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VOLUME 1 01 - 15 OCTOBER, 2010 NO. 4

Current State of Indian Economy: Page 2




The Industry News Digest is a fortnightly publication. It attempts to serve as medium for rapid dissemination of industrial information to our users.

In this issue, one article on Indian Economy has been incorporated at the beginning.

Abstracts in this document have been scanned from The Economic Times, the renowned business newspaper and most of the articles are related to industry.

It is expected that this issue will also reach a wide and interested users. We will be pleased to receive the healthy criticism and improvement proposals. In case the full text or any other information is desired, the same may be obtained from the library.

SUBJECT An Article on Current State of Indian Economy Automobile Industry Banking/ Credit Services Biotechnology Drugs/ Pharmaceuticals Education and Training Electronics/ Telecommunication Energy/ Energy Resourses Global/ Indian Economy Human Resource Development Hotel/ Hospitality Management Industry News Information Technology Infrastructure Insurance Sector Investment Media and Entertainment Micro Finance Non Government Organization Retail Steel Industry PAGE NUMBER 2 18 21 23 24 29 33 34 36 38 42 44 47 52 54 55 56 57 58 59 60

Current state of Indian Economy August 2010

July 2010 overall industrial growth numbers continued on the path of buoyancy. The high growth in the overall industrial output was solely on account of the heavyweight manufacturing sector. The other two sectors also remained in the positive zone in July and during the period from April July 2010. However, the growth in output was lower than the growth seen in the corresponding period of previous year (FY10). Going by the use-based classification we see a huge rise in the production of capital goods which rose by 63 percent in July 2010 as compared to the rise of 1.7 percent in the same month of previous year. The growth in the consumer goods output swelled only on account the durables segment.

The industry segments that registered a sizable increase in output were food products, cotton textiles, jute products, paper products , rubber and plastic products, petroleum , coal and tar, metal products and among the capital goods were the machinery and equipment , transport equipment and parts.

The growth momentum of the six core infrastructure industries was maintained with the increase in petroleum products ( crude petroleum and petroleum refinery). Production in coal and power remained positive, however, the growth numbers were not higher than the previous year. The two segments that were found in the negative territory were cement and finished steel.

The moderation in overall inflation could be observed in July 2010, 10 percent in July from 11 percent in the previous month. However, inflation was found to be much higher when compared with the inflation recorded in July last year and may require more time and steps by the government to cool down to targeted levels. The prices of items / article groups that fueled the overall price to rise to such levels were the food and non-food articles (primary goods), fuel products, beverages, textiles, wood, rubber, chemicals, basic metals, machinery and transport equipments.

The broad money supply rose by 3.4 percent over the period from April to July 2010-11, this was lower than the M3 recorded in same period of previous year. The aggregate deposits was also seen to expand slowly by 3.3 percent during the period from April to July of the current fiscal as compared to the expansion of 6.2 percent during the same period of 2009-10. The bank credit rose by 3.5 percent calculated in July over April 2010. The total revenue of the government stepped up sharply this year with more than twofold increase, from the Rs 105378 crores up to July 2009-10 to Rs 238524 crores up to the month of July of current fiscal . Consequently, the magnitude of fiscal deficit has contracted by almost 43 percent during this period of 2010-11 over the previous year.

According to RBI, government acquired higher than anticipated revenue in July from the auction of 3G and BWG and revenue from taxes helped the holding back of fiscal deficit within the targeted level of 5.5 %.

The buoyancy in tax collection in July has been on account of impressive collection in the direct and indirect taxes. However, in growth terms the indirect tax was observed to be much higher as compared to the growth in direct taxes. The indices continue to swing between 16 K to 17K points. In July 2010 it rose to the level of 17.5 K points and currently in September 2010 we saw the Indian stock market rise to the level of 20 K points again. The overall merchandise exports slowed to 13 percent in the fourth month ( July) of the present fiscal as compared to the 30 plus percent growth registered in the previous month of this year. It is early for any comment on the trend without the trade numbers of August and September.

The total foreign investment swelled to 10.8 billion up to July on the back of inflows in the portfolio investment category. High investment activity by the FIIs was witnessed during the month, this high inflows is what has led to increased portfolio investments ( USD 9.1 billion). FDI received during the month was only USD 1.7 billion . Further increase in the forex reserves has been witnessed; this has been observed to rise from USD 275 billion to USD 284 billion and enough to cover 11 months of imports.

1 2 3 4 5 6 7 8 9 Industrial Growth Core Infrastructure Industries Trends in Inflation Monetary Indicators Stock Market Trends Fiscal Management Foreign Trade Capital Inflows Foreign Exchange Reserves


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ListofTables 7
Table- 1.1: Growth of Industry: Recent Trends (in percentage) Table -1.2: Growth in 17 Industry sectors Table-1.3: Growth in six-core infrastructure industries (% change) Table-1.4: Growth in six-core infrastructure industries (% change) Table-1.5. Monthly trends in Wholesale price index- monthly average (% change) Table-1.6: Monthly trends in consumer prices (% change) Table-1.7: Monetary sector indicators Table-1.8: Monthly trends in stock market indices Table-1.9: Trends in cumulative tax collections of central government (%) Table-1.10: Service Tax Table-1.11: Trends in central government finances: Table-1.12: Monthly trends in growth of merchandize trade (% change) Table-1.13: Monthly trends in foreign investments ($ million) Table-1.14: Monthly trends in foreign exchange reserves ($ billion)

8 9 9 10 10 11 12 13 14 14 15 16 17

1. Industrial growth
The IIP growth numbers released in September for July 2010 showed that the overall industry posted 13.8 percent growth, which is higher than the growth of 7.2 percent posted in the corresponding month of previous year. The three constituents of the overall industry namely the mining, manufacturing and electricity were seen to grow positively. However, what mainly led to the sizable increase in the overall growth was high growth of 15 percent in the manufacturing sector in contrast to the increase of 7.2 percent in the previous year. The use-based classification shows that production of basic goods , capital goods, intermediate goods grew at 5.1 percent , 63 percent and 9.1 percent in July 2010 as compared to 4.7 percent , 1.7 percent and 9.1 percent respectively in the same month of previous year. The growth in the consumer goods decelerated slightly from 9.7 percent previously to 6.7 percent in the current year. The consumer durables segment clocked the same growth rate as in the previous year. The industry sectors which among the 17 industry sectors saw an increase were the food products that increased by 9.1 percent ( -0.1 percent), cotton textiles by 12.1 percent (0.5 percent) , jute products by 19.3 percent (-28.1 percent ), paper products by 7.3 percent ( 1.7 percent), rubber , plastic , petroleum and coal products by 19.4 percent ( 12.5 percent), metal products rose by 14.8 percent ( 12.6 percent ), machinery and equipment and transport by 49.4 percent (12.0 percent ) and transport equipment by 24.9 percent (10.9 %) . ( The numbers within braces are for the previous year )

1.1: Growth of Industry: Recent Trends (in percentage) Weights July 2009 7.2 8.7 7.4 4.2 4.7 9.8 1.7 9.7 5.3 22.1 July 2010 13.8 9.7 15.0 3.7 5.1 9.1 63.0 6.7 0.5 22.1

Industry Mining Manufacturing Electricity Use Based Classification Basic Intermediate Capital Consumer Goods Consumer non Durables Consumer Durables

100 10.2 79.4 10.5 35.6 26.5 9.3 28.7 23.3 5.4

Table- 1.2: Growth in 17 Industry sectors

Food Products Beverages, Tobacco and Related Products Cotton Textiles Wool, Silk and man-made fiber textiles Jute and other vegetable fiber Textiles (except cotton) Textile Products (including Wearing Apparel) Wood and Wood Products; Furniture and Fixtures Paper & Paper Products and Printing, Publishing & Allied Industries Leather and Leather & Fur Products Basic Chemicals & Chemical Products (except products of Petroleum & Coal) Rubber, Plastic, Petroleum and Coal Products Non-Metallic Mineral Products Basic Metal and Alloy Industries Metal Products and Parts, except Machinery and Equipment Machinery and Equipment other than Transport Equipment Transport Equipment and Parts Other Manufacturing Industries 9.1 2.4 5.5 2.3 0.6 2.5 2.7 2.6 1.1 14.0 5.7 4.4 7.5 2.8 9.6 4.0 2.5 -0.1 3.7 0.5 34.0 -28.1 5.9 1.7 1.7 14.9 6.9 12.5 6.5 3.7 12.6 12.0 10.9 -0.7 9.1 -2.1 12.1 1.2 19.3 -0.7 -9.4 7.3 -1.8 2.5 19.4 0.0 4.6 14.8 49.4 24.9 31.1

Source: Central Statistical Organization

2. Core sector growth

The core infrastructure industries were seen to maintain growth during the four month period of FY11. In July growth in the overall core sector was 3.9 percent as against the growth of 3.2 percent attained in the same month previous year. Four sectors namely the crude petroleum, petroleum refinery, coal and power were seen to post positive growth of 15.8 percent, 13.7 percent, 4.5 percent and 3.8 percent during the month as against the negative growth of 0.4 percent , (-) 14.4 percent, 10 .5 percent and 3.8 percent respectively in the previous year. The categories that posted negative growth in July this year after three months of positive growth were the finished steel and cement industry.
Table-1.3: Growth in six-core infrastructure industries (% change) July 2010 All infrastructure industries 08-09 09-10 4.6 3.7 4.4 3.2 4.4 6.3 5.2 3.2 2.0 6.5 4.1 4.5 2.4 3.8 0.8 6.0 0.7 6.4 2.2 9.4 1.9 4.5 3.3 7.2 Finished steel Cement Crude petroleum 10-11 8.7 8.6 3.6 -0.2 08-09 1.0 3.2 -4.7 -3.0 -1.0 -0.4 -0.2 0.5 -0.3 -8.1 -6.2 -2.3 09-10 -3.1 -4.3 4.0 -0.4 -2.6 -0.5 -2.2 -1.5 1.1 9.7 4.0 3.5 10-11 5.2 5.8 6.8 15.8

April May June July August September October November December January February March

10-11 5.1 5.0 3.4 3.9

08-09 7.5 8.3 8.1 6.3 3.3 2.3 -3.8 -6.3 -8.0 3.2 2.4 -1.8

09-10 -1.3 2.8 3.6 4.0 0.3 0.8 2.5 11.7 9.6 16.2 0.9 9.2

10-11 4.7 2.5 3.5 -0.9

08-09 09-10 6.9 11.9 3.8 11.8 6.6 12.7 5.5 13.8 1.9 17.6 8.1 6.5 6.2 5.2 8.7 9.0 11.6 11.0 8.3 12.4 8.3 5.8 10.1 7.8 Source: Ministry of Industry

Table-1.4: Growth in six-core infrastructure industries (% change) Petroleum refinery 08-09 09-10 April May June July August September October November December January February March 4.3 0.1 5.6 11.8 2.5 2.8 5.0 -1.1 3.0 -1.3 0.5 3.3 -4.5 -4.3 -3.8 -14.4 31 3.4 7.2 4.9 0.8 3.8 0.8 -0.4 Coal 10-11 5.3 7.7 2.9 13.7 08-09 10.4 8.8 6.1 5.5 5.9 11.2 10.6 9.7 11.2 6.7 6.0 5.2 09-10 13.2 10.4 15.2 10.5 12.9 6.5 5.0 4.6 2.5 6.0 6.8 7.8 10-11 -2.3 0.1 0.9 4.5 Power 08-09 1.4 2.0 2.6 4.5 0.8 4.4 4.4 2.6 1.5 1.8 0.6 6.3 09-10 6.7 3.0 7.7 3.8 10.6 7.9 4.7 3.3 6.7 5.6 7.3 7.8 10-11 6.0 6.4 3.4 3.8

3. Inflation
Inflation continues to remain one of the top concerns. The WPI based inflation still remains above the double digit mark. Currently inflation is above 10 percent, way off the targeted 5.5-6.0 percent for the current fiscal. The inflation is fueled by the prices of primary articles (both food and non- food ), fuel . Prices were also seen to rise in the case of manufactured articles such as textiles, wood, rubber, chemicals, basic metals, machinery and transport equipments.
Table-1.5. Monthly trends in Wholesale price index- monthly average (% change) 2009 June -1.0 6.5 10.9 0.1 -12.5 0.6 11.5 6.0 4.5 0.3 2.6 -1.0 3.4 2.1 3.1 -14.1 -2.2 0.6 July -0.5 7.6 14.2 -3.3 -10.4 0.1 9.7 5.5 2.1 0.3 2.0 -1.2 2.5 3.2 5.2 -15.2 -2.2 0.6 2010 June 11.1 18.1 15.6 18.7 14.0 6.9 4.0 7.6 15.2 14.6 1.0 0.5 6.7 6.3 -1.1 12.0 5.1 2.6 July 10.0 14.9 10.3 21.0 14.3 6.2 4.1 6.5 13.8 14.6 1.4 0.2 7.0 4.9 -4.8 11.9 4.2 2.3

All Commodities I Primary Article (A) Food Articles (B) Non-Food Articles II Fuel Power Light & Lubricants III Manufactured Products (A) Food Products (B) Beverages, Tobacco & Tobacco Products (C) Textiles (D) Wood & Wood Products (E) Paper & Paper Products (F) Leather & Leather Products (G) Rubber & Plastic Products (H) Chemicals & Chemical Products (I) Non-Metallic Mineral Products (J) Basic Metals Alloys & Metals Products (K) Machinery & Machine Tools (L) Transport Equipment & Parts

Source: Reserve Bank of India Table-1.6: Monthly trends in consumer prices (% change) CPI-IW 08-09 April May June July August September October November December January February March 7.8 7.8 7.7 8.3 9.0 9.8 10.4 10.4 9.7 10.4 9.6 8.0 09-10 8.7 8.6 9.3 11.9 11.7 11.6 11.5 13.5 15.0 16.2 14.9 14.9 10-11 13.3 13.9 13.7 11.3 CPI-UNME 08-09 7.0 6.8 7.3 7.4 8.5 9.5 10.4 10.8 9.8 10.4 9.9 9.3 09-10 8.8 9.7 9.6 13.0 12.9 12.4 12.0 13.9 15.5 16.9 15.8 14.9 10-11 14.4 14.1 14.1 -CPI-AL 08-09 8.9 9.1 8.8 9.4 10.3 11.0 11.1 11.1 11.1 11.4 10.8 9.5 09-10 9.1 10.2 11.5 12.9 12.9 13.2 13.7 15.7 17.2 17.6 16.5 15.8 10-11 15.0 13.7 13.0 11.0 CPI-RL 08-09 8.6 8.8 8.8 9.4 10.3 11.0 11.1 11.1 11.1 11.1 10.8 9.7 09-10 9.1 10.2 11.3 12.7 12.7 13.0 13.5 15.7 17.0 17.4 16.5 15.5 10-11 15.0 13.7 13.0 11.2

Source: Ministry of Labor, CMIE


Monetary indicators

The broad money supply expanded by 3.4 percent during the period of April to July this year compared to the growth of 5.3 percent registered during the same period of 2009-10. In absolute terms M3 stood at Rs 191240 crores as against Rs 253921 crores during the same period of previous fiscal. As on July 30, 2010, the net bank credit flow to Government slowed to 4.3 percent corresponding to the 11.3 percent growth in 2009-10. The expansion in money supply is mainly contributed by credit to the commercial sector and increase in net foreign assets. The net bank credit to the commercial sector was observed to grow at 3.3 percent during this period compared to modest growth of 0.9 percent in the last fiscal. The net foreign Exchange assets of banking sector swelled by 4.7 percent vis--vis 0.1 percent growth posted during the same period of 2009-10. Aggregate deposits in the banking sector increased by 3.3 percent over the period from July to April 2010-11 as against the expansion of 6.2 percent during the same period of previous year. Investments in government and other approved securities shows moderation in growth to 4.3 percent in 2010-11; showing a relative decline from the growth of 14.5 percent in the previous financial year. During this period, total bank credit augmented sharply from 1.1 percent in 2009-10 to 3.5 percent in 2010-11. The recent hike in key policy rates by RBI on September 16, 2010, made the Indian bankers cautious about their future move in banking operation. The banking sector is unlikely to respond immediately to the rate hike by raising their deposit rates and lending rates. Bankers opined that, the persistently low deposit growth could not support the credit growth. There may also be the possibility of increase in deposit rates followed by lending rates of banks.
Table-1.7: Monetary sector indicators up to July (July 2010-11 over March 2009-10) Variation in M3 (Rs crore) 08-09 09-10 22235 124682 73398 172709 89283 172702 169734 253921 208571 280313 264364 331793 331450 391310 374193 431266 423509 521426 508078 575387 635810 652944 740332 806190 Variation in M3 (%) 10-11 42384 92656 77314 191240 08-09 0.6 1.9 2.2 4.2 5.2 6.6 8.3 9.3 10.6 12.7 15.9 18.4 09-10 2.6 3.6 3.6 5.3 5.9 7.0 8.2 9.1 10.9 12.1 13.7 16.9 10-11 0.8 1.7 1.4 3.4

April May June July August September October November December January February March

