Omega are Indian companies. These investments put together give Vodafone a controlling interest of 52 per cent in Hutchison Essar.

The Ruias-promoted Essar will continue to have 33 per cent stake in the cellular company.

HTIL's Indian partners, Asim Ghosh, Analjit Singh and Infrastructure Development Finance Company Ltd, who together hold the balance 15 per cent stake in Hutchison Essar, retain their shareholdings with full control, including voting rights and dividend rights.

Vodafone will be entitled subsequently to acquire shares in TII and Omega if permitted under Indian regulatory requirements, which permits FDI only up to 74 per cent. When Vodafone is able to acquire these shares, it will own a 67 per cent interest in Hutchison Essar.

News: Indian billionaires outside the tax loop

(BL 17/03/2007) New Delhi - Two unrelated developments, happening as they did in the immediate aftermath of the Budget, made two telling revelations. The raid following a tip off provided by the random scrutiny of the return of one Hassan Ali Khan has revealed the proverbial tip of the iceberg — roughly Rs 36,000 crore worth of transactions through Swiss bank accounts. While this is the seamier side of life, laying bare the gargantuan problem of black money in this country, the other development looked forward with the same avid interest every year is the announcement of Forbes list of billionaires. Supreme irony This year there are as many as 36 Indians, which is as much a matter for celebration as it is of concern. Mukesh Ambani is 14th in the pecking order and his brother Anil Ambani is 18th. The supreme irony is the country where they and other company promoters have made their fortunes lets them off the tax hook. The hefty dividends they receive from the Indian companies are completely tax-free in lieu of dividend distribution tax paid by such companies. And the other major source of income for them — long-term capital gains that they might earn from sale of shares through stock exchanges — is also tax-free in lieu of an apology of tax called Securities Transactions Tax (STT). Yes, they must all be paying tax on, and filing returns for, their pocket monies — salary, income from house property and interest income. But that is about all. Their major sources of income are left severely alone. Tacit admission In one of his numerous post-Budget interviews, the Finance Minister expressed his helplessness in not restoring the tax on long-term capital gains from the bourses in the face of the Double Taxation Avoidance Agreement (DTAA) with Mauritius. Though he did not spell out, one can easily understand what he was getting at — even if restored, the tax would still be avoided, thanks to the DTAA with Mauritius. FIIs, the movers and shakers of the market, get themselves incorporated in Mauritius, thus becoming residents of that country wherefrom the funds are poured into the Indian bourses. The DTAA with that country says capital gains earned by a resident of Mauritius is not taxable by the Indian Government but by the Mauritius Government, which curiously does not tax capital gains in the manner of dog in the manger policy. Spurred by this intended or unintended giveaway, many of our industrialists and other rich and the famous of this country are reportedly resorting to round-tripping — channelising their own investments through the FII route under the opaque Participatory Notes mechanism. By being candid, Mr Chidambaram has now let the entire country know why the DTAA with Mauritius is not being abrogated. The Government must summon courage to do the following to put an end to the unseemly spectacle of the Forbes billionaires remaining out of the tax net: Restore capital gains tax on profits from bourses; Scrap the DTAA with Mauritius; and Allow dividend as business expenditure a la interest for a company with a concomitant tax liability in the hands of the shareholders, thus knocking the bottom out of the double-taxation argument, which is at the back of the invidious present regime of sparing the shareholders completely from the tax burden in respect of dividend income.

News: Govt committed to SEZs, says Kamal Nath

(PTI 17/03/2007) New Delhi - Unfazed by the Nandigram violence and political concerns, the Commerce and Industry Minister Kamal Nath has said the UPA government remains committed to the Special Economic Zones with full backing of Prime Minister Manmohan Singh.

"They (Nandigram and political concerns) have not put me off and the government is absolutely committed," he said in an interview to TV news channel CNN-IBN' programme 'Devil's Advocate'.

When asked whether he enjoyed the support of the Prime Minister, Nath replied, "of course, the (whole) government is committed."

The Minister was confident that Empowered Group of Ministers headed by External Affairs Minister Pranab Mukherjee would go ahead with clearing the SEZ cases where there was no land dispute.

"Of course there is a fear now where land acquisition is concerned... but where there is no land in dispute why should we be worried," he said.

Nath said the land acquisition must be transparent and he was "personally in favour of giving farmers a stake in the development that comes up on their land in addition to the market price".

He said the new National Rehabilitation Policy was likely to include a provision for making farmers stake holders in the development.

"The New Land Acquisition Policy is looking at all these things and which ever it happens, whether by giving him (the farmer) a job or a stake... he must be part and parcel of new development," he said. Nath said there was no political wriggling out of the SEZ impasse.

"It is an Act of Parliament. The Cabinet has considered it... Nandigram was a very unfortunate incident of land acquisition and we must not confuse the land acquisition with SEZ. They are two distinct things," he said.

However, Nath was concerned that if clearances on SEZs were not forthcoming many investors might opt out of India.

"Of course I am worried. There is investment competitiveness from Thailand, the Philippines and Indonesia.. Investment has to be attracted it cannot be demanded," he said.

Nath refuted claims by the Finance Ministry that SEZs could lead to revenue loss of Rs 100,000 crore over four years.

He said this was a distorted picture as the government was anyway refunding customs and excise on exports.

On FDI in retail, Nath said since the small retailers may be impacted, the big retail chains should be allowed only in the back-end.

"If Wal-Mart provides to every retailer good food products ... and if they put up packaging it strengthens my retailer," he said.

Nath denied there were differences on this issue between him and Prime Minister or UPA Chairperson Sonia Gandhi.

News: American Kmart set for Indian debut

(TNN 16/03/2007) New Delhi - Kmart, one of America’s leading discount retailers, is the latest to vie for a share of India’s $12-billion organised retail market. The Michigan-based retailer is believed to be gearing up for an India foray with cash-and-carry stores, which will be its first in the world. This apart, there are plans to forge a franchisee tie-up with an Indian partner. Kmart executives recently met Department of Industrial Policy and Promotion officials and discussed their entry plans.

Kmart, which operates in the discount store and hypermarket formats, hopes to get an insight into the Indian retail market through the cash-and-carry venture, which could be leveraged when the government allows FDI in multi-brand retail. Currently, 100% FDI is allowed in the cash-and-carry format under the automatic route.

News: American Kmart set for Indian debut

(TNN 16/03/2007) New Delhi - Kmart, one of America’s leading discount retailers, is the latest to vie for a share of India’s $12-billion organised retail market. The Michigan-based retailer is believed to be gearing up for an India foray with cash-and-carry stores, which will be its first in the world. This apart, there are plans to forge a franchisee tie-up with an Indian partner. Kmart executives recently met Department of Industrial Policy and Promotion officials and discussed their entry plans.

Kmart, which operates in the discount store and hypermarket formats, hopes to get an insight into the Indian retail market through the cash-and-carry venture, which could be leveraged when the government allows FDI in multi-brand retail. Currently, 100% FDI is allowed in the cash-and-carry format under the automatic route.

News: 'Indian wages to rise fastest in Asia in 2007'

(RTR 16/03/2007) Mumbai - Wages in India are expected to rise by 14.5 per cent in 2007 from 2006, the fastest rate in Asia, as companies pay top dollar to attract and retain talent, a survey showed.

