Dark Age: 60 crore hit as power snaps in 19 states Life comes to standstill in half of India following northern and north-eastern grid failure

NEW DELHI The power crisis that hit northern India on Monday turned into a larger blackout a daylatertoaffectasmanyas19 states not just in the north but also in the east and northeast, paralysing essential services such as rail and metro operations,besidescausingmassive trafficsnarls. 

    "Gridincidentoccurredat1 pm, affecting the northern, eastern and northeastern grids. The system is under restoration," said the official website of the eastern grid, among such systems managed by the state-run Power System OperationCorpLtd. 
    The states affected on Tuesday were Jammu and Kashmir, Himachal Pradesh, Punjab, Haryana, Delhi, Rajasthan, Uttar Pradesh, Bihar, West Bengal, Odisha, Jharkhand, Sikkim, Assam, Meghalaya, Tripura, Nagaland, Manipur, Mizoram and Arunachal Pradesh. 
    These states account for half of India's 1.2 billion population. 
    Power Minister Sushil Kumar Shinde, who had constituted a committee to probe the failure on Monday, attributed the collapse on the second straight day to overdrawing of power by some states and said efforts were on to fetch electricityfromotherregions. 
    "Alternative arrangements have been made. I have put all my men at work. We are getting power from western grid. Wewilltrytorestoreservicesof the Metro and the railways first,"Shindetoldreporters. 
    There was, however, little respite for some 300,000 rail passengers, who were stuck in over 300 trains across eight states, after the power failure crippled such operations across six railway zones in the country. 
    The Delhi Metro suspended services on all the six lines as power tripped for the second straight day. It normally operates over 2,700 trips a day, coveringatotalsome70,000km,to carry around 1.8 million passengersonaweekday. 
    In the national capital, and inmostothercities,trafficwas also severely affected as traffic signals tripped and caused major snarls at intersections. Some 4,000 traffic police personnel in Delhi were immediately deployed to bring some semblanceoforder. 
    Flights operations remainednormal. 
    Speaking to reporters in the evening, chairman and managing director of Power Grid Corp of India R N. Nayak, said close to 50 per cent of power had been restored in the northeastern region and 20 per cent inthenorth. 
    Nayak also said excess powerdrawnbyonestatehadacascading effect on the three grids. He, however, did not name which state had overdrawn power. The officials said every effort was being madetorestoresuppliesfully. 
    AGENCIES

300 TRAINS AFFECTED 
At least 300 trains came to a grinding halt at various places in north and north-eastern regions due to the power failure, movement on the busy Delhi-Howrah route almost paralysed. 
    The affected trains included scores of long distance trains, Rajdhani and Shatabdi expresses, as well as suburban trains in Delhi and Kolkata, causing inconvenience to lakhs of passengers.

SIGNALS GO BLANK 
Traffic was thrown out of gear in the capital this afternoon when signals went blank following power failure across north India. 
    Huge traffic jams were reported from various parts of the capital, including Connaught Place, Ashoka Road and India Gate. "The city is without electricity in most of the areas. Traffic signals are not functioning due to power failure, said a top traffic officer.

HOLIDAY IN BENGAL 
Following the crisis, West Bengal CM Mamata Banerjee ordered all government offices to declare a holiday for the day and urged the private sector to the same to enable the people to go home and appealed to people to maintain calm.

300 coal miners trapped for hours 
KOLKATA Hundreds of coal miners were stranded on Tuesday in various coal mines across Assam and West Bengal after the blackout paralyzed elevators in the underground pits. 
    While 100 workers got stuck several feet below ground level in Assam, nearly 200 workers from government-owned Eastern Coalfields Limited were waiting to be rescued from mines in Bengal's Burdwan district . 
    Nildari Roy, a senior official at Eastern Coalfields Limited said they were waiting for the restoration of power. "There is no threat to the lives of the miners. There is no reason to panic," Roy said. 
    JAYATRI NAG

Commuters at a Metro station in Delhi on Tuesday after services were disrupted

14 Maruti parts suppliers face downgrade threat

Mumbai:The domino effect of the ongoing lockout and production uncertainty at Maruti Suzuki's Manesar plant in Haryana is set to impact auto component manufacturers which have close supply relationships with the automobile major. On Tuesday, ICRA, the Indian arm of global ratings major Moody's, put the ratings of 14 of Maruti's auto component suppliers on watch list, usually the first step towards a downgrade. The companies include auto component majors like Subros, Lumax Industries and Jay Bharat Maruti, which are also listed on the bourses. 

    Several ICRA-rated auto ancillaries that have a high revenue dependence on Maruti's Manesar plant "may experience lower cash accruals" and in some cases possible "stress" on their liquidity position during the lockout, prompting the agency to place their ratings under "watch with developing implications". 
    "Given the present uncertainties, it is difficult as of now to quantify the extent of supply disruption and its eventual impact on individual companies' financial risk profile," ICRA said in a release here. 
    The ratings major has pointed out that between June and October of 2011, production at Maruti's two plants were affected for 72 days and as a result it produced about 40,000 less units during the 2011-12 fiscal. 
    Since July 18, the Subros scrip on the BSE has lost nearly 14% to Rs 29 on Tuesday, and Jay Bharat Maruti is down 11.3% to Rs 57, while Lumax has lost just 0.5% to Rs 395 now. Compared to these, since fresh troubles at the Manesar plant started, the Maruti stock has lost 7.5% to Rs 1,133 while its market capitalization is down by about Rs 2,600 crore (nearly $500 million) to nearly Rs 32,800 crore.

Aug 31 new deadline for e-filing returns

New Delhi: While extending the due date of filing of returns of income for the assessment year 2012-13 from July 31 to August 31, the Income Tax department on Tuesday relaxed norms for e-filing of returns for NRIs and trusts whose income exceeds Rs 10 lakh annually. 

    The decision to extend the due date for filing of returns has been taken "on consideration of the reports of disturbance of general life caused due to failure of power and further in consideration of the fact that the e-filing of returns for a specified category of individuals and Hindu Undivided Family (HUF) has been made mandatory," a press note from the Central Board of Direct Taxes (CBDT) said. 
    Relaxing norms for NRIs and trusts, the CBDT said it will not be mandatory for "private discretionary trusts" and NRIs, if his or its total income exceeds Rs 10 lakh, to electronically furnish the return of income for assessment year 2012-13.