Source: Reserve Bank of India


5. Stock market trends .

The Indian stock market appears highly promising for the overseas investors as reflected by the inflows in the past few weeks with the high flow in investments in the countrys stocks. The growing FII investments made the BSE index not only cross 17 K points but to get closer to the 20 K points in September 2010.
Table-1.8: Monthly trends in stock market indices (beginning of month figures) Date 1.01.08 1.02.08 3.03.08 1.04.08 2.05.08 2.06.08 1.07.08 1.08.08 1.09.08 1.10.08 3.11.08 1.12.08 26.12.08 30.01.09 02.03.09 31.03.09 29.04.09 01.06.09 01.07.09 03.08.09 01.09.09 01.10.09 03.11.09 01.12.09 04.01.10 01.02.10 02.03.10 01.04.10 03.05.10 01.06.10 01.07.10 BSE Sensex 20300 18242 16677 15626 17600 16063 12961 14656 14498 13055 10337 8839 9328 9424 8607 9708 11403 14840 14645 15924 15551 17134 15405 17198 17558 16356 16773 17693 17386 16572 17509 % Change 4.8 -10.1 -8.5 -6.3 12.6 -8.7 -19.3 13.1 -1.1 -9.9 -20.8 -14.5 5.5 1.0 -8.7 12.8 17.5 30.1 -1.31 8.7 -2.3 10.2 -10.1 11.6 2.1 -6.8 2.5 5.5 -1.7 -4.7 5.7 S&P CNX NIFTY 6144 5317 4953 4739 5228 4739 3896 4413 4447 3950 3043 2682 2857 2874 2674 3020 3473 4529 4340 4711 4625 5083 4564 5122 5232 4900 5017 5291 5223 4970 5251 % Change 6.6 -13.5 -6.8 -4.3 10.3 -9.3 -17.8 13.3 0.8 -11.1 -23.0 -11.9 6.5 0.5 -7.0 12.9 15.0 30.4 -4.1 8.5 -1.8 9.9 -10.2 12.2 2.1 -6.4 2.4 5.5 -1.3 -4.8 5.7

Source: Reserve Bank of India


6. Fiscal Management
The total government expenditure amounted to be Rs 332700 crores in July end 2010 calculated over April 2010; securing almost 25.4 percent increase over the same period of previous year. On the revenue side, the total receipts increased more than two folds (126.4 % growth in July 2010 over July 2009) from the level of Rs 105378 crores in 2009-10 to Rs 238524 crores during the same period of current year. The resultant diminution in fiscal deficit is evident from the finance score sheet of the Government as the level of deficit has come down by 42.7 percent during the period in 2010-11. RBI in the Mid-Quarter Monetary Policy Review of September 2010 assessed the holistic situation of government finance in detail. According to the review, higher than expected realizations on 3G and Broadband Wireless Access (BWA) auction accompanied with buoyant tax revenues, have rationally suspended the fear of the fiscal deficit exceeding the target of 5.5 per cent announced in Union Budget 2010-11. Thus it would help to stabilize market expectations of liquidity and interest rate movements in coming months. The overall tax collection grew by 27.5 percent during the month as against the negative growth of 11.1 percent in July 2009. The persistent collection in both direct and indirect taxes is primarily responsible for such an increase in tax revenue. In the segment of direct taxes, corporate tax rose by 18.4 percent vis-a-vis 4.7 percent growth in July 2009 and the collection in income tax accelerated by 15.8 percent corresponding to the growth of 5.9 percent in same month of last fiscal. Looking at indirect taxes we find all major tax components except the Other taxes category confirmed an impressive growth in July 2010. The customs and excise collection grew by 57.4 percent and 52 percent respectively corresponding to the negative growth observed in same month of last fiscal. The performance in service tax collection also remained buoyant with a strong growth of 12.5 percent in this month as against the negative growth of 1.5 percent in July 2009.

Table-1.9: Trends in cumulative tax collections of central government (%) Gross tax revenue 08-09 09-10 52.2 -16.9 36.1 -11.8 28.4 -11.4 26.2 -11.1 25.0 -11.5 25.3 -7.6 20.3 -7.5 17.5 -7.8 9.6 -2.5 7.2 -1.2 6.9 -1.6 2.7 Corporation tax 08-09 09-10 55.0 -8.4 58.1 10.1 43.4 1.8 41.6 4.7 45.9 2.4 38.2 7.7 30.3 6.5 26.4 6.6 11.9 16.8 11.9 16.5 17.9 10.9 10.8 Income tax 08-09 127.7 76.0 50.0 42.0 35.7 30.7 21.9 19.0 6.8 5.4 7.5 7.1

April May June July August September October November December January February March

10-11 27.0 22.0 28.6 27.5

10-11 23.4 -1.8 23.7 18.4

09-10 20.0 11.7 7.1 5.9 8.1 7.2 10.5 9.8 12.2 13.3 11.4

10-11 8.3 13.0 13.8 15.8


April May June July August September October November December January February March 08-09 25.0 24.1 19.9 19.2 17.0 16.8 14.4 13.7 11.1 6.4 1.7 -4.1 09-10 -52..6 -38.2 -37.3 -34.7 -34.0 -32.9 -31.7 -31.2 -29.2 -25.2 -21.8 10-11 106.4 56.6 62.2 57.4

Excise duties
08-09 -28.3 1.3 -0.9 4.0 6.5 6.6 6.3 5.1 2.1 -2.6 -7.1 -12.0 09-10 -114.2 -23.3 -23.7 -26.6 -24.5 -22.9 -21.7 -20.0 -18.2 -14.5 -10.2 10-11 314.1 49.3 52.0 52.0

Other taxes
08-09 9.04 26.7 26.0 24.7 17.4 30.7 16.2 6.1 -2.6 -6.4 -10.0 -11.5 09-10 -5.4 -18.7 -9.5 -3.87 -1.97 -20.5 -17.2 -15.0 -24.2 -21.8 -19.8 10-11 -43.2 -11.7 -36.8 -33.3

Table-1.10: Service Tax Service Tax April May June July August September October November December January February March 08-09 09-10 62.3 -0.04 40.7 -2.60 34.2 -2.85 29.7 -1.46 28.6 -2.29 31.8 -3.7 31.8 -5.3 30.2 -6.2 25.4 -5.9 24.6 -6.2 22.2 -5.9 18.6 Source: Controller General of Accounts 10-11 -6.0 1.6 9.1 12.5

Table-1.11 Trends in central government finances: July 2010 Actual to budget estimates ( in Rs crores) 09-10 10-11 Revenue receipts Tax revenue Non tax revenue Total receipts Non plan expenditure On revenue account On capital account Plan expenditure On revenue account On capital account Total expenditure Fiscal deficit 105378 238524 86309 112821 19069 125703 106690 241785 194868 222900 181145 194141 13723 28759 70376 109800 59011 94458 11365 15342 265244 332700 158554 90915 Source: Controller General of Accounts


7 . Foreign trade
The total merchandise trade (including the imports and exports) during the first four months of the 2010-11 stood at USD 180 billion as against USD 136 billion. Merchandise exports neared USD 70 billion in the fourth month of the present fiscal, and imports were seen to rise to the level of USD 112 billion. The high imports have increased the deficits to USD 43 billion from USD 31 billion in the same period of previous year.

Table-1.12: Monthly trends in growth of merchandize trade (% change) up to July 2010 Exports 08-09 31.5 12.9 23.5 31.2 26.9 10.4 -12.1 -9.9 -1.1 -15.9 -21.7 -33.3 Oil imports 08-09 09-10 46.2 -58.5 50.8 -60.6 53.4 -50.6 69.3 -55.5 76.7 -45.5 57.1 -33.5 22 -9.3 11.9 7.3 -30.9 42.8 -47.5 56.0 -47.5 97.4 -58.1 85.2 Non-oil imports 08-09 09-10 32.3 -24.6 17.4 -25.4 13.9 -16.5 38.7 -24.5 39.6 -25.5 36.2 -30.4 5.5 -17.2 3.4 -5.9 31.9 22.4 -0.5 28.8 -10.2 55.6 -18.9 61.0 Total imports 08-09 09-10 36.6 -36.6 27.1 -39.2 25.9 -29.3 48.1 -37.1 51.2 -32.4 43.3 -31.3 10.6 -15.0 6.1 -2.6 8.8 27.2 -18.2 35.5 -23.3 66.4 -34.0 67.1

April May June July August September October November December January February March

09-10 -33.2 -29.2 -27.7 -28.4 -19.4 -13.8 -6.6 18.2 9.3 11.5 34.8 54.1

10-11 36.2 35.1 30.4 13.2

10-11 70.5 66.7 26.5 4.4

10-11 34.3 28.2 21.5 49.6

10-11 43.3 38.5 23.0 34.3

Source: Ministry of Commerce


8. Foreign investment
The foreign direct investment received up to July 2010 was USD 7.5 billion and was much lower than the investment of USD 10.3 billion received in the previous year. However, the total FDI which includes the portfolio investments (which is mainly the FII investments) lifted the total foreign investment for the four-month period (April July ) to USD 21.3 billion almost at the same level as recorded in the previous year .
Table-1.13: Monthly trends in foreign investments ($ millions) Foreign direct investments April May June July August September October November December January February March 08-09 3749 3932 2392 2247 2328 2562 1497 1083 1362 2733 1466 1956 09-10 2339 2095 2582 3476 3268 1512 2332 1722 1542 2042 1717 1209 10-11 2179 2213 1380 1785 Portfolio investments 08-09 -880 -288 -3010 -492 593 -1403 -5243 -574 30 -614 -1085 -889 09-10 2278 5639 353 2077 926 4999 2922 1274 1533 3139 230 5306 10-11 3315 41 1232 9114 Total foreign investments 08-09 09-10 10-11 2869 4617 5494 3644 7734 2254 -618 2935 2612 1775 6508 10899 2921 4194 1159 6511 -3746 5254 509 2996 1392 3075 2119 5181 381 1947 1067 6515 Source: Reserve Bank of India


9. Foreign exchange reserves

In July 2010 forex reserves rose to USD 282 billion from USD 275 billion in the previous month, the rise in the forex reserves can be attributed to large inflows coming through the portfolio investment route and partly as a result of revaluation of non-dollar assets. Indian Rupee against the USD gained by a Rupee over the three-month period .Indian Rupee traded at Rs 46.5 approx in July and Rs 45.5 in September 2010. Whereas, Euro was seen to get weaker against the Indian Rupee, trading between RS 56-58 during July and Rs 60-61 in September.
Table-1.14: Monthly trends in foreign exchange reserves ($ billion) 07-08 April May June July August September October November December January February March 204.1 208.3 213.4 229.3 228.8 247.7 262.4 273.5 275.9 288.3 301.2 309.7 % Change 2.5 2.0 2.4 7.4 -0.2 8.2 5.9 4.2 0.8 4.4 4.4 2.8 08-09 314.5 312.5 312.0 306.1 295.3 286.3 252.8 247.6 255.9 248.6 249.2 251.7 % Change 1.5 -0.6 -0.1 -1.8 -3.5 -3.0 -11.7 -2.0 3.3 -2.8 0.2 1.0 09-10 251.7 262.3 265.1 271.6 276.4 281.2 284.3 288.1 283.4 280.9 278.4 279.1 % Change 0.0 4.2 1.0 2.4 1.8 1.7 1.1 1.3 -1.6 -0.9 -0.9 0.3 Source: Reserve Bank of India 10-11 279.6 273.5 275.7 284.2 % Change 0.2 -2.2 0.8 3.1

Automobile Industry
1. Car sales jump in Sept; Maruti, Hyundai cross new milestones
MOST carmakers, including the top twoMaruti Suzuki and Hyundai Motors, reported their best monthly sales in September and look poised to set new marks in October even as booming vehicle sales revive concerns about increasing traffic congestion in cities. We are heading for a blockbuster year on sales. All urban and rural markets are strong and the momentum is likely to go beyond the festive months of October and November, said Mayank Pareek, managing executive officer of Maruti Suzuki India. The countrys largest carmaker reported sales of 1,08,006 cars (including exports) in September, beating 1,04,971 sales in August. In the domestic market, sales increased 33% to 95,148 cars. Hyundai Motors also posted its highest monthly sales since inception in 1998 at 31,751 cars in the domestic market. Its overall sales, however, declined 4% as exports fell 24.3% to 19,690 units last month, which is partly contributed to shifting export volumes to local market. We have tweaked supplies to domestic market We prefer growth here rather than overseas markets, said Arvind Saxena, director, marketing & sales, at Hyundai Motor. And the industry is building up inventories to maximise supplies in the festive season when automakers expect sales to break new records. Tata Motors sold 23,877 cars in September, a jump of 31% while Ford Motors posted sales of 8,380 cars, a growth of 146% y-o-y. Among the two-wheeler makers, market leader Hero Honda posted sales of 4,33,000 vehicles, a growth of 8%while TVS sold 1,88,005 vehicles in September, up 31% y-o-y. Manufacturers are pushing up volumes at the dealerships in a buildup for the festive season, said Ajay Sethia, auto analyst at financial service company Centrum. Primary sales (factory to dealers) will be high and that will keep the momentum going, although postfestive season could witness lower growth, he added. While car sales in the country have been robust for several months now, growing at more than 30% since April and showing no signs of slowdown, there is a rising concern about traffic congestion in most cities. This is clogging urban infrastructure and, across the country, state governments are trying to discourage use of private cars on weekdays, said Abdul Majid, leader, auto practice, at PwC India. Last month, the Centre for Science and Environment had suggested introduction of hefty road tax and a congestion charge as well as high premium on parking to check growth of private vehicles and overcome the traffic mess in Delhi. There are about 65 lakh vehicles registered in the capital, and an average 1,000 new ones hit its roads every day. And the issue is not limited to metros but traffic snarls is a reality across cities, from Kochi to Gangtok. In its effort to deal with the menace of vehicles parked on roads, the Sikkim transport department recently made it mandatory for car buyers to produce an availability-of-parking-space certificate before they can get their vehicles registered. Urban development minister S Jaipal Reddy in June termed Indian middle-class car crazy as he urged states to impose a congestion tax to discourage people from buying cars. Car is a status symbol in the country and this state of car mania can be done away with only in a subliminal way and not by the government, he had said. But all this is unlikely to impact the sales of cars. One cant stop people from buying cars Car penetration in India is low and public transport is inadequate, so this growth in car sales will continue, said Mr Majid. Even price hikes by manufacturers due to increasing input costs are unlikely to slow demand in the festival season. Tata Motors, which reported a 61% jump in sales of the Nano in September to 5,520 units, on Friday said it is raising prices of some models to counter higher input costs. But analysts said that rising incomes, positive consumer 18

sentiment as well as availability of easy finance and a slew of new and old models to choose from, sales will continue to rise. Economic Times 02.10.10 p.6

2. Automated Powerhouse
IF WE think rationally there wont be many people who actually take their SUVs out to bash some dunes or attempt serious river-crossing expeditions. But still when it comes to buying one they would invariably end up with a machine which would never be let out in its natural habitat. In fact weve always felt that manufacturers should have a variant for their SUVs which looks exactly like a thunderous beast but when on the road behaves in a much practical way. The latest 4x2 Ford Endeavour with an automatic transmission is exactly for those people who want a beastly looking machine but might never ever get down to do the actual stuff an SUV is meant for. Launched about a couple of weeks back we got to try it out and compare it against its own 4x4 brother at one of the most popular tourist destinations of our country: Goa. So lets take out our colourful beachwear and figure out the car. From the point of view of looks and interior space, both cars are similar to the T. It had been a long while since we had touched the automatic transmission on an Endeavour or any other sub-20 lakh SUV. Used to the crisp hum of the Audi and the Merc SUVs, the initial feel of this one was surely marred a bit by its incessant growling nature. But in a bit we were quite used to its mighty rumbles. Out of these two, first we decided to try out the 4x4 version which instantly took us back to a drive we had done on the same machine to Jim Corbett. The machine was all prepped up and ready to hit the Goan highway with ease. Maneuvering through its narrow by lanes we were quite at ease with its massive size and even while reversing and parking it at tight spots was not a problem. But being used to different sizes of SUVs there was nothing new for us. So what we did was place a woman behind its wheels who was neither comfortable with an automatic transmission and nor had ever driven an SUV of this size. Though initially our lab rat was a bit apprehensive but within moments she got so used to the ease of driving this behemoth that we had to literally wrench it out of her hands! After a bit of the highways and the narrow corridors we reached the foothills of a mountainous track from where it seemed as if the Endeavour was back at home ground. From curves to ups and downs it tackles everything with ease. The only problem was in overtaking when the engines growl touched its highest notes but the car itself was pulling us at quite a languid pace. And yeah we still hadnt changed the drive mode to 4x4! Now at the mountain trail we decided to switch to the 4x2 Endeavour which interestingly seemed a bit peppier than its big brother. Not only was the engine noise considerably in check, the car also felt a bit lighter. While descending back to sea level the clouds caught up with us and we used the slippery situation to literally drift this behemoth out of curves but unfortunately due to speed restrictions and low visibility were unable to feel the real power of this engine. Economic Times 03.10.10 p.10


