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Monday, January 25, 2010

Telecom sector may see salary hikes of up to 30%

COMPETITION PAYS

As New Players Enter, Telcos Roll Out The Goodies To Retain Talent

HERE'S the hot news from the telecom industry: a senior executive from Sony Ericsson in London has made a couple of calls to human resource consultants in India, looking for an opening in the telecom sector here. 

    His enthusiasm is not without reason: he doesn't want to miss out on the action in the world's fastestgrowing telecom market, where plum salary packages are matched equally by attractive incentives and stock options. 
    While last year's downturn did bring with it the pain of salary cuts and no bonuses, the sector has recovered since. It is offering pay hikes in the region of 10-15%, which could go up to 30%, according to Sistema Shyam Teleservices (SSTL) chief HR officer Manish Kharbanda. 
INCREASING COMPETITION 
    
Increasing competition in the form of tariff cuts, the entry of new players — at least half-a-dozen in each circle — rural forays and the opening up of 3G airwaves have ensured that companies chase talent to sustain the pace of growth. 
    "Salary hikes will be in the 20-25% range for senior management this year, because most of them have not received big increases last year. For the middle level, it will be anywhere between 15% and 20%, depending on the employee's experience," says Sanjay Teli, MD of executive search firm ESP Consultants India. 
    Meanwhile, for those on the rolls, salary hikes have been well over 15% this year and have even touched 30% in some cases. At senior levels — VP onwards — salaries are seen beginning at Rs 60 lakh per year. 
    "The competitive intensity will increase as more new players with deep pockets enter an already unviable market for so many players," HSBC Securities and Capital Markets analyst Rajiv Sharma said in a recent report. 
    Bharti Airtel, India's largest telecom company by revenues, paid average increments of 8-10% in the midst of the slowdown. Neither has the company pared its training budget during the period. This year, 
it plans to pay entry-level salaries of at least Rs 8.5 lakh per annum. "We continue to attract the best talent not only from within the sector, but also from across sectors," says HR director, Krish Shankar. 
TOWER BUSINESS BOOST 
    
The boom has been aided by the growth of telecom tower business. 
At a time when most businesses were struggling with the downturn, the GTL Group — which bought Aircel's towers in a Rs 8,400-crore all-cash deal — gave increments averaging 15% to performing business verticals. "We have further restructured compensation in a way that people earn handsome incentives and bonuses," says GTL VP-human resources Eugene Valles. 
Competition from foreign players and telecom companies' rural forays, too, have helped. "As companies expand into rural markets, professionals will have to be be given additional incentives," says Adil Mallya, president, group HR, Essar. 
BATTLE READY 
Idea Cellular paid Esops worth Rs 18 crore in the previous quarter, which hit its bottomline but ensured that it remained battle-ready with a good workforce even as foreign operators like Telenor, DoCo-Mo, Sistema and Etisalat entered India. "New entrants to every sector, including telecom, usually hire people from existing players by paying high levels of compensation which to my mind is unsustainable. I am sure these new players have an intelligent business model to sustain costs," says Santrupt Misra, director, HR, the Aditya Birla group which owns Idea Cellular. 
All in all, the sector may see a growth of 8-12% in manpower, says Mr Teli of ESP Consultants. 
Sistema Shyam Teleservices (SSTL), which rolled out services in 2009, hired 2,000 people last year and has another 1,500 outsourced employees. "We had a lot of traction from existing players and were spoilt for choice. We are offering hikes of 10-12% as per market trends," says its chief HR officer Manish Kharbanda. He claims SSTL paid out 100% bonuses last year, and is looking at adding 1,500 people this year. 
The process of hiring has meant companies have also seen the flight of talent over the past year. GTL, for instance, has an attrition rate of 12%, which it considers healthy. "We, however, do not lose more than 2% of our star performers every year," says Mr Valles. 
rashmi.pratap@timesgroup.com 

SANTRUPT MISHRA DIRECTOR HR, ADITYA BIRLA GROUP



Sunday, January 24, 2010

Million-dollar bonuses back at MNC banks

BONUSES paid by US banks back home may have raised the hackles of the Obama administration, but Indian employees working in MNC banks here have little to complain about. Information on the first round of payouts trickling in from four American banks suggests a return to the heyday of 2007 — or at least close to those levels — when fat paychecks raised few eyebrows. 

