Indian IT bellwethers Infosys Technologies and Wipro Wednesday expressed confidence that the US would not take any measure that would hurt its global competitiveness.
Reacting cautiously to US President Barack Obama's remarks on outsourcing Tuesday, Infosys said outsourcing had enhanced the competitiveness of US corporations and had created more jobs within the US economy.
"The US is a very open economy and a strong proponent of free trade globally. We are confident the US will not take any measure, which might hurt its global competitiveness," Infosys said in a statement here.
In his first address to the joint session of the US Congress in Washington, Obama said there would be no tax breaks to US companies that outsource their jobs abroad. "We need to wait for more details to understand Obama's statement," Infosys added.
Wipro said in the current economic environment, it was imperative for global corporations to collaborate on technology and innovation. Wipro executive director and chief financial officer Suresh Senapaty said policies of protectionism would only hinder the revival of the world economy.
IT industry body National Association of Software and Services Companies (Nasscom) said it was heartening to note that Obama had supported the need to "avoid protectionism" in his speech.
"This is not the time for protectionism but for global collaboration, if the world is to come out of this economic downturn quickly. We hope that all other countries would support this and continue to be proponents of free trade," Nasscom said in a statement from New Delhi.
"Global outsourcing has helped (US) companies gain the vital competitive edge - time to market, transformation of businesses, integration of processes, reduce costs and enhance efficiency - all of which are key drivers for revival of economic activity," it added.
The Federation of Indian Chamber of Commerce and Industry, in a statement issued from New Delhi, expressed concern over Obama's statement, saying "protectionist measures could deteriorate the situation further".
"Coming at a time when the global economy is going through a phase of slowdown and when countries need to work collectively, protectionist measures of any kind could deteriorate the situation further," FICCI said.
On the likely impact the US move could have on Indian companies, FICCI said: "We will have to wait and see how the rules are framed and implemented."
Wednesday, February 25, 2009
If needed, I am willing to quit: Subhiksha chief
R. Subramanian, managing director of the troubled retail chain Subhiksha, Wednesday said he was ready to quit if it would help in reviving the company."If there is a need to install a new management for the better future of the business, its employees and customers, then I shall be more than happy to facilitate that and play an appropriate role as a financial stakeholder," Subramanian said in a statement.
He, however, added: "I cannot leave the system in the lurch till one is sure that the company is back on track and all stakeholders are taken care of adequately."
The statement comes in the wake of media reports that the 23-percent stake holder ICICI Venture is working with other investors to revive Subhiksha.
"There is no question of any greater control ICICI Venture can exercise than presently under the rights they already have and have been exercising," Subramanian later told IANS.
"There is no contradiction - even if I am to step down that can be only when I am sure that we have the right people in place who can take care of the company and take it forward," he added.
Taking a dig at ICICI Venture officials, who have resigned from the Subhiksha board this month, Subramanian said: "Would you leave the boat in the middle of a rough sea and escape? That would be like what ICICI venture has done by trying to withdraw nominees from the board."
ICICI Venture sold a portion of its holding in the cash-strapped retail chain to Zash Investment - the private equity fund owned by Wipro's Azim Premji - for Rs.2.3 billion (Rs.230 crore) in March last year.
Subhiksha, with a debt burden of over Rs.7.5 billion (Rs.750 crore), is looking for a Rs.3 billion (Rs.300 crore) cash infusion to stay afloat.
"All employees and banks and stakeholders can be reassured that I am not walking out of this nor trying to evade or escape responsibility for resolving the issues that we face today due to lack of liquidity and the wrong decision on letting equity not flow into the company," Subramanian said.
Tata Motors launches new lifestyle pickup
Tata Motors launched the new lifestyle pick-up, Xenon Cross Terrain (XT), here today.The four-door five passenger vehicle is powered by the company's 2.2 VTT DICOR engine delivering peak power of 140 PS and peak torque of 320 Nm. It will be available in two models -- the 4x2 for Rs 7.62 lakh and 4x4 for Rs 8.58 lakhs -- with a warranty of 75,000 km/ two years.
For safety and comfort, Xenon will sport power steering and windows, central locking and electrically adjustable ORVMs.
''It would be difficult to classify the segment in which the Xenon belongs to as there are no reference points as far as the Indian market goes. It is a robust product and follows the company's policy of entering and developing a new market and segment, said Tata Motors president (Passenger Cars) Rajiv Dube at the launch.
He said the Xenon would not replace its workhorse -- the TM 4x4, and that both the vehicles were in seperate segments altogether.
''The Xenon is a lifestyle product with a host of accessories to customize available at the dealerships. We are looking at the growing segment of customers looking for SUVs or similar products.'' It is the first vehicle to roll out from the joint efforts of Tata Motors' commercial and passanger car divisions.
''This is the sixth vehicle to be launched by us in the last 14 months including the Fiat Linea, and will be followed by the 'Nano', a MPV (multi-purpose vehicle) and SUV combined vehicle and the Grand Punto,'' said Mr Dube.
''We are facing a tough market but our portfolio of vehicles are catering to the different segments. Right now we have a problem of plenty, and are looking for appropriate spaces as far as dealership and marketing teams are concerned,'' he added.
Tata Motors has already shipped 6,000 units to its overseas markets including Thailand, South Africa, Algeria, Saudi Arabia Italy and Poland.
Women's portal SitaGita.com to be refurbished
Accentium Web Pvt Ltd, owner of popular websites like 'Secondshaadi.com' and 'Gaadi.com', today announced its partnership with India's oldest women's portal -- SitaGita Ltd to help the site reach the next level.A three party alliance, which also constitutes of Compare Infobase, will be equity based partnership and is targeted to take the number of daily clicks of Sitagita.com from 5,000 to 40,000 by 2011, according to an Accentium release here today.
Speaking on the coalition, Accentium Web Pvt Ltd chief executive officer Vivek Pahwa said the site would be made more dynamic and interactive to attract the fair sex. ''There is great interest in women-oriented inventory online in India and this interest is likely to increase over the next years,'' he said, adding that more content would be added to cater to the younger audience and to gradually convert it into the leading site for women-related content online in India.
''Along with creating a fresh new look for sitagita.com, we will also create a new product jointly, which will let young women bond with each other, share knowledge and consume information,'' he said.
'''SitaGita' represents the duality of the Indian woman. Nowhere in the world does a woman combine such traditional and contemporary skills. SitaGita has come to mean many things to many women across the length and breadth of India. It started as an urban centric site but soon we will be stepping towards targeting Tier II, Tier III town. This has been my mission in the last ten years, to provide a little handholding and empower the Indian woman personally and professionally,'' said Nirmal Mirza, Founder of SitaGita Ltd.
ING Life tie up with SIB for premium renewal
ING Life, part of the ING Group, today announced its tie-up with South Indian Bank (SIB), one of the leading banks in south India, to collect insurance policy renewal payments.
Speaking on the occasion, ING Group Chief Operating Officer Ashwin B said customers of the ING Life could now pay their renewal premium at any of the 530 SIB branches spread across the country.
The facility would provide an impetus to the company, specially in Kerala, where its customers would now have access to 332 branches to deposit their renewal premiums, he added.
Initially the tie-up would allow ING Life customers to deposit their renewal premium in cash and later the payments would be accepted in cheque and demand draft.
SIB Executive Director M Valsan said '' with all our branches connected under the robust 'core banking' technology, the bank is geared up to offer various cash management services to our partners and customers.''
Speaking on the occasion, ING Group Chief Operating Officer Ashwin B said customers of the ING Life could now pay their renewal premium at any of the 530 SIB branches spread across the country.
The facility would provide an impetus to the company, specially in Kerala, where its customers would now have access to 332 branches to deposit their renewal premiums, he added.
Initially the tie-up would allow ING Life customers to deposit their renewal premium in cash and later the payments would be accepted in cheque and demand draft.
SIB Executive Director M Valsan said '' with all our branches connected under the robust 'core banking' technology, the bank is geared up to offer various cash management services to our partners and customers.''
MindTree among top 100 global outsourcing list
IT and R and D services provider MindTree Ltd, has been selected for the Leaders category for The 2009 Global Outsourcing List of 100 by the International Association of Outsourcing Professionals (IAOP).
The numerical rankings would be unveiled in a special advertising feature produced by IAOP in the May 4 edition of the Fortune magazine.
An independent panel of industry-recognised leaders in outsourcing chose MindTree as a Leader among a full spectrum of outsourcing services companies ranging from information technology and business process outsourcing, to facility services, real estate and capital asset management, manufacturing and logistics, a company release said here today.
MindTree’s selection as a Leader is based on a set of measurable standards such as size, revenue, depth of competencies and customer satisfaction levels.
The numerical rankings would be unveiled in a special advertising feature produced by IAOP in the May 4 edition of the Fortune magazine.
An independent panel of industry-recognised leaders in outsourcing chose MindTree as a Leader among a full spectrum of outsourcing services companies ranging from information technology and business process outsourcing, to facility services, real estate and capital asset management, manufacturing and logistics, a company release said here today.
MindTree’s selection as a Leader is based on a set of measurable standards such as size, revenue, depth of competencies and customer satisfaction levels.
Tuesday, February 17, 2009
Edrington Group to launch more whisky brands in India
Unperturbed by the economic slowdown, the Edrington Group, maker Famous Grouse whisky, is planning to launch more brands in India and step up promotional campaigns, a senior official said Tuesday.
"We will be launching the Snow Grouse and Black Grouse in the coming fiscal, both priced tentatively around Rs.1,700," group area director (Southeast Asia, Africa and Indian subcontinent) Geoff Kirk told IANS.
Explaining the company's decision to go ahead with the investment plans despite the slowdown, Kirk said India was still a "growing market".
"There is a slowdown undoubtedly, but it has resulted in lower growth rates and not a reversal of growth. The Indian market might not grow at 25 percent CAGR (compound annual growth rate) as it did over the past four-five years, but it will still be a growing market," he said.
Famous Grouse hopes to capture a sizeable chunk of the estimated 1.2-million-case Indian market.
"We will launch our premium single malt whisky brands - Macallan and Highland Park - priced over Rs.3,500, soon," Kirk added.
Most imported liquor labels attract central and state excise levies to the tune of almost 300 percent of the cost of a bottle.
Said Gerry O'Donnell, director of Famous Grouse: "We are talking to the federal and state governments to rationalise the taxes and are hopeful in persuading them to do so like we did in China. It's ultimately going to be beneficial to the Indian consumer."
"We will be launching the Snow Grouse and Black Grouse in the coming fiscal, both priced tentatively around Rs.1,700," group area director (Southeast Asia, Africa and Indian subcontinent) Geoff Kirk told IANS.
Explaining the company's decision to go ahead with the investment plans despite the slowdown, Kirk said India was still a "growing market".
"There is a slowdown undoubtedly, but it has resulted in lower growth rates and not a reversal of growth. The Indian market might not grow at 25 percent CAGR (compound annual growth rate) as it did over the past four-five years, but it will still be a growing market," he said.
Famous Grouse hopes to capture a sizeable chunk of the estimated 1.2-million-case Indian market.
"We will launch our premium single malt whisky brands - Macallan and Highland Park - priced over Rs.3,500, soon," Kirk added.
Most imported liquor labels attract central and state excise levies to the tune of almost 300 percent of the cost of a bottle.
Said Gerry O'Donnell, director of Famous Grouse: "We are talking to the federal and state governments to rationalise the taxes and are hopeful in persuading them to do so like we did in China. It's ultimately going to be beneficial to the Indian consumer."
MAIT Launches a "Digital Inclusion" Program in Partnership with Microsoft
MAIT, the apex body representing India's IT hardware, training and R&D services sectors, today launched a unique corporate social responsibility campaign titled "Digital Inclusion - IT Adoption for Growth & Employability" by tying up with its member companies to facilitate access to computers and software to the digitally deprived with an aim to enable them to develop skills in IT and become employable. In a first-of-its-kind initiative, MAIT has partnered with Microsoft to donate computers and software to NGOs, who are engaged in taking IT education to the rural/poor masses. Microsoft is well known for its leadership in Corporate Social Responsibility (CSR) investment programmes in India which are run with a goal of empowering and enabling the marginalized sections of society through usage of technology. It recently won the prestigious Pegasus Award for Social Responsibility, based on their work for its "Unlimited Potential" programme initiative: "The Community Technology Skills Program". MAIT intends to encourage all its members to generously contribute hardware to the cause of bridging the digital divide in India.
Commenting on this unique initiate, MAIT Executive Director, Mr Vinnie Mehta said: "While IT has become an integral part of our life, its penetration remains confined to the urban areas alone, even the poor in such areas are yet to take advantage of the digital revolution. One of the reasons cited for digital divide is the non-availability of IT hardware at desired price-points. We hope that through this initiative we will be able to make available the hardware at no or marginal cost to the deserving. We have been in dialogue with our members and their response towards this initiative has been very encouraging. Further, extending the life of hardware through such means will go a long way in minimising the environmental concerns due to e-waste. "
Expressing his solidarity to this campaign, Microsoft's Associate General Counsel, Redmond, USA, Mr. David Finn, said: "Digital inclusion has been identified as one of the millennium development goals by the UN and it is Microsoft's firm commitment to work towards empowering people in India by bridging the digital divide. Microsoft in India had donated over 1,000 computers since the last one year and it will continue to strive to provide IT training, skills and tools to create social and economic opportunities in India that can transform communities and help people realize their potential. Being a leader in the software space, we are also sensitive to the fact that while serving the deprived through such laudable programs, security and ethics should not be sacrificed and therefore, Microsoft ensures that all the donated computers run on genuine software."
Commenting on this unique initiate, MAIT Executive Director, Mr Vinnie Mehta said: "While IT has become an integral part of our life, its penetration remains confined to the urban areas alone, even the poor in such areas are yet to take advantage of the digital revolution. One of the reasons cited for digital divide is the non-availability of IT hardware at desired price-points. We hope that through this initiative we will be able to make available the hardware at no or marginal cost to the deserving. We have been in dialogue with our members and their response towards this initiative has been very encouraging. Further, extending the life of hardware through such means will go a long way in minimising the environmental concerns due to e-waste. "
Expressing his solidarity to this campaign, Microsoft's Associate General Counsel, Redmond, USA, Mr. David Finn, said: "Digital inclusion has been identified as one of the millennium development goals by the UN and it is Microsoft's firm commitment to work towards empowering people in India by bridging the digital divide. Microsoft in India had donated over 1,000 computers since the last one year and it will continue to strive to provide IT training, skills and tools to create social and economic opportunities in India that can transform communities and help people realize their potential. Being a leader in the software space, we are also sensitive to the fact that while serving the deprived through such laudable programs, security and ethics should not be sacrificed and therefore, Microsoft ensures that all the donated computers run on genuine software."
Huawei and Intel Develop New WiMAX Test Lab
Huawei Technologies ("Huawei"), a leader in providing next-generation telecommunications network solutions for operators around the world, together with Intel Corporation, today announced the launch of a new WiMAX Interoperability Testing (IOT) laboratory in Beijing.
Jointly designed and built by Huawei and Intel, the completion of the testing lab represents another milestone in the ongoing effort to enhance the speed of interoperability and delivery of commercial-ready WiMAX devices throughout the global WiMAX industry.
“Huawei is delighted to play an active role in the development of WiMAX with Intel through its partnership. This state-of-the-art test laboratory in Beijing that will further advance WiMAX technology,” said Mr. Zhao Ming, President of Huawei CDMA & WiMAX Product Line. “The systematic and rigorous testing in our new Beijing test lab will accelerate the development of WiMAX market segments for worldwide operators.”
Sriram Viswanathan, Vice President of Intel Capital and General Manager of Intel’s WiMAX program office said: “Intel is dedicated to providing market-ready, fully-tested and interoperable WiMAX-enabled devices. We applaud Huawei’s leadership in helping to continue to advance the global WiMAX industry.”
As a leading WiMAX solution supplier, Huawei has been involved in WiMAX research since 2001 and now has more than 2,000 engineers engaged in WiMAX R&D. Huawei and Intel first signed an agreement in April 2005 to cooperate in the development WiMAX technology and market development.
Jointly designed and built by Huawei and Intel, the completion of the testing lab represents another milestone in the ongoing effort to enhance the speed of interoperability and delivery of commercial-ready WiMAX devices throughout the global WiMAX industry.
“Huawei is delighted to play an active role in the development of WiMAX with Intel through its partnership. This state-of-the-art test laboratory in Beijing that will further advance WiMAX technology,” said Mr. Zhao Ming, President of Huawei CDMA & WiMAX Product Line. “The systematic and rigorous testing in our new Beijing test lab will accelerate the development of WiMAX market segments for worldwide operators.”
Sriram Viswanathan, Vice President of Intel Capital and General Manager of Intel’s WiMAX program office said: “Intel is dedicated to providing market-ready, fully-tested and interoperable WiMAX-enabled devices. We applaud Huawei’s leadership in helping to continue to advance the global WiMAX industry.”
As a leading WiMAX solution supplier, Huawei has been involved in WiMAX research since 2001 and now has more than 2,000 engineers engaged in WiMAX R&D. Huawei and Intel first signed an agreement in April 2005 to cooperate in the development WiMAX technology and market development.