Hewitt Associates, a human resource consulting and outsourcing firm, said in their annual survey that this would be the fourth consecutive year that Indian salaries have notched double-digit growth.

India's economy is expected to grow 9.2 per cent in the 2006/07 fiscal year to March 31 -- its fastest pace in 18 years.

"Due in large to the effects of globalisation, the war for talent is becoming increasingly fierce in India," said Sharad Vishvanath, a business leader at Hewitt in India.

Demand for experienced bankers and traders far outstrips supply as firms from Lehman Brothers and UBS to Goldman Sachs expand their teams in India, where investment banking revenue jumped 23 per cent to $413 million last year, according to market data firm Dealogic.

Hewitt surveyed 600 companies across 21 industries in five different employee groups, and said it expected salaries in the financial sector to grow the fastest this year.

"Salaries in India continue to rise and will most likely reach the same levels as more developed economies in Asia in the near future," Vishvanath said.

Rising productivity

Rising salaries have fueled demand for real estate and consumer durables, and helped push inflation higher.

Annual wholesale price inflation rose to 6.73 per cent in early February, its highest in more than two years, and the government and central bank have taken a number of policy steps to check price pressures.

Among different employee classes, the middle management and the professional sector received the highest salary increases and this trend was likely to continue, Hewitt said.

"Wage differential at the professional levels between India and the rest of the Asian region and other developed nations continue to be huge given the productivity levels," said Sandeep Chaudhary, another business leader at Hewitt told Reuters.

"Admittedly, salaries at the top management level are at very competitive levels. Still, we see a 15-20 per cent headroom from current levels," he said.

News: 'Suzlon may raise bid for Repower'

(RTR 16/03/2007) Mumbai - Suzlon Energy Ltd. may raise its offer for wind turbine maker REpower to about 160 euros ($ 212.62) per share, which would value the German company at $ 1.7 billion, the Economic Times said on Friday.

French nuclear reactor maker Areva on Thursday offered 140 euros per share for REpower, raising its previous offer of 105 euros by a third, to top Suzlon's bid of 126 euros.

"The company is in talks with a consortium of banks led by ABN Amro and may come out with a revised offer of close to 160 euros per share," the paper said, quoting unnamed sources.

A Suzlon spokesman was unavailable for comment.

REpower shares rose 12.4 per cent to 148 euros on Thursday after Areva made its offer public. Areva now holds more than 30 per cent of the German wind turbine maker.

Suzlon chairman Tulsi Tanti told Reuters the company was reviewing the situation and would issue its response later.

Suzlon, the world's fifth-largest wind turbine maker, last month teamed up with Martifer, a unit of Portugal's largest builder, Mota Engil, to launch a bid for REpower. Martifer owns more than 25 per cent of REpower.

News: GE Healthcare to continue investing in India

(BL 16/03/2007) Bangalore - GE Healthcare, a $ 15 billion segment of General Electric Company, will continue to invest aggressively in India, where it is logging double-digit growth, a top company official said on Thursday.

"Based on the growth of (the company's) globalisation stand point and inherent growth of Indian marketplace, we will continue to aggressively invest here (India)'', GE Healthcare's President and CEO Joseph M Hogan told reporters here. ''It (India) is a g ood place to invest'', he said.

GE Healthcare has six legal entities in India, where it clocked revenues of $ 450 million last year. It has over the last 17 years invested $ 100 million in India, company officials said.

Hogan said India now accounts for around 15 per cent of GE Healthcare's global manufacturing, a 100 per cent growth compared to four-five years ago. He said he expects manufacturing of GE Healthcare products to grow very well in India going forward but added that ''a lot depends on (the growth) of Indian economy".

Hogan spoke highly of the quality of Indian engineers and said the company expects to hire 'hundreds' of them for its India and global operations.

News: 'India's FDI outflow to exceed inflow'

(IANS 16/03/2007) New Delhi - As a confident India Inc has started bidding for more and bigger deals abroad, in 2007-08 overseas investment from India will be around $15 billion - surpassing foreign direct investment (FDI) inflows in the country, says a study.

The bulk of outward FDI flow will be driven mainly by India's booming manufacturing sector, said the 'Study on FDI Outflow & Role of Manufacturing in the Mergers & Acquisitions Front, 2007', by the Associated Chambers of Commerce and Industry (Assocham).

Indian companies' preferred investment destinations are the European countries and the US, as also Africa taking advantage of its cost competitiveness.

Sectors such as pharma and automobiles will give a major thrust to the FDI outflow, though IT will continue to dominate the scene, said the report released Friday.

"Riding on strong balance sheets, good credit ratings and confidence shown by global business community, Indian manufacturing is leading India Inc.'s global quest," said Venugopal Dhoot, president, Assocham.

The main factors fuelling the growing hunger for mergers and acquisitions (M&A) among Indian companies are huge fund supply, globally competitive business practices and favourable regulatory environment, besides higher margins, revenue, volumes and growth prospects.

"The number of outbound M&A deals has increased sharply over the past six years from about 37 in 2001 to more than 170 in 2006. The transactions gathered tremendous momentum in 2005," the report said.

"The total number of deals actually doubled in 2005 from 2004 to reach a figure of close to 150 from 70 in previous year."

According to Assocham, the Indian conglomerates that are upbeat on inorganic growth are the Tata group, Bharat Forge, Ranbaxy, ONGC, Infosys and Wipro.

"The sectors attracting investments by Corporate India include a whole gamut of sectors - metal, pharmaceuticals, industrial goods, automotive components, beverages, cosmetics and energy in manufacturing; and mobile communications, software and financial services in services," the report said.

Talking about specific examples, the study noted: "The Apollo Group of Hospitals may strike cross border deals to expand its global footprint through strategic partners with some of the local hospital chains overseas while pursuing mergers and acquisitions in the US and Europe.

"Nicholas Piramal India Ltd plans to invest $50 million over a three-year period in its plants in the UK and India," it added.

In the energy sector, India's Suzlon Energy Limited, the world's fifth largest wind turbine manufacturer, has offered $1.3 billion for Germany's REpower.

News: Investment norms for insurance cos may be eased

(BL 15/03/2007) Mumbai - Insurance companies may soon have more flexibility investing in corporate bonds and mortgage-based securities.

The Insurance Regulatory and Development Authority is likely to issue guidelines by the end of the month.

"We are trying to give insurers this flexibility so that they can enjoy higher yields from their investments. We are doing away with the rigidities and the qualifying criteria for investment in these instruments," said a senior IRDA official.

Insurance companies will now be allowed to invest in all highly rated (minimum AA+) corporate issuances. Mortgage-based securities will now be categorised as `approved' investment. Also on the cards are detailed guidelines for investing in equity and debt derivatives.

The report of a Working Group on investment regulations set up by IRDA last year has submitted its report to act as a template.

According to the Insurance Act of 1938, investment could only be made in corporate issuances where interest instalments had been regularly paid (without defaults) for five consecutive years. Mortgage based securities are currently considered `other than approved' investments.

Broadly, life insurance companies can invest 25 per cent of their `investible' funds in government securities and another 25 in other approved securities such as State government paper and oil bonds. Insurers can additionally invest around 20 per cent in approved instruments such as corporate bonds, around 15 per cent in `other than approved instruments' and 15 per cent in infrastructure and social sector.