    Citi, JP Morgan, Morgan Stanley and Goldman Sachs have declared bonuses for 2009 over the past few days. Grapevine suggests that there are quite a few employees who have received million-dollar bonuses, but the banks are unwilling to share the details. Indeed, the number is higher than 2008. 
    This time, though, there is a 
rising trend of staggering the cash component over 2-3 years — a payment mechanism that enables companies to cushion their balance sheets, silence critics as well as retain staff. Also, unlike last year, when there was a major difference between performers and non-performers, the distinction has been less glaring this time, which also presages the opening up of the job market. 
    Citi has been the surprise of the lot. As in the recent past, the bank has made an exception for India and a few other geographies. Punished by markets globally, Citi has seen a flight of talent at senior rungs. In India, while its consumer finance arm has been battered by loan delinquencies, corporate and investment banking, along with treasury, has managed to ride out the downturn. Bonuses at Citi are much higher than in the previous year, though not on par with the pre-Lehman days. Also, much to the relief of employees, only a slice of the bonus has been paid in stocks. The stock component is 25-40%, much lower than Morgan Stanley and JP Morgan, said sources in investment banks who did not want to be named. 
More cos may defer cash payouts 
BONUSES paid by Morgan Stanley India are said to be 5-10% higher than what was paid in 2008. The bank has deferred the cash as well as the stock components of the payouts. Fixed salaries have gone up by around 15-20%. Deferral in the cash component was started last year. Incidentally, the stock portion of the incentive has gone up substantially. Some senior officials have received bonuses up to 75% in stocks, up from 30% last year. 
    Bank officials refused to comment on the matter. R Suresh, MD of head hunting firm Stanton Chase, said: "Globally, this was the last of the opportunities to pay bonuses. Banks have been increasing their fixed pay. However, bonuses have come down after the crisis. In India, the bonus levels for high performers in Citi and some of the other banks have seen a comeback from a moderate 2008 levels, but bonuses are not as high as 2007." 
    In the case of JP Morgan, bonuses have been around the 2008 level mark. On an average, stocks were at 40-50% of the bonus levels, which was around the same level as last year. At the senior level, the stock component was as high as 60%. Incidentally, the bank also has a deferred cash component that will be disbursed over a period of three years. The bank is also said to have given reasonable increment to employees. Asia, India in particular, is increasingly becoming important for MNC banks because of increasing revenues from the region amid a slowdown in the western markets. Firoze Patel, 
senior client partner, Korn Ferry International, said: "Banks are finding more innovative ways of paying bonuses. The worry would, however, be a herd mentality. There will be a domino effect, with each bank trying to be on a par. It will impact business." 
    Banks like Bank of America-Merrill Lynch (BofA-ML) and Credit Suisse will declare bonuses this week, while others like Standard Chartered are likely to do so in March. In the case of BofA-ML, it is expected that stock portion for senior management could be as high as 70%. 
    Standard Chartered has not yet decided on its bonus pool. However, average stock levels are likely to move up marginally. The bank is expected to give an average increment of around 12%, though increments in some of the divisions would be higher. HSBC staff are also expected to get a good deal. 
    Mr Suresh added that among segments that have done well are corporate and investment banking (CIB) division. Retail and wealth management has suffered the most. On the CIB front, corporate project finance, cash management and trade finance have performed well in terms of payouts. "More organisations will defer cash payouts as far as possible. Banks are likely to be more prudent, circumspect and also more innovative," Mr Patel added.


Sunday, January 17, 2010

BULL'S EYE

PUNJ LLYOD 
RESEARCH: CITIGROUP 
RATING: SELL 
CMP: RS 219 
Citigroup downgrades Punj Llyod's rating to `Sell' and cuts the target price to Rs 197 from Rs 228. It also reduced FY10E-12E EPS to 8-11% to factor in: (1) 4-5% lower sales growth and (2) 28-40 bps cut in EBITDA margins on potential write-offs in projects. Citigroup values the shipyard on the west coast at a 50% discount to book since at the current stock price, the risk reward trade off seems unfavourable given: (1) risks of additional write-offs in the Ensus project; (2) chances of potential LDs in the Ensus project; (3) cost over-runs on the ONGC Heera project; (4) Auditor qualifications of Rs 69.6 crore at the end of Q2FY10; and (5) Inconsistent earnings delivery. Earnings downgrades of 8-11% lead to a lower target price. Every months' delay beyond 12 December '09 will cost Simon Carves £5m on the Ensus bio ethanol project. Technically, Ensus can also claim liquidated damages on this project in the future. According to the FY09 annual report, estimate revisions on the ONGC Heera project have resulted in costs and revenues on the project increasing by Rs 360 crore and Rs 150 crore respectively. The company has filed claims with ONGC amounting to Rs 510 crore against the increase in cost estimates. Pending acceptance, these claims have not been accounted for in the books. 
INFOSYS 
RESEARCH: MORGAN STANLEY 
RATING: EQUAL WEIGHT 
CMP: RS 2675 
The Infosys stock is likely to continue outperforming relative to the market following December '09 results. However, the stock is trading at about 21x FY11 EPS and absolute returns may be limited in the near term. Despite significantly better results and material earnings upgrades, the stock price reaction has been lukewarm, suggesting that the stock was largely pricing in the turnaround ahead of Street expectations. Infosys' revenues of $1,232 million (6.8% q-o-q, 5% y-o-y) were ahead of the estimates. At the current rate of absolute revenue addition, even dollar revenue growth of over 25% could be achievable in FY11E. Following the strong performance in the December '09 quarter, Morgan Stanley raises FY11E/12E revenues to about $6 billion (+19% y-o-y) and $7.4 billion (+25% y-o-y), respectively. Infosys revised its FY11E campus hiring target from 13,000 to 15,000 offers. The FY11E hiring target could be as high as about 20k campus offers by the time the company guides in April, with gross hiring in the range of 25,000-30,000 for FY11E. Infosys reported a 100 bps q-o-q EBIT margin improvement despite hiking wages during the quarter. The management appeared very confident of maintaining margins. Morgan Stanley believes it may not be difficult for Infosys to maintain EBIT margins of about 32% over the next two years as the contribution from non-linear revenue models increases. 

