THE ECONOMIC TIMES

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EMPLOYEES HAVE A BALL COMMODITIES COS BEAUTIFUL GAME MAY SEND

DURING THE WORLD CUP
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BUSINESS OF BRANDS: PAGE 4

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Realty firms told to recast

ET–InstaPOLL THE ROAD AHEAD
Is 'employees first and customer second'
policy right for India Inc?
Yes: 100%, No: 0%, Can’t say: 0% If its billion-dollar telecom foray left you
TO DAY ’ S Q U E ST I O N
Will the auto industry be able to
stumped, wait till you hear out RIL’s plans
sustain its growth momentum?

Y O U R
To vote, log on to
http://economictimes.indiatimes.com
G A T E W A Y T O
Essar Oil in talks to exit
CDR process
With operations turning profitable, Essar
Oil is in talks with a consortium of
leading banks to reach an agreement on
the recompense amount. This is the
amount the oil company will have to pay
to get out of a lenders-controlled restruc-
turing bracket implemented in 2005.
CORPORATE: PAGE 5
I N D I A
for power, financial sector & pharma
SPREADING WINGS
GROWTH FOCUS
India's most valuable
POWER PLAY
Analysts expect
target-linked FDI deals
company has zeroed the petro- RBI Directive To Cos That Obtained Funds Via Convertible Papers FUNDING TWIST
in on four critical areas: chemicals Sugata Ghosh which local companies and existing shareholders
financial services, power, telecom- major to bid for ultra-mega Foreign PE funds & overseas investors often
munications and pharmaceuticals. power projects.
MUMBAI can sell their stocks to foreign investors.
“In the last three weeks, RBI has written to sever-
ABOUT a dozen companies, mostly in the real estate al companies, asking them to spell out the exact
1 link number of shares on conversion to the
performance of companies in which they invest
FINANCIAL PLAN FUND FLOW
Reliance may sector, have been told by the Reserve Bank of India number of shares against convertibles they have is-
Reliance may enter
insurance and utilise the free
cash it generates
(RBI) to restructure the deals they have cut with for- sued. These firms are in a spot because the money
eign investors. from foreign investors has already come in. Now,
2 Alesscompany which does well has to convert
shares than one which misses targets.
broking first and These local firms have recently brought in foreign they will try to convince the central bank, failing This has now been questioned by RBI, thanks
wait for clarity before foraying
into banking.
from the oil & gas business
to fund these plans.
direct investment (FDI) by selling con-
vertible papers — notes that will convert FINANCE
which they will have to rework the trans-
action structure,” a senior industry source 3 tomethod
changes in FDI guidelines and the new
for calculating floor price at which
SARFARAZ into shares after a date — to offshore FALLOUT familiar with the development told ET. local firms can sell their stocks to foreign
funds and strategic players. The central bank’s letters are in re-
RIL board okays A customary practice among foreign In the performance- sponse to the standard forms submitted
private equity funds and overseas in- linked FDI deals, by companies a month after issuing secu-
vestors is to link the number of shares on promoters of cos that rities to non-resident investors. Compa-
conversion to the performance of com- nies receiving foreign investment have
investors.
RBI's move is in
4 response to standard
forms submitted by
4-way expansion panies in which they invest. A company did not deliver had to to spell out transaction details like identi-
which does well has to convert less dilute significant stake ty of investors, size of the investment,
shares than one which misses perform- and conversion terms in these forms,
ance milestones. In other words, promoters of firms known as FC-GPR filings.
companies a month after
issuing securities to non-
resident investors
Sabarinath M & M Padmakshan that have performed badly will suffer a significant di- “Since these investments are in sectors in which Some of the local firms are also
MUMBAI lution in their holdings. FDI is allowed through the automatic route, it’s like
This sliding rule mechanism has now been ques- a post facto intimation to RBI. “
5 taking refuge in the new
guidelines to avert a significant

T HE management of Reliance Industries (RIL) has told its

board that it has identified power, telecommunications, fi-
nancial services and pharmaceuticals for investments in the
near future. The board, which met early last week, discussed
tioned, thanks to changes in the FDI guidelines and
the new method for calculation of floor price at
Cos looking to avoid big dilution: P 6
dilution in the promoter holdings

Listed defaulters may be named

Liquidity crunch may tighten
as Rs 68K cr set to flow out
The crunch in the money market may
worsen this week with over Rs 68,000
crore flowing out of the system into
the government's coffers. Even without
this outflow, banks were forced to borrow
in the range of Rs 50,000-Rs 60,000 crore
on a daily basis from RBI.
BANKING & FINANCE: PAGE 14
ET INTERVIEWS
ASHOK CHAWLA FIN SECY P 11
HANS WIJERS CEO, AKZO NOBEL P 6
MADHU KELA RELIANCE MF P 16
Today’s edition carries
ET INVESTOR’S GUIDE
& 4 PAGE PULLOUT TITLED INDIA COAL REPORT
strategies to enter these high-growth sectors, something which
has become possible after the cancellation of a non-compete pact
between the Ambani brothers which had barred RIL from busi-
nesses such as power and telecom.
RIL plans to utilise the free cash it gen- FRIDAY
erates from its oil and gas business to fund
these diversifications. The company’s only FARE
foray outside its core businesses in the past Mukesh Ambani
four years had been its entry into the retail will unveil RIL’s
segment, which is housed in a wholly-
owned subsidiary called Reliance Retail. plans at the AGM
“It was a discussion on the future of Re- slated to be held in
liance. The company will venture into pow- Mumbai on June 18
er after telecom,” said a person familiar with
the discussions. RIL chairman Mukesh Ambani will unveil these
plans at the annual general meeting slated to be held in Mumbai on
June 18. A Reliance spokesperson, however, declined to comment.
EThad reported on one of the major decisions taken at the board
meeting, the move to return to telecom, in its June 10 edition.

RIL’s financial services foray likely to take more time: P 6

RIL may invest $5 b in telecom: P 5
High-Level Panel On Fin Mkts Feels Naming Erring Cos Will Improve Transparency
Dheeraj Tiwari & Rohini Singh “Sebi may consider making changes in (PFRDA) attended the meeting. SELECT ACCESS
NEW DELHI the listing norms so that whenever a com- At present, information on loan defaults
pany defaults on any payment obligation, is available only to the lenders, RBI and
A COMMITTEE comprising senior gov- it would trigger a public announcement,” credit information companies such as
ernment officials and financial regulators the official said, requesting anonymity. CIBIL. As per the current practice, banks
has proposed mandatory disclosure of loan The meeting of the coordination com- disclose a list of defaulters to RBI on a quar-
defaults by listed companies, a move mittee was chaired by Reserve Bank of terly basis. A copy of this report is forward-
aimed at protecting shareholders’ interest India (RBI) governor D Subbarao. Fi- ed to Sebi and CIBIL.
and boosting investor’s confidence. nance secretary Ashok Chawla, depart- Globally, there were a number of corpo-
The proposal was discussed at the May ment of financial services secretary R rate loan defaults in 2009, after some of the At present, info on
24 meeting of the High-Level Coordina- Gopalan, chief economic advisor Kaushik world’s largest economies were hit by the loan defaults is
tion Committee on Financial Markets, said Basu, Sebi chairman CB Bhave, Insur- worst financial crisis since 1930s. India also
a senior finance ministry official. Market ance Regulatory & Development Author- felt the tremors of the crisis, leading to a
available only to the
regulator Securities & Exchange Board of ity (IRDA) chairman J Hari Narayan and few high-profile default cases. lenders, RBI and credit
India (Sebi) will examine the practical as- senior officials of the Pension Fund information companies
pects of the proposal. Regulatory & Development Authority
‘Disclosures may create panic’: P 6 such as CIBIL

‘ MILESTONE HCC

Kyun karega koi

Goongi se shaadi ?
Hansti gaati iss duniya ke shorr mom
kya Kanku ka chup rehna ek ilzaam hal?
Kaisi hal duniya uski...
ek taraf khamoshi, ek taraf shorr haL..

( CastIo1
Activ
Starts
“IOWG’ I SAHARA
NI MI
, I ®
M011— I
I • p in r a cat aniya,Nay sahel,yan, Naya Sahara One
2
THE POLITICALTHEATRE
SERIOUS, SOLID POLITICS: GOING BEHIND THE SCENES & DECODING THE POWER MATRIX FOR YOU * THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010

BJP biggies black out Nitish ALL IN A DAY

Govt plans bill to foil

communal violence
Saffron Party Plays Down Bihar CM’s Outburst; No Leader, Barring Advani, Makes Any Reference To Nitish UNION HOME MINISTER P Chidambaram has
said that government would soon introduce the
Ashok K Mishra party cadres were livid over the “shoddy treat- However, none of the top-ranked leaders,
Communal Violence (Prevention,Control and
PATNA ment” meted out to their leaders. All this hap- barring Mr Advani, made any reference to Ni-
pened on Saturday. tish Kumar, when they addressed the “Swabhi- Rehabilitation) Bill with amendments to prevent

I NSTEAD of retaliating, a circumspect BJP
played the game tactfully on Sunday to sal-
vage the BJP-JD(U) alliance in Bihar, which
saw fissures developing following Bihar chief
minister Nitish Kumar’s outburst on the Naren-
dra Modi ad controversy. In a final act to help
restore sanity, senior BJP leader L K Advani,
went on to laud Nitish Kumar for the good
work he was doing, along with BJP colleagues
at a public rally on Sunday evening.
Nitish Kumar’s disapproval of the newspaper
ads showing him along with Modi had not gone
down well with the BJP camp. But Nitish Ku-
mar did not stop at that and decided to pack
more punch when he called off the dinner he
had hosted for the top BJP brass who are here
So there was wide speculation that the BJP
leadership would hit back and may well be in-
clined to take the matters to head. But BJP lead-
ers came out with a measured response and
willingly sought to downplay the issue. But the
leadership allowed Giriraj Singh, a BJP minister
in the Nitish cabinet, to indulge in public pos-
turing for taking on Nitish Kumar, as part of a
move to calm frayed tempers of the party rank
and file.
In the official press briefing of the party, BJP
national spokesperson Rajiv Pratap Rudy po-
litely refused to take questions or ducked
queries related to the Nitish-Modi advertise-
ment or the dinner controversy. “The BJP is a
mature party that can deal with such issues am-
man Rally” after the two-day national meet.
Perhaps it was a conscious decision of the BJP
that its leaders will not mention the name of Ni-
tish Kumar, perhaps to convey their anguish.
While Narendra Modi had a positive take on
the development work in Bihar, not for once
during his speech, did he utter Nitish Kumar’s
name. Instead, he praised deputy chief minister
Sushil Kumar Modi and his colleagues for
scripting the turnaround story.
Even party chief Nitin Gadkari and senior
leader Sushma Swaraj avoided the name of Ni-
tish Kumar, but exhorted the gathering to work
for the victory of the NDA government in Bihar.
As the last speaker, Mr Advani, however, ac-
knowledged Nitish Kumar by name and said he
violence in the name of caste and religion. Some
suggestions had come from parliamentary
standing committee for amending the bill and it
had been placed before Parliament, he said.
Congress chief Sonia Gandhi had suggested
making it tougher for those instigating caste and
communal violence, he said, adding the draft bill
would be ready soon. It was not good to hear
about caste and communal violence even after
several decades of Independence, he said.
ANTI-NAXAL OPERATIONS

CROWD PULLERS: BJP leaders at a Swabhiman Rally at Gandhi

Maidan in Patna on Sunday.
for the two-day BJP national executive com-
mittee meeting.
While the party leadership was taken by sur-
Photo: K M Sharma prise, which was seen by many as an affront,
icably but yes, we will not compromise with the
self-respect of our party. We have a larger agen-
da to fight the menace of the Congress party,”
Mr Rudy remarked at the press briefing .
had done good work with the help of BJP min-
isters. “I only wish that Nitishji were present
here with us in the rally as was the case in the
MHA mulling
Mumbai convention in 1995,” he said. revised strategy
A REVISED STRATEGY to combat Maoist

NRIs likely to get Rio BASIC meet in July-end to insurgents is being planned with the focus on
precise intelligence, specialised training,
modern equipment and faster mobility for

voting rights soon invite other developing nations

the anti-Naxal forces. Under the new plan
being worked out, a slew of operational
measures will be instituted and high-end
equipment acquired over the next few
Urmi A Goswami uity study, which it prepared in 1997. Ensuring finance for developing months with an aim to strengthen the state
Our Political Bureau by the GoM comprising Mr Ravi, parliamen- BONN In the joint statement issued at the nations, beginning with the $30-billion police forces, official sources said. On the
NEW DELHI tary affairs minister Pawan Kumar Bansal and end of the May meeting in Cape Town, fast track, has been on the BASIC anvil is a new deployment plan for the central
NRIs may be able to vote in the 2014 Lok Sab-
law minister M Veerappa Moily.
In January, Prime Minister Manmohan
ha elections, with a group of ministers (GoM) Singh, while addressing the Pravasi Bhartiya
clearing a draft bill giving them right to fran- Divas had said he recognised the desire of In-
chise. A long-pending demand of NRIs, the dians abroad to exercise their franchise in In-
A HEAD of the August round of
negotiations at Bonn, the BASIC
(Brazil, South Africa, India and
China) countries will meet in Rio de
Janeiro in late July. This will be the third
environment ministers of the four coun-
tries stressed that equity would be a “key
issue” for any pact. The question of equi-
ty in determining a carbon budget or the
amount of carbon each country can
agenda. However, Bonn II made it clear
that public funding would not be the
only source for finance. It is also clear that
much of the money being put on the
table is recycled overseas development
paramilitary forces — BSF, ITBP and CRPF.

CPI to vote for

proposal is now ready for the Union Cabinet’s dia and hoped that NRIs would be able to vote quarterly meeting of the four countries. spew into the atmosphere while not assistance. A briefing by the UN
nod. The bill, seeking to amend the People’s by the next general elections in 2014.
Representation Act, was under the scrutiny of Under the existing law, an NRI’s name gets
It is expected that the other developing
countries will be invited to take part in
irrevocably endangering the health of
the earth has taken on added
Secretary General’s advisory group on fi-
nance indicates the need to look beyond
Paswan in RS polls
a GoM headed by defence deleted from the voters’ the deliberations. This is a part of the importance with the acceptance of the 2 public sources like budgetary provisions. CPI ON SUNDAY said its three MLAs will vote for
minister A K Antony. CHANGING RULES list if the person is outside agreement that the four countries agreed degrees celsius threshold. India has been The BASIC meeting may focus on ways LJP national president Ram Vilas Paswan in the
“The GoM headed by the country for more than to at their May meeting in Cape Town. In at the forefront of putting the issue of eq- to leverage private financing. Rajya Sabha polls. The three-member CPI
the defence minister
GoM has cleared a draft six months at a stretch. a departure from practice, the Rio uity in burden sharing on the agenda. The four countries have clarified that
cleared the bill. Now, we bill giving NRIs right to vote. The proposed amend- meeting will have technical segment fol- The carbon budget has implications for the BASIC is a forum for discussion and legislature party, comprising Rajendra Prasad
are all set to present it be- The bill, seeking to amend ments will allow an Indian lowed by the high-level ministerial the economic growth and poverty not a negotiating group. This could Singh, Ram Naresh Pandey and Ram Vinod
fore the Cabinet and then the People’s Representation citizen residing abroad to segment. Sources said the technical alleviation goals of the developing coun- explain the reason behind a session on Paswan, will caste votes for Mr Paswan in the
it will be introduced in the Act, was under the scrutiny enroll in the voter’s list and segment would focus on three issues — tries. The BASIC joint statement stated: “science and possible scenarios”. This Rajya Sabha polls on June 17, CPI state secretary
Parliament,” overseas In- exercise the franchise if equity, leveraging private finance, and “The implications of this budget for indi- exercise takes on additional importance Badri Narayan Lal said. CPI was of the view that
dian affairs minister Vay- of a GoM headed by Antony. the person is present in the science and possible scenarios. vidual countries require careful analysis, due to the inclusion of 1.5 degrees thresh-
Rajya Sabha seats should not be allowed to be
alar Ravi was quoted as constituency on the Each of the four countries is working and must be based on a multilateral old in the latest text on the Bali track. For
saying by a news agency on Sunday. polling day. There are around 50 lakh NRIs, on a model for equity in carbon space. agreement about equitable burden- these countries, this exercise is important won by horse trading, he said referring to the
The bill was drafted four years ago in a bid to with Kerala alone having over 21 lakh NRIs. India has prepared a paper on a burden- sharing, including historical responsibili- to determine the future trajectory of independent candidate B G Uday. The decision to
encourage participation of NRIs in the coun- Though the prime minister had expressed sharing model based on the principle of ty for climate change, the need to allow negotiating position on the temperature support Paswan in Rajya Sabha poll was taken at
try’s economic growth by giving them an op- the hope that Indians abroad should get vot- per capita emission, South Africa is developing countries equitable space for threshold. In Bonn, India and China did the ongoing National Council of CPI at Hyderabad,
portunity to be part of the democratic process. ing rights, the law ministry was of the view working on a study which is based on development, and adequate finance, not object to a demand for a technical pa- CPI state secretary said. There are six candidates in
It was introduced in Rajya Sabha in 2006 and that this would open the question of dual citi- the global development rights technology and capacity-building per by the Alliance of Small Island States
then referred to a parliamentary standing zenship as all people of Indian origin living framework, China is preparing a carbon support provided by developed that was blocked by Saudi Arabia and the fray for five Rajya Sabha seats in Bihar.
committee, following which it was examined abroad do not hold Indian passports. budget as well. Brazil already has an eq- countries for all developing countries.” other oil producing countries.