News: 'Reliance, Dow Chemical set to form JV'

(RTR 15/03/2007) Mumbai - Top petrochemicals maker, Reliance Industries Ltd., is set to form a joint venture with Dow Chemical Co. for plastics and chemical businesses, the Economic Times said on Thursday.

"Talks are at an advanced stage and the two sides are expected to make a formal announcement by the weekend," the newspaper said, quoting unnamed sources.

Top Reliance officials led by Chairman Mukesh Ambani are scheduled to meet Dow Chief Executive Officer Andrew Liveris and a memorandum of understanding may be signed, it said.

A Reliance spokesman denied a deal was in the offing, the newspaper said, while a Dow spokesman said it was not the company's policy to comment on rumours about itself or its activities.

The newspaper said Dow was unable to unlock the full value of its huge commodity chemicals and plastics business because of rising cost of feedstock and raw materials in the West.

A deal will enable to move some of the manufacturing to Reliance's massive complex in Jamnagar in western India from high-cost locations in the United States and Europe, it said.

Reliance, the world's largest maker of polyester and fibre yarn, will prefer to hold a 51 per cent stake in the joint venture while giving Dow management control, the newspaper said.

"Reliance reckons that a foreign partner will be far more adept at managing customer relationships at the front end, while its core competence will lie in manufacturing and supply chain management," it added.

News: 'ITC to bid for UK's Patak's brand'

(RTR 15/03/2007) Mumbai - ITC Ltd's foods unit is likely to bid for Britain's Patak's, valued at about 200 million pounds ($ 387 million), the Economic Times newspaper said on Thursday.

Patak's, a 50-year-old family-owned company, makes a range of ready-to-eat Indian foods, cooking sauces, snacks, spices and pickles, and also supplies to shops and restaurants worldwide.

Heinz, which already has a partnership with Patak's, could also be interested, the paper said, citing unnamed sources.

ITC, India's top cigarette maker with interests also in hotels, paperboard, retail and information technology, has been approached by Patak's banker, NM Rothschild, the newspaper said.

ITC is seen as "exactly the type of company that could be interested in talking to Patak's", the paper said, citing people close to the founding Pathak family.

The paper said ITC Foods' chief executive, Ravi Naware, declined comment.

ITC, which derives more than half its revenue from cigarettes, is keen to strengthen its food portfolio. It sells ready-to-eat foods, confectionery, biscuits and snacks.

News: Fitch upgrades support ratings for major Indian Banks

(PTI 15/03/2007) New Delhi - Global rating agency, Fitch has upgraded its support ratings for several Indian banks, including ICICI Bank, HDFC, Punjab National Bank, Canara Bank, Bank of India and IDBI among others. The support rating has been upgraded from '2' to '3' for ICICI Bank, Punjab National Bank, Canara Bank, Bank of Baroda, Bank of India, Union Bank of India and IDBI Ltd, a Fitch release said. Meanwhile, for HDFC Bank, UCO Bank, Indian Overseas Bank, Oriental Bank of Commerce and Allahabad Bank, the rating has been upgraded to '3' from '4'. At the same time, the agency has upgraded IDBI's long-term foreign currency Issuer Default Rating ("IDR") to 'BBB-'(BBB minus) from BB+ and the bank's individual rating to 'C/D' from 'D/E', the release said. The rating actions reflect the Indian government's improved ability to provide timely support to systemically important banks as reflected in the government's long-term foreign currency IDR of 'BBB-’ (BBB minus).

News: Munich Re eyeing Indian Insurance Market

(IM 15/03/2007) Munich - German based re-insurance hotshot Munich Re, is planning to enter Indian life and non-life, both insurance segments via its insurance company Ergo, as confirmed by IRDA chairman C.S. Rao. Munich Re is already operating in Indian health insurance market by collaborating with Apollo. DKV International Health Holdings, which joined hands with Apollo, is an Ergo brand and Munich Re holds 94% stake in Ergo. Munich Re's initial plans were to foray into the Indian re-insurance market but it now going for the primary insurance market.

After Indian insurance market's record-breaking growth in the first months of 2007, many international players are eyeing the life, non-life and health insurance market of India. A good number of companies are very keen on plunging into the Indian life, non-life and health insurance markets and have already applied to IRDA for licenses, like HSBC, Principal PNB Life Insurance, Future Generali Life Assurance, Future Generali India Insurance Company, Apollo DKV Insurance, Universal Sompo General Insurance, IDBI Fortis Life Insurance and Shriram Life Insurance. Indian banks and businesses, like PNB, Canara Bank, Vijaya Bank, DLF real estate group, Karnataka Bank, Allahabad Bank, IDBI, etc. are also welcoming the foreign players as they want to diversify their businesses into the ever-growing and untapped field of

News: Vodafone, Essar ink agreement; aims for top slot by 2010

(PTI 15/03/2007) New Delhi - Ending weeks of uncertainty, UK telecom giant Vodafone and Indian conglomerate Essar today inked a deal to jointly run the nation's fourth largest mobile firm Hutch-Essar, setting themselves a target of beating market leader Bharti by 2010.

Vodafone CEO Arun Sarin pledged to pump in all the money "it takes" to make the company number one. "We are a healthy company with strong cash flow."

As per the agreement, Essar Vice Chairman Ravi Ruia would be the Chairman, while Sarin would be the Vice Chairman in the reconstituted Board, where Indian partners would have four out of 12 full-time members.

Sarin and Ruia told a joint press conference that they have agreed on partnership terms for Hutchison Essar, in which Vodafone is acquiring controlling stake from Hong Kong's Hutchison Telecom while Essar would retain its 33 per cent.

"The partners have agreed that Hutchison Essar will be renamed Vodafone Essar and in due course... will market its products and services under the Vodafone brand," they said.

To enthuse Asim Ghosh, who would continue to lead the venture, to make Vodafone-Essar the market leader ahead of the 2010 target, Sarin said: "There will be a special bonus for Ghosh."

The contentious issue of Bharti as preferred carrier of NLD and ILD traffic appears to have been sorted out between two partners, with Ruia saying that whoever offered best terms, including his own company, would be given preference.

Sarin, on the other hand, said the MoU with Bharti on infrastructure sharing was not binding and the issue of who would carry the traffic, would be decided by the reconstituted Board.

News: Soros buys 11 per cent in Reliance vulture fund

'(HT 14/03/2007) Mumbai - George Soros Quantum Fund is picking up an 11 per cent stake in Reliance Asset Reconstruction Company Ltd, Mauritius. The third asset restructuring company wanting to start operations in India has sought regulatory approval to enhance its equity share capital to Rs 100 crore.

Quantum, which acquired a 4.82 per cent stake in Reliance Capital last year, will acquire 11 million of the proposed shares that Reliance ARC plans to allot preferentially at a price of Rs 10 each.

The shares will be issued to Dacecroft Ltd, a company tracing its parentage to Quantum Endowment Fund NV. The latter is a limited liability corporation whose principal business is to invest worldwide in equity, debt, currencies, commodities and derivatives.

Reliance ARC plans to issue 21 million shares, 21 per cent of the enhanced equity share capital. The company plans to issue another 6.2 per cent to Blue Ridge Limited Partnership, a New York-based fund managed by Blue Ridge Capital LLC.

Blue Ridge Offshore Master Limited Partnership, a sister fund also owned by Blue Ridge Capital, will pick up another 3.8 per cent of Reliance ARC.