BAJAJ AUTO 
RESEARCH: CLSA 
RATING: OUTPERFORM 
CMP: RS 1726 
CLSA maintains estimates and `Outperform' recommendation on Bajaj Auto with a target price of Rs 1,900. Bajaj reported strong Q3 results with net profit at Rs 480 crore up 189% y-o-y/18% q-o-q. Net realisations declined 4% y-o-y/3% q-o-q due to a decline in the share of three-wheelers (3Ws)and higher share of Discover 100 cc. Q3 EBITDA at Rs 720 crore grew 137% y-o-y/14% q-o-q while EBITDA margins at 22.0% were up 740 bps y-o-y/ flat q-o-q, ahead of expectations. Net profit also got a small boost from higher-than-expected other income and lower-than-expected interest costs. CLSA expects Bajaj's volume momentum to remain strong in FY11. The Discover 100 cc has received a good response, with retail sales strong even after the festival season and Bajaj has gained market share in motorcycles. The recently launched Pulsar 135 cc is likely to boost volumes further. In 3Ws, Bajaj is likely to gain some market share in FY11 with the launch of new passenger 3W variants by end-FY10. CLSA maintains the EPS estimates for Bajaj Auto, noting the likely sequential decline in margins and continues to prefer Bajaj over Hero Honda, which has been our preference since February '09. 
IDFC 
RESEARCH: JP MORGAN 
RATING: OVERWEIGHT 
CMP: RS 160 
JP Morgan initiates coverage on IDFC with an `Overweight' rating and March 11 PT of Rs 190. JP Morgan believes that IDFC will be a strong beneficiary of India's infrastructure boom, helped by regulatory tailwinds and strong markets. They expect the strong rerating to continue. The cliché suits IDFC well. Its strong investments in developing domain expertise in infrastructure are now expected to pay off. Not only is it the leading specialist in infrastructure financing, but its product suite is all encompassing, which gives it a competitive edge as well as strong long-term RoEs. The downgrade by CRISIL in July '09 was a setback, but the special status as an infrastructure lender (being contemplated by the RBI) could negate that problem. JP Morgan now factors in tier 1 CAR (capital adequacy ratio) reaching 16%. IDFC is not cheap at 2.6x P/BV (FY11E), but this still underestimates the long-term growth potential of the company. JP Morgan thinks that IDFC can grow its balance sheet at about 25% for five years or more, and that this is not fully captured in the current valuations.

SEBI SENDS PROPOSAL TO FINMIN

India Inc may lose tax sops on MF investments

CAPITAL markets regulator Securities and Exchange Board of India (Sebi) wants the government to scrap tax benefits for corporates investing in mutual funds (MFs), a proposal, if accepted by the government, could deal a body blow to local asset management companies and other firms. 

    The regulator has also proposed to the government that the securities transaction tax, or STT, which is levied on buying or selling of stocks and on derivatives trade, should be cut by one-third and that a uniform stamp duty be levied and collected by a central agency. These proposals have been forwarded to the finance ministry, in the run-up to the Budget, said a person with the knowledge of the proposal. 
    The letter to the finance ministry says, "Tax benefits to corporates investing in schemes of mutual funds may be withdrawn." 
    It is not just the capital markets watchdog that is uncomfortable with MF industry's unhealthy dependence on short-term funds from corporates. Though this helps fund houses grow their assets and boost valuations, policymakers are worried about the systemic implications of any swift outflow of such institutional funds that could hobble some of the fund houses. This was evident during the secondhalf of 2008, when the Reserve Bank of India (RBI) had to keep liquidity support open to help MFs meet their redemption obligations. 
    RBI has also been unhappy at the way banks have been parking their surplus with 
MFs, which in turn finds its way back to banks. The central bank has nudged banks to restrict their investments in MFs. 
    Any move, either to do away with the tax benefits or to tweak the tax rates, could hurt the local MF industry whose growth is linked to the flow of funds from corporates. Over 50% of the money that Indian MFs attract for their debt schemes comes from corporate treasuries and banks. According to latest data, the assets under management of the Indian MF industry are a little under Rs 7-lakh crore. 