PC back in finance, safe Shinde placed in home Moily Mollified With Power

New Delhi: The Congress has brought back P Chidambaram to the finance ministry to handle the tough task of reviving the economy and helping the party in the build-up to the 2014 Lok Sabha poll. His place in the home ministry has been taken by a "safe" Sushil Kumar Shinde.      Chidambaram's appointment comes against the backdrop of expectations in the Congress that he will be able to script a turnaround, putting an end to the gloom the economic downturn has cast over its electoral prospects. The timing of the change was influenced by the keenness of PM Manmohan Singh, who had handled the portfolio after Pranab Mukherjee resigned on June 26, to have a full-scale finance minister ahead of the monsoon session.      Given his run-ins with the opposition, it marks a huge vote of confidence for Chidambaram. His return to the ministry soon after he was given the charge of the ministerial panel on spectrum marks his steady ascension in the hierarchy post-Pranab Mukherjee, but might carry the risk of escalation of tension with the BJP.      TOI was the first to report about the new portfolios of Chidambaram and Shinde on July 11.      Corporate affairs minister Veerappa Moily has been given the additional charge of power ministry, a responsibility that Shinde handled. The reluctance to have a full-time power minister stood out on a day when over half the country plunged into darkness following the worst-ever blackout, and was being seen as an indication that a larger restructuring of the government is likely after the monsoon session ends in September to coincide with changes in the Congress.      Shinde's appointment has clearly been influenced by the Congress's anxiety to keep the politically sensitive ministry with a loyalist.  Started as a peon, now India's 4th home min from M'rashtra Back in 1972, when the Congress high command refused a nomination to Dalit activist Sushil Kumar Shinde, a police-sub-inspector-turned-politician, his colleagues advised him not to pursue a career in active politics at the cost of a lucrative police job. But Shinde, who studied in a night school and worked as a peon in the Solapur district court for over four years, persisted and was rewarded when he was elected by a huge margin in a by-election to the legislative assembly from Karmala reserved constituency in 1974. A year later, he was inducted into the state cabinet by S B Chavan as minister of state for sports and cultural affairs. There was no looking back after that. Shinde (71) will the fourth home minister from Maharashtra, the previous ones being Y B Chavan (1966-70), Shankarrao Chavan (1991-95) and Shivraj Patil (2004-08). P 13 Will PC's NCTC become a casualty?  New Delhi: New home minister Sushil Kumar Shinde has handled an array of responsibilities in his home state of Maharashtra and at the Centre, but can hardly boast of dynamism that brought to the job in the aftermath of 26/11. The National Counter-Terrorism Centre (NCTC), which Chidambaram kept pushing for despite the resistance from states, risks becoming a casualty.      His new responsibility marks the apogee of a career studded with highprofile assignments and is being seen as a testimony to the returns that loyalty to the leadership can fetch in the Congress.      The arrival of the reforms-friendly P Chidambaram, who is now on his way to equalling Morarji Desai's record of presenting the most full budgets, has been looked forward to since Mukherjee's elevation as President.      The investors expect him to quickly take a fresh look at Mukherjee's controversial measures: from General Anti Avoidance Rules (GGAR), to retrospective changes in taxation law to make telecom major Vodafone pay up Rs 12,000 crore, to demands on international tech giants such as Microsoft.      He will also be required to rein in expenditure, especially the non-essential types: a tough ask which has become tougher because of the enhanced premium on populism at a time when polls are approaching.      However, Chidambaram has shown his sensitivity to the Congress's political needs when he managed to conjure the Rs 70,000 crore agricultural loanwaiver in his 2008 budget: something which paid off handsomely at the next hustings. The party and the government expects him to do the same balancing in the next budget: the last full one before the 2014 election. CAN PC TURN THE ECONOMY AROUND IN ANOTHER STINT AS FM? P Chidambaram, Sushil Kumar Shinde and M Veerappa Moily

POWERLESS & CLUELESS Over Half Of India’s Population Reels Under World’s Biggest-Ever Blackout, Minister Gets Promotion North, East & North-East Grids All Trip