The transactions have been cleared by the Foreign Investment Promotion Board and are awaiting the Reserve Bank of India?s approval, according to sources.

Reliance ARC will reconstruct and securities assets in India and outside. It will acquire, hold, manage, assign or dispose off loan assets with or without underlying securities in banks, financial institutions and corporates.

Reliance is the third Indian player to get into asset restructuring. ARCIL, a joint venture between the State Bank of India, ICICI Bank and a clutch of other banks, has been in operation for three years and has acquired stressed assets from banks of around Rs 20,000 crore.

The second vulture fund, yet to be operational is Assets Care Enterprise Ltd (ACE). In January 2006, US-based commodities giant Cargill acquired a 49 per cent stake in the company.

News: India adds 6.3 mln new telephone users in February

(RTR 14/03/2007) Mumbai - Telecoms firms added 6.3 million new subscribers in February, taking the total user base above 203 million, a government statement said on Wednesday. Wireless service providers continued to dominate user growth by adding 6.23 million subscribers in February, while 67,000 new fixed-line users signed up, the statement said.

Call rates of as low as 2-3 U.S. cents a minute are luring customers in the world's fastest-growing wireless services market, where Britain's Vodafone recently paid more than $11 billion for a controlling stake in fourth-largest mobile operator Hutchison Essar.

News: Chinese, Indian firms plan $ 651 m alumina JV

(PTI 14/03/2007) Beijing - China's second largest aluminium maker has got the green light for a 5-billion-yuan ($ 651 million) joint venture with an Indian company to produce alumina, state media reported today.

The National Development and Reform Commission, China's top planning agency, has approved Qingtongxia Aluminium Group's proposal to set up an alumina mining and processing joint venture in India, the Shanghai Securities News said.

Qingtongxia, based in the northern Ningxia region, will have a 50% share in the project with India's Ashapura Minechem Co.

The facility will have a capacity of 1 million tonne annually, according to the report.

This is the Chinese company's first investment in alumina, the main raw material for aluminium production, and will see China's biggest investment in India so far, the report said.

Qingtongxia has an annual production capacity of 4,30,000 tonne of primary aluminium, which needs 9,00,000 tonne of alumina a year, the report added.

With domestic alumina running short and the price surging, the resource-hungry government has been encouraging Chinese companies to seek overseas supplies.

India has reserves of 3 billion tonne of bauxite, the principal aluminum ore, and the fifth largest in the world, the report said.

News: 'India 5th most corrupt in Asia'

(IBN 14/03/2007) Hong Kong - India stands as the fifth most corrupt economy in Asia, says an international survey.

Singapore (1.20) and Hong Kong (1.87) were seen as the cleanest economies, among the 13 Asian economies while China, Indonesia and Vietnam posted improvements, said the Hong Kong-based Political and Economic Risk Consultancy (PERC.

In a grading system with zero as the best possible score and 10 the worst Phillipines got 9.40, worsening sharply from its grade of 7.8 last year. India, though improved its score from 6.76 last year to 6.67 this year, was in the fifth in the ranking among 13 Asian economies.

PERC said the Indian government must accelerate reforms, warning that corruption can limit companies' expansion plans.

News: Tatas renew talks in Bangladesh for $ 3 b plan

(PTI 14/03/2007) Dhaka - The Tata group has renewed efforts to gauge the mind of the caretaker government regarding its proposed $3 billion investment in Bangladesh.

Manzer Hossain, resident director, Tata Group, met Communications Adviser M A Matin, and discussed the latest developments related to the Indian conglomerate's proposed investments in the country.

"We are yet to get any indication regarding resumption of talks on the investment proposals," Manzer was quoted as saying in the media today.

"The industries ministry is the proper authority to deal with such projects while the governments investment promotion agency, Board of Investment, is the custodian of the review report on the investment proposal by the Tatas," Matin said.

News: 'Reliance eyes stake in Carrefour'

(RTR 14/03/2007) Mumbai - An Indian television station reported on Wednesday that Reliance Industries Ltd is in talks to buy a stake in French retailer Carrefour.

Reliance Industries Chairman Mukesh Ambani is scheduled to visit foreign retailers shortly, NDTV Profit said, citing unnamed sources. It gave no further details. A spokesman for Reliance Industries, which is India's largest private company, declined comment.

The president of Reliance Retail Ltd., a wholly-owned unit, told Reuters on Tuesday he was not aware of any plans to buy a foreign retailer, following a local news report that the company was looking at such a move.

Reliance, which operates the world's third-largest oil refinery, is spending more than $5.5 billion on its push into the Indian retail sector, with formats ranging from convenience stores to hypermarkets.

India's fast-expanding but tightly controlled retail market has attracted the likes of Wal-Mart Stores Inc. which is signing a cash-and-carry venture with India's Bharti Enterprises.

Indian Trade Minister Kamal Nath said last month that Carrefour, the world's second biggest retailer, was on the verge of signing a deal with India's Wadia Group.

French billionaire Bernard Arnault recently bought a 9.8 per cent stake in Carrefour, prompting speculation of a buyout attempt. The Halley family owns about 13 per cent of Carrefour.

A Web site reported on Wednesday, citing banking sources, that the Halley family was seeking to sell its stake.

News: Mukesh Ambani in global search for retail chain

(PTI 13/03/2007) New Delhi - Reliance Industries Chairman Mukesh Ambani, equipped with a war-chest of an estimated Rs 100,000 crore, is understood to be on a global hunt for
acquiring a retail giant of the size of Wal-Mart or Tesco.

Listed as World's 14th richest person by Forbes, Ambani is believed to have let loose his advisers to scout the globe, hoping to market India's agriculture produce, including fruits and vegetables that could fetch much higher value abroad than the domestic market.

After the merger of group company IPCL with flagship RIL, the Indian business tycoon is believed to have created a trust with cash up to Rs 25,000 crore, which could be doubled with other investors for leveraging the equivalent debt for global acquisitions, a source in the know of the development said.

"Why should Mukesh Ambani not go global when international companies are looking toward India's retail market... he is looking for a global acquisition of a chain
like Wal-Mart, Tesco or Carrefour," he said.

Officials of RIL or aides of Mukesh Ambani could not be contacted for comments.

Industry sources said a top-level team associated with Mukesh Ambani was in the US last week, possibly exploring the market.

Mukesh Ambani has already committed an investment of Rs 25,000 crore for the retail operations in India, which would comprise hypermarkets, supermarkets and speciality stores. Going by the present level of real estate acquisition for the purpose, the investment in the domestic retail business could double.

Reliance Retail has already emerged as the single largest player in the fresh food format stores within months of its launch and Ambani is believed to be keen on taking his
farm-to-fork project global.

Toward this, he is entering into massive contract farming and strengthening the supply chain, which includes creating a huge cold storage network and streamlining transportation.

The group has its own fleet of cargo aircraft, which could ensure supplies to any part of the globe overnight.

The move comes amid a rush among global retail giants to enter India, one of the most promising retail markets with a population of over one billion.

While the likes of Wal-Mart, which has a revenue of around 320 billion dollar, is looking at the Indian retail market worth 300 billion dollar, sources said Ambani believes the value for Indian farm produce abroad could be ten times more than what it can fetch at home.

As such there are reports that Mukesh Ambani could also be looking for a major petrochemical entity to leverage his strong domestic supply of raw materials for high value products and markets in Europe and America.