Max New York Life Launches Smart Move Internship Program
Max New York Life Insurance today announced the launch of Smart Move, an all India internship program to provide students an opportunity to 'earn while learn'. Max New York Life also announced the first collaboration for this program with IGNOU to offer internship to over 10,000 students.
Speaking on the occasion, Mr. Rajender Sud, Director & Head - Agency Distribution. Max New York Life Insurance said, ''with the rapid growth in the Indian insurance industry over the last few years, there is an increasing need for skilled professionals in this sector. One of the most effective ways to generate a ready pool of productive talent is by providing students, specialized training and practical experience early in their careers. Keeping this approach in mind, we have launched Smart Move Internship Program to partner with multiple educational institutions across the country."
"Through this Internship Program we look forward to providing a strong platform for students to learn, earn and build careers in specialized functions of life insurance." he added.
Prof. V N Rajasekharan Pillai, Vice Chancellor, IGNOU said, "Today, one of the end objectives of most teaching learning transactions is gainful employment in areas of ones own choice and aptitude. IGNOU is acting as a dynamic interface by providing an interactive platform for corporate world on one hand and the learner population on the other side, to facilitate learning. One such initiative has been the country wide launch of an internship program with Max New York Life Insurance Company."
Interested students, as part of their internship will be provided three days of intense training on all concepts and aspects of Life Insurance, the organization and the recruitment process. This knowledge gained at the initial stage of their academic pursuit will be instrumental to their professional career. Trained Interns can recruit agent advisors and on each successful recruitment of an agent advisor, they will be remunerated as per Smart Move Internship Program. In addition to the rewards and recognition schemes offered by Max New York Life, if an intern recruits three or more agents, he qualifies for a pre placement interview, clearing which he may be absorbed as a permanent employee.
Speaking on the occasion, Mr. Rajender Sud, Director & Head - Agency Distribution. Max New York Life Insurance said, ''with the rapid growth in the Indian insurance industry over the last few years, there is an increasing need for skilled professionals in this sector. One of the most effective ways to generate a ready pool of productive talent is by providing students, specialized training and practical experience early in their careers. Keeping this approach in mind, we have launched Smart Move Internship Program to partner with multiple educational institutions across the country."
"Through this Internship Program we look forward to providing a strong platform for students to learn, earn and build careers in specialized functions of life insurance." he added.
Prof. V N Rajasekharan Pillai, Vice Chancellor, IGNOU said, "Today, one of the end objectives of most teaching learning transactions is gainful employment in areas of ones own choice and aptitude. IGNOU is acting as a dynamic interface by providing an interactive platform for corporate world on one hand and the learner population on the other side, to facilitate learning. One such initiative has been the country wide launch of an internship program with Max New York Life Insurance Company."
Interested students, as part of their internship will be provided three days of intense training on all concepts and aspects of Life Insurance, the organization and the recruitment process. This knowledge gained at the initial stage of their academic pursuit will be instrumental to their professional career. Trained Interns can recruit agent advisors and on each successful recruitment of an agent advisor, they will be remunerated as per Smart Move Internship Program. In addition to the rewards and recognition schemes offered by Max New York Life, if an intern recruits three or more agents, he qualifies for a pre placement interview, clearing which he may be absorbed as a permanent employee.
Rediff.com Launches LocalAds on Mobile and Web
Rediff.com India Limited (NASDAQ: REDF), India's leading online portal, has launched an advertising service for small and local advertisers.
The system has more than half a million ads available for users searching for products and services. Advertisers can post their ads free of cost. The service is easy to use. Users can post and view local ads on both personal computers as well as mobile phones.
The new service is designed for small and home businesses such as travel agents, tuition classes, insurance agents, matrimony services, estate agents, pre-owned car sellers, maintenance contractors and others.
The Rediff Local ads service is available at http://localads.rediff.com
About Rediff.com
Rediff.com (Nasdaq: REDF) is one of the premier worldwide online providers of news, information, communication, entertainment and shopping service.
Rediff.com provides a platform for Indians worldwide to connect with one another online. Rediff.com is committed to offering a personalized and secure user experience. Founded in 1996, Rediff.com is headquartered in Mumbai, India, with offices in New Delhi, Bangalore, Chennai, Hyderabad and New York, USA.
The system has more than half a million ads available for users searching for products and services. Advertisers can post their ads free of cost. The service is easy to use. Users can post and view local ads on both personal computers as well as mobile phones.
The new service is designed for small and home businesses such as travel agents, tuition classes, insurance agents, matrimony services, estate agents, pre-owned car sellers, maintenance contractors and others.
The Rediff Local ads service is available at http://localads.rediff.com
About Rediff.com
Rediff.com (Nasdaq: REDF) is one of the premier worldwide online providers of news, information, communication, entertainment and shopping service.
Rediff.com provides a platform for Indians worldwide to connect with one another online. Rediff.com is committed to offering a personalized and secure user experience. Founded in 1996, Rediff.com is headquartered in Mumbai, India, with offices in New Delhi, Bangalore, Chennai, Hyderabad and New York, USA.
Monday, February 16, 2009
Status quo on tax rates in India's high-deficit mini-budget
In an exercise that has disappointed India Inc and the average citizen alike, External Affairs Minister Pranab Mukherjee Monday tabled a Rs.953,231-crore (Rs.9.53 trillion/$190.6 billion) interim budget for 2009-10 that keeps tax rates unaltered and steps up social sector spending, while giving a skip to fiscal prudence in times of "extraordinary" circumstances.
Primarily devoting his 69-minute speech to highlighting the achievements of the United Progressive Alliance (UPA) government with an eye clearly to the ensuing general elections, Mukherjee expressly chose to leave additional measures required to counter the economic slowdown for the regular budget to address.
He, nevertheless, said India's growth story remained intact and that the steps taken by his government, as also the Reserve Bank of India (RBI), had helped in cushioning the impact of the global crisis on the country's economy.
"In these difficult times, when most economies are struggling to stay afloat, a healthy 7.1 percent rate of gross domestic product (GDP) growth still makes India the second fastest growing economy in the world," he said.
"Extraordinary economic circumstances merit extraordinary measures. Now is the time for such measures," he said, but stuck to presenting what was essentially a vote-on-account, seeking parliament's approval to finance government expenditure till the regular budget is presented and passed.
Mukherjee was chosen to present the interim budget as Prime Minister Manmohan Singh, who holds the finance portfolio, is convalescing from a heart surgery and gave the additional charge of the ministry to his foreign minister.
The interim budget had a clear focus on social sectors, and the higher spending on rural job guarantee scheme, on education and the midday meal scheme will take huge toll on the country' fiscal deficit, now budgeted at 5.5 percent of the GDP during 2009-10.
The external affairs minister said the current year, too, fiscal deficit would climb to 6 percent, against the budgeted 2.5 percent, while revenue deficit would move up to 4.4 percent against 1 percent, he said.
Tax collections were also not helping either, Mukherjeee said, adding that there was a sharp shortfall compared with budget estimates. Gross tax revenues were budgeted at Rs.687,715 crore (Rs.6,877.15 billion) for the current fiscal and the government now hopes to garner no more than Rs.627,949 crore.
"Since the scope for revenue mobilization is bound to be limited in a period of economic slowdown, any increase in plan expenditure will increase the fiscal deficit. Indeed, we may have to consider additional plan expenditure of anything from 0.5 percent to 1 percent of GDP and gear up our system accordingly."
The budget was not totally bereft of new schemes, though not to the extent that was expected. Two new schemes were unveiled - the Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme - for widows and disabled people in the age group 18-40 years.
The foreign minister also stepped up the allocation for defence to 141,703 crore (Rs.1,417.03 billion) against the budget estimates of Rs.114,600 crore (Rs.1,146 billion) and justified it saying India was facing a renewed threat perception.
"We are going through tough times. The Mumbai terror attacks have given an entirely new dimension to cross-border terrorism. A threshold has been crossed. Our security environment has deteriorated considerably," he added.
Mukherjee said economic crisis of the magnitude being faced by the developed countries was bound to have an impact around the world, resulting in emerging markets also slowing down significantly.
"India too has been affected," he said, adding export growth dipped 17.1 percent in the first nine months, while industrial production fell 2 percent in December 2008.
Soon after he presented the budget, Mukherjee was asked why he decided to ignore tax measures to boost the economy and his reply was that the interim nature of the budget - as opposed to the regular exercise - had placed constraints.
"That's why I have said that the regular budget needed to address the concerns."
But the disappointment from Indian industry was evident, as it found little to cheer but for some sops for infrastructure projects and low-cost housing and the extension of an interest subsidy scheme for exporters till September.
"Industry did expect that at least the surcharge on corporate taxes would be removed and new corporate tax ceiling introduced," said the Associated Chambers of Commerce and Industry (Assocham), reacting to the measures announced Monday.
"There was no hint in this direction in the interim budget. Likewise on infrastructure refinancing, the focus is there in the budget but directions are not clearly laid out," the chamber said.
Added Harsh Pati Singhania, president of the Federation of Indian Chambers of Commerce and Industry (FICCI): "The interim budget has set the direction for the next government and gives a clear message on what steps need to be taken in the months following the general election."
The markets also gave a thumbs down to the budget, with the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) extending the morning's losses to 3.35 percent after Mukherjee's speech as investors said the mino-budget merely was primarily packed with data on past performance with little to stimulate growth.
"The message is loud and clear," said Jagannadham Thunuguntla, chief executive of SMC Group, a brokerage based here. "The government seems to be saying that it has done as much as it could and there is no headroom left."
Primarily devoting his 69-minute speech to highlighting the achievements of the United Progressive Alliance (UPA) government with an eye clearly to the ensuing general elections, Mukherjee expressly chose to leave additional measures required to counter the economic slowdown for the regular budget to address.
He, nevertheless, said India's growth story remained intact and that the steps taken by his government, as also the Reserve Bank of India (RBI), had helped in cushioning the impact of the global crisis on the country's economy.
"In these difficult times, when most economies are struggling to stay afloat, a healthy 7.1 percent rate of gross domestic product (GDP) growth still makes India the second fastest growing economy in the world," he said.
"Extraordinary economic circumstances merit extraordinary measures. Now is the time for such measures," he said, but stuck to presenting what was essentially a vote-on-account, seeking parliament's approval to finance government expenditure till the regular budget is presented and passed.
Mukherjee was chosen to present the interim budget as Prime Minister Manmohan Singh, who holds the finance portfolio, is convalescing from a heart surgery and gave the additional charge of the ministry to his foreign minister.
The interim budget had a clear focus on social sectors, and the higher spending on rural job guarantee scheme, on education and the midday meal scheme will take huge toll on the country' fiscal deficit, now budgeted at 5.5 percent of the GDP during 2009-10.
The external affairs minister said the current year, too, fiscal deficit would climb to 6 percent, against the budgeted 2.5 percent, while revenue deficit would move up to 4.4 percent against 1 percent, he said.
Tax collections were also not helping either, Mukherjeee said, adding that there was a sharp shortfall compared with budget estimates. Gross tax revenues were budgeted at Rs.687,715 crore (Rs.6,877.15 billion) for the current fiscal and the government now hopes to garner no more than Rs.627,949 crore.
"Since the scope for revenue mobilization is bound to be limited in a period of economic slowdown, any increase in plan expenditure will increase the fiscal deficit. Indeed, we may have to consider additional plan expenditure of anything from 0.5 percent to 1 percent of GDP and gear up our system accordingly."
The budget was not totally bereft of new schemes, though not to the extent that was expected. Two new schemes were unveiled - the Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme - for widows and disabled people in the age group 18-40 years.
The foreign minister also stepped up the allocation for defence to 141,703 crore (Rs.1,417.03 billion) against the budget estimates of Rs.114,600 crore (Rs.1,146 billion) and justified it saying India was facing a renewed threat perception.
"We are going through tough times. The Mumbai terror attacks have given an entirely new dimension to cross-border terrorism. A threshold has been crossed. Our security environment has deteriorated considerably," he added.
Mukherjee said economic crisis of the magnitude being faced by the developed countries was bound to have an impact around the world, resulting in emerging markets also slowing down significantly.
"India too has been affected," he said, adding export growth dipped 17.1 percent in the first nine months, while industrial production fell 2 percent in December 2008.
Soon after he presented the budget, Mukherjee was asked why he decided to ignore tax measures to boost the economy and his reply was that the interim nature of the budget - as opposed to the regular exercise - had placed constraints.
"That's why I have said that the regular budget needed to address the concerns."
But the disappointment from Indian industry was evident, as it found little to cheer but for some sops for infrastructure projects and low-cost housing and the extension of an interest subsidy scheme for exporters till September.
"Industry did expect that at least the surcharge on corporate taxes would be removed and new corporate tax ceiling introduced," said the Associated Chambers of Commerce and Industry (Assocham), reacting to the measures announced Monday.
"There was no hint in this direction in the interim budget. Likewise on infrastructure refinancing, the focus is there in the budget but directions are not clearly laid out," the chamber said.
Added Harsh Pati Singhania, president of the Federation of Indian Chambers of Commerce and Industry (FICCI): "The interim budget has set the direction for the next government and gives a clear message on what steps need to be taken in the months following the general election."
The markets also gave a thumbs down to the budget, with the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) extending the morning's losses to 3.35 percent after Mukherjee's speech as investors said the mino-budget merely was primarily packed with data on past performance with little to stimulate growth.
"The message is loud and clear," said Jagannadham Thunuguntla, chief executive of SMC Group, a brokerage based here. "The government seems to be saying that it has done as much as it could and there is no headroom left."
Highlights of Interim Budget 2009
Following are the highlights of the interim budget presented by Minister for External Affairs Pranab Mukherjee in the Lok Sabha Monday:
* Total expenditure for 2009-10 pegged at Rs.953,231 crore (Rs.9.52 trillion)
* Plan expenditure for 2009-10 at Rs.2,85,149 crore (Rs.2.85 trillion)
* Non-plan expenditure at Rs.668,082 crore (Rs.6.68 trillion)
* Provision for subsidy on food, fertiliser and petroleum at Rs.95,579 crore (Rs.955.79 billion)
* Defence allocation increased to Rs.141,703 crore (Rs.1.417 trillion)
* Urban renewal spending pegged at Rs.11,842 crore (Rs.118.42 billion)
* 2009-10 gross budgetary support at Rs.2,85,000 crore (Rs.2.85 trillion)
* Substantial relief of about Rs.40,000 crore (Rs.400 billion) due to tax cuts in 2008-09
* Rural job schemes to get Rs.30,100 crore (Rs.301 billion) in 2009-10
* Rural sanitation spending at Rs.1,200 crore (Rs.12 billion)
* National rural health mission spending at Rs.12,070 crore (Rs.120.7 billion)
* Rural infrastructure development outlay at Rs.14,000 crore (Rs.140 billion)
* Midday meal scheme spending at Rs.8,000 crore (Rs.80 billion)
* India remains second-fastest growing economy in the world
* Economy expected to grow 7.1 percent this fiscal
* Need to make economic growth inclusive
* Government spent Rs.70,000 crore (Rs.700 billion) on 37 infrastructure projects in 2008-09
* Under public-private partnership (PPP), 54 central infrastructure projects approved
* Total expenditure of PPP projects estimated at Rs.67,700 crore (Rs.677 billion)
* India Infrastructure Finance Company to raise Rs.10,000 crore (Rs.100 billion) by end-March
* India has weathered inflation crisis, but no room for complacency
* Country's agriculture outlook is encouraging
* Focussed attention to agriculture
* Plan allocation for farm sector hiked 300 percent in past five years
* Three-fold increase in short-term agriculture credit to Rs.250,000 crore (Rs.2.5 trillion) in 2007-08
* Farm debt worth Rs.65,300 crore (Rs.653 billion) waived of 360 million farmers.