New Delhi: It was a Terrible Tuesday that 680 million Indians are not going to forget in a hurry. In the world's biggest blackout that affected onetenth of the global population, 21 states and Union Territories went on the blink after three arterial power lines collapsed at 1pm.      The northern, eastern and north-eastern regions suffered the outage when their  respective grids collapsed in quick succession with devastating effect.      The blackout disrupted normal life, rail and air services as well as industrial production across sectors.      Even as the country was reeling under the outage, power minister Sushil Kumar Shinde was moved out to the home ministry, and Veerappa Moily given the additional charge of power—a move that hardly indicated seriousness on the government's part in dealing with the crisis.      Some 300 miners were trapped in coal mines. Two hundred miners were evacuated from mines in Bengal. Till the time of reporting, efforts were on to rescue 65 others stuck in Jharkhand mines.      More than 300 trains were affected. Many others are likely to be cancelled. Airports, hospitals and BPOs functioned with their back-up generators. In Delhi, commuters again had a harrowing time, with the day being a scary one for those who were stuck in the Metro Rail trains that stopped in their tracks several feet above the street or deep inside tunnels. Roads were gridlocked as traffic lights stopped working.      In Kolkata, the Metro was not hit by the outage as the city largely remained isolated since power is supplied by a private firm. But West Bengal chief minister Mamata Banerjee asked all government offices to shut early and urged the private sector and schools to do the same to protect against commuter chaos in the evening.      Tuesday's grid collapse, like Monday's, was triggered at Agra, a major interconnect between the northern, western and eastern grids.      On Monday, the Agra relay station had tripped to trigger a blackout. This time too, the station kicked off a domino effect after suspected overdrawal by some of the states in the eastern grid.  You can e-file I-T returns by Aug 31 D ue to the difficulties caused by the power failure, the I-T department has decided to extend the deadline for e-filing of returns to August 31. P 19 5 WAYS TO FIX THE MESS 1 Price power properly so that state utilities have money to buy power 2 Check theft and account for every unit of electricity produced. Cut out free power 3 Get regulators with teeth. Currently, most are ineffective retired IAS officers 4Invest in building new power plants, give them remunerative tariff, revamp existing plants 5 Plan for the future – for 10-20 years, not for 5 years TIMES VIEW Moving Sushilkumar Shinde out of the power ministry now is like changing the captain of the Titanic when it's reeling after hitting a giant iceberg. The country is in the midst of an unprecedented power crisis. For two days in a row, the grid has collapsed. This doesn't cover Shinde with any glory. Yet he's promoted as home minister. Even if that's ignored, what's pertinent at this point of time is that Shinde is likely to have some clue aboutthe power problem; a new minister – who will be holding additional charge of the portfolio – will possibly have none. So, what does the change indicate? The irrelevance of ministers? Never mind who's in charge, the net result is the same? PowerGrid hints at overdraw W ithin a fraction of a second of the Agra station tripping, the northern, eastern and the north-eastern grids went down. At the time, the three grids together were carrying some 66,000 MW, 12 times Delhi's demand. The tripping immediately shut down some 14,000 MW of generation capacity of state-run utility NTPC.      Who triggered the collapse? Fingers were pointed at Uttar Pradesh, Haryana and Punjab for overdrawing power. All three states stoutly denied the charge. PowerGrid chairman A M Nayak could not give a reason for Tuesday's grid collapse. "I am a technical person and it will be unfair on my part to suggest a reason without fully understanding and analysing the sequence of events that led to the problem," he said.      Nayak said the complex grid network and the increasing interconnectivity increase the vulnerability of the system. "It is difficult to point a finger at something quickly in a complex grid. Things happen in milliseconds. We have data from some 100 critical sub-stations. Only after a proper analysis will we be able to identify the reason."      Some 5,000 MW in the northern grid was restored by 4pm, or three hours after the outage. The grid was carrying 32,400 MW when it tripped. Similarly, 2,000 MW was restored in the eastern grid (12,000 MW) and 500 MW in the north-eastern grid (1,100 MW). The northern grid was carrying 22,000 mw, or 80% of its load by 7.30 pm. The eastern grid carried a load of 4,400 MW, or 40% of its usual load of 12,000 mw. The northeastern grid was operating at near-full capacity of 1,200 mw.      Nayak indirectly pointed that overdraw could be causing the collapse. "Some sections (of the grid, an indirect reference to states) are creating problem by overdrawing. The grid system is dynamic and not static. There are several parameters...voltage, frequency etc. These keep changing. Small over or under-drawal will be here and there. I can't say it will stop."      But Nayak's words did not cut much ice with UP, Punjab and Haryana, the states that had been blamed for tripping the northern grid by overdrawing power on Monday. All three denied the allegation. LIGHT AT END OF DARK HOLE: An RTO officer in Chandigarh keeps the files moving on Tuesday despite a blackout

Hundreds of millions without power in India

Trains ground to a halt across the country, leaving passengers stranded at railway stations

Continue reading the main story

Related Stories

• India's energy crisis threatens growth
• In pictures: India's power crisis deepens
• Monday's power disruption

Hundreds of millions of people have been left without electricity in northern and eastern India after a massive power breakdown.

More than half the country has been left without power after three grids collapsed - one for a second day.

Hundreds of trains have come to a standstill and hospitals are running on backup generators.

The country's power minister has blamed the crisis on states drawing too much power from the national grid.

The breakdowns in the northern, eastern, and north-eastern grids mean around 600m people have been affected in 20 of India's states.

Traffic jams

In a statement on national TV on Tuesday evening, Power Minister Sushil Kumar Shinde said he had appealed to states to stop trying to take more than their quota of power.

Continue reading the main story

"Start Quote

India has one of the lowest per capita rates of consumption of power in the world ... this is nothing compared to say, Canada"

End Quote

Soutik Biswas India correspondent

---

• Read more from Soutik

"I have also instructed my officials to penalise the states which overdraw from the grid," he said.

Media reports in India have suggested that Uttar Pradesh is among the states that government officials have been blaming for the grid collapse.

But officials in the state denied this, saying there was "no reason to believe that any power operations in Uttar Pradesh triggered it".

Anil K Gupta, the chairman of the state's power company, called for "further investigation to ascertain the real cause".

Also on Tuesday it was announced that Mr Shinde had been promoted to the post of home minister, in a widely anticipated cabinet reshuffle.

'Complete mess'

By late on Tuesday, officials said the north-eastern grid was fully up and running. The northern grid was running at 75% capacity and the eastern at 40%.

Businesses had to use generators or candles to keep working once it got dark

In Delhi, Metro services were halted and staff evacuated trains. Many traffic lights in the city failed, leading to massive traffic jams.

Much of the country's railway network has started moving again, although a full service is not expected for many hours and there is a huge backlog to clear.

The failure on the northern grid on Monday also caused severe disruption and travel chaos across northern India.

One shopworker in Delhi, Anu Chopra, 21, said: "I can understand this happening once in a while but how can one allow such a thing to happen two days in a row?

"It just shows our infrastructure is in a complete mess. There is no transparency and no accountability whatsoever."

In eastern India, around 200 miners were trapped underground as lifts failed, but officials later said they had all been rescued.

Ageing grid

Addressing a news conference earlier on Tuesday, the chairman of the Power Grid Corporation of India said the exact cause of the power cut was unclear, he said, but that it appeared to be due to the "interconnection of grids".

Continue reading the main story

"Start Quote

This is also the season of no rain when humidity is high, the heat is sweltering and people get taken ill"

End Quote

Narayan Bareth BBC News, Jodphur

---

• BBC reporters: India's power failure

"We have to see why there was a sudden increase in load... we will make sure that such a situation is not repeated," he said.

"Our message to people is that they are in safe hands, we have been in the job for years."

After Monday's cut, engineers managed to restore electricity to the northern grid by the evening, but at 13:05 (07:35 GMT) on Tuesday, it collapsed again.

The eastern grid failed around the same time, officials said, followed by the north-eastern grid.

Areas affected include Delhi, Punjab, Haryana, Uttar Pradesh, Himachal Pradesh and Rajasthan in the north, and West Bengal, Bihar, Orissa and Jharkhand in the east.

Smriti Mehra, who works at the Bank Of India in Delhi, said it had to turn customers away.

"There is no internet, nothing is working. It is a total breakdown of everything in our office," she told AFP.

The failure of traffic lights has led to huge traffic jams in Delhi

Across West Bengal, power went at 13:00 and all suburban railway trains on the eastern railways ground to a halt from Howrah and Seladah stations, the BBC's Rahul Tandon reports from Calcutta.

However, the city is not badly affected as it is served by a private electricity board, our correspondent adds.