UNDER THREAT 
Big Loss 
Sebi's proposal aims to end tax arbitrage by corporates. While income from treasury ops is subject to corporate tax of 33.99%, treasury investments in debt funds attract a dividend distribution tax of 22.66% 
Retail Therapy 
Sebi seeks to develop MFs as a vehicle for retail investors to take exposure in the securities market 
Fund Flow 
Currently, more than half of the inflows to MFs' debt schemes come from corporate treasuries and banks 
Sebi wants govt to cut STT by a third 
SEBI'S proposal is aimed at putting an end to the rampant misuse of debt schemes of MFs by corporates, who park short-term corporate treasury funds to enjoy a tax arbitrage. While income from their treasury operations attract the corporate tax rate of 33.99% (including surcharge and education cess), treasury investments in debt funds attract a dividend distribution tax (DDT) of only 22.66%. 
    "If the tax benefit is removed, it will discourage corporates from using mutual funds as a treasury instrument... as we want to develop mutual funds as a vehicle for retail investors to take exposure in the securities market," said a Sebi official. Recently, RBI had told banks to go slow on their MF investments. In the last fortnight of December 2009, banks withdrew more than Rs 1- lakh crore from MFs. RBI deputy governor Shyamala Gopinath too had expressed her concerns about tax arbitrage through mutual fund investments. "Mutual funds' fixed-income products enjoy certain tax exemptions not available to banks. But this is outside the regulatory purview. However, if these policies introduce any vulnerability in the financial system, there is a need to address this through appropriate macroprudential and microprudential regulations," Ms Gopinath said at a Fixed Income and Money Market Dealers Association (FIMMDA) meet. 
    Sebi has also asked the government to drastically reduce the securities transaction tax (STT) on equity transactions, as it increases the transaction cost. The regulator has recommended that STT should be slashed by one-third, as the rate has effectively tripled with the withdrawal of STT as a rebate under Section 88E in the last Budget. 
    Besides proposing a uniform stamp duty that will levied and collected by a central agency and shared among states based on an agreed formula, Sebi has recommended a goods and services tax (GST)-type concept for stamp duty collection on securities trades. Market players say that there are several anomalies in the stamp duty, as it is levied by states with each levying different rates for different securities instruments. 
    Transaction costs in India are one of the highest in the world, with government levies, such as stamp duty and STT, accounting for almost 75% of the cost.Sebi also wants Indian Depository Receipts(IDRs) — instruments through which Indian investors can invest in equity shares of foreign companies — to be treated as securities for tax purposes. It has also recommend to the government that IDRs should not be taxed on transfer.

Equity MFs reap mkt boom in Dec

Coimbatore: Investors of equity mutual funds (MFs) continue to cash in on the buoyancy in markets as redemptions stood at Rs 6,232 crore in December, the second highest in nearly two years. 

    The equity MFs registered net outflows for the fifth consecutive month, which have come to Rs 7,315 crore since August, data with the Association of Mutual Funds in India (AMFI) shows. Net outflows touched Rs 2,185 crore in December, the highest in 2009. 
    "A large number of investors who came in when the 
sensex moved towards the 21,000-levels have booked profits," says Jaideep Bhattacharya, chief marketing officer, UTI MF. "Inflows (into equity schemes) are quite muted now," he says. 
    "Most people, including those who made investments (when sensex was) at the 20,000-levels, have recovered their losses and are pulling out money," says Vikram Kaushal, head, retail sales and distri
bution, ICICI Prudential MF. 
    Many investors of equity schemes believe that the markets have risen too fast in a short period and are waiting on the sidelines to see how they evolve before committing fresh money, say industry officials. 
    With large pullouts, net inflows into equity schemes stood at a mere Rs 117 crore for March-December 2009 compared to Rs 1,254 crore during the same period the previous year, AMFI data shows. The MF industry added 10,000 folios in December, a mere 0.2% improvement over the previous month, industry officials estimate. 

    "New systematic investment plans (SIP registrations) are quite flat. We need more efforts on the distribution side," says Kaushal. The focus should be on bringing regular inflows through SIPs, industry officials say. "We have to find ways to get larger retail participation and bring more investors from smaller cities," says Bhattacharya. 
    Sales from existing equity MFs are hovering around Rs 4,000 crore for the past five months after surging to a peak of Rs 8,737 crore in July when the industry went all out to get more investors before the ban on entry loads came into effect. 
Walking Away With Cash 
December 2009 Redemptions: Rs 6,232 cr Net outflows: Rs 2,185 cr Net inflows in Mar-Dec 2009: Rs 117 cr 2008: Rs 1,254 cr


Tuesday, January 12, 2010

B K Birla plans to hike stake in group cos

Kolkata: On his 89th birthday, the eldest member of the Birla family has a wish for his grandson Kumar Mangalam Birla. The octogenarian is determined to increase his stake to at least 50% in those companies where the holding of the B K Birla Group is low so that Kumar does not face any hurdle in running the firms which he plans to bequeath to him. 