News: More IIM-B grads refuse jobs abroad

(IBN 13/03/2007) Bangalore - Kunal Mahipal was the only student in IIM Bangalore last year to opt out of the placement process and go the entrepreneurial way.

Mahipal took the road less travelled but now that is not the case anymore as many are following in his footsteps like this year Mahadeo Chitale, who decided to ignore the corporate ladder and join an NGO that deals with microfinance.

“If someone comes to me I would tell him to go through the recruitment process especially if he is a fresher. He should build his contacts before deciding to start independently,” says Chairman, Placement Commission, IIM-B, Sourav Mukherjee.

Chitale is the only student who refused a corporate offer this year. But the trends in IIM Bangalore's placements this year have been interesting.

For example, The Sun Group, a private equity firm, recruited a student for the post of vice-president.

Firms like McKenzie and Barclay Capital, too, made plum offers but what has stood out is the fact that five students have rejected offers from foreign investment banks to work for private equity and consultancy firms in India.

“A lot of people ask me if I have taken the right decision by staying back in India. I don’t feel I have comprised and I know I have made the right choice,” says a student, Manasi Prasad.

Now, the placement season at IIM-B is not about salaries any more.

Most people consider IIM degrees to be a one-way ticket to multinationals abroad but with the emerging trends it seems more students are opting to start their own businesses and choosing to work with Indian companies.

News: India, Trinidad and Tobago sign bilateral trade agreement

(PTI 13/03/2007) New Delhi - India and Trinidad and Tobago today signed the Bilateral Investment Promotion and Protection Agreement (BIPPA) aimed at enhancing investment and technology flows between the two countries.

The agreement was signed by Commerce and Industry Minister Kamal Nath and Minister of Trade and Industry of Trinidad and Tobago Kenneth Valley.

The Agreement aims to enhance bilateral investment and technology flows between India and Trinidad and Tobago by creating favourable conditions for investors, an official statement said.

These include a mutually acceptable definition of investment and IPR, besides National Treatment and Most Favoured Nation Treatment, protection against expropriation and full reparability of investment and returns.

The Agreement also provides elaborate dispute resolution mechanism, including negotiations, conciliation, domestic and international arbitration, to settle disputes between an investor and the host government or between the two governments.

Applicable for a period of 10 years, the agreement would thereafter be deemed to have been automatically extended unless either country gives a written notice to the other of its intention to terminate it, it said.

Meanwhile, Trinidad and Tobago Manufacturers Association and the Confederation of Indian Industry (CII) today signed a Memorandum of Understanding for co-operation between the two industry bodies for promoting, exploring and facilitating any possibility of manufacturing joint ventures.

News: India Inc not keen to save on dividend tax

(BL 12/03/2007) Kolkata/Bangalore - Why have only a handful out of 5,000 plus listed companies opted for interim dividend in March itself, while the majority is not utilising the opportunity to save on tax? As per quick estimates, less than five per cent of the listed companies have either initiated moves to recommend an interim dividend or have already declared it this month till date. Among the 30 Sensex companies, only four - Reliance Industries, Hindalco, Grasim Industries and L&T - have blinked. According to an impact analysis done by KPMG on the Budget proposals, the effective incidence of tax (additional secondary and higher education cess to be levied at one per cent and surcharge) on the dividend distribution at the corporate level has been hiked by about three percentage points from 14.025 per cent to 16.995 per cent. As the Budget proposals would come into effect from April 1, March had provided an opportunity for tax savings to corporates on the dividend payout. However, according to a senior official of a Sensex company, apart from the simple arithmetic on the saving there are various factors that may not favour such a hasty call within a timeframe of 31 days. "The protocols of declaring dividend involve a number of steps from calling of a board meeting till actual distribution. "Moreover, a corporate financial decision depends on a comparative study of interest cost and the so-called savings on tax." The Company Secretary of a BSE 200 company said that considering the number of working days available in view of the strike called by some of the bank unions between March 20 and March 30, it may actually be difficult to distribute the dividend before the end of the month. Ketan Dalal, senior partner of consulting firm RSM, said that the current cash flow and management of shareholders' expectations are also crucial inputs in arriving at such a decision. Consequent to the high yields being offered (11-11.75 per cent for tenures between 90 days and one year), the last few weeks have seen large accretions of bulk corporate deposits. In view of this, organising free cash for dividend distribution might prove costlier than the notional tax saved, banking sources said. The recent acceleration in wholesale deposit accretion was supported by data from the Reserve Bank of India's liquidity adjustment facility auction. At Friday's auction, the RBI mopped up Rs 26,000 crore for three days. The migration into bank deposits in recent weeks has been evident from figures released in the weekly statistical supplement of the RBI too. In the February 16-23 period, the aggregate deposits rose by Rs 38,806 crore. During the period, time deposits alone shot up by over Rs 20,000 crore, almost entirely by way of bulk deposits from corporates, bankers said.

News: European property group to invest $ 100 m in India

(PTI 12/03/2007) London - Scottish entrepreneur Sir Tom Hunter has teamed up with Icelandic investor Baugur and Britain's HBOS to finance a $ 100 million fund set up by pan-European property group Catalyst Capital to invest in India.

Hunter traveled with Baugur chief John Asgeir Johannesson and Catalyst's Julian Newiss to India last week to conclude the deal, his spokesman said today.

The fund will include $ 40 million of equity and the rest will be debt.

It will invest in hotel development, house-building and land acquisition, initially around Mumbai and then other Indian cities. The fund sees significant investment opportunities in the growing Indian economy but will not compete for larger deals, preferring to remain a niche player.

The fund was part of Hunter's strategy to diversify investment interests outside the UK, the spokesman said.

Through the West Coast Capital investment deal, backed by HBOS, Hunter has recently concluded deals in continental Europe, China and America.

News: India is 7th largest steel producer in the world

(PTI 12/03/2007) New Delhi - International Iron and Steel Institute (IISI) has ranked India as the 7th largest steel producer in the world with an overall production of about 40 million tonnes in 2006, Minister of State for Steel Akhilesh Das said in the Lok Sabha today.

Replying to a written question, Das said India's ranking in terms of annual steel production increased from 9th in 2004 to 7th in 2006.

He said the government is not taking any direct steps to push India's global ranking but considering the importance of the sector, it is aiming at achieving production level of 110 million tonne by 2019-20.

Replying to another question the minister said, IISCO plant of SAIL has incurred a loss of Rs 407 crore since 2005-06 due to obsolete technology of production.

"The government would invest Rs 9,592 crore in the next 3 years to revive IISCO. The modernisation and upgradation plan has been approved by SAILs board," Das said.

News: Allegro Capital in alliance with Close Bros

(RTR 12/03/2007) Mumbai - Indian boutique investment bank Allegro Capital Advisors said on Monday it had signed an alliance with British investment bank Close Brothers Corporate Finance.

The deal would benefit Indian and international firms involved in cross-border deals, the two banks said in a joint statement, without disclosing financial details.

"We already have a number of cross-border acquisition mandates from Indian corporates which would benefit significantly from this alliance," Kunal Kashyap, chairman and chief executive of Allegro said.

"Close's focus on the mid-market corporate segment made it an ideal candidate for Allegro to partner with."