RESPONSE BUSINESS ASSOCIATE INFORMATION

EXIM Bank to open East Africa New initiative by Bank of India SIDBI wins ADFIAP Awards 2010 APPOINTMENTS
Regional Office in Ethiopia IDBI has been honoured
xport-Import
B ank of India,
has added another S with international Merit
E
Bank of India
and the
dimension to its delivery
channel for Urban
Award on “MSME Financing
& Development Project by
Financial Inclusion by Association of Development
Government of Financing Institutions in
launching Mobile Based
Ethiopia signed in Asia Pacific (ADFIAP) for the
Remittance facility
Addis Ababa a Project’s developmental Bharat Pal Singh, Deputy Supratik Chatterjee has
through Business
‘Headquarters impact on the local economic development. The Merit Award Managing Director, IDBI taken over as MD of
Correspondents. This was launched at the hands of Dr K C
Agreement’, for was conferred in recognition of the impact created by the Bank Ltd. will now State Bank of Bikaner &
Chakrabarty, Dy Governor RBI at a function in Mumbai. Alok K
setting up a multi-activity, multi-agency MSME Financing and Development co-ordinate the day-to-day Jaipur. He was earlier
Misra CMD, Bank of India, emphasized on the commitment of
Representative Office of Exim Bank in Addis Ababa. The Project (MSMEFDP) which is being implemented by SIDBI. The affairs of the Bank CGM of the Bank
the Bank to the cause of Financial Inclusion. The function was
Agreement was signed by T.C.A. Ranganathan, CMD, Project aims at addressing the demand & supply side issues of
attended by Dr Amarendra Sahoo CGM, RBI, M G Bhide, Ex
Exim Bank and H.E. Sufian Ahmed, Minister for Finance MSMEs through judicious provision of financial and non-
CMD Bank of India, M Narendra, ED, Bank of India
& Economic Development financial services. The ADFIAP Award on MSME Financing &
Development Project being received by Rakesh Rewari, Deputy
Dr. R.Mohan, DGM (law) SBI,
MD, SIDBI from Fuimaono Falefa Lima, Chairman, ADFIAP and
United Bank sets to increase its
Indian Bank signs MOU with Chennai circle hands over the
keys of the mortuary van with Jeane Rene Halde, President & CEO, Business Development footprint in unbanked villages
Government of Karnataka freezers costing Rs. 3.60 lacs to Bank of Canada in Vancouver
Exnora Jeevan Mukthi,
M Bhasin, CMD, Indian
TRamagopal,
Bank along with V
Adambakkam, Chennai.88 in
association with Alandur IDBI Bank Opens First Overseas
ED, Indian
Bak met B S Yeddyurappa,
Municipali
Branch at Dubai
Hon'ble CM of Karnataka DBI Bank Ltd. opened its first overseas branch at The Dubai
at the Global Investors Central Bank of India signs MOU with Iinaugurated
International Financial Centre (DIFC). The branch was
nited Bank of India organized Awareness
Meet held at Bangalore
recently and signed an
State Government of Karnataka by Hon’ble Union Minister of State for Finance.
Namo Narain Meena in the presence of B. P. Singh, Deputy U Programme on Financial Inclusion in collaboration
with NABARD through credit linkage to Joint Liability
MOU with Govt. of CMD of Central Bank of India, MD, IDBI Bank. DIFC Governor. Ahmad Humaid Al Tayer, His
Karnataka for financing projects S.Sridhar signed an MOU Excellency M.K. Lokesh, Ambassador of India to UAE and Groups (JLGs) and adoption of Farmers’ Clubs as
committing to be a part of the Abdulla Mohammed Al Awar, CEO, DIFC were the Guest of business facilitators at Medinipur, Paschim Medinipur
industrial development of Honour at the inaugural function District, West Bengal Bhaskar Sen, CMD of United Bank
Central Bank of India launches Karnataka State, on the occasion of India, N.S.P. Rao,CGM, NABARD, Narayan Swarup
of a Global Investors Meet Nigam, District Magistrate, Paschim Medinipur District, &
New Savings Account Product organized by the State State Bank of India wins the -“The other dignitaries attended the Awareness Programme
n pursuance of its endeavour to provide value added Government of Karnataka at Banker - Innovation in Banking
Ilaunched
services to the customers, Central Bank of India has
a new Savings Account product, “Cent Savings
Bangalore. Seated from left to
right clock-wise : R.Katri, Commissioner of Department of Industries, Technology Award 2010” Financial Results
Plus” on 10th June 2010. Any person who opens an SB V.P.Baligar, Principal Secretary to Government of Karnataka,
tate Bank of India has won the prestigious international
Account with any of its CBS enabled branches on or
after 10th June 2010 and who maintain an average
Commerce & Industries Department, S.Sridhar, CMD, Central Bank of
India, Vijay Misra, DGM, Central Bank of India, Hyderabad Zone. S award “Innovation in Banking Technology Award - 2010”
instituted by The Banker Magazine, London, for its project on
Sky Industries Limited posts very encouraging
results for FY 2009 - 10:

A healthy jump in Profit before tax from Rs. 21 Lacs
quarterly balance of Rs.10,000/- in the account will be Standing from left to right : Murugesh Nirani, Minister for Large &
Medium Industries, B.S.Yediyurappa, Hon’ble Chief Minister of Green ATM Installation. State Bank of India was the eventual to Rs. 546 Lacs for the year ended 31st March 2010.
provided with free accident insurance cover of winner for the "Innovation in Eco-IT" category in which JP
Net Profit also shot up from Rs. 15 Lacs to Rs. 401
Rs.100,000/-. (Rupees one hundred thousand) Karnataka, S.V.Ranganath, Chief Secretary, Government of Karnataka
Morgan, Investment Bank, USA and Itau Unibanco, Brazil were Lacs
in the final reckoning with SBI. In all more than 230
The Company has recommended a dividend of Rs.

Union Bank Introduces
Cheque Drop Boxes
U nion Bank have
recently introduced
“Cheque Drop Boxes”
with new technology to
provide customers with a
convenient and secure
way to deposit cheques
without the assistance of
a Bank official. This facility is initially introduced in two
of its high profile branches viz. Mumbai. The machine at
M S Marg branch was inaugurated by one of the oldest
customers of the bank Mr. & Mrs. Nanavati in the pres-
BOB opens customer service nominations were received from banks across the globe for
these awards under twelve different categories. Interestingly
0.50 per share
Ahluwalia Contracts (India) Ltd., announced its audit-
centres at Dubai and RAKIA SBI was the only Indian bank to be in the final shortlist under
any of these categories
ed financial results for the year ended March 31, 2010.
The company achieved a 34.2 % growth in Total
ank of Baroda,
B opened two
more Customer
Vijaya Bank Awarded IInd Prize in
Income at Rs.157343.37 lacs as compared to
Rs.117195.64 lacs in year ended FY09. PAT grew by
41.6% at Rs.8178.34 lacs as compared to Rs. 5771.69
Service Centres Reserve Bank Rajbhasha Shield lacs in year ended FY09.
(EBSUs) at Al
Qusais, Dubai and Competition National Insurance Company Ltd., a public sector
at RAKIA, Ras Al undertaking Non Life Insurance Company headquar-
eserve Bank
Khaimah. Both the
EBSUs were inau- R of India has
conferred
tered in Kolkata, adopted its Annual Accounts in the
Board Meeting The Board has recommended a divi-
dend of 43.98% on the paid up capital of the compa-
gurated by Namo
Narain Meena, Hon. Minister of State for Finance, Govt. of 'Second Prize' ny.
India. M.D. Mallya, CMD of the Bank of Baroda and His on Vijaya Bank Highlights are as follows-
Excellency M.K. Lokesh, Ambassador of India to UAE were also in 'C' Region for
The Company has booked a global Gross Domestic

ence of S. P. Goel, Field GM present at the occasion
Corporation of India has been
Allahabad Bank awarded “ FIRST POSITION” in First
excellence in (GDP) premium income of rs 4646.00 crores register-
Progressive use ing a growth rate of 8.15% over the previous year.
of Hindi for
The profit before Tax for the year is Rs 269.00 crores.
of Life Insurance Corporation of India.
Allahabad Bank has mobilized more 2008-09. In a
The company has issued a total of 1,62,28,859 poli-

Ranked First by LIC Premium (FPI) Growth Rate based on

the performance during the Financial
than a lac Life Policies with Premium
of over Rs. 100 crores during the
glittering award distribution function held at the Central
Office of Reserve Bank of India in Mumbai, Shubhalakshmi
cies and settled 12 lac claims during the year.

The total amount of claim settled is Rs 3712.18

Allahabad Bank, the Corporate

Agent of Life Insurance
Year-2009-10 amongst all the
Channel Partner-Public Sector Banks
financial year 2009-10 Panse, ED, Vijaya Bank received the award from
Dr.D.Subbarao, Governor, Reserve Bank of India
crores.
THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010 *
THE POLITICAL THEATRE 3

India delaying
$100-million joint With CM in US, infra projects on hold
investment fund, Trans-Harbour Link, Dharavi Makeover Entangled In Committee Labyrinth, Delay Leading To Huge Cost Overruns
says Oman Abhiram Ghadyalpatil
MUMBAI
projects even as the delay in decision making
has led to cost escalation and indifference
clusive meetings to decide on the future of
Dharavi redevelopment. Here, too, the chief
Nirmala Ganapathy among key players like private companies minister has not been able to take the project
MUSCAT

India is responsible for the delay in setting

up a India-Oman joint investment fund an-
nounced way back in 2008, according to an
Omani official. India and Oman concluded ne-
gotiations on the $100-million joint investment
fund, which is expected to encourage projects
between the two countries. But the Omani side
feels that the fund —which was conceptualised
in 2008 —could have been launched much ear-
lier. “We are suffering from bureaucracy in India.
It is delaying the start of new projects,” said Dr
Abdulmalik A. Al-Hinai, under secretary for eco-
nomic affairs. He also noted that the fund was
initially the idea of the Indian government.
Nevertheless the fund, according to sources, is
now expected to be inked soon with Oman’s
minister for economy expected to travel to India
next month. The visit is likely to take place from
July 13 to 15.
India’s ambassdor to Oman Anil Wadhwa said
that the Oman-India fund, which is the first of its
kind for India, would provide a template for sim-
ilar funds with other countries. “The fund will
T HE delay in Mumbai trans harbour link
and Dharavi redevelopment projects
has just got a little longer. Chief minis-
ter Ashok Chavan’s 10-day long foreign trip,
which began on Saturday, has further held
up final decisions on these crucial infrastruc-
ture programmes. Both projects have been
languishing in the muggy Mantralaya corri-
dors for months now.
Ironically, the objective of Mr Chavan’s
visit to the United States, Singapore and
Malaysia is to study the high-
speed means of mass transport
and low-cost housing, and to
replicate the model in Mumbai to
improve the quality of life in In-
CLOUDY
dia’s financial capital.
It’s almost 20 months since he
FUTURE
became the chief minister and
these two projects, among others, have
hardly moved ahead. All that Mr Chavan
has managed to do is to form a few more
committees and sub-committees on mega
interested in the projects, bureaucrats, and
consultants.
Now, the chief minister has set up a war
room team with a mandate to fast-track
these projects. Ironically, the war room team
forward from the point where it was left by
his predecessor, Vilasrao Deshmukh, in 2008.
Asked for the reason for this delay, an ur-
ban development official said the chief min-
ister has been preoccupied with several oth-
has had its meeting cancelled twice in the er pressing tasks. “There has been a drought-
past one month or so. “Decisions on both like situation in more than 20,000 villages.
trans-harbour link and Dharavi redevelop- Water scarcity is a serious issue and so is the
ment will be taken whenever the war room tussle between Tata Power and R-Infra. Last
team meets now. Now, it will happen on the week, the meeting of war room was put off
chief minister’s return from abroad,” a for polls for the legislative Council,” said the
Mantralaya official dealing with the official.
mega infrastructure projects told ET. A veteran bureaucrat who has worked
The trans-harbour link project, a with several chief ministers, however, con-
Rs 9,300-crore 22-km-long sea-way
connecting Mumbai with Navi
ceded that Mr Chavan has been “fairly un-
eventful so far” in terms of results. “He has
Mumbai, is being sought by two
government agencies, the Maha-
brought in a kind of academic approach to
governance and he sits through the meetings
rashtra State Road Development Ironically, the CM’s team will take a close look at mass transport and housing overseas studiously taking down notes himself. I have
Corporation (MSRDC) and the Mumbai seen few chief ministers do this before. Yet, on
Metropolitan Region Development Author- offers to the state government. These agen- minister to settle this dispute for the past the decision-making front, he has not been
ity (MMRDA). Both have proposed to build cies as well as other players keenly watching three months. able to deliver,” the senior bureaucrat added.
the sea link and submitted their competitive this project have been waiting for the chief Similarly, there has been a string of incon- abhiram.ghadyalpatil@timesgroup.com

Congress tries to shield Arjun Come clear on

serve as a template for funds with other countries
in the GCC and others,” he said, adding, “We will
be able to attract a lot of capital from Oman,” he
said. The fund, which can be increased to $1.5

billion, is expected to enourage joint investment
in areas like infrastructure, tourism, health, tele-
com and real estate sectors promoted by the pri-
vate sector in both countries.
It was announced during Prime Minister
Manmohan Singh’s visit to Oman in November
2008 when the State Bank of India and Oman’s
State General Reserve Fund signed an MoU to
promote the fund with a $100 million corpus
with equal share. India and Oman already have
good economic ties with bilateral trade at around
$2 billion. Most of Oman's export to India in-
cludes oil, gas and fertiilisers.
But Oman’s eagerness to get the bilateral fund
off the ground reflects the interest in deepening
economic cooperation with India. “Cooperation
has always been there... when it comes to the
federal government it takes time,'' said Dr Al-Hi-
nai on the investment fund.
The two countries are no strangers to jont
ventures. The Oman India Fertiliser Company
based in Oman is a venture between Oman Oil
Company, Indian Farmers Fertilisers Coopera-
tive Ltd and Krishak Bharati Cooperative Ltd.
The fund is expected to encuorage jont ventures
between small and meduim size ventures. Indi-
an companies also have a sizeable presence in
Oman with 130 Indian companies in Oman
while 30 Omani companies operate in India.
IN A NUTSHELL
Inspector can’t authorise
use of loud speakers: HC
Anderson: BJP
Pranab Says Safe Passage To Anderson To Control Law & Order Situation
deteriorating. There was mass frenzy and there-
fore, it was thought necessary to move out War-
ren Anderson,” Mukherjee said, trying to get
things clarified.
But this explanation is unlikely to take the
heat off the government. The argument that
the person responsible for the worst industrial
disaster was allowed to escape for controlling
law and order situation in a city may not have
many takers.
But the Congress is under compulsion to
shield Arjun Singh as any statement from the
party veteran pointing to the Centre’s role can
be damning. Mr Mukherjee had on Saturday
said that the government will still try to seek SERIOUS TALK: BJP president Nitin Gadkari (R) with Gujarat CM Narendra
the extradition of Anderson. Modi (L) and senior party leader Arun Jaitley at a rally in Patna on Sunday. PTI
“We are trying to extradite Anderson,” he
had said. But legal experts are of the view that Our Political Bureau tims of Bhopal tragedy,” a resolution
it will not be easy to extradite Anderson be- PATNA passed at the national executive meet-
QUESTIONS TO ANSWER: Pranab Mukherjee and Arjun Singh cause of “lapse of time”. ing of the BJP said.
According to former attorney general Soli THE BJP on Sunday sought action In his inaugural address on Satur-
Our Political Bureau indicates that the Congress is against laying the Sorabjee, it is futile to make a request. “I had against all those who allowed Warren day, BJP president Nitin Gadkari had
NEW DELHI blame for Anderson’s release solely on the then asked the ministry to obtain opinion of a rep- Anderson to escape from India after the asked the Congress to come clear on
state government. His junior party colleagues utable US legal firm that dealt with the Bhopal gas tragedy. its role in allegedly providing safe pas-
THE Manmohan Singh government on Sunday have been engaged in an attack on Arjun Singh matter. “The life of an Indian is not cheap in sage to Anderson.
came out with a fresh excuse to explain safe pas- in the hope that it would help the Congress duck The US attorney gave some reasons, one of comparison to any American or any- “Why is the Congress silent on the
sage for Warren Anderson. Finance minister the charge that the Rajiv government was equal- them being lapse of time. They sought evi- body else. The gross injustice which the issue? Why is Arjun Singh silent?
Pranab Mukherjee told reporters that the then ly culpable. dence complying the US extradition law. victims of Union Carbide gas tragedy in Why has the country not been in-
Union Carbide chairman was let off by the Arjun According to Mr Mukherjee, tempers were They didn’t think the requisite evidence was Bhopal have suffered must make us all formed about what happened?....The
Singh “to control the deteriorating law and order running high in Bhopal over the incident. “It is available for extraditing Anderson. It would
situation in Bhopal”. clear in Arjun Singh’s statement made on De- be futile to make a request now,” Mr Sorab-
alive to this critical aspect. The BJP de- silence is eloquent,” BJP spokesper-
mands that all requisite steps must be son Ravi Shankar Prasad told re-
Mr Mukherjee’s statement is significant as it cember 8, 1984, that law and order situation was jee had said. taken for expeditious justice to the vic- porters, quoting Gadkari.

MUMBAI: The Bombay High Court has ruled

that a police inspector in charge of a local
police station cannot give permission for use
of loud speakers or public address system.
Only an officer “not below the rank of
Deputy Superintendent of Police” can grant
such permission, a division bench
comprising Justices A M Khanwilkar and S
S Shinde pointed out. The high court was
hearing a petition filed by Aurangabad-
based Anand Salvi, who had sought a ban
on use of loudspeakers during ‘Aurangabad
Premier League’, a cricket tournament, at
ADCC stadium in the city. Salvi had pointed
out that the event, which took place
between March 3 and March 11, coincided
with Std X and XII board examinations.
After organisers assured of abiding noise
pollution rules, the event was allowed to
proceed while the petition was kept
pending. But in the judgement delivered
last week, the High Court observed that
organisers had obtained permission to use
loudspeakers from the local Mukundwadi
police station.
Illegal banners draw HC fire
MUMBAI: The Bombay High Court has held
that any political leader, whose picture
appears on an illegal hoarding or a banner,
can be prosecuted. If leaders, who are
“eulogised” by party workers, are prosecuted
for the hoardings that mar the city landscape,
it would act as very effective deterrent,
Aurangabad bench of the High Court said in
the judgement last week. The division bench
of Justices A M Khanwilkar and S S Shinde
was hearing a PIL filed by an Aurangabad
resident Sunil Jadhav, who had sought action
against hoardings in city’s Kranti Chowk.
During the hearing, the Municipal
Corporation lawyer had argued that often the
hoardings do not bear the name of the person
who had put it up, so prosecuting the culprit
becomes difficult.
The lurking danger: Pak’s whine rings hollow as LSE report
600-800 militants points to ISI backing for Taliban tactics
waiting to cross LoC
Our Political Bureau
NEW DELHI
The Army on Sunday said that there was no let-up on Pakistan’s
part to send terrorists from across the border. According to a top
Army official, who heads the wing that man the borders, said 600-
800 militants were waiting to infiltrate into India.
Northern Army Commander Lt General BS Jaswal, who
shared information on Pakistan’s subversion plans, however,
said the Army has succeeded in keeping the infiltrators at bay by
adopting a three-pronged strategy.
“There is no let-up on the part of Pakistan in trying to send across
terrorists. But if you see the statistics this year, they have not been
able to make any inroads,” the Army official told a TV channel.
He said 600-800 militants were waiting to infiltrate from across
the border. According to estimates, 70 militants had infiltrated by this
time last year. But this year, only 12 could infiltrate into India. Ex-
plaining the Army's strategy to prevent infiltration, Lt Gen Jaswal
said “first strategy is to ensure no one comes in. Second is the intelli-
gence base and the third is the defence line and the anti-infiltration
position.” The US has been asking Pakistan to put an end to infiltra-
tion before the two sides re-start the dialogue process. Assistant sec-
retary of state for South and Central Asian affairs Robert O Blake had
recently acknowledged that the main hurdle before a meaningful
engagement between India and Pakistan was infiltration of anti-In-
dia elements.
“One of the most important obstacles to expansion of those
relations is the continuing infiltration from Pakistan to by Pun-
jab-based groups, such as Lashkar e Taiba and Jaish-e-Mo-
hammed and others. And the United States has consistently
called for greater action on the part of Pakistan to stop the activ-
ities of these groups,” Mr Blake had said. President Barack Oba-
ma, Secretary of State Hillary Clinton and defence secretary
Robert Gates have all made the point it's in Pakistan’s own in-
terest to take on these groups.
Our Political Bureau
NEW DELHI
PAKISTAN’S“we-are-victims-of-terror” claim, which it
periodically uses for guilt-tripping other nations, has got
a severe knocking.
A report published by the London School of Eco-
nomics said Pakistani military intelligence not just funds
and trains Taliban fighters in Afghanistan, but is official-
ly represented on the movement's leadership council,
giving in significant influence over operations.
What is equally damning is the revelation about close
links between Taliban and the political leadership of
Pakistan. It said President Asif Ali Zardari had visited
senior Taliban prisoners in Pakistan earlier this year,
where he is believed to have promised their release and
help for militant operations, suggesting support for the
Taliban “is approved at the highest level of Pakistan's
civilian government.” The report also said support for
Taliban was the “official policy” of Pakistan’s semi-rogue
spy agency, the ISI. Although links between the ISI and
Islamist militants have been widely suspected for a long
time, the report’s findings, which it said were corrobo-
rated by two senior Western security officials, could raise
more concerns in the West over Pakistan's commit-
ment to help end the war in Afghanistan. “Pakistan ap-
pears to be playing a double-game of astonishing mag-
nitude,” said the report, based on interviews with Tal-
iban commanders and former senior Taliban ministers
as well as Western and Afghan security officials.
This could also make things difficult for the Manmo-
han Singh government, which has bought into a spuri-
ous distinction between the civilian leadership and the
army establishment in the neighbourhood.
In March 2009, Admiral Mike Mullen, chairman of
the US Joint Chiefs of Staff, and General David Petraeus,
MORE SKELETONS
In a damning disclosure, the LSE report
says Taliban has an official representation
from Pakistan’s ISI
What is more unsettling is it claims that
the terror group and the country’s political
leadership are acting hand in glove
Though the links are an open secret, the
latest findings will, for sure, give
Washington more sleepless nights
The report, based on remarks from key
western security officials, may force India
to have a rethink on its strategy on terror
head of US Central Command, had said there were in-
dications of elements in the ISI supporting the Taliban sentatives on the (Quetta) Shura, either as participants
and al Qaida. Nevertheless, senior Western officials or observers, and the agency is thus involved at the
have been reluctant to talk publicly on the subject for highest level of the movement,” the report said.
fear of damaging possible cooperation from Pakistan, a
nuclear-armed state Washington has propped up with
billions of dollars in military and economic aid.
“The Pakistan government's apparent duplicity —
and awareness of it among the American public and po-
litical establishment — could have enormous geo-polit-
ical implications,” said the LSE report’s author, Matt
Waldman, a fellow at Harvard University.
“Without a change in Pakistani behaviour it will be
difficult if not impossible for international forces and the
Afghan government to make progress against the in-
surgency,” Waldman said in the report.
The report comes at the end of one of the bloodiest
weeks for foreign troops in Afghanistan — more than
21 have been killed this week — and at a time when the
insurgency is at its most violent. More than 1,800 for-
eign troops, including some 1,100 Americans, have
died in Afghanistan since US-backed Afghan forces
overthrew the Taliban in late 2001. The war has already
cost the United States around $300 billion and now
costs more than $70 billion a year, the report said, citing
2009 U.S. Congressional research figures.
The report said interviews with Taliban commanders
in some of the most violent regions in Afghanistan "sug-
gest that Pakistan continues to give extensive support to
the insurgency in terms of funding, munitions and sup-
plies." The report said these accounts were corroborated
by former Taliban ministers, a Western analyst and a
senior UN official based in Kabul. Almost all of the Tal-
iban commanders interviewed in the report also be-
lieved the ISI was represented on the Quetta Shura, the
Taliban's supreme leadership council based in Pakistan.
“Interviews strongly suggest that the ISI has repre-