    According to the filings to the stock exchanges, the over Rs 11,000-crore B K Birla Group has less than 30% stake in two major companies which are goingto Kumar Birla. These are Century Enka and Kesoram Industries. The group stake in Century Textiles and Industries is also below 50%. But it is at a relatively comfortable level of just over 40%. The group stake in Century Enka is 25.23% and in Kesoram it is 26.5%. All these three companies are going to Kumar Birla. 
    "In whatever companies I give to Kumar, we should have a 50% stake. In a few companies we still have less than 30%,'' B K Birla told TOI in an exclusive interview. Birla pointed out that he would look at various options, including creeping acquisition, for raising stake. It may be noted that the B K Birla group has already been buying into group companies since September 2008. 
    Basant Kumar Birla himself has bought additional 
shares in Kesoram Industries. The group has raised its stake in Century Textiles as well. Kesoram and Century are the two biggest companies of the group. While Kesoram has a turnover of over Rs 4,300 crore, Century Textiles has a turnover of close to Rs 3,900 crore. 
    "We will raise our stake through creeping acquisition but it will take some
time. As far as I know, there is a limit on creeping acquisitions every year. We cannot do more than that,'' he added. It may be noted that the promoters can raise their stake up to 5% through the creeping acquisition route. according to guidelines. 
    Incidentally, B K Birla plans to give Mangalam Cement and Mangalam Timber to his granddaughter Vidula Jalan (daughter of Manjushree Khaitan) and her husband Anshuman Jalan. Mangalam Cement was the last company of the group which was handed over to Jalan. Jayshree Mohta, the elder daughter of B K Birla, is getting Jayshree Tea & Industries and ECE Industries. The group stake in these companies is more than 40%, except Mangalam Cement which was earlier supposed to go to Kumar. 
    The man who saw the evolution of Indian industry from its formative phase believes that India and China will become economic superpowers in the coming decades.



Kumar Mangalam Birla

Bharti buys 70% stake in Warid

Will Also Make Fresh Investment Of $300 Million In Bangladesh Firm

New Delhi: Bharti Airtel, India's leading telecom services provider, on Tuesday said it has agreed to acquire a 70% stake in Warid Telecom, Bangladesh, currently a wholly-owned subsidiary of the Dhabi Group, for a nominal but undisclosed consideration. Bharti Airtel will also make a fresh investment of $300 million to expand the operations of Warid Telecom, which is also the largest investment in Bangladesh by an Indian company. 

    The company declined to give details of the acquisition value which gives the Bharti Airtel management and board control of Warid Telecom while allowing the Dhabi Group to continue as a strategic partner with 30% shareholding and some Board representation. 
    The acquisition by Bharti Airtel would be done partly by purchase the existing shares held in Warid Telecom International by Dhabi Group for a nominal consideration and the balance by way of issue of fresh shares at par. 
    Grameenphone, which is owned by Nordic firm Telenor, is the largest mobile operator in Bangladesh with over 23 million subscribers and a 45.5% market share (see chart). 

    Warid Telecom is the fourth largest operator with a total customer base of over 2.9 million across Bangladesh. 
    The new funding of $300 million will be utilised for expansion of the network, both for coverage and capacity, and introduction of innovative products and services. As a result of this additional investment, the overall investment in the company will be in the region of $1 billion. Airtel clar
ified that this figure includes $700 million of existing investment by Warid Telecom. 
    According to Kunal Bajaj, MD of consulting firm BDA Connect, the deal is not going to be a major gamechanger for Airtel in terms of scale or revenues. "While Bangladesh has one of the lowest teledensities in the world at 32%, the total population is just 160 million of which the market leader Grameenphone already has a 
45.50% share. It is a very small field,'' he told TOI. 
    However, Arpita Agarwal, associate director telecom for PwC, felt that Airtel could quickly bridge the gap between Warid and Grameenphone. 
    On how Bharti proposed to compete with Grameenphone, Manoj Kohli, CEO & Jt MD, Bharti Airtel, said, "The business plan and targets will be finalised over the next 4 to 6 weeks. The Airtel brand is al
ready well known in Bangladesh and we plan to introduce new services." 
    Sunil Bharti Mittal, CMD, Bharti Airtel, said, "This landmark deal underlines our intent to further expand our operations to international markets where we can implant our unique business model and offer quality and affordable telecom services. At the same time, it is a symbol of the growing economic cooperation between the South Asian countries and we would like to thank the Government of India and Bangladesh for their support 

