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Monday, November 29, 2010

BSNL can impose max penalty on RCOM for masked calls: SC

NEW DELHI: The Supreme Court on Monday upheld BSNL's right to impose the maximum penalty on the Anil Ambani group firm Reliance Communications (RCOM) for wrongly routing international calls through the state-run telco's network as local connections by tampering with Calling Line Identification (CLI) numbers.

RCOM, India's second-largest mobile phone operator, slumped to a record low on BSE after the apex court order. Its shares fell 2.2% to Rs 128, the lowest since listing in March 2006. The BSE sensex gained 1.4% on Monday.

A three-judge bench headed by the Chief Justice S H Kapadia said that as per BSNL's interconnect agreement with RCOM, the state-run firm had the right to levy a penalty on all calls routed by the R-ADAG firm through its network, including local calls, based on the highest call rate slab.

The Supreme Court also held that by masking international call as local, RCOM had tried to destroy the "principles of level playing field" and BSNL has the right to recover its losses.

The apex court also set aside the earlier order of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) in favour of RCOM, saying such violations come under "strict liability", where the PSU can impose penalty on each and every call from their Point of Interconnection (PoI).

"We set aside the impugned judgment and remit the matter to TDSAT to decide the matter de novo in accordance with the law laid down," said the bench, which also comprised Justices K S Radhakrishnan and Swatanter Kumar.

TDSAT had on May 24, 2010, set aside the bills raised by BSNL and said that Clause 6.4.6 of the Interconnect Agreement between RCOM and the PSU was penal in nature and, therefore, the PSU cannot impose penalty on all calls routed by RCOM through its PoI.

TDSAT had further said the amount of penalty was not commensurate to the actual damage.

Read more: BSNL can impose max penalty on RCOM for masked calls: SC - The Times of India http://timesofindia.indiatimes.com/business/india-business/BSNL-can-impose-max-penalty-on-RCOM-for-masked-calls-SC/articleshow/7013017.cms#ixzz16jBEnjBo

Friday, November 26, 2010

SPECTRUM HOARDING BIGGER SCANDAL

Ratan Tata says Radia tapes a smokescreen

RATAN Tata, the chairman of India's largest conglomerate, has described the media frenzy over the tape leaks featuring conversations between Niira Radia, the owner of a public relations agency, and prominent politicians, industrialists and journalists as a "smokescreen" which was deflecting attention from bigger scandals.
    In an interview with the broadcaster NDTV, Mr Tata suggests that the real scandal was out-of-turn allocation of spectrum and what he described as the "hoarding" of spectrum by some telecom companies.
    "There has been a smokescreen behind what is really the so-called scam, which really is out-of-turn allocation of spectrum, hoarding of spectrum by important players
for free, and things of this nature," Mr Tata said.
    Niira Radia, whose agency handles public relations for the Tata Group and Reliance Industries, has been questioned by government agencies that are probing her alleged role in the award of a number of tele
com licences in 2008. The government's chief auditor has said that these licences cost the exchequer 1,76,000 crore because they were sold at prices set in 2001. A Raja, the telecom minister when the permits were issued, was forced to step down earlier this month.
    In the interview, Mr Tata said the government should hold a proper investigation to book the guilty. "I wish the government would take a stand, bring order... have an investigation, book people who are guilty of something," Mr Tata said.
    A government agency has sent notices to nine telecom firms including Tata Teleservices, India's fourthbiggest mobile operator, over investigations related to the alleged multibillion dollar scam, media reports said.
Book people who are guilty: Tata
IN remarks posted on the channel's website, Mr Tata criticised the media coverage of the tapes, saying it was a steep comedown from two weeks ago when US President Barack Obama backed India's bid for membership of the United Nations Security Council and praised India's achievements.
    "We have somewhat slipped into a morass of a series of allegations... unauthorised tapes flooding... the media going crazy on alleging, convicting, executing... literally character assassination.... I wish the government would take a stand, bring an auditor... have an investigation and book people who are guilty of something, but
stop this sort of Banana Republic kind of attack on whoever one chooses to attack on a basis unsubstantiated, even before the person has a very Indian right — namely to be considered innocent until found guilty in a court of law."
    The tapes feature conversations between Ms Radia, Mr Tata and other industrialists, politicians and journalists. The tapes suggest that Ms Radia was lobbying for the continuation of Mr Raja as telecom minister after the 2009 elections.
    Last week, the Supreme Court criticised Prime Minister Manmohan Singh for what the judges described as his delay in probing the scandal.
    The scandal has now engulfed
Parliament as opposition parties have kept it shut since November 9 over demands to set up a joint parliamentary committee, or JPC, to probe the allotment of telecom licenses. The government has resisted this, saying investigations by the Central Bureau of Investigation and the Enforcement Directorate, which probes violation of foreign exchange laws, were enough.
    The shutdown has weakened the government's ability to move key economic measures and delayed legislation in areas such as banking and mining, although the government is not at risk of collapsing.
    (The article is based on inputs
    from a Reuters report and
    from the website NDTV.com)


Lavasa lands in trouble for flouting green laws

SHOWCAUSE NOTICE: JAIRAM ORDERS WORK TO STOP

THE Union environment ministry has issued a showcause notice to Lavasa Corporation, which is constructing a 25,000-acre hill township near Pune, alleging myriad violation of environmental laws. The company, promoted by a clutch of investors led by Hindustan Construction Co (HCC), will have to stop construction work immediately.
    The notice from the ministry continues a high-profile crackdown on violators of India's hitherto loosely-enforced environmental laws by environment minister Jairam Ramesh.
    The high-profile project described as independent India's first hill city may get away by paying a "hefty penalty", according to sources in the environment ministry. This penalty will have to be paid if the company is unable to explain violations, including construction above 1,000 metre of sea level, and without prior clearance on an area over 20,000 sq metre.
    The second phase of the project is unlikely to receive clearance in the wake of the new findings, they added.
    The move immediately pulled down the HCC stock, and may impact the company's proposed initial public offering (IPO). On Friday, after the news of the showcause notice to Lavasa, HCC shares slipped 19% to close at 40 on NSE.
    The stock had declined 11% and 2.9% on Thursday and Wednesday, respectively, after Lavasa's name cropped up in
an unrelated scam involving alleged payment of bribes by a number of companies, largely real estate firms, to bank officials. News broke on Wednesday that the company had used Money Matters, a debt arranger at the heart of the scandal, for some property transactions.
    HCC chairman and managing director Ajit Gulabchand has said these transactions were completely legal.
    The environment ministry had sought a report from the Maharashtra environment department in June after a complaint by an NGO called the National Alliance of People's Movement, whose leaders include Medha Patkar, a well-known activist.
    The state government arm responded in August saying a no-objection certificate by it was later converted into a final environmental nod based on two assumptions.
Lavasa project will need fresh approval
THESE were that buildings had been built below 1,000 metre and the proposed construction was limited to an area less than 20,000 sq metre. Both limits have been breached, the state government report says.
    The Union ministry has been able to intervene due to an Environment Impact Assessment Notification issued in 1994 (later amended in 2004), according to which any new industrial estate that had commenced without central clearances under the notification will now be required to do so if construction work had not commenced as on July 7, 2004, or if the expenditure occurred till that date had not exceeded 25% of the sanctioned project cost. According to the report by the Maharashtra environment department, the project cost incurred by the 2004 threshold was only 5.33% of the total cost.