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4 BUSINESS OF BRANDS * THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010

JWT Kolkata wins Idea Brand Equity Quiz 2010, Triton runner-up
Our Bureau Of the nine regional teams, the final and the very long variety is more than gear after round four answering three could have gone anyway and the audi-
MUMBAI four who qualified for the last leg of the 7.5 ml, to qualify as Basmati;” “Apsara, questions on the trot, the team became ence along with the two teams were on
finals were Triton Communication Julie, Suvidha and Humjholi are brands the clear favourites. Of course, team Tri- the edge. The last question — What does

I T DIDN’T matter that it was the

weekend, and add to that Argentina
was playing one of the league
matches in FIFA world cup. Quizzing
enthusiasts not just from Mumbai, but
across the country thronged to Jamshed
Bhaba theatre, NCPA, on Saturday
evening to witness a closely-fought duel.
At the end, the national finals of
The Idea Brand Equity 2010 wit-
nessed history-in-the-making with
two advertising agencies battling for
the most-coveted quizzing trophy in
India Inc. The run-up to that saw up-
BHARAT CHANDA sets, close finishes and coming back
from the brink. And the duo of Gau-
tam Roy and Angshuman Roy from
JWT Kolkata, making their maiden
appearance in the national finals, de-
WINNERS TAKE ALL: (L-R) Rajashree Birla, chairperson, Aditya Birla feated veterans Mayur Rana and Ma-
Foundation; Vivek Nayer, chief marketing officer, M&M (automotive sector); hesh Manjawala from Triton, Ahmed-
and quizmaster Derek O’ Brien with winners Gautam Roy & Angshuman Roy abad, who reached the national finals
of JWT Kolkata; and Dr Bhaskar Das, executive president, BCCL. for the third consecutive year.
from Ahmedabad, Infosys from
Chandigarh, IBM from Hyderabad and
JWT from Kolkata. The early favourites
in the final four were Infosys Chandi-
garh, also making their maiden appear-
ance in the finals, who scored 60 in the
first prelims. Interestingly, in the first
preliminary of the evening, last year
winners Accenture Delhi and clear
favourites this year as well were unable
to grab the two seats to the finals.
Favourites they may have been dur-
ing the prelims, but Infosys Chandigarh
never really got off to a good start and
ended up at the fourth position. Quiz
master Derek O’Brien in his back room
chat with the teams gave them a peek
into the pattern of quizzing he had in
store this time. “The questions this time
is more about India and the nuances of
Indian business and not so international
or NY (New York) types,” he said. Ques-
tions like “The long variety is 6.6 – 7.5 ml
of Oral Contraceptives;” and “Why is the
Patiala Peg called the Patiala Peg;”
among others got the teams either giv-
ing laudatory answers or as O’ Brien put
it, ‘pure gibberish’. Even renowned ad
man Piyush Pandey made an appear-
ance at this year’s Idea Brand Equity quiz
2010 as a question when the teams were
asked to identify the voice in the famous
“Har Ghar Kuch Kehta Hain” commer-
cial of Asian Paints.
Giving the teams on-stage tough
competition was the audience, who an-
swered googlies like “What is the special-
ity of the Kashida saree of Kashmir;”
“David Ogilvy said hospitals do two
things — one they look after patients
and two they teach young doctors.” It
was not just the teams who took home
fabulous prizes but even the audience
won prizes like holidays and BlackBerry
phones with one-year free connection.
As IBM Hyderabad got into the fifth
ton were close on the heels. JWT
Kolkata never looked in the contention
till the buzzer round. For it was then that
the entire complexion of the game
changed as JWT Kolkata raced past IBM
Hyderabad to set off a thrilling close fin-
ish between two ad agencies.
Gautam of JWT had been participat-
ing in the BEQ for the last five years and
was very happy to have won. “For us
getting to the national finals was big
enough, but winning makes it even big-
ger,” he said. His partner Angshuman,
who confessed that he was a bundle of
nerves throughout the evening, was
equally thrilled to have been crowned
the winner, “I think the buzzer round
was the clincher for us. We answered 4
of 5 questions and that really took us
ahead,” he said.
At the end, the scores stood at 90
points for JWT Kolkata and 85 for Triton,
with one last question on the buzzer. It
B in Oral-B stand for was answered by
Triton Ahmedabad by hitting the buzzer
as Bacteria. Sections of the audience
started clapping for Triton thinking it had
won, but the answer was Brush — mak-
ing JWT Kolkata the winners.
The Team from JWT Kolkata
walked away with Rs 13,09,221 each
in prizes including a Mahindra Scorpio
each. The winners received prizes
from Mrs Rajashree Birla from the
Aditya Birla Group of companies
along with Dr Bhaskar Das, executive
president, BCCL, and Mr Vivek Nayer,
chief marketing officer, Mahindra &
Mahindra (Automotive Sector) hand-
ed the trophies and the car keys to the
winners. Runners-up, Triton Ahmed-
abad, received prizes from Mr Sanjeev
Aga, MD, Idea Cellular, and second
runners-up IBM Hyderabad received
prizes from Mr Pradeep Shrivastava,
CMO, Idea Cellular.

Soccer queers the cricket pitch
World Cup May Score Marketing Goal Against Asia Cup THE EYEBALL GAME
Monica Behura
NEW DELHI
its equally dismal show in Zimbabwe have
waned interest in the game, at least for now.
“Fifa will have group stage matches during
the Asia Cup. So it is advantage cricket,” says
While it’s early to say which game will
come up trumps, duplication of audi-
SPEEDING UP
And absence of stars such as Sachin Ten- Neo Sports COO Prasanna Krishnan. Everyone’s looking to grow through
ences as was seen in 2006 is certain expansion, takeover or relaunches

T HE FIRST stab that soccer took at

punching through cricket’s marketing
hegemony in India four years ago may
well turn into a decisive strike this time
round.
dulkar and Yuvraj Singh may work against
the Asia Cup, say marketing experts, spon-
sors and broadcasters.
ESPN-Star Sports, the official broadcaster
of the Fifa cup, has no doubts about that.
The channel has already snapped up ad-
vertisers such as Tata Motors, Tata DoCoMo,
Micromax and Airtel DTH that have bought
slots of nearly 120 seconds for the tourna-
ment that ends on June 24. Having sold a
Match timings are overlapping —
cricket matches begin at 3.30 pm
while some Fifa matches
kick off at 5-7.30 pm
FINANCIAL KHILADI

The Fifa World Cup in 2006 was evenly
matched against the India-West Indies series
in terms of television ratings, with the soccer
tournament drawing in 44.4 million viewers
compared to the cricket contest’s 49.2 million.
But this edition of the Fifa Cup, which
kicked off in South Africa last Friday, has a lot
going for it than the Asia Cup cricket match-
es that begin on Tuesday. With hundreds of
millions of dollars’ worth of sales of World
Cup replica shirts and merchandise to fans
riding on the soccer tournament, sponsors
have firmly planted the beautiful game in the
minds of consumers. Through the huge
buildup to the tournament, companies
such as Nike and Adidas have also en-
sured soccer’s pervasive reach
from living rooms to the streets.
A Nielsen Company survey
says soccer sponsors are gener-
ating unprecedented brand
awareness through their associa-
tion with the tournament in In-
dia. The report says, football is the
top non-cricket sport in India and
the country boasts of 83 million
viewers, with 55% of them glued in
on leagues. The beautiful game has
attracted 60% more audiences in five
years and three times the number of
advertisers since 2006.
“Football will reign this season as the
Indian market seems highly promis-
ing,” says The Nielsen Company.
Cricket, in comparison, appears to be
on a sticky wicket. India’s tepid perform-
ance in the T20 World Cup, which re-
ceived an average TRP rating of 3.98, and
PITCH REPORT FREEWHEEL
UK vodka voted the
“Soccer fans will be glued to their televi- 10-second slot for around Rs 2.5 lakh, Neo At least 49% of TV
sion sets,” says Sanjay Kailash, executive is looking to earn up to Rs 100 crore from
vice-president of ESPN-Star Sports. ESPN the Asia Cup. viewers switched back
Star Sports had acquired the broadcast rights “The channel has already sold and forth between the
of the tournament for a whopping $40 mil- 80% of its inventory and the Fifa Cup and India-
lion two years ago. rest will be sold to spot buy- West Indies cricket
Companies associated with the soccer cup ers during the matches at then, say TAM
believe that there is an unmatched interest in a premium rate of Rs 5 ratings
the tournament. Soccer, they say, will draw lakh per 10 seconds,”
younger and newer audiences not just in says Mr Krishnan.
metros but also smaller towns. In any case, there
Sponsors and durable goods makers such would be duplica-
as LG Electronics, Samsung Electronics and tion of audiences
Sony Corp that are using the soccer tourney to as was seen in RATING RATTLE
launch a barrage of products, notably 3D tele- 2006. At least 49%
vision sets, swear by its marketing potential. of TV viewers 9 JUN - 9 JUL 2006
“Soccer this season will graduate from be- switched back and FIFA World Cup 2006
ing a premium sport in India to gaining a forth between the Avg TVR %: 1.21
more mass appeal and will probably will be a Fifa Cup and India-
bigger hit among viewers than the Asia Cup,” West Indies cricket then, Total Reach: 1.21million
says Adidas India CEO Andreas Gellner. say TAM ratings. This TO AKSHAY Kumar’s growing list of
Media buyers, the group that secures ad time too, it will be no dif- 19 MAY - 29 MAY 2006 endorsements spanning cellphones to
spots for companies, agree. “With shorter ferent because the match India vs West Indies ODI Series cola drinks to LED TVs to
versions of games becoming popular, football timings of the Asia Cup Avg TVR %: 3.63 undergarments, add financial services
seems to have a upper hand not only among and soccer matches are Total Reach: 44.2 million
consumers but also advertisers,” says Praveen overlapping — cricket will products. Kerala-brand Manappuram
Sharma, COO of media agency Madison Me- begin at 3.30 pm and a few Finance is about to rope in the actor as
2 JUN - 2 JUL 2006 brand ambassador as it looks to expand
dia Plus that services sponsors such as Airtel Fifa matches will kick off be-
and Coca-Cola. tween 5 pm and 7.30 pm. India vs West Indies Test Series in the north. Akshay joins southern
Despite soccer fever in India scaling new Advertisers such as Nokia, Mi- Avg TVR %: 1.27 actors Mohanalal, Vikram, Venkatesh
heights, it may still be rich to say that cricket’s cromax and Airtel DTH, present in Total Reach: 49.2 million and Punit Raj who are the company’s
marketing potential is in danger. both the tournaments, are not com- faces in its key markets of Kerala, Tamil
Asia Cup official broadcaster Neo Channel, plaining. What matters to these com- Nadu, Andhra Pradesh and Karnataka.
for one, sees no threat from soccer. The com- panies will be the different ad slots. "Akshay has a good brand appeal in
pany is confident of cricket coming up trumps “Football will get 30-second ad spots north India, especially in the hinterland
because it believes soccer will be mostly seen whereas cricket will get 150-second spots be-
in urban cities and regions such as Kerala, cause of the longer duration of matches,” says and among the lower middle class
Kolkata and Goa. Madison’s Sharma. consumers," said Manappuram Finance
PURNIMA
managing director I Unnikrishnan.
Manappuram is targeting 20% of overall
revenue from North India in two years.
HYUNDAI WILL BRING ELECTRIC CARS WHEN THERE’S ADEQUATE INFRASTRUCTURE
SUPERMAN’S DREAM RUN

We are now taking position of

DREAM THEATRE,
world’s best an entertainment
company owned by
LONDON: Russia and Poland are known for former Cartoon
vodkas, but a British produce has now Network Enterprise
beaten the two countries and 113 other executive director

a trusted innovator: Hyundai

global rivals to be voted the world's best at a
spirits' competition. Chase Vodka, produced
in Hereford, has been crowned the world's
finest by a panel of 30 judges at San
Francisco World Spirits Competition 2010,
the 'Daily Mail' reported. "Winning the
award has been fantastic for us. It has really
helped to build up the brand's profile,
which is vital. You can have the best
product in the world, but it won't sell if the
brand isn't strong. "One of the unique
things about our vodka is it is made from a
traditional copper pot, which gives it its
character. We boil it up in the copper pot
and it has a column and it bubbles away in
there and condenses and evaporates about
50 times. "A lot of people just make the
vodka then filter it whereas we do all of that
in the distillation process, so there are
already no impurities. To make spirits is like
a fine art. It isn't just a process," William
Chase, who started making the drink two
years ago, was quoted as saying. The 45-
year-old entrepreneur had no previous
distilling experience but decided to aim for
the gourmet end of the market and
invested nearly three million pounds to
build distillery. All the potatoes are grown
on his Rosemaund Farm near Hereford
before being added to water, fermented,
and then distilled and bottled -- which all
takes place on site. The spuds give Chase a
"natural sweetness" which tastes better
than traditional vodkas made from cheaper
wheat or rye grains. "You can get a bit more
of a yield out of wheat but with the
potatoes it has a natural sweetness to the
product and the consistency of a fine wine,"
Chase said. —PTI
Spice Mobile to spend
Rs 120 cr on marketing
NEW DELHI: Handset maker Spice Mobile on
Sunday said it has earmarked Rs 120 crore
for marketing and promotion this fiscal as it
focuses on building its brand in the metros
and tier I cities in India. Spice Mobile, which
has a portfolio of about 50 handsets, also
plans to launch about 2-3 models every
month, some of which would be targeted at
the urban markets. "We have focused on tier
II and III towns so far, now the focus is on
strengthening the brand in the metros and
tier I cities as well," said Spice Mobile vice-
president marketing Naveen Paul. "We will
roll out new handsets for the urban
markets," he added.—PTI
HYUNDAI Motor, India’s second-largest carmaker, has lined up
ambitious growth plans for the Indian market. Encouraged by
the scorching demand for cars over the last year and rising compe-
tition, the company has decided to launch at least three new car
models every year to keep up with an ever-increasing demand. It
is also busy ramping up sales and service stations across the
hinterland, seeing opportunity in low-car penetration. Among
other things, the company will have a stronger rural focus in the
coming years. During January- April this year, the rural market
for cars grew 27%, with Hyundai's sales growing at about 40%,
thanks to the company's move of having sales branches and road
shows to stimulate demand in those areas. Arvind Saxena, direc-
tor, sales and marketing, Hyundai Motors India, discusses
company’s strategy in an ever-evolving Indian market in an
interview with Amit Sharma. Excerpts:
There will not be uniform growth for
all. But one thing that we believe is
that competition always expands
the market.
i10 seems to have gone down well with the Indian
consumers. Which other upcoming product from
Hyundai could get a similar response?
Any product of our company is developed in such a way
that it helps the company’s cause in terms of volume and
market share. We designed i10 for the Indian market, and
it has done well and achieved its aim. Fair amount of
research went into designing it; we repeatedly checked
with consumers about the product. The key was to give
them value for money. Customers do not always go for the
cheapest product, and look for value in products.
Everything about the car was new—styling, interiors—all
this gave much greater value to the consumers.
Hyundai had to strip down the i20 to launch a
lower-priced variant. How successful has the
company been in attracting consumers?
The i20 was designed for the European market. It’s a very
high spec car and is expensive in its segment. People do
want to buy high-performance, fun-to-drive cars but in a
small package. We are surprised by the customer response
to the car, which has been unexpectedly good. The package
of design and features has caught the fancy of consumers.
I would not say that we have stripped down the car as we
still have a fairly feature-rich car. But naturally, variants al-
Jiggy George, has
bagged exclusive
rights to build the licensing business for
Warner Brother Consumer Products
(WBCP) in India. The company will
ways allow you to expand the market and clearly, that is serve WBCP in food and beverages,
what we have attempted. After creating a product with personal care and promotional
very high brand image, we had to go for volumes. licensing for characters such as
Superman, Batman, Justice League,
While auto industry had a good run last year, the Looney Tunes, Tom and Jerry, Scooby-
competition has become intense and the space is Doo and Harry Potter. Dream Theatre
now more crowded. It’s said that in any industry
there is room for only top three players in the long will also have licensing rights for
run. Your comment? consumer products lines of Discovery
The penetration of four-wheelers here is such that the Indi- Channel and Animal Planet in India.
an market will take years to reach saturation point. There
are different reasons for the growth. Most of the growth has DON’T RING A BELL HERE!
been from July last year. Fundamentally, we are a growing
and stable economy. We never had a recession. Automo- THIS MAY be a
bile is the biggest beneficiary of economic growth. revelation for
There will not be uniform growth for all, but one thing that we cellphone
believe is that competition always expands the market. India
companies drawing
has a stellar advantage of having an excellent financial system.
So, availability of finance enables car market to grow. up plans for rural
India. At least 65%
At a time when retail presence and service net- of the rural
work widening are at the top of the agenda for population is not
carmakers, how much of a priority is it for your influenced by
company? mobile phone advertisements, reveals a
We are in a strong position to take full advantage of the recent survey by MediaTek India
market scenario. We are a much stronger brand now. We Technology. Brand recall of such ads is a
have close to 1.5 million customers and a strong network paltry 19%, says the study. Rural folks
of outlets. Products, distribution and overall company ARVIND SAXENA listen to their peers or colleagues and
strategy are all key in the Indian market. DIRECTOR, SALES & MARKETING, personal experience while buying a
We are committed to expanding operations. Last year, we
had 285 dealers. We will close this year at 320, many of HYUNDAI MOTOR INDIA handset. And for them, the longer the
them in newer cities. mand in some other markets. battery life, better the phone because of
If our cars meet Euro –4 standards in terms of technology, the electricity factor.
How has the brand evolved over the years? then they cease to be old. We are giving choice to con-
When we began operations, we banked on the superior sumers by retaining established models. We are still sell-
FROM VATICAN WITH LOVE
technology plank. So we introduced a lot of firsts in the mar- ing 7,000 santro cars a month. It means that there is
ket. The first power steering in a small car with Santro, clear strong demand for these cars. If there will be no demand,
headlamps were first brought by Hyundai. We introduced a we will stop selling them. These are contemporary cars GERMAN LUXURY
technology like crdi, an advanced form of diesel engines. from the technological standpoint. label Villeroy & Boch,
But with a customer base of 1.5 million, we are now taking whose crockery has
the position of a trusted innovator. It reflects in our products, There is a lot of talk about green tech, especially in found a place in the
technology and approach to consumers. We have the most the auto sector. What are you doing in this field? Vatican, plans to
innovative and fuel-efficient engines in the market. So we We have the widest range of alternate fuel cars in the coun- launch its tableware
are innovating rapidly to live up to that image. try. Santro, i10, Accent are already available in dual-fuel range in India this
options. We also showcased the electric i10 in the auto expo year. The company’s
Old cars have been replaced globally, but not in In- earlier this year. I do not think that the time is right for bring- collection of bath and wellness products
dia. How does this make the Indian auto buyer dif- ing electric cars. The technology is there with us, but the in- already sell in India — starting at Rs 20,000
ferent from their global counterparts? frastructure is inadequate. There are no charging stations for and running up to several lakhs of rupees.
India is a very different market. Consumption of cars in cars. Range is also an issue. Even for CNG, there are long
Villeroy & Boch typically targets architects
developed markets is far greater than in India. The per queues, despite close to ten years of its launch in India. So this
capita income of people in those countries is greater than dissuades consumers from such cars. We will bring the tech- and interior designers with its products but
Indians. So we are dealing with different consumer de- nology when the infrastructure is adequately available. is increasing its showroom count to 19 by
the year-end.
THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010 *
CORPORATE 5