* Government will continue to provide additional subsidy to farmers
* Corpus of Rural Infrastructure Development Fund hiked to Rs.14,000 crore (Rs.140 billion) from Rs.5,500 crore (Rs.55 billion)
* Outlay for higher education hiked 900 percent for 11th Five-Year Plan
* Country's social security net will be strengthened
* New scheme unveiled for young widows in the age group of 18-40
* New disability pension scheme introduced for age group of 18-40
* 15-point programme for welfare of minorities set up
* Record foreign direct investment of $32.4 billion attracted
* Global economic situation not encouraging
* Extraordinary situation merits extraordinary measures
* Need to consider additional fiscal measures in regular budget
* Financial sector reforms need to be accelerated
* Non-performing assets (NPAs) of public sector banks have declined
* State-run banks see NPAs drop from 7.8 percent to 2.3 percent in four years
* Number of loss-making state-run units down from 73 to 58
* Profit-making units up from 143 units to 158 units
* In past three years, India grew by average of over 9 percent
* Per capita income expanded by 4.7 percent per annum
* Fiscal deficit was brought down from 4.5 percent to 2.7 percent
* Revenue deficit was cut from 3.6 percent to 1.1 percent
* Exports increased 26.4 percent per annum
* Foreign trade increased from 27.3 percent to 35.5 percent
* Tax to gross domestic product ratio expanded by 9.2 to 12.5 percent
* Agriculture grew by 3.7 percent per annum
* Revised estimates for 2009-09 peg plan expenditure at Rs.282,957 crore (Rs.2.83 trillion)
* Central plan increased for host of areas like telecom, rural development
* Tax collections expected to fall to Rs.627,949 crore (Rs.6.28 trillion)
* Revised revenue deficit is 4.4 percent of GDP against 1 percent
* Revised fiscal deficit at 6 percent of GDP against 2.5 percent
* Total expenditure for 2009-10 pegged at Rs.953,231 crore (Rs.9.52 trillion)
* Plan expenditure for 2009-10 at Rs.2,85,149 crore (Rs.2.85 trillion)
* Non-plan expenditure at Rs.668,082 crore (Rs.6.68 trillion)
* Provision for subsidy on food, fertiliser and petroleum at Rs.95,579 crore (Rs.955.79 billion)
* Defence allocation increased to Rs.141,703 crore (Rs.1.417 trillion)
* Urban renewal spending pegged at Rs.11,842 crore (Rs.118.42 billion)
* 2009-10 gross budgetary support at Rs.2,85,000 crore (Rs.2.85 trillion)
* Substantial relief of about Rs.40,000 crore (Rs.400 billion) due to tax cuts in 2008-09
* Rural job schemes to get Rs.30,100 crore (Rs.301 billion) in 2009-10
* Rural sanitation spending at Rs.1,200 crore (Rs.12 billion)
* National rural health mission spending at Rs.12,070 crore (Rs.120.7 billion)
* Rural infrastructure development outlay at Rs.14,000 crore (Rs.140 billion)
* Midday meal scheme spending at Rs.8,000 crore (Rs.80 billion)
* India remains second-fastest growing economy in the world
* Economy expected to grow 7.1 percent this fiscal
* Need to make economic growth inclusive
* Government spent Rs.70,000 crore (Rs.700 billion) on 37 infrastructure projects in 2008-09
* Under public-private partnership (PPP), 54 central infrastructure projects approved
* Total expenditure of PPP projects estimated at Rs.67,700 crore (Rs.677 billion)
* India Infrastructure Finance Company to raise Rs.10,000 crore (Rs.100 billion) by end-March
* India has weathered inflation crisis, but no room for complacency
* Country's agriculture outlook is encouraging
* Focussed attention to agriculture
* Plan allocation for farm sector hiked 300 percent in past five years
* Three-fold increase in short-term agriculture credit to Rs.250,000 crore (Rs.2.5 trillion) in 2007-08
* Farm debt worth Rs.65,300 crore (Rs.653 billion) waived of 360 million farmers.
* Government will continue to provide additional subsidy to farmers
* Corpus of Rural Infrastructure Development Fund hiked to Rs.14,000 crore (Rs.140 billion) from Rs.5,500 crore (Rs.55 billion)
* Outlay for higher education hiked 900 percent for 11th Five-Year Plan
* Country's social security net will be strengthened
* New scheme unveiled for young widows in the age group of 18-40
* New disability pension scheme introduced for age group of 18-40
* 15-point programme for welfare of minorities set up
* Record foreign direct investment of $32.4 billion attracted
* Global economic situation not encouraging
* Extraordinary situation merits extraordinary measures
* Need to consider additional fiscal measures in regular budget
* Financial sector reforms need to be accelerated
* Non-performing assets (NPAs) of public sector banks have declined
* State-run banks see NPAs drop from 7.8 percent to 2.3 percent in four years
* Number of loss-making state-run units down from 73 to 58
* Profit-making units up from 143 units to 158 units
* In past three years, India grew by average of over 9 percent
* Per capita income expanded by 4.7 percent per annum
* Fiscal deficit was brought down from 4.5 percent to 2.7 percent
* Revenue deficit was cut from 3.6 percent to 1.1 percent
* Exports increased 26.4 percent per annum
* Foreign trade increased from 27.3 percent to 35.5 percent
* Tax to gross domestic product ratio expanded by 9.2 to 12.5 percent
* Agriculture grew by 3.7 percent per annum
* Revised estimates for 2009-09 peg plan expenditure at Rs.282,957 crore (Rs.2.83 trillion)
* Central plan increased for host of areas like telecom, rural development
* Tax collections expected to fall to Rs.627,949 crore (Rs.6.28 trillion)
* Revised revenue deficit is 4.4 percent of GDP against 1 percent
* Revised fiscal deficit at 6 percent of GDP against 2.5 percent
Sunday, February 15, 2009
Service sector to see slower growth, says industry lobby
India's service sector could see slower growth, said a Confederation of India Industry (CII) report released here Sunday.
According to CII, recent data on specific service sector activities gives a mixed picture - while there has been a sharp drop in indicators such as tourist arrivals or air freight and passenger movements, railway traffic and cellular subscriber growth have been holding up.
In banking, deposit and credit growth have begun to slow down - though only moderately. Given that the service sector accounts for over 50 percent of GDP, trends in this sector will have important implications for growth in the coming year, the industry lobby noted.
CII also said the manufacturing sector has been severely affected, with the growth in net sales of a sample of 324 companies declining from 32.4 percent in the quarter ending September 2008 to 6.6 percent in December 2008.
Profit after tax (PAT), which declined by 4.3 percent in the second quarter, showed a further decline of 28.5 percent the next quarter ending December 31.
The study said the global financial crisis has had a significant impact on domestic monetary conditions: as capital outflows gathered steam, the Indian banking system faced a severe liquidity crunch in September and October.
This, CII said, has had an impact on banks' lending behaviour. Banks are averting taking risk, on account of increased fears of default.
Subsequently, credit growth has witnessed a slowdown, especially in the small scale sector. The year-on-year growth in bank lending has dropped from a peak of 29 percent last October to 22 percent as of Jan 16, 2009.
According to CII, recent data on specific service sector activities gives a mixed picture - while there has been a sharp drop in indicators such as tourist arrivals or air freight and passenger movements, railway traffic and cellular subscriber growth have been holding up.
In banking, deposit and credit growth have begun to slow down - though only moderately. Given that the service sector accounts for over 50 percent of GDP, trends in this sector will have important implications for growth in the coming year, the industry lobby noted.
CII also said the manufacturing sector has been severely affected, with the growth in net sales of a sample of 324 companies declining from 32.4 percent in the quarter ending September 2008 to 6.6 percent in December 2008.
Profit after tax (PAT), which declined by 4.3 percent in the second quarter, showed a further decline of 28.5 percent the next quarter ending December 31.
The study said the global financial crisis has had a significant impact on domestic monetary conditions: as capital outflows gathered steam, the Indian banking system faced a severe liquidity crunch in September and October.
This, CII said, has had an impact on banks' lending behaviour. Banks are averting taking risk, on account of increased fears of default.
Subsequently, credit growth has witnessed a slowdown, especially in the small scale sector. The year-on-year growth in bank lending has dropped from a peak of 29 percent last October to 22 percent as of Jan 16, 2009.
'Reckless' RBS signed Sachin, others for 200 mn pounds
A spendthrift Royal Bank of Scotland (RBS) spent 200 million pounds on sponsorship deals with Sachin Tendulkar and other top sportsmen just weeks before being bailed out by the British government, a newspaper reported Sunday.
The Sunday Times said the bank, which is now 68 percent owned by the taxpayer, signed the long-term contracts before being bailed by the British government in October.
Former RBS chief executive Sir Fred Goodwin agreed contracts of up to five years.
Apart from Sachin, the stars signed as 'global ambassadors' include Zara Phillips, the rider and granddaughter of the Queen, Jack Nicklaus, the golfer, and Sir Jackie Stewart, the former motor racing champion.
Stewart, who is said to have earned four million pounds to promote RBS, said last week: "I am very much still with RBS. My contract has nearly two years to run and they always honour contracts."
The news comes after the bank announced that it had made a loss of 28 billion pounds last year.
Treasury select committee member MP John Mann told the paper: "They have been reckless yet again. This doesn't seem to be a bank that could do anything in moderation. It now needs to realise the golden days are over."
The paper quoted a spokesman for RBS as saying: "All our sponsorship agreements were negotiated on commercial principles and meet strict corporate governance rules."
The Sunday Times said the bank, which is now 68 percent owned by the taxpayer, signed the long-term contracts before being bailed by the British government in October.
Former RBS chief executive Sir Fred Goodwin agreed contracts of up to five years.
Apart from Sachin, the stars signed as 'global ambassadors' include Zara Phillips, the rider and granddaughter of the Queen, Jack Nicklaus, the golfer, and Sir Jackie Stewart, the former motor racing champion.
Stewart, who is said to have earned four million pounds to promote RBS, said last week: "I am very much still with RBS. My contract has nearly two years to run and they always honour contracts."
The news comes after the bank announced that it had made a loss of 28 billion pounds last year.
Treasury select committee member MP John Mann told the paper: "They have been reckless yet again. This doesn't seem to be a bank that could do anything in moderation. It now needs to realise the golden days are over."
The paper quoted a spokesman for RBS as saying: "All our sponsorship agreements were negotiated on commercial principles and meet strict corporate governance rules."
Expectations run high on eve of India's interim budget
With the economic downturn beginning to hurt India Inc., pulling down exports and industry output, expectations are high from the interim budget to be presented in parliament Monday by Minister for External Affairs Pranab Mukherjee.
Although the measures to be announced by Mukherjee will be interim in nature, as the regular budget for the next fiscal will be tabled after inauguration of a new government following national elections, industry said exceptional circumstances called for special steps.
Industry chambers have accordingly given their wish list and top of that is tax break for both the corporate sector and individuals, as it would have a direct impact on the finances of industries and households alike and help lift demand.
"Tax rate reduction is desirable in the current context," said Suresh Tendulkar, who chairs Prime Minister Manmohan Singh's Economic Advisory Council. "This will essentially generate more purchasing power," he said ahead of the budget.
Industry feels it is unlikely that Mukherjee, who has additional charge of the finance, as Manmohan Singh, who holds the portfolio, is convalescing following a heart surgery, would ignore the suggestion from such a high-powered panel.
The United Progressive Alliance (UPA) government having announced two stimulus packages since December, industry feels this will also be the last chance for the government to comprehensively address the economic slowdown before the ensuing elections.
"A major demand of India Inc. for many years has been for reduction in corporate tax, which remains unattended to," said the Associated Chambers of Commerce and Industry of India (Assocham) in its pre-budget memorandum.
"India Inc. therefore anticipates that Mr. Mukherjee would revisit corporate tax rates in India and not only remove surcharge on it but bring it down to global average of around 26-27 percent, especially at times of meltdown."
Sharing this view, the Federation of Indian Chambers of Commerce and Industry (FICCI) also wanted tax holidays for housing to be extended by five years and the reintroduction of investment allowance, among other measures.
On a larger canvas, what is expected to weigh heavily in Mukherjee's mind is the drop in industrial production in October for the first time in 15 years that was attributed to demand slowdown. Industrial output fell again in December.
Exports have fared no better and logged a decline for three straight months since October, with commerce secretary G.K. Pillai predicting yet another fall in January.
As for Mukherjee, who has presented three budgets in the past as regular finance minister between January 1982 and December 1984, he is clear about what areas need urgent attention of policymakers and spelt that out three days ago at an industry seminar.
"There is a need to sustain our foreign trade, revive foreign investment and generate domestic demand to maintain our growth rates, which are essential for the uplift of the multitudes below the poverty line," Mukherjee said.
Although the measures to be announced by Mukherjee will be interim in nature, as the regular budget for the next fiscal will be tabled after inauguration of a new government following national elections, industry said exceptional circumstances called for special steps.
Industry chambers have accordingly given their wish list and top of that is tax break for both the corporate sector and individuals, as it would have a direct impact on the finances of industries and households alike and help lift demand.
"Tax rate reduction is desirable in the current context," said Suresh Tendulkar, who chairs Prime Minister Manmohan Singh's Economic Advisory Council. "This will essentially generate more purchasing power," he said ahead of the budget.
Industry feels it is unlikely that Mukherjee, who has additional charge of the finance, as Manmohan Singh, who holds the portfolio, is convalescing following a heart surgery, would ignore the suggestion from such a high-powered panel.
The United Progressive Alliance (UPA) government having announced two stimulus packages since December, industry feels this will also be the last chance for the government to comprehensively address the economic slowdown before the ensuing elections.
"A major demand of India Inc. for many years has been for reduction in corporate tax, which remains unattended to," said the Associated Chambers of Commerce and Industry of India (Assocham) in its pre-budget memorandum.
"India Inc. therefore anticipates that Mr. Mukherjee would revisit corporate tax rates in India and not only remove surcharge on it but bring it down to global average of around 26-27 percent, especially at times of meltdown."
Sharing this view, the Federation of Indian Chambers of Commerce and Industry (FICCI) also wanted tax holidays for housing to be extended by five years and the reintroduction of investment allowance, among other measures.
On a larger canvas, what is expected to weigh heavily in Mukherjee's mind is the drop in industrial production in October for the first time in 15 years that was attributed to demand slowdown. Industrial output fell again in December.
Exports have fared no better and logged a decline for three straight months since October, with commerce secretary G.K. Pillai predicting yet another fall in January.
As for Mukherjee, who has presented three budgets in the past as regular finance minister between January 1982 and December 1984, he is clear about what areas need urgent attention of policymakers and spelt that out three days ago at an industry seminar.
"There is a need to sustain our foreign trade, revive foreign investment and generate domestic demand to maintain our growth rates, which are essential for the uplift of the multitudes below the poverty line," Mukherjee said.
Thursday, February 12, 2009
Cisco Unveils "Intelligent Urbanisation" Global Blueprint
Cisco today unveiled its holistic blueprint for "Intelligent Urbanisation," a global initiative to help cities around the world use the network as the next utility for integrated city management, better quality of life for citizens, and economic development.
Cisco chairman and CEO John Chambers, speaking from the launch at Cisco's Globalisation Centre East in Bangalore, India, said; "With the number of people living in urban areas growing from three billion today to five billion by 2030, urbanisation is a global trend impacting citizens, governments, and industries. This trend will also significantly impact the environment - the 20 most populous cities alone are responsible for 75 percent of the planet's energy consumption. In a world where all things are becoming connected, the network has become the next utility, enabling the holistic, intelligent and environmentally sustainable creation and management of cities, industries and public services."
Building on the thought leadership developed through Cisco's ongoing efforts with Connected Urban Development (CUD), the Intelligent Urbanisation initiative will bring together a broad portfolio of Cisco's products, services, partners and solutions. The initial focus will be on global sustainable solutions for public safety and security, transportation, buildings, energy, healthcare and education.
Jointly with the chief minister of Karnataka, B.S. Yeddyurappa, Cisco also announced a pilot program with the State of Karnataka to develop the roadmap for an intelligent, smart and sustainable Bengaluru city. This collaboration builds on Cisco's thought leadership and technology expertise with Connected Urban Development (CUD), a public-private partnership that includes cities like San Francisco, Amsterdam, Seoul and Singapore, which develops replicable ICT solutions to help promote sustainable, intelligent urban development practices.
As another step towards its focus on intelligent urbanisation, Cisco today announced that it had signed a Memorandum of Understanding with the Incheon Metropolitan City in Korea to mutually collaborate to transform the Incheon Free Economic Zone (IFEZ) into a center of globalisation expertise in Asia Pacific. As part of this collaboration, Cisco will provide its experience and technologies around creating intelligent urbanisation for Incheon Metropolitan City. The model will be partly based on Cisco's previous globalisation projects in major cities in Singapore, India, Malaysia and the Middle East. The two parties also agreed to launch a joint task force to investigate legal, technical aspects of this cooperation.
Wim Elfrink, Chief Globalisation Officer and EVP, Cisco Services, said: "The Internet is quickly expanding from mobile devices and computers to become the 'Internet of Things', as it begins to encompass not only the consumer and business internet but now the industrialisation of the Internet. Cities which are run on information will transform the quality of life for citizens, drive economic growth and improve city services and management. Particularly in these tough economic times, cities that use the network to accelerate and multiply their infrastructure investments will be those who not only survive challenges but thrive and lead into the future."
"The network is also key to addressing one of the 21st century's most significant issues -environmental sustainability," Mr. Elfrink said. "While technology contributes to about 2 percent of the world's carbon emissions, it can be a substantial part of the solution. It is estimated technology can reduce carbon emissions by 15% by 2020; an environmental saving of 1 ton of CO2 per capita that translates into US$946 billion dollars in financial savings. Additionally, cities that run on information can improve their energy efficiency by 30% within 20 years."
Cisco chairman and CEO John Chambers, speaking from the launch at Cisco's Globalisation Centre East in Bangalore, India, said; "With the number of people living in urban areas growing from three billion today to five billion by 2030, urbanisation is a global trend impacting citizens, governments, and industries. This trend will also significantly impact the environment - the 20 most populous cities alone are responsible for 75 percent of the planet's energy consumption. In a world where all things are becoming connected, the network has become the next utility, enabling the holistic, intelligent and environmentally sustainable creation and management of cities, industries and public services."