    The project, which has often been linked to Agriculture Minister Sharad Pawar, will now have to get fresh clearances from the ministry.
    Pawar, in a recent newspaper interview, had strongly defended the project saying it was aimed at creating a modern hill station, something
that had ceased after independence. He had said he had personally identified the areas where such a hill station might be set up.
    The environment ministry's intervention might affect the company's plan to float an IPO. The company had filed a draft red herring prospectus with Sebi last week, and the market regulator had approved the proposal. The corporation aims to raise 2,000 crore through its IPO.
    A company spokeswoman refused to comment in detail on the showcause beyond saying, "We have received the notice and the senior management is studying the same and contemplating a response."
    HCC owns 64.99% of Lavasa Corporation. Its other major investors include Gautam Thapar's Avantha Group with 16.25%, Venkateshwara Hatcheries with 12.8%, and individual investor
Vinay Vithal Maniar with 6%.
    A number of banks have significant exposure to the Lavasa project. These include ICICI Bank ( 250 crore), Axis Bank ( 225 crore), Bank of India ( 150 crore), Allahabad Bank ( 500 crore), IndusInd Bank ( 500 crore), Andhra Bank ( 250 crore), Union Bank ( 500 crore) and Jammu
& Kashmir Bank ( 100 crore).
    Earlier this year, an inquiry by the state government suggested the Lavasa deal had deprived Maharashtra of revenues. An inquiry conducted by the state revenue department says Lavasa bought 600 hectare from farmers who were given land by the state. Therefore, Lavasa should have paid 75% of the price of the land to the state. Instead, it just paid 2% to the government.
    But company officials say Lavasa bought 350 hectare, not 600 hectare, as stated in the report. It paid 2% because this was the amount demanded by the collector's office.
    The government report also says Lavasa bought 98 hectare of tribal land without the prerequisite clearance from the government—a charge Lavasa denies completely. The report also finds fault with the state's irrigation department—MKVDC—
for leasing 141 hectare at throwaway rates to Lavasa. The government at no point sanctioned this lease and while the market price should have been 20 crore a year, the lease was signed for 3 lakh a year.
    Lavasa argues that the lease signed in 2002 was based on the market rates at that time.


Thursday, November 18, 2010

Bells palsy:Trai annuls 62 licences for rollout delays

Here's the bellwether of scams

THE telecom regulator has asked the government to cancel 62 of the 122 licences issued by former telecom minister A Raja under controversial circumstances in 2008 to new companies, including joint ventures of international operators such as Telenor ASA, Emirates Telecommunications Corp and Sistema JSFC, because they had not been able to launch services in time.
    The recommendations of the Telecom Regulatory Authority of India—which claims that its views were ignored by Mr Raja—strengthens the possibility of several licences issued in 2008 being revoked.
    On an action-packed day,
the telecom department, under new minister Kapil Sibal, decided to seek legal opinion on the validity of the telecom licences dished out by Mr Raja after the country's national auditor said 70% of these mobile permits were obtained through fraudulent means, an official aware of the development told ET.
    It is also learnt that Mr Sibal convened a meeting of top officials of the telecom
ministry to discuss the regulator's recommendations, but ET has been unable to ascertain the outcome of this meeting.
    The Comptroller and Auditor General of India, or CAG, in its report on Tuesday said 85 of the 122 licences given to six companies, notably Uninor, Videocon, Loop Telecom, S Tel, Etisalat and Allianz Infratech, were illegal as these firms were not eligible to obtain them. The auditor added that these six companies had disclosed "incom
plete information and submitted fictitious documents and used fraudulent means" for obtaining them. Many companies were allowed to change 'doctored and fictitious documents' later, in some cases even as late as 12 months after they had submitted their applications.
    CAG said most licensees had prior information and even had
pre-dated demand drafts, allowing them to jump the queue for spectrum. An earlier probe by the ministry of corporate affairs had also established that these companies were not eligible to receive mobile permits and had submitted doctored and fake documents along with their applications. Telcos missed deadlines
THE companies facing the threat of losing their licences claimed that they were not in violation of the rollout obligations. But, Trai officials said their investigations revealed that 34 licensees had not rolled out services while 28 had launched operations, but failed to meet the minimum criteria as specified in their agreements. India is divided into 22 telecom circles, and pan-India operators get individual licences for each region. Trai chairman JS Sarma, in a note to the communications ministry, said mobile permits held by Loop in 14 service areas, Etisalat DB Telecom in two service areas, Sistema Shyam Teleservices in 10 service areas, and Unitech Wireless in eight areas be withdrawn because of these lapses.
    The regulator further recommended that 13 licences of Etisalat DB, five of Loop Telecom, and 10 of Videocon Telecommunications be cancelled, as the network rollouts undertaken by these companies fell short of the requisite conditions.

    India's telecom regulations mandate that any company with a licence must meet the deadlines for commercial launch of services, and the telecom department has the powers to cancel licences of mobile phone companies in circles where they have not launched services even a year after getting the licence. The six new mobile phone companies had missed several deadlines for launching commercial services. Existing laws mandate mobile companies to provide commercial services in at least 10% of the district headquarters in a circle by the end of the first year. DoT can fine companies 5 lakh a week per circle for the first 13 weeks of delay. The fine goes up to 10 lakh each for the next 13 weeks, and to 20 lakh for delays up to 26 weeks.
    Trai said imposing penalties for failure to roll out services would run into huge amounts. "So, we had suggested that these licences should be cancelled. This would vacate enormous amount of spectrum (radio waves)," the regulator added. CAG had slammed the telecom ministry for not recovering 679 crore as penalty or liquidated damages from six new operators for missing deadlines.

    Refuting the regulator's arguments, Sistema Shyam, in which the Russian conglomerate holds 74% stake, said, "Amongst the new telecom operators, Sistema Shyam Teleservices Ltd (SSTL) was the first company to launch its services." "The company has complied with all its rollout obligations in all the 22 telecom circles and has already secured over 7 million voice subscribers and over 3,00,000 data customers," it said in a statement.
    Norway's Telenor, which holds a controlling stake in Unitech Wireless had earlier warned that any move to cancel licences could impact foreign investment in India.
    "We have not received any information from Trai regarding our licences in India. Therefore, we can't comment on this matter," Uninor said in an emailed statement, while adding that the company has launched its services across India... and is therefore a real operator." Loop Telecom's spokesperson said the company has not 'received any communication from Trai or DoT, and therefore could cannot comment on specifics'.


SC to PM: Explain silence on Raja

Unprecedented Move: Wants Affidavit By Sat, Says Matter 'Extremely Serious'

New Delhi: Prime Minister Manmohan Singh remained in the Supreme Court's line of fire over the 2G spectrum scam with the apex court on Thursday asking the government to state on oath the reasons for his failure to respond for 11 months to a petition seeking sanction for prosecution of ex-telecom minister A Raja.
    A bench comprising Justices G S Singhvi and A K Ganguly gave the government two days—that is, till Saturday—to file an affidavit listing the reasons for the delay by the Prime Minister.

    The SC's directive is unprecedented. This is the first time that the court has insisted on an explanation from a PM through an affidavit. Usually, it would settle for a perusal of files. The next hearing in the case is scheduled for Tuesday.
    The court's directive in what the bench has termed a "very, very sensitive matter'' will ensure that the PM remains under the public
glare over the spectrum scam and that the logjam in Parliament will not abate any time soon. Apex court cites 'bitter experience' in the past T he intent of the bench came through very clearly in the hearing on Thursday as the two judges brushed aside solicitor general Gopal Subramaniam's praise for the PM and insisted on an affidavit on Singh's behalf.
    Indeed, at another point in the hearing, the court agreed with the petitioner that a response from Raja could not be seen as a rebuttal of Swamy's argument on the PM's failure to respond to his petition. "Raja is not the sanctioning authority. We wanted the reply from the sanctioning authority,'' the bench said as it explained why it was insisting on an affidavit instead of going ahead with the hearing on the basis of oral arguments of the SG.
    The bench cited its "bitter experience'' in the past when the government held back facts from the court after it had allowed oral submissions. It further said that the petitioner was unable to verify facts when the court allows oral submissions. The petition in question was filed by Subramaniam Swamy who on November 21, 2008, sought the PM's sanction for Raja's prosecution. Swamy, who listed "evidence'' of Raja's involvement in the 2G spectrum scam, has claimed that he got no response for 16 months. Stressing that the case was "very, very
sensitive'', the court said oral arguments should not be the basis of adjudication. It reminded the SG that this was why on November 15 it had repeatedly asked him whether he needed time to seek instructions from the sanctioning authority (the PM). The SG sought to paint an "everything is clean and shorn of irregularity'' picture, while assuring the SC that all letters from Swamy had been dealt with more than adequately and responded to.
    Swamy contradicted the SG, pointing out he had written five times to the PM and had received only one communication, that too from the Department of Personnel and Training, on March 19, 2010. "Yes, I have received another communication but that was from then telecom minister A Raja,'' he added.
    The bench shot back, "This is a very, very sensitive matter. We think it will be appropriate that you put in an affidavit. If it is oral arguments and something is kept back from the court, nothing can be done later. Speaking from the bitter experiences of the past when things have been kept back from the court, it will be better if an affidavit is put on record.''
    It further explained that simply showing the files to the bench would not suffice in an extremely serious matter as the petitioner would not have the advantage of seeing the files.