3. Now, Nano direct from showroom

CUSTOMERS can finally buy Tata Nano directly from showrooms in select states as Tata Motors moves to end booking system for the worlds cheapest car. Tata Motors started open sales of the Rs 1-lakh car in Maharashtra, West Bengal , Uttar Pradesh and Karnataka on Tuesday, making it possible for people to purchase the car directly from dealers instead of booking it. Customers in these states that have not booked a Nano so far can now purchase the Nano directly from showrooms, the company said in a statement. When it launched the Nano commercially in March 2009, Tata Motors decided to sell the car through a booking mode due to expected huge demand and limited production capacity at Pantnagar in Himachal Pradesh. Tata Motors was forced to move the Nano mother plant to Sanand in Gujarat from Singur in West Bengal following agitations over a land row. The Sanand plant started commercial production in June, helping the company speed up delivery and meet most of the initial bookings done last year. The countrys largest automaker had started open sales of the Nano in Kerala in August when the state celebrated the Onam festival. Tata Motors has tied up with 25 banks including the State Bank of India, HDFC Bank, ICICI Bank and Canara Bank to offer loans for purchasing the Nano, the company said in the statement. Customers will be able to take a closer look at and test drives the Tata Nano across all Tata Motors dealerships and special Nano access points, it said. Last year, Tata Motors had selected 1.55 lakh customers for delivering the car in two phases. It is in the process of delivering the car to the first one lakh customers, which will be completed by the end of this year. The company has been ramping up production at Sanand and intends to reach 20,000 units per month by December. The plant has the capacity to produce 2.5 lakh units which can be ramped up to 3.5 lakh units. Economic Times 06.10.10 p.4

4. BMW launches auto finance arm in India

WORLDS largest luxury carmaker BMW Group has entered into auto finance business in India through its global finance arm, BMW Financial Services, to support its customers and dealers to boost sales volume in the country. The finance entity, which is a wholly-owned subsidiary of the BMW Group, has received the licence to operate as a non-banking finance company (NBFC) from the Reserve Bank of India. BMW Financial Services will be based in Gurgaon and has been set up with an initial investment of $50 million. BMW is locked in a pitched battle with Mercedes for the top slot of luxury car sales in India. Daimler AG, which makes and sells Mercedes cars, has also said it will begin operations of its finance arm Daimler Financial Services in India by 2011. BMW Financial Services will help finance customers looking to buy BMW cars as well as those of few other brands. We would provide tailor-made financial services through our dealers and also cater to other brands from Maruti to Honda, where our dealers have a commercial interest, Sanjiv Shah, the newlyappointed MD & CEO of BMW Financial Services said. BMW Financial Services, which operates in 31 countries besides India and has a 3 million global customer base will have three business verticals in India retail, finance, commercial finance (for the BMW dealerships) and auto insurance solutions. Economic Times 06.10.10 p.4 20

5. Top gear car sales drive up forecast

THE Indian auto industry sharply increased its sales forecast for this fiscal year after reporting more than 30% rise in car sales for the third straight month as launches and easy finance helped keep strong demand intact in September. With more people expected to buy cars and two-wheelers in the festival season, the Society of Indian Automobile Manufacturers (SIAM) on Friday increased its growth forecast for 201011 to 18-20% from its previous forecast of 13%. There is a strong growth momentum and we see the trend continuing, said Pawan Goenka, president of SIAM. Car sales increased 30% in September to 169,082 units with most carmakers including Maruti Suzuki and Hyundai Motors reporting their best monthly sales. Analysts expect the momentum to continue although there is increasing concern about the pace of road building in the country and increasing traffic congestion in cities. Manufacturers will push volumes to the dealerships as a build-up to the festival season and this will keep the momentum going, said Mahantesh Sabarad, auto analyst at Mumbai-based brokerage Fortune Financial. SIAM expects passenger car sales to grow 21% this financial year to 2.4 million units from 1.95 million. Two-wheeler manufacturers are expected to sell 11 million while trucks and three-wheelers may record 6 lakh and 5 lakh sales, respectively. Economic Times 9.10.10 p.4

Banking/ Credit Services

6. SBI, PNB raise deposit rates for second time in 2 months
INDIAS two largest banks, the State Bank of India (SBI) and Punjab National Bank (PNB), have raised deposit rates for the second time in the past two months. The second round of hike in rates is in response to the increase in policy rates a fortnight ago by the Reserve Bank India (RBI). Both banks have decided not to raise their benchmark rate for loans and floating deposits the base rate, which stays at 7.5% and 8%, respectively. IDBI and Axis Bank have, however, decided to raise their base rates. IDBI has hiked its base rate by 50 basis points to 8.5% while Axis Bank has raised its base rate to 7.75%. The base rate, which replaces the prime lending rates, has come into effect from July 1, 2010. Most banks are set to review their base rate in the first week of October since RBI has said banks should review it once a quarter. SBI will offer 7.75% for its special 1,000-day scheme which was introduced mid-August against 7.72% earlier. On its other special deposits scheme 555 days scheme the bank has raised rates by 50 bps to 7.50%. SBIs move to raise rates comes at a time when its share in deposit market has dipped from 24.1% in March 2009 to 22.5% in March 2010. This is the second rate hike by SBI and PNB this calendar year while RBI has raised repo rates (the rate at which RBI lends to banks) four times from 4.75% to 6%. The hike in rates has been steepest in the 91 to 180-day slab from 4.75% to 5.50%. If SBI deposits rates that were offered two months ago are compared, rates have risen by 150 basis points from 6% for deposits up to two years to 7.75%, which is now being offered in special 1,000 day scheme. Following the hike in deposit rates, SBI floating rate deposits scheme where interest rates are linked to base rate may lose some shine. SBI floating rate deposit scheme was launched mid-August and it offered slightly higher rate than fixed deposit rates. Following SBIs 21

decision not to revise the base rate, floating rate on these scheme remains unchanged and now both rates would be at par. For instance, in floating scheme, SBI pays 7% for one year (base rate minus 50 bps) and under fixed rate, it pays 7% for one year to 554 days against 6.75% earlier. Meanwhile, PNB has raised rates by 25 bps on slab starting form 91 to 179 days by offering 5.5% for 179 days and 8% for 10 years. For 1-2-year slab, banks are paying 7.25% against 7%. IDBI has also raised deposit rates by 25 to 50 bps across all maturities. Economic Times 01.10.10 p.17

7. RBI holds the key to banking licence vault

THE LAST time a new bank was set up in India was eight years ago. Much has happened in the Indian economy since then. So when the Reserve Bank of Indias deputy governor Usha Thorat meets bankers and industry representatives this week to discuss the issue of new bank licenses, interests will be high, to say the least. This will be the first meeting between RBI and industry since the apex bank came out with the draft guidelines on new banking licences in August this year. In a discussion paper titled Entry of new banks in the private sector RBI acknowledged the necessity of large capital investment, but also put on record its reservations against the entry of promoter-driven corporate houses. It indicated that there is a case for a minimal capital requirement in excess of 300 crore, but added that corporate houses with diversified shareholding should be preferred. Big corporate groups such as Reliance Capital (of ADAG Group), the Tatas, Aditya Birla group and Larsen & Toubro have already evinced interest in the sector, in addition to large non-banking finance companies such as LIC Housing, Shriram Finance, Mahindra Finance, IFCI among others. The stakes are high. In a country of a billion-plus population and growing at 8% (of GDP), six out of every ten people still does not have access to banking services. According to a PricewaterhouseCoopers study only 5% of the 600,000 village habitations in the country have a commercial bank branch and 51.4% of the nearly 89.3 million farm households do not have access to any credit either from institutional or non-institutional sources. Needless to say, RBIs licensing policy will be aimed to facilitate financial inclusion and companies that have substantial exposure to rural areas, namely via farm equipment financing, are likely to be at an obvious advantage. Also, with CASA (current account savings account) deposits being the cheapest sources of funds for banks, the new banking licences represent a tremendous opportunity to access cheap funds, says Sudip Bandyopadhyay, managing director and chief executive officer of Convexity Solutions, who has headed Reliance Money in the past. But foraying the rural markets is fraught with challenges. It will be important for new players to design and develop relevant products for these markets that are currently out of the ambit of banks and NBFCs. The cost of delivery of services too will play a big part. Of course, reducing transactional costs through appropriate technologies will be among the challenges in store for us, says Ramesh Iyer, managing director of Mahindra Financial Services. Companies looking to enter the banking space could broadly be classified into three categories, says Ashvin Parekh, partner national leader, global financial services at Ernst & Young. Category A companies are the ones that meet the criteria broadly and can start preparing for the licence. Category B companies, which fall short on certain parameters, namely capital or experience, are likely to look for foreign partners to plug those loopholes. Category C will be those companies that have set themselves a vision in being part of the sector but fall short of the proposed criteria. The latter are likely to explore taking over an RRB. In his budget speech, the finance minister had said that the government and RBI 22

would collaborate to provide banking facilities to habitations which have a population in excess of 2,000 (as per 2001 census) by March 2012. If that deadline has to be met, the stakeholders will need to act swiftly. Economic Times 03.10.10 p.7

7. IndusInd clocks 71% rise in second quarter net profit

INDUSIND Bank has reported a net profit of . 133 crore for the quarter ended September 2010 a 71% increase in net profit over . 77.8 crore in the corresponding quarter last year. The increase was largely due to a 57% rise in net interest income to . 330 crore from . 209 crore in the corresponding quarter last year. The bank ended the quarter with a 16% capital adequacy ratio (CAR) after following a . 1,172.75cr qualified institutional placement on September 24. The bank issued five-crore shares at a price of . 234.55 per share. The QIP issue resulted in the promoters stake declining from 22% to 20%. The net interest margin of the current quarter was 3.41% against 2.86% in the corresponding quarter of the previous year. We expect our margins to improve further as we go ahead. Our book is balanced in such a manner that it is interest rate agnostic, said IndusInd Bank MD & CEO Romesh Sobti. He said a large chunk of the banks loans, accounting for nearly 42% of all lending, comes from consumer finance business. As on September 30, 2010, total advances were at . 23,452 crore and total deposits were at . 31,290 crore, showing a YoY growth of 33% and 37%, respectively. The CASA (Current Accounts-Savings Accounts) ratio improved to 25.44% against 21.22%. Mr Sobti said while the central bank was expected to raise rates further, IndusInd did not expect a rise in its blended cost of deposits Economic Times 12.10.10 p.15

When Professor Robert Edwards was awarded the Nobel Prize in Medicine for his pioneering work in developing in vitro fertilisation (IVF), Indias first test tube baby Kanupriya Didwania (nee Agarwal) was celebrating her 32nd birthday. Didwania came into the world nine and half weeks after Prof Edwards made possible the worlds first test-tube baby, Louise Brown (July 25, 1978). Late Dr Subhash Mukhopadhyay performed the same feat in Kolkata with Kanupriya Durga (a possible theme for this seasons Pujo pandals!). But while Dr Edwards achievements got him the accolade in his lifetime albeit after 32 years and over 4 million test tube babies across the globeDr Mukhopadhyay wasnt lucky enough. Derided and ridiculed, he took his life. But his pioneering work ensured Didwania would be in good company of thousands of others like her, as the acceptance as well as the need for IVF grew over the years. It is a pleasant coincidence that Didwania, an MBA, is 23

now brand manager for Perfetti India, selling confectionery and gum to childrenmany of them born in the tube. Bourn Hall, the first IVF clinic co-founded by the Nobel laureate, says the IVF business in India is already 300-crore strong, and growing at a rate of 15% year-on-year. Some other industry experts, however, say this is a conservative estimatethe business is already 1,000crores and more. There are more than twenty reputed IVF clinics in New Delhi alone. And each of these clinics is performing 200 to 300 cycles (attempts) a year. So you can easily put the number of annual cycles in the country at about 10,000. It is phenomenal, says Dr Kuldeep Jain, president-elect of the Indian Fertility Society. Jain, who studied IVF in Singapore and has published over 35 papers in national and international journals, adds that the given number of cycles at the prevalent rates of an IVF treatment should put the Indian IVF industry in the vicinity of 1,000 crore. He is, however, quick to add that one must not see such medical procedures in business terms. Economic Times 10.10.10 p.1

Drugs/ Pharmaceuticals
9. Japans Taisho leads race for Paras Pharma
JAPANS Taisho Pharmaceuticals has emerged as the front-runner to buy a majority stake in Paras Pharmaceuticals by offering over six times the annual sales of the Indian drugmaker, an industry executive familiar with the development said. Though discussions with Taisho have not gone to the extent of signing a so-called term sheet agreement, it is now the most likely buyer, unless a competitor outbids it, an executive from a PE firm said, asking not to be named. A term sheet is an agreement which describes the broad structure of a proposed deal, but may not be legally binding. PE investors Actis Advisors and Sequoia Capital India Advisors, which jointly own 70% in privately-held Paras Pharma, have put their stakes on the block. Morgan Stanley is looking for a buyer. Promoter Girish Patel and his family hold the remaining 30% stake. We are interested in entering the Indian market. But it is not true that we have offered to buy the PEs stake, the Taisho Pharmaceuticals spokesman said. He refused to comment any further when asked if Morgan Stanley has approached it to buy the stake of the PE firms or if Taisho is in discussions to buy a stake in Paras. Taisho is among Japans top 10 drug makers, but has no presence in India. It employs over 5,500 globally and had revenues of $3.1 billion for the year ended March 2010. Economic Times 04.10.10 p.1

10. Torrent Pharmas ED Sanjay Dalal quits

SANJAY Dalal, the executive director and chief operating officer of the 1,500-crore Torrent Pharmaceutical, has stepped down. He put in his papers last week. This is the second major change in the top management within a span of five months after Ruchir Modi, marketing & sales head and nephew of the promoters the Mehta brothers was shifted to Torrent Power 24

from the pharma business. Torrent Power is a 6,000-crore company engaged in power generation and distribution in three major cities of Gujarat. Sanjay Dalal, a 10-year veteran with the organisation, quit to take up a new challenge and job profile, industry sources said. In his mid-50s, he was considered second-in-command after Samir Mehta, managing director and whole-time director of Torrent Pharma. Mr Dalal joined Torrent Pharma in September 2000 after a seven-year stint with Arvind Mills as vice-president-finance. In between, he also worked as vice-president-finance in Reliance Industries for a short period of six months (from April 2000 to September 2000). A chartered accountant by profession, Mr Dalal did his B.Com from HL College of Commerce. He also holds a law degree. His expertise lies in corporate finance, treasury & risk management, accounting, audit & control, tax, commercial and general management. Talking to ET, Mr Dalal confirmed that he quit Torrent Pharma but declined to give any specific reason. When asked about his next assignment, he said he was undecided yet. In response to an email query, Torrent Power said Ruchir Modis move from Torrent Pharma was a business need. Mr Modi, who did his engineering in chemical, mining and environment from University of Nottingham, joined Torrent Pharma in January 2002 as head of marketing and sales and worked with the organisation for more than eight years. He was instrumental in increasing drug sales and market share of Torrent Pharma. Torrent Pharmas share price has moved sharply in the last several months. From a 52-week low of 285 in October 2009, it peaked to 606 this month. On Wednesday, the share closed at 580.50. Economic Times 07.10.10 p.27

11. India, EU settle generic drug dispute

India has said it has resolved its dispute with the European Union (EU) over confiscation of Indian generic drugs by European countries such as the Netherlands and France, ending uncertainty among Indian pharmaceutical producers who use Europe as transit point for exporting to Africa and Latin America, report Our Bureau & Agencies from New Delhi & Berlin. Economic Times 08.10.10 p.1

12. Drug seizure issue settled, EU agrees to amend laws

INDIA has resolved the dispute with the European Union over confiscation of Indian generic drugs by countries such as the Netherlands and France, ending uncertainty for Indian pharma firms which use Europe as a transit point for exports to Africa and Latin America. The EU has accepted our position and amended its rules, commerce and industry minister Anand Sharma told reporters on the sidelines of the Ficci-Frauenhofer CEOs Roundtable in Berlin on Thursday. He said India would withdraw the complaint filed at the World Trade Organisation (WTO) against such seizures. We do not want to be in conflict. There has been realisation and we appreciate the steps, which have been taken. They went to the extent of saying that they were misreading the concerned EU notification, the minister said. In the last couple of years, Customs authorities in a number of European countries seized about 17 drug consignments shipped from India en route to various African and Latin American countries. The medicines, which were generics or off-patent in India, were 25

impounded as European companies holding patents for them in their countries had complained to the authorities that they were counterfeit. India claimed that such seizures flouted multilateral trade rules as the medicines were offpatent both in India and the country where they were being exported. Almost half of Indias drugs exports worth 40,000 crore are generics. The Indian industry welcomed the EU decision to amend its customs rules, but said there is need to be cautious. This is good news, but it could be a strategy by the EU as its intellectual property interests are now covered by the anti-counterfeit trade agreement (ACTA) that it is about to implement with 10 other countries, DG Shah, secretary general at Indian Pharmaceutical Alliance (IPA) said. The ACTA being negotiated among 11 countries the EU, the US, Canada, Mexico, Switzerland, New Zealand, Morocco, Japan, Australia, Korea and Singapore proposes to widen the scope of protection and setting up higher standards for enforcement of intellectual property rights. It would extend to import, export and in-transit goods and includes infringement of all IPRs. The proposed legislation provides for seizures, confiscation and destruction of devices. Prathiba Singh, a Delhi-based lawyer who represents Indian drug makers in patent cases against global drug makers, said the government should negotiate to preclude similar actions to seize Indian drugs through any other laws or treaties such as the ACTA before withdrawing its complaint to the WTO. Ficci president Rajan Bharti Mittal said: We are happy that this dispute has now been resolved, not only because a significant part of our over $5-billion pharma exports was at stake, but there was serious concern about a large number of disadvantaged and poor people being deprived of access to affordable generic medicine. In its joint complaint filed against EUs Customs regulations at the WTO, India pointed out that GATT (the WTOs former avatar) had specific rules on goods in transit which did not allow such confiscation. Economic Times 08.10.10 p.9