Building on the thought leadership developed through Cisco's ongoing efforts with Connected Urban Development (CUD), the Intelligent Urbanisation initiative will bring together a broad portfolio of Cisco's products, services, partners and solutions. The initial focus will be on global sustainable solutions for public safety and security, transportation, buildings, energy, healthcare and education.
Jointly with the chief minister of Karnataka, B.S. Yeddyurappa, Cisco also announced a pilot program with the State of Karnataka to develop the roadmap for an intelligent, smart and sustainable Bengaluru city. This collaboration builds on Cisco's thought leadership and technology expertise with Connected Urban Development (CUD), a public-private partnership that includes cities like San Francisco, Amsterdam, Seoul and Singapore, which develops replicable ICT solutions to help promote sustainable, intelligent urban development practices.
As another step towards its focus on intelligent urbanisation, Cisco today announced that it had signed a Memorandum of Understanding with the Incheon Metropolitan City in Korea to mutually collaborate to transform the Incheon Free Economic Zone (IFEZ) into a center of globalisation expertise in Asia Pacific. As part of this collaboration, Cisco will provide its experience and technologies around creating intelligent urbanisation for Incheon Metropolitan City. The model will be partly based on Cisco's previous globalisation projects in major cities in Singapore, India, Malaysia and the Middle East. The two parties also agreed to launch a joint task force to investigate legal, technical aspects of this cooperation.
Wim Elfrink, Chief Globalisation Officer and EVP, Cisco Services, said: "The Internet is quickly expanding from mobile devices and computers to become the 'Internet of Things', as it begins to encompass not only the consumer and business internet but now the industrialisation of the Internet. Cities which are run on information will transform the quality of life for citizens, drive economic growth and improve city services and management. Particularly in these tough economic times, cities that use the network to accelerate and multiply their infrastructure investments will be those who not only survive challenges but thrive and lead into the future."
"The network is also key to addressing one of the 21st century's most significant issues -environmental sustainability," Mr. Elfrink said. "While technology contributes to about 2 percent of the world's carbon emissions, it can be a substantial part of the solution. It is estimated technology can reduce carbon emissions by 15% by 2020; an environmental saving of 1 ton of CO2 per capita that translates into US$946 billion dollars in financial savings. Additionally, cities that run on information can improve their energy efficiency by 30% within 20 years."
India Inc concerned as industrial output falls again
Latest data on industrial output has left India Inc worried as the official index showed a two percent drop in December, after a small recovery the previous month, indicating that a demand slowdown continued in the economy.
Data on the Index of Industrial Production (IIP) released Thursday also showed that the index for manufacturing, that has the maximum weight, fell 2.5 percent, versus 8.6 percent in the similar month of previous fiscal.
Among other sectors, the index for electricity expanded one percent, while that for mining was up one percent.
The general index had expanded eight percent in December last fiscal, showed data released by the Central Statistical Organisation (CSO). It also revised downward the industrial growth for November to 1.7 percent from the estimated 2.4 percent earlier.
Industrial production had fallen for the first time in 15 years to 0.4 percent in October, against a growth of 12.2 percent in like month last year. Officials attributed the fall to a demand slowdown.
The use-base classification revealed that the indices for intermediate goods fell 8.5 percent, consumer durables 12.8 percent and consumer non-durables, while that for capital goods was up 4.2 percent.
In terms of industries, only seven out of 17 industry groups managed to show a positive growth in December 2008 as compared to the corresponding month of the previous year.
"Indicators are showing weakness across the board," said Tushar Poddar of Goldman Sachs, a leading global consultancy, saying the decline of 2 percent was lower than their own expectation of a 0.5 percent slump.
The Associated Chambers of Commerce and Industry (Assocham) said in a statement that the latest figures clearly indicate that India Inc needs a comprehensive package to come out of the slump.
"Such a negative growth was never recorded in the recent past and a huge fiscal, excise and other duty concessions are immediately required to help industry fall back on growth momentum," said Assocham president Sajjan Jindal.
"In the absence of handsome package, industry will have no other option but to downsize operation, hold back expansion and modification plans, restructure it drastically, and cut jobs."
Data on the Index of Industrial Production (IIP) released Thursday also showed that the index for manufacturing, that has the maximum weight, fell 2.5 percent, versus 8.6 percent in the similar month of previous fiscal.
Among other sectors, the index for electricity expanded one percent, while that for mining was up one percent.
The general index had expanded eight percent in December last fiscal, showed data released by the Central Statistical Organisation (CSO). It also revised downward the industrial growth for November to 1.7 percent from the estimated 2.4 percent earlier.
Industrial production had fallen for the first time in 15 years to 0.4 percent in October, against a growth of 12.2 percent in like month last year. Officials attributed the fall to a demand slowdown.
The use-base classification revealed that the indices for intermediate goods fell 8.5 percent, consumer durables 12.8 percent and consumer non-durables, while that for capital goods was up 4.2 percent.
In terms of industries, only seven out of 17 industry groups managed to show a positive growth in December 2008 as compared to the corresponding month of the previous year.
"Indicators are showing weakness across the board," said Tushar Poddar of Goldman Sachs, a leading global consultancy, saying the decline of 2 percent was lower than their own expectation of a 0.5 percent slump.
The Associated Chambers of Commerce and Industry (Assocham) said in a statement that the latest figures clearly indicate that India Inc needs a comprehensive package to come out of the slump.
"Such a negative growth was never recorded in the recent past and a huge fiscal, excise and other duty concessions are immediately required to help industry fall back on growth momentum," said Assocham president Sajjan Jindal.
"In the absence of handsome package, industry will have no other option but to downsize operation, hold back expansion and modification plans, restructure it drastically, and cut jobs."
Reliance Power bags third ultra mega power projec
The government Thursday handed over the letter of intent for the Tilaiya ultra mega power project (UMPP) to Reliance-Anil Dhirubhai Ambani Group (R-ADAG), being set up at an investment of over Rs.120 billion (Rs.12,000 crore/$2.4 billion).
This is the third UMPP awarded to group company Reliance Power, with the other two being at Sasan in Madhya Pradesh and Krishnapatnam in Andhra Pradesh.
"Recognising the fact that economies of scale leading to cheaper power could be secured through large size power projects and for introducing the efficient super critical technology in a big way, a unique initiative had been launched for the development of UMPPs under tariff-based international competitive bidding route," the government said in a statement.
"Development of 4,000 MW power project through a tariff-based bidding process is the first of its kind in the world," it added.
Reliance Power was awarded the Tilaiya project in Jharkhand late last month.
"We have been awarded the Tilaiya project. We bid the lowest per unit cost of Rs.1.77. We will generate 4,000 MW," a senior official of Reliance Power told IANS after a high-powered committee named his company the winner.
Besides Reliance, four other companies had bid for the project. These included the state-run power utility NTPC, Jindal Power, Lanco Infratech and Sterlite Energy. They were among the 11 that had met the pre-bid criteria, officials said.
With the Tilaiya project also in its kitty, Reliance Power has a portfolio to generate over 30,000 MW of power in the country. The group is now developing as many as 14 medium- and large-sized power projects, company officials said.
Of these, projects in western India will account for 12,220 MW, north for 9,080 MW, east for 4,000 MW, northeast for 2,900 MW and the south for 4,000 MW.
The group's 7,480-MW project to be located at Dadri in Uttar Pradesh, not far from the national capital, is expected to be the world's largest gas-fired power project at a single location, officials said.
This is the third UMPP awarded to group company Reliance Power, with the other two being at Sasan in Madhya Pradesh and Krishnapatnam in Andhra Pradesh.
"Recognising the fact that economies of scale leading to cheaper power could be secured through large size power projects and for introducing the efficient super critical technology in a big way, a unique initiative had been launched for the development of UMPPs under tariff-based international competitive bidding route," the government said in a statement.
"Development of 4,000 MW power project through a tariff-based bidding process is the first of its kind in the world," it added.
Reliance Power was awarded the Tilaiya project in Jharkhand late last month.
"We have been awarded the Tilaiya project. We bid the lowest per unit cost of Rs.1.77. We will generate 4,000 MW," a senior official of Reliance Power told IANS after a high-powered committee named his company the winner.
Besides Reliance, four other companies had bid for the project. These included the state-run power utility NTPC, Jindal Power, Lanco Infratech and Sterlite Energy. They were among the 11 that had met the pre-bid criteria, officials said.
With the Tilaiya project also in its kitty, Reliance Power has a portfolio to generate over 30,000 MW of power in the country. The group is now developing as many as 14 medium- and large-sized power projects, company officials said.
Of these, projects in western India will account for 12,220 MW, north for 9,080 MW, east for 4,000 MW, northeast for 2,900 MW and the south for 4,000 MW.
The group's 7,480-MW project to be located at Dadri in Uttar Pradesh, not far from the national capital, is expected to be the world's largest gas-fired power project at a single location, officials said.
Wednesday, February 11, 2009
Reliance enhances value proposition for its GSM customers
Following the successful launch of its GSM service, Reliance Mobile GSM has further enhanced the value proposition for its customers by adding a new leaf to its existing Customer Experience Programme.
The earlier Customer Experience Programme was much appreciated by the customers and the feedback received from the delighted customers provided stimulus to the new and improved Customer Experience Programme, a company release said.
The new offer effectively addresses the issues of incoming validity and talk time. Earlier Reliance Mobile GSM had offered limited validity of either three months or six months which has now been enhanced to lifetime validity, by default. Thus, all new Reliance Mobile GSM connections will come with lifetime validity at a nominal charge.
Prior to this offer, the Reliance Mobile GSM customers were entitled for free talktime only, but this offer not only provides free talktime over a period of 90 days but also doubles the talktime on every recharge done till March 31, the release added.
The earlier Customer Experience Programme was much appreciated by the customers and the feedback received from the delighted customers provided stimulus to the new and improved Customer Experience Programme, a company release said.
The new offer effectively addresses the issues of incoming validity and talk time. Earlier Reliance Mobile GSM had offered limited validity of either three months or six months which has now been enhanced to lifetime validity, by default. Thus, all new Reliance Mobile GSM connections will come with lifetime validity at a nominal charge.
Prior to this offer, the Reliance Mobile GSM customers were entitled for free talktime only, but this offer not only provides free talktime over a period of 90 days but also doubles the talktime on every recharge done till March 31, the release added.
BSNL to launch 3-G, IPTV services in HP
Bharat Sanchar Nigam Limited (BSNL) would launch 3-G Mobile and Internet Protocol Television Services in Himachal Pradesh soon.
Shimla is among 15 big cities where BSNL is launching 3G mobile services in the country.
State Circle CGM of BSNL, Mr Anil Kaushal said that 31 towers for the 3-G services were being installed at various parts of Shimla town.
After launching 3-G services, processing of data with high speed accuracy would be possible, video and films could be downloaded easily beside it would add the facility to display TV Channel on mobile sets, he added.
Mr Kaushal said that after successful test of IPTV, the facility would be launche initially in Shimla.
Shimla is among 15 big cities where BSNL is launching 3G mobile services in the country.
State Circle CGM of BSNL, Mr Anil Kaushal said that 31 towers for the 3-G services were being installed at various parts of Shimla town.
After launching 3-G services, processing of data with high speed accuracy would be possible, video and films could be downloaded easily beside it would add the facility to display TV Channel on mobile sets, he added.
Mr Kaushal said that after successful test of IPTV, the facility would be launche initially in Shimla.
Ford India launches Fiesta ZXi
Ford, one of the largest car manufacturing company, has launched Fiesta ZXi, with a host of new features to enhance the comfort level higher, here today.The new features on the Fiesta ZXi include an Anti-lock Braking System (ABS) with Electronic Brake Force Distribution (EBD), a 2 DIN MP3 player with speakers and front fog lamps. And all these exciting features are offered at no additional cost.
While briefing media persons here today, Nigel Wark, executive director, Marketing, Sales and Service, Ford India, said '' It has always been our endeavour to provide our customers exceptional value and these enhancements are in line with our overall product strategy to provide best in class offerings.'' Ford Fiesta gives Indian consumers the choice between Ford India's advanced and efficient Duratec (petrol) and Duratorq (common-rail, turbodiesel) engines, he said.
CarSalesIndia.com to Boost Roadside Breakdown Service
You may not have even imagined, a service that was available only in the most developed countries is now a reality in India. Yes, car owners can now subscribe to MyTVS 24x7 emergency services to enjoy a stress free drive anywhere and everywhere, and to make things easy, you can apply for this service online at www.CarSalesIndia.com. CarSalesIndia.com is appointed as the exclusive web retailer for MyTVS roadside and breakdown service memberships.
Be it a Ghat road or the most remote village, you now have a service which you can trust, and rely upon, to be by your side when you have a breakdown or emergency. With a low package price Rs 3.50 on a daily basis costing less than a cup of coffee, it is sure to attract thousands of car owners. Customers also enjoy a host of features such as car towing, wrecker service, free minor repairs, locked out keys, wheel change and arranging cab/taxi for passengers if stranded.
MyTVS a part of the $4 billion TVS group is a market leader in providing roadside breakdown and emergency services, with over 2000 ASP's (Actual service provider) spread all over India, waiting to respond for roadside emergencies and breakdowns. In case of a breakdown or emergency, all you have to do is call the MyTVS Toll free number. The moment you call MyTVS 24 hour's helpline, the call centre swings into action, within moments you will be on a conference call with one the ASP's nearest to your location. The ASP will then get to you within the shortest possible time and get you back on the road. The average response times between you calling the service centre and one of the ASP's to reach you are 60 mins within city limits, 90 mins on state & national highways and 120 mins for ghats and remote places.
Be it a Ghat road or the most remote village, you now have a service which you can trust, and rely upon, to be by your side when you have a breakdown or emergency. With a low package price Rs 3.50 on a daily basis costing less than a cup of coffee, it is sure to attract thousands of car owners. Customers also enjoy a host of features such as car towing, wrecker service, free minor repairs, locked out keys, wheel change and arranging cab/taxi for passengers if stranded.
MyTVS a part of the $4 billion TVS group is a market leader in providing roadside breakdown and emergency services, with over 2000 ASP's (Actual service provider) spread all over India, waiting to respond for roadside emergencies and breakdowns. In case of a breakdown or emergency, all you have to do is call the MyTVS Toll free number. The moment you call MyTVS 24 hour's helpline, the call centre swings into action, within moments you will be on a conference call with one the ASP's nearest to your location. The ASP will then get to you within the shortest possible time and get you back on the road. The average response times between you calling the service centre and one of the ASP's to reach you are 60 mins within city limits, 90 mins on state & national highways and 120 mins for ghats and remote places.
Learn Color Cartridge Remanufacturing at Recharger's ReIndia Expo
Recharger Magazine has assembled industry leaders to teach the latest cartridge remanufacturing techniques and other relevant classes at ReIndia Expo, March 5-7, 2009, at the Bombay Exhibition Centre in Mumbai, India. ReIndia Expo will feature three days of industry information and peer networking with a full complement of comprehensive classes and presentations for the cartridge remanufacturing industry.
ReIndia Expo will be open 11 a.m. to 7 p.m. Thursday and Friday and 11 a.m. to 4 p.m. on Saturday. There will be several education sessions Thursday and Friday that will be an essential part of the ReIndia Expo experience for those who are new to the industry or simply want to learn more and stay up to date.
ReIndia Expo will feature several classes on color toner cartridge remanufacturing, an essential element for remanufacturers. One of the can't-miss classes will feature UniNet Imaging's Javier Gonzalez covering the HP CP 1215 printer. The color Laserjet printers from Hewlett-Packard are popular in both India and internationally, and the cartridges for these printers will be a critical component of any remanufacturer's catalog. Additionally, Indian remanufacturing expert Dhruv Mahajan will teach "Color in the Indian Market."
ReIndia Expo will be open 11 a.m. to 7 p.m. Thursday and Friday and 11 a.m. to 4 p.m. on Saturday. There will be several education sessions Thursday and Friday that will be an essential part of the ReIndia Expo experience for those who are new to the industry or simply want to learn more and stay up to date.
ReIndia Expo will feature several classes on color toner cartridge remanufacturing, an essential element for remanufacturers. One of the can't-miss classes will feature UniNet Imaging's Javier Gonzalez covering the HP CP 1215 printer. The color Laserjet printers from Hewlett-Packard are popular in both India and internationally, and the cartridges for these printers will be a critical component of any remanufacturer's catalog. Additionally, Indian remanufacturing expert Dhruv Mahajan will teach "Color in the Indian Market."
Ernst and Young-Assocham report stresses on consolidation in financial services
Leading professional services firm Ernst & Young (EY) and the Associated Chambers of Commerce and Industry of India (ASSOCHAM) today released a report titled ”Financial services: state of the industry and way forward.” The report seeks to present distinct opportunities such as consolidation, development of the debt market, focus on risk management and alternate financing options, which will help India develop into an economic power and help ride out the adversities arising from the current global credit crisis.
According to the EY-Assocham report, while the subprime crisis has been manifest worldwide as an adversity of unprecedented scale, it has also concurrently opened new vistas for fast emerging economies such as India to assume a stronger role in the global financial system.
Reforms needed in the debt market
To capitalize on such opportunities, India will have to set its basics in order. The reform process, particularly in the debt markets, which lags far behind equity, must be put on a fast track. Strong debt markets provide the requisite financing to various entities in the economy, thereby reducing reliance on foreign capital as well as equity markets.