STRAIGHT TALK


Is Raja the sanctioning authority? We wanted the reply from the sanctioning authority (the PM) on the delay. We think it will be appropriate that an affidavit is filed on behalf of PM as the matter is very, very serious in nature
    SUPREME COURT


It must be clear things have been dealt with transparently. Every letter of Swamy has been dealt with and he has got the replies. He has been answered more than adequately
    GOPAL SUBRAMANIAM
    SOLICITOR-GENERAL


I have received only a single communication from the DoPT on behalf of PM to my petition seeking sanction to prosecute A Raja. And yes, another letter from Raja himself
SUBRAMANIAM SWAMY


LEGAL VIEW


PM has to explain? Unusual, very unusual? I don't recollect anything of this sort
    SOLI SORABJEE


There's been a cover-up. The highest court of the land is entitled to find the truth
RAM JETHMALANI

Wednesday, November 17, 2010

India Drained Of 20 Lakh cr During 1948-2001: Study

ZEROING IN ON BLACK MONEY

$462000000000

IN A season of swindles, kickbacks and scams, here is some more on the mother of them all. Black money — the popular moniker given to the billions seeded by dirty deals and whisked away abroad from the taxman's prying eyes — has received much attention in recent years.
    The opposition never tires of screaming foul at the government. The government, for its part, is at pains to say it is doing all it can to track down the illegal stash.
    Despite the cacophony, an estimate of the scads of black money in secret bank vaults overseas has long been one big unknown, resulting in a great deal of speculation and glib talk around the subject. Finally, some help is at hand.
    A new study by an international watchdog on the illicit flight of money from the country, perhaps the first ever attempt at shedding light on a subject steeped in secrecy, concludes that India has been drained of $462 billion ( 20,556,848,000,000 or over 20 lakh crore) between 1948 and 2008. The amount is nearly 40% of India's gross domestic product, and nearly 12 times the size of the estimated loss to the government because of the 2G spectrum scam. The study has been authored by Dev Kar, a lead economist with the US-based Global Financial Integrity, a non-profit research body that has long crusaded against illegal capital flight.
    Mr Kar, a former senior economist with the International Monetary Fund, says illicit financial flows out of India have grown at 11.5% a year, debunking a popular notion that economic reforms that began nearly two decades ago had tempered the creation and stashing away of black money overseas.
Outflows accelerated after reforms
IF CAPITAL outflows were a child of the independence era, the problem came of age in the years after the reforms kicked in. Nearly 50% of the total illegal outflows occurred since 1991. Around a third of the money exited the country between 2000 and 2008.
    "It shows that reforms seem to have accelerated the transfer of black money abroad," says Mr Kar, whose study titled 'The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008' sifts through piles of data on the issue over a period of 61 years. The study, which Mr Kar says is the most comprehensive one yet on illicit financial flows from India, will be made public on Thursday.
    His report comes amid a renewed government push in recent months to pursue black money stashed abroad. In late August, the government signed an agreement with Switzerland — its banks top a list of usual suspects — that will enable exchange of information on tax evaders. New Delhi is also in talks with at least 20 tax havens, particularly Mauritius, to extract similar information.
    The government is also attempting to gain a measure of the total unaccounted money circulating in the economy. The finance ministry last week approached the National Institute of Public Finance and Policy to get a fix on such money.
    But M Govinda Rao, director of the institute, says his think-tank is yet to decide on going ahead with the exercise because it is not an easy task. "A study on this subject is a huge challenge because one is dealing with a very big problem that covers hordes of money from many sectors," he says.
    Black money turned into an election issue during the 2009 general elections, with the BJP harping on the issue throughout its campaign. Its leader LK Advani has been the most vocal critic of the government on this issue, time and again questioning the government's resolve to chase illegal funds. Mr Advani recently urged the government to publish a white paper on the issue.
    While Mr Advani was unavailable for comment, the government's detractors on this issue say there is more talk than action to address this issue.
    "Everybody knows about the gravity of the problem, but the government has not shown the political will to bring the money back to India," says Prakash Karat, general secretary of the Communist Party of India (Marxist).
    The government has, however, received praise from Paris-based Organisation for Economic Cooperation and Development, which has been at the forefront of the fight against tax evasion. OECD, whose relentless offensive is largely credited with lifting the veil of secrecy over umpteen tax havens, hailed India's efforts to crack down on tax evasion and sign information exchange agreements earlier this year.
    These are but short-lived answers, say experts, adding that an overhaul in the global financial system is central to a lasting solution. New tax havens will spring forth when pressure mounts on existing ones.
    That is not to say there are only a few tax havens out there. Indeed, at least 91 such hotspots flourish across the globe. Asian countries, particularly Thailand, Singapore, Hong Kong and Macau, too are emerging as new destinations for parking illicit funds.
    Besides Switzerland and Mauritius, Indian money is also said to end up in
Seychelles and Macau. Due to the illicit nature of these deposits, pinpointing the journey's end of the bulk of India's black money is tenuous at best.
    The GFI study gives a measure of the amount of money that the government is chasing, but it is only a fraction of the $1.4 trillion that the BJP claims is the illegal stash.
    GFI acknowledges as much, saying its figure is conservative and hasn't taken into account smuggling and certain types of trade mischief. It also admits to gaps in available statistics, lamenting the lack of data on the consolidated fiscal balance with the government, which has hampered research. If these indicators were counted, India's total illicit outflows would well be half a trillion dollars.
    But Mr Kar says the $1.4 trillion figure was an "estimate", while the numbers in the latest report are based on real data.
    Still, GFI says that by no stretch of imagination is its calculation insignificant, more so when viewed against the country's existing external debt at nearly $230 billion.
    "It means India could not only have contracted less debt or even paid it off, but another half would also have been left over for poverty alleviation and economic development," says Mr Kar. "There is no question that this huge loss of capital has set India back in its struggle to eradicate poverty and illiteracy."
    The study has based its findings on the World Bank Residual Model that tracks illicit outflows by measuring the disparity in a country's recorded source and use of funds. It also delves into IMF's 'trade-mispricing' model that compares a country's recorded imports to what the world says it exported to the country as well as the recorded exports against its global imports. The gaps tell the story.
    The perpetrators of illicit outflows, says the study, are wealthy individuals and private companies. Black money is also abetted by the existence of an 'underground' economy that emerged out of illegal activities and assets spawned by such activities.
    The unabated growth of slush funds is borne out of a growing affinity of culprits for offshore financial centres, or tax havens, at the expense of banks in developed countries such as the US, France and the United Kingdom. The study finds that the share of deposits in offshore tax havens grew to 54.2% in 2009 from 36.4% in 1995.
    The study is as much an indictment of feckless government action as it is about shedding a light on the nature of illicit financial flows. "The sharp rise in illicit flows means that tax evasion (which is part and parcel of such flows) is also increasing sharply," says Mr Kar.
    "In the absence of good governance and poor institutional oversight, the desire for the hidden accumulation of wealth drives more of such transfers," he adds.
    Though India cannot end its black money problem alone, there are challenges it must address by itself, says the study. Legal institutions and procedures need to be strengthened and streamlined. The guilty should be punished --the architects of the Commonwealth Games scam, for example -- swiftly. And tax policies must be rationalised.
    "Sure, black money is there in most countries but if it worsens poverty, robs human rights and drives centrifugal forces such as naxals, it becomes a problem that can no longer be ignored," says Mr Kar.


Axis wins Enam, buys its best for 2,067 cr

WIN-WIN DEAL POSITIVES FOR BOTH SIDES

Snaps Up Investment Banking, Institutional & Retail Broking Enam exits with handsome gains while deal will pay off for Axis in long term given strengths & profitability of investment banking & institutional broking units

AMBITIOUS private lender Axis Bank has snapped up the best of the house of Enam—one of Dalal Street's most influential brokerage-cum- investment banks.
    Axis, led by CEO Shikha Sharma, a former ICICI Bank director, will acquire Enam Securities' key businesses such as investment banking, institutional and retail broking, and distribution of financial products in an allstock deal worth 2,067 crore.
    With this, Enam will exit its famed agency businesses that will be demerged from Enam Securities to a wholly-owned Axis subsidiary. Close to 400 Enam officials will move to the new outfit that will be headed by Manish Chokhani—a key member of the Enam management and one of the four shareholders in Enam Securities.
    Mr Chokhani, and the founders of Enam—Nemish Shah, Vallabh Bhanshali and Jagdish Master—will own a 3.3% equity in Axis after the bank issues new shares to
them. The transaction will need approvals of RBI, Sebi, and the high courts of Gujarat and Mumbai.
    The story was broken by ET NOW, this paper's business channel, at 12:35 pm on Wednesday, ahead of other broadcasters and wire services. Later in the afternoon, ET NOW correctly reported the swap ratio, which is 5.7 Axis Bank shares for one Enam share.