Once reluctant to RIL may invest $5 b in telecom More CEOs enter

crore-plus pay
lend, banks now Co May Share Infrastructure With RCom, Spend $1 B For Broadband Services Our Bureau
bracket in India
PTI

won’t talk pre-pay MUMBAI

FRESH CALL NEW DELHI

with Essar Oil M UKESH Ambani-led Reliance In-

MV Ramsurya & Sangita Mehta
MUMBAI
IT’S acase of changing fortunes. In the
early nineties, lenders were hesistant
to fund the Essar Group which was
then struggling to grow its oil and steel
assets amidst the commodities slump
that almost wiped out consumer de-
mand. Today, the same lenders are re-
luctant to finalise a prepayment settle-
ment with the group’s Essar Oil as the
refinery’s operations have turned
profitable and banks are keen to hold
on to the portfolio.
For the past few weeks, senior ex-
ecutives from Essar Oil and represen-
tatives from a consortium of leading
A company is brought under CDR
when it fails to meet financial dues.
Under CDR, a company can negotiate
a liberal tenor and lower rates with ex-
tended maturity profile. In return, all
cash flows from the company are put
in an escrow account—the trust and
retention account—and all opera-
tional and financial decisions are tak-
en with the approval of the lenders.
Essar Oil is keen to move out of
CDR as it would give the company
greater flexibility and enable them to
take faster business decisions without
waiting for lenders’ approval. It will
also improve Essar Oil’s credit ratings.
For a recompense amount to be
valid, it has to be approved by a clear
dustries is likely to invest $5 billion
(approximately Rs 23,375 crore) in
about two years from now, as it completes its
telecom rollout for broadband access across
India, the company spokesman said.
The company will lease the so-called pas-
sive telecom infrastructure — such as towers
used to connect cellular phones to networks
— from existing players and is open to sharing
it with the younger brother Anil Ambani-
owned Reliance Communications.
On Friday, RIL said it will buy a 95% stake
in Infotel Broadband Services, the only com-
pany to win all-India broadband spectrum,
for Rs 4,800 crore, or around $1 billion.
India’s largest private sector company will
pay Rs 12,848 crore for the spectrum to the
Indian government — making its total invest-
ment in the telecom foray about $4 billion al-
ready. RIL is likely to spend further $1 billion
in building a broadband access network.
“We are betting on the company’s data
market,” the spokesman said. “The market
has not moved much in the last eight years.”
He was speaking after RIL’s management
shared these details at an analysts’ meet
on Saturday.
RIL will require transmitting equipment for
15,000-20,000 towers for full coverage of In-
dia, he said. The company expects to have 100
million subscribers in five years.
There are around nine million broadband
subscribers in India, restricted largely to wired
infrastructure as radio waves to offer
broadband had so far not been released by
the government.
RIL will possibly compete with established
telecom players like Bharti Airtel, Reliance
Communications, and Vodafone that bought
3G telephony spectrum instead of broadband
wireless access spectrum. The third genera-
tion spectrum can be more readily used for
voice communications.
Some details of RIL’s broadband access plans
were unveiled in a presentation by Alok Agar-
wal, the company’s chief finance officer, in a
presentation to analysts over the weekend.
RIL has the advantage of being the only
player to have spectrum for data services in all
22 Indian service areas.
Bharti Airtel has spectrum in 16 circles,
while Vodafone has it in nine and Reliance
Communications in 13.
The RIL spokesman said the company ex-
pects cash break-even in its telecom venture
in three years.
RIL acquired a 95% stake in Infotel
Broadband, the only company to
win all-India broadband spectrum,
for Rs 4,800 cr
RIL will pay Rs 12,848 crore for
the spectrum to the government
— making its total investment
in the telecom foray around
$4 b already
RIL will require transmitting
equipment for 15,000-20,000
towers for full coverage of India
Ambanis discuss synergies
during African safari
NEW DELHI: Leaving little to doubt about their
growing understanding at home and at work,
Mukesh and Anil Ambani holidayed with their fami-
lies in South Africa and are believed to have dis-
cussed synergising their businesses to mutual
advantage. The brothers, who have been battling
ever since the family patriarch Dhirubhai Ambani
passed away in July 2002, revisited the same lodge
at the Kruger National Park where their father had
brought the family last in 2000. During the break,
the brothers are understood to have discussed
ways to leverage each other’s business activities in
the telecom, finance and entertainment sectors,
sources said. — PTI
CALLS for reining in astronomical salaries
for corporate head honchos notwithstand-
ing, the number of top management person-
nel getting a pay package running into crores
of rupees has crossed the century mark, and
the data flow has just started.
Of more than 4,500 listed companies in
the country, about 175 entities have dis-
closed the last pay package for their CEOs
and other top management personnel,
which includes 60 companies having paid in
crores to one or more of their top executives.
So far, there are 105 top management
personnel who were paid annual remuner-
ations in crores of rupees during the last fis-
cal, ended March, 2010, or December, 2009.
The list is topped by media baron Kalanithi
Maran and wife Kaveri Kalanithi with total re-
muneration of a little over Rs 37 crore each in
the FY10. This is despite the two capping their
collective salary at Rs 74.2 crore, about 22%
below their entitlement of Rs 94.8 crore for the
year. Maran, the MD of Sun TV Network, and
wife Kaveri, joint MD, opted to limit their re-
muneration for 2009-10 to Rs 74.2 crore, the
same paid to them in the last fiscal.
The list also includes Reliance Industries
chief Mukesh Ambani, who has also taken a
voluntary pay cut and still figures among the
highest paid so far with Rs 15 crore, less than
half of what he is eligible for.
Three other executives from the same
company earned in crores during the year
— PMS Prasad, Hital Meswani and Nikhil
Meswani saw their remuneration rise to
Rs 1.5 crore, Rs 11.1 crore and Rs 11.1
crore, respectively.

Reliance Venture plans to invest

banks such as ICICI, IDBI,
SBI and others have been
meeting to reach an agree-
ment on the recompense SHARING
amount. This is the amount
Essar Oil will have to pay to
get out of a lenders-con-
BURDEN
trolled restructuring brack-
et that was implemented in 2005. The
two sides are now close to an agree-
majority, or at least 75% of
the lenders. “If the lenders
and Essar Oil don’t agree on
the recompense amount,
then the company can sug-
gest a refinance scheme
outside the CDR,” said peo- $30 m in ancillary businesses
140W TURN
ple who are part of the ne-
gotiations. The ambitious refinery Deepali Gupta their components.
conceived by the Ruias in 1994 was MUMBAI Mr Shah said, “The investment

YOUR çINANC1
ment, said people familiar with the one of the biggest laggards for the $15- philosophy is to put money into an-
development. Essar Oil’s current debt billion group, which also has interests RELIANCE Venture Asset Manage- cillary businesses, the ones that are
totals Rs 7,500 crore. in steel, shipping, telecom and BPO. ment, the private equity arm of Anil overheating at the moment.” This

%(NOWW
Under corporate debt restructur- Delay in environmental clearances Dhirubhai Ambani Group, plans to includes sectors like logistics, educa-
ing (CDR), the lenders charged Essar saw work on the 10.5-million tonne invest between $25 and $30 million tion and microfinance that have at-
Oil 12.5% interest with an arrange- refinery start only in 2004. (approximately Rs 117-140 crore) in tracted large foreign and domestic

ment where the company pays 9%
upfront, and the balance 3.5% is
charged at the end of the tenure.
Further, the CDR had stipulated it
would charge Essar Oil a lower rate
of 9%, provided the company
moves out of CDR in five years.
Now that the times have turned
in favour of Essar Oil — from prof-
itable operations and robust funds
infusion — the company has offered
to get out of CDR. The recompense
amount is the compensation for the
sacrifice that the lenders made.
The refinery operations began in
May, 2008. “Now operations have
stabilised and the plant is operating at
133% capacity which is why the com-
pany has initiated discussions with
lenders for exiting CDR,” said people
familiar with the matter. The im-
provement in Essar Oil’s finances has
also come due to large equity contri-
bution from the holding company,
which invested $518 million, and
through the funding of the capital
project by an overseas bond issue of
$300 million.
11410MEDIA
the next six months, after making an investments in the past few years.
equal investment in the past three Gradatim provides on demand,
months, Harshal J Shah, chief exec- enterprise resource planning for
utive, Reliance Ventures told ET.
While group companies such as
Reliance Communications may be
microfinance companies. Its clients
pay on usage, or per transaction
model, making the initial cost of set-
MARI(ETING
strapped for cash due to high debt, Mr ting up systems almost one-tenth.
Shah said there is no issue with liquid- Venture has invested $7-9 million, Yet the company is able to deliver
ity for private equity investment. but did not disclose the stake ADAG some amount of customisation of
PR0PERhI
The company just made its third company now holds. The company software, Mr Shah said. “Microfi-
investment since April in a microfi- invested in Tessolve, a semiconduc- nance companies don’t have funds
nance technology solutions compa- tor testing technology company, and like banks, so they can’t invest too
ny Gradatim IT Ventures. A person Reverse Logistics that buys waste much on technology to start with,”
familiar with the deal said Reliance technology products and recycles said an IT analyst.

HOMAG E

02-07-1940 11-06-2010

Dr. D. Jayava rt hanave lu

Chairman & Manag ing Director Lakshmi Machine Works Limited -

May his soul rest in peace

DIRECTO RS & EMPLOYEES

I.MW®
LAKSHMI MACHINE WORKS LIMITED
COIMBATORE
6 CORPORATE * THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010

‘We may look at acquisitions to RIL’s financial services foray

likely to take more time
grow industrial paints segment’
From Page 1

THE Mukesh Ambani-controlled

the bidding process for UMPPs,” said
independent investment advisor SP
Tulsian. The refinery-to-retail major
pharmaceutical industry, said the per-
son familiar with the discussions. The
unlisted company has made profits

T HREEyears ago, Hans Wijerstransformed Dutch

firm Akzo Nobel from a mid-size drugmaker to the
world’s largest paints company by acquiring UK’s
ICI. The former civil servant, who dabbled as a business con-
sultant before becoming the Dutch minister for economic af- Looking at the
How do you attack emerging markets like India
with a brand that is perceived to be relatively
premium? Is there a second brand in the works?
Dulux is not just for the very high end and it has different
offerings. We have a second brand in some markets and
company has since moved to imple-
ment part of this plan by taking over
Infotel Broadband, which has won
licences to supply high-speed inter-
net connectivity using radio waves in
has set up an internal team to over-
see plans to bid for these mammoth
projects, according to power indus-
try sources.
RIL’s re-entry into power and tele-
and is looking to expand its presence
in global markets such as Europe.
“It is a good business proposition
for RIL once a business achieves crit-
ical size. You may see the group eval-
fairs only to return to the corporate world and eventually be- growth potential need to build on that. A typical mistake that companies 22 circles in India. com doesn’t come as a surprise and uating options like merger and
came the CEO of Akzo Nobel, loves to ask questions. In an ex- from US and Europe make is focus on high-end prod- Details of RIL’s entry into power had been widely expected, once the takeovers to enter the pharma
clusive interview with ET’s Vivek Sinha, he says asking in India, it’s ucts. Although you can grow that, you miss out on enor- will unravel by the month-end as non-compete pacts between RIL and space,” said an analyst with an insti-
helps him build a logic as he prefers to ask how one is doing early days and mous opportunities in other markets. Our ambition is to bidding opens for ultra-mega power companies of the Anil Ambani Group tutional brokerage.
and what he is doing, rather than telling people what to do. participate in the mid-segment also. There is an existing projects or UMPPs. The government were scrapped. Its interest in pharma- The last piece of the puzzle—the
But the task is cut out for the India team at Akzo Nobel with markets are still brand in India and we will use it to serve the mass and has sought to spur power generation ceuticals, however, is not widely proposed move into financial servic-
the top boss looking at more than fourfold jump in revenues in infancy. We mid-end market. by inviting bids to build large power known and is believed to be linked to es—may take more time because the
to €1 billion by 2015. Excerpts: plants, typically 4000 mw and more, the prospects of Reliance Life Sci- Reserve Bank of India does not allow
are at number Sometime ago, you delisted from Nasdaq. Is it supplying power to a number of ences, which is privately owned by industrial houses like Reliance and
Much before buying ICI you said a measure of three position part of a strategy to exit from multiple stock ex- states. The sites where these power RIL chairman Mukesh Ambani. Tatas to set up banks. Analysts, how-
great leadership is courage, citing example of in India, but it changes and what does it mean for Indian arm stations are located are pre-selected Reliance Life Sciences has reached ever, expect RIL to enter banking, if
IBM transforming from hardware to software where the public holding norms have just by the government. a critical size in its operations, bright- regulators allow, as well as the insur-
firm. You did something similar, so was it will change changed? “RIL will definitely participate in ening prospects of a bigger play in the ance and broking businesses..
planned years ahead? We were listed in Nasdaq and then we found what
Not exactly the timing and exact steps. But where we HANS WIJERS Sarbanes Oxley was about. We decided to exit after
wanted to go, yes. It took me one year to think of the
sequence of steps and then I followed that agenda. CEO, AKZO NOBEL
looking at the benefits and costs involved under
the new regulations as international capital mar-
kets do not give any premium to have a dual listing ‘Default disclosures Cos looking
How did you justify selling high-margin phar-
maceutical business in favour of paints?
For very big companies, it is less likely to happen but
there are still a long list of companies in the €2-2.5 bil-
in US and Europe. So we only saw the additional to avoid
may create panic’
costs. If we would ever make a move again, we
One of my teachers once said it is not good to be gener-
ally right, and you have to be specifically right. Pharma-
ceuticals is interesting but its high-risk and high-return
lion sales mark. So there are lot of M&A opportunities,
maybe not within the top five firms but we have ag-
gressive growth ambitions in emerging markets in-
would not go back to Nasdaq and look at opportu-
nities in Asia. For India, we haven’t completely
made up our mind and are currently majority
big dilution