Bangalore-based Allegro, a corporate finance boutique, has 24 offices in India. Close Brothers has offices in 20 countries.

"Allegro's extensive relationships across large and mid-sized businesses in India makes it ideally suited to cement deals with mid-sized European organisations that we represent," said Richard Grainger, chief executive of Close Brothers.

"Already a number of our European offices have initiatives with Allegro and this is just the start of things to come."

Close Brothers had told Reuters last November it was looking to enter India via an alliance with a local boutique firm.

News: Volkswagen - wooed and won

(BL 11/03/2007) Pune - Not only the Maharashtra Government but corporate Pune's First Family - the Bajajs - too played a role in the German auto major Volkswagen AG's decision to locate its car plant at Chakan, in Pune's backyard.

If the State Government made an exception and offered them land at a price (Rs 325 per sq m.) substantially lower than their normal asking rate (the Government had priced its land in the Phase 3 of its industrial development project at Chakan at Rs 700 per sq m.), the Bajajs in a fine example of good neighbourliness agreed to the Government redrawing the boundaries of the land originally allotted to it to accommodate the German auto maker.

Consequently, the land for Bajaj Auto's project which was originally a horizontal plot of land ended up being reshaped as a vertical one and the land thus released on its length-ward side got tagged on to a vacant parcel of land lying adjacent and offered to Volkswagen. While agreeing to accommodate the foreign auto giant's need for a larger plot (the largest in the area), the Bajaj Auto group did however lay down one condition - they should continue to share a fence with them. The reconfiguration does allow that.

Volkswagen got the land at Rs 325 per sq m. which works out to Rs 14.30 lakh per acre. The going rate for private land is reported to be in the region of Rs 40 lakh per acre, according to one industrial house that has recently acquired six acres of land in the area.

But the land cost is not a major issue in such big ticket deals, says Rajiv Jalota, Chief Executive Officer of the Maharashtra Industrial Development Corporation.

News: IOC to buy French co in Congo for $ 1.5 b

(PTI 11/03/2007) New Delhi - Indian Oil Corp (IOC) is likely to acquire French company Maurel & Prom's stake in oilfields in Congo for about $ 1.5 billion. Maurel & Prom had on February 22 announced sale of its interest in the producing fields of M'Boundi and Kouakouala and other exploration areas in Congo to Eni of Italy for $1.434 billion. But the transaction was subject to waiver of pre-emption right by partner Burren Energy of UK. "Burren Energy is opposed to the sale. It is likely to exercise its pre-emption right to stop the sale and instead bring in IOC," an industry source said. The British firm has time till the end of this month to exercise its pre-emption right. IOC and its partner Oil India Ltd are in advanced stage of discussion with Burren Energy for possible takeover of Maurel & Prom's interest in Congo. "Burren Energy wants operatorship of the fields in Congo. By exercising its pre-emption right, it will first acquire Maurel & Prom's interest in the fields and through a back-to-back agreement sell most of it to IOC-OIL combine," he said. IOC, OIL combine had been interested in Maurel & Prom's Congo assets and their internal valuation had put the asset value at about $ 1.5 billion, $ 100 million more than what Eni is paying. Maurel & Prom had last month announced sale of its 48.6 per cent interest in M'Boundi oil field and 66 per cent in Kouakouala-A oilfield to Eni. Besides, it was selling 50 per cent in Kouakouala B, C, D exploration blocks and 50 per cent Kouilou exploration permit. Burren Energy has 31.5 per cent interest in M'Boundi field and 25 per cent interest in Kouakouala. If the acquisition goes through, IOC-OIL will get 17,000 barrels of oil per day from M'Boundi field in 2007. This will increase to 28,000 barrels per day in 2010, the source said. The giant field holds 1.4 billion barrels of in-place oil reserves and produces high quality oil (39 degree API). The Kouilou and Kouakouala license areas, located onshore along the Atlantic coast of Republic of Congo (Brazzaville), extended over an area of about 2,600 sq km and contain two producing fields - M'Boundi and Kouakouala, of which M'Boundi is by far the largest. The operator in each case of Maurel & Prom, the French independent oil company. M'Boundi field currently produces 56,100 barrels of oil per day. Kouakouala field produces 1,000 barrels of oil a day. The fields are connected by pipelines to the Total-operated export terminal at Djeno on the Atlantic coast, a distance from M'Bouondi of about 40-km, where the crude is blended for export. The M'Boundi and Kouakouala crudes are very light low sulphur crudes.

News: Reliance gets huge response to Mumbai SEZ package

(PTI 11/03/2007) Mumbai - The rehabilitation package announced by the Reliance Industries-promoted Mumbai Special Economic Zone (MSEZ), has received a huge response with several farmers turning up to sell their land, a company spokesperson said.

Reliance is building a special economic zone in Raigad district adjacent to Mumbai, which had earlier met with stiff resistance from farmers in places like Uran, Panvel and Pen.

However, a highly tempting economic package for the Project Affected Persons (PAP) offered by the company seems to have done the trick and farmers are reportedly vying to offer their land, the spokesperson said without revealing the exact number of farmers who have sold their land.

As per the package announced by the company, PAPs are to get Rs 10 lakh per acre of land surrendered, a job for a nominated member of each project affected family and return of 12.5 per cent land developed by the company.

The company has also given an option of Rs 5,000 per month for a lifetime besides an offer to give training to youth of PAP families in different technical courses.

The offer by the company was tempting as the annual income from agriculture for most of the farmers was not much, as per a survey carried out in the region. This could also be an important reason for them to opt for the company's package despite alleged pressure from certain elements against selling the land.

The spokesperson said that the villagers are, however, insisting on entering into land deals directly with the company as they did not want any middlemen to come into the picture.

News: DP World to invest $ 2 b in India

(PTI 11/03/2007) Mumbai - Global container terminal operator DP World plans to invest about $ 2 billion in Indian operations, top company officials said here on Sunday.

DP World operates five container terminals in India. "Port investment is crucial for growth of industries," DP World Senior Vice President and Managing Director Ganesh Raj told media.

Pointing out the significance of investment in ports, Ganesh Raj gives the example of Chennai container terminal that is being maintained by DP World.

"Before we took over, the terminal was witnessing a growth rate of 9 per cent per annum. But now it is clocking 22-23 per cent," he said.

Besides Chennai, the company handles container terminals at Kochi, Mundhra, JNPT and Vishakapatnam. The terminals at Kochi and Vishakapatnam are DP World's while Mundhra, JNPT and Chennai's container terminal came under the company after its acquisition of P&O last year.