    Mr Bhanshali, Enam chairman and the group's public face, is reluctant to call the deal a "selloff" or "acquisition". "This is a match of similar cultures, and synergies will kick in from Day 1... You may say we are known for IPOs, but for me Enam represents a set of values that will continue to survive," he said while jointly addressing the media with Ms Sharma.
    Mr Bhanshali, whose firm has dominated the public issue market for 25 years and published the first nine research reports in an era when few attached importance to them, has been invited by Axis to join the bank's board. This, however, will have to be cleared by RBI.
    As part of the deal, Enam and its founders will enter into a five-year non-compete agreement with Axis, and the private bank will have the right to use the Enam brand for two years.
Deal came as a surprise to many
FOR Axis, the once-conservative lender that is undergoing a slow transformation under its new CEO, the deal is a strategic move to get into a lucrative business and shore up fee income, with Enam managing most large equity offerings, including the recent issuances by Coal India and Power Grid Corporation. "Since the days I was part of the start-up team in ICICI Securities, I have watched Enam, its franchise, quality and sustainability. This complements the corporate banking and debt market franchise of Axis," said Ms Sharma.
    Senior bankers made a mental note of the deal, which was announced on a public holiday and came as a surprise to many. "It's a good move. All customer-centric banks need to offer a bouquet of products and this will strengthen the bank's corporate banking business," said Madhvi Puri Buch, CEO & MD of rival ICICI Securities and Ms Sharma's former colleague.

    According to Rashesh Shah, chairman & CEO, Edelweiss Capital, the deal is fair priced. "Enam is expected to have a profit after tax of 100 crore for the full year. So, 2,000-odd crore for the full stake looks all right," he said. For the seven months between April 1 and October 20, the Enam arm recorded a pre-tax profit of 77 crore against a turnover of Rs 182 crore.
    The deal with Axis excludes Enam's portfolio management service, asset management company and assets under Enam Holdings—the group's investment management arm—all of which will stay with Enam.
    "With Axis Bank's distribution platform of almost 1,100 branches and Enam's retail network, the combined entity will have an opportunity to build a dominant retail franchise as well," said a joint press statement.

    Anil Singhvi, former Gujarat Ambuja CEO and currently an investment banker, advised Enam while Macquarie Group advised Axis on the deal. "Today, ideas alone don't work... you need balance sheet strength," said Mr Singhvi, whose long association with Mr Bhansali and Ms Sharma helped him cobble the deal in less than a month.

SHIKHA SHARMA CEO & MD, AXIS BANK


VALLABH BHANSHALI ENAM CHAIRMAN PAGE 16 

Sunday, November 14, 2010

Samsonite has grabbed share from us


IN JUST about six months after taking over as the managing director of VIP Industries, Radhika Piramal —daughter of business historian Gita Piramal and company chairman Dilip Piramal — has already earned respect from rivals. "VIP is not operating like earlier. She seems to be a tough task master and it shows in VIP's aggression on the field," says a top executive of a rival company. In her second stint with the family business, Ms Piramal is determined to get back the market share VIP has conceded to Samsonite by launching its premium brand. In 2000, after graduating in politics, philosophy and economics from Oxford University, Ms Piramal had joined VIP Industries as a rookie brand manager before joining Harvard. She returned to the company in July 2009 as a director, armed with a degree from Harvard and work experience at Bain & Co and Future Brand in the US. As the MD of the Rs 1,870-crore VIP, her biggest challenges are to relaunch Alfa brand and recruit and retain top talent, Ms Piramal to ET's Maulik Vyas in an interview. Edited excerpts:


VIP Industries is the second largest luggage maker in the world, but it's almost 10 years since you have launched any new brand. Why?
During the 1990s, we had
launched many new brands. However, after a point, we realized that these sub-brands were diluting VIP's brand equity. So, we began focusing more on the flagship brand and at the same time worked towards making other brands stronger. We realized we needed a brand for soft luggage in our portfolio and that's when, Foot Loose, our last brand was launched in 2001. Now we are planning to bring our European brand Carlton to India to cater to the premium segment and also re-launching the Alfa brand for mass market.
VIP is preceived to be a massmarket brand. Aren't you too late to enter the premium segment?
We acquired the premium British brand Carlton in 2004. However, we didn't bring it to India since we had a distribution agreement with French luggage brand Delsey SA then and marketing its luggage in India. We believe there is not enough space for two premium brands. Recently, we took the decision to terminate the
distribution agreement with Delsey to focus on our own brands. We will sell the Carlton brand by opening exclusive stores in the next quarter. Indians are travelling to more geographies than they ever did before and it is time to promote this segment.
Samsonite is aggressively opening stores in India while Tommy Highflier has plans to launch a luggage label from India? How will you deal with such intense competition?
Samsonite came to India in the mid-90s and grabbed some share from us. Currently it has around 15% market share in the organised luggage segment. However, we are determined to get that share back by launching our premium brand in India. We have our own research and development (R&D) centers and

aggressive promotional plans for it. As far as Tommy Highflier is concerned, we have seen that companies with fashion background have not succeeded in hardcore luggage segments.
It's been more than six months since you became the MD. What changes hav you brought to the company ?
This is my second stint in VIP. When I joined the company after a gap of six year, my single aim was to increase our top-line. The biggest challenge is to relaunch Alfa at affordable prices without compromising on the quality. Another challenge is to recruit and retain good people for growing other portfolio brands. We already have a seasoned management team for VIP.

M&M to hit MotoGP track for global bike

INDIA will debut in MotoGP, the world's premier motorcycle championship, next season when the country's youngest motorcycle maker Mahindra 2Wheelers enters the race that may give a big push to the company's marketing and brand-building efforts.
    The two-wheeler arm of Mahindra & Mahindra will participate in the 125cc category of the world's oldest motorsports event started in 1949 and having 18 Grand Prix races across 14 countries from March 2011.
    "This category (125cc MotoGP) is relevant to people in India as bulk of the bikes are in the 110cc and 125cc," said Anand Mahindra, vice-chairman and managing director of the Mahindra & Mahindra group.
    "The advertising in the recent Football World Cup (for the group's technology arm Mahindra Satyam) made us understand the power of global branding and benefited the group. So this is an interesting sequential chapter to our global branding effort," he said.
    Marketing experts believe the association with MotoGP will provide an ideal platform for Mahindra to showcase its two-wheeler technology and give its brand a boost in a market dominated by Hero Honda and Bajaj Auto.
    "The participation in MotoGP will give Mahindra 2Wheelers a leap of a few years as compared to a conventional marketing route," said Jagdeep Kapoor, MD of Samsika Marketing
Consultants. He said the association will give its products a jumpstart in the international market, while its domestic sales will benefit from the halo effect. "Mahindra & Mahindra will gain recognition and credibility in a highly competitive market," said Mr Kapoor.
    Adil Jal Darukhanawala, editor of Times Zigwheels, said it is a big event for the country. "It will be a red letter day to see an Indian manufacturer turn out on the Grand Prix circuits with a bike of its own and fighting for technological brilliance against the elite," he said.
    Mahindra & Mahindra, a leader in SUVs and tractor segments, entered the two-wheeler market with gearless scooters in September last year after acquiring Pune-based Kinetic and rode in to the motorcycle market this September with the 110cc Stallio and the 300cc Mojo.
    "Since we are new in the motorcycle business, participating in such an event will help build the brand equity, showcase technology and will be a testing ground for technology that we will offer to Indian and global consumers," said Mr Mahindra. "It will enhance our entire automotive range, auto
components and IT
domains," he said.

    MotoGP, established as a world championship by the Fédération Internationale de Motocyclisme, has three racing categories: 125cc, where the maximum engine displacement is 125cc; Moto2, the 600cc four-stroke engine category; and MotoGP, where competing bikes must be prototypes with maximum engine capacity of 800cc.
    Mr Mahindra said his company will leverage the MotoGP platform to prove its engineering, design and endurance skills and compete with the best in the world. "We will be taking over an existing racing team and call them `Mahindra Racing Team'," he said.
    M&M has submitted the names of its two bikers to the International Road-Racing Teams Association and Dorna Sports, which administrates and organises all Grands Prix, and is expected to hear from them by the month end.