and encouragement. 
    "Bangladesh, with a population of over 160 million and teledensity of 32% is a very promising market for telecom services. Bharti is keen to work in Bangladesh and contribute to achieving the vision of Digital Bangladesh even sooner than 2021." 
    HH Nahayan Mabarak Al Nahayan, chairman, Dhabi Group said, "We are pleased to partner Bharti Airtel and believe this partnership will bring benefits to all stakeholders, most importantly the customers of Warid Telecom. 
Warid buy may not open up B'desh market for Bharti Sumali Moitra | TNN 
Kolkata: The acquisition of the 70% stake in Warid by Bharti Airtel will, at best, give the Indian mobile service provider a toehold in the Bangladesh market since the company only has a 5% market share. 
    With about 2.9 million subscribers, Warid ranks just ahead of CityCell (owned by Singtel and Pacific Group with two million subscribers) and state-run Teletalk which has over one million users, among Bangladesh's six service providers. 
    The top three players are Grameenphone (majority owned by Telenor with 23 million subscribers), Orascom-owned Banglalink which has 12 million users and Aktel (owned by Docomo and Axiata) which has over 8 million subscribers. 

    On its part, market leader Grameenphone - the number one player in Bangladesh - indicated that it was not losing sleep over Bharti's entry. "We welcome new competition on a level playing field and are preparing ourselves to give the new entrant a challenging time as it ventures into the Bangladesh market," Grameenphone CEO Oddvar 
Hesjedal told TOI. 
    Grameenphone has more than double the number of base stations of the other five operators combined. Listed on Bangladesh's stock market, Grameenphone, in which Grameen Telecom has a minority holding, has the best bottomline among its peers. 
    Sources in the Bangladesh mobile phone industry said there is fear that Bharti may play the price game to push up its numbers and drop tariff rates further to attract customers. Such a move could affect the entire industry as existing players, too, may be forced to act likewise by diverting spends earmarked for network expansion to other avenues and also deter other investors from entering Bangladesh. They added that the country could also see more M&As as the market has become overcrowded.




Pharma cos fund WHO flu doctors

Vested Interests Behind Move To Push H1N1 Vaccine?

 Even as questions are being raised about whether the swine flu scare was exaggerated to benefit pharmaceutical companies, evidence has surfaced showing that several members of the World Health Organisation's (WHO) vaccine board which pushed countries to buy the H1N1 vaccine have had significant financial ties with various pharmaceutical companies. 

    This fact, which is bound to raise significant issues of conflict of interest, was exposed by the Danish daily newspaper Information last month. TOI attempted to get WHO's response to the expose, but several emails sent to the office of the Director General of the WHO on January 9 have met with no response. 
    Documents acquired through the Danish Freedom of Information Act revealed that Prof Juhani Eskola, a Finnish member of the WHO board on vaccines, Strategic Advisory Group of Experts (SAGE), received almost € 6.3 million in 2009 for his vaccine research programme,THL,from vaccine manufactures, GSK, quali
fying GSK as THL's main source of income. SAGE advises WHO director-general Margaret Chan and recommends which vaccines and how much of it member countries should purchase for the pandemic, pointed out the Danish paper. 
    However, Professor Eskola is not alone. Danish journalists reported on six other members of SAGE with financial ties to various pharmaceutical companies. They include Dr 
Peter Figueroa, Dr Neil Ferguson, Prof Malik Peiris, Dr Arnold Monto, Dr Friedrich Hayden and Dr Albert Osterhaus.Barring Dr Figueroa,who revealed that he had accepted a research grant from Merck,none of the others made any disclosures. 
    Many pharma firms, like GSK, Novartis,Solvay,Baxter,MedImmune and Sanofi Aventis, with which the vaccine board members had ties are also makers of vaccines, including the H1N1 vaccine. None of the WHO members, barring one, declared any conflict of interest despite having financial ties with the firms in the form of research grants and consultancies. 
    In a statement on December 3, WHO claims that numerous safeguards are in place to manage possible conflicts of interest. "Members of SAGE are required to declare all professional and financial interests, including funding received from pharma firms or consultancies or other forms of professional engagement with pharma companies.'' 