From Page 1
business and needs scale. We had a nice business, but we cluding India. Now, we can do a lot via organic growth shareholder. It’s not the highest priority to bring
were relatively small. We were already a big player in in India and the ambition is to upscale the business here operations directly under one roof. Besides, there’s
From Page 1 A section of industry officials and “I feel RBI may not question
paints and I felt it was an underestimated sector with in 4-5 years to a €1 billion euro company. That’s basi- an advantage of being a listed company as it at- market analysts fear that such disclo- those investments in which
high-growth potential and if you become number one, cally organic growth. Our M&A strategy can be for tracts more attention and even if we don’t do it for SEVERAL companies in the worst- sures may lead to panic in the capital the FC-GPR forms have al-
you have a very attractive position. So, it was a counter three reasons. In mature markets, if it leads to consoli- the need for capital, it makes sense to connect with hit sectors such as retail and real es- market. “There needs to be clarity on ready been processed. But in
intuitive move and we sold off pharma business and dation where you can reach the top two positions. In the people. So there might be an argument to stay tate had a tough time servicing their the definition of default. Missing a many companies, investments
used that money to get ICI. Yes, the margin is not as high emerging markets, which are at a certain stage of de- listed on stock exchange. loans. Institutional lender IDBI re- monthly payment is also default, but have happened a little before
as pharma, but in 2009, despite the economic scenario, velopment, to establish a growth platform. ICI has us called a loan to a private airline re- putting that information out in public or around May, when the new
we still had a formidable margin. It’s a very attractive an entry into markets like India and China where we You have made fairly interesting career moves cently after it failed to meet its repay- will be disastrous both for the lender FDI norms and pricing were
business and less cyclical than what people thought. The were too late in the game. Thirdly, if there are local swinging between public administration and ment obligations. and the corporate as it may create un- announced,” said the invest-
deal also gave us a great platform in all growth markets, players with excellent technology who do not have re- corporate world... Industry officials and policymakers necessary panic,” said an RBI official. ment banker. “Perhaps, they
including the BRIC. sources to go global, we can buy them. I am a curious person and always interested in changes. are of the opinion that disclosure on If a company fails to repay the loan, should have been more care-
Having a government experience has been useful to un- loan defaults will promote trans- the banks give a window of 90 days. ful,” he added.
But in some of the emerging markets including Analysts say your China investment strategy has derstand how government works and why public ser- parency and strengthen corporate Failure to make repayments in this Interestingly, some of the
India, you are not among the top two firms.... more clarity than that for India... vants do what they do. As a consultant, I have learnt to governance. “Sebi should not have period results in the loan being classi- local firms are taking refuge in
Until now, what we have done in India is on a rela-
In mature markets like Europe and US, if I see a situa- digest lot of information at a very fast pace. any problem. There are already laws fied as a bad loan or non-performing the new guidelines to avert a
tively low scale beyond the cost of acquiring ICI In-
tion like this I would be concerned. But looking at the in place making it mandatory for pro- asset (NPA). Sharing such informa- significant dilution in the pro-
dia. We expect it to grow much faster now on the
growth potential in India, its early days and markets are But you must be glad you are in the other side, moters to disclose information about tion with public is unnecessary and in moter holdings. “These com-
industrial side, which means performance coating
still in infancy. We are at number three position in India given the state of European economy... shares pledged,” a finance ministry some cases this would lead to witch- panies, mostly property firms,
business and specialty chemicals in the B2B seg-
but it will change. We have just begun. India will see I continue to follow closely what is going on in Eu- official said. hunting, said Abizer Diwanji, head have not delivered and ac-
ment that is small at present compared to our dec-
atypical pattern of growth, services first then industry rope. Even as the growth markets are in BRICs, 40% Under the current laws, a company (financial services) at consultancy cording to the terms, they
orative paints business. We have got more ambi-
will take over and we are going to benefit from this. The of our business is in Europe. If you study the history will have to disclose on a quarterly ba- firm KPMG. “In my view, flow of such have to accept a high conver-
tious and rather than taking step by step, we plan to
country has developed a better sense of direction over of EU changes take a lot of time. They were never sis if its promoters have pledged shares sensitive information should be re- sion ratio in favour of the for-
accelerate growth in the industrial side. And that
the past few years that I have been visiting India. nicely done and Europe stumbles from one change amounting to 1% or more of the com- stricted amongst regulators,” he said. eign investors. But they are
could also include acquisitions plus big investments to another and typically looks a bit awkward. But pany’s capital. When promoters fail to Such information will be open to trying to wriggle out of their
You have indicated Akzo Nobel is not chasing in new plants across the country. For decorative they get there. I guess this time also you will see it will repay, lenders dump their shares to re- interpretation and may adversely af- commitment by simply citing
mega deals like ICI in the paints industry. What paints business, we want to really outgrow the mar- take too much time, mistakes will be made but in the cover their dues. Retail investors suf- fect corporate houses, he said. “If the new pricing rule,” said a
does it mean for consolidation and for Indian ket primarily through organic expansion. If there end it is an irreversible process for the European fer in this whole process as they do not there were any chances of recovery, legal advisor to one of the for-
growth plans? are some attractive targets, we will look at them. countries to unite further. have access to information. even that may dry up,” he said. eign investors.

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THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010 *
CORPORATE 7

CO ALSO PLANS TO ACQUIRE TRANSMISSION COMPANY IN GERMANY

I-T dept to earn over Rs 600 cr from tax
Hero Motors keen to roll deduction by TPAs on hospital payments
out global superbikesArun Kumar provider for the global auto industry.” But he declined to divulge
M Padmakshan
MUMBAI

TAX authorities can now raise an additional Rs

NEW DELHI details. Even as the settlement was sealed recently, Hero Motors
has been working over these two transactions for the past cou-
600 crore or more after a Bombay High Court or-
der that held that third party administrators
(TPA)—companies that liaise between insurers
LEGAL ROUTE
The high court order issued in May
2010 was on a writ petition filed by
Dedicated Health Care Services. This is
the latest in a series of litigations
them by non-life insurance companies. In return
for their services, the TPAs receive a 5% commis-
sion from insurance companies on the health in-
surance premium. The I-T authorities claim that
TPAs have to deduct tax at the rate of 10% at
source before making payments to hospitals.
The I-T department, Mumbai had carried out

H ERO MOTORS owned by Pankaj Munjal, nephew of ple of months, the first person said. The settlement has given
group-chief Brijmohan Lall, is in talks to manufacture freedom to the company to foray into the bike manufacturing
high-powered bikes in the country for a host of global space and form alliances with global majors besides Honda.
superbike makers including Harley David-
son. The move is significant after the four-
“Earlier it was difficult for the same
group to have two different partners op-
and hospitals to facilitate cashless treatment for
policyholders—are required to deduct taxes
while making payment to hospitals.
The High Court order issued in May 2010 was
on a writ petition filed by Dedicated Health Care
between TPAs and the I-T department

cular was issued. The association of TPAs had also

way separation of the Munjal family busi-
ness, earlier this month. Although Hero Mo-
tors will not exactly compete with Hero
Honda that is managed by Brijmohan Lall
and Sons, it will mean that the two separate
Hero Group firms will be involved in manu-
facturing bikes for the first time.
Some of the global superbike makers
— Harley Davidson, Ducati and BMW —
are looking to tap the growing Indian
premium bike market. So far,
Pankaj Munjal (son of OP
Munjal) has been involved
in the auto component busi-
ness with Hero Motors. Under
the settlement, he has also got
Hero Cycles.
The auto component mak-
er is also in talks to acquire a
transmission company in
Germany. It has appointed
leading investment bank NM
Rothschild for the proposed transac-
tion, two executives familiar with
the development told ET. When
contacted, Pankaj Munjal, manag- ing director at Hero Mo-
tors, said: “We are looking at becoming an integrated solution
MEAN MISSION
Hero Motors will not exactly
compete with Hero Honda. But
the two group firms will be
involved in manufacturing
bikes for the first time
Global superbike makers like
Harley Davidson & BMW are
looking to tap the growing
Indian market
erating in the same space,” he added.
Hero Motors has embarked upon di-
versification and expansion and is look-
ing at inorganic growth for acquiring
technology in transmission space, Mr
Munjal said. “We plan to invest between
Rs 500 and 700 crore over the next three
years as capital expenditure,” he said.
The proposed expansion will be either
funded by Hero Cycles or the initial pub-
lic offering route that the company may
tap. NM Rothschild has been given a
comprehensive mandate to identify the
target and suggest the funding plan for
the acquisition.
Hero Motors specialises in
transmissions for recreation
products with an address-
able market of $1.5 billion.
Besides Hero Motors, the
flagship group company
Hero Cycles is also part of the
Pankaj Munjal group. Hero Cy-
cles is the main revenue gener-
ator and it has funded all the
major businesses of the group in
their formative stage.
decided to file a special leave petition in the
surveys last year on six TPAs and raised tax de-
mands ranging from Rs three crore to Rs 69
crore. The survey had revealed that none of
them had deducted tax (TDS) while making
payments to the hospitals, from the fund made
Services. This is the latest in a series of litigations Supreme Court. available to the patients by the insurance com-
between TPAs and the Income-tax (I-T) depart- Although it is an administrative hassle for the panies. The I-T authorities therefore issued de-
ment. The Karnataka High Court too had held, in insurance industry, the tax deduction at source mand notices under section 194 (J) of the In-
the case of Medi Assist, that TPAs are required to will not hit buyers of health insurance. According come-tax Act which deals with payment for
withhold taxes while making payments to hospi- to Sanjay Datta, head of customer service, health professional services.
tals. The Bombay High Court order however set and accident at ICICI Lombard, it will bring more The Karnataka High Court had observed that
aside a CBDT circular stipulating penalty on TPAs of the unorganised healthcare service providers since it is the TPA which is the authority in mak-
for non-deduction of taxes. into the tax net. The money reimbursed every ing payments to hospitals, it is obligated to deduct
Speaking to ET, Dr Nayan Shah, a director, year to hospitals—for cashless service to policy- TDS. The High Court had also observed that the
Paramount Health Services said that TPAs have holders—amounts to Rs 4,000 crore annually. Of critical factor in deciding this issue is the fact that
been depositing tax, deducted at source, with the this, 60% is facilitated by TPAs who make the the agreement for paying to the hospitals is be-
I-T department under protest ever since the cir- payment out of float funds that are parked with tween the TPA and the hospital.
Jupiter Lifeline plans to
invest Rs 200 crore
MUMBAI: Jupiter Lifeline, which runs
the Jupiter Hospital at Thane, will invest
over Rs 200 crore in two-three years for
setting up three ‘boutique’ hospitals in
Pune, Surat and Indore.
The group recently launched its first hotel,
Fortune Park Lakecity, in the ‘hospital and
hotel’ segment, termed as boutique hospitals.
It shares a common premise with its hospital
in Thane. “We are planning to come up with
similar projects in Pune, Surat and Indore,”

Eric Paternoster appointed

Jupiter Hospital director, consultant and in-
tervention cardiologist, Bhaskar P Shah said.

e
Jupiter plans to invest around Rs 75 crore in
each of the three proposed projects.

CEO of Infosys’ US subsidiary ‘

Pankaj Mishra
MUMBAI
ALMOST nine months after Infosys Tech-
nologies established its subsidiary in the US
for targeting over a $100-billion govern-
ment outsourcing market, Eric
Paternoster—the current head
of insurance and healthcare
business at the company, has
confirmed this appointment, and said his
company is currently in the process of fine-
tuning its strategy for addressing govern-
ment outsourcing market in the US. Infos-
ys, which serves top corporate customers
such as American Express, Bank of Amer-
ica and BP Plc, leads domestic
rivals Tata Consultancy Ser-
vices (TCS) and Wipro in terms
of profitability with almost 30%
we scale up the business, we have to look
at all sectors. We will always be selective
about what we want to work at, depend-
ing on the business model and services to
be provided, we have to look at what is
profitable,” he added.
US IT budget is $82 billion for fiscal
2010, of which $35 billion is in the de-
fense department. Other departments
that might be
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SALE IN PUNJAB
Paternoster will report to Ashok state governments as their pub- fosys are justice,
Vemuri, who heads Infosys’ US lic sector customers in the US, transportation,
business, and also work with the Infosys, according to rivals and homeland securi-

“11VIJI‘tE l

JrJL1:L
company’s independent director Jeffrey
Sean Lehman. Infosys Public Services
some experts, may have been late in ad-
dressing the opportunity. Rival Wipro al-
ty, health and hu-
man services,
A SUGAR MILL SITUATED I PUNJAB
‘ IN
board is constituted of SD Shibulal, Mo- ready has a nine year $407 million out- commerce, ener- IS FOR SALE. INTERESTED PARTIES
handas Pai, Vemuri, Lehman and Pater- sourcing contract from the State of Mis- gy, veterans ad- MAY CONTACT FOR DETAILS AT:
noster himself. souri for delivering health care services to ministration, agri-
When contacted by ET last week, S US citizens. culture and treas- batradk@rediffmail.com
(Kris) Gopalakrishnan, the Infosys CEO “We are never late,” said Mr Kris. “As ury, said experts. Mobile No.: 09650122005.

Adani Power UTTAR PRADESH STATE ROAD TRANSPORT CORPORATI(

T E H R I KOTHI . M .G .M A R G L U C K N O W
gets govt Tel:0522-2622363/2628461 I 2629914 , Fax . 2274578
Website: www.upsrtc.com
nod for two _ _ _ _ _ _ _ _ _ _

ADVT. No. 336 CAMD/PPP/PlceII-VoI- IV/09 Dated :06-06-2010

projects Request for Qualification for Development of 242 Bus Stations in Ultar Pradesh on THE TIMES

Yasodhara Rakshit Design Build Finance Operate Transfer (DBFOT) in PPP Mode : GROUP

NEW DELHI
The Government of Uttar Pradesh is committed to provide the most modern
INDIA’S national authority on
clean development mecha-
passenger amenities and infrastructure to its citizens. In order to initiate that as premiere
nism (CDM) has approved in this direction Uttar Pradesh State Road Transport Corporation proposes to modernize, www.hdfc.com
Adani Power’s two power redevelop and manage its 242 bus stations on Public Private Partnership basis. In this

LET YOUR
projects to draw carbon credits
worth Rs 290 crore annually. regard UPSRTC invites Request for Qualification from eligible developers.
The company has made ef-
forts to significantly reduce Region! No of Bus Approx Gross Estimated Highlights of the Project:
greenhouse gas emissions Bid Parcel Stations Land Project cost First of its kind of a project being

DREAM HOME
(GHG) and increase produc-
tivity of its plants located in Area (Tentative) implemented in the state
Maharashtra and Gujarat. The (in Rs.in Crores > Maximum ground coverage upto 3O°I
combined power generation
capacity of the two power sq. mts .) and FAR upto 250%
projects are 3,960 MW. Agra 27 1 , 12 ,121 234.52 > Immense potential for commercia

FULFIL OTHER
“Though the details are
confidential, we can state that Aligarh 15 56,397 120.04 exploitation
we have got the government 14 74,202 189.62 Fleet size of more than 8000 state run
74,757
>
approval for the projects,”
12 144.83 buses and 16 ,000 private buses

DREAMS
Adani Power spokesperson
Devendra Amin told ET. 18 1,22 ,533 272.38
Adani Power(APL) is set-
ting up the two coal-fired
1 22 1,62 ,026 177.85 industrial , tourist or cultural
power plants with super-criti- ad 15 58,712 110.08 importance
cal technology. The technolo- 13 1,76 ,783 454.38 -
Concession Period of 33years
gy, which is operated at higher
temperatures, increases ipur 19 1,44,578 300.56
plant’s efficiency and lowers Hardoi 6 28,685 53.88 RFQ document may be obtained

r
emissions of carbon dioxide.
The company is investing 6 83,660 125 89 from the office of UPSRTC at the
about Rs 18,270 crore in the 14 92,778 173.61 address given below with a non-
two projects.
The two units will be eligi- U 7 reRjndable fee of Rs.1O, 000 in the
ble to generate 2,617,567-car- 4 f frfl of Demand Draft in favour of
bon emission reduction (CER)
11 iit ar Pradesh State Road
/
per annum till 2012, Mr Amin
said. The current trading price 6 ‘I
/
of CER is at 12 Euro per CER.
Thus, APL will be able to gen- 11
erate revenues of Rs 140-150 21
crore annually from it.
These plants will have con-
densing steam turbines where
steam would be utilized only
for power generation and the
electricity generated would be
used for the local and national
grid. The two plants have a
l ‘] s1.
HDFC’ Loan
iiLAgainst rrn l II 3$-1expansion
flnrri Property for business _____ I

ktor I Your home can do• so

1• much for you. Withi HDFC’s Loan Against Property, you can
steam temperature of 5,710
‘
Celsius and a pressure of 25.4
encash the present market value of your property. So that you get
Mpa (Mill Pascal). te Road Transport Cli Competitive immediate financial assistance to meet a variety of personal and
The super-critical coal fired
power plants attract high cap- I! Interest Rates
_______________ busIness
-
needs. Talk to us today.
ital investment compared to
the sub-critical coal fired pow- 3.Marg Also for • Child’s Education
er generation. The efficiency 1 • Medical Expenses • Child’s Marriage -ii HDFC
.
improvements and thereby
reduction in GHG leads to Head Off .
HOME LOANS
earning of CERs through the I’D— a ’XYKno Financial Ceiijé (iill : 6663 6000
Ca SMS:HDFCLAPto 56767 ‘ ‘in :YOU
WITH : THROUGH
, RIGHT
t•i’g :i
CDM under the Kyoto Proto- ‘
I’ Level 3, Leela Vista , Bajaj Nagpl MLJMBAI/NAVI MUMBAI: Tel: 6663 6000. Branches at: •Mumbai: Andheri (E), Andheri (W), Andheri-Kurla Road,
col. The project to be located I’
in Taluka, Gujarat and Gondia aX Y K n o D Handphone:+91 956109886. I 91 712€ Borivali , Chembur, Churchgate , Malad , Mira Road, Mulund (W) (Paanch Raasta) , Lower Parel , Vikhro li. •Navi
in Maharashtra is expected to m&l iD , ntt v ,knn ,‘nm nikhilt i v Mumbai: Koparkhairane , New Panvel , Seawoods , Vashi. Thane: Gokha e Road , Vikas Complex , Ambarnath ,
be completed by April 2012. Donbivli , Kalyan , Virar. NAGPUR: Tel: 256 6000. Branches at: Butibori , Chhatrapati Square , Civil Lines, Kadbi
Chowk. NASHIK: Tel: 660 6000. PUNE: Tel: 2550 5000. Gofidit/ons app/y Net work HDFC51I-10 Mum
8 CAREER & BUSINESS LIFE * THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010

Weekly boarding schools catching on in India
While Parents Focus On Work, Children Say They Have The Best Of Both Worlds With These
Mahima Puri
NEW DELHI
DELHI-BASED hotelier Dilip Puri and his jew-
ellery designer-artist wife Vallery’s children at-
tend boarding school, with a slight difference.
The boys, Prahlad and Arjun, who study at Del-
hi NCR-based Pathways World School, come
home every weekend to be with their parents.
The 24x7 professionals believe the concept
works well for them as well as their children.
While the children get a well-rounded educa-
tion, parents, who are usually unable to spend
quality time with them, get to do so over the
weekend.
“I feel I can allow myself to be completely
dedicated to my work and take care of myself
when the boys are not around,” says Vallery.
“Both the boys are doing well, academically
THERE’S A NEW LIFE HERE and in sports,” says Mr Puri. The Puris plan
GOING FOR THE KICK: PRODUCTIVITY NOT A WORRY
their weekends in advance. “We watch
movies together, eat out and often go for
bowling,” he says.
Apart from Pathways World School, those
that offer week-long boarding solutions in Del-
hi NCR include Genesis Global Schools and GD
Goenka Public School.
Pathways, which is an International Bac-
calaureate school, has a varying fee structure.
For grade 11 and 12, residential charges are at
Rs 71,250 per quarter, while tuition fees
amount to Rs 99,000 every quarter.
Genesis Global School, on the other hand,
charges Rs 1.5 lakh per annum for a five-day
boarding. Says BS Vivek (40), a cardiologist at
Sir Ganga Ram Hospital whose 11-year-old son
studies here, “My son was not getting enough
physical exercise in his earlier school due to the
lack of space. But now, I can see the difference
in him. He does well in academics and sports.”
The GD Goenka School has 85 weekly
boarders this year compared to 70 last year, and
charges around Rs 55,000. The school’s director
Satinder Kumar says weekly boarding has a
positive impact on children, “as they do not feel
alienated from their parents.”
Parents believe the space that children get
helps in their development. Besides, “parent-
child bonding is better as both feel the need to
spend time together,” says Shuchi Gupta, whose
daughter graduated from Pathways in 2007.
Students themselves appear to be happy at
the arrangement. Prahlad Puri, who recently
graduated from Pathways, says weekly board-
ing has helped him lead a disciplined yet flexi-
ble life. When he’s in school, he can focus on
studies and sports, which he feels children who
stay at home have to be nagged into doing. And
when he’s home, he gets to spend time with
friends and family.
Cultural fit, job content and people
you work with make a big difference
New job offer in
hand? Introspect
before you jump
THE recession seems to be over. Then,
what is the problem?” Rakesh Sood,
the MD of a financial services compa-
ny, screamed at Nikhilesh Garg, his
sales director, for not meeting the
monthly targets. “That, in fact, is the
problem, Rakesh,” said Garg. Garg’s
retort left Sood fuming, but only till
Garg explained. “The job market has
opened up. More and more people
who were with us so far are finding
jobs outside. We are losing good sales
people. And that is having an obvious
impact on our sales numbers.”
to do this? Being paid in line with in-
dustry standards is also key for me.”
For Richard, cultural fit may be im-
portant but not at the cost of money.
Akriti Bhatnagar, an HR consultant
adds, “Yes, salary is important. (But)
job content seems to be the more de-
termining factor these days. What are
your roles and responsibilities going
to be? Are they in line with your qual-
ification and experience, etc, etc,” are
questions which are being asked.
Bijoy Dutta, though, has a different
and tragic tale to nar-

It’s football full time at India Inc

This is a phenomenon rate. Though he took
that seems to be impacting his time confirming to
almost all companies. For this new company that
you readers, this holds he was going to join, on
more relevance because day one, he realised that
you now have seen a sud- his boss was an ass. He
Firms Offer Free Tickets & Flexi Working Hours For Next One Month den surge in opportunities
and hence your own job
had done all his home-
work on job, salary,
mobility has increased company, etc, but had
Writankar Mukherjee & Sreeradha D Basu pressing employees from indulging in fun since it might be count- substantially than missed out doing a ch-
KOLKATA er-productive, says Acclaris India MD Kalyan Kar. “They are free what it was a few years eck on the people he
to get completely caught up in the World Cup fever, provided ago. And if you have was going to work with.