ANAND MAHINDRA VC & MD, MAHINDRA & MAHINDRA

ED sleuths target Adani after boss’ rap

SLEW OF NOTICES IN THE PIPELINE

THE Enforcement Directorate's investigation of Adani Enterprises has cranked into high gear after a stern reprimand from the agency's top boss to the Mumbai team tasked with the high-profile probe.
    In the past few weeks, it has booked the Ahmedabad-based company for alleged violations of foreign exchange law and is preparing to slap Adani Enterprises with more show cause notices, including for money laundering, a top official connected with the investigation said.
    The burst of activity follows a letter in August by Arun Mathur, the director of the agency, who upbraided the investigators in Mumbai for 'callousness' and 'inordinate delay' in filing complaints against the Adani group, perceived as close to politicians such as Gujarat chief minister Narendra Modi and agriculture minister Sharad Pawar.
    The Adani group, whose business interests include trading, infrastructure and energy, did not respond to phone calls and emails
seeking comments for this story.
    Two show cause notices were issued last month to Adani Enterprises alleging illegal payment of overseas commission and claiming illegal value addition in the export of diamonds during 2004-05 and 2005-06. Such a notice marks the commencement of adjudication by a quasi-judicial authority to give the alleged offenders a chance to explain their version of events.
Adanis face laundering charges
    THE authority's verdict can be challenged in an appellate tribunal and the tribunal's order can be contested in a high court.
    Three more show cause notices are being readied, investigators said. These relate to Adani Enterprises availing buyers' credit without permission of the Reserve Bank of India, opening bank accounts and setting up companies abroad without RBI's approval, and illegal acquisition and holding of foreign exchange.
    The Mumbai investigators have also asked Mr Mathur for permission to register a complaint against the group for money laundering, a criminal offence. They claim Adani Enterprises manipulated and forged overseas suppliers' invoices to facilitate transfer of funds and borrowed money overseas without the central bank's approval. The investigation into the Adani group went into a lull after April 2009, when Adani Enterprises, the flagship company, was issued a show cause notice alleging violations of foreign exchange law involving a sum of over 1,000 crore. Samir Bajaj, a deputy director in Mumbai, attributed the delay in the investigation to 'staffing issues'.

    "As directed by the head office, the investigation has been given top priority and it will be ensured that any delay in the past owing to staffing issues will not recur," he said in a letter to Mr Mathur. ET has seen a copy of this letter.
    Founded by Gautam Adani, who began his career as a trader, the three listed companies of the Adani group — Adani Enterprises, Adani Power and Mundra Port & Special Economic Zone — have a combined market value of nearly 1.5 lakh crore. It has announced ambitious plans over the next decade for the ports, power and coal mining businesses, projects which will require investments of tens of thousands of crore. Investigators said Adani Enterprises and its associate companies engaged in 'irregular' export and import of cut and polished diamonds during 2004-05 and 2005-06 to the tune of 1,990 crore.
    An official described the investigation of the group as the agency's "largest and most complicated", involving a large number of transactions in Singapore, Dubai and Hong Kong. The Adani group raised buyers' credit and foreign loans of 8,149 crore for the import of diamonds and investigators are examining whether RBI guidelines were flouted while
raising these loans, the official said. Two of India's largest public sector banks are under the directorate's scanner for facilitating this and bank officials have been questioned. The agency has also written to 22 other banks in Ahmedabad for further information about the import and export of diamonds by Adani Enterprises in 2004-05 and 2005-06.
    Investigators also said the group opened several offshore companies and bank accounts in Dubai, Hong Kong and Singapore without the RBI's approval or knowledge. They named Adani Global in the UAE and Adani Global Pte in Singapore as two of the subsidiaries that are being investigated. These offshore subsidiaries and bank accounts were used to route money from one location to another, they claimed. Four companies in Singapore — Emperor Exports Pte Ltd, Gracious Exports Pte Ltd, Planica Exports Pte Ltd and Orchid Overseas Pte Ltd — were used to transfer illegal foreign exchange, directorate officials claimed.
    Earlier this year, the group was raided by the Customs department and Gautam Adani's younger brother and group managing director Rajesh Adani was briefly in custody for alleged violation of Customs rules.

FEELING THE HEAT: Gautam Adani

RCOM set to raise $500m abroad

Flag Telecom To Float Bonds In European Mkt To Meet Debt Obligations

AFTER failed efforts to sell equity, Reliance Communications (RCOM), Anil Ambani's cash-strapped telecommunications company, is tapping the bond markets. Flag Telecom, a part of its international network arm Reliance Globalcom, could raise at least $500 million by selling bonds to European investors, said a number of investment banking sources.
    RCOM has appointed Deutsche Bank's investment banking arm to spearhead the latest fund-raising effort. If successful, the funds will be used to meet debt obligations, including $200 million worth of convertible bonds held by overseas investors due May 2011.
    Executives at Reliance Communications did not respond to queries while Sanjay Agarwal, head of investment
banking in India at Deutsche Bank, declined comment.
    The company has another $900 million of foreign currency convertible bonds, or FCCBs, maturing February 2012. The company has a current net outstanding debt—which rose over 700 crore between July and September this year—exceeding 30,000 crore.
Previous attempts failed
THE effort to raise fresh debt comes after several recent failed attempts by the company to gather funds through asset divestitures, in part or full, of its telecom tower business and Globalcom.
    Intense competition in the world's fastestgrowing mobile markets has dented its profits. The company reported a 40% plunge in profits in the second quarter of this fiscal to 446 crore—its fifth-straight quarter of profit fall.
    Reliance Communications acquired Flag Telecom, the undersea cable business, in 2003 for about $207 million. After a recent restructuring, the company's Indian enterprise business has been added to Reliance Globalcom. Speculation is rife that the restructuring was done largely to make the unit attractive to potential suitors.
    Until two years ago, RCOM had said it planned to launch an overseas public share sale of Globalcom. That plan was shelved.
    The company was recently involved in another deal discussion, to merge its tower business with GTL Infrastructure, to create the world's largest independent telecom infrastructure company. That deal was scrapped early September. Recent efforts to part-sell Reliance Communications to a strategic investor also did not fructify.


Saturday, November 13, 2010

The nation is witnessing new winds of transformation impacting entire India

The Tortoise Paradigm

THE WORLD has been waiting to see whether India will "make it". The world has also been wishing India well in meeting its challenges from poverty to poor infrastructure, from lack of education and health to regional security. The list is unending and there many sceptics. The year 1991 brought a new paradigm of development with a central role for entrepreneurship and the private sector in economic activity. This process has evolved creating a new balance and, bringing with it sustainable 9% plus annual GDP growth. The nation now sees the new winds of transformation impacting the entire population of India, to include the rural people.
    The high growth rate is key because it generates many positives. First, the level of resources is unprecedented enabling action on multiple issues. Second, jobs and self-employment on a scale hitherto never experienced. Third, income in the hands of people beyond all precedent. Fourth, consumption, savings and investment, all on a new high. Fifth, a real change in living standards and in aspirations. Sixth, a new impetus to providing education and health to all. Seventh, a huge momentum of infrastructure development.