FALSE ALARM? 
Strategic Advisory Group of Experts (SAGE) advises WHO director-general Margaret Chan which vaccines and what quantities countries should purchase 
SAGE member Juhani Eskola received almost 6.3m euros in 2009 for his vaccine research programme from GlaxoSmithKline (GSK) 
6 other members of SAGE had financial ties to various pharma companies. Only 1 revealed that he had accepted a research grant from Merck 
Dr Wolfgang Wodarg, head of health at Council of Europe, has alleged that swine flu was a 'false pandemic' driven by drug companies 
Was swine flu a 'false pandemic'? 
    The World Health Organisation had claimed that "the names and affiliations of members of SAGE (experts' group) and of SAGE working groups are published on the WHO web site, together with meeting reports and declarations of interest submitted by the experts. Allegations of undeclared conflicts of interest are taken very seriously by WHO, and are immediately investigated''. However, there is no such disclosure by these SAGE members on the WHO website. 
    The accusation of Dr Wolfgang Wodarg, head of health at the Council of Europe, that the swine flu outbreak was a 'false pandemic' driven by drug companies that made billions of dollars from creating a worldwide scare has added fuel to this controversy. Dr Wodarg is quoted as saying: "They have made them squander tight healthcare resources for inefficient vaccine strategies and needlessly exposed millions of healthy people to the risk of unknown side-effects of insufficiently tested vaccines.'' 
    Despite the huge pandemic scare created by the WHO officials, less than 1% people infected with swine flu died as the disease swept through the world. Several European governments have admitted to being stuck with a huge surplus of H1N1 vaccines worth millions. The UK government has stated that it faced wasting millions of pounds if it was unable to get out of the huge orders for vaccines placed with the pharmaceutical giant GSK. The UK is already reportedly considering selling or giving away millions of doses. Several other countries, including France, have already announced plans to sell off their surplus vaccines. 
    Interestingly, in the UK, it had earlier been reported that Sir Roy Anderson, a scientist who advised the UK government on swine flu, also held a post on the board of GSK for which he was being paid 116,000 pounds annually. However, GSK claimed that he had declared his commercial interests and had not attended any meetings related to the purchase of drugs or vaccine for either the government or GSK.


Thursday, January 7, 2010

Reliance MediaWorks acquires ilab UK

Buyout To Help Reliance Tap Entertainment Cos Looking To Outsource Production & Development

RELIANCE MediaWorks (RMW), formerly Adlabs, has acquired the assets of ilab UK Ltd., one of only two film processing facilities operating in London's Soho. With this acquisition, RMW has expanded and strengthened its international presence which is already spread well across the globe. 

    With ilab, RMW offers a dedicated film and media services facility in London, that will offer front-end, processing, restoration, 2D to 3D conversion and post-production services to broadcasters and studios. In fact, ilab has been the lab of choice for high end processing for film, television, commercial and shorts productions. "Our expansion is growing at a remarkable pace. The UK is one of the world's leading post-production markets and now we have a presence there. Through RMW UK we would provide next generation services for the local film makers and broadcasters, while also catering to Hollywood and Hindi film businesses," said CEO RMW, Anil Arjun. 
    While strengthening their services portfolio in UK, Arjun says they gain talent, experience and local learning that ilabs team brings on board. "We look forward to the creative synergies that integrating of UK operations would bring to the entire film and media services value chain that RMW has developed across continents, " Arjun added. 
    RMW UK has already secured image processing and restoration work for two high profile projects from BBC at RMW's 
LA-based subsidiary Lowry Digital, Hollywood's leading film restoration expert. Lowry Digital has handled projects for leading studios like Walt Disney, Paramount Pictures, MGM and 20th Century Fox and entertainment leaders like George Lucas, Steven Spielberg and James Cameron. Also recently, Lowry Digital has handled the restoration of footage sent back to Earth from Apollo 11, as part of the 40th anniversary celebrations of the mission for NASA. 
    To further enhance the synergy between the services offered by RMW across three continents, the company has established an optical fibre network, first of its kind, through Reliance Globalcom's Ethernet Private Line. This network has already been used for close to a year for dis
tributing digital cinema releases of Indian films from Mumbai to the US. 
    In the past year, ilabs has been the rushes house of choice for the majority of high-end film originated Drama Series for the BBC and offers bespoke, specialist rushes service night and day for the commercials, feature and broadcast market. Apart from tying in with RMW's lab facility in Mumbai, it will be able to offer lab, rushes and transfer services to the many Indian films that are shot on location in London and UK each year. 
    Reliance MediaWorks has a dominant and comprehensive presence in Film Services: Motion Picture Processing and DI; Visual Effects; Film Restoration and Image Enhancement; Digital Mastering: Studios and Equipment rentals with facilities located at US and India.

EYEING BUSINESS: Processing success

Reliance outlets under attack in AP

FANS of the late chief minister YS Rajasekhara Reddy attacked Reliance establishments across Andhra Pradesh on Thursday evening after a local TV channel telecast a sensational story published in a Russian online bi-weekly tabloid, exiledonline.com, which alleged that the Ambanis were "involved" in the helicopter crash that killed YSR. 