A S THE world gathered in front of television sets to catch they are able to give their deliverables on time, even if
the Fifa World Cup inaugural programme, the mood at they are required to work extra hours,” he adds.
Mahindra Satyam’s Hyderabad campus was one of cel- Mahindra Satyam chief of HR and mar-
ebration. Techies left their cubicles and came down to the sports keting Hari T too claims the fun will not hit
field. The company had organised a penalty shoot-out compe- productivity. “The Fifa World Cup may be
spent countless hours
scouring newspapers,
job ads, activating con-
tacts and networks,
and have landed that dream job, you
And that backfired. Re-
member, you are well
within your rights to
carry out a detailed bac-
kground check on the people that you
tition among employees, while Shakira’s ‘Waka Waka’ was special for us, but we have always conduct- need to be careful before you sign on are going to work with.
beamed live across two big screens and scores of TV sets installed ed small activities around big sporting events. Such activities tend to the dotted line. While all these are important, for
across the office. And when the first match kicked off between increase the employee’s commitment and sense of attachment to- “Frustration with the current job me, there is one aspect which is para-
South Africa and Mexico, the party started with an unlimited wards the company. Since they are organised outside working is leading to people accept the first job mount — in fact the most decisive
flow of snacks and beverages. hours, we have never seen a drop in productivity,” he says. which comes their way. This is factor to consider before shifting jobs.
Mahindra Satyam has decided to organise such screenings “It also drives home the point to employees that at times they ridiculous. It’s akin to jumping into The organisation that has hired you
during all the big matches. And such celebrations will have to give that extra beyond regular working bed with the first girl you meet. Had only knows a little about you. Proba-
continue across its delivery centres. The menu items SECURE hours,” adds Mr Hari. However, opinions vary, with you waited longer, you could have bly not even a quarter of as much as
in the cafeteria have been named after the teams, some companies keen to instil the World Cup spirit found a better one,” says Kavita Ra- you do about yourself. Introspect.
note pads designed in the shape of the soccer field, GAME without any special arrangement to view the matches, jagopal. “When you get a job offer, Think. Ask yourself a very serious
and so on. What’s more, the company recently or- Matches are in fearing it may hit employee productivity. For instance, take your own time in evaluating if question: “Why do you think you
ganised a football quiz among employees and 30 late evening hours Capgemini is organising an in-house soccer tourna- the job is fit for you, and more impor- will be able to do that job?” The or-
people won free tickets to the quarter and semi finals. ment, decorating workstations with football themes tantly, if you are fit for the job.” ganisation thinking that you are
Mahindra Satyam may have a special reason, in India, when most and employee competitions. “But we have no plans “It’s also about the organisation good for the job is one aspect. You
with the company being the official IT service employees wrap up to set up TV sets or give any leeway,” says Capgem- that has made you an offer. Do you thinking that you are good for the job
provider of the Fifa World Cup. But soccer fever their work ini India vice president and head (sales) Anish have a cultural fit in that organisation? is even more paramount. If you even
has hit India Inc equally hard. Several companies Sarkar. A Philips spokesperson said that while em- Are the company’s overall value sys- have a fleeting doubt that you may
are setting up special screening zones, decorating worksta- ployees generally finished work early, TVs in canteens would tems in sync with your own? Is the not be able to do well in the new role,
tions with jerseys and posters, organising soccer tournaments, beam repeat telecasts of matches during lunch hours. The silver environment open and friendly or is it it might be worth giving it a pass.
offering free tickets and even flexible working hours for the lining this time around is that in India, most of the matches are closed and intimidating? Would you Remember, getting a big job is
next one month. scheduled in the late evening hours, when most employees feel comfortable in that set up?” asks good. Getting it before you are ready
Quick service restaurant chain McDonald’s, for instance, has wrap up work. But in sectors like IT, BPOs and banking, where Ratnesh Bhargava. He stresses the for it may be disastrous. Years of
the option of flexi-timing for its football-crazy employees. A Mc- employees keep long hours or work round-the-clock, the fun need for a cultural resonance. painstakingly built personal equity
Donald’s spokesperson said: “If any employee shows keen inter- quotient is limited. Richard Pereira has a different can be washed down the drain by one
est in following the game, managers are quite open to them “We are trying to wrap up work early and head home so we view. “For me, salary is equally im- wrong step. To me, this aspect is the
changing around their shifts.” can catch the matches. Our organisation does not beam anything portant. You need to put food on the most important one to consider as you
US-based KPO, Acclaris has decorated its delivery centres in other than news channels on TV,” says a football buff who is an table, pay the bills and have a little move from one job to the other.
Kolkata and Vizag with flags and jerseys, set up big screens in the employee of a foreign bank. Another young employee of an In- something left over after meeting Ravi Subramanian
cafeteria and is even allowing its night-shift employees to wear dian bank was slightly more upbeat. “Once banking hours are your living expenses. Will the pay Banker and author of
their favourite jerseys. Employees are eligible to take small breaks over, we are free to tune into the matches. The saving grace is package I am being offered allow me ‘Devil in Pinstripes’
between work to view the matches. There is no point in sup- that the matches are held after the customers have left.” GEETANJALI

Enr r for 1nUi
CAIRN ENERGY INDIA PTY LIMITED
(incorpor ated in New South Wales ,Austra lia — ACN 002 066 784)
GLOBA L EXPRESSION OF INTEREST !PRE
QUALIFICATION FOR BLASTING AND PAINTING
OF OFFSHORE PLATFORM: BLOCK RAWA
Cairn Energy India Pty Ltd. (“CElL”) is the Operator of the Offshore
Rawa block located in the east coast of India . CElL is planning to
engage an experienced Contractor for blasting and painting of
offshore platlorms located in the Ravva Field.
For further details of this Tender please refer to
http://www.cairnindia .com
Bharat Heavy
THE FERTILISERS AND CHEMICALS TRAVANCORE LTD
Corporate Materials , PD Admn .Bui lding,
Electri cals Limited
UNIT : T IRUCHIRAPPALLI
Udyog amandal , Kochi- 683 501 (Kerala)
Ph: 0091 484 2552267/2552641/ 254656712552233
MOBILE CRANES REQUIRED ON HIRE
-
Fax: 0091 484 2545196 Tender Notice No. M&S: 01/2010-11
E-mail - remesanb@factltd.com ,sisupalank®factltd.com BHEL requires Hydraulic Mobile Cranes on hire basis for
TENDER FOR PRE-QUALIFICATION CUM SUPPLY OF MULTILAYER SAGS erection of new 8000 Ton Press at AHEL, Tiruchirappalli. Scope
FACT purchases around 21 lakhs 25kg. capacity multilayer bags of work , conditions for the contract and qualifying criteria for the
for packing Caprolactam per annum. Interested vendors mayvisit contractors may be obtained from BHEL’s website
our website at i http:Ilwww.bhel.corn (Tender Notifications page) or from the
l p://www.fact.co.in for the tender—cum- Govt. Tenders website http:l/tenders.gov.in (Public Sector
prequalification documents.
Units > Bharat Heavy Electricals LimIted page) against the Ref .
Last date and time for receipt of bids is 08-07-2010/11.00 am 1ST No. indicated below:
Chief Manager [Materials]-RM Work Description Website Ref. No.
Hiring of 2 Nos of Hydraulically operated 350 Ton capacity
NIT 8347
Tyre mounted Mobile Cranes; EMD: Rs 2 lakh
Last date for receipt of filled-in tenders 02.07.2010, 14.00 hrs.
Date of opening of Qualification Bid 02.07.2010, 14.30 hrs.
Senior Manager!Planning!M&S , Bldg. 2&4, BHEL , Tiruchirappalli-620014
Ph: (0431) 2575532; Fax: 2521416; email: sraj@bheltry.co.in

GLOBAL EXPRESSION OF INTEREST (EOI) FOR PROCUREMENT OF CHEMICAL

INJECTION SKIDS AT MANGALA: BLOCK RJ-ON-90/1 - MUMBAI RAILWAY VIKAS CORPORATION LTD.
Cairn Energy India Pty Ltd . (‘CElL’) is the Operator on behalf of Joint Venture partners CElL, MUMBAI URBAN TRANSPORT PROJECT
Cairn Energy Hydrocarbons Limited and Oil and Natural Gas Corporation, of the Contract Area CORRIGENDUM NO.5
RJ-ON-90/1 in the state of Rajasthan. The RJ-ON-90/ 1 Block contains a number of major oil
Design , Supply, Erection , Testing & Commissioning of 110 KV/25
discoveries, including the Mangala field, the largest onshore oil discovery in India since 1 985. The
Mangala field development consists of well pad facilities and processing hub named Mangala Processing KY AC s i ngl e Phase 50 HZ, 30 MVA , Traction Substations and Feeding
Terminal (MPT) which is currently under implementation. posts at Chinchpok li & Sion and 5 Switching Posts on Thane-CSTM
CElL on behalf of its joint venture partners invites reputed Indian and International Suppliers/ Section on Mumbai Division of Central Railway at Mumbai , India.
Manufacturers to express their interest, for Supply of complete Chemical Injection Skid package (IFS No. MRVC I ELECT IAC TSS 116)
for its existing Mangala Process Terminal (MPT) as described below, Extension of date for the Bid openin g
1.The date of bid opening which was fixed on 18.06.2010 at 1530 hours
Package Package Sub item Doscri ption * Tent ative of the above work is postponed and now will be held on 27.08.2010.
Ref. No. Name Qty____ 2. The last date for sale of bid document, last date of bid submission and

Real Estate
439C1 -MPX- Chemical Chemical Injection Skids package completely designed, 7 nos date of bid opening will be as under:
CN-RFQ-0001 Injection Fabricated, assem bled, coated and tested to be fully Last date and time for sale of bid documents : 26.08.2010 1700 hours
System functional and operable as shown on the attachment Last date and time of bid submission : 27.08.20101500 hours
specifications and datasheets Date and time of Bid opening : 27.08.20101530 hours

Regional Value * The Scope of supply for complete skid shall incorporate but not limited to supply of storage tanks,
pumps, electric motors, dampners, calibration pots, pressure transmitters, level gauges, pressure
relief valves, other valves, strainers, piping, flanges and fittings, fasteners, skids and skid panes ,
Naresh Chandra , Director (Technical)
Mumbai Railway Vikas Corporation Ltd .
2 d floor, Churchgate Stn. Bldg., Churchgate, Mumbai-400020, INDIA

Analysis Reports
flame arrestor, motor canopy, and all other electrical and instrument items / assemblies etc. Tel. 91-22-22036174, 22032826 Fax :91-22-22096972,
Specific Qualification Criteria:- E-mail: dt@mrvc.gov.in, ceemrvc@gmail.com
• Executed at least two (2) similar jobs of value USD 1.5 million or more. Website: www.mrvc.indianrail.gov.in
• Average annual turnover for last two (2) years should be US$ 2 Million or more.
(Vol 2, Issue-I ,Jan-Mar 2010) Companies are requested , as a minimum , to submit following documents and details: NMDC LIMITED, HYDERABAD
I. Letter of interest with detailed com pany information as follows:
• State the name of the parent Company ,
• Organization structure.
* (A Government of India Enterprise)
NOTIC E INVITING TENDER
ADVERTISEMENT No. 01/51/ 069B/ Pkg 5D Dated 14.06.2010
• Manpower spread across India and world. NMDC LIMITED (NMDC) proposes to develop Bailadila Iron Ore Deposit 116 for a ROM capacity
Explore the changing The reports capture value • Operation strategy. of 7 MTPA to produce calibrated Lump Ore and fines at Kirandul Dist., Dantewada , Chhattisgarh.
• Monitoring and control mechanisms. MECON Limited (Consultants to the project) on behalf of NMDC invites sealed Tenders, on lump-
market trends across cities trends across the 3 regions -
• Details of Softwares used for design verification I validation.
sum turn-key basis, under the three bid system from experienced , reputed and competent
contractors I firms for the following package
in different regions post West India, North India and • Details of technical Collaboration, if any.
2. Company’s financial performance documents i.e. Audited Balance Sheets, Profit and
Package.50: Supply and Erection of Cranes— Estimated cost — Rs. 2.45 Crores
This scope of this lender includes Design , Engineering, Supply, Erection , Testing and
the economic slowdown South India Loss Account & Cash Commissioning of EOT Cranes complete with long travel rails and all electrics.
• Flow Statement for the last 3 years & following det ails separately: Completion time: 10 months inclusive of monsoon period.
• Company Turnover based on last 3 audited/Financial statement Earnest Money Deposit — Rs. 2.45 Lakhs.
• Company’s Net Worth based on last 3 audited/Financial statement Pre-qualification criteria is available on website www.meconlinated.co.in.
• Return on Equity based on last 3 audited/Financial statement Non-transferable Tender documents with relevant details (including the pre-qualification criteria)
• Working Capital based on last 3 audited/Financial statement can be purchased on payment of non-refundable fee of Rs.2,5001-, in the form of Demand Draft
Avail 50% discount on all previous issues • State the banker’s name , address and Solvency certificate from the bank indicating the credibility drawn in favour of MECON LIMITED , payable at Bangalore between 14.06.2010 and 19.07.2010
limit in financial terms. during office hours at the following address:
3. Experience: Assistant General Manager (Contracts) ,
MECON LIMITED, Tel. No. 080 2625 2000
• List of similar projects in oil & gas field / processing successfully executed with det ailed facility in
No . 89, South
End Road, Fax No. 080 - 26578352