    So, sustained high growth has led to the term "India Rising" because there is visible change in the country, touching nearly every corner. At 7% growth, it was still incremental. At 9% plus it is transformational. For India and Bharat. Combined with this is technology. IT, TV, Telecom, to name just three areas, have touched the lives of hundreds of millions, giving new hope. People living in rural areas now have cell phones to communicate, TV to connect to the country and world and IT enables empowerment unimaginable ten years ago.
    The impact of all of this has just begun. Especially, the use of technology to enable distance education and telemedicine, as well as e-governance. The "reach" and impact will be truly nation
wide. The Unique Identity Card project will also be transformational.
    2010-2020 will really see Bharat, and the 600 million people in the rural areas, emerge into a new way of life. Thousands of new towns will develop as technology enables development where people are. The rush for migration to the big cities for jobs and related opportunities will fall. Socially, families can stay together instead of the man leaving the village and the family for work.
    New challenges are already emerging as villages and small towns witness new growth, including the building of physical, social and technology infrastructure. It is happening slowly but steadily. The chaos of India in some sense will always be a part of life but democracy, free media, millions of young people with new aspirations- all of this are driving connectivity and growth.
    The most important feature of all this is the unleashing of entrepreneurship. Not just the big corporates or the mid size but the micro- entrepreneurs, self- employed and providing jobs to others. The opportunity that the shift of the 90's gave is to create entrepreneurs out of disadvantaged people and many, today, are millionaires and employers.
    This is a phenomenon impacting all of society.
Vast new opportunities
THE EARLIER limited options of government employment and/or corporate employment are matters of the past. Vast new opportunities have opened up across all sectors. Anyone with an idea or a skill can become an entrepreneur which gives a different kind of self-esteem, self-confidence and self- respect. And, families from farms to elsewhere are finding that the young want to do "their own thing" using new access to finance.
    So, a "Rising India" is also a "Rising Bharat" and the change is happening, fuelled by technology which bypasses incremental development, enabling 600 million rural people to join the mainstream of the economy and society in a steady procession. The challenge is to speed the process and manage it more efficiently.
    And, this is crucial because government — at the Central, State and local levels, have a major part to play to address the issues of administration, corruption, bureaucracy, judiciary, all of which delay the country moving to another paradigm change. In spite of the new economic environment, the "official" systems and procedures are still way behind- and that the crucial challenge to be met and overcome so that there is one India , one Bharat. Technology, again, can make the difference.

TARUN DAS FORMER CHIEF MENTOR, CII

Friday, November 12, 2010

SENSEX DOWN 432 PTS: FOREIGN FUNDS GETTING SKITTISH

FIIs desert Street on IIP nos, global scare

Offload Shares Worth 782.27 Crore,Highest Since May 25 Equities across the world tumble while commodities & precious metals lose steam as fears of a fresh credit crisis loom large

Our Bureau MUMBAI



    INDIAN shares fell the most in five months on the biggest selloff by overseas investors since May 25, as slowing industrial output and global turbulence forced some to lock up profits.
    Equities across the world tumbled, with China's benchmark indices crashing more than 5% on fears that it may raise interest rates to contain a 25-month-high inflation. Commodities and precious metals also lost steam as a fresh credit crisis looms,
with Ireland possibly heading the Iceland way in repaying sovereign debt.
    "Markets have been looking for an excuse to correct for a while now," said Bharat Iyer, executive director and head-India research at JPMorgan. "With the primary market opening up, choppy economic data points... and whatever data is coming out of the G20 summit... has served as an excuse to shed some froth."
    The 30-share Sensex declined
432.20 points, or 2.10%, to 20,156.89 with three stocks falling for every one rising. The broader S&P CNX Nifty fell 122.60 points, or 1.98%, to 6,071.65. Foreign funds sold Indian shares worth 782.27 crore on Friday, according to provisional BSE data. This is the highest since May 25 when they sold 1,200 crore. The Shanghai Composite Index crashed 5.2% in China and the MSCI Emerging Markets Index fell 1.5%.
    Both the domestic indices have risen about 15% since January, boosted by record foreign fund flows of 1.2 lakh crore, or $27 billion.

    Investors are getting skittish due to a divergence of policy actions between the US and the rest, with the possibility of a currency war. While the Federal Reserve's $600-billion quantitative easing, or printing of more money to revive the economy, has raised hopes of more money flooding the emerging markets, including India, it could lead to controls that could force the world economy into a slump again.
    "One cannot deny that market reaction to events like say China hiking interest rates or South Korea imposing capital controls has been slightly disproportionate. This would seem more on account of the
    sharp run-up," said Mr Iyer.

The slowing industrial output in India is also raising concerns that soaring inflation and lack of capacity addition could cripple the overall growth rate.
Industrial production growth slowed to a 16-month low of 4.4% in September compared with Bloomberg estimates of 6.4%. But some believe that it may be a temporary phenomenon.
`We would caution against interpret
ing the year-on-year August and September softness as a sign that demand is slowing," Goldman Sachs economist Tushar Poddar wrote in a note.
    Some of the international investors hurt by low returns in the West and growth uncertainty are favouring emerging markets such as Brazil and China. This could also help India attract more funds.
    The latest quarterly Bloomberg Global Poll of 1,030 investors, analysts and traders showed that they are seeing opportunity and taking on greater risks, looking more to emerging markets such as China, Brazil and India than developed countries.


Thursday, November 11, 2010

Bhatt of State Bank of India rejects Parekh offer to end teaser rates


Our Bureau MUMBAI


THE chairman of India's largest bank and the head of the country's largest mortgage finance company are sparring over scrapping the so-called teaser rates, highlighting the tough competition to dominate a market perceived to be safe, at least for now. State Bank of India chairman OP Bhatt ruled out lenders collectively deciding to do away with teaser rates, ignoring a suggestion from Housing Development Finance Corp chairman Deepak Parekh.
    "The special home loan scheme is a desirable product for consumers and profitable for our bank," Mr Bhatt told reporters on the sidelines of a banking summit organised by the
IBA and industry group Ficci. "No one can claim that the special rate loans are not good for the customer."
    This is in contrast to Mr Parekh, who said, "I would like to see it die down, but it must be done universally, because there are many people who talk on a one-on-one basis that we don't like this product. It is a product which has caught the fancy of individuals."

    Teaser rate loans are multi-year loans that bear low monthly repayment in the initial 2-3 years. It shoots up substantially in the subsequent years, straining consumer's finances which in some cases leads to default. This was said to be one of the causes of the bubble in the US real estate market that collapsed leading to the worst-ever recession since the Great Depression of the 1930s.
    SBI charges 8% in the first year, 9% in the second and third year after which it moves to market rates. HDFC charges 8.50% up to March 2011, 9.50% up to March 2012, and floating rate after that.
Mortgage business stable so far
INDIAN lenders led by SBI and HDFC have been competing to increase their share of mortgage business which so far has proven to be a stable one without high delinquencies unlike lending to companies and personal loans. But the fears that lenders may be compromising on standards is rising with the Reserve Bank of India tightening provisioning norms for such loans.
    "This practice raises concern as some borrowers may find it difficult to service the loans once the normal interest rate, which is higher than the rate applicable in the initial years, becomes effective," RBI governor Duvvuri Subbarao said on November 2. "It has been observed that many banks, at the time of initial
loan appraisal, do not take into account the repaying capacity of the borrower at normal lending rates."
    Mr Bhatt said the bank would review its special rate loan scheme at the end of the quarter. Defending the special scheme which offers better deals for new borrowers, he said the scheme was born out of compulsion to deploy the surplus funds it got when investors chased safety after Lehman Brothers collapsed.
    SBI and HDFC account for more than a third of all home loans given in the country where both claim leadership.
    The special home loan scheme was first devised by the Indian Banks' Association, which offered loans up to 5 lakh at 8.5% and between 5 lakh and 20 lakh at 9.25% for the first five years.

I would like to see it (teaser rates) die down, but it must be done universally, because there are many who talk on a one-on-one basis that we don't like this product
DEEPAK PAREKH CHAIRMAN, HDFC


The special home loan scheme is a desirable product for consumers and profitable for our bank. No one can claim the special rate loans are not good for the customer
OP BHATT CHAIRMAN, SBI

Moneyed farmers cotton on to property

Cotton Growers Plough Returns In Land,Machinery

COTTON, which has turned into white gold for Indian farmers, is fuelling a property boom in Punjab, Gujarat and Maharashtra this year as growers invest their returns in land. Smaller farmers are heading to automobile and FMCG showrooms to celebrate a season of record prices.
    "The net profit is expected to be 25,000 per acre, which is a 40% increase over the previous year. As a safe investment, we will look at buying property in Chandigarh. New machinery, from direct seeders for paddy to happy seeder for wheat sowing and roto seed drill, is the other key investment that we will make to increase our reach in providing farm services to peasants," said 71-year-old Surinder Ahuja, a progressive farmer who has been planting Bt cotton on 50 acres in Hisar (Haryana) and 10 acres in Fazilka (Punjab) for the past four years.
    He added that though the yield has not been good (15-20% loss in yield this year) compared to the previous year and input costs have increased, the savings were good due to a hike in the price of cotton. "I have spent 8,000 per acre on input costs, including labour, fertilisers, insecticides, seeds, etc, compared to 5,000 per acre in the previous year, owing to rains and pest attack," Mr Ahuja said.