13. Diabetes drugs post fastest sales growth

SALES growth of diabetes medicines has accelerated the fastest among all drugs sold in the country as pharma companies pushed their products to tap over 50 million people suffering from the lifestyle disease in India, making it the single largest home for diabetics in the world. Oral anti-diabetes segment grew 29.7% for the nine-month period ended August 2010 over the year ago period compared with 22.9% increase in the same period last year. The growth of insulins accelerated about five times to 28%, as per research firm IMS Health Information and Consulting Services India. This was much higher than the 20% growth in the overall Rs 43,000 crore local drug retail markets in the same period that made it one of the fastest growing drug markets in the world. An analysis of the product trend in the insulins market showed that a major component of the growth has resulted from volume increase of existing leading brands. New launches in 2009 have also contributed to this growth, Sameer Savkur, MD at IMS India said. The total anti-diabetes drug market is estimated to be around Rs 2,600 crore, 70% comprising oral medication. Sales of some of the top selling anti-diabetes brands grew much faster than the industry. Sanofi Aventis Lantus ranked 50th among all medicine brands in the highly fragmented local market, grew 57.9%, the highest among the top 50 brands, as per IMS data. Sales of rival 26

MSDs Januvia, ranked 110th among all medicines sold in the country, rose a whopping 111.4%. Abbotts insulin brand Human Mixtard, the fifth largest medicine brand in the country grew 30.9%. In comparison, the countrys top two selling drug brands, Pfizers Corex and Abbotts Phensedyl, both cough syrups, grew 23.5% and 11.3%, respectively, during the nine-month period ended August 2010. Last year also, oral diabetes segment had posted the highest growth across all key segments, marginally ahead of antibiotics segment. But overall growth for diabetes drugs was modest as sales of insulins grew just 5.3%. Sanjiv Navangul, business unit director (chronic care, critical care & disease management) at MSD India said: More diabetic patients are coming for therapy and compliance to medication has increased due to new marketing strategy and awareness. Companies have also penetrated markets in small towns and rural areas, he said. Muralidharan Nair, partner (life sciences) at consultancy firm Ernst & Young estimates about half of the countrys diabetes population is yet to be diagnosed. With global firms such as Abbott, Pfizer, Sanofi Aventis and MSD pushing their drugs to the hitherto neglected smaller towns to tap newer markets, the potential in the segment is immense. Companies are trying to tap the undetected segment of diabetic population, Mr Nair said. Around 4% of the Indian population is suffering from the disease, making it the diabetes capital of the world. The spurt in sales from medicines to treat diseases such as diabetes, cardiovascular, and anti-psychotics is increasing the revenues from the segment also known as chronic segment. The market share of drugs for treatment of chronic diseases has gradually increased, accounting for 27% now, from about 20% a few years ago. In developed markets, chronic segment accounts for two-thirds of the total market reflecting the predominance of lifestyle diseases with economic prosperity. Economic Times 11.10.10 p.5

14. Nirma strategy fails to turn pharma subsidiary around

ITS LOW-PRICE strategy made it a favourite case study across B-Schools. However, Nirmas attempt to replicate the detergent price war in the pharma segment has not yielded similar results. The Ahmedabad-based FMCG major, which has decided to delist from the BSE and NSE for operational freedom, acquired the ailing business of Core Healthcare in 2006, reportedly for 300 crore, to enter the pharma sector. Core, an Ahmedabadbased manufacturer of IV fluids (parenteral), was declared sick. Even after four years, Nirma is yet to bring about a turnaround of the loss-making entity it had renamed Nirlife. The company incurred a loss of 49.21 crore for 2009-10, 43% lower than a loss of 86.75 crore incurred in the previous year. ccording to a pharma analyst who tracks Gujarat companies, Nirma tried to cut prices in IV fluids (parenteral) drug segment, a strategy it adopted to challenge multinationals like HLL and P&G in the detergents space. However, the strategy did not work in a drug segment that often deals with critical care treatment where quality and not price is a premium. According to a former Nirma executive, the lowprice strategy was bound to fail as there are many small companies who can cut prices to match those of the branded products. Also, Big Pharma with its strong marketing network has an upper hand in pricing. Apart from pharma, the billion-dollar company by revenues and the seventh largest soda-ash maker in the world, diversified into real estate, cement and packaging.


There was a lot of expectation from Nirma when it took over Core Parenterals. But we did not see an aggressive push, says the marketing head of an Ahmedabad-based pharma company. The net loss stood at 173.12 crore in the first year after the Core Healthcare acquisition. The following year, it saw a minuscule net profit of 6.71 crore, but in 2008-09, the company again incurred a loss of 86.75 crore. The trend is yet be reversed. Nirma does not respond to media queries, but its FY09-10 annual report mentioned that its pharma business continued to be impacted by rising raw material prices and stiff competition. The report highlighted increase in gross sales to 230 crore up from 160 crore in the previous year. In 2007-08, Nirma undertook installing a formation facility to manufacture a complete range of pharma formulation in injectibles, syrups, ointments etc. The company saw a rise in its total revenue in 2007-08 to 127.16 crore from 53.79 crore in 2006-07. Similarly, the revenues rose from 156.36 crore in 2008-09 to 225.10 crore in 2009-10. However, despite rising revenues, losses continued. Core Healthcare was incorporated as public limited company in 1986 in the name of Core Parenterals by Sushil Handa and Sunil Handa, as a multiproduct healthcare company producing IV fluids, medical disposables, injectables, orals and formulations. The name of the company was changed to Core Healthcare in 1994. Economic Times 12.10.10 p.5

15. GSK to raise elephantiasis drug output at Nasik unit

BRITISH drugmaker Glaxo-SmithKline (GSK) will increase its capacity to make a medicine for treatment of elephantiasis at its manufacturing facility in Nasik (India) besides its South African plant, a top company executive said. GSK makes albendazole, a medicine used by 120 million people across the world, at its production units in Nasik and Cape Town. The two units together have the capacity to make 600 million units of the drug, all of which is donated by the company to global health organisations. The firm now intends to increase the capacity to make albendazole to 1 billion units. Shipments of the new donations are expected to start in late 2011, Andrew Witty, CEO at GSK said. The cost of making these drugs will cost GSK about 12 million ( 85 crore) a year. The companys plant in Nasik to make 300 units of the medicine annually was inaugurated in March this year. This plant is operated by GSKs public listed Indian subsidiary GSK Pharmaceuticals. The additional global capacity to make the medicine will support the World Health Organisation (WHO) project to eliminate the elephantiasis-causing infection lymphatic filariasis through universal coverage. Lymphatic filariasis, often called elephantiasis, is a parasitic infection that causes disfigurement and painful swelling of limbs, breasts and genitals. It places at risk the lives of about 1.3 billion people in worlds poor countries. Economic Times 15.10.10 p.5


Education and Training

16. Seniors join ISB for modern lessons
FOR a clutch of senior professionals with an average 18 years of work experience life has come full circle. They are back to school, not as teachers, but as students. Sixty-six executives from various sectors have joined ISBs (Indian School of Business, Hyderabad) new programme PGPMax, a part-time course designed for senior executives. For the next 15 months, the first batch of students at PGPMax will trade their current roles in their respective companies to debate over current issues with classmates, spend hours pouring on study material and burn the midnight oil to wrap up last-minute assignments. The idea is to grow beyond their functional areas, and look at larger aspects of modern management. Paramita Sarkar is a case in point. With 19 years of experience in sales, marketing and product development laboratories, Paramita, general manager, Care Chemicals at BASF India, says that though a professional learns a lot on the job, certain important areas are left out because it doesnt fall in his or her vertical. I want to equip myself on issues pertaining to M&As as my company has investment plans in China and in the Asia Pacific region, says Sarkar, who has a BTech in chemical engineering from Jadavpur University in Kolkata. For Imal Fonseka, a Sri Lankan national, it is the need to know how managers in India strategies and work on big brands. We are facing competition from India and other nations in the Asia Pacific, says Fonseka, managing director of Hemas Consumer Brands of Sri Lanka. Gaining local knowledge and meeting those in competition is what I am looking for, adds Fonseka, who comes with 20 years of experience in the FMCG business. The premier B-school decided to start this programme as it found that several business leaders were looking for a leadership course for senior executives. We discovered that several CAs, engineers and other professionals were a few levels below the business head, and wanted to move on to the next level of leadership, says Deepak Chandra, deputy dean. We decided to start this programme to fill the gap, adds Chandra. Peer-to-peer learning is the key unique selling proposition of this programme. Economic Times 01.10.10 p.10

17. IIMC students get into the mind of investors

IIM Calcutta students are now studying psychological concepts to better understand investor behavior and the financial implications of such behavior. In a novel course introduced this year called Behavioral Finance taught by Prof Avanidhar Subrahmanyam, the Goldyne and Irwin Hearsh Chair in Finance from UCLA Anderson School of Management the students, by means of interactive dialogue, learn about different aspects of investor behaviour, the rationale, or lack thereof, behind such behaviour and ways to forecast them. Classical finance assumes all investors to be rational and thus, fails to explain events like market crashes, unprecedented booms or volatility. Behavioural finance, on the other hand, proposes psychology-based theories to explain anomalies in the market.


The course gives the students an insight into the world of irrational investors, and through interactive dialogue, helps students assess what investors would do in various situations, as humans and not as calculators. Nitin Pahwa, a student who took the course, said: The course material comprised a set of recent research papers in the field and the discussions in the class were of immense value. Economic Times 01.10.10 p.10

18. IIMA out to reform placement system

IN 2010, IIM Calcutta reported 1.6 crore as the highest international annual salary offered to one of its students. At IIM Ahmedabad, the average domestic salary this year was 14.94 lakh as against 12.17 lakh in 2009, but well below the 2008 levels of 17.85 lakh. The average salary at IIMKozhikode stood at 14 lakh. The astronomical salaries paid to management passouts is a much-discussed topic and Bschools too, in their rush to establish supremacy, sometimes tweak salary components to arrive at higher figures. Hence a need was being felt to bring in more uniformity and transparency in placement standards. Towards this end, the IIMA has put forth a new system, Indian Placement Reporting Standards, which aims at achieving goals similar to those envisaged in the International Financial Reporting Standards (IFRS). IIMs, private B schools and blue-chip recruiters debated the concept at a recent recruiters conclave in Mumbai. The proposed system would calculate salary figures as per a common formula and placement results would be announced in a pre-decided format. The pan-India standards presented in the conclave also aimed at a fair comparison between B-schools on parameters like salary figures and number of grads picked up by top recruiters. The norms aim to bring in more clarity on say, what actually constitutes a croreplus salary package. According to IIMA director Samir Barua, the norms will include salary structure, amount of CTC (cost to company), bonuses, relocation expenses, other cash expenses and even the noncash part of the salary offered to the students. The conference was attended by over 50 recruiters, including GE, McKinsey & Co, HUL, P&G, Wipro, Standard Chartered, Bank of India, and Monitor Group. While IIM-Bangalore was conspicuous by its absence, other IIMs, including IIM-Calcutta, Indore, Lucknow and Shillong participated along with private B-schools like ISB, SP Jain Institute of Management and Research and Institute of Management Technology, Ghaziabad. In fact, IIMA has introduced its new cohort-based system for both summers as well as final placements from this year itself. The new system, which has replaced the traditional Day Zero process, aims to accommodate the increased number of students and facilitate smooth placement for them IIMAs student strength has gone up from 220 in 2003 to 431 in 2010. According to it, recruiters are grouped together as per sectors, and not as per salaries offered. The process typically goes on during weekends without disrupting classes and allows recruiters more time with a student during interviews. IIMA placement chairperson Saral Mukherjee, who designed the cohort-based system, said there were inaccuracies in the way salary packages were reported. We hit upon an idea to tackle this problem. Through these standards we are looking at figures that are more robust and reliable, Mukherjee said, referring to the blatant misuse of students salary figures by some Bschools in promoting their brand. 30

The format has found favour among most recruiters, and the premier B School hopes to tell its success story to other institutes through recruiters experiences. We prefer the cohort system at IIMA. It was clear that we needed time to discuss with the candidate and evaluate the strengths before hiring any graduate. The Day system did not give enough time and students ended up hurriedly selecting jobs, said Vasudev Murthy S, general manager-consulting operations, Wipro. There was a need for a new system that can give much more time to students and recruiters. We believe that all the top IIMs like Ahmedabad, Bangalore, Calcutta and Lucknow should discuss and find out a common placement system which is similar to the cohort. Apart from reporting standardisation, there is a need for process standardisation, said a top official of a leading global investment bank on condition of anonymity. Economic Times 06.10.10 p.10

19. Spice sprinkles its corporate flavour in Indian academia in 2010

The Spice Group has always looked for tools to explore and exploit opportunities. Amazingly, this time, it is education that the group is taking a plunge into. The group plans to set up a global university at Modipur in Rampur district of Uttar Pradesh by 2012. It will be built on the site of the now defunct Modi Xerox factory and will be a part of the S Foundation. Spice Group, currently, has four major sector-based verticals, namely, telecom through a new holding company - Spice Televentures; entertainment; financial and capital market services; and IT and related technology verticals. Group chairman B.K. Modi said: "The objective of the university is to help propagate "holistic education". The total cost of the project is estimated to be Rs 1,000 crore, of which Rs.100 crore will initially be pumped in to kick start, the project. The university, we expect, will be complete by 2012. The rest of the money will be built as wealth generated from the project itself as internal accruals. This is the same model that is employed by any Indian family run business to begin a university such as the Amity University headquartered in NOIDA and the Lingayat University headquartered in Bangalore. Although the Lingayat University is headed by a trust and not a single family, yet it is run on the same lines. The group feels that there is a huge market and business opportunity in India in the education sector. "In a country whose 50 per cent population is below the age of 25, it makes good business sense to foray into the education sector. We feel there is more scope in this market segment," said Prakash Nanani, group president at Spice Corp., who is in charge of the project. While talking about providing reservation to the children of local people in the university, Modi said: "We already have a school operating here from which brilliant results are showing up. I don't think there's a need to provide reservations to them. However, financial assistance in the form of scholarships will be provided to the deserving candidates." The Group is also planning to set up a Business Process Outsourcing (BPO) unit in Rampur, which will start its operations in the next three months. In case local students do well in the university then the university and the BPO management may consider absorbing these good students in their respective projects. Besides, the latest with the group is its new technology products. In line with its vision to provide cutting edge, technology products and services that enable new age mobility 31

consumers to stay one step ahead of their dreams, Spice Mobility recently announced a new range of devices termed "Connected Spice Life" operating on the open source Android platform, and powered by chipsets from Qualcomm Incorporated, the world leader in 3G and next generation mobile technologies. Three distinctive Connected Spice Life devices have already been unveiled by the company, which follow closely on the heels of a global launch in ASEAN countries. Economic Times 03.10.10 p.14

20. That touch with industry

The Indian School of Business (ISB) recently hosted 'India Fast Growth 25' in partnership with the AllWorld Network and The Indus Entrepreneurs (TiE), Hyderabad. 'India Fast Growth 25', is an annual rating of emerging private companies in India and offers a snapshot of how India is creating new economic values and the constraints faced by entrepreneurs. Through this, the AllWorld aims to recognise and advance all the growth entrepreneurs of the emerging world by 2015, creating a global entrepreneurship industry and next one million jobs. The 25 winning companies were felicitated at the ISB and were also part of a panel discussion on entrepreneurship. The discussion began with a welcome address by Krishna Tanuku, executive director, Wadhwani Centre for Entrepreneurship Development, ISB. A panel discussion followed with Tanuku; Ramu Kallepalli, CEO, TravelSpice.com; Phanindra Sama, CEO, redBus.in; Sameer Mehra, CEO, Suminter India Organics and Vipin Aggarwal, vice president, Nexus Capital as the panellists. The discussion was moderated by Sudhir Syal, editorial head, Starting Up, ET Now. The panel discussed issues likestart up ventures, importance of retaining talent, funding for fast growth, raising capital and market expansion. This was followed by a keynote address by Srini Raju, founder and chairman, Peepul Capital. Discussing the importance of raising capital, Raju said that it is very important for entrepreneurs to project a realistic picture of the company as they approached and signed deals with investors, particularly private equity players. Habiby, co-founder and director, AllWorld, introduced the organisation and spoke about how India Fast Growth 25 was started. She said that the 25 companies created about 7,000 jobs since their establishment and these firms are expected to grow by 50 percent or more in the next six months. Discussing entrepreneurship at the ISB, Tanuku said, "At the ISB we encourage students to seek entrepreneurship as their career choice. The ISB is trying to facilitate a more in-depth understanding of the students to understand the power of entrepreneurship, what it takes to be a successful entrepreneur and eventually becoming a successful enterprise." The other partners that supported India Fast Growth 25 are Entrepreneur Magazine, ET Now, PHD Chamber, TiE Network, Nexus Ventures and Mumbai Angel Network. Economic Times 03.10.10 p.14


Electronics/ Telecommunication
21. DoT turns down RIM solutions
THE BlackBerry security jinx is unlikely to be resolved in a hurry. The telecom department has rejected the interception solution offered by Canadas Research In Motion (RIM) for its secure corporate email service. Whats more, it has spurned RIMs technical solution for decoding all chat communication on the popular BlackBerry Messenger service, which contradicts the home ministrys recent clean chit to the Canadian smartphone makers interception solution for its messaging service. In an internal note, dated September 28, reviewed by ET, the telecom departments security wing claims security agencies have been unable to intercept or monitor secure email communication made through the BlackBerry Enterprise Services (BES) in readable format. RIM maintains that it does not have the encryption keys that can be offered to security agencies for converting secure corporate email into readable format, said a senior DoT official with direct knowledge of the matter. The telecom departments internal note claims law enforcement agencies have failed to intercept chats on the Blackberry Messenger platform, which runs counters to the home ministrys recent position that it is satisfied with the interception solution offered by RIM. The latest development comes at a time when the central government has directed all mobile phone companies to install legal interception gear that can monitor services on every BlackBerry handset. RIM has recently warned DoT secretary K Chandrasekhar that blocking its popular BlackBerry services will not end Indias security concerns but induce the legion of internet offenders to migrate to the innumerable alternate encryption solutions available online. It also comes at a time when the Canadian smartphone maker edges closer to the October 31 deadline for handing over the encryption keys and codes of its corporate mail and messaging services to the Indian security establishment. The stakes are indeed big for the Canadian smartphone maker, especially since India is one of its fastest growing markets. Super secure corporate email has been RIMs USP, which has made the BlackBerry service an instant hit with high-flier executives. Today, India has over a million Black-Berry users, although less than 4 lakh subscribe to corporate email and use BlackBerry Messenger. The home ministry fears that terrorists can use BlackBerry email and messaging services to coordinate and plot attacks as information exchanges on these channels cannot be monitored. The crackdown on all communication services offered through channels that could not be intercepted began after 26/11 when security agencies learnt that Pakistani militants used mobile and satellite phones to coordinate the Mumbai terror strikes. Economic Times 01.10.10 p.7

22. NSN, Ericsson to roll out Vodafones 3G network

SWEDENS Ericsson and Finland-headquartered Nokia Siemens Networks will roll out the 3G network of Vodafone Essar, one of the largest service providers in the country.