News: Apollo Group formulates a biotech entry

(DNA 10/03/2007) Mumbai - The Indian biopharmaceuticals industry, which is readying itself to take on the world with bio-generic drugs, is all set to witness a fierce battle in the domestic sector. The new entrant into the biopharmaceuticals sector is the Apollo Hospitals Group, the largest hospital group in the Asia. It is learnt that the group, which is scouting for a R&D expert to head its planned biopharmaceuticals foray, will be setting up the biopharmaceuticals company by middle of this year. During 2005-06, the Indian biotech industry registered sales of Rs 6,521 crore -a 37.42% growth. Of this, the biopharma sector registered sales of Rs 4,708 crore - a 72% share of the total Indian biotech industry, according to the Association of Biotechnology Led Enterprises (ABLE). The Indian biotech industry has pinned its hopes on the possibility that the new biogeneric laws in the US and Europe will allow them to launch generic versions of off patented biotech drugs. It is learnt that in the US alone, biotech drugs worth $10 billion are going off patent by 2010. By then the Indian biotech industry is expected to be a $9 billion industry by 2010. Global biotech drug sales, which touched $60 billion in 2005, is expected to total $90 billion by 2009. Confirming the development, Prathap C Reddy, chairman, Apollo Hospitals Group, told DNA Money, "We are scouting for an research and development expert to head our proposed biotech company. We are in talks with few professors in Harvard University. Once we appoint the helmsman, we will finalise all other details." He hinted that the company would be set up at the Hyderabad biotech SEZ in Andhra Pradesh. He, however, refused to disclose the planned investments, saying, "We have enough financial strength already to fructify our plans thus we are not restricted on how much to spend for the biotech company. " It is learnt that the proposed company will manufacture generic versions of biotech drugs as well as do R&D for new drugs. Meanwhile on the group's global acquisitions, Prathap C Reddy said he hopes to complete the UK buyouts within a couple of months. Apollo is keen on acquiring either of the hospital group - Capio and Abbey - that have been put on the block. "Capio has the advantage of 21 hospitals under its brand name. However, we are yet to zero on any one. We hope the deal could be sized around £250 million," Reddy added. Presently, Apollo is learnt to be the sole bidder for Capio hospital. DNA Money had reported on Apollo's plans for hospital buyouts in the UK its November 3, 2006 edition. The UK healthcare market is worth £ 6 billion. The Apollo Hospitals Group runs 44 hospitals, 50 clinics and 380 pharmacies across the country. Last month the group had signed an MoU with StemCyte, a US-based umbilical cord blood stem cell transplantation company, for collaboration in the use of stem cell therapy in the treatment of blood disorders. An operational agreement with Yemen-based Hayel Saeed Anam Group (HSA), to provide super specialty healthcare was also signed by Apollo last month.

News: Credit Suisse centre in pact with Wipro

(BL 10/03/2007) Pune - The centre of excellence set up by Credit Suisse has signed a two-year contract with Wipro Technologies to utilise the Pune premises and also provision for outsourcing services for a range of banking functions, including IT, HR and finance.

Talking to presspersons, Tom Sanzone, Chief Information Officer, said the centre has been operational since January and would become a central hub and support its business across 50 countries globally. The centre, which currently has about 200 personnel, is ramping it up to touch 2,500 by 2008, he said.

He said the Pune facility would provide support to its global business activities across information technology, operations, finance, product control as well as a range of front office functions, including analytics. He also noted that it would be bringing in other functions such as IT, BPO and KPO soon.

Tom said it would be a fully captive site, branded Credit Suissewhile pointing out that it has other partners, such as Cognizant and Office Tiger doing different functions. He said the Pune outfit would also support its new integrated global bank strategy where its three core businesses of private banking, asset management and investment banking to provide products and solutions for the bank clients.

Tom, commenting on other locations, said it has set up centres of excellence in North Carolina, Singapore and Holland, besides Pune. He added that it would be ramping up its human resources across these locations also.

News: Forbes' rich list reflects Indian realty boom

(BL 10/03/2007) New Delhi - The boom in the real estate sector has led to a mushrooming of Indian billionaires on the Forbes list, a trend reminiscent of that seen in the IT sector earlier.

According to the Forbes list of billionaires, five Indians from the real estate sector with a combined wealth of $24.5 billion figure in the coveted list this year. These include Kushal Pal Singh of DLF, Ramesh Chandra of Unitech, Pallonji Mistry of Shapoorji Pallonji Group, Vikas Oberoi of Oberoi Construction and Pradeep Jain of Parsvnath Developers

Similarly, five Indians from the infotech/software sector are present on the Forbes list, which has ranked 946 billionaires from across the world. These include Azim Premji of Wipro, Shiv Nadar of HCL and three from Infosys — N.R. Narayana Murthy, Nandan Nilekani and Senapathy Gopalakrishnan. The combined wealth of these five from the IT sector stood at $25.4 billion, driven mainly by Azim Premji's personal wealth of $17.1 billion.

Meanwhile, the India growth story was very apparent on the Forbes compilation of global billionaires. By sheer numbers, Indians topped the list of richest people in Asia with 36 billionaires, of whom Forbes placed Lakshmi Mittal, Mukesh Ambani and Anil Ambani in the elite global top 20. The combined wealth of Indian billionaires, including familiar names such as Azim Premji, K.P. Singh, Sunil Mittal, and Adi Godrej, swelled to $191 billion — equal to one-fourth of India's GDP.

Mukesh Ambani and his brother Anil Ambani breached the top 20 richest list with a net worth of $20.1 billion and $18.2 billion respectively. The magazine ranked Lakshmi Mittal, whose steel empire has earned him $32 billion, the fifth richest person on the planet. The Forbes list for 2007 further said India ended Japan's 20-year reign as home to Asia's largest number of the richest people. As many as 14 Indians have joined the coveted club this year, raising the net worth of the country's billionaires by around $90 billion.

News: Videocon still in race for Daewoo Elec

(BS 09/03/2007) Mumbai - Even as creditors of ailing Korean giant Daewoo Electronics send signals of rejecting the revised bid of Videocon-RHJ consortium, the Mumbai-based Videocon Industries maintains that they are still in the race to take over the company.

Venugopal Dhoot, chairman and MD of Videocon Industries, maintained that he is still in the race to take over Daewoo’s electronics business. However, he maintained that he cannot pay more than what would be commercially viable.

Dhoot said, “We want commercial viability from the deal. We do not want to pay an exorbitant price.” In October last year, the Videocon-led consortium was shortlisted for buying a stake in the ailing South Korean electronics major.

After a due diligence process, the Videocon consortium in December asked for 13 per cent discount on the initial bidding price of $ 752 million to acquire 97.5 per cent stake in the company. But this was rejected by Daewoo’s 40-odd creditors and Videocon lost its preferred bidder status. The bid was found unacceptable.

Later, Videocon submitted a revised bid to the creditors and the bid came up for consideration last month. Daewoo Electronics is a former unit of the Daewoo group, collapsed in 1999 with $80 billion in debt in one of the world’s largest corporate failures.

Trailing Samsung Electronics and LG Electronics, it posted net profit of 93.9 billion won on sales of 2.15 trillion won in 2005. It produces a range of goods including TVs, air-conditioners and washing machines. The proposed acquisition fits into Videocon’s strategy to become an Indian multinational as Daewoo operates six plants in South Korea and 18 overseas units.

News: 'GDP to grow more than 9%'

(BS 09/03/2007) New Delhi - India’s economy may expand more than 9 per cent in the current fiscal, Prime Minister Manmohan Singh said, adding that growth was a “necessary condition” to eradicate poverty in the country.

The United Progressive Alliance government wants to accelerate growth to as much as 10 per cent by 2012, to generate jobs and improve the lives of half the country’s 1.1 billion people who live on less than Rs 100 a day.

Still, the second-fastest expansion among the world’s top 15 economies pushed inflation in India to a two-year high last month, eroding the purchasing power of the nation’s poor.

“We are trying to curb inflation without affecting the strong growth impulses,” Singh told the Lok Sabha today.