    However, the unpredictable weather has done little to dent the hopes and sense of optimism among cotton growers across the country.
    "I earned around 4.5 lakh in 2009 growing Bt cotton on nearly 20 acres. Part of the money was used to clear outstanding loans, including one taken for constructing a house. Buoyed by last year's experience I have increased the acreage to nearly 30 acres though late rains may lower the yield this year," said EB Bhanuvalli, a cotton grower based in Ranebennur, Karnataka, who was earlier growing the Jayadhar variety.
Cotton farmers investing in gold, farm machinery
MR BHANUVALLI, who had used last year's earnings to partly repay the home loan, is hopeful of moving into the new house with better returns this year.
    Similarly, in Gujarat, where cotton is grown over 26 lakh hectares, farmers are investing in real estate projects across the state. The price of Shankar-6 variety on Thursday in the state was 46,500-47,000 per candy. "Farmers from one or two villages are coming together and purchasing entire buildings and plots to maintain the community feeling. Others are investing in educating their children in city schools," said Bharat Wala, president of Saurashtra Ginners Association.
    In the irrigated north Maharashtra's cotton belt districts of Jalgaon and Dhule, daily arrivals at each Agricultural Produce Market Committee was 8,000-10,000 quintals. With farmers not willing to sell land, buyers were investing either in gold or farm machinery. Pravin Dhangar, a cotton farmer from Dharangaon in Jalgaon district, produced 100 quintal cotton which he sold at 4,350 per quintal. The marginal farmer, who
has a two-wheeler, now plans to buy a tractor. "Buying new land is not possible as prices are very high and farmers are not ready to sell their land even for high prices. Also, with gold prices ruling at an all-time I am not keen to invest in the commodity," he said.
    Automobile to tractor manufacturers are expecting good business this year across India's cotton belts. So it isn't surprising that farmers are being told to wait for 1-3 months for the delivery of their vehicles. "We have experienced a sudden rise in demand for our tractors and hence the waiting period has gone up to one month," said Jeevan Patil, sales manager, Chaudhari Automobiles, dealers of John Deere tractors in Bhusaval in Jalgaon district.
    Progressive farmer Vikas Rai of village Nihal Khera in Ferozepur district, who cultivated Bt-I and Bt-II on his 100-acre farm, feels that investing back into the field was the best thing to do. "Major investment of 21 lakh this year will go on importing machinery from Lemken, Germany, which will include reversible plow, cultivators, sub soiler, disc rotator, harrow, etc. Also, I will be setting up a 70 feet by 200 feet workshop shed for my farm equipment," he said.

Wednesday, November 10, 2010

What Makes Web Promotion the New Growth Story!

manojseo writes

SEO companies in India contribute website listing services to the established search engines such as Yahoo, Google, MSN and the like. It follows their guidelines. Web promotion India is the advocacy of a website on internet so that it gets maximum exposure through surfer clicks for enhancing the products and services displayed on it.


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Meta tags are placed expertly interspersed after analysis as keywords with optimum density within the text through SEO software tools. White hat technology is applicable for clients stationed at America, Britain, Canada, and Australia. Some use natural and ethical SEO techniques. The content is with relevant keyword, are key phrase based, image based, local search based, news based etc connecting it to the construction and website submission. The existing websites feeling redundant through no click can utilize the services of the web building companies to get into circulation. Ranking of the website can also be improved though experts in the field. It is possible through the editing of HTML software to just modify the keyword, its positioning and the cost remains affordable for the owner. It is undertaken through efficient SEO technique. At present the Indian companies are in great demand globally because of technology and timely work. Success is assured within a year. The chances are higher that the site ranking may reach within the first 30 listings.

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FAST LANE Auto cos on a high again, sales zoom 38% Two-Wheelers Follow Suit With 50% Sales Growth; Lower Borrowing Costs, New Models Propel Demand In Oct Our Bureau MUMBAI CAR sales zoomed 38% with 1.82 lakh vehicles being sold in October this year,

FAST LANE

Auto cos on a high again, sales zoom 38%

Two-Wheelers Follow Suit With 50% Sales Growth; Lower Borrowing Costs, New Models Propel Demand In Oct

 CAR sales zoomed 38% with 1.82 lakh vehicles being sold in October this year, the fifth consecutive month of buoyant gains, a trend automakers expect to continue because of a growing economy and lower borrowing costs.
New cars such as Maruti Suzuki's revamped WagonR, Ford's Figo, Polo from Volkswagen, Nissan Motor's Micra and an upgraded i10 from Hyundai propelled demand during the

Dussehra-Diwali period, considered an auspicious time to make new purchases.
    Total vehicles sales — that in
cludes two-wheelers commercial vehicles and three-wheelers or autorickshaws — stood at 14.6 lakh units last month, a shade higher than the previous best of 13.3 lakh units sold in September this year.
    Analysts tracking the auto industry said that the current momentum is likely
to continue with the comparatively low penetration level of vehicles in India likely to drive growth in the long term.
    "Rising incomes and robust economic growth are likely to help auto companies sustain their top-line growth helped by sound volume growth," said Vaishali Jajoo, auto analyst with Mumbai-based Angel Broking.
    The industry body, Society of Indian Automobile Manufacturers (SIAM) revised its sales projections and now expects the industry to grow around 20% this fis
cal. However, in contrast to the automobile manufacturers, it expects sales to slow down during the rest of the fiscal.
    "We have witnessed higher 46% growth in October on the back of strong festive demand, but in the coming months the
base effect could moderate this growth as sales are normally sluggish in the third quarter as customers prefer to buy cars in new year," said SIAM director general Vishnu Mathur.
    SIAM now expects car and sport-utility
vehicles sales to grow 21-23% to 2.4 million vehicles this year, up from an earlier forecast of 12-13% growth. According to carmakers the festive season is expected to spill over to November keeping the sales momentum going.
    "The overall fundamentals of the industry are strong. With interest rates continuing to be favourable and flexible availability of financing, we are expecting bumper sales in November too," Maruti's chief general manager (marketing)
Shashank Srivastava said.
    The two-wheeler industry also hit a sweet spot with an all-time high monthly sales of 11.27 lakh units, a 50% growth over October 2009, mainly helped by strong demand for scooters whose sales doubled to 1,88,633 units in October this year, with the Indian units of Honda Motor and Suzuki Motorcycles posting impressive gains.
    "While demand for scooters has picked up in the past few months, the festive period witnessed a huge draw of customers. Despite increasing our production our 125cc Access scooter has a waiting period of over three months," Suzuki Motorcycle India vice-president Atul Gupta said. SIAM has projected the twowheeler market to scale the 11-million mark this fiscal.
    Despite the boom in retail products the sales of heavy commercial vehicles, considered a barometer of the economy, slowed down compared with the earlier months. In October, the truck and bus segment grew 13% to 21,807 units over the same month of last fiscal, but much lower than 30,453 units sold in September this year.


Hope floats, post Obama’s visit

By VINEET NAYAR
Vice-Chairman & CEO, HCL Technologies

I LEFT India for the US the day after President Obama landed in India. So, I had the unique privilege of seeing his visit from both sides of the borders — and the proverbial lens!
    In fact, such has been the depth of symbolism, expectation and hope from President Obama's visit that most conversations I have had on this trip have either started or ended with the President's Indian sojourn. And they started right at the New Delhi airport with a friendly, casual remark from the airline's ground staff: "All roads are leading to India right and you are off to the States?" "Business", I said explaining my rationale. "That's what I meant", she said!
    The world believes that the primary reason for President Obama's visit to India was commerce. Who could've thought that one would live long enough to see an American President visit India
to promote 'business interests'! I am reminded here of one of my favourite author Nassim Nicholas Taleb's famous 'Black Swan theory' which refers to unexpected events of large magnitude and consequence and their dominant role in history. Such events, considered extreme outliers, collectively play vastly larger roles than regular occurrences.
    Could President Obama's visit be described as a 'black swan' event for India? I think so. The Black Swan theory also says that a 'black swan', in spite of its outlier status, is explainable and predictable.
    If the White House fact-sheet is to be believed, over the last decade, investment capital from India to the US grew at an annualised rate of 53%. Add to that the fact that US is India's largest trading partner in goods and services, and India is now among the fastest-growing sources of foreign direct investment entering the United States. The 50,000 American jobs that this visit itself has created are being viewed as an emphatic underlining of the potential of free bilateral trade.
    We also have to view President Obama's visit from two lenses. He is just out of an election defeat. With increased muscle power, the Republicans are going to push for free global trade and if President Obama wants to make progress in the Congress, he has to adopt a different tune. The second is the open criticism by heads of state of countries like Germany whose Chancellor Angela Merkel recently described "trade protectionism (as the) greatest threat to global recovery". This censure is likely to reach its peak at the G20 summit.
    The global eco-political environment has completely changed and President Obama's action and speeches in India are a reflection of his appreciation of this changing reality.
    As he rightly pointed out that with "more than half of all Indians being under 30 years old", we are a country of millions of possibilities and America — with its culture of innovation — is a natural multiplier for this potential. And vice-versa. The time has come to celebrate an uninhibited fusion of – as a leading Indian journalist said - the 'new world' that is India and the 'old New World or the new Old World' that is the US.
    Hope floats, I say.