Power cuts are common in Indian cities because of a fundamental shortage of power and an ageing grid - the chaos caused by such cuts has led to protests and unrest on the streets in the past.

But the collapse of an entire grid is rare - the last time the northern grid failed was in 2001.

India's demand for electricity has soared in recent years as its economy has grown but its power infrastructure has been unable to meet the growing needs.

Correspondents say unless there is a huge investment in the power sector, the country will see many more power failures.

Are you in the affected regions? Send us your comments and experiences using the form below.

RBI lowers growth forecast to 6.5%

Sees Upside Risks To Inflation, Dashes Rate Cut Hopes In Today's Review Mumbai: A day before it reviews interest rates in its monetary policy review, the Reserve Bank of India (RBI) has kept the market guessing by publishing a sharply lower growth forecast of 6.5% for 2012-13. At the same time, RBI has said that the near-term outlook on inflation continues to be marked by a number of upside risks, despite the significant slowdown in growth.      Lower growth forecasts typically increase hopes of a rate cut. However, RBI has queered the pitch by stating that persistent inflation limits the space for monetary policy to revive growth.      In its report on macroeconomic and monetary developments, which is published on the eve of the monetary policy, RBI has reported the findings of its poll among professional forecasters on the economy. According to the poll, India's GDP growth rate forecast for 2012-13 has been lowered to 6.5% from the earlier 7.2% on the back of a weak monsoon and high inflation.      Economists, bankers and traders expect RBI to hold interest rates when it announces its monetary policy review on Tuesday. However, public sector banks, which control nearly 70% of banking activity, have made a strong pitch for easing liquidity through a reduction in cash reserve ratio (CRR).      While banks have argued on the need for lower rates for Indian business to be more competitive, RBI has rebutted this in its report stating that real interest rates (nominal interest rates adjusted for inflation) today are much lower than they were in the pre-crisis period. The central bank has attributed the investment slowdown to factors other than interest rates. RBI has also put the onus of reviving growth on the government. "The economy is now at a critical juncture where revival can be supported by restoring confidence through policy actions to encourage investment. Removing constraints on FDI and improving the investment climate by moving quickly to address bottlenecks in infrastructure space are important," RBI said in its report.      Earlier, RBI had taken the stance that the centre does not have the headroom for a fiscal stimulus. Now, the macro report states that speeding up fiscal consolidation by putting in place an investment stimulus through large capital spending by the government — but offsetting it by curtailing revenue spending by revamping the subsidy schemes — could go a long way in reviving growth.      Commenting on the international situation, RBI said that global financial market stress resurfaced due to the deepening crisis in the euro area, especially in Greece and Spain, with the Libor fixing scandal adding to the uncertainty. The central bank has pointed out that the deceleration in growth in the BRICS nations, which have so far been drivers of emerging market growth, has added a new dimension to the global slowdown, making near-term recovery difficult.      In a different context, the central bank has also asked corporates to focus on their business rather than bet on currency movements and to use derivatives carefully and only for the purpose of hedging. Speaking at the iForex Leaders Summit in Mumbai on July 28, RBI executive director G Padmanabhan said, "We expect greater responsibility on the part of corporates in managing their risks, which calls for greater understanding of their actions from a macro perspective."  PRICE PAIN tRBI says space for monetary policy to revive growth limited by high inflation  tMaintains current real interest rates (nominal interest adjusted for inflation) much lower than pre-crisis period  tRBI sees factors other than interest rates for investment slowdown, puts onus of reviving growth on govt  tAsks corporates to focus on business rather than bet on currencies, use derivatives only for hedging

For a Well-Oiled Future, RIL Builds Pipeline of Leaders Reliance’s leadership course developing new breed of execs for top roles

CREATING TOMORROW'S STARS

Robin Cherian only had a broad idea of the role he would be playing when he agreed to join Reliance Industries some time ago. As a procurement expert, his world was one of buying raw materials, equipment from the cheapest sources available in the world. Costs, location, transportation, logistics were what he was involved in. When he was told by the Reliance managers that he would be part of a training programme which would rotate him within some of the company's key functions, he did not see it as something alien to his area of interest. Rather, it was a way to do something for his new employer. 