Hitherto, factors such as lengthy and cumbersome processes followed in the listing of a debt instrument, high cost of issuance and low liquidity have impeded growth. A strong impetus is required to develop and strengthen the debt market in India. Well developed debt markets have historically been seen to act as a cushion against financial crises, such as the one experienced in FY97–98.
While government securities (G-secs) dominate the debt market in India, they may decline with improving fiscal discipline and the government’s lower borrowing requirements. Yet, the corporate bond market lags behind in terms of market infrastructure, trading facilities, number of market participants, which is in contrast to developed countries where the corporate debt market is at par with the securities market.
Retail and institutional investments are necessary to develop and strengthen corporate debt markets. This requires a set of market and regulatory intervention. Regulators should provide incentives to boost issuance as well as buying of corporate papers. Further, the reforms should encompass both the markets — primary and secondary with a focus on issuers, investors and the regulatory structure, says the EY-Assocham report.
Consolidation in financial services
The Indian financial sector, particularly the banking system, needs to achieve size and scale to spread its reach both within as well as beyond domestic boundaries. Therefore, small and fragmented entities, as they exist today, will have to give way to the stronger and bigger corporations to take on the might of the global leaders. Consolidation would be the fastest and the most practical solution to achieve this.
It is quite ironical that consolidation has been the current flavor from the global perspective as well; however the reasons are starkly contrasting, says the report. In the west, consolidation has been more of a survival strategy amid the fall of the world’s largest investment banks. But in the Indian banking set up, consolidation will act as an enabler and an engine for growth to propel Indian financial institutions to come out of the shells of protectionism and compete against their much more powerful global counterparts, it highlights.
One of the significant characteristics of the Indian banking industry is that it is very fragmented. As of March 2007, the top eight banks in India have a combined market share of just 50% while the big-four state-owned banks in China alone hold a 50% market share. Besides the structural drivers for consolidation, certain additional factors driving consolidation include regulatory changes which propose opening up of the sector, the Basel II requirements, capital requirements, need to attain size, declining profitability, particularly for the smaller banks and increasing geographic presence.
Apart from the commercial banking space, there is a compelling case for consolidation among regional rural banks (RRBs), co-operative banks and NBFCs. Especially, RRBs and co-operative banks have been one of the primary vehicles to extend banking services in rural and semi-urban areas. As of March 2007, there were 96 RRBs, sharing just 3% of the total assets and 1.5% of the total profits of all scheduled commercial banks (SCBs) in India. In today’s competitive environment, it would be essential for these RRBs to consolidate either among themselves or with their sponsored banks to improve their scale, efficiency, profitability and viability of conducting business in rural areas.
In the asset management space, the impact of the liquidity crisis during the last six months has impacted some of the smaller players significantly, which may seek to exit the business. As of December 2008, 37 asset management players are registered, which had shown a CAGR of 34% in assets under management (AUM) to reach INR5.3 trillion as of September 2008. While merger and acquisitions (M&A) in the asset management space have been sporadic, with deals mainly used as an entry strategy rather than consolidation, the trend may change moderately if the smaller players are forced to opt out.
According to the report, while there is a little possibility of any consolidation in the insurance sector as its still in a growth phase, there could still be some consolidation, primarily driven by the lack of capital and the mandatory requirement for listing insurance companies within 10 years of their operation. This is particularly true for small insurance players who might find it difficult to raise additional capital for their growth in today’s difficult market conditions.
Strengthening of risk management systems is vital
The challenges and opportunities thrown open by the emerging growth paradigms also involve inherent risks for banks. The prudent path ahead for banks is to align internal mechanisms and strategies by strengthening risk management systems. A risk-focused approach will enable banks to efficiently allocate capital and manage risks. This will entail a radical shift in the treatment of loans and over a period of time, the system will move from segmental banking to individual banking. With most banks operating under the core banking solutions, data warehousing and information systems need to be in place to assist in determining individual risk allocation and prudent risk management.
In an earlier EY survey on risk governance, citing critical lessons from the current economic the chief was the vital importance of liquidity management. Fostering a risk culture and staying attuned to industry dynamics were also cited by respondents as imperatives. The subprime crisis presents invaluable lessons for countries such as India to develop the right frameworks as they chart out their future growth plans.
Alternative financing options
Among alternate financing options, Private Equity (PE) has become an important source of equity capital, but the flow of capital can become extremely uncertain during a downturn. The credit crisis in 2008 has seen a deceleration in PE activity, but given the long-term growth prospects of the economy, Indian companies would continue to attract PE. On the debt side, External Commercial Borrowings (ECBs) have grown at a brisk pace. A positive outlook on the sovereign ratings, coupled with the improved performance of India Inc., has amply supported the growing acceptance of Indian paper abroad.
The latest addition to this list is Exchangeable Bonds (EBs), which has the potential to emerge as an important source of capital for corporate groups running several companies under their umbrella. With the release of the guidelines for FCEBs, the government has provided an added option to the listed firms to raise capital from overseas markets, whose proceeds can be used to fund operations abroad.
Being a relatively new instrument for Indian issuers, it will become clearer only with time as to what extent the companies can leverage upon this option. Nonetheless, it can turn out to be an interesting tool for groups operating through multiple companies.
According to the EY-Assocham report, while the subprime crisis has been manifest worldwide as an adversity of unprecedented scale, it has also concurrently opened new vistas for fast emerging economies such as India to assume a stronger role in the global financial system.
Reforms needed in the debt market
To capitalize on such opportunities, India will have to set its basics in order. The reform process, particularly in the debt markets, which lags far behind equity, must be put on a fast track. Strong debt markets provide the requisite financing to various entities in the economy, thereby reducing reliance on foreign capital as well as equity markets.
Hitherto, factors such as lengthy and cumbersome processes followed in the listing of a debt instrument, high cost of issuance and low liquidity have impeded growth. A strong impetus is required to develop and strengthen the debt market in India. Well developed debt markets have historically been seen to act as a cushion against financial crises, such as the one experienced in FY97–98.
While government securities (G-secs) dominate the debt market in India, they may decline with improving fiscal discipline and the government’s lower borrowing requirements. Yet, the corporate bond market lags behind in terms of market infrastructure, trading facilities, number of market participants, which is in contrast to developed countries where the corporate debt market is at par with the securities market.
Retail and institutional investments are necessary to develop and strengthen corporate debt markets. This requires a set of market and regulatory intervention. Regulators should provide incentives to boost issuance as well as buying of corporate papers. Further, the reforms should encompass both the markets — primary and secondary with a focus on issuers, investors and the regulatory structure, says the EY-Assocham report.
Consolidation in financial services
The Indian financial sector, particularly the banking system, needs to achieve size and scale to spread its reach both within as well as beyond domestic boundaries. Therefore, small and fragmented entities, as they exist today, will have to give way to the stronger and bigger corporations to take on the might of the global leaders. Consolidation would be the fastest and the most practical solution to achieve this.
It is quite ironical that consolidation has been the current flavor from the global perspective as well; however the reasons are starkly contrasting, says the report. In the west, consolidation has been more of a survival strategy amid the fall of the world’s largest investment banks. But in the Indian banking set up, consolidation will act as an enabler and an engine for growth to propel Indian financial institutions to come out of the shells of protectionism and compete against their much more powerful global counterparts, it highlights.
One of the significant characteristics of the Indian banking industry is that it is very fragmented. As of March 2007, the top eight banks in India have a combined market share of just 50% while the big-four state-owned banks in China alone hold a 50% market share. Besides the structural drivers for consolidation, certain additional factors driving consolidation include regulatory changes which propose opening up of the sector, the Basel II requirements, capital requirements, need to attain size, declining profitability, particularly for the smaller banks and increasing geographic presence.
Apart from the commercial banking space, there is a compelling case for consolidation among regional rural banks (RRBs), co-operative banks and NBFCs. Especially, RRBs and co-operative banks have been one of the primary vehicles to extend banking services in rural and semi-urban areas. As of March 2007, there were 96 RRBs, sharing just 3% of the total assets and 1.5% of the total profits of all scheduled commercial banks (SCBs) in India. In today’s competitive environment, it would be essential for these RRBs to consolidate either among themselves or with their sponsored banks to improve their scale, efficiency, profitability and viability of conducting business in rural areas.
In the asset management space, the impact of the liquidity crisis during the last six months has impacted some of the smaller players significantly, which may seek to exit the business. As of December 2008, 37 asset management players are registered, which had shown a CAGR of 34% in assets under management (AUM) to reach INR5.3 trillion as of September 2008. While merger and acquisitions (M&A) in the asset management space have been sporadic, with deals mainly used as an entry strategy rather than consolidation, the trend may change moderately if the smaller players are forced to opt out.
According to the report, while there is a little possibility of any consolidation in the insurance sector as its still in a growth phase, there could still be some consolidation, primarily driven by the lack of capital and the mandatory requirement for listing insurance companies within 10 years of their operation. This is particularly true for small insurance players who might find it difficult to raise additional capital for their growth in today’s difficult market conditions.
Strengthening of risk management systems is vital
The challenges and opportunities thrown open by the emerging growth paradigms also involve inherent risks for banks. The prudent path ahead for banks is to align internal mechanisms and strategies by strengthening risk management systems. A risk-focused approach will enable banks to efficiently allocate capital and manage risks. This will entail a radical shift in the treatment of loans and over a period of time, the system will move from segmental banking to individual banking. With most banks operating under the core banking solutions, data warehousing and information systems need to be in place to assist in determining individual risk allocation and prudent risk management.
In an earlier EY survey on risk governance, citing critical lessons from the current economic the chief was the vital importance of liquidity management. Fostering a risk culture and staying attuned to industry dynamics were also cited by respondents as imperatives. The subprime crisis presents invaluable lessons for countries such as India to develop the right frameworks as they chart out their future growth plans.
Alternative financing options
Among alternate financing options, Private Equity (PE) has become an important source of equity capital, but the flow of capital can become extremely uncertain during a downturn. The credit crisis in 2008 has seen a deceleration in PE activity, but given the long-term growth prospects of the economy, Indian companies would continue to attract PE. On the debt side, External Commercial Borrowings (ECBs) have grown at a brisk pace. A positive outlook on the sovereign ratings, coupled with the improved performance of India Inc., has amply supported the growing acceptance of Indian paper abroad.
The latest addition to this list is Exchangeable Bonds (EBs), which has the potential to emerge as an important source of capital for corporate groups running several companies under their umbrella. With the release of the guidelines for FCEBs, the government has provided an added option to the listed firms to raise capital from overseas markets, whose proceeds can be used to fund operations abroad.
Being a relatively new instrument for Indian issuers, it will become clearer only with time as to what extent the companies can leverage upon this option. Nonetheless, it can turn out to be an interesting tool for groups operating through multiple companies.
Friday, February 6, 2009
1.8 mn Americans lost jobs in worst slashing spree in 34 years
Americans have lost 1.8 million jobs in just the last three months with employers slashing 598,000 more jobs in January, taking the unemployment rate up to 7.6 percent, the country's worst in 34 years.
According to a government report released Friday, the latest job loss is the worst since December 1974, and brings job losses to 1.8 million in just the last three months, or half of the 3.6 million jobs that have been lost since the beginning of 2008.
January's job loss was also worse than the forecast of a loss of 540,000 jobs from economists surveyed by Briefing.com.
The rise in the unemployment rate also was worse than the 7.5 percent rate economists expected, CNNMoney.com said. The unemployment rate is now at its highest level since Sepember 1992.
Friday's report also showed that 2.6 million people have now been out of work for more than six months, the most long-term unemployed since 1983.
And that number only counts those still looking for work. The so-called underemployment rate, which includes those who have stopped looking for work and people working only part-time that want full-time positions, climbed to 13.9 percent from 13.5 percent in December.
That is the highest rate for this measure since the Labour Department first started tracking it in 1994.
January was a brutal month for layoffs, as major companies ranging from Microsoft, Boeing and Caterpillar to Home Depot and Starbucks all announced substantial job cuts.
The job losses in January were widespread, with the manufacturing sector shedding 207,000 jobs, the construction industry cutting 111,000 jobs and business and professional services companies losing 121,000 jobs.
Retailers also cut 45,000 workers, while the leisure and hospitality sector lost 28,000. Among the only sectors posting narrow gains in jobs were education, health services, and the government.
The jobs report comes as the Senate debates the Obama administration's proposal for a nearly $900 billion economic stimulus bill. During a debate late into the night Thursday Republicans and some Democrats questioned the bill's mix of measures and its size.
According to a government report released Friday, the latest job loss is the worst since December 1974, and brings job losses to 1.8 million in just the last three months, or half of the 3.6 million jobs that have been lost since the beginning of 2008.
January's job loss was also worse than the forecast of a loss of 540,000 jobs from economists surveyed by Briefing.com.
The rise in the unemployment rate also was worse than the 7.5 percent rate economists expected, CNNMoney.com said. The unemployment rate is now at its highest level since Sepember 1992.
Friday's report also showed that 2.6 million people have now been out of work for more than six months, the most long-term unemployed since 1983.
And that number only counts those still looking for work. The so-called underemployment rate, which includes those who have stopped looking for work and people working only part-time that want full-time positions, climbed to 13.9 percent from 13.5 percent in December.
That is the highest rate for this measure since the Labour Department first started tracking it in 1994.
January was a brutal month for layoffs, as major companies ranging from Microsoft, Boeing and Caterpillar to Home Depot and Starbucks all announced substantial job cuts.
The job losses in January were widespread, with the manufacturing sector shedding 207,000 jobs, the construction industry cutting 111,000 jobs and business and professional services companies losing 121,000 jobs.
Retailers also cut 45,000 workers, while the leisure and hospitality sector lost 28,000. Among the only sectors posting narrow gains in jobs were education, health services, and the government.
The jobs report comes as the Senate debates the Obama administration's proposal for a nearly $900 billion economic stimulus bill. During a debate late into the night Thursday Republicans and some Democrats questioned the bill's mix of measures and its size.
Toyota losses mounting, US parts firms seek aid
Toyota, the world's top auto maker, said its losses were ballooning as global car sales slide, and U.S.
auto parts suppliers pushed for government aid to save their companies and hundreds of thousands of jobs.
A sudden collapse in consumer demand last year and turmoil in credit markets have battered automakers, forcing them to cut production and shed jobs, adding to the global economic gloom.
Related industries are also reeling.
The U.S. auto supply industry, which employees more people directly than auto manufacturers, said it was in talks with the U.S. Treasury to secure emergency funding to avoid a wave of bankruptcies.
Toyota Motor Corp warned on Friday that its operating loss for the year to end-March would be 450 billion yen ($4.95 billion), three times the loss it had forecast just six weeks ago.
Toyota's sales fell 34 percent last month in the United States, its biggest market, and 23 percent in Japan, as recession gripped major economies.
''This is absolutely awful. The earnings situation has obviously deteriorated since last October when the company's stock price plunged,'' said Yoshinori Nagano, chief strategist at Daiwa Asset Management in Tokyo.
''Hopes for U.S. economic (stimulus) steps have supported the company's stock since then. Still, if something goes wrong on that front, that could batter the stock price once again.'' Toyota posted an operating loss of 360.5 billion yen for October-December. The Japanese firm has already let most temporary workers go, and could cut full-time jobs in Britain and North America, a company source said.
Predicting further pain for the world auto industry, Moody's Investors cut its credit rating on Toyota for the first time in a decade.
In Europe, world-number two truck maker Volvo said it slipped to a surprise operating loss in the fourth quarter amid plunging demand and warned that key markets were likely to fall further this year.
RESCUE ME Toyota's grim forecast came as U.S. parts suppliers pressed for government aid, and as President Barack Obama urged swift passage of a $900 billion stimulus package for the world's largest economy.
The auto suppliers have requested some $25 billion in assistance, an amount that would double the U.S. government's commitment to the auto sector at a time when sales are at their lowest since the early 1980s.
''The key now is whether consumers in America will be able to start securing loans again,'' Daiwa's Nagano said.
''Slumping sales due to the dismal state of the economy may be inevitable, but another big problem today is that consumers who can normally get loans can't get them.'' Bob McKenna, president of the Motor & Equipment Manufacturers Association warned that the parts industry has been shut off from credit at a time when orders from automakers are shrinking.
Major problems at auto suppliers could quickly cripple or shut down car and truck production.
''Without immediate credit availability, an onslaught of supplier company bankruptcies is inevitable in the coming weeks and months, which would have a devastating, long-term effect on the U.S. economy,'' McKenna said in a statement.
Delphi Corp, the biggest parts supplier to General Motors Corp, said on Thursday it was seeking court permission to eliminate healthcare benefits for 15,000 salaried retirees.
Delphi has been under bankruptcy protection since 2005.
GM itself is restructuring under a $13.4 billion government bailout, and along with Chrsyler LLC is racing to meet a Feb.
17 deadline to show U.S. officials they can be made viable after receiving massive public aid.
In South Korea, cash-strapped SUV maker Ssangyong Motor Co secured protection from creditors, but may struggle to revive in the near term or find new owners after it posted four loss-making quarters on plunging sales.