Vodafone on Wednesday awarded a three-year contract estimated to be worth $500 million to the gear makers, which are the companys existing equipment vendors. ET had reported this development a month ago. Nokia Siemens Networks will supply, implement and manage Vodafones 3G network in Tamil Nadu, Gujarat, Maharashtra, Uttar Pradesh (East), West Bengal (excluding Kolkata) and Haryana while Ericsson will cover the high-density metros of Mumbai, Delhi and Kolkata. With the implementation of the 3G rollout, more than 113.77 million Vodafone users would be able to avail of high-end services such as video calling, interactive gaming and use highspeed internet on mobile phones by late December. Vodafone Essar, Bharti Airtel, Reliance Communications, Idea Cellular, Aircel and Tata Teleservices, which won 3G airwaves in an auction earlier this year, are placing equipment contracts collectively worth $3 billion. A few weeks ago, Bharti Airtel gave a 3G network rollout contract to Ericsson India, Nokia Siemens Networks and Huawei Technologies, estimated by the industry to be worth $700 million. The two Chinese vendors will also roll out 3G services for Reliance Communications across 13 circles. Earlier this month, Tata Teleservices had said that Huawei would implement the initiation of 3G services for the company in five circles while Nokia Siemens Networks has bagged the contract for the remaining four circles. The combined deal size for Tata is said to be under $300 million. Idea Cellular is said to be in talks with a mix of existing vendors including Nokia-Siemens Networks, Ericsson, Huawei and ZTE for 3G rollouts in 11 circles. Industry insiders peg the contract at $500 million in the first phase. Ericsson foresees 3 billion new mobile broadband subscriptions by 2015, a ten-fold increase over five years, and expects 50 billion connected devices by 2020. Further, it anticipates data traffic to grow 90% annually over the next five years, the company said in a statement Economic Times 14.10.10 p.5

Energy/ Energy Resources

23. IDBI in pact with WRI for energy-saving initiatives
IDBI Bank has tied up with US-based environmental research organisation, World Resources Institute (WRI), for providing consultancy services to its borrowers on energy cost reduction. The cost of implementing the energy-saving initiatives will be funded by IDBI Bank and WRI will guarantee the savings. Under the agreement, if a companys energy bills dont decline during the stipulated period and if the company does not repay the loan, IDBI can invoke the WRI guarantee. Energy cost is as much as 25% of the cost of production. Besides cost reduction, the move is aimed at the ecosystem protection. The tie-up is for micro, small and medium enterprises (MSME) segment and we expect forging units, textile, steel sector and the hotel industry to benefit from this tieup, said TR Bajalia, executive director and head of MSME at IDBI Bank. They (WRI) will find out where and how the energy could be saved and suggest it to companies. By reducing the energy cost, they (companies) will be able to repay the loan and improve their profitability, he added. 34

A statement issued by IDBI said WRI has more than 400 partners in 50 countries. WRI has a similar agreement with Axis Bank, officials from IDBI Bank said. IDBI has an exposure of 21,000 crore to MSME, and of this, 10,000 crore is for SME segment. It gross non-performing assets in MSME is 2.4% of the portfolio. Meanwhile, IDBI Bank has introduced the facility of online application form on its website from the MSME sector. It has also put in place a web-based application for MSME borrowers, which will help them track the status of their applications submitted to the bank online. The system is aimed at bringing transparency in the processing of loan applications and enables a borrower to know at which stage the loan application is being processed. Economic Times 06.10.10 p.17

24. Govt auditor alleges harassment by RCOM

AJAIPUR-based auditor that had examined the books of Reliance Communications, or RCOM, as part of a government-ordered investigation has sought protection from the telecom ministry, alleging a campaign of harassment by the Anil Ambani Group company. The auditor, Parakh & Co, wrote on October 1 to telecom minister A Raja and several senior officials of his ministry, saying it had received a notice from the anti-extortion cell, crime branch, Navi Mumbai, asking for documents and records relating to the RCOM audit. The police was acting after a criminal complaint from RCOM, the audit firm added. The auditor has told DoT that it had examined RCOMs books on the departments directions as part of its professional commitment. In doing our duties as directed by the government, we have unwillingly become victim of personal stigmatisation by a big industrial house, its communication added. ET has seen a copy of the audit firms communication to Mr Raja. The letter claimed that the firm had been at the receiving end of a barrage of allegations from RCOM and the police notice was the last straw. A spokesman for RCOM said the company was merely following through on a statement made by chairman Anil Ambani while addressing the media and analysts on October 15, 2009. Mr Ambani had said at the time that the company was taking all steps to counter what he described as a vicious and mala fide campaign of falsehoods and disinformation conducted against the group. These steps included lodging a formal complaint with Sebi to probe the hammering of group stocks, as well as lodging a formal complaint with the cyber crime police authorities to investigate the dissemination of false and malicious emails against the group from bogus IDs. Economic Times 09.10.10 p.1

25. Suzlon Energy gets board nod for 5,000-crore issue

THE board of Suzlon Energy has passed an enabling resolution to raise up to 5,000 crore through a share issue, the company said in a regulatory filing. Indias largest turbine company said it would seek shareholders approval to raise funds through issue of equity shares, American depository receipts, global depository receipts, nonconvertible debentures, convertible debentures, foreign currency convertible bond, or qualified institutional placement. 35

In a parallel development, Suzlon Energy has offered a 1.8% stake to IDFC Private Equity in exchange for the private equity investors holding in its subsidiary, SE Forge, which would lead to a notional loss of over 200 crore for the fund. In October 2008, IDFC PE had bought 17.1% stake in SE Forge for 400 crore. Suzlon Energys stake to be transferred to IDFC PE is worth 187.36 crore based on Mondays closing price. Although Suzlon did not detail the timing of the ambitious fund-raising, analysts believe that Suzlon Energy may not raise the total quantum through share sale in one go as it might lead to an equity dilution of almost 50%. On Monday, Suzlon Energy had a market capitalisation of 10,210 crore. Shares of Suzlon Energy closed at 58.55 on the BSE, up 2.1%. The Tanti family, the promoters, hold a 53% stake. Suzlon may raise the fund in tranches for better pricing, said Sanjeev Zarbade, analyst at Kotak Securities. It may induct strategic investors who may be willing to infuse capital and help the company service its debt. Earlier this year, Suzlon Energy completed refinancing and consolidation of its debt facilities to make its capital structure more sustainable. It repaid and refinanced loans aggregating $780 million in December 2009. Subsequently, the company completed the refinancing of its existing rupee-denominated term loans and working capital loans aggregating to 10,624 crore. Economic Times 12.10.10 p.5

Global/ Indian Economy

26. GDP growth figure to rise on new-look WPI
INDIAS economic growth numbers for the fiscal first quarter could be re-stated to 9% due to recent changes to inflation calculations, giving a statistical boost to the economy at a time when several independent forecasters are already raising their forecasts. The new series of wholesale price index (WPI) with 2004-05 base year, released last month, had shaved off 1.3 percentage points from the inflation figure for August calculated on the older WPI series. The lower inflation in the new series could boost the first quarter growth to 9% from 8.8%, estimated on the basis of the older series, other things being equal, said a person closely associated with the preparation of national accounts. National accounts use deflators to neutralise the impact of increase in prices on GDP growth and arrive at the growth in output of goods and services in constant prices. The deflator is calculated using various measures of price increases such as the WPI, which means the decline in WPI due to the change in base, would have an impact on the derived number. In the case of certain services such as banking, the WPI is used as a deflator in the absence of an appropriate index. The current Q1 estimates were arrived at using a deflator constructed with the older WPI data, said a Central Statistical Organisation (CSO) official, confirming the growth number will be revised. If the new deflator is used for changing all the previous figures, then there is a possibility that it would not cause any major change in the growth estimates, said Sonal Varma, vicepresident and economist at Nomura. Economic Times 02.10.10 p.1 36

27. Global economy showing signs of better times ahead

In the world today, boundaries are blurred when it comes to business and investments. Over the last few years, it has been seen that the markets are more influenced by global factors than by domestic factors. The current bullishness and support in the domestic markets is mainly due to the huge inflows from global investors. The world economy is still going through a period of recession. However, the situation has been improving over the last few quarters, but there are still many concerns waiting to be addressed before a complete economic recovery can be declared. Some analysts believe the world economy might fall back into a recession again if these factors are not managed carefully. Here is an outlook on some of the major economies across the world: US The US is the largest economy in the world. It has come out of the 2008 recession after massive stimulus spending from the government. However, sustainability of growth is the question as new job creations is much lesser than expected. There are discussions on extending the soft monetary policy measures in order to provide support to economic activity. Since the US is the biggest consumer of products and services from across the world, its slow growth will have a major impact on economic growth across the world. Euro region In the Euro region, the German economy is better positioned than its peers. The changes in employment regulations and tax incentives to companies to promote the creation of new jobs, as well as hold on job cuts, have helped in maintaining low unemployment rates. Also, the depreciation of Euro against major currencies has helped a pick-up in exports. In a nutshell, analysts believe the German economy is on the path to complete recovery from the slowdown in the coming quarters. On the other hand, the situation is far from stable in some troubled European countries. There are serious issues mainly due to hikes in taxes and spending cuts by governments to control the finances. Ireland, Greece and Portugal are some of the countries that are struggling to reduce their huge public debts and fiscal deficits. The interest yield on their sovereign bonds has gone up significantly as investors are worried about funding their debts. Picture in some troubled European countries is still not stable and may haunt market sentiments in the short to medium terms. UK The UK economy is yet to feel positive signals. However, the latest economic survey by the Bank of England has suggested some modest easing in conditions. The unemployment rate is still ruling high but the increase in availability of credit to corporates is a good sign for the economy. The Bank of England is maintaining a soft monetary policy regime in the country.


Japan Japan is struggling to come out of the prevailing deflation in the economy. On the other hand, the currency is appreciating against major world currencies. The yen is trading close to a 15year high against the dollar. The Bank of Japan has finalised a large economic stimulus package to provide a boost to the economy and create new jobs. China The Chinese economy is the fastest-growing one in the world. However, the authorities have adopted monetary tightening measures to prevent any bubble formation and contain the inflation rate. The recent manufacturing numbers show that the tightening measures are working well. They are achieving the goal of gradually slowing the economy down a bit and controlling inflation. Analysts believe the Chinese economy will grow at around 8-10 percent in the coming years. Impact on domestic markets The domestic economy has completely recovered from the slowdown phase. However, the market direction is dependent to a large extent on the activity of foreign institutional investors (FIIs). FIIs are bullish on the domestic markets as the economy is quite strongly placed, domestic companies are doing well, and there are limited investment options elsewhere in the world. The domestic markets are in a bullish momentum and can scale new highs in the short to medium terms. However, investors should be cautious in the markets as the valuations are quite stretched and the allocations of FII funds can change based on developments in the global economy. Economic Times 03.10.10 p.13

Human Resource Development

28. A leave for every season
Many Organisations Are Introducing New Forms of Leave Like Parental, Paternal, Bereavement and Such, To Help Employees Maintain a Work-Life Balance Which They Hope Will Boost Productivity ONCE upon a time, there was casual leave, sick leave, privilege leave and earned leave: pretty much the annual quota of leaves in every organisation. But as India Inc evolved, newer varieties set in. Like bereavement leave, stint-oriented leave, parental leave, sharing of leaves amon employees, leave for reward and recognition, study leave and, of course, paternal leave. In fact, the anticipated trouble following the Ayodhya verdict may have thrown up a new kind of emergency leave, with most IT offices allowing employees to go home early, or declaring a half-day at work. Some of the countrys leading business houses and companies are now innovating on their paid leave component as a way to improve employee work-life balance in the belief that it will 38

boost productivity. Employees are not complaining either, for even as they work hard, there are now many more opportunities to take a day off with the reason that suits best! Leave has taken on a different connotation, a way to provide a level of comfort to employees, says veteran HR professional and Max Group director (human capital) P Dwarkanath. The Max Group, for instance, has conceptualised self-development leave of up to one month for employees to attend short-term courses and reward recognition leave whereby they are sent on a fully-reimbursed holiday along with family. It is also reviewing possibilities to allow accumulation of sick leaves to make its leave policy more employee-friendly. Accenture has recently launched Hours That Help, that provides employees an opportunity to receive additional or extra leave from fellow employees during a medical crisis or emergency. As part of this, employees can voluntarily donate their leave to fellow employees who require availing such leave beyond their stipulated ones. Accenture has created an internal system whereby all employees will receive a notification when an employee in crisis requires additional leave. Economic Times 01.10.10 p.10

29. Beat the stress before it beats you down

WE ALL know that some stress, especially at the workplace, is worth experiencing, because it presents fresh challenges and excitement to help raise the bar for your performance. In fact, work-related stress has been found to enhance performance and productivity. However, a continuous overload of these stressful cues eventually bears on our mental and physical health; signs of which are visible to ourselves and people around us. Before it begins to gradually overwhelm our lives, relationships and work performance, we need to beat the stress and stay ahead of it. After a whole week of rushing through the deadlines, meetings, presentations, targets, surviving office competition and politics, the arrival of a weekend must be a blissful window to recharge yourself with fresh energy and enthusiasm, to take on the madness of the Monday thereafter. While the chores pending at home do need your attention-time, you still feel like planning somethingsome activity or no activity at all so that you take away all the stress bundled-up throughout the week. Here are a few things you could look at doing on your weekends. Get that sleep If we were to take a spot survey about what one would like to do most at the weekends, perhaps sleeping as much as possible would be the most frequent reply. And why not! Although scientists out there are still debating on the reasons, we all need to sleep. That too, a good, quality slumber, that makes us wake up fresh, energized again. There is no better healing process than a deep slumber. According to Dr Atul Malhotra, a sleep expert at Harvard, each one of us, without exception, requires 7-8 hours of sleep everyday. And if we are not, then we are depriving ourselves of adequate sleep. This may eventually lead to emotional or behavioral aberrations. In fact, missing one days sleep impairs your capacity to drive as much as the presence of legally intoxicating level of alcohol in your blood. People with chronic lack of sleep have been found to have a higher risk for developing diabetes, obesity and high blood pressure. 39