He knew Reliance was one of the biggest buyers of raw materials and project equipment. As it expanded into new areas like telecom and retail, procurement would become all the more important. 
He quickly devised a pilot project, a model programme, which, according to him, would help the company cut costs and get better prices. He wrote it out and sent it to Mukesh Ambani, the chairman. The answer was quick. The project was accepted and he was made in-charge of its implementation. Cherian is not the first executive to have found so much freedom within Reliance nor would he be the last. And the interesting aspect of the whole story is perhaps not the individual but the process in which he is involved. 
Reliance Accelerated Leadership Programme (RALP), a programme conceived and conceptualised by the RIL management, is developing a new breed of executives for top leadership roles within the organisation. It is an initiative aimed at attracting and training middle-level managers from outside, and helping them become tomorrow's leaders. 
Not many people know that some of Reliance's biggest challenges have always revolved around human resources. In the first ten years after 1991, when it was hungry for growth and eager to take advantage of liberalisation's promises, the most pressing concern for the company and its investors was project implementation. It is not easy to build one of the world's largest refineries, or a mega petrochemical complex, or plumb the ocean's darkest depths in search of oil and gas without talent. 
Reliance's success in achieving all this is always attributed to its fund-raising prowess and its ability to bargain and get the best price possible. RIL has an Ability to Attract Best Talent 
    Less well known is its ability to attract the best talent from the industry and the government and weld them into a fighting, successful unit capable of pulling off near-impossible feats. The HR success is a story that has remained untold even as the company and its investors have reaped the benefits.In 2012, as Reliance grapples with a slowdown in key businesses and concerns over whether it has unfairly secured government favours, and as it prepares to expand its bouquet to include new areas like broadband connectivity andmedia, and push forward in retail, human resources is once again at the forefront. This time though, the challenges are very different. Most of the giant projects have been completed. No massive new refinery or petrochemical complex is on the horizon and most of the ongoing ones don't really need new talent. 
What Reliance does need is something else. A reservoir of new leaders, ready to take over key roles at any time in future across various departments, functions and categories, and an institutionalised system which identifies, trains and prepares people for the bigger roles. This is where RALP comes in. "The company's growth phase is so huge, the diversification projects so big that there is a need to beef up the middle management," says Vivek Paranjpe, advisor to the chairman, strategic HR and business transformation. 
In size and scale, the programme may seem small. Unlike other Reliance operations where the numbers tend to be large, RALP is a focused and intense leadership course where a select group of recruits are put through all the departments of the company and made to learn the ropes and gain experience. The ultimate objective is to hone leadership skills and make people take charge of key roles in various departments and functions. 
The programme's first phase began last year and will last for two years. About 32 executives are a part of the first phase but this number will change depending upon the needs of the organisation. They are selected after careful vetting and then assigned to different roles within the organisation under the mentorship of a senior executive. Their progress is monitored on a regular basis and they are assigned to a particular function once the training programme is completed. 
"We wanted people with passion, hunger. Many of these roles are highly complex and large, and provide an ideal training ground for leadership aspirants," says V Srikanth, joint chief financial officer of Reliance Industries, who is a mentor to a group of RALP executives. 
In his role, Srikanth knows the critical value of leadership. Many executives in the finance functions spend time managing cash flows, budgeting and expenditure programmes of large divisions, some with an EBITDA of more than Rs 10,000 crore. On top of that, the company is spending money in rolling out a 4G network across the country and opening new shops under Reliance Retail. 
All these positions and posts need years of careful training and an understanding of the inner workings and processes. Without a robust internal system and process, selection of candidates to man these crucial positions will be difficult and probably time consuming. 
"We have also tried to inculcate in these candidates a not-so-regimented, not-so-strait-jacketed style of thinking because especially in finance, there are various dimensions to the role," Srikanth adds. 
The RALP candidates are not college or IIM graduates. They are successful middle management professionals possessing a wealth of experience and knowledge. The programme is also different from the normal campus recruitment that happens every year. 
RALP, according to Paranjpe, is a formal institutional structure which allows leaders to emerge from within the organisation and take charge of important positions. And training for this is crucial. "A transplanted organ has to be integral to the body. Otherwise, the body will reject it," Paranjpe added. 
In the Reliance of yore, before the division between the brothers in 2005, a top-level team comprising founder chairman Dhirubhai and his two sons, Anil and Mukesh, along with some senior executives were responsible for hiring senior talented executives for leadership roles. 
But some time in the last few years, Reliance realised that this would not be enough. Many of the recruits were raw and though they would gain experience, there was no formal process to identify suitable candidates for the upper echelons of leadership. There was also the question of sufficient acclimatisation to the Reliance way of thinking, solving problems and doing business. Reliance is also expanding in new fields that are outside the core areas in which the company has always operated — petrochemicals, and oil and gas. By the end of this year, it plans to launch 4G broaband services across the country, putting it directly in touch with millions of consumers, for the first time since the undivided company launched mobile phone services in 2002. Retail is still not a fully profitable business but the company is expanding and would like to scale it up. Reliance is also keen on expanding in financial services for which it has formed a partnership with DE Shaw. All this calls for diverse talent from various sectors. The old boys' network, with its excellent contacts within government and PSUs, will no longer suffice. New recruits, especially from the services industry will play a far more prominent role in Reliance's future and a formal process of induction, training and mentoring is a must for developing a reservoir of talent. 
Thirdly and more importantly, leadership in Reliance has a different meaning and connotation than in other companies. With annual turnover well past Rs 4 lakh crore and net profit likely to hover above Rs 35,000 crore by the end of this year, Reliance has the luxury of having several individual businesses with massive scale and complexity. 
For instance, petrochemicals had a turnover of Rs 80,625 crore in the year ended March 2012 while refining alone delivered Rs 294,734 crore. These two businesses alone are bigger than the hundreds of other companies in the private sector. 
"The candidate should be extremely comfortable about holding these roles," Srikanth adds. What is often left unsaid is that executives who manage these roles would be candidates for leadership positions opening up within the organisation and its affiliate companies. "There are different dimensions of learning within the organisation, the width, the depth and you often have to be individually driven to succeed," says Cherian. His boss, Michael Wheeler, vice-president (procurement and marketing), concurs. "There is great lively interest in the programme. We discuss, debate, there are weekly sessions. We take them through various levels of procurement, planning and operational models." Wheeler has worked in global giants such as DuPont and Conoco Philips. 
All functions and divisions are not open to RALP executives. They are now rotated through only four main departments. Future recruits would be exposed to more, making the process bigger and expansive. By that time, Reliance's needs and requirements would have greatly increased, making RALP an integral part of the company's growth.

AROUND 32 execs are part of the first phase of RALP 
RECRUITS ARE assigned to roles under the mentorship of a senior executive
THEY ARE put through different depts & progress is monitored regularly 
EXECUTIVES ARE assigned to particular functions once programme is completed 
OBJECTIVE IS to hone skills and make people take charge of key roles

Indian Cos’ Q1 net falls 12% since last qtr

Mumbai: More signs of a slowdown in the economy emerged in the second week of the first quarter results season. An analysis by Crisil Research of the April-June numbers announced by 208 large- and medium-sized companies shows that their revenues grew by 15.3% on a yearly basis while the net profit rose 8.4%.      The companies do not include banks and non-banking finance companies.      The picture looks even more alarming if one compares the results on quarterly basis. These 208 companies together have reported a 4.6% drop in revenues while their net profit slid by nearly 12% when compared to the fourth quarter of the last fiscal, the analysis showed. "Overall, sales growth remains weak on the back of slowing economy and decline in investment cycle. Poor monsoon and resultant higher inflation can further hurt growth, unless investments pick up," said Mukesh Agarwal, president, Crisil Research. "Higher interest costs — up 35% y-o-y — are also hurting the bottomline growth, which we expect to remain in single digit in the near term," he said.      The 15% yearly growth in revenues came on the back of a strong 30% revenue growth posted by IT and pharma companies. If one excludes the strong showing by these two sectors, the overall revenue growth falters to just 12.9%. A combination of lower revenues and higher expenses continues to impact EBITDA (gross profit) margins which are under severe pressure and have declined by close to 201 basis points (100 basis points = 1 percentage point) on a yearly basis and 132 basis points on a quarterly basis, the Crisil analysis showed.      Margins pressures are more pronounced in sectors like construction, auto components, commercial vehicles, steel and paper. FMCG companies have bucked the trend as their EBITDA margins have expanded by close to 130 basis points y-o-y, led by decline in input costs and price increases in both cigarettes and soaps &detergent segments.      In the banking segment, bad loans of the public sector banks have been on the rise and remain a matter of concern. Gross NPAs of these banks have increased to 2.7% from 2.4% in the previous quarter, with sectors like power, airlines and textiles showing more stress compared to others. Although the net profit growth of public sectors banks has been close to 22%, this is largely because of lower provisioning, the analysis showed. Compared to the state-run banks, some of the private sectors banks which have announced their results have shown improvement in their asset quality.