Ssangyong, which employs 7,100, is South Korea's first big corporate casualty as the global recession batters Asia's key export markets.
Difficulties with parts suppliers prompted Russian carmaker AvtoVAZ, which is 25 percent-owned by Renault, to halt its assembly line indefinitely, the Kommersant newspaper said, quoting AvtoVAZ's president.
auto parts suppliers pushed for government aid to save their companies and hundreds of thousands of jobs.
A sudden collapse in consumer demand last year and turmoil in credit markets have battered automakers, forcing them to cut production and shed jobs, adding to the global economic gloom.
Related industries are also reeling.
The U.S. auto supply industry, which employees more people directly than auto manufacturers, said it was in talks with the U.S. Treasury to secure emergency funding to avoid a wave of bankruptcies.
Toyota Motor Corp warned on Friday that its operating loss for the year to end-March would be 450 billion yen ($4.95 billion), three times the loss it had forecast just six weeks ago.
Toyota's sales fell 34 percent last month in the United States, its biggest market, and 23 percent in Japan, as recession gripped major economies.
''This is absolutely awful. The earnings situation has obviously deteriorated since last October when the company's stock price plunged,'' said Yoshinori Nagano, chief strategist at Daiwa Asset Management in Tokyo.
''Hopes for U.S. economic (stimulus) steps have supported the company's stock since then. Still, if something goes wrong on that front, that could batter the stock price once again.'' Toyota posted an operating loss of 360.5 billion yen for October-December. The Japanese firm has already let most temporary workers go, and could cut full-time jobs in Britain and North America, a company source said.
Predicting further pain for the world auto industry, Moody's Investors cut its credit rating on Toyota for the first time in a decade.
In Europe, world-number two truck maker Volvo said it slipped to a surprise operating loss in the fourth quarter amid plunging demand and warned that key markets were likely to fall further this year.
RESCUE ME Toyota's grim forecast came as U.S. parts suppliers pressed for government aid, and as President Barack Obama urged swift passage of a $900 billion stimulus package for the world's largest economy.
The auto suppliers have requested some $25 billion in assistance, an amount that would double the U.S. government's commitment to the auto sector at a time when sales are at their lowest since the early 1980s.
''The key now is whether consumers in America will be able to start securing loans again,'' Daiwa's Nagano said.
''Slumping sales due to the dismal state of the economy may be inevitable, but another big problem today is that consumers who can normally get loans can't get them.'' Bob McKenna, president of the Motor & Equipment Manufacturers Association warned that the parts industry has been shut off from credit at a time when orders from automakers are shrinking.
Major problems at auto suppliers could quickly cripple or shut down car and truck production.
''Without immediate credit availability, an onslaught of supplier company bankruptcies is inevitable in the coming weeks and months, which would have a devastating, long-term effect on the U.S. economy,'' McKenna said in a statement.
Delphi Corp, the biggest parts supplier to General Motors Corp, said on Thursday it was seeking court permission to eliminate healthcare benefits for 15,000 salaried retirees.
Delphi has been under bankruptcy protection since 2005.
GM itself is restructuring under a $13.4 billion government bailout, and along with Chrsyler LLC is racing to meet a Feb.
17 deadline to show U.S. officials they can be made viable after receiving massive public aid.
In South Korea, cash-strapped SUV maker Ssangyong Motor Co secured protection from creditors, but may struggle to revive in the near term or find new owners after it posted four loss-making quarters on plunging sales.
Ssangyong, which employs 7,100, is South Korea's first big corporate casualty as the global recession batters Asia's key export markets.
Difficulties with parts suppliers prompted Russian carmaker AvtoVAZ, which is 25 percent-owned by Renault, to halt its assembly line indefinitely, the Kommersant newspaper said, quoting AvtoVAZ's president.
India slows palm buying, China on the sidelines
India halved its palm shipments this week after two months of frenzied buying, while top consumer China stayed on the sidelines as traders assess whether stocks need to be replenished after the Lunar New Year.
India, the second largest vegetable oil importer after China, struck deals to buy 20,000 tonnes of palm oil products at $535-$555 a tonne C&F (cost and freight), and shipments are expected to taper off for the rest of February.
The South Asian country usually buys 55,000 a week, which include a mix of crude palm oil and refined palm olein.
''India imported more than half-a-million tonnes in the last two months and now there is a price disparity between imported oils and domestic sources,'' said a top Indian dealer.
Even state-run trading companies slowed their purchases with MMTC Ltd and State Trading Corp of India Ltd.
issuing much smaller tenders for palm oil, which is produced mainly in Indonesia and Malaysia.
''Part of the slowdown in Indian imports is due to the incoming rapeseed crop and the fact that prices are not going move very wildly in the next few weeks,'' said a Malaysian trader with dealings in India.
Rapeseed output in India is initially estimated to be around 6 million tonnes in the current oil year starting in October, up 20 percent from the previous year, industry officials say.
''The increase is significant because the rapeseed hectarage has increased by more than 10 percent because farmers wanted to take advantage of the high oilseed prices last year,'' said B.V.
Mehta, executive director of the Solvent Extractor's Association of India.
Rapeseed oil prices have been mostly steady this week at 980 -1,050 rupees ($20-$20.11) per 15-kg tin as trading was light in Jaipur, the capital of the northern state of Rajasthan where most of the rapeseed is harvested, Indian dealers said.
India grows two oilseed crops, mainly soybean and groundnut in the winter season, and rapeseed and groundnut in the summer season.
CHINA WAITS FOR NEXT WEEK China was mostly unsighted in palm oil markets as traders needed to assess the drawdown in stocks after the Lunar New Year holidays last month.
But exporters in Malaysia and Indonesia said China would need more palm cargoes in the next few months as the vegetable oil is better for cooking in the summer season than soyoil.
February soyoil imports were likely to remain at January levels of about 400,000 tonnes, a plunge of 42 percent from December, according to an official survey released on Friday.
[ID:nPEK3006] ''There is interest in buying palm oil but the deals will start coming in next week when most of the trading companies are back in action after the long Chinese New Year holidays,'' said the head of palm oil trading at an international house in Malaysia.
One trade source said Chinese traders would usually buy more than 250,000 tonnes of refined palm olein per month from Malaysia, starting in March, with demand slowly edging up in February.
China bought around 155,690-170,680 tonnes of palm oil in January, cargo surveyors Intertek Testing Services and Societe Generale de Surveillance said last week.
Physical crude palm oil prices in Malaysia have risen roughly 5 percent to 1,870 -1,880 ringgit ($518-$521) per tonne for February delivery from last week on fars of tight supply and increased hedging on the uncertain crop outlook in South America, traders said.
Spot refined, bleached and deodorised palm olein, the most heavily traded physical product, inched up more than 2 percent to $570 per tonne from last week.
($1=3.612 Malaysian Ringgit) ($1=48.72 Indian Rupee)
India, the second largest vegetable oil importer after China, struck deals to buy 20,000 tonnes of palm oil products at $535-$555 a tonne C&F (cost and freight), and shipments are expected to taper off for the rest of February.
The South Asian country usually buys 55,000 a week, which include a mix of crude palm oil and refined palm olein.
''India imported more than half-a-million tonnes in the last two months and now there is a price disparity between imported oils and domestic sources,'' said a top Indian dealer.
Even state-run trading companies slowed their purchases with MMTC Ltd
''Part of the slowdown in Indian imports is due to the incoming rapeseed crop and the fact that prices are not going move very wildly in the next few weeks,'' said a Malaysian trader with dealings in India.
Rapeseed output in India is initially estimated to be around 6 million tonnes in the current oil year starting in October, up 20 percent from the previous year, industry officials say.
''The increase is significant because the rapeseed hectarage has increased by more than 10 percent because farmers wanted to take advantage of the high oilseed prices last year,'' said B.V.
Mehta, executive director of the Solvent Extractor's Association of India.
Rapeseed oil prices have been mostly steady this week at 980 -1,050 rupees ($20-$20.11) per 15-kg tin as trading was light in Jaipur, the capital of the northern state of Rajasthan where most of the rapeseed is harvested, Indian dealers said.
India grows two oilseed crops, mainly soybean and groundnut in the winter season, and rapeseed and groundnut in the summer season.
CHINA WAITS FOR NEXT WEEK China was mostly unsighted in palm oil markets as traders needed to assess the drawdown in stocks after the Lunar New Year holidays last month.
But exporters in Malaysia and Indonesia said China would need more palm cargoes in the next few months as the vegetable oil is better for cooking in the summer season than soyoil.
February soyoil imports were likely to remain at January levels of about 400,000 tonnes, a plunge of 42 percent from December, according to an official survey released on Friday.
[ID:nPEK3006] ''There is interest in buying palm oil but the deals will start coming in next week when most of the trading companies are back in action after the long Chinese New Year holidays,'' said the head of palm oil trading at an international house in Malaysia.
One trade source said Chinese traders would usually buy more than 250,000 tonnes of refined palm olein per month from Malaysia, starting in March, with demand slowly edging up in February.
China bought around 155,690-170,680 tonnes of palm oil in January, cargo surveyors Intertek Testing Services and Societe Generale de Surveillance said last week.
Physical crude palm oil prices in Malaysia have risen roughly 5 percent to 1,870 -1,880 ringgit ($518-$521) per tonne for February delivery from last week on fars of tight supply and increased hedging on the uncertain crop outlook in South America, traders said.
Spot refined, bleached and deodorised palm olein, the most heavily traded physical product, inched up more than 2 percent to $570 per tonne from last week.
($1=3.612 Malaysian Ringgit) ($1=48.72 Indian Rupee)
Motherboard maker Gigabyte targets One million sales in 2009
Going against the industry tide, manufacturer of motherboards and graphics cards, Gigabyte said it expects sales to cross the one million mark in 2009.
The company said today that it would pursue an aggressive business strategy rollout that will include DIY (Do It Yourself) programs and focused-segment education initiatives, to achieve its target of 50 percent growth in overall business revenue from the region.
In 2008, it registered 60 percent growth over previous year sales, FY2009 turnover target in FY 09 was pegged at Rs 190-210 crore.
To reach one million sales figure, the company will focus majorly on emerging markets like B, C, D and E class cities, said company sources.
'' Desktop market is still vibrant and scope for growth is enormous as PC penetration is at its lowest in India,'' said officials.
The company said today that it would pursue an aggressive business strategy rollout that will include DIY (Do It Yourself) programs and focused-segment education initiatives, to achieve its target of 50 percent growth in overall business revenue from the region.
In 2008, it registered 60 percent growth over previous year sales, FY2009 turnover target in FY 09 was pegged at Rs 190-210 crore.
To reach one million sales figure, the company will focus majorly on emerging markets like B, C, D and E class cities, said company sources.
'' Desktop market is still vibrant and scope for growth is enormous as PC penetration is at its lowest in India,'' said officials.
RBI fixes reference rate at Rs 48.73 per USD
The Reserve Bank of India (RBI) today fixed the reference rate at Rs 48.73 per US Dollar, nine paise down against yesterday's rate of Rs 48.82 per Dollar.
The reference rate for Euro also slashed by 40 paise at Rs 62.29 per unit, against its previous rate of Rs 62.69 per unit, an RBI release said.
The exchange rates for Pound and Japanese Yen were quoted at Rs 71.2676 (Rs 70.4790) per Pound and Rs 53.58 (Rs 54.57) per 100 units of Yen, the release added.
The reference rate for Euro also slashed by 40 paise at Rs 62.29 per unit, against its previous rate of Rs 62.69 per unit, an RBI release said.
The exchange rates for Pound and Japanese Yen were quoted at Rs 71.2676 (Rs 70.4790) per Pound and Rs 53.58 (Rs 54.57) per 100 units of Yen, the release added.
Pfizer clarifies viagra not produced in India
Leading drug maker Pfizer today clarified that its product viagra, which is not manuactured in India, could not be among the drugs banned for sale by Maharashtra.
In a clarification here, a Pfizer spokesman said the original blue pill is manufactured in the Phrama company's unit in Amboise, France and is sold in India by Pfizer in two strengths of 50 mg and 100 mg as singles in a carton pack.
He said Pfizer contributes towards building a healthier world through discovering an developing medicines.
''Sub-standard drugs can have significant social and economic consequences, but most imortantly, there may be loss of human life which is invaluable,'' he said adding that Pfizer believed that there was no higher priority than ensuring that consumers receive safe, effective and original medicines.
Recently, Maharashtra FDA had found out that 144 drugs manufactued in the state and 436 in other states, and sold in the state, were found to be below the standards set by the Drug Controller General of India.
In a clarification here, a Pfizer spokesman said the original blue pill is manufactured in the Phrama company's unit in Amboise, France and is sold in India by Pfizer in two strengths of 50 mg and 100 mg as singles in a carton pack.
He said Pfizer contributes towards building a healthier world through discovering an developing medicines.
''Sub-standard drugs can have significant social and economic consequences, but most imortantly, there may be loss of human life which is invaluable,'' he said adding that Pfizer believed that there was no higher priority than ensuring that consumers receive safe, effective and original medicines.
Recently, Maharashtra FDA had found out that 144 drugs manufactued in the state and 436 in other states, and sold in the state, were found to be below the standards set by the Drug Controller General of India.
Hutchison says withdraws from Ecuador port project
Hutchison Whampoa's <0013.HK> port unit said it will withdraw from a Manta cargo port project, reportedly worth $513 million, after the Ecuadorian government made changes in the concession agreement.
This is the first major project to be abandoned by Hutchison after the port-to-telecoms conglomerate said last October it would halt on ''uncommitted spending'' until June 2009 and all investments would require a new look amid the global financial crisis.
[ID:nHKG51727] Hutchison Port Holdings Group said in a statement on Friday its member Terminales Internacionales de Ecuador S.A. will withdraw from the concession agreement to operate the Port of Manta in Ecuador because it found the changes unacceptable.
Ecuador President Rafael Correa said in January that he had ''pulled out a yellow card'' for Hutchison, the world's largest container terminal operator, due to delays in investment in the project, the South China Morning Post reported.
Correa said if Hutchison could not meet its commitments ''it will have to leave the country,'' the paper said.
Analysts said it was not surprised that Hutchison would take the opportunity of weak economic conditions to reorganise its business.
''Hutchison's business is closely related to the world economy and now under the global financial crisis, there is no doubt that its business will be affected,'' said Marco Mak, an analyst at Tai Fook Securities.
Shares in Hutchison fell nearly 2 percent earlier on Friday as its unit Husky Energy reported its fourth quarter profit sank 79 percent. The stock closed 0.7 percent up, lagging a 3.6 percent rise on the blue chip Hang Seng Index <.HSI>.
This is the first major project to be abandoned by Hutchison after the port-to-telecoms conglomerate said last October it would halt on ''uncommitted spending'' until June 2009 and all investments would require a new look amid the global financial crisis.
[ID:nHKG51727] Hutchison Port Holdings Group said in a statement on Friday its member Terminales Internacionales de Ecuador S.A. will withdraw from the concession agreement to operate the Port of Manta in Ecuador because it found the changes unacceptable.
Ecuador President Rafael Correa said in January that he had ''pulled out a yellow card'' for Hutchison, the world's largest container terminal operator, due to delays in investment in the project, the South China Morning Post reported.
Correa said if Hutchison could not meet its commitments ''it will have to leave the country,'' the paper said.
Analysts said it was not surprised that Hutchison would take the opportunity of weak economic conditions to reorganise its business.
''Hutchison's business is closely related to the world economy and now under the global financial crisis, there is no doubt that its business will be affected,'' said Marco Mak, an analyst at Tai Fook Securities.
Shares in Hutchison fell nearly 2 percent earlier on Friday as its unit Husky Energy
China's economy hit by world slump, boosted by stimulus
The conflicting winds of the global slowdown and a huge domestic stimulus blew through China's economy in January, with exports plunging but bank loans surging, according to a Reuters poll.
The median forecast of 18 economists polled by Reuters is for a 10.8 percent drop in exports in January compared with a year earlier, the sharpest decline in exactly a decade and an acceleration from a 2.8 percent fall in December.
''Despite some recent tentative signs of growth deceleration beginning to moderate, we believe China's growth momentum will remain weak before the influence of policy stimulus kicks in and the external environment improves later this year,'' Goldman Sachs economists said in a research note.
Only a partial list of China's regular economic indicators will be published for January, as the statistics agency puts out January-February numbers for output, investment and retail sales data to smooth out the effects of the Chinese New Year holiday, which falls in January some years and February in others.
The timing of the holiday complicates year-on-year comparisons, but the underlying trends of a slowing economy and a robust government campaign to prop up growth are likely to be borne out in the data.
The deterioration of Chinese aggregate demand will probably be seen in a steep drop in imports, down 28.5 percent in January, according to the poll, compared with a 21.3 percent fall in the previous month.
The resulting trade surplus would be $28.7 billion, considerably narrower than the $39 billion surplus in December.
But loans and money supply probably grew strongly in January as banks answered the government's call to extend credit to struggling firms.
Economists forecast that the broad M2 measure of money supply is likely to have expanded by 18 percent, while new yuan lending probably grew by 19.5 percent.