While some people, despite high levels of stress, are able to sleep like a baby, many are not. And these are the people who are not able to cope with the stress and frequently take to sleeping pills. Those who keep erratic hours during weekdays should at least ensure proper sleep on the weekends. With a 5-day workweek, three nights of full-sleep can definitely be achieved on the weekends. For getting a good sleep are: 1) Avoid caffeine drinks after lunch such as coffee, tea, colas and chocolate; 2) Do not watch TV or work on PC immediately before sleeping time; 3) Allow yourself to relax for 15-30 minutes before going to bed; experts advise not to study or work right before bedtime; 4) Do not exercise heavily just before hitting the sack and; 5) Keep your room dark and quiet. Avoid 24X7 schedule: You are not a tv channel We tend to carry work home, make initial drafts of a memo, few power-point slides just to begin things, check mails and reply to them. We do it with the belief that we are being competitive and are cutting down workload for the week ahead. But actually you are compounding your stress. Weekend is the time for your own self, family and friends. Invest time in your people around you. This will take away a lot of routine worries and tensions. Be a slot bear State of doing nothing can also be a great sense of being. Try it! Just take it easy and see what it would take you to keep away from thoughts that you perceive as stressful. Reading a book, watching a movie, cooking something, tending to plants or some house-work, painting, music, anything that keeps you happy and content is worth it. Yoga and Travel Two-three sessions of yoga at the weekend will help elevate your mood. Try to do it amidst greens, along with other people. Spending half an hour in green areas, a park etc. has been found to be effective to beat even depression. A quick weekend getaway might just be the break you need to unwind. Pick up a luxury hotel with recreational facilities and try to keep your mobile phone switched off for at least eight hours a day. Consider a spa session, never mind the expenses. Keep in mind you are earning primarily for yourself. Remember that problems in our day-to-day work and life routine are part of our lives. But when we begin to respond to these problems or pressures in a way that it causes an emotional or physical strain, it is called stress in medical terms. World Health Organization considers stress as a Worldwide Epidemic and United Nations calls it a 20th Century Disease. Do not postpone your fight against stress. Deal with it as you would deal with a symptomatic disease like Dengue, before it is too late. Economic Times 03.10.10 p.11

30. Mentee As Mentor

WHEN Nokia India began working on its transformation from a pure device manufacturer to a solutions provider, it realised that HR would play a critical role in this process. That, it felt, 40

would lead to new methods of training development and resource allocation. Reverse mentoring was one such initiative. So, last year, the company introduced the concept with 30-32 people. It identified 8-9 domain specialists to coach seniors to make them more comfortable with the existing services and intended future ones. It was a big success. The concept has helped the company gain fresh perspective of new areas like social media, value-added services and the youth consumer segment, says Anu Pires, head of HR, Nokia. It has also helped create a flatter, networked organisation with a greater learning experience for both parties involved. Introduced by GEs legendary CEO Jack Welch, reverse mentoring is a concept that turns the traditional top-down, senior-tojunior relationship on its head. Instead of a more senior person, by age, position or experience, mentoring a junior, reverse mentoring places the more junior person as the mentor. In India, it has slowly but surely been gaining ground across corporates, with the likes of Nokia, Bharti Airtel and Essar Group driving the trend. Bharti Airtel introduced reverse mentoring when it realised that to tap into the countrys huge youth market, it had to do something to understand what the future generation wants. Accordingly, young mentors were roped in to work with the companys leadership team. At Essar, the group uses this tool to ensure that its senior leaders adopt the latest technologies like SAP and ERP at a much faster pace by learning it from the techsavvy juniors. Essar says that by using reverse mentoring, it has seen higher technology usage and yield among senior managers that also helps in faster decision-making."Every senior leader has a mandate to create a readiness in the organisation for the future. Reverse mentoring helps them get a first-hand view from young colleagues on the possible trends," says Essar Group president-HR Adil Malia. Analysts are gung-ho too. "It is a very powerful concept. It comes from the core idea that to be a great leader, one also needs to have a devoted set of followers. It helps in creating that bonding among juniors and seniors," says NS Rajan, partner, national head and EMEIA leader, people and organisation, Ernst & Young. Rajan feels that now when consumer goods and service companies are looking at ways to reach out to Generation Y customers, the best way the senior management can pick up strategies is from its Gen Y employees to see how they think, respond and relate. Its a belief echoed by the Max Group, which encourages reverse mentoring across businesses, even though it does not have a dedicated policy per se. While the concept is more popular in technology firms and those which are shifting strategically into newer sectors, even other companies in sectors as wideranging as auto manufacturing, energy and IT products are now adopting reverse mentoring within their organisations. At Bharti Axa for instance, from January, the insurance firm is planning to kick off a buddy and coach initiative across the organisation. New employees at the middle and senior manager levels will be mentored by their juniors. "We expect this policy to ensure faster induction for senior talent. It will also ensure that the seniors get to know their down-the-line people much better, which will improve processes," says Priya Ranjan, HR director, Bharti Axa Life Insurance Company. Bimal Rath, founder of HR consulting company Think Talent Services says, "Reverse mentoring helps in three ways: seniors become familiar with new-age thinking and tools/technologies; improved flow of ideas and communication between senior managers and relatively junior employees in the company, and better opportunity for innovation." 41

Agrees Nokia Indias head of services marketing and devices OPM, Jasmeet Gandhi, who mentored the companys MD Shivakumar. "Its not a one-time effort. The platform needs to keep evolving," says Gandhi. R Suresh of Stanton Chase International, India office, adds:"Keeping in mind the larger objective of performance/leadership management, there is a bias towards funding out the views of juniors as part of a system that needs 360 degrees guidance and views. Economic Times 08.10.10 p.8

Hotel/ Hospitality Management

31. Medium sized hospitality groups such as Confident, Sayaji, to be hit highest by attrition from 2010
If you have a favourite restaurant in New Delhi or Mumbai, chances are that you have looked at a new head waiter every time you go to visit the place. This creates a problem for creatures of habit who like to enjoy the sun streaming in from the window and having the facility of not having to order specifically every time as the head waiter knows your "usual." Alas, that is not to be. We have a steady stream of people leaving their jobs in hospitality to explore jobs in the United Kingdom, Dubai, Abu Dhabi, Canada or Thailand. The hospitality industry is seeing a surge in the northern region with all major groups setting their foot here. But rising attrition rates are posing a major threat to the hotel groups. Even though there has been an increase of over 15-20 per cent in packages being offered to the youngsters here, they seem to be testing foreign waters for more lucrative opportunities. untries like the US, UK, Canada, Dubai, Australia etc are being explored by the aspiring youth to start a career in hospitality industry. A study conducted by an industry chamber located in New Delhi reveals that the attrition rate in the hospitality industry in India is set to double to nearly 50 per cent by 2010, up from the earlier 25 per cent growing at an alarming rate of 10 per cent per annum. A hospitality professional once said that the source of recruiting new people for us is the hotel management and catering training institutes. Many people join us at levels of operational trainees, front and back office management, in kitchen or service but not many stay back. They move on either to some other country or industries like BPO, Banking, Call centers etc. Moreover, they explore better opportunities in the West Asia and Europe as well. As per estimates about 80 per cent of people prefer going to UK and Dubai to join the food and retail industry. Since Radisson Hotel was amongst the frontrunners to set foot in Punjab, we have seen youngsters treating it as a training ground and later shifting base. The attrition rate here is also growing between five-10 per cent per annum. The industry is losing its professionals at the top management level. Supporting this view, the Federation of Hotel & Restaurant Association of India (FHRAI) has gone on record saying that the industry leaders are worried about losing qualified trained professionals to outer shores. But owing to the development in the hospitality sector, the hotel management institutes in India have mushroomed from just 18 to over 280 at this time. The private sector and the government should make efforts to retain people in this industry. Some incentives, better perks etc, could be introduced through a policy to support retaining of talent in the private sector. 42

Since our housekeeping, front office, bell desk etc, are performing at par with the international levels. Most of us claim that high attrition rates are a serious issue in the hospitality industry. Economic Times 03.10.10 p.1

32. Umesh Modi group enters liquor biz

THE Umesh Modi Group, which owns Modi Sugar and has interest in consumer and specialty goods, has signed a joint venture with Italian spirits maker Illva Saronno to enter the Indian spirits market. The 50:50 venture, christened Modi Illva, will first launch Illvas luxury vodka brand, Artic, in the Indian market, said Mr Umesh Modi, chairman of the Umesh Modi group. We want to be in the premium liquor segment in India. We will build up our portfolio through Illva and we will also tie up with other brands to market their products here, said Mr Modi. The focus will be the premium segment, he added. Modi Illva is already in talks with other international liquor brands for marketing tie-ups. The joint venture plans to bring in Illvas entire portfolio including Disaronno, Tia Maria, Isolabella and Sambuca in India over the next three years. Illva Saronno also markets Wine brands including Vini Corvo, Cantine Florio and Duca di Salaparuta. The Umesh Modi Group, which owns and markets prominent brands such as Betadine and Modi Revlon in India, is targeting $100 million turnover for its liquor marketing business. Mr Modi said the company aims to capture a 10% market share of the vodka market in next three years, which is growing at 30% annually. Currently 90% of the vodka sold in the Indian market is regular vodka and rest 10% is premium vodka. The Umesh Modi group will also manufacture and produce the luxury range of vodka at its plant at Modi Nagar in Uttar Pradesh. This is the first time an international spirit will be manufactured locally, usually it is imported. But, we will use Illvas technical expertise, Mr Modi said. Economic Times 06.10.10 p.4

33. Top hotels in US, UK & China sprucing up in a downturn

THE hotel industry in the United States, still in the doldrums from the slowdown in leisure and business travel, is generally not taking on many major redesigns or other big projects. But there are exceptions. Starwood Hotels and Resorts Worldwide is planning guest room redesigns for its Sheraton and Westin brands. And some top business travel hotels are undergoing total or major refurbishments in cities like New York and Los Angeles, as well as London and Shanghai. Holiday Inn, a brand of the InterContinental Hotels Group, meanwhile, says it will complete its systemwide, top-to-bottom upgrading of all its hotels by December. Starwoods redesign plans will affect just 30 Sheratons and 11 Westins out of a total of 576 hotels worldwide next year, at an estimated cost of over $100 million. Industry experts predicted that these and other refurbishments would continue to be unusual, perhaps for years. Hotels mostly are franchised or managed, not owned, by companies like 43

Starwood and Marriott, though the companies set standards for decor and service that hotel owners must maintain. The owners, not management companies, must pay for upkeep. Bjorn Hanson, divisional dean of the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University, estimated that capital spending at existing hotels in the United States climbed to a record high of $5.5 billion in 2008. But he estimated that spending fell to $3.3 billion last year and would drop further, to $2.7 billion, in 2010. The decline in hotels overall upkeep is starting to become evident to guests, he said, from scuffed wall coverings in hallways to torn drapes and faded, worn and stained carpeting and upholstery. Many hotel owners cannot afford to improve guest rooms or public spaces because of declining room revenue and other income, which may be enough only to pay debt service, said Rick Swig, president of RSBA & Associates, a US consulting firm that advises hotels. The biggest exception is the Holiday Inn brand, including the midscale, full-service Holiday Inn and limited-service Holiday Inn Express hotels. IHG announced a plan for widespread facelift in 2007, before the worst of the economic downturn hit. But it went ahead with the plan. The plan, which is costing $150,000 to $250,000 for each hotel, entails upgraded lobbies, guest rooms and bathrooms, plus a new employee training program Economic Times 13.10.10 p.5

Industry News
34. I am here to improve lives of 1 b Indians
ITS a line he seems to have rehearsed. Ken Chenault looks straight at you, and with a measured pause repeats it in less than an hour. We want to use our capability and resources to improve the lives of one billion Indians. It sounds like a spin from an MNC thats snooping around for new opportunities. Perhaps, it is. But behind the fancy line is the story of how American Express Company, the worlds largest credit card issuer by purchase volume, is changing tack. For years, Amex has sold cards a status symbol to millions to the wellheeled who dont need credit. Today, Amex is looking at customers below that top-end market it has been always associated with. But its a business that will be done differently. The new market will be tapped with new brands and new partners that will receive faceless backroom support from Amex. In India the companys largest employment base outside the US and one of its fastestgrowing markets Amex is eyeing acquisitions, it has set aside substantial resources, recently received the central banks permission for a prepaid card and is looking at having a mobile payment solution. Sanjay Rishi, who was heading Amexs corporate card business in the US, is now in India to spearhead the new strategy. In a rare interview, chairman & CEO Kenneth I Chenault shares with Mayur Shetty & Sugata Ghosh Amexs next big move. I think what is important is to separate the brand from the imagery of the brand, he says. One of the few African-American CEOs in the Fortune 500 list, the tall, well-built Chenault, who was a lawyer before he turned a banker, personifies the return of optimism in the US. What I dont do is dwell on what are the obstacles. I focus on how to overcome the obstacles, he says when asked whether Corporate America was anytime unfair to him. Economic Times 04.10.10 p.1 44


STARTING SMALL, AIMING HIGH Coming from a very closeknit middle-class family from Banda, Uttar Pradesh, having spent his childhood in Nowgong in Madhya Pradesh and subsequently finishing his post graduation from Symbiosis Institute of Telecom Management, Pune, Vinay Agarwal, founder and managing director, Unicel Technologies is a true success story of a small town entrepreneur making it big. Fresh out of college, I joined Aircel and I believe that's where the seed of entrepreneurship was sown in my mind, shares Agarwal, adding, Unicel is into the business of providing enterprise mobility solutions on the VAS platform. In 2003, I finally took the plunge as an entrepreneur and established Unicel. Started with a humble capital of 10 lakhs, most of it saved up and borrowed from family and friends, Unicel began operations from my flat in Chennai and later moved to a quaint garage in Bangalore. But the journey is never that easy and Agarwal agrees. Coming from a conservative town with virtually no backing and an unknown reputation, we had to squeeze an unbelievable amount of effort out of ourselves to even get people to give us a chance. I was sure that we could deliver what we promised, but before that, we had to ensure enterprises placed their belief in us. Slowly, but surely, our perseverance began to pay off and that just inspired us more, he expresses. According to Agarwal, hailing from a small town does have its share of advantages. First and foremost, a small-town entrepreneur is extremely revenue-focused - not willing to compromise on sustenance. Secondly, even as we were working out of a garage, I had set my eyes at something much higher. We stick to the basics - no hype, no faade. Thirdly, my humble upbringing helped me relate to my customers at the most basic level, down to the smallest detail. Finally, I think a small-town entrepreneur's biggest strength is his/her rocksolid family relationships. When you're looking at making sacrifices and taking risks to grow as an entrepreneur, you need stability back home, he asserts. Economic Times 05.10.10 p.6

36. THE TOP10 OF 10

THE Great Recession has been followed by a rapid recovery in most of the emerging countries, with India very much in the vanguard. Leaders of Western businesses, long used to their roles as dispensers of wisdom, sometime react with bemusement to the apparently effortless success of Indian companies and entrepreneurs. How do guys grow at 8% without generating a single bad loan? wondered Stephen Schwarzman, co-founder of Blackstone and chairman of the ET jury, at one stage of the afternoons proceedings. The seemingly inexorable march of the emerging markets was also very much on the minds of the other jury members as they gathered to decide the winners of the 2010 edition of The Economic Times Awards for Corporate Excellence. Unilever president Harish Manwani was extolling the virtues of Brazil to KV Kamath, the chairman of ICICI Bank. Ram Charan, peripatetic CEO coach and yet another jury member, had just flown in from Bangladesh. Yet for all the triumphalism that sometimes creeps into the pronouncements of the leaders of Indias government and industry, most know that the downturn that started in 2008 was a


close-run thing. It demonstrated the virtues of conservative business practices, the ability to deliver quality products and services, and the virtues of a large domestic market. The winners of this years awards are a varied bunch, but most demonstrate some or all of these criteria. The jury chose the CEO of a bank renowned for its conservative lending practices as its Business Leader while a company that is almost synonymous with Indias infrastructure got the nod in the Company of the Year category. A home-grown pharmaceuticals company that sells over-the-counter medicines, generic drugs and vaccines was chosen as the Emerging Company. Sustained recovery would depend on the formation of new companies and the ability to scale them up, thus creating jobs. Also, the ability to win the support of the local community is becoming increasingly crucial. The winner of the Entrepreneur of the Year is a professional who has thrived in the heavily-politicised sugar industry while giving farmers a stake in his company; the Businesswoman of the Year has created one of Indias largest corporate law firms from scratch. Economic Times 07.10.10 p.1

37. 74 business ideas in final power list

The much-awaited final cut-off list comprising 74 entrepreneurs of The Power of Ideas has been announced. These 74 entrepreneurs will now go through an intensive mentoring session at the Indian Institute of Management-Ahmedabad (IIMA) which starts on October 9 and goes on till October 16. The mentoring is designed to help them fine tune their ideas and prepare them for the investor meet. All 74 of the participants in the mentoring programme will have to pitch their complete business plans to a committee of investors at the Centre for Innovation, Incubation and Entrepreneurship at IIM-Ahmedabad. The pitches for seed funding made at CIIE is not the final stage of The Power of Ideas. The final stage will be a round of investor meets to be held after October 20. The event has been great till now. It is much more structured compared to last year. The combination of ET, CIIE and DST has been fruitful, says Vikram Patel who is participating in the event for the second time. Last year, I just had an idea on paper. This year I have a proper business plan. I also learnt what investors are looking for, he added. Economic Times 08.10.10 p.5

38. Industrial growth slumps to 5.6%

INDIAS industrial output growth plummeted to a 14-month low in August, much below analysts estimates, indicating a possible slowdown in growth momentum. The widely-tracked index of industrial production (IIP) for the month rose 5.6%, sharply lower compared with an upwardly revised 15.2% in July, as the volatile index of capital goods contracted by a massive 41%. I am disappointed over the IIP data. It is not up to our expectations, finance minister Pranab Mukherjee said after the data was released on Tuesday. The manufacturing sector, which has the largest weight in the index, grew a mere 5.9% while mining grew 7% and electricity generation just 1%. 46