State to fine bldrs 31cr for duping Mhada

Mumbai: The going is set to get tough for 33 builders who have not yet surrendered surplus built-up area worth over Rs 200 crore to Maharashtra Housing and Area Development Authority (Mhada). The state housing department has proposed to slap fines collectively worth Rs 31.47 crore on thesebuilders. 

    The fines will be over and abovethelandthatthebuilders have to surrender to Mhada, a senior officialsaid. 
    The 33 builders owe Mhada 1.22 lakh sq ft of land, which is roughly equivalent to 407 small-sized(300sq ft)flats. 
    Under the development control regulations, builders redeveloping dilapidated cessed properties in the island city have to surrender a portion of the built-up space to Mhada. The builder receives a floor-space-index of 3 for such redevelopment. The available built-up spaceisfirstusedto rehabilitate tenants. The builder gets to retain proportionate area asincentivefor hissalecomponent. The surplus built-up area has to be divided in the ratio of 2:1 between Mhada and the builder. The 33 builders breached the rules and some even sold off Mhada's share of surplus area.In somecases,the surplus area has not been surrenderedfor over twodecades. 
    Mhada had planned to use thesurplusbuilt-up area for its various redevelopment and rehabilitation projects. 
    The redevelopment projects involving these lands are situatedin areaslikeMazgaon, Tardeo, Prabhadevi and Parsi Colony, among others, where real estate rates vary from Rs 1.5 lakh per sq m to Rs 2.5 lakh per sq m. 
    Last year, the economic offences wing registered cases against these builders on Mhada's complaint. The proposal hasbeen putup for approvalbefore minister of state(housing) Sachin Ahir,following whichit will be submitted to CM PrithvirajChavan. 
HOMING IN ON THE DEFAULTERS 
Land Ahoy Of the 1.22 lakh sq ft land due to Mhada from 33 projects, about 76,828 sq ft (10 projects) is in the Mazgaon-Byculla belt. Nineteen projects are in the Dadar-Mahim-Parel-Sewri belt. Mhada's share in these works out to 24,363 sq ft. The remaining four projects are in Tardeo and parts of south Mumbai, where Mhada's share is 21,131 sq ft 
Money Matters At current market rates, Mhada's share is valued at over 200 crore. About 407 small-sized flats can be built on the area 
Rise From The Ashes The file on fine proposal was charred in the Mantralaya fire. It was reconstructed and put up for approval 
Fine Move The housing department has used state norms on fines for overstay in government tenements to charge builders

Buy DCB; target of Rs 65: Nirmal Bang

Nirmal Bang

Research Reports on:

Development Credit Bank

Nirmal Bang is bullish on Development Credit Bank  (DCB) and has recommended buy rating on the stock with a target of Rs 65 in its July 17, 2012 research report.

"Development Credit Bank (DCB)'s performance for Q1FY13 was above estimates. DCB reported a net profit of Rs.18.9 crs in Q1FY13 resulting in a growth of 114.3% on YoY basis and QoQ increase of 9.2%. Net Interest Margin (NIM) of the bank stood at 3.18% as compared to 3.1% in Q1FY12 and 3.12% in Q4FY12. NIMs witnessed an improvement as the full benefit of the capital (~Rs 190 cr) which was raised during Q4FY12 was visible mainly in this quarter. Management expects that NIMs will be broadly in the range of 300-325 bps for FY13E. We expect NIMs to be at 3.2% for FY13E and FY14E respectively. Non Interest Income declined marginally on a sequential basis but increased YoY by 17.3% to Rs 27.5 crs. The bank's core fee income declined 9.8% QoQ but increased 18.8% YoY to Rs 20.2 cr. The share of non interest income as % of total income stood at 30.1% in Q1FY13. Management expects the momentum in fee income to continue going forward."

"The cost to income ratio of the bank stood at 72.8% as compared to 71.9% in Q4FY12 and 78.1% in Q1FY12 mainly due to higher employee expenses. We expect cost to income ratio to come down to 68.6% in FY13E and 65.6% in FY14E as compared to 70.7% in FY12. DCB reported growth both on QoQ and YoY basis (+ 28.7% YoY and 3.1% QoQ) at Rs 5,449 cr. This was mainly due to increase in the corporate banking segment and growth in the bank's mortgage book. The bank's SME book witnessed a flattish growth due to repayment in the existing books. However, Management has mentioned that the pipeline for the SME book continues to remain strong. We have factored in 19.8% growth in advances in FY13E and 18.2% growth in FY14E." 

"At the current price of Rs. 46, DCB is trading at a PE of 13.82x and 10.56x of FY13E and FY14E EPS & at P/ABV of 1.20x and 1.08x of FY13E and FY14E respectively. We recommend BUY on the stock with a target price of Rs 65 (1.7x FY13E ABV)," says Nirmal Bang research report.  