The official China Securities Journal has already reported that banks extended a monthly record of 1.2 trillion yuan ($176 billion) in new loans in January, following earlier comments by Premier Wen Jiabao that the first 20 days of the month had seen record loan growth.
Bank lending works hand in glove with Beijing's 4 trillion yuan stimulus package, as the government has explicitly called on huge state-owned lenders to provide the financing for much of the spending boost.
China's economy grew 6.8 percent in the fourth quarter compared with the same period a year earlier, weighing down 2008 growth to a seven-year low of 9.0 percent.
The expected surge in January lending has fuelled confidence among Chinese investors, with the country's benchmark stock market index rising solidly this week.
The collapse in global commodity costs probably dragged China's producer prices further into deflation. Economists forecast a 2.6 percent annual drop in the producer price index in January after a 1.1 percent fall in the previous month.
Consumer price pressures, while weakening, are expected to remain mildly inflationary, with food costs picking up because of the New Year holiday. The consumer price index probably rose an annual 0.9 percent in January, down a touch from the 1.2 percent increase in December.
The median forecast of 18 economists polled by Reuters is for a 10.8 percent drop in exports in January compared with a year earlier, the sharpest decline in exactly a decade and an acceleration from a 2.8 percent fall in December.
''Despite some recent tentative signs of growth deceleration beginning to moderate, we believe China's growth momentum will remain weak before the influence of policy stimulus kicks in and the external environment improves later this year,'' Goldman Sachs economists said in a research note.
Only a partial list of China's regular economic indicators will be published for January, as the statistics agency puts out January-February numbers for output, investment and retail sales data to smooth out the effects of the Chinese New Year holiday, which falls in January some years and February in others.
The timing of the holiday complicates year-on-year comparisons, but the underlying trends of a slowing economy and a robust government campaign to prop up growth are likely to be borne out in the data.
The deterioration of Chinese aggregate demand will probably be seen in a steep drop in imports, down 28.5 percent in January, according to the poll, compared with a 21.3 percent fall in the previous month.
The resulting trade surplus would be $28.7 billion, considerably narrower than the $39 billion surplus in December.
But loans and money supply probably grew strongly in January as banks answered the government's call to extend credit to struggling firms.
Economists forecast that the broad M2 measure of money supply is likely to have expanded by 18 percent, while new yuan lending probably grew by 19.5 percent.
The official China Securities Journal has already reported that banks extended a monthly record of 1.2 trillion yuan ($176 billion) in new loans in January, following earlier comments by Premier Wen Jiabao that the first 20 days of the month had seen record loan growth.
Bank lending works hand in glove with Beijing's 4 trillion yuan stimulus package, as the government has explicitly called on huge state-owned lenders to provide the financing for much of the spending boost.
China's economy grew 6.8 percent in the fourth quarter compared with the same period a year earlier, weighing down 2008 growth to a seven-year low of 9.0 percent.
The expected surge in January lending has fuelled confidence among Chinese investors, with the country's benchmark stock market index rising solidly this week.
The collapse in global commodity costs probably dragged China's producer prices further into deflation. Economists forecast a 2.6 percent annual drop in the producer price index in January after a 1.1 percent fall in the previous month.
Consumer price pressures, while weakening, are expected to remain mildly inflationary, with food costs picking up because of the New Year holiday. The consumer price index probably rose an annual 0.9 percent in January, down a touch from the 1.2 percent increase in December.
Kuwait Finance Malaysia gets $300 mln capital boost
Islamic bank Kuwait Finance House Malaysia said on Friday it has received a $300 million capital injection from its parent.
That leaves the bank, a subsidiary of Kuwait Finance House, Kuwait's biggest Islamic lender, with paid-up capital of $500 million.
''The strong liquidity and capital position enables us to look at and seriously evaluate various investment opportunities in Malaysia and within the region,'' K. Salman Younis, Kuwait Finance Malaysia Managing Director said in a statement.
That leaves the bank, a subsidiary of Kuwait Finance House
''The strong liquidity and capital position enables us to look at and seriously evaluate various investment opportunities in Malaysia and within the region,'' K. Salman Younis, Kuwait Finance Malaysia Managing Director said in a statement.
Sharp Q3 in red, sees first ever annual loss
Japanese electronics maker Sharp Corp swung to a quarterly loss, battered by steep price falls for flat panel TVs and a firmer yen, and warned on Friday it would post its first ever annual operating loss.
Sharp cut its annual dividend outlook by a quarter and said it plans to cut 1,500 non-regular workers and reduce costs by 200 billion yen ($2.20 billion).
The maker of Aquos brand LCD TVs became the latest technology firm to fall victim to a deepening global recession, after Sony Corp, Panasonic Corp and Hitachi Ltd all warned of deep losses.
Sharp, the world's No.3 LCD TV maker, also competes with South Korea's Samsung Electronics Co Ltd and LG Electronics Inc, which are benefiting from a softer won.
It slashed its outlook and warned of an operating loss of 30 billion yen for the year to March 31 against its previous forecast for a 130 billion yen profit and a consensus of a 45.4 billion yen profit from 21 analysts polled by Reuters Estimates.
It reported a 183.69 billion yen profit the previous year.
''The real impact of the weak market and the strong currency was felt only for the last four months. So because of that four months Sharp's guidance has gone from plus 130 to minus 30, a swing of 160 billion yen,'' said a Tokyo-based electronics analyst who declined to be named.
''These losses are tiny compared to what it could suffer next year.'' OVERSEAS ALLIANCES In a bid claw its way back to profitability in the year starting on April 1 despite tough conditions, Sharp plans to fortify its sales network and seek alliances with overseas business partners, as well as cutting jobs and reducing costs.
In one example of such cross-border business pacts, Sharp said in November it and Italy's largest power company Enel planned to spend about 100 billion yen to set up solar power generating plants in Italy.
Sharp is the world's second-largest solar cell maker behind Germany's Q-Cells.
The Osaka-based company cut its LCD TV sales forecast for the current business year by 9.1 percent to 10 million units, while lowering its mobile phone sales target by 8.5 percent to 10.7 million units.
Sharp's earnings were also hit by valuation losses on its securities holdings and a $120 million fine for participating in a price-fixing cartel for LCD panels.
Sharp holds a 14.3 percent stake in struggling auto and home electronics maker Pioneer Corp, whose shares dived 76 percent in October-December.
Sharp's operating loss was 15.86 billion yen in October-December against a 51.99 billion yen profit a year earlier. Sales fell about 20 percent to 735 billion yen.
Shares in Sharp closed up 4.5 percent at 742 yen, outperforming the Tokyo market's electrical machinery index, which gained 1.8 percent. Sharp shares lost 44 percent in October-December against a 31 percent fall in the subindex.
Sharp cut its annual dividend outlook by a quarter and said it plans to cut 1,500 non-regular workers and reduce costs by 200 billion yen ($2.20 billion).
The maker of Aquos brand LCD TVs became the latest technology firm to fall victim to a deepening global recession, after Sony Corp, Panasonic Corp and Hitachi Ltd all warned of deep losses.
Sharp, the world's No.3 LCD TV maker, also competes with South Korea's Samsung Electronics Co Ltd and LG Electronics Inc, which are benefiting from a softer won.
It slashed its outlook and warned of an operating loss of 30 billion yen for the year to March 31 against its previous forecast for a 130 billion yen profit and a consensus of a 45.4 billion yen profit from 21 analysts polled by Reuters Estimates.
It reported a 183.69 billion yen profit the previous year.
''The real impact of the weak market and the strong currency was felt only for the last four months. So because of that four months Sharp's guidance has gone from plus 130 to minus 30, a swing of 160 billion yen,'' said a Tokyo-based electronics analyst who declined to be named.
''These losses are tiny compared to what it could suffer next year.'' OVERSEAS ALLIANCES In a bid claw its way back to profitability in the year starting on April 1 despite tough conditions, Sharp plans to fortify its sales network and seek alliances with overseas business partners, as well as cutting jobs and reducing costs.
In one example of such cross-border business pacts, Sharp said in November it and Italy's largest power company Enel planned to spend about 100 billion yen to set up solar power generating plants in Italy.
Sharp is the world's second-largest solar cell maker behind Germany's Q-Cells.
The Osaka-based company cut its LCD TV sales forecast for the current business year by 9.1 percent to 10 million units, while lowering its mobile phone sales target by 8.5 percent to 10.7 million units.
Sharp's earnings were also hit by valuation losses on its securities holdings and a $120 million fine for participating in a price-fixing cartel for LCD panels.
Sharp holds a 14.3 percent stake in struggling auto and home electronics maker Pioneer Corp, whose shares dived 76 percent in October-December.
Sharp's operating loss was 15.86 billion yen in October-December against a 51.99 billion yen profit a year earlier. Sales fell about 20 percent to 735 billion yen.
Shares in Sharp closed up 4.5 percent at 742 yen, outperforming the Tokyo market's electrical machinery index, which gained 1.8 percent. Sharp shares lost 44 percent in October-December against a 31 percent fall in the subindex.
RBS ousts seven directors in boardroom cull
Royal Bank of Scotland ousted seven directors in a boardroom cull on Friday to leave the government-backed bank better positioned for its restructuring.
The seven non-executive directors will retire immediately, RBS said, just three days after Philip Hampton replaced Tom McKillop as chairman.
RBS's board has been criticised for allowing former chief executive Fred Goodwin to make too many acquisitions and pursue a risky strategy. Britain's government has had to pump 20 billion pounds ($29.3 billion) into the bank which is set to report a 2008 loss of up to 28 billion pounds, a record for a UK company.
The directors going in the dramatic clear-out include Peter Sutherland, the former attorney general of Ireland and chairman of oil major BP and Goldman Sachs International, and Bob Scott, the senior non-executive of RBS and chairman of publisher Yell.
Also going are Jim Currie, Bill Friedrich, Bud Koch, Janis Kong and former Treasury official Steve Robson.
RBS has pledged to name three new non-executive directors, to be appointed with the approval of UK Financial Investments, the body set up to oversee the government's near 70 percent stake in the lender.
The board keeps its three executives -- new Chief Executive Stephen Hester, Finance Director Guy Whittaker and Gordon Pell, head of regional markets.
There are five remaining non-executive directors in addition to Hampton, who said now was the right time to cut the board's size as several directors were completing two or more terms or had asked to retire.
Whittaker and Pell are the only executives left from Goodwin's regime.
The seven non-executive directors will retire immediately, RBS said, just three days after Philip Hampton replaced Tom McKillop as chairman.
RBS's board has been criticised for allowing former chief executive Fred Goodwin to make too many acquisitions and pursue a risky strategy. Britain's government has had to pump 20 billion pounds ($29.3 billion) into the bank which is set to report a 2008 loss of up to 28 billion pounds, a record for a UK company.
The directors going in the dramatic clear-out include Peter Sutherland, the former attorney general of Ireland and chairman of oil major BP and Goldman Sachs International, and Bob Scott, the senior non-executive of RBS and chairman of publisher Yell.
Also going are Jim Currie, Bill Friedrich, Bud Koch, Janis Kong and former Treasury official Steve Robson.
RBS has pledged to name three new non-executive directors, to be appointed with the approval of UK Financial Investments, the body set up to oversee the government's near 70 percent stake in the lender.
The board keeps its three executives -- new Chief Executive Stephen Hester, Finance Director Guy Whittaker and Gordon Pell, head of regional markets.
There are five remaining non-executive directors in addition to Hampton, who said now was the right time to cut the board's size as several directors were completing two or more terms or had asked to retire.
Whittaker and Pell are the only executives left from Goodwin's regime.
IOC buys 3mln bbls sweets for April
India's largest state-owned refiner Indian Oil Corp (IOC) has bought 3 million barrels of Nigerian and Azeri crude in its tender for April loading sweet crude, traders said on Friday.
It bought one Very Large Crude Carrier (VLCC), or 2 million barrels, of Nigerian Bonny Light and Bonga grades from oil major Shell and 1 million barrels of Azerbajan's Azeri Light.
Price details have yet to emerge.
IOC issued three tenders in March, buying mostly West African crude as improving refining margins and a tightening of supply raised demand for Nigerian and Angolan grades.
IOC bought 950,000 barrels of Bonny Light and 950,000 barrels of Amenam from European trader Total in its third tender for March.
In its second tender of the month, it bought 1 VLCC of West African crude oil made up of a cargo each of Qua Iboe and Escravos grades. IOC also took one million barrels of Azeri Light.
In its first March tender, IOC took 4 million barrels of Nigerian crude.
It bought one Very Large Crude Carrier (VLCC), or 2 million barrels, of Nigerian Bonny Light and Bonga grades from oil major Shell and 1 million barrels of Azerbajan's Azeri Light.
Price details have yet to emerge.
IOC issued three tenders in March, buying mostly West African crude as improving refining margins and a tightening of supply raised demand for Nigerian and Angolan grades.
IOC bought 950,000 barrels of Bonny Light
In its second tender of the month, it bought 1 VLCC of West African crude oil made up of a cargo each of Qua Iboe
In its first March tender, IOC took 4 million barrels of Nigerian crude.
Speedy fiscal reforms will help face the economic crisis: Kelkar
Calling for acceleration of fiscal reforms to overcome profoundly difficult economic challenges, 13th Finance Commission Chairman Vijay Kelkar today said the goods and services tax (GST) to be implemented from next year will be an attractive policy option.
Delivering the sixth Convocation Address at the Indira Gandhi Institute of Development Research Acceleration (IGIDR), Dr Kelkar said ''even as the storm clouds of recession gather there was potential for carrying forward the reform process to improve the economic fortunes of India.'' He said ''the present economic crisis portends a huge challenge, the 'only gain without pain' would come if the efficiency of the economy is improved and thereby the productivity and international competitiveness.
On GST, he commended the task carried out by the empowered committee of finance ministers for their contribution towards strengthening the federal system.
While finalising the design of the GST in the coming months, he hoped, that they would ensure minimum number of rates and miimum exemptions so as to achieve widest possible tax base and remove distorting state tax rates such as entry tax, octroi and high stamp duties by subsuming them in the GST.
This, he said would help to acheive reasonably low GST rates ensuring nationwide acceptability, high compliance and revenue gains to all members of the federation, implying the Central, state and local governments.
He said preliminary research indicated that the effective revenue neutral rate at which GSt could be implemented would be far lower than 30 per cent, indicating a significant reduction in the effective tax buden on economic agents.
''Consequent to alignment with the lower effective rate, we can also expect an upsurge in compliance as has been witnessed in the case of direct taxes'' he added.
He said GST would also create a common market across the length and breadth of the country, something which had eluded the country this long.
Dr Kelkar said by sharing the GST, the finances of the three tier of government could be significantly strengthened which would make cities and towns a much better places to live, work and enjoy.
Delivering the sixth Convocation Address at the Indira Gandhi Institute of Development Research Acceleration (IGIDR), Dr Kelkar said ''even as the storm clouds of recession gather there was potential for carrying forward the reform process to improve the economic fortunes of India.'' He said ''the present economic crisis portends a huge challenge, the 'only gain without pain' would come if the efficiency of the economy is improved and thereby the productivity and international competitiveness.
On GST, he commended the task carried out by the empowered committee of finance ministers for their contribution towards strengthening the federal system.
While finalising the design of the GST in the coming months, he hoped, that they would ensure minimum number of rates and miimum exemptions so as to achieve widest possible tax base and remove distorting state tax rates such as entry tax, octroi and high stamp duties by subsuming them in the GST.
This, he said would help to acheive reasonably low GST rates ensuring nationwide acceptability, high compliance and revenue gains to all members of the federation, implying the Central, state and local governments.
He said preliminary research indicated that the effective revenue neutral rate at which GSt could be implemented would be far lower than 30 per cent, indicating a significant reduction in the effective tax buden on economic agents.
''Consequent to alignment with the lower effective rate, we can also expect an upsurge in compliance as has been witnessed in the case of direct taxes'' he added.
He said GST would also create a common market across the length and breadth of the country, something which had eluded the country this long.
Dr Kelkar said by sharing the GST, the finances of the three tier of government could be significantly strengthened which would make cities and towns a much better places to live, work and enjoy.
Reliance Big signs separate deals in Hollywood
Expanding its investments in Hollywood, Reliance Big Entertainment (RBE), media venture of Reliance Anil Dhirubhai Ambani Group (ADAG), has signed two separate deals with Julia Roberts' Red Om Films and Brett Ratner's Rat Entertainment.Reliance Big has so far established creative partnerships with nine leading production entities in Hollywood.
The initial seven deals, with Nicolas Cage's Saturn Productions, Jim Carrey's JC 23 Entertainment, George Clooney's Smokehouse Productions, Chris Columbus' 1492 Pictures, Tom Hanks' Playtone Productions, Brad Pitt's Plan B Entertainment, and Jay Roach's Everyman Pictures, were announced during the Cannes Film Festival 2008 by RBE Chairman Amit Khanna and President Rajesh Sawhney.
All nine deals provide for the creation of a development silo for each of the production entities and the possibility of Reliance co-financing projects that emanate from these development deals, a company release here said.
For any green lit projects utilising Reliance co-financing, the filmmakers would enjoy full creative and fiscal freedom.
