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PREFACE
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 INDEX
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
HighlightsAugust2010
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.
Contents
Title
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
Page
7 9 10 11 12 13 15 16 17
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
17industrysectors
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
April May June July August September October November December January February March
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
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
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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
11
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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
09-10 20.0 11.7 7.1 5.9 8.1 7.2 10.5 9.8 12.2 13.3 11.4
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Customs
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
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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
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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
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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
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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
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
Biotechnology
8. GEN EGGXOTIC
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
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
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
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
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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
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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
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
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
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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
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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
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
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
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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
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
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
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
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
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
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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
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
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
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
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
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
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Infrastructure
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
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
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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
Investment
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
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
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
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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
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
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