“The Reserve Bank of India’s (RBI) effort to moderate growth of money supply and the finance ministry’s move to reduce Customs duty on essential commodities will have a desired effect on inflation,” he added.

Inflation has stayed above the RBI’s tolerance level of 5 per cent since September and the bank may raise its key overnight lending rate next month for the second time this year to curb prices, according to Goldman Sachs Group Inc.

Last month, the RBI unexpectedly increased the amount of cash lenders have to set aside to cover deposits for the second straight month to curb inflation.

News: New wine policy in Karnataka

(BS 09/03/2007) Bangalore - Karnataka has decided to remove the ‘liquor’ tag attached to wine to promote the growing wine industry in the state.

The state Cabinet on Thursday approved the draft version of the wine policy. Once the policy comes into force, wine can be sold in restaurants, hotels, grocery and retail stores without a liquor licence.

“The policy has been modelled on the lines of the existing policy in Maharashtra. We intend to liberalise the wine industry in the state to promote its growth. Entrepreneurs and farmers willing to shift to wine making will benefit in the process,” Karnataka medical education minister V A Acharya told reporters after the meeting.

The draft policy will be referred to experts before evolving the final guidelines.

“We expect the final version of the policy to be ready in a few weeks,” the minister added.

News: Ex-Citibanker to float NBFC for urban poor

(BS 09/03/2007) Bangalore - As someone said, once a banker always a banker. This is turning out to be true in the case of Ramesh Ramanathan, who quit his Citibank job in the US to start a social upliftment organisation, Janaagraha, in Bangalore.

Ramanathan over the last seven years has also been operating a micro-finance organisation Janalakshmi Social Services, offering micro-credit to urban poor.

According to regulations in India, a micro-finance organisation under section 25 of Companies Act cannot raise deposits from the public, but can only lend to a certain section of population. This, according to Ramanathan, is proving to be a hurdle to widen his reach and broaden the agenda of financial inclusion.

To overcome this hurdle, Ramanathan plans to create a holding company, which will serve the norms of operating a non-profit organisation, and this holding company will float an NBFC (non-banking financial company).

Dell Foundation, Lok Capital (in which CDC is an investor) and Bellwether Microfinance are together picking up minority stake in the NBFC.

“This will be a recognised NBFC which can raise deposits and carry out various other financial activities. The only difference is that we are focussed on urban poor and we will continue on that path,” Ramanthan detailed.

This move to set up an NBFC is part of his vision to move beyond the narrow definition of micro-credit to a more broadbased one of micro-finance, encompassing a range of financial services to include credit, savings, insurance, remittance services etc. According to information available, the licence for starting this NBFC is expected anytime soon.

Janalakshmi has cumulatively lent close to Rs 30 crore to around 2 lakh people by raising resources from institutions such as Nabard and Sidbi.

“We lend at a rate of 24 per cent including our loan costs, operations costs and other variables. Our NPA is at around 3 per cent and we are adopting technology to reduce our operation cost so that we can lend at a much lesser rate of interest,” Ramanathan said.

Janalakshmi’s business objective is to become a financial services provider to the sub-prime sector, providing Rs 586 crore for at least 5 lakh customers in the next 5 years, said Ramanathan, elaborating on his plans, that they have entered into a pact with Financial Information Network and Operations Ltd (FINO) for deployment of a core banking solution on i-flex platform.

“This a pay per usage model, and FINO along with IBM has implemented this solution for us. This deployment will enable our customers to have a smart card through which, besides other features, can participate in fruit and vegetable auctions at Safal outlets without having to carry cash,” he noted.

News: Tatas buy 2 steel units in Vietnam

(DNA 09/03/2007) Kolkata - Even as Corus shareholders were voting in favour of a $12.1 billion take-over by Tata Steel, the latter’s Singapore-headquartered Natsteel Asia has concluded a deal to acquire two new steel units in Vietnam for $ 41 million.

Natsteel has inked a conditional agreement with the Vietnam Industrial Investments Ltd (VII), an investment holding company, to acquire the latter’s 100% holding in Structure Steel Engineering Pte Ltd (SSE) and a majority 70% equity in Vinausteel Ltd. The transaction is expected to be completed by June, 2007.

Natsteel, acquired by Tata Steel in 2005 for $305 million, is a two-million-tonne company that manufactures only long products based on direct induction of scrap. It has mills in Singapore, China, Thailand, Vietnam, Malaysia, Philippines and Australia. Natsteel is in the process of ramping up its total production capacity to 5-6 million tonnes over the next three to four years.

With the acquisition of two Vietnamese units, Natsteel will get two rolling mills - a 2.5-lakh-tonne wire and rod mill operated by SSE and a 1.8-lakh-tonne reinforcing bar mill operated by Vinausteel in Haiphong, North Vietnam.

In a recent interaction with DNA Money while explaining Natsteel’s south-east Asian strategy after the Tata Steel takeover, Oo Soon Hee, president and CEO, Natsteel, said the company was banking on its network of production bases in Asia and China to implement a move to get “closer to markets” and tide over shrinking demand from the construction sector in Singapore. “Long products used in construction, because of dimensions and size, are not travel friendly and, therefore, the strategy is to build catchment areas of demand for high-value long products around each production unit,” Hee said. “The Vietnamese steel market has been growing at a healthy rate over the past five years. Natsteel believes the market for steel products in Vietnam will continue to grow at a strong pace as consumption on a per capita basis is relatively low,” Hee said.

News: Morgan Stanley, Citi, Actis buy 6% in NSE

(RTR 09/03/2007) Mumbai - Morgan Stanley, Citigroup and private equity fund Actis have entered into agreements to buy 6 per cent of National Stock Exchange (NSE) for undisclosed sums, the exchange said.

The deals will take foreign ownership of the NSE to 26 per cent, the maximum allowed by Indian law, after NYSE Group Inc, Goldman Sachs, General Atlantic and Softbank Asian Infrastructure Fund paid $460 million for stakes totalling 20 per cent in January.

Individual foreign holdings are limited to 5 per cent.

Morgan Stanley will buy 3 per cent, while Citigroup will take 2 per cent and Actis 1 per cent, NSE said in a statement late on Thursday.

The three firms will buy stakes held by IDBI, State Bank of India, SBI Capital Markets Ltd., Corporation Bank, Union Bank of India, Bank of Baroda, Canara Bank and Oriental Bank of Commerce, the NSE said.

Earlier this week, Singapore Exchange paid $42.7 million for a 5 per cent stake in NSE's smaller rival, the Bombay Stock Exchange (BSE), following a similar deal by Deutsche Boerse last month.

The interest in India's vibrant stock exchanges follows several consolidation attempts among the world's bourses.

News: List of 36 richest Indians

(SF 09/03/2007) Mumbai - Steel baron Laxmi Mittal leads a pack of 36 Indian billionaires with a total net worth of $191 billion, according to the list of richest persons complied by Forbes magazine. Global ranking Name Networth (in $ billion) Organisation 5 Lakshmi Mittal 32.0 Arcelor-Mittal 14 Mukesh Ambani 20.1 Reliance Industries 18 Anil Ambani 18.2 Reliance Communications 21 Azim Premji 17.1 Wipro 62 Kushal Pal Singh 10.0 DLF 69 Sunil Mittal & family 9.5 Bharti Telecom 86 Kumar Mangalam Birla 8.0 AV Birla Group 86 Shashi & Ravi Ruia 8.0