Eight of the partnerships have had development projects approved and there was already a handpicked slate in excess of 20 projects and it was anticipated that most will generate content during 2009.
RBE chairman Amit Khanna commenting on the latest development said, ''These creative partnerships will lead to Reliance co-financing with the majority of the major US Studios as we are totally respectful of the existing first-look deals that each of our partners enjoys.''
Oil falls below $41 as downbeat data weigh
Oil fell below $41 a barrel on Friday, reversing some of the previous day's gains as the focus turned from a stock market rally to bleak economic news.
U.S. non-farm payrolls numbers due later on Friday are likely to add to the gloom, after data the previous day showed applications for U.S. jobless benefits soared to a 26-year high and German manufacturing suffered its biggest decline since 1990.
U.S. light crude for March delivery fell 43 cents to $40.74 a barrel at 0152 GMT, while London Brent crude, which usually trades below its U.S. counterpart, fell 15 cents to $46.31 a barrel.
A steep contango, with the April NYMEX contract $4.86 more expensive than March barrels, is encouraging traders to buy crude now for storage and sale at a later date.
Oil has shed more than $100 from its July peak near $150 a barrel as the global financial crisis triggered recessions in all of the big industrialised economies and sharp slowdowns elsewhere, cutting demand.
Inventories in the world's top consumer, the United States, have swelled.
''The relationship between NYMEX and Brent is still being distorted by the inventory situation in the United States,'' said David Moore, commodity strategist at Commonwealth Bank of Australia.
''Tonight's (payrolls) data may affect the perception of the U.S. economy and may give the market new direction,'' he added.
U.S. non-farm payrolls, due out later in the session, are estimated to have shed more than half a million jobs in January after losing a similar number in December.
Signals from producer group the Organization of the Petroleum Exporting Countries that it may cut output further to help bolster the market have supported prices this week.
The cartel may cut more oil output at a meeting next month, and one OPEC source said a reduction of 1 million barrels per day may be discussed.
U.S. Democrats in the Senate on Thursday pushed towards passage of a huge economic stimulus package despite scant Republican support, hoping to boost the U.S. economy, which could help stem a decline in fuel demand.
U.S. non-farm payrolls numbers due later on Friday are likely to add to the gloom, after data the previous day showed applications for U.S. jobless benefits soared to a 26-year high and German manufacturing suffered its biggest decline since 1990.
U.S. light crude for March delivery fell 43 cents to $40.74 a barrel at 0152 GMT, while London Brent crude, which usually trades below its U.S. counterpart, fell 15 cents to $46.31 a barrel.
A steep contango, with the April NYMEX contract $4.86 more expensive than March barrels, is encouraging traders to buy crude now for storage and sale at a later date.
Oil has shed more than $100 from its July peak near $150 a barrel as the global financial crisis triggered recessions in all of the big industrialised economies and sharp slowdowns elsewhere, cutting demand.
Inventories in the world's top consumer, the United States, have swelled.
''The relationship between NYMEX and Brent is still being distorted by the inventory situation in the United States,'' said David Moore, commodity strategist at Commonwealth Bank of Australia.
''Tonight's (payrolls) data may affect the perception of the U.S. economy and may give the market new direction,'' he added.
U.S. non-farm payrolls, due out later in the session, are estimated to have shed more than half a million jobs in January after losing a similar number in December.
Signals from producer group the Organization of the Petroleum Exporting Countries that it may cut output further to help bolster the market have supported prices this week.
The cartel may cut more oil output at a meeting next month, and one OPEC source said a reduction of 1 million barrels per day may be discussed.
U.S. Democrats in the Senate on Thursday pushed towards passage of a huge economic stimulus package despite scant Republican support, hoping to boost the U.S. economy, which could help stem a decline in fuel demand.
World Bank to triple health lending to $3 billion
The World Bank expects to triple its lending for health programmes to 3 billion dollar this year to mitigate the impact of the global credit crisis in poor countries, senior officials said.
''The health sector is particularly badly affected,'' Julian Schweitzer, World Bank director of health, nutrition and population, told reporters in Geneva yestrday.
Some developing countries' health budgets are shrinking, while currency devaluations in some mean that imports of drugs are more costly, he said. Remittances from workers living abroad are also normally lower during recessions.
''World Bank lending for health will be up from just less than 1 billion to 3 billion dollar this year,'' Schweitzer said, referring to its financial year which ends on June 30.
Joy Phumaphi, the World Bank's vice president for human development, urged donor countries to honour their foreign aid commitments for health during the slowdown.
''This financial crisis could unravel many of the hard-fought gains in health over previous decades unless we all hold the line on the flow of development aid and health spending,'' she said, estimating that for every 1 per cent drop in gross domestic product, 20 million additional people are pushed into poverty.
''What this means for households is that they will have even less money available for health,'' said Phumaphi, a former health minister of Botswana. It can take up to 10 years for health services to recover even to pre-crisis levels, if services are reduced, she warned.
The World Bank officials were speaking at a meeting of the the International Health Partnership, launched in September 2007 to expand health services in developing countries.
That programme aims to increase the volume of long-term predictable financing for results-oriented health strategies. It is supported by the World Bank, World Health Organisation and Bill & Melinda Gates Foundation.
Ivan Lewis, Britain's international development minister, said his government would devote 450 million pounds (657 million dollar) over the next three years to support plans in eight IHP countries. ''Now is not the time to retreat,'' he said.
''The health sector is particularly badly affected,'' Julian Schweitzer, World Bank director of health, nutrition and population, told reporters in Geneva yestrday.
Some developing countries' health budgets are shrinking, while currency devaluations in some mean that imports of drugs are more costly, he said. Remittances from workers living abroad are also normally lower during recessions.
''World Bank lending for health will be up from just less than 1 billion to 3 billion dollar this year,'' Schweitzer said, referring to its financial year which ends on June 30.
Joy Phumaphi, the World Bank's vice president for human development, urged donor countries to honour their foreign aid commitments for health during the slowdown.
''This financial crisis could unravel many of the hard-fought gains in health over previous decades unless we all hold the line on the flow of development aid and health spending,'' she said, estimating that for every 1 per cent drop in gross domestic product, 20 million additional people are pushed into poverty.
''What this means for households is that they will have even less money available for health,'' said Phumaphi, a former health minister of Botswana. It can take up to 10 years for health services to recover even to pre-crisis levels, if services are reduced, she warned.
The World Bank officials were speaking at a meeting of the the International Health Partnership, launched in September 2007 to expand health services in developing countries.
That programme aims to increase the volume of long-term predictable financing for results-oriented health strategies. It is supported by the World Bank, World Health Organisation and Bill & Melinda Gates Foundation.
Ivan Lewis, Britain's international development minister, said his government would devote 450 million pounds (657 million dollar) over the next three years to support plans in eight IHP countries. ''Now is not the time to retreat,'' he said.
Ford decision to cut jobs angers British workers
Car giant Ford said Thursday it would cut up to 850 jobs at British plants by May and review this year's pay deal because of the "serious economic situation."
The announcement brought an angry response from trade unions who said industrial action would be an "option" if the plans went ahead.
The US company, which employs 12,900 people in Britain, said that "unprecedented circumstances" were behind the decision to review this year's agreed pay rise of a 5.2 percent.
But the Unite trade union described the plans as "completely unacceptable" and urged Ford to reconsider the decision.
"Ford has today reached a new low in corporate integrity. While their executives pay themselves handsomely and their European profits alone totalled $1.06 billion in 2007/2008, they are using the challenging global circumstances to cut the jobs and pay of the workers who helped make them these massive profits," it said.
The announcement brought an angry response from trade unions who said industrial action would be an "option" if the plans went ahead.
The US company, which employs 12,900 people in Britain, said that "unprecedented circumstances" were behind the decision to review this year's agreed pay rise of a 5.2 percent.
But the Unite trade union described the plans as "completely unacceptable" and urged Ford to reconsider the decision.
"Ford has today reached a new low in corporate integrity. While their executives pay themselves handsomely and their European profits alone totalled $1.06 billion in 2007/2008, they are using the challenging global circumstances to cut the jobs and pay of the workers who helped make them these massive profits," it said.
BlackBerry bosses fined $77 million for option backdating
BlackBerry co-CEOs and top executives were collectively fined $77 million Thursday for their role in a stock option backdating controversy at the wireless communication giant.
The provincial Ontario Securities Commission, which has been investigating the two co-CEOs - Jim Balsillie and Michael Lazaridis - and other executives for their role in the controversy dating from 1996 to 2006, handed down the biggest fine in its history for financial irregularities.
It said the top bosses at BlackBerry maker Research In Motion (RIM) were not involved in the fraud but negligent in letting option backdating take place.
Under the deal with the market watchdog, the two co-CEOs and a former chief financial officer will pay the bulk of $77 million in fines and legal costs for settlement of the controversy.
Stock options backdating set the grant date of RIM shares retrospectively when the stock was low, thus giving instant paper gain for top employees.
The RIM board set up a special committee to investigate the backdating issue in 2007 and reportedly found that the company had backdated more than 40 per cent of stock options granted to employees since 1996.
The investigation also found that 12 of the 16 option grants made to the two co-CEOs between 1996 and 2006, to acquire a total of two million shares, were priced using an incorrect date.
The stock option backdating reportedly benefited the two co-CEOs to the tune of US $1.6 million each.
As per the settlement, Lazaridis, who founded RIM in 1984, will also pay $1.5 million in penalty and $150,000 in legal costs to the market watchdog.
Co-CEO Balsillie will also pay $5 million as administrative penalty to the securities commission.
Under the settlement, the two c-CEOS and senior executive Dennis Kavelman will repay $38.3 million to the BlackBerry maker company. This amount includes $5.3 million in interest to RIM.
They will also have to pay $44.8 million to cover RIM's investigative costs.
``We are very pleased to put this behind us, for the employees and for the shareholders, and really get back to work 100 per cent,'' Balsillie said after the settlement.
He added, ``It's highly inappropriate for me to talk about specifics of the settlement and so I just won't. But I really want to re-emphasize that we take this very seriously.''
The launch of BlackBerry smart phones - which serve as mobile phones as well as send secure email messages - in 1999 has made RIM a major global brand. More than 50 million BlackBerry devices have been sold so far, making the two co-CEOs billionaires in the process.
While Balsillie holds shares worth $2.4 billion in the company, Lazaridis' stake is valued at $2.5 billion.
The provincial Ontario Securities Commission, which has been investigating the two co-CEOs - Jim Balsillie and Michael Lazaridis - and other executives for their role in the controversy dating from 1996 to 2006, handed down the biggest fine in its history for financial irregularities.
It said the top bosses at BlackBerry maker Research In Motion (RIM) were not involved in the fraud but negligent in letting option backdating take place.
Under the deal with the market watchdog, the two co-CEOs and a former chief financial officer will pay the bulk of $77 million in fines and legal costs for settlement of the controversy.
Stock options backdating set the grant date of RIM shares retrospectively when the stock was low, thus giving instant paper gain for top employees.
The RIM board set up a special committee to investigate the backdating issue in 2007 and reportedly found that the company had backdated more than 40 per cent of stock options granted to employees since 1996.
The investigation also found that 12 of the 16 option grants made to the two co-CEOs between 1996 and 2006, to acquire a total of two million shares, were priced using an incorrect date.
The stock option backdating reportedly benefited the two co-CEOs to the tune of US $1.6 million each.
As per the settlement, Lazaridis, who founded RIM in 1984, will also pay $1.5 million in penalty and $150,000 in legal costs to the market watchdog.
Co-CEO Balsillie will also pay $5 million as administrative penalty to the securities commission.
Under the settlement, the two c-CEOS and senior executive Dennis Kavelman will repay $38.3 million to the BlackBerry maker company. This amount includes $5.3 million in interest to RIM.
They will also have to pay $44.8 million to cover RIM's investigative costs.
``We are very pleased to put this behind us, for the employees and for the shareholders, and really get back to work 100 per cent,'' Balsillie said after the settlement.
He added, ``It's highly inappropriate for me to talk about specifics of the settlement and so I just won't. But I really want to re-emphasize that we take this very seriously.''
The launch of BlackBerry smart phones - which serve as mobile phones as well as send secure email messages - in 1999 has made RIM a major global brand. More than 50 million BlackBerry devices have been sold so far, making the two co-CEOs billionaires in the process.
While Balsillie holds shares worth $2.4 billion in the company, Lazaridis' stake is valued at $2.5 billion.
Wall Street gains on MasterCard, retail sales
Stocks rose on Wall Street Thursday as MasterCard exceeded earnings estimates and several major retailers said sales were better than expected last month.
MasterCard rose 14 percent, or $19.69, to $159.84 per share in trading after it said earlier in the day it had lost less than expected in the last quarter.
The second-largest credit card firm said profits fell by more than 20 percent to $239 million. Revenues rose 14 percent to $1.2 billion on higher fees and growing credit card use worldwide.
Retailers Wal-Mart, Target, Macy's and Limited Brands rose 3 percent or more after they said discounts lured in more customers than expected in January despite the ongoing recession.
The blue-chip Dow Jones Industrial Average earned 106.41 points, or 1.3 percent, to close at 8,063.07, while the broader Standard & Poor's 500 Index rose 13.62 points, or 1.6 percent, to 845.85, and the technology-heavy Nasdaq Composite Index gained 31.19 points, or 2.1 percent, to end at 1,546.24.
The US currency rose against the euro to 78.15 euro cents from 77.81 euro cents on Wednesday. The dollar was also up against the Japanese currency to 91.28 yen from 89.48 yen.
MasterCard rose 14 percent, or $19.69, to $159.84 per share in trading after it said earlier in the day it had lost less than expected in the last quarter.
The second-largest credit card firm said profits fell by more than 20 percent to $239 million. Revenues rose 14 percent to $1.2 billion on higher fees and growing credit card use worldwide.
Retailers Wal-Mart, Target, Macy's and Limited Brands rose 3 percent or more after they said discounts lured in more customers than expected in January despite the ongoing recession.
The blue-chip Dow Jones Industrial Average earned 106.41 points, or 1.3 percent, to close at 8,063.07, while the broader Standard & Poor's 500 Index rose 13.62 points, or 1.6 percent, to 845.85, and the technology-heavy Nasdaq Composite Index gained 31.19 points, or 2.1 percent, to end at 1,546.24.
The US currency rose against the euro to 78.15 euro cents from 77.81 euro cents on Wednesday. The dollar was also up against the Japanese currency to 91.28 yen from 89.48 yen.
Thursday, February 5, 2009
Subhiksha's growth story changes to sad story
The Rs.23.05-billion (Rs.2,305-crore) retail chain Subhiksha Trading Services says its reserves have dwindled to "nearly nil" and that it has "mucked up".The chain, which is into retailing grocery products, mobile phones, medicines, fruit and vegetables with plans to get into consumer durables, believes a fresh infusion of Rs.3 billion (Rs.300 crore) would help it get back on track.
"We did not raise enough equity and we paid the price," Subhiksha managing director R. Subramaniam told IANS, referring to the company's furious expansion on a meagre equity base of Rs.32 crore.
"It was a capital structure problem rather than a business model problem; after all, this is the model that everyone else is copying from Wal-Mart to Pantaloon. We mucked up on not raising enough equity."
After growing from 150 outlets in September 2006 to 1,655 last September - all of it funded through debt - the company found itself in a soup as banks closed the tap and asked it to increase its equity. It has now closed down around 90 outlets.
A product of the Indian Institute of Technology-Madras and a topper at the Indian Institute of Management-Ahmedabad, Subramaniam admitted Subhiksha's current cash position was "almost nil", with a debt of Rs.7.5 billion (Rs.750 crore) and a monthly interest bill of Rs.90 million.
Subramaniam said he was open to exiting some lines of business if demanded by investors willing to pump in funds. "Rationally, we are willing to look at it if we need to."
A few years ago, when rumours floated about Subramaniam offloading stake, he had told this correspondent: "One should exit a business when one is not able to (a) compete (b) fund and (c) grow the business. We don't face any of these issues. As a matter of fact, we should be buying companies."
When IANS raised the issue in the current context, he said: "We are in 'b' position (fund) now. However, the market is so bad that it is not a sane time to exit - so slogging with the business is the only way forward."
According to him, the issue is not that somebody else could run Subhiksha better. "We need capital and that could be there from the investor community. We have large investors and 13 banks supporting us; we do not see what value anyone else can add."
Subhiksha is holding discussions with its bankers for the first round of funding, and is looking at private equity funds for the second round.
Subramaniam said the Rs.3-billion fresh investments will go towards meeting staff and vendors' dues (Rs.850 million), working capital for buying goods and cash cushion (Rs.2 billion), and contingencies (Rs.150 million).
On Wednesday, around 100 Subhiksha employees held a demonstration in Chennai. They claimed that they had not been paid since October.
Of the company's Rs.32-crore equity, promoters including Subramaniam hold 59 percent, ICICI Ventures three percent, ICICI Prudential Mutual Fund five percent, IT czar Azim Premji 10 percent, and the balance by an employees' trust.
Asked about the quantum that the promoters would bring in and how much stake he was willing to dilute, Subramaniam said: "It will be decided along with other investors as part of the package. The issue is not of stake dilution but getting the company back to health."
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