rnag icbricks corn

.
— India ’s No. I Property Site
To buy log on to www .brixresearch .com
or mail your queries to info@br ixresearch .com
or call Ayesha at 09717095249 (10am
the last five years in India with completion Certificate and those of currently under execution.
Basavanagudi, BANGALORE: 560 004 email:contractsblr@meconlimited .ce.in
• Detail of current and projected commitment Alternatively, the tender document nay be downloaded from our Websit e
CElL requests interested bidders to submit their Expression of Interest for the any I all of the www.meconlimited.co.in. NMDC/ MECON shall not be responsible for any delay! difficulty!
— above packages , clearl y s peci fying the package reference no. along with pre-qualification
documents to the below address within ten (10) days of the publication of this EOl.
inaccessibi lity of the downloading facility for any reason whatsoever. No time extension shall be
granted for inability to download the Tender Document during the sale period. Normally, the
downloading facility shall be available dudng the period of sale of Tender.
Director - P&SCM Queries , if any, on the Tender Document shall be sent to MECON Limited before 05.07.2010. No
Cairn Energy India Pty Limited queries shall be entertained after the cut oft date of 05.01.2010.
2nd Floor, Tower A, Paras Twin Tower, Sector Road , Sector 54, The tenders with necessary documents (along with tender fee if tender document is downloaded
- 6pm) Gurgaon - 122 002 (Haryana), India from website) in support thereof shall reach the above address before 15.00 hours on 20.07.2010.
Tel.: 009 1-124-476 4000 Fax: 009 1- 124-476 4568 For MECON LIMITED ,
Email: pscmmba@cairnindia.com AGM (Contracts)
THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010 *
UK may ‘share’ $3-b IT jobs with India ‘We plan to recruit more to
Govt To Move Jobs By Establishing Shared Service Centres To Avoid Offshoring Backlash
Pankaj Mishra
BANGALORE
U K’S government departments
struggling to cope with fiscal
deficit and seeking to cut costs
without having to send jobs overseas, are
set to flesh out shared service centres,
which means new business for top back
office and outsourcing firms.
The new political leadership with Con-
servative David Cameron at the helm has
to deal with high unemployment rate of
around 8% by creating more local jobs
and, at the same time, cut government
spending by almost $9 billion this year.
While outsourcing and offshoring of non-
core back-office activities can help the gov-
ernment achieve this goal, some officials
and experts say, the government is more
inclined to establish shared service centres
in order to avoid any mass-offshoring fears.
“The current government’s focus on
giving greater autonomy to agencies is
likely to mean that we see a range of pub-
lic sector bodies within a local area work-
ing together towards common goals of re-
DoT to select security
audit firm to certify
imported tele gear
PTI
NEW DELHI
FIFTEEN companies, including British Telecom,
have been shortlisted by the government to select
a telecom vendor which will certify equipments
imported by various mobile companies into the
country, especially from China. Official sources
said the Department of Telecom has been asked to
pick up the international security audit firm which
will certify the imported equipments.
The move comes as a breather for vendors espe-
cially from China like Huawei and ZTE, as well as In-
dian telecom companies like Reliance Communica-
tions and Tata Teleservices that are looking for cost-
effective telecom gear to expand their networks.
Under a proposal, Government has allowed
telecom companies to import the equipment from
foreign suppliers only after an International Certi-
fication Agency visits the plant of the vendor and
gives a security clearance.
‘ I
‘ ‘
I Man
Regd. Office
Regd. Office :: 504,
504 , Trividh
Trividh Chambers
Chambers , Opp.
E-mail :: sumeetindus
E-mail sumeetindus ::yahoo.
lTS FOR THE YEAR E N D E D MARCH ,, 2010
AUDITED FINANCIAL RESU
RESULTS
SuccessfUll
f y—
If] iii iii Mu Iit[!II
Commissionin g 01
U 1A
® 48 300 TPA
1. (a)NetSaIesIIncomefi mOperations
(b)OtherOperabng Income
POY / FDY Pla it 2. Expenditure:
,,
TotalIncome
L1
® 100 000 TPA
j b.C umptionofrawmateiials
CR Plant
DIVIDEND
ll I
-1 I
“I I
IRECOMMENDED
1 A 1 1
‘II I
10%
I 8. Exceptionalitems
‘C
_______________________
—
Turn Over
Zooms By
131%
Y-o-Y
Net Profit
Increased By
rd184% 1
I 1
Y-o-Y
E.P.S.
Increased By
I1Y85%
• •
-o-Y I
EMERGING BUSINESS & IT 9
ment departments have to seek spending
expand IPTV ops in India’
CALIFORNIA-based UTStarocom is betting big on the India is a very important market for us besides China
TECH SAVVY cuts. If they can absorb some of the civil broadband and IPTV potential that India offers and is and Japan. India accounts for nearly 50% of our glob-
servants impacted by the cuts, the propo- confident of maintaining its leadership in providing tele- al revenues. I see it growing or at least sustaining the
Move to help UK’s govt dept,
struggling to cope with fiscal
deficit, to cut costs without
having to send jobs overseas
sition becomes more inviting to govern-
ment ministers,” Mr McDowall added.
Initially, non-core functions, including
anything that’s based on common off-
the-shelf software, email and office appli-
com gear in these segments. Foreseeing a strong business
case, the company plans to start local manufacturing here
to serve the Indian market, which accounts for nearly
50% of its global revenues. UTStarcom CEO, Peter
Blackmore shares the company’s plans with ET’s
current levels in the coming years. We have already
established an R&D centre in Gurgaon for broadband.
We plan to escalate it and recruit more people for IPTV.
We are also looking at local manufacturing in India. It
will cater to the Indian market alone.
Initially, non-core functions like cations could be brought under a shared Durba Ghosh. Excerpts.
email and office applications service centre that can support multiple The Indian government has raised security
may be brought under the shared government departments. “Among local How do you perceive the Indian market with concerns against Chinese vendors operating
service centre plan authorities this can include processes such regard to broadband and IPTV? in India and UTStarcom has its operations
as revenue and benefit, payroll and HR Broadband and IPTV are the two main focus areas headquarters at Beijing, China. Does the gov-
Outsourcing and back office firms functions,” the Ovum analysts added. for us in India. There is huge opportunity here due ernment’s reluctance have anything to do with
such as EXL Services, TCS and Already, departments including HMRC, to lower penetration for these platforms. The gov- your plans to manufacture locally?
others to gain most from move Department of Work and Pensions and Na- ernment has spoken about significant expansion The government’s concerns should be respected, but
tional Health Services (NHS) have piloted in broadband and that ensures a lot of business for that has nothing to do with our manufacturing plans.
this concept in some form. Local authorities us. We already have a 30% mar- Having a local manufacturing
duced costs and economies of scale,” said “I suggest this is one of the routes they such as Liverpool and Birmingham City ket share in broadband. India unit will definitely help. It also
Jessica Hawkins and Ian Brown, analysts will have to evaluate to meet imposed tar- Council have also started this journey. has just close to 9 million broad- reduces import costs. Customi-
at UK-based research firm Ovum. get spending reductions, however reluc- Several UK government departments band users and lags far behind sation for local consumers in
For India’s outsourcing and back office tant they may be to look at giving their have already started sending IT jobs overseas other countries. Like the mobile India is a very important software is already being done.
firms including EXL Services, Tata Con- processes to third parties,” said Bob Mc- in order to lower their cost of operations and revolution, India can have 100 market for us besides China
sultancy Services (TCS) and others, Dowall, research director at TowerGroup. cope with unavailability of skills locally. The million within next five years. India recently concluded 3G
shared service centre opportunity could “They (the BPO vendors) should be UK’s tax authority, HM Revenue & Cus- and Japan. It accounts for and BWA auctions. what
be worth $2-$3 billion over next few preparing to approach government de- toms, is beginning an offshore outsourcing IPTV service has been in India nearly 50% of our global kind of opportunity do you
years, experts tracking the sector said. partments over Q3 this year as govern- pilot in India with Capgemini. for over two years now but revenues. I see it growing or see in that space?
has failed to take off com- Yes, apart from broadband and
pared with DTH. What kind at least sustaining the current IPTV, network transportation is
Elder arm to enter oral, skin care biz of market do you see for IPTV
in India?
IPTV is still a new technology and
levels in coming years
PETER BLACKMORE
another of our focus areas. Op-
erators will now update their
network. We are strong in pack-
Writankar Mukherjee
KOLKATA
“After growing our distribution net-
work, we are now looking at a bal-
The skin care market in India is esti-
mated to be Rs 4,000 crore, while the
every technology takes time to be
adopted. In the case of telecom,
C E O , U T S TA R C O M et transport network (PTN). We
are talking to all the operators
anced portfolio of own and licensed
ELDER Healthcare, the FMCG arm of products,” said Elder Healthcare MD
oral care segment is worth around Rs
2,500 crore.
growth has come in the past one year or so. Initially, regarding that. The mobile operators would want to
the wealthy part of the society will move to IPTV and migrate to higher networks. We are targeting to lower
Mumbai-based Rs 800-crore pharma Anuuj Saxena. At present, Elder’s largest selling this process has already begun. The technology has a the cost of network ownership for the operators and
major Elder Group, popular for brands “We expect around 50% of our FMCG brand is Tiger Balm which huge potential because it is user friendly and very in- enable them to offer new services and newer applica-
like Shelcal, is soon going to expand into revenue will come from own brands alone, has revenue of Rs 30 crore. teractive. Once the infrastructure for IPTV is estab- tions. The benefits for the operators are significant.
the oral and skin care segment with in three years. These products will The product is exclusively licensed to lished, it will see a far greater adoption. The basic USP
their own brands. The com- be rolled out in phases Elder by its owner Haw Par of Singa- of the technology is that a lot of interesting applica- UTStarcom recently went through restructur-
pany plans to extend its from the fourth quarter of pore. Other key licensed products in- tions and services can be offered through the medium ing, sold out few units and reduced head-
AMPM mouthwash brand in this fiscal year,” he said. clude Shahnaz Hussain’s Fairone of television. Currently, India has about a lakh users. count. Do we see more such activities from
the oral segment and is devel- At present, Elder Fairness Cream, VLCC’s Fuel for China and Japan, too, have a modest user base. The the company?
oping a range of products for Healthcare’s sole own Men deodorant, Australia-based Rye next two-three years will be crucial for its growth. The We have worked hard and reformed the company.
the skincare segment to be brand AMPM mouthwash Pharma’s Burn Aid anti-burn gel, challenge is to grow the market. The restructuring process is now complete. We
rolled under a new brand. contributes a meagre 4% US-based Blistex’s lip care product have identified our key markets and focus areas,
This is the first time Elder to its turnover. It plans to and US-based Combe’s Just for Men Where does India stand in UTStarcom’s which are optical broadband and IPTV. We now
Healthcare will roll out its extend the brand into hair colour. These brands enjoy mar- global scheme of things? What are plans for have a strong balance sheet.
own brands, as till now, the company’s toothbrush, toothpaste and teeth ket share ranging between 3% to the market? durba.ghosh@timesgroup.com
main thrust area has been on market- whitener. In the skincare segment, 20% in their respective segments.
ing and distributing brands of other Elder Healthcare plans to launch 14 Elder Healthcare also plans to
companies under exclusive licensing SKUs in areas like moisturiser, sun grow its present distribution network
Biotechnology
arrangement. With this, the company screen, anti-ageing and under-eye of about three lakh outlets by adding
expects to grow its revenue upwards of gel. The company has given the man- another five lakh outlets, primarily
4M3
Industry Partnership
60% to achieve a turnover of Rs 300 date for these product developments in the semi-urban and rural markets.
crore by FY13. to an Italian firm. writankar.mukherjee@timesgroup.com
Programme (BIPP)
INDUSTRIES LIMITED (An Advanced Technology Scheme)
/
1
A liirers & Exporters
ufactu
Hit
_ _
iIJ
lt
i I
[CALL FOR PROPOSALS]
Opp . Fire
Fire Station
Station, Ring
Ring Road
Road, Surat
Surat 395 002.
002 . India.
India. -
(15th June 2010 31st July 2010) -
at :: www.sumeetindustries.com
com,, Visit us at
yahoo.com www.sumeetindustries.com
Department of Biotechnology (DBT) inv ites proposals fro m Indian Biotechnology
under the Biotechnology Industry Partnership Programme (BIPP), a
Companies
Government partnership with industry for support on a cost sharing basis for development
( R U P E E S IN LACS) of novel and high risk futuristic technologies mainly for viability gap funding and
Year Ended Previous
_ _
On
_ _ _ _
Year Ended On
_ _ _
enhancing existing R&D capacities. BIPP has been initiated under Biotechnology
Industry Research Assistance Programme (BIRAP), a unique initiative of DBT being
PARTICULARS 31.03.2010 31.03.2009
Audited Audited
implemented in partnership withABLE and BCILto nurture R&D and innovation in Biotech
Industry. Biotech Consortium India Limited (BCIL) is the BIPP Management Agency and
36382.25 15778.68 will ensure maintenance of strict confidentiality of the proposals as per DBT norms.
1221.85 69.03
37604.10 15847.71
_ _ _ _ _ _ _ _ _ _ _
* Supports:
a. Increase/decrease in stock in trade and work in piogress -878.90 -824.23 Larg e ,medium, small scale companies; start-ups on costsharing basis
3297129 10076.07
-
High risk ,discovery linked innovation
-
c.Purchaseoftradedgoods 3011.22
iitI
- - Accelerated technology development
d. Employeescost 267.18 108.38 - Evaluation and validation of biotech products
e. Depreciation 643.20 325.86 - Indigenous discovery, innovation and technology to products
f.Otherexpend iture 2218.55 2006.45 Products of national relevance or public benefit
:1
-
9. Total 35221.32 14703.75 * Varying models of grants , loans or grant + loan available .
3. ProfitfrornOperationsbefOre Other Income,Interestand Exceptional Items(1-2) 2382.78 1143.96
4. Otherlncome
5. Proflt beforelnterestandExceptionalltems (3+4)
6. Interest
74.13 -21.31
2456.91 1122.65
_ _ _ _ _ _ _ _ _ _ _ _ _ _
778.84 487.58 A single or consortia of Indian “for profit” company (les) - Small , Medium or Large
7. ProfitalterInterest but before Exceptional Items(5-6)
___________________
1678.07 635.07
having DSIR* recognized in-house R&D unit(s). An Indian Company is defined as
one in which more than 51% of the ownership is h&d by Indian citizens (including
0.00 -1.82 NRIs).
9. Profit (+)/Loss(-)fr ornOdina ryAcdvibesbeloretax(7+8) 1678.07 633.25 The proposals can be submitted:
10. Taxexpense 593.21 251.69 solely byan Indian Company; or
1;W. ;I
[I: !I1 381.56
-
11. NetProfit( I)ILoss (-)fromOrdin aryActivitiesaftertax(9-10) 1084.86
jointly by an Indian Company arid National R&D Organizations or Institutions; or
12. ExtraoidinaryItems 0.00 ‘x i
0.00
-
xi
by a group of Indian Companies along with National Research Organizations
13. NetPrefit (+)ILoss(-)brthe pedod(11-12) 1084.86 381.58
-
etc.
14. Paid-upequit n harecapital aceValue of Rs. 101-per Share) 3999.52 3999.52
I: :
(*The companies who are in the process of obtaining DSIR recognition may also
15. Reserves
v ’ exduding RevaluationReserves asper balance sheetof previous 2805.20 2191.72
j: apply along with the proof of application to DS!R. However, the final decision on such
1acoountingyear
I!
_____________
applications would be subjectto their getting DSIR recognition.)
16. Earnings PerShare(EPS) :
a)Basicandc IutedEPSbefore Extraordinaty itemsforthe period,fortheyeartodate 2.71 0.95
andfor thep reviousyear(notto beannuaIizec
b)Baalcand IutedEPSafterExtraordinary ftemsfor theperiod,fo rthey earbdate 2.71 0.95
Proposals are required to be submitted online only. To submit a proposal online ,
followthe following steps:
please
andforthepreviousyear(nottobeannualized)
1. Log on the BIRAPwebsite (www.birapdbt.nicin)
17. PubIicSharelioId ig:
2. If you are a registered user , log-on using the credentials, else you need to register
-No.oIshares 14952999 15352024
yourcompany with by clicking on New User Registration .
-Percentageofsha reholding 37.39 38.38
18. Promoters and PiomoterGioupShareholding : 3. In case of new user registration, a computer generated password would be sent to
‘I I • • •
— •
the email-id provided at the time of registration. The password can be changed later.
: :1
a) Pledged/Encumbered
j
-Numberofshares 0 0 4. Once you login, you would be navigated to the page displaying BIPP link.
-Peiventageof shams (asa% oflhethl arehoIdingofpromoterandpiomoter ’oup) 0.00 0.00 5. Click on the BIPP link under Programmes and the active call would be highlighted.
-Pa ageof shares (asa%oflhetctal sharecapitaloftheCompany)
b)Non-encumbered
0.00 0.00 _____ 6.
7.
Click on the new call and proceed towards proposal submission.
Further details on How to submit a proposal would be available in the BIPP User
-NumberofShares 25042161 24643136 Guide available on the website.
-Pe.ter geofshams (asa%oftheto aIsharehddingofpmmoterandpmmotergn up) 100.00 100.00 8. The proposals should be submitted on or before 3lstJuly, 2010.
-Pa ageof shares (asa%ofth talsharecapitaloftheCompany) 62.61 61.62
Company User Registration is open round the clock. Online Proposal
NOTES :- Submission would begin from 15th June , 2010. No Hard Copy to be
1. The above results have been taken on record atthe meeting of the Board of Directors oithe Company held on 09th
June , 2010. submitted , Proposals submitted online only would be considered.
2. During the year Company has commissioned C.P. Plant (Continuous Polymerizaton Plant) of 1,00,000 TPA For details contact
capacity and POY! FDY Plant of 48300 TPA capacity and also 6MW Gas based Genset Captive Power Plant Dr. Renu Swarup, Advisor Incharge BIPP, Department of Biotechnology,
successfull y. Block No: 2 , 7th Floor, CGO Complex , Lodi F oad , New Delhi 110003 , India
3. The Company has recommended 10% Dividend fortheyear, subject to approval oftheAGM .
-
Email: swarup@dbt.nic.in
4. As perAccounting Standard 17 , the requirement of Segment reporting is not applicable to the Company both in
respect of Geographical Segment and Product Segment.
end of the year.
-
t-
5. 36 complaints were received and resolved during
-. . - . -.. the
- year.
- There was nil balance of complaint at the beginning and
Last date for submission of Proposals
6. Figures of previous year have been re-grouped wherever necessary.
For SII1I1iiI!I INDUSTRIES
t LIMITED
PLACE : SURAT Shankarlal Somani Detailed guidelines for the scheme including eligible project categories to be
DATE :: 09/06/20
09/06/2010
10 Chairman supported are available at http://dbtindia nicin/uniquepage asp?id_pk=680;
http ://www birapdbtnicJn/programmes php
GROW INC CONSISTENTIX : MUITIPIYINC PRUFITABIIJTV A
10 INTERNATIONAL * THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010

SAFE BET: IT’S ANOTHER GOLD RUSH AS STOCKS, CURRENCIES LOSE LUSTRE
Chinese tell US
Old Refuge Regains Glitter ‘baby kissers’ to
lay off yuan issue
Amidst Global Uncertainty
Nelson D Schwartz a vault as the ultimate insurance policy, exchange-
Reuters
BEIJING

US LAWMAKERS risk “poisoning

NEW YORK traded funds, or ETFs, that hold gold have exploded the atmosphere” with China
in popularity in recent years. Gold ETFs, which through proposed laws aimed at the