The index contraction shows that the growth momentum might be fading, said Sunil Sinha, head of research at rating agency Crisil. The lower-than-expected IIP numbers for August could put pressure on the Reserve Bank of Indias (RBI) monetary tightening plans, despite sticky inflation numbers. Economic Times 13.10.10 p.1

39. HAL to play critical role in fifth gen aircraft

HINDUSTAN Aeronautics (HAL) will be playing a critical role in the design and development of the much-vaunted Fifth Generation Fighter Aircraft (FGFA) programme, contrary to expectations, the state-owned defence undertakings chairman and managing director told ET. With the $30-billion agreement scheduled to be signed during Russian president Dimitry Medvedevs visit to India in December, questions had been raised about the companys exact role, considering it will be Indias primary development agency for the programme. We will be part of the team designing the aircrafts fuselage and airframe, and will be manufacturing the same in India as well. While we have had a certain amount of experience designing aircraft, playing a role in the design and development of next generation combat features such as stealth and super cruise will add to our knowledge, HAL chairman and managing director Ashok Nayak said. The concern arises from the fact that the Russians have been developing a single seater prototype, the PAKFA T-50 since 1999, and carried out a test flight earlier this month, its 22nd since its maiden flight in January 2010, with a large degree of success. While the Indian Air Force has indicated its preference for a twin-seater version of the fifth generation aircraft, Mr Nayak indicated that HAL will be playing a role in the further development of the single-seater combat aircraft as well. We will be working on the single-seater combat aircraft to a certain extent. That is because we have to understand the entire design process of the aircraft and then move on to the twinseater version, he said. There is a possibility of the IAF inducting between 250 to 300 FGFA by 2018, comprising of both single-seater and twinseater variants, while the Russians have shown their preference for the former only. We are going along with the single-seater FGFA for the moment, but the IAF want a twin-seater combat aircraft also. However, this is yet to be crystallised, Mr Nayak said. Economic Times 15.10.10 p.5

Information Technology
40. Wipro fraud may not be one-man show
THE multi-crore embezzlement at Wipro may have been carried out by several employees across units, and not just one as was thought earlier, people familiar with the ongoing probe told ET. Last week, Wipro had said it will file its annual report with the US Securities and Exchange Commission for the year ending March 2010 more than a month after the scheduled September 30 deadline, as it awaits the investigation findings. 47

Audit firm Ernst & Young, apart from an internal probe committee led by Narayanan Vaghul, former chairman of ICICI and an independent director with the countrys third-biggest software exporter, will submit their reports to the companys board later this month, according to persons with knowledge of the developments. The embezzlement has been happening over three years it cannot be carried out in isolation. The objective of the investigations is to identify process improvements and even fix accountability, one of the persons told ET, requesting anonymity. He added that it could still be early to draw conclusions, since the investigation is expected to be completed by October end only. The fraud came to light in December last year after a banker to the firm alerted Wipro about an overdraft. An employee working with Wipros controllership division within the finance department had embezzled about $4 million by exploiting the exclusivity of access to the companys banking accounts. Wipro declined to offer any specific comments for the story since the company is in a silent period ahead of its second quarter results later this month. An Ernst & Young spokeswoman did not respond to a query sent by ET on Monday. As reported by ET in February, an employee embezzled crores of rupees over the past three years, sending Indias third-largest software exporter scrambling to tighten internal controls in the finance division where the incident took place. The employee had been working with the company for the past three years in the controllership division within the finance department. The controllership cell is responsible for keeping the companys accounts and also has powers to authorise payments. The employee siphoned the companys money to his personal savings accounts in multiple transactions worth anywhere between 1 lakh and 1.2 crore, and used the money to buy jewellery and to make other investments, including buying land. Apart from investigating how the processes were tweaked to carry out the embezzlement, E&Y along with internal auditors, is examining if there were more departments and people involved. For instance, while the controllership unit is responsible for authorising payments, such requests are processed by Wipros payments processing department, Wividus. However, Wipro CFO Suresh C Senapaty had denied the role of more than one Wipro staffer in this scam. Economic Times 05.10.10 p.5

41. BT revives efforts to exit Tech Mahindra

BRITISH Telecom (BT), one of the original promoters of Tech Mahindra, has re-initiated discussions to sell its stake in the firm and has attracted the interest of private equity firms Providence Equity Partners, UK-headquartered Apax Partners and Goldman Sachs Private Equity Group, said two people with knowledge of the discussions. A sale of the British telecom majors stake in Tech Mahindra would also involve its stake in Satyam Computer Services, now rebranded as Mahindra Satyam. The restating of the financials of Mahindra Satyam clears the way for a stake sale. BT was waiting for a clearer picture to emerge on the financials before proceeding with the sale process, one of the two people quoted earlier told ET. Mahindra Satyam and Tech Mahindra are set to merge at a later date and the management is expected to announce a road map for the merger next month. Tech Mahindra holds 42.66% in Mahindra Satyam and is its promoter. 48

BT may or may not wait until the merger to proceed with the sale process. In any case, the merger is now only a technicality, the person said. BT is said to be expecting a 30% premium over the current market price for its stake, estimating the value of the deal at 3,700 crore. It is the largest shareholder in Tech Mahindra after Mahindra & Mahindra, holding over 30% stake in the software exporter. The Mahindra group has the first right of refusal for the sale of BTs stake in Tech Mahindra but is unlikely to exercise it because it would involve a significant financial outflow. Besides, it is already the single largest stakeholder with over 43% stake, the second person with knowledge of the discussions said. He said both Providence which specialises in telecom, media and IT investments and Apax had already approached the Mahindra group for informal discussions after holding talks with BT, indicating the seriousness of their intent. Any investor coming in would also need the Mahindra groups approval. The Mahindras should be okay with a financial investor as long as there is a level of comfort, he added. Goldman Sachs Private Equity is also learnt to have held discussions with BT, although it has not yet approached the Mahindras. In response to an e-mail from ET, a BT spokesperson replied, BT does not comment on rumour and speculation. BT has operations and investments worldwide which we regularly review. India remains a critical market both for BT and our customers, and we expect to continue developing both the operational network and service presence that we have established over a number of years. An e-mail sent to the Mahindra group did not receive a response till the time of writing. BT has been considering exiting Tech Mahindra for some years now. It had appointed Credit Suisse as advisor to sell its stake in Tech Mahindra in 2008 but postponed its plans following the financial meltdown and dramatic collapse of the stock markets. Since then, though, the market has recovered and more than recouped its losses. Economic Times 05.10.10 p.5

42. IT majors vie for Irda project

INSURANCE watchdog Irda has shortlisted IT biggies Tata Consultancy Services (TCS), Mahindra Satyam, Deloitte, Infosys and Wipro for implementing an enterprise resource planning (ERP) package to deal with its proposed staff expansion. Confirming the development, a senior official of the Insurance Regulatory Development Authority (Irda) handling the project, said: It is for the 150-odd Irda employees. The contract being worked out is for supply, customisation and implementation of the ERP system. It will be used to manage human resources, payroll, selfservice portal, accounting modules, connected hardware/software and providing post-implementation support along with software updates. According to Irda sources the number of staff at the regulators office is likely to rise to about 400 in five years and the ERP solution has to take care of the increase in the number of staff in the future. Based on the scrutiny of the technical proposals submitted by various IT firms and evaluation of the presentations made before the Irda technical committee, five IT firms have been short-listed for the project, the source said. Irda has invited financial bids for the project and final selection will be on the basis of a quality-cum-cost based system in which the technical proposals will be allotted 70% 49

weightage, while the financial proposals will be given a weightage of 30%. The last date for submission of bids is October 11, 2010. The project involves six months of implementation followed by six months of post go-live stabilisation support. The implementation phase ends after six months from the start of the engagement when the new ERP system, along with its components, is moved to production. Following this, theres three months of stabilisation support when both the legacy applications and the new ERP system will run in parallel. This will be followed by three months of steady state maintenance support. Economic Times 05.10.10 p.7

43. IT biggies vroom back on job street

FOR over two million software professionals in India recovering from last years recession blues, when employers trimmed payrolls and froze hiring, theres finally some good news ahead. According to software industry lobby Nasscom, Indias top IT firms, including Tata Consultancy Services, Infosys and Wipro, are set to hire nearly 90,000 this year, compared with only around 20,000 last year. For the first time since the global economic crisis forced IT companies to freeze hiring and shed jobs in December 2008, employment in the sector is now looking up. Recruitment firms and HR honchos at leading IT firms say the sector has witnessed the highest-ever job creation in September, with staff strength growing over 50%, similar to prerecession levels. This is the highest hiring growth recorded in the IT sector since recession. We expect similar momentum till November since companies will be required to complete their annual hiring plan before next year, says E Balaji, director & president, Ma Foi Randstad. He estimates IT hiring to have grown 20-22% during August-September over the same period last year. Till 2008, even a 15% attrition rate was conservative in an industry where some firms struggled to keep it below 20-30%. However, with large customers like JPMorgan, Citibank and GE sending more projects to India and with firms such as IBM and Accenture under pressure to hire more in low-cost locations like India, the war for retaining and hiring talent is back. Economic Times 12.10.10 p.1

44. How a software pro turned satphone star

WHEN Inmarsat Plc, the worlds biggest satcom provider to the maritime industry, wanted to build its own handset at half the $1,000 cost of available phones in March last year, it dialled Bangalore-based Sasken. This communication software services firm is not known for its handsets. Though it has been helping Nokia, Samsung and Motorola design their phones, the company has never taken full ownership of one; and this includes hardware design, testing, building applications and finally earning a royalty fee every time a new unit is sold. With nine satellites, Inmarsat wanted to capture the market for voice calls by developing a low-cost phone. But the challenge was to replicate the features of a normal mobile handset to 50

ensure ease of use at an attractive price to customers. After considering various options, including building its own phone, Inmarsat hit upon Sasken. It was a leap of faith on their part. For us too, because there is no history, says Sasken chairman & CEO Rajiv C Mody. Today, nobody is complaining. Sales of the Sasken-built satphones are rising at a record pace and estimates for the current year have been doubled to over 80,000 units. Inmarsat officials say Sasken has helped open a new market and disrupted the global market for satellite phones. For the first time, they were combining their software capability in Bangalore with their hardware teams in Finland and designing a complete product for us, says Johny Nemes, senior director (handset programme) at Inmarsat. The news must be music to the ears of Sasken shareholders. The company made its stock market debut in September 2005, when it listed at 400 per share, an over 50% premium to the offer price of 260 Economic Times 12.10.10 p.1

45. Tata Tele recasts top deck ahead of 3G service launch

AIMING for a leaner and more efficient management, Tata Teleservices has changed the roles of four top executives, just weeks ahead of rolling out 3G services. An executive familiar with the development told ET that Deepak Gulati, who was president of the companys GSM operations (Tata DoCoMo) and its 3G business, will now be the executive president of the entire mobility division. The companys CDMA business is also part of the mobility business. Mr Gulati has been with the company for over two years. AG Rao, who was heading technology and networks, has been appointed executive president, enterprise and technology division. Formerly the head of marketing, Lloyd Mathais is now president of corporate monitoring, which involves risk management, audit, business process re-engineering, brand development and governance. The president of corporate services, Pankaj Sethi, will now head Tata Teleservices Maharashtra, a listed arm of Tata Teleservices. These changes were effective from October 1. Earlier this year, the managing director of Tata Teleservices Maharashtra was given another post within the Tata Group and the listed entity has been reporting directly to Anil Kumar Sardana, managing director of both companies. The central functions of Tata Teleservices will remain with the management members who were handling it earlier, but their roles were recently formalised to cover all subsidiaries, including Tata Teleservices Maharashtra. This includes Madhav Joshi, president, legal and regulatory affairs, CN Nagakumar, chief human resources officer, SG Murali, chief financial officer, and Koichi Takahara, chief strategy officer. Apart from Mr Takahara, who joined the company after NTT DoCo-Mos interest in Tata Teleservices, the remaining members have been with the India telecom major between five and ten years, the first person said. Tata Teleservices is the first to talk of a launch of 3G services, by Diwali November 5. In May this year, the government auctioned airwaves for these services and collected nearly 51,000 crore from private operators. Economic Times 14.10.10 p.5


46. BS Transcomm plans green power solutions for telecom tower cos
INFRASTRUCTURE and managed services provider, BS Transcomm, plans to provide telecom tower companies with solar and wind power solutions along with its existing fuel management solutions, a person familiar with the companys plans told ET. BS Transcomm will own the natural power equipment, and charge a lease on it, like tower companies do on tower slots. The cost to set up the equipment is about Rs 1 lakh per site, the person said. However, the more important revenue source will be a managed service contract for BS Transcomm for each of the sites, he added. For telecom tower companies, pilferage of diesel at towers is a major worry. The company has an order for 500 such sites which will generate 200crore revenue over 10 years. BS Transcomm expects to clock around 700-crore revenue this fiscal, with an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 18.3%, the person said. Also in the wings is the companys initial public offer in which it expects to raise 200 crore. BS Transcomm will offer 7.7 million shares, or 35.1%, in an issue that opens on October 6 and ends on October 8. JM Financial is the lead manager for the issue. The companys order book stands at around 720 crore. Around 65-70% of its revenue comes from the power sector while the rest comes from telecom. Its customers include Power Grid, a number of state power boards, Indus Towers, Viom Networks, and Global group. The company will use around Rs 90 crore on expansion of its tower manufacturing capacity, the first person quoted said. The company has already spent 130 crore on the expansion, he added. Economic Times 01.10.10 p.7

47. New $1-b core loan window

THE government is working on a proposal to open a new overseas borrowing window for Indian corporates enabling them to raise up to $1 billion annually exclusively for infrastructure projects. The department of economic affairs, or DEA, the policymaking arm of the finance ministry, has proposed that Indian firms be allowed to raise up to $1 billion by selling long tenure bonds in the overseas markets or as loans. This will be a separate facility available to corporates that are eligible to borrow up to $500 million now. The DEA has also recommended that withholding tax should be waived on such long-term foreign currency loans, which, if accepted by the revenue department, could make such borrowings more competitive. Currently, interest paid on all foreign currency loans attract withholding tax of up to 20% depending on the tax residency of the lender. Countries that have double taxation avoidance treaties, or DTAT, with India have lower rates. However, countries with which India does not have double taxation avoidance treaties or where the lender cannot be clearly identified as belonging to a specific jurisdiction, a rate of 20% is applied on the entire interest paid. As there are virtually no borrowings of this nature currently, this would not impact the current revenue estimates related to withholding tax. On the other hand, it will help raise long52

term funds at competitive rates for crucial infrastructure sectors such as power, telecommunications, ports and roads, said a senior official in the finance ministry involved in policy formulation. Indian corporates have not been able to access long-term foreign loans of maturities beyond 10 years mainly on account of the impact of the high withholding tax on such borrowings. Economic Times 06.10.10 p.1

48. IDFC looks to pick up stake in husk-based power firm

INFRASTRUCTURE lender Infrastructure Development Finance Company (IDFC) plans to pick stakes in Patna-based Husk Power Systems that is into generating electricity for off-grid villages. IDFC managing director and CEO Rajiv Lall, on the sidelines of launch ceremony of 3,400crore infrastructure bonds, told ET that the company is studying the feasibility of this business before putting in any investment. The company would invest in this project through IDFC Foundation that is funded through 1.7% of the companys profit every year. The foundation funds innovative concepts which have the potential of making a difference to the society. We are impressed with this business model. But we are just exploring the scalability of this project keeping in mind the limited availability of husk, he said. Run by Gyanesh Pandey and Ratnesh Yadav, Husk Power Systems generates electricity for 200 villages by setting up 35-100 KW mini power plants that convert rice husk into combustible gases for driving a generator to produce clean electricity. Its a pre-paid system in which villagers have to pay an initial connection charge of 100 besides a prepayment of their power requirement. It rules out any power theft and electricity bill evasion, he said. Husk Power Systems is among nine other businesses across the world that have been shortlisted by BBC World News for its World Challenge 2010 competition, which identifies people and businesses bringing economic, social and environmental benefits through innovation at the grassroots level. IDFC is interested in other green power projects as well. Its private equity arm IDFC PE has committed 360 crore to renewable power company Green Infra to enable it to consolidate its leadership in the renewable energy sector. We have generated a capacity of 112 MW through biogas plants of Green Infra. We have invested substantially in various wind power projects of companies like Enercon, he said. The company aims at tripling its book size from 35,000 crore to over 1 lakh crore in the next 3-4 years. We have been recording a CAGR of 25%. With more private participation in infrastructure projects, we expect to grow at 35-40% in the coming years, he said. Mr Lall said sectors like power, transportation and telecom are likely to remain the growth drivers for the company. Power projects with 38% take the biggest chunk followed by telecom (24%), transportation (20%) and commercial and industrial infrastructure (18%). We have stakes on 24000 MW out of the total generating capacity of 1.7 lakh MW in the country. Likewise, every 1 km out of 5 km in an NHAI project is being funded by us, he said. Economic Times 01.10.10 p.23