Tatas offer to fit safety add-ons for Nano

NOT A RECALL BUT QUALITY FIRST

THE maker of the world's cheapest car announced a number of steps to enhance its safety after a series of fire incidents while insisting that the move did not amount to a recall. Tata Motors, India's largest automobile company, said it would upgrade the exhaust and electrical systems for all the 70,000 Nanos, currently on road. The initiative comes after a sharp fall in Nano sales from 9,000 in July to 3,065 in October, a period which saw the domestic market clocking 30% growth.
    "It's the adverse impression created from those fire incidents that has shaken the confidence of potential customers in the car.
The few incidents have labelled the car unsafe, which is reflected in the declining sales," said a Delhi-based Tata Motors dealer, who spoke on condition of anonymity.
    Safety concerns around the much-hyped car — the cheapest version of which costs 1
lakh — rose after seven cases of fire were reported from different parts of the country, the latest being on September 27 in Ahmedabad in Gujarat. Asserting that these checks do not constitute a 'recall', Tata Motors on Wednesday insisted that the modifications were intended to make the small car more robust. The statement from Tata Motors, while insisting that the car was safe, said Nano owners could get them upgraded, if they so desired. Nano fires 'stray cases', says
Tata Motors

RECALLS of locally-manufactured vehicles are almost unheard of in India. Unlike the developed markets of Europe and the US where engineering defects often lead to mass recalls, no legal protection is provided for Indian customers in the Central Motor Vehicle Rules.
    Tata Motors spokesman Debasis Ray asserted that there were no generic defects in the Nano and that the company would inform its owners about these safety measures beginning the third week of November.
    "We would like to state that Nano is a safe car with a robust design. This has been re-established through a second analysis, conducted during the months of September and October 2010 by the company," he said on Wednesday.

    The company spokesman said as a pre-emptive measure, Nano dealers approached customers in May 2010 for an inspection. "However, after the second round of investigation, we thought, we should go back to all our customers and make the car more robust. These are additional safety measures," he added.
    Tata Motors has maintained that all the different fire incidents were 'stray cases'. The statement issued on Wednesday said that a 20-member internal team and an independent forensic expert had undertaken a comprehensive investigation related to the cause of the fires.
STOCK AT RECORD HIGH
The Tata Motors scrip has not been affected in the least by Nano's troubles. On Wednesday, the stock zoomed 6.3% to a record high of 1,350 in a weak Mumbai market, as investors cheered the company's soaring quarterly profits. The stock has been boosted by a sharp turnaround at its UK unit, Jaguar-Land Rover and rising domestic sales. Citigroup, Bank of America Merrill-Lynch and Citigroup have raised their price targets.
    The announcement on the enhanced safety measures came after market hours.
    Despite the sterling performance of its other businesses, adverse perceptions about the car's safety has hit the company's production plans. According to a number of officials at vendors supplying components for the Nano, Tata Motors had planned to raise production to over 500 cars per day from the second-half of the current fiscal. But lack of demand and high inventories at dealerships restricted the production to a mere 100 cars per day.
    An official at a Delhi-based component supplier to Nano told ET that the car had not lived up to expectations. "The car is facing challenges in the market and has not lived up to our expectation. After the hype, people were not so impressed with the build quality and performance. Our supply orders are also on the decline, as the company (Tata Motors) is coping up with growing inventories that has altered its production plans."




Sunday, November 7, 2010

‘Visit opens up more biz for both sides’

US President Barack Obama's visit to India will provide a big thrust to business ties between the two countries and create a win-win situation for companies from both countries, says Dinesh Keskar, head of aircraft giant Boeing in India. In an exclusive interview with G Ganapathy Subramaniam of ETa day after Obama landed in India, he said Indian companies will now get access to high-end technologies from the US while American companies can look forward to more exports to India. The 'trust factor' will now go up several notches and more American companies will land up here, feels Mr Keskar who is also the chairman of American Chamber of Commerce in India. Excerpts:
What does the visit of Obama mean to India-US business relations?
The US is known for innovation and India is known for talent, especially in sectors like information technology. What I expect to see now is the two combining to create benefits for both sides. Liberalisation of export controls will enable India to get access to top-end American technology which will help in various sectors, including defence and energy. American companies will get to do more technology business with India and this will create jobs in the US. The technology transfer and off-set business will create more opportunities for companies like Hindustan Aeronautics and Bharat Electronics in the public sector and big corporate players like the Tatas, Infosys, Wipro and HCL. The US President wants to double American exports in five years and incremental exports to
India will be a key part of that. When the relaxation in technology export curbs enables American companies to provide more military equipment to India, there will be a new cycle of business creation in both countries.
What is your view on issues
like protectionism that Indian corporates are complaining about?
Indian IT compan
ies have been doing good business in the US. There is an understanding that Indian engineers bring skills which are important for American companies, especially at a price that enables US industry to stay competitive. Enhanced business ties between the two countries will result in bilateral issues getting resolved over a period of time. Obama's visit is extraordinary and unprecedented if you look at the large delegation which has come with him and also the fact that this is his longest overseas visit. I have no doubt that the President's visit will add new momentum to bilateral business relations.
For a large American company like Boeing, how will the outlook on India shape up after Obama's visit?
The $2.7-billion order from SpiceJet to buy 30 Boeing 737 aircraft was announced in the presence of the President. We see it as a key landmark since this is the first big aircraft order from India, post slowdown. We see the Indian aviation industry growing at 15% per annum, which is a strong recovery from the slowdown.

RPower secures $5-b line of credit from US Ex-Im Bank

   THE Export-Import Bank (Ex-Im) of the US will offer loans up to $5 billion to Reliance Power (RPower), part of the Anil Dhirubhai Ambani Group, to help the Indian company purchase US goods and services for various power plants.
    RPower chairman Anil Ambani and the US Ex-Im Bank president Fred Hochberg signed a memorandum of understanding during the visit of US President Barack Obama, the company said in a statement. The agreement would make available long-term dollar loans in the next three years. Earlier, the board of Ex-Im Bank had accorded its final approval of project finance facilities aggregating $917 million for their 3,960 megawatt (MW) Sasan Ultra Mega Power Project (UMPP). This was the largest funding support by Ex-Im Bank to an
Indian company on a project recourse basis. The funding facility is to support Sasan Power's plans to purchase coal mining equipment
    "The MoU would enable RPower and its affiliates access to Ex-Im Bank long-term dollar loans at a substantially reduced processing time. Consider
ing that Ex-Im Bank exposure to India has been primarily limited to public sector, execution of the MoU is a landmark event that would go a long way in increasing diversity of lenders that could provide long-term finance to India's private sector," the statement said. RPower, a leading private sector power generation company, is implementing power projects with aggregate capacity of over 37,000 MW, by far the largest development portfolio in the country. The company also has the largest captive coal reserves in the private sector estimated at more than two billion tonnes.
    RPower had earlier placed a $750-million order with General Electric for its power plants. The company expects its association with American firms to generate manufacturing exports worth over $2 billion from the US into India, chairman Anil Ambani said on Saturday at a function during the visit of US President Barack Obama. RPower plans to scale up its capacity to 25,000 MW by 2015. Currently, the company has an operational capacity of 600 MW at its 1,200 MW Rosa Power Project in Uttar Pradesh and has also acquired operational capacity totalling 433 MW from group company Reliance Infrastructure.

Anil Ambani (R) with US Ex-Im Bank chief Fred Hochberg —PTI

 

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