    There is, however, absolutely no indication that YSR's death was anything more than an accident caused by bad weather. CBI officials who are investigating into the crash have so far not been able to get hold of any evidence to suggest that the crash was due to sabotage. 
    Units owned by the Reliance group, such as Reliance towers, Reliance Fresh marts, communications establishments and petrol bunks were attacked by the Congressmen. One Reliance Big Cinema in Tirupati was also attacked. Reports added Reliance Fresh, Reliance Mart and other outlets were damaged in the districts of Hyderabad, Kadapa, Tirupati, Rajahmundry, Khammam, Karimnagar and Anantapur. 
    A Reliance spokesman confirmed that seven outlets were attacked in Hyderabad, Kadapa, Vijayawada, Eluru and other places. 
    Meanwhile, YSR's son and Kadapa MP YS Jaganmohan Reddy, through his own TV channel, appealed to the party workers not to resort to destruction. "We will bring pressure on the Centre to bring the truth to light. But do not resort to destructive acts," he said. 
    Kadapa saw several Congress workers organising protests and will remain shut on Friday. The police have been put on high alert across the state. 
    The Andhra Pradesh DGP held a late night press meet and called for restraint. Prohibitory orders have been issued in Hyberabad. The state road corporation buses have been cancelled in many routes.

SPITTING FIRE MITTAL BLAMES ALL OF INDIA

LNM slams 'unprepared' govt

Says India Hasn't Been Able To Handle Surge In Big Investments

LN MITTAL successfully fought off French and Spanish governments' resistance to buy Arcelor in 2006, but on Thursday the Indian establishment came in for a stinging attack from the London-based steel tycoon for its inability to facilitate his multi-billion-dollar steel projects at home — nearly five years after these were conceived. 

    In a rare display of frustration at the tardy pace of the progress of his projects in India, the billionaire businessman pinned the blame on the country's inability to move things. "The entire country is to be blamed for the delay in execution of the projects," Mr Mittal, among the world's top 10 richest people, told reporters in New Delhi. And in venting his ire, he joins a long list of business groups, notably the Tatas, Sterlite and South Korea's Posco, which have all seen their projects get mired in problems related to land acquisition, environmental clearances, red tape and a lack of infrastructure. "I am unhappy with the progress achieved so far on the proposed projects in Jharkhand and Orissa," Mr Mittal said. 
    The CEO and majority shareholder of Luxembourg-based ArcelorMittal, the world's largest steel maker, announced plans in 2005 to set up a $10-billion steel plant in Jharkhand following Posco's plan to build a steel mill for $12 billion in Orissa, which could have made it the biggest foreign direct investment in India. In 2006, Mr Mittal said he would build a similar plant in Orissa.But none of these plans have progressed as government departments dither and locals accuse these companies of strong-arm tactics in grabbing land they have lived on for centuries without adequate compensation. 
    After years of waiting, Mr Mittal rationalises that the problems may be due to the country's inability to handle a surge of big-ticket investment proposals, fuelled by unprecedented interest in investing in India. 
ArcelorMittal may look at Chhattisgarh 
"WE have not experienced this kind of growth and interest in investments in India before. Neither the central government nor the states were prepared for such growth," he said, adding that he would share his concerns with the prime minister. 
    But Mr Mittal, who built his global steel empire starting off with a small steel plant in Indonesia in the 1970s, is not giving up on his ambitions in the country of his birth yet. While he lives in London, Mr Mittal continues to retain an Indian passport. 
    With his efforts to kick-start greenfield projects in India not gaining traction, Mr Mittal, who has most of his assets overseas, last year sought to build up an Indian presence using another route. He has agreed to buy up a 35% stake in Uttam Galva Steels for an estimated Rs 500 crore. 
    "Since I left India in 1976, it has always been my intention to build an operating presence here and this transaction will give us our first manufacturing presence on the ground," Mr Mittal said in a statement last September. Mr Mittal is also moving on other fronts. 
    In November last year, ArcelorMit
tal got permission from the Karnataka government to set up a Rs 30,000-crore steel plant with a capacity to produce 6 million tonne of steel per year. The state government will ensure basic infrastructure support for the project, which is expected to spread over 4,000 acres and also comprise a 750-megawatt power plant. 
    "The Karnataka project may become a priority if work on Jharkhand and Orissa steel projects doesn't take off soon," Mr Mittal said on Thursday. 
    ArcelorMittal may look at Chhattisgarh as an alternative location to set up a 12-million-tonne steel manufacturing unit, if any of the plants in Jharkhand and Orissa don't take off, he added. 
    Plans of companies such as Tata Steel, which announced a 6-milliontonne plant in Orissa in 2004, and JSW Steel, which wants to boost capacity by 12 million tonnes in setting up plans in three states, are all crawling and it may be difficult for many companies to complete the projects on schedule. 
    "I sympathise with the companies building greenfield projects," steel minister Virbhadra Singh was quoted as saying last month. "It's a time-consuming process."

We have not experienced this kind of growth and interest in investments in India before. Neither the central govt nor the states were prepared for such growth. 
LN MITTAL CEO, ARCELORMITTAL

 

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