49. JV to set up 100 skill development centres

THE small and medium enterprise unit of Infrastructure Leasing & Financial Services (IL&FS) is in final negotiations with the National Skill Development Corporation (NSDC) to float a joint venture which will set up 100 skill development centres over the next five-seven years. While both the organisations are giving a final shape to the deal, IL&FS Cluster Development Initiative (IL&FS-CDI) will hold 73% of the equity in the proposed special purpose vehicle, while the balance 27% is likely to be held by NSDC, two people familiar with the development said. When contacted, NSDC CEO & MD Dilip Chenoy told ET that the NSDC board has just cleared the setting up of a joint venture with IL&FS-CDI. We are in the process of finalising the term sheet with them. As per the proposed plans, the JV will set up 100 skill centres, on the lines of the ITIs, over the next five-seven years which will focus on developing manpower for the leather, textile and general engineering segments, Chenoy said. IL&FS-CDI head RCM Reddy said the JV deal with NSDC will be frozen by early November. The operational details are still being worked out. We plan to launch a large-scale programme for skill development, he said. NSDC sources said the total NSDC contribution to the JV would be nearly 159 crore by way of loan, grant and equity. The target of the IL&FS CDI-NSDC JV will be to train 1.94 million skilled workers. This is expected to give a fillip to NSDCs mandate to create 150 million employable youth by 2022. The deal with IL&FS-CDI will be the second such JV for NSDC. Just last month, NSDC announced its intention to form a JV with Bharti Groups Centum Learning where also the national skill body will hold 27% stake. The JV Centum Workskills will set up 383 training centres nationally which will aim to train 11.5 million people. NSDC is a not-for-profit organisation set up by the Union finance ministry to lift private sector participation in manpower training in 21 sectors identified by the government. While the government holds 49% in NSDC, the balance 51% is with the private sector which includes all the apex chambers of commerce such as Assocham, CII and Ficci. Recently, Nasscom joined NSDC as a shareholder. A study conducted by IMaCS, a subsidiary of Icra, on behalf of NSDC, points out there would be incremental HR requirement of 240-250 million by 2022 in sectors like construction, IT, leather, gems and jewellery, retail, electronics and automobile. This number could grow higher if the economic growth tops 8-9% on a sustained basis in the next decade. Economic Times 06.10.10 p.10

Insurance Sector
50. Indias health cover for poor attracts world
Maldives, Indonesia, Pakistan, Bangladesh, Nepal, Nigeria and Ghana Keen To Learn From India Experience INDIAS ambitious public health insurance scheme covering 19 million poor families is now going global, after the World Bank recommended it for the rest of the world. 54

After the multilateral development institution flagged it as a model of good design and implementation, countries such as Indonesia, Pakistan, Bangladesh, Nepal, Nigeria and Ghana have evinced interest in learning from the experience. The Maldives government has asked the Union labour ministry, the nodal ministry for implementing the Rashtriya Swasthya Bima Yojana (RSBY), to design a similar project for its people. We have just had a meeting with the finance minister of Maldives. He not only wants us to design a health insurance scheme for them, but also is keen on empanelling our hospitals, said Anil Swarup, director general, labour and welfare. If the plan comes through, it will be the first experiment with transnational insurance and could actually bring business to our hospitals, said Mr Swarup, the man behind the scheme. Maldives has just three hospitals and several hospitals in southern India get asubstantial number of patients from the country every year. Other countries in Asia and Africa with sizable number of poor people have shown interest in replicating the Indian scheme that provides cashless treatment up to Rs 30,000 annually to a family of five at empanelled government and private hospitals through smart cards. About 4,500 private hospitals and 2,000 public hospitals are part of the RSBY scheme. Indonesia has invited Mr Swarup to Bali next week to give a presentation on how the scheme works while Nigerias health department has already had a meeting through video conferencing. Pakistan and Bangladesh have also discussed the possibility of introducing the scheme in their countries at various international forums, Mr Swarup said. It is the smart card-driven foolproof technology, which makes the scheme unique and is the reason behind its success in India, said M Ramadoss, chairman and managing director of public sector insurance company New India Assurance, one of the insurance providers under the scheme. Countries such as Ghana and the Philippines, which already have a functional public health insurance schemes in place but have problems in settling accounts of hospitals, want to use the smart card technology to make their schemes smoother. The biometric card has the finger print of the cardholder and a mere swipe allows a free treatment at empanelled hospitals. The Indian labour department has now started work on the tender document that Maldives should float to select an insurance company to run the scheme. The procedural costs will be more (than in India) as transportation costs will also have to be taken into account, Mr Swarup said. The premium for providing the Rs 30,000 medical cover to a poor household of five varies from state to state and ranges from Rs 300-600. Medical emergency is one of the biggest reasons for indebtedness among the poor. Economic Times 15.10.10 p.9

51. What is the need for index investing
AS THE bellwether stock market index sensex crosses the 20,000 level and soars towards new highs, the fund management industry is breathing a collective sigh of relief. We havent had much good news in the last one year, and it has been a tough sell to investors. At every point in time, investors were waiting for it to become cheaper. At 8,000, it looked like reaching 6,000. 55

At 10,000 we waited for 8,000 and as it galloped past 11,000 and 12,000 we decided we had missed the bus and so would wait till things became cheaper. People are like that at 40% off, a dress or a jacket looks cheap. But stock markets are a funny thing: At 40% off, a market looks ready to head for a 70%-off fire sale. At a stock market fire-sale, I am afraid we would see only sellers, not buyers. Fund managers are the High Priests of the Stock Markets; except the really brilliant ones, who tend to be humble people with no claim to divine and exclusive knowledge. They know that the real probability of success when making a trade is roughly 50%. Thats because a price can move in only two directions in the short-term up, or down. Which brings me to index investing. What is an index? It is a group of stocks, selected by an independent body of professionals to reflect the mood of a market or a segment thereof. Thus: 1. An independent body of professionals calculates factors like liquidity, representative ness of a stock of its industry, size (price x number of stocks) of the total number of stocks of that company that are available to the investing public (free-float market cap) in determining the suitability of a stock for an index. 2. Then they compare it with similar stocks in the industry on the above parameters and pick the ones at the top of the list on the basis of the weighted average of those parameters 3. They look at industry factors to determine which industries must be represented in the index 4. Then a basket is created that has stocks (and consequently industries) in the ratio in which the independent body feels the market would be best represented. 5. Every quarter or so this body of professionals re-visits their assumption and decides to add, remove or re-balance the companies that they have chosen. What is an index fund: it is a fund that invests in the exact proportion determined by this independent body in each and every one of the stocks that are present in the index. Such a fund must have a very good dealer (that is, a person who buys and sells stocks) but does not need a fund manager. Index funds are meant for the long-term investor, it is said. In my view a long term equity investor is a person who buys equity like our mothers used to buy goldbuy it when you have the money; sell to meet an emergency or to buy a longer term asset, like a house or amarried life or an education for a child! Anyone who invests or disinvests by timing the market is not a longterm investor. Economic Times 03.10.10 p.6

Media and Entertainment

52. Eros signs deal with Zee for 50 cr
THEbig picture is increasingly moving to the small screen as producers rush to sign on big buck deals with general entertainment channels. Eros International Media (Eros Media), which 56

listed on the BSE last week, is reported to have struck a deal worth Rs 40-50 crore with Zee Entertainment for yet-to-be-released three to four films. These include Anil Kapoors No Problem, the under production Agent Vinod a co-production between Eros Media and Saif Ali Khans Illuminati Films and Akshay Kumar starrer Desi Boyz scheduled to go on floor this year. Yes, we have signed a seven year exclusive deal with Eros for these films but I cannot confirm the deal worth, said Jayantilal Gada, who is in charge of acquisition of films for Zee Network. With competition in the general entertainment space growing, channels have been shelling out more money to buy the satellite rights for films, specially the blockbuster names. Prices have gone up by 30% in the last year, so while we have not increased our spend, within our existing budget, we are very selective about the films we acquire, said Sameer Rao, general manager, Star Gold, also in charge of acquisition of films for the Star Network. Over the last three to four months, Rao confirms that they have acquired a slate of films from Eros for a period of five years, which include Anjana Anjani and Ranbir Kapoors yet-to-bereleased Rockstar. The SRK starrer and much awaited RA.1 is also said to be in Stars kitty but Rao does not confirm the same. The total number of films from Eros is around eight to nine and the deal is said to be close to Rs 70-80 crore according to trade sources in the television industry. Earlier, Eros Media, promoted by Eros Plc and Kishore Lulla, had also struck a deal with Sony for 3 Idiots along with three other films for close to Rs 40 crore, taking their satellite sales to above Rs 150-160 crore Economic Times 15.10.10 p.

Micro Finance
53. Microfinance cos to go slow on IPO plans
NERVOUS microfinance firms are delaying plans for initial public offerings as a spate of negative publicity over the sacking of a CEO at the industry leader, SKS, and suicide deaths in Andhra Pradesh trigger a strong backlash. Officials at two microfinance firms based in Hyderabad told ET that they dont want to consider an IPO at this stage. The environment is volatile and attention is likely to be focused on non-operational issues, the officials added. Spandana Spoorthy, the second largest Indian microfinance company in terms of assets, planned to file the draft red herring prospectus sometime in November and December this year. The IPO was slated towards April. Now, the company wants to change the time-table. The industry is going through a bad phase. Moreover, after watching the scheme of events at SKS once they terminated the services of Gurumani, we have decided to go slow with our plans. Funds can be raised through other avenues as well. If the IPO happens, the core management team may have to shift focus from operations and get entangled in procedural issues, a top official said on condition of anonymity. The company wanted to raise 1,500 crore and was in talks with Citigroup, Morgan Stanley and JM Financial to work out details of the details. While we will still file the DRHP, we may not issue public offer according to the time-frame that was decided earlier. It is better for the industry to wait and watch now, the official added. Another Hyderabad-based firm, Share, the third-biggest in terms of business value, planned to merge with Asmitha Microfinance and hit 57

the market some time early next year. The merger was supposed to help them increase market share. Economic Times 14.10.10 p.10

Non Government Organization

54. Coming soon: New accounting norms for NGOs
THE government is set to frame new accounting norms for non-governmental organisations (NGOs), as it looks to remove the veil over the flow and utilisation of funds by the sector that is not entirely above suspicion. The ministry of corporate affairs is working on a more structured financial reporting format for the civil society organisations. It recently asked the Institute of Chartered Accountants of India (ICAI), the accounting regulator, to overhaul the accounting and disclosure norms for NGOs. The NGOs, which have for long been shrouded in suspicion due to money laundering, terror funding and corporate corruption, have suddenly caught attention of the government, partly due to the allegations of corruption in the Indian Premier League. And more recently due to allegations of funds mishandling by the the Commonwealth Games Organising Committee. Unlike companies, NGOs do not follow a structured format for financial reporting, due to which it gets difficult to track their flow of funds, said a ministry official. The proposed format will ensure that grants pouring in from within and outside the country are properly accounted for, said the official, requesting anonymity. The format will focus on aspects like utilisation of grants and contributions received by NGOs and strict compliance with provisions of the Foreign Contribution (Regulation) Act (FCRA). A group, which has been constituted to debate and recommend suggestions to ensure better governance of NGOs, will look to enhance transparency over related party disclosures, cash flow and reporting of an NGOs interest in joint ventures as well as of their investments, said an official in the ICAI. ICAI president Amarjit Chopra says: There is a need for improvement in matters of accounting and utilisation of funds by NGOs. He added, a group has already been formed to recommend changes. While experts have welcomed the move on framing new norms for NGOs, they feel the government should stress on governance for such bodies. From the point of the government, it will help them to understand the money flow of the organisations, their assets and liability. Of late, NGO have been floated to divert money and avoid taxes, said Resmi Bhaskaran, fellow at New Delhi-based think tank Institute of Human Development. The government will simultaneously empower the Comptroller and Auditor General of India (CAG) to audit NGOs through the proposed amendments to its governing law, presently being considered by the finance ministry. The government is particularly concerned about the financial reporting standards of organisations that are receiving funds from abroad. A standard format on financial reporting for NGOs will ensure greater comparability between firms, as currently there is no clear standard or benchmark in the way these firms report on aspects governing grants received by them, another expert on role of NGO s in the micro-financing domain said. 58

The need of the hour is to know the way any charity or donation is used by a NGO.The accounting system should ensure maintaining a continuous review of the receipt and payment related with the specific project for which any grants are remitted, said Santanu Mishra, executive trustee, Smile Foundation, a New Delhi based NGO, adding that the current system of accounting transactions on grants or donation received by a NGO need to be elaborated. Economic Times 02.10.10 p.7

Retail 55. Future, Spencers and more at your service

DESTINATION retailing is the new buzz in the countrys $20-billion organised retailing sector. Besides their regular offerings, top retailers now woo consumers through services such as salons, spa, and laundry and even travel services. Retail chains such as Spencers Retail, Hypercity, Future Group and Aditya Birla Retail have already initiated moves to convert their large-format outlets into destination stores that offer a plethora of consumer-oriented services. The line between products and services is blurring in organised retail, says Sanjay Gupta, head (marketing) at Spencers Retail. Services retailing is going to be the next big thing that retailers will offer in order to truly become a one-stop shop, since shopping time is slowly becoming a premium with most consumers of modern trade, he adds. Spencers Retail is already offering exclusive wine and liquor corner, cigar zone, live bakery, gourmet section, pet care and florist service in select outlets. The RPG Retail flagship is also in talks with reputed chains to introduce salons and laundry services by the end of this financial year. Countrys largest retailer Future Group has set up salons, fitness centres and food courts inside all its Big Bazaar Family Centers, while Hypercity Retail offers laundry, salon and spa services in seven outlets. Jewellery retailer Gitanjali Group too plans such a model for its Maya chain. What retailers are looking at is to engage the customers. These services lead to a lot of additional footfalls and help increase the average ticket value, says Rohit Bhatiani, principal consultant (retail and consumer products division) at Technopak. Destination retailing is an established concept in the global market, with retailers such as Wal-Mart and Tesco even selling financial services like insurance, auto loans and medical insurance under their store banner. Analysts expect the concept, now primarily targeted at metros and other top cities, to pick up in India over time as shoppers look for new concessions and retailers add new offerings to increase footfalls in their outlets. The model of operation is hybrid. While sometime retailers run such services themselves, they also partner with established players for other services. Economic Times 01.10.10 p.4


Steel Industry
56. Tata Steel, Nippon may set up 15k-cr plant in India
TATA Steel is considering setting up a 15,000-crore steel plant in India in collaboration with Japanese firm Nippon Steel Corp. When contacted, Tata Steel spokesperson said: Any further co-operation between the two companies may be part of an ongoing conversation in the future but no decision has been taken in that regard. Nippon Steel could not be contacted for comments. Sources said the two companies are discussing plans to set up an integrated steel plant in India with an initial production capacity of 3 million tonnes per annum which could entail an investment of at least 15,000 crore. The two companies are already in pact to jointly produce auto grade steel at Jamshedpur in Jharkhand, where Tata Steel runs a 6.8 mtpa steel plant. Tata Steel will hold 51% in the JV Company. The framework agreement for the JV was signed in January. It aims at capturing the growing demand for high-grade automotive coldrolled flat products in India and envisages setting up a continuous annealing and processing line (CAPL) with a capacity of 6 lakh tonnes by 2012. Nippon will transfer its technology for producing high-grade cold-rolled steel sheet for automotive application, including skin panels and high tensile steels. Taking forward their relationship, the construction for the JV integrated plant could start as early as in 2013, media reports also suggested. Economic Times 05.10.10 p.10

57. Steel sector amid big job switches

ITS movement time for the men of steel. As the domestic industry jumps to an upward growth trajectory, with rising prices and increased production, the new shine seems to have touched senior executives too. Career movements, mainly in the league of CEOs and directors, have resumed, with some major ones in the past few months, signalling that opportunities are opening up in the worlds second largest market after China. Whats more, the playing field seems to have opened up both in state-owned and private steel companies, as can be seen from the unbridled jumps. Some of the major names which have made the job shift include Brahma Nand Singh, former CEO of Brahmani Steel; Raman Madhok, formerly joint managing director of JSW Steel; T P Rao, former executive director of Rashtriya Ispat Nigam and Bhairava Nath Singh, former MD of SAIL, Rourkela. Coming after a three-year lull, the movements may be a precursor to increased hiring too. There is even talk of stock options for existing employees, according to people connected with the industry. This trend is largely due to the fact that the Indian steel industry itself is in the middle of a number of changes. While the rise in domestic demand is a key driver, a reduction in exports from China is playing a big role too. Mumbai-based brokerage Elara Capital says that steel production in China has been subdued since the second quarter of the calendar year due to a 60

demand slowdown there. Besides, the higher cost of electricity and forced shutdown of mills in some regions, on pollution concerns, have hampered steel production growth in that country, analyst Ravindra Deshpande wrote in a recent article. Lower exports from China have prompted Indian steel makers to raise prices recently. Coupled with softening key raw material, margins for Indian companies such as JSW Steel and Essar Steel have surged as savings on cost are high. Margins for the third quarter are improving too, as contract prices for key raw materials have fallen 7-13% due to low spot prices and also due to a seasonal rebound in steel prices. People connected with hiring say companies are flush with money and are devising growth and expansion plans. Hence the need for key talent to steer them. Economic Times 13.10.10 p.10