Shares held by Mutual Funds/UTI     

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

MIXED RESULTS ICICI net up 36% but PSUs hit by slowdown

MIXED RESULTS ICICI net up 36% but PSUs hit by slowdown

Mumbai: ICICI Bank has reported a net profit of Rs 1,815 crore for the quarter ended June 2012 — an increase of 36% over the Rs 1,332-crore profit reported in the corresponding quarter last year following wider interest margins and lower provisions for bad loans.      The bank announced its results on the same day as five other nationalized banks announced their quarterly performance. ICICI Bank, which abandoned its quest for market leadership in retail after the crisis and also focused on loans to top-rated borrowers, has managed to maintain loan quality even as public sector banks reported deterioration in their loan book.      Analysts said that there has been a sharp contrast in the performance of private and public sector banks.      "Among banks, we are seeing divergent performance on asset quality. While public sector banks are reporting significant stress on asset quality, delinquencies in private sector banks are still healthy," said Gautam Trivedi, MD & head of equities, Religare Capital Markets.      Vaibhav Agarwal, banking analyst at Angel Broking, said, "We had been building in higher provisioning expenses towards NPAs (non-performing assets), in line with ICICI Bank management's own assessment that their NPAs too could increase marginally due to the weak environment. But, for another quarter, the bank has managed to broadly hold on to good asset quality."      As a result of the divergent performance of private and public sector banks, the BSE Bankex closed almost flat.      Delhi-based Punjab National Bank reported a 12.7% rise in net profit at Rs 1,246 crore during the first quarter of the current fiscal due to growth in interest income.      The bank had a net profit of Rs 1,105 crore during the April-June quarter of the previous fiscal. Interest income during the quarter registered a healthy growth of 26.8% at Rs 10,545 crore against Rs 8,315 crore in the first quarter of the previous fiscal.      Bank of India reported a net profit of Rs 887.5 crore — an increase of 71.5% from Rs 517.5 crore in the corresponding quarter last year. The bank's net interest income increased from Rs 1,841 crore to Rs 2,043.6 crore following an improvement in its net interest margin from 2.19% to 2.27%.Union Bank of India saw its net profit rise 10.34% to Rs 512 crore from Rs 464 crore in the first quarter last year. Meanwhile, a 23% surge in advances helped Central Bank of India record a net profit of Rs 336 crore as on June 30, 2012, 20% higher than the Rs 281 crore reported in the year-ago period. Dena Bank saw its net profit increase by 41.97% to Rs 238.63 crore following a 37.1% increase in its net interest income.

Margin calls, rumours hit mid-caps Panic Selling Pulls Index Down 2.1% | Several Stocks Close At Lower Circuit

Mumbai: Fears of margin calls on certain mid-cap stocks after the recent slide in the market, combined with rumours of selling by traders and foreign funds operating participatory notes from Mauritius, led to panic selling in mid-caps on Thursday, pulling the BSE index for this segment down by 2.1%. 

    In Thursday's market, Tulip Telecom, after cracking as much as 40% in intra-day trades, closed 26% lower on the BSE, while a host of other stocks, including Parsvnath Developers, Pipavav Defence and Era Infra, closed at the 20% lower circuit level. 
    The day's session also witnessed a 206-point fall in the sensex, which closed at 16,640, its lowest close since early June, and investors were left poorer by Rs 50,000 crore with BSE's market capitalization now at Rs 59.16 lakh crore. 
    Dealers said there is fear among speculators and traders that the recent sharp slide in the market could trigger margin calls from their brokers. Falling in four of the last five sessions since July 19, the sensex has lost 3.7% and the BSE mid-cap index 4.2%, data from the bourse showed. Market players said some brokers have already started marginbased selling. However, the same is not widespread yet. 
    A margin call is a demand by a broker that an investor deposit further cash or securities to cover possible losses. In case of margin calls, traders and speculators are left with the choice of either liquidating their positions or putting in more money to meet their margin requirement. In a falling market, to limit their losses, usually these market participants prefer to cut their positions, which in turn leads to a further slide in these counters. 
    It eventually becomes a vicious circle of a sharp slide in stock prices that triggers margin calls, which in turn leads to selling and a further slide in prices. 
    Other than the anticipation about margin calls in a number of mid-cap counters in Thursday's session, there were rumours about some foreign institutional investors (FIIs), which had P-Notes in their books, liquidating part of their positions in mid-cap stocks. 
    NSE data showed that units of Barclays and Macquarie were among the sellers in some of the mid-cap stocks, while institutional trading data showed that FIIs were net sellers at Rs 1,181 crore — the second-highest single-session outflow this year. 
    There were also rumours that some large operator, based in Kolkata, sold aggressively. In addition, there were also talks about placements of shares by a domestic infrastructure company with some insurance companies, which may be investigated by government agencies.

UNREAL ESTATE Unsold units in Mumbai touch 122 million sq ft

Mumbai: With fewer buyers showing interest in purchasing property, the number of unsold units in the Mumbai metropolitan region has skyrocketed. 

    Unsold units touched 121.97 million sq ft by June 2012 from 110 million sq ft in December 2011, according to Liases Foras real estate rating and research firm. Of 121 million sq ft, the highest number of unsold units, about 25%, are located in the western suburbs from Bandra to Borivli and also in the areas beyond Thane in the central suburbs. 
    Unsold stock comprises roughly 10% of ready flats, while the balance comprises under-construction and newly-launched projects. 
    "Going by the existing absorption rate (sales), it will take approximately 37 months to clear the current stock of unsold units," said Pankaj Kapoor, founder of Liases Foras. 
    As per the company's data, sales have climbed from eight million sq ft between April and June 2011 to almost 9.79 million sq ft between April and June 2012. The value of homes sold in the Mumbai metropolitan region correspondingly increased from an average Rs 10,559 per sq ft to Rs 11,154 per sq ft. 
    "Although sales in the metropolitan region have improved in terms of the number of units, figures suggest that cheaper properties available in the extended suburbs of the city were major contributors of this improvement," Kapoor said. 
    Expressing a similar view, research firm Prabhudas Lilladher said that while a slight increase of about 6% was noticed in sales registrations in the past few months in Mumbai, one could hardly term this "arrest" in sales as a recovery in the real estate sector. "The incremental demand could be on account of first-time home buyers taking the plunge in the absence of price correction and from NRI-led demand due to significant weakening of the rupee," analysts said. 
    "With interest rates remaining firm, the woes of the real estate industry are likely to continue. With developers sitting on highly leveraged balance sheets, a price cut becomes a strong possibility. Challenges to the sale scenario in the city remain high and more needs to happen to correct the stressed affordability equation amid high property prices," analysts added.

City got fraction of 26/7 rain this time Colaba Faces A Deficit of 632mm, Santa Cruz 346mm

July 26 this year was a complete contrast to that fateful day seven years ago when incessant rains and the consequent floods left a nightmarish memory in every Mumbaikar's mind.      On July 26, 2005, the city received 944mm rainfall in 24 hours. This Thursday, Colaba got just 1.8mm and Santa Cruz, 0.9mm between 8.30am and 5.30pm.      The current rainfall situation appears grim for Mumbai. As of Thursday, the total rainfall for Colaba and Santa Cruz was 541mm and 887.6 mm, respectively. According to the meteorological department, Colaba faces a deficit of 632mm and Santa Cruz, 346mm.      "The offshore trough over the Konkan-to-Kerala coast has become very feeble, because of which rainfall activity over the Konkan coast has weakened," said V K Rajeev, director of weather forecast at the Indian Meteorological Department (IMD), Mumbai. "Rainfall activity has, however, picked up in Madhya Maharashtra and Marathwada since the past three to four days because a cyclonic system is active over these areas. But Mumbai, which falls in the north Konkan region, has not been receiving much rainfall."      In the 2005 deluge, more than 500 people were killed in the worst-ever floods to hit Mumbai, Konkan, Thane and Navi Mumbai. Most deaths —273—were reported from Mumbai alone. Infrastructure losses were estimated at Rs 1,000 crore, livestock at Rs 100 crore, housing at Rs 300 crore and crops at Rs 600 crore after the deluge.      Varsha Tawde, a social worker who had conducted several mental health camps post floods, said the fear of disaster persisted for long. "For the next twothree years after the 26/7 deluge, every time it rained heavily, it reminded people of the floods. In slum areas, which had lost the most number of lives, people were scared and depressed for months thereafter. The biggest problem later was the loss of important documents," she said.      Psychiatrist Dr Harish Shetty recalls having to counsel parents whose children had died in cars. "I had met three set of parents who had lost their children after being locked in cars. It took several sessions for the parents to come to terms with such a death," he said.      The situation, as of now, does not seem to be encouraging for the city, which may face major water cuts if monsoon does not buck up soon. "If a low pressure area forms over the Konkan area soon, the wind speed will start increasing, and that would bring good rainfall over the city. But, as of now, Mumbai is only likely to receive passing showers for the next two days," said Rajeev.

Dry Patch Ahead for Nifty as Rain Gods Fail to Smile

In five of the seven years of deficit rains, Nifty fell during the last two weeks of July, says a study     The Nifty, already suffering its worst July in a decade, could slip further by mid-August, if an analysis of data linking index movements and monsoon-deficient periods in the past 22 years is any indication.  Between 1990 and 2011, monsoon has been officially classified as deficient on 13 occasions. The toughest seven years during this period saw the monsoon falling short by between 6.7% and 21.8%, meteorological department data shows.  In five of the seven years that the rain gods failed to deliver, the 50-share Nifty index fell during the last two weeks of July, with the selling abating only after the second week of August, a study of seasonal charts shows.  This time around, a weak monsoon season comes at a time of high domestic political uncertainty, paralysis of sorts in decision-making, a slowing economy and global economic problems.  "Given the lack of monsoon and other negatives, the Nifty is likely to retest the lower end of the 4,700-5,600 zone in the August-September time frame," says trader and fund manager Ashwani Gujral. "Deficient rains sentimentally impact a weak market much more adversely than otherwise. There is a negative bias for the market for next one month.'"  So far this year, monsoon has severely underperformed the average — the first time since 2009, a year that was officially labeled a drought year. As of July 24, the monsoon is 22% below the 50-year average, according to the Met Department.  Even though agriculture's share in the overall economy has fallen over the years, it is still an important factor in the health of the rural economy and can impact growth in earnings of companies with a high degree of sensitivity to the rural economy. Companies such as Hero MotorCorp, Mahindra & Mahindra and HUL have their fortunes tied to a plentiful monsoon, which drives up rural incomes and, with it the consumption of their products.  "If rains falter, rural incomes could weaken, with risk to rural consumption," Morgan Stanley said in a note advising clients to avoid stocks of companies with higher rural exposure.  The effect of a truncated monsoon is severe on the Nifty too. The shortfall in rains stood at 7.8% in 2000, triggering a five-week fall on the index. It again slumped for four continuous weeks in 2002 when the rain deficit was 19.2 percent. The weekly drops in the Nifty-50 have ranged from falls between 0.3% and 8.1% for the four weeks from mid-July to mid-August in the 13 rain deficient years since 1990. The only aberration was in 2009, when the global financial system was in the grips of a bull run, recovering from the depths it had touched during the market meltdown of the previous year. Similarly, in the years when rains were abundant, the Nifty began a sustained upturn from the third week of July, showing a strong co-relation between Nifty and monsoon season. On Wednesday, the Nifty closed 0.4% lower at 5,110 points. The index has had its worst July so far since 2002, and has dropped 10% from its February 22 peak.

Inflation, Economic Woes Eat into Fast-food Majors’ Sales

McDonald's, Domino's & Yum Restaurants post slower same-store sales growth in April-June period Three of the country's biggest quick service restaurant chains — McDonald's, Domino's and Yum Restaurants that operates Pizza Hut and KFC — have reported slower growth in same-store sales during April-June than earlier quarters, signalling that inflation and weak economic sentiments have begun to impact the eating-out segment. The three chains together operate over 1,000 stores in the country. Jubilant FoodWorks, which operates the Domino's Pizza chain, on Wednesday reported same store sales growth of 22.3% for April-June, down from 36.7% in the year-ago quarter. "Consumers are getting more discreet as far as spends in the QSR (quick service restaurant) format are concerned, but on a standalone basis and in the current economic environment, our numbers are very robust," Domino's CEO Ajay Kaul said.  Kaul said Domino's has introduced entrylevel products at . 25 for its dine-in restaurants. "We don't feel the need to drop prices, but we are looking at multiple ways to increase consumer offtake," he said. Jubilant's standalone net profit rose 39.6% year-on-year to . 32.3 crore for the quarter. The company posted a net profit of . 23.2 crore.  Last week, Yum Restaurants India, which operates Pizza Hut and KFC restaurants in India, reported same-store sales at 7% in the April-June quarter, compared to 8% in the January-March quarter this year. And burger-and-fries chain McDonald's north and east restaurants are dropping prices by anywhere between 6% and 15% for entry-level products to spur consumption, starting next month, after same-store sales growth dropped to high single digits in the April-June quarter compared to double-digit growth last year. "There is pressure on consumption and people are beginning to hold back spending," McDonald's India (North & East) MD and JV partner Vikram Bakshi told ET. "The objective of our price rationalisation is to give them more reasons to come to our stores," he added.  Smaller restaurant chain operators such as Lite Bite Foods and Global Franchise Architects too are facing slowing growth. "High inflation is hitting the low-cost sector," said Amit Burman, chairman of Lite Bite Food. Global Franchise Architects said the pizza chain's same-store sales grew 15% in the second quarter and 18% in the first quarter.  ratna.bhushan@timesgroup.com