I T IS the resurgent passion of the doomsday

crowd, a bet that everything will go wrong. No
matter what has you worried, they say, the an-
swer is gold. Inflation, deflation, government bor-
rowing or the plunging euro — you name it — the
spectre of these concerns has set off a dash to gold,
driving the precious metal to new highs and illus-
trating how fears of economic turmoil have moved
from the fringe to the mainstream.
And gold bugs, often dismissed as crackpots who
hoard gold bars in the basement, are finally having
their day. “I just think you’re in a world where a lot
of chickens are coming home to roost,” said John
Hathaway, manager of the Tocqueville Gold fund.
“Gold is an escape hatch.”
The most visible new gold enthusiasts range fr-
om the Fox News commentator Glenn Beck on the
right to the financier George Soros on the left, with
even some sober-minded Wall Street types develo-
ping a case of gold fever. While their language may
differ, they share a fundamental view that the age-
old refuge of gold is relevant again, especially as oth-
er assets like stocks and national currencies show
signs of weakness.
Now, individual investors are following their ex-
ample around the world. The US Mint is running
short of gold coins, and the South African mint in-
creased Krugerrand production by 50% late last
month, to its highest level in 25 years, on brisk Eu-
ropean demand.
The debt crisis in Europe and the ensuing drop in
the value of the euro are the most recent catalysts for
gold’s spike last week to $1,254 an ounce, a record
before adjusting for inflation, but the deeper concern
is that even in the United States, government bor-
rowing is unsustainable and the day of reckoning is
at hand. Sales of American Eagle one-ounce gold
coins tripled in May from the month before.
If governments print more money to pay off
their debts, the logic goes, inflation will destroy the
value of the dollar, the euro and other paper cur-
rencies — thus enhancing the value of gold. What is
more, with tax increases unlikely and with Europe
on the brink, the unthinkable — a sovereign debt
default or the collapse of the credit system — has
suddenly become thinkable.
To be sure, gold buyers have always been moti-
vated by fear. What has changed is that some of the
most respected investors on Wall Street are now
among the fearful.
Logically speaking
If govts print more money to
pay off debts, the logic goes,
inflation will destroy the value
of the dollar, the euro and
other paper currencies — thus
enhancing the value of gold
With tax rises unlikely and
with Europe on the brink, a
debt default or collapse of the
credit system, has suddenly
become thinkable
IN DEMAND: The precious metal has reached new highs on fears of economic turmoil
“In recent years, we have gone from
one bubble and bailout to the next,”
David Einhorn, a New York money man-
ager who was among the first to foretell
GLOSSY
the failure of Lehman Brothers, said in a
speech last month. “Our gold position re-
EDGE
flects our concern that our fiscal and
monetary policies are not sufficiently geared to-
ward heading off a possible crisis.”
Since ancient times, gold has been deemed in-
trinsically valuable, holding its worth even as gov-
ernments fell and currencies collapsed, while seem-
ingly casting a spell on its owners.
Still, gold can go down — sometimes sharply. Af-
ter peaking in 1980 at more than $800 an ounce,
gold sank over the next two decades, bottoming out
at just over $250 an ounce in 1999. But unlike pa-
per assets that can become worthless, gold always
retains at least some value.
These days, gold is also something of a political
Rorschach test. On conservative talk radio, opposi-
tion to the Obama administration’s economic poli-
cies and warnings that huge budget deficits will set
Tried and tested
off runaway inflation have made gold a
hot topic of on-air discussion — and lured
gold companies as advertisers.
Tongue only half in cheek, Glenn Beck
adviced his audience to consider “Gold,
God and Guns,” while laying out three
possible scenarios for the economy: reces-
sion, depression or collapse.
One major advertiser on Beck’s show is Goldline,
a huge California marketer of gold coins and bars
that is also a sponsor of programs hosted by other
prominent conservative commentators like Laura
Ingraham and Mike Huckabee. Beck has said he
“was a client of Goldline long before they were a
client of mine,” adding: “I personally don’t buy gold
as an investment. I buy it for protection.”
Of course, the right hardly has a monopoly on
gold. Soros, a prominent donor to liberal causes and
candidates, holds more than $600 million in bullion
and gold mining shares.
Even as worries about the global economy have
intensified, gold has become easier to buy.
Although some people still regard bars of gold in
Since ancient times, gold has
been deemed intrinsically
valuable, holding its worth
even as governments fell
and currencies collapsed,
while seemingly casting a
spell on its owners
Unlike paper assets that
can become worthless,
gold always retains at least
some value
trade like stocks but track the price of physical gold,
account for 1,856 tons of gold, up from less than
500 tons in 2005, according to Credit Suisse.
Besides luring individual investors, these funds
have also made gold more appealing to hedge
funds and other institutions, allowing them to
own vast amounts of gold without the burden of
having to store it.
John A Paulson, a top New York hedge fund
manager who earned billions betting against sub-
prime mortgages, holds $3 billion worth of gold
ETFs, making gold the largest single position in his
$35 billion portfolio.
Daniel J Arbess, who manages more than $2 bil-
lion in Perella Weinberg’s Xerion fund, is another
new gold lover. A few years ago, he said, he would
not have taken a second look at gold as an invest-
ment. But now Arbess, a Harvard Law graduate
and a generally conservative investor, is very seri-
ous about gold.
Spiralling deficits in the United States, Japan and
Britain are unsustainable, he said, and could even-
tually hurt confidence in what are called “fiat cur-
rencies” — paper money not backed by gold, in-
cluding the United States dollar.
“Indebted countries may soon be forced to
choose among three politically difficult alternatives:
sharp cuts in expenditures, debt default or printing
money to pay off debt,” he said, with the last option
the most likely outcome. Gold, he said, is a logical
hedge against this risk, because firing up the print-
ing presses ignites inflation.
True believers note that gold has risen in each
of the last nine years, and that while the Stan-
dard & Poor’s 500-stock index is down 13%
since 2001, gold is now worth nearly five times
what it was then.
For all its newfound respectability, gold still
manages to bring out the inner survivalist in its ad-
herents. Gold bugs like Peter Schiff of the invest-
ment firm Euro Pacific Capital in Westport, envi-
sion a black market arising in the United States,
with merchants refusing paper money and insist-
ing on gold instead, while Hathaway, the gold
fund manager, says the credit system has entered
“the end game.”
“People probably still think I’m nuts,” Hathaway
said. “But I’m not talking to myself in an isolation
chamber anymore. We’ve got company now.”
(New York Times News Service)
Favoured position
ETFs, that hold gold have
risen in popularity in recent
years. Gold ETFs, which trade
like stocks but track the price
of physical gold, account for
1,856 tonne of gold
These funds have made gold
appealing to hedge funds,
allowing them to own vast
amounts without the burden
of having to store it
yuan currency, China’s official
news agency said on Sunday, call-
ing Congress members ‘baby kiss-
ing’ incompetents.
The commentary from the state-
run Xinhua news agency was Beijing’s
latest jab at members of the US Con-
gress demanding legislation tackling
what they say is China’s policy of
CHEQUE POINT
keeping its yuan currency artificially
low against the dollar. blamed on the yuan. It said the US
One of the most vocal backers of lawmakers were trying to divert
such action, Senator Charles public attention from “much more
Schumer, a Democrat, said this week serious domestic economic prob-
that he and other colleagues want a lems, which are caused in part by
vote in the next two weeks on legis- their incompetence.”
lation to allow the use of anti-dump- Chinese government leaders have
ing and countervailing duty laws not used such strong words in op-
against China or any other country posing the proposed US legislation.
deemed to have a fundamentally But the commentary gave some hint
misaligned exchange rate. of the acrimony that could erupt be-
Late last month, China and the tween the world’s biggest and third
United States avoided open con- biggest economies if bills targeting
tention over the yuan at high-level the yuan exchange rate move closer
talks held in Beijing. The Xinhua com- to becoming law.
mentary was not so polite. With many US lawmakers facing
“When they are manipulating the re-election in November and unem-
yuan debate, these American politi- ployment hovering just below 10%,
cians may make some short-term political pressure is building on Presi-
political gains, but they put the
long-term Sino-US bilateral rela-
dent Barack Obama’s administration
to push China to break the yuan’s
tions in jeopardy,” said the English-
language commentary.
nearly two-year-old peg to the dollar.
US treasury secretary Timothy Gei-
“These Congressmen claim they thner said on Thursday the yuan was
are the white knights defending the an impediment to global rebalancing,
interests of the American people, but indicating that US patience with Chi-
in fact, they are nothing more than a na’s currency policy was wearing thin.
bunch of baby-kissing politicians try- After partly freeing its currency to
ing to swing voters by manipulating rise gradually from mid-2005 to mid-
the yuan debate.” 2008, China repegged the yuan to the
The commentary repeated Bei- dollar at a rate that US lawmakers and
jing’s stance that the United States’ some economists say is as much as
trade deficit with China could not be 40% below the appropriate value.
South Korea unveils currency controls
SEOUL: South Korea announced on Sunday long-anticipated currency
controls, saying it aimed to curb rapid shifts in capital flows that were
linked to short-term foreign debt and posed a risk to the world’s ninth-
biggest exporter. The authorities, alarmed by the won’s sharp swings
during recent market turbulence caused by Europe’s debt problems,
have been priming investors for weeks for action aimed at stabilising
its currency and cooling overseas borrowing. The well-flagged new
restrictions slap limits on banks’ and other financial institutions’ cur-
rency forwards, cross-currency swaps as well as non-deliverable cur-
rency forwards. “These measures are aimed at reducing the volatility
in capital flows that poses a systemic risk in the country,” South
Korea’s finance ministry, two financial regulators and the central bank
said in a joint statement.
The new rules will cap domestic banks’ and non-bank financial institu-
tions’ currency forwards and derivatives at 50% of their equity capital.
The cap for foreign bank branches was set at 250% of equity to account
for their lower capital, which on average is just 1/30 of that held by
domestic banks. — Reuters

UBS has already

given details of 500 Obama wants BP to form
a/cs to US: Paper
Reuters
ZURICH
escrow fund for oil claims
SWISS authorities have al-
ready handed over 500 ac-
counts of UBS clients to the
United States under an agree-
ment to end a tax dispute that
IIied di has threatened the bank’s ex-
istence, a paper reported on
beyond bound
Sunday.
The Swiss lower house rejected the agreement on
Tuesday, triggering a new parliamentary debate next
week and delaying a final decision on whether to al-
low the government to hand over a total of 4,450
UBS client accounts to US authorities.
UBS, the world’s second-largest wealth manager,
has already handed the accounts to Swiss tax author-
ities but the domestic political deadlock threatens to
stop Switzerland handing them on to the US by the
August deadline. Missing this deadline could lead to
the US restarting legal action against the bank.
Around 2,900 files had already been prepared
for handover and 1,550 more accounts were still
being processed, Swiss paper Sonntag reported.
“Client dossiers were transferred to the United
States in around 500 of the 2,900 cases,” the paper
cited the Swiss tax office spokesman Thomas
Brueckner as saying. Jeffrey Jones since the well blew out. He will stay US public anger is high as the crisis
These 500 clients had signed waivers allowing BURAS overnight there for the first time during nears two months and news is marked
their accounts to be handed over to the US taxman the crisis and then return to Washington by images of polluted beaches, oil-cov-
voluntarily. Swiss bank secrecy law usual prohibits US PRESIDENT Barack Obama will on Tuesday and address the nation at 8 ered birds and fishermen anxious about
the transfer of account details to foreign authorities. press BP executives this week to set up pm/0000 GMT. their precarious situation. Democrats
UBS, which has asked US clients to sign an escrow account to pay damage “He wants to lay out the steps we’re want Obama to tap that mood to press
waivers voluntarily, declined to comment. The claims by individuals and businesses going to take from here to get through for development of alternative energy
Swiss federal tax office was not immediately avail- hurt by the Gulf of Mexico oil spill disas- this crisis,” Axelrod said. such as solar and wind power.
able for comment. ter. The move comes as Obama, who The New York Times was strongly crit- The United States and Britain played
will address the nation about the spill on ical of Obama’s leadership on the oil down diplomatic tensions over the cri-
Tuesday night, faces ques- spill in an editorial on Sun- sis. British foreign secretary William
tions on his handling of the PAYBACK day. “Americans need to Hague said it was up to the British ener-
REACH YOUR disaster, which has now know that Mr Obama, wh- gy giant, under pressure in the United
dragged on for 55 days. Mil- TIME
TARGET AUDIENCE lions of gallons of oil have Obama plans to
ose coolness can seem like
detachment, is engaged,”
States to suspend its dividend to help
pay for the damage, to decide on its pay-

Adve rtise in
poured into the Gulf since call for an the Times wrote, noting that out to shareholders.
an April 20 offshore rig blast independent panel the spill raised questions A source said on Sunday the compa-
killed 11 workers and blew about Obama’s “compe- ny was unlikely to cancel the dividend,
out the well. to administer tence and leadership.” currently valued at about $10.5 billion
A US official said on Sun- the payments The Obama annually. “We’re considering several
TOI IT & ET IT day that Obama also will call when he meets administration has delayed ideas short of eliminating the dividend,”
Sourcing for an independent panel to chairman Carl-
administer the payments Henric Svanberg
plans to increase offshore
drilling as a result of the
the person said on Sunday.
The options include deferring the div-
when he meets chairman spill. The crisis has put Oba- idend, paying it in shares or paying into
Carl-Henric Svanberg and ma on the defensive and a ring-fenced account until the oil spill li-
For Details & other BP officials at the White House on distracted his team from the domestic abilities become clearer, the source said,
Wednesday. “We want to make sure that agenda — a new energy policy, reform adding that the issue probably would
Advertising enquiries money is escrowed for the legitimate of Wall Street and bolstering a strug- not be decided this week.
claims,” White House adviser David Ax- gling American economy. BP placed a containment cap on its
Email: elrod said, adding that the money would The focus on America’s biggest envi- blown-out seabed well this month af-
eta.mudaliar@timesgroup. be independently administered to en- ronmental disaster comes ahead of No- ter a series of failures to stem the flow
sure it is disbursed in a timely fashion. vember’s congressional elections in but oil continues to gush, polluting
OR On Monday, Obama will make his which the Democrats are expected to beaches and wildlife habitats, killing
Call: 9819490448 fourth trip to the Gulf, visiting Alabama, struggle to keep their majorities in the marine life and damaging tourism and
Mississippi and Florida for the first time House of Representatives and Senate. fishing. — Reuters
 THE ECONOMICTIMES

MUMBAI
ECONOMY, FINANCE & MARKETS BENNETT, COLEMAN & CO LTD www.economictimes.com * MONDAY 14 JUNE 2010

SHORT TAKES

Govt announces bonus Banks told to come clean on lending to airlines

of Rs 500/q for pulses Checks Ordered After IDBI Bank Allegedly Ignored Norms While Lending Rs 900 Cr To Kingfisher LENDING SCARE
NEW DELHI: To woo the pulses farmers to sell
their produce to the procurement agencies,
the government has announced a Rs 5-a kg
incentive to the growers, on top of the
higher support price that it had announced
Dheeraj Tiwari
NEW DELHI

THE finance ministry has directed public sec-

last week. The incentive of Rs 500 per
tor banks to disclose their exposure in airline
of state-owned banks to the aviation sector,”
the official said.
The ministry wants to assess if there have
been any irregularities while sanctioning
loans to airline firms, a bank official said.
complaining about lack of funds that these
companies face. It has also raised the demand
of restructuring the loan of Air India and pare
the interest rates. This exercise will do a reali-
take risk, a company may be facing liquid-
ity crunch but if it has sound operations,
it’s a good bet,” said a senior official of Pun-
jab National Bank.
22k 14k
DEBT ON AIR JET AIR’S
INDIA BOOKS* APPROX DEBT*
ty check ,” the finance ministry official said. As per senior bankers, the total loans giv-

quintal would be given to the farmers
growing tur, urad and moong dals, sold
during the two-month harvest period. The
new sop would cost the Centre an
additional outgo of up to Rs 2,000 crore this
year. “This is likely to result in a subsidy
7k 50k
companies after it was alleged that The bank had already recalled a While the total debt on Air India is over en to aviation companies by public sector
IDBI bank overlooked prudential Rs 750-crore loan advanced to Rs 22,000 crore, Jet Airways has a debt in banks may be around Rs 50,000 crore. “Most
lending norms while sanctioning Rs Kingfisher Airlines after the com- the range of Rs 13,750 crore, Kingfisher of the public sector banks have exposure in
900 crore to Kingfisher group. pany failed to stick to its repay- Airline has a debt of Rs 7,000 crore. As per Air India. This is despite the fact that the KINGFISHER’S PSB LOANS TO
The government has asked all ment schedule. the results posted for the financial year company is making losses. Also, given the LOANS * AVIATION COS*
state-owned banks to submit the de- The finance ministry is con- 2009-10, Jet Airlines has posted operating nature of ownership there is moral persua-

payment of Rs 1,000 crore to Rs 2,000
crore,” an official statement said. Last week,
the Cabinet Committee on Economic
Affairs had announced a sharp increase of
up to Rs 700 a quintal in the minimum
support price of pulses. Prices of pulses are
skyrocketing in the retail market. Moong
dal is selling at over Rs 100 a kg, while arhar
tails including terms of lending
within a week, a finance ministry
official said.
“We’ve asked for total loans sanctioned,
outstanding amount and company-wise de-
tails. We want to know what is the exposure
cerned that financial health of the
aviation companies may translate
into delayed repayments and
hence large number of bad assets or non-
performing assets (NPAs).
“The civil aviation ministry has also been
$2b 750
profits, while Kingfisher reduced its operat- sion to lend to the state-owned carrier,” said
ing losses by half. a chairman of a leading public sector bank.
The banks, however, feel that some As per industry reports, total losses incurred INDIAN AIRLINES RECALLED LOAN
loans going bad doesn’t necessarily mean by Indian airlines in 2008-09 was in the LOSSES IN ’08-09 TO KINGFISHER*
that the whole sector is stressed. “It can range of $2 billion fuelled by excess capacity *Rs cr
happen to any sector. But banks are here to and high fuel prices.

GST looks suddenly doable: Chawla

and urad dals are also not far behind. The
domestic production of pulses stood at
14.77 mt in the 2009-10 crop year as
against the annual demand of 18-19 mt,
resulting in 3.5 mt imports last fiscal.

Pranab to meet bankers,

chief ministers today
PATNA: Breaking away from the practice of
meeting PSU bank chiefs in Delhi, finance
T HE over Rs 1,00,000 crore bonanza from
the 3G and broadband auctions has
dissipated all fiscal concerns for the finance
ministry. A sticky inflation and the dodgy issue
petroleum subsidies seem to be the only concerns.
Inflation is sticky. But it is
states will be fully compensated, there is a
revival of spirit among states.

With the bonanza on account of 3G and

minister Pranab Mukherjee will hold
deliberations with them here on Monday on
the prevailing tight liquidity condition,
financial inclusion and farm credit. Besides
the bank chiefs, the meeting would also be
attended by the chief ministers of all Eastern
and Northeastern states. The meeting
assumes importance as it is being held in the
light of the prevailing tight liquidity situation
in the country. It will discuss the progress of
Centrally-sponsored schemes, state-wise
flow of credit to the agriculture sector,
credit-deposit ratio and loan to weaker
section of society among others.
Canada, India to sign key
pacts during PM’s visit
TORONTO: India and Canada will sign key
agreements covering economic and cultural
spheres and are expected to begin
negotiation on a comprehensive economic
partnership pact during the visit of Prime
Minister Manmohan Singh who will be
here later this month to attend G-20
summit. Singh, who would accompanied
by a high-powered Indian delegation
including deputy chairman of Planning
Commission Montek Singh Ahluwalia,
foreign secretary Nirupama Rao and
national security advisor Shiv Shankar
Menon, would explore new options to
increase bilateral trade and investment with
Canada. Describing June as a significant
month for Indo-Canada bilateral relations,
high commissioner to Ottawa, S M Gavai
said PM will hold a bilateral meeting with
his Canadian counterpart Stephen Harper.
New I-T office in Delhi to
give relief to tax payers
NEW DELHI: Come next year, Delhi’s tax
payers will no longer have to travel long
distances and wait endlessly in serpentine
queues to file their income tax returns. The
Income Tax (I-T) department is moving its
centralised front offices — for tax filing,
receipt of refunds and other services — to
the air conditioned environs of the new
Civic Centre building of MCD near
Connaught Place, which is very close to the
Metro station. “Taxpayers will now be
hosted at the new income tax office for a
slew of services rendered by the department
including tax filing. The centre is very close
to the New Delhi railway station of the
Delhi Metro,” a senior I-T officer said.
BWA auctions there is a view that disin-
Finance secretary Ashok Chawla talked mainly because of supply-side vestment may slacken. The markets are
to ET’s Deepshikha Sikarwar and also volatile so do you see a change in
Vinay Pandey on a wide range of issues such problems. So, interest rate hike the policy. Will we see big ticket sales?
as rupee volatility, impact of Greek crisis and the The disinvestment people are going ham-
new norm that stipulates 25% floating stock for is not going to have an effect mer and tongs. They have some idea of the
listed firms. Excerpts: on inflation. You will only end next few companies, but they may not have
an idea of the entire lot. As these keep com-
IIP numbers have been very good. Will up curbing growth. To raise ing on the table. They are quite confident of
the government revise the growth target? achieving Rs 40,000 crore target.
More than the numbers, we need to see that policy rates just because of
mining and manufacturing are doing very Questions have been raised about
well. They have reasonably good contribu- inflation is not the most the new norm of 25% minimum pub-
tion to GDP as they have 18-20% weight. lic holding…
So that augurs well for GDP as well. Second appropriate policy option. Let me set the record straight. Any time
thing is capital goods growth signals that when you have a major change there will
ASHOK CHAWLA
corporates that had put their investment
plans on hold are now coming back and F I N A N C E S E C R E TA RY
always be huge response to it. Some good,
some bad. Secondly, this is not something
placing orders for machinery for expansion. it we will go to trim the deficit and consol- tainly watching it. pen between debt and equity based on we have done overnight in a kind of knee-
We have indicated in the Economic sur- idate the fiscal position further. But at this where they are getting better returns. Today jerk manner. It has been announced, dis-
vey a growth target of 8.5% plus or minus stage, it is very difficult to say precisely How do you see the Greek crisis im- they are all running for cover to safe instru- cussed at various levels and finally some-
25 basis points. Now I think revising beyond what will be the apportionment of this ex- pacting us? ments for some return. So this is a tempo- thing has come out. But still we are not say-
that is not appropriate at this stage when we tra money that has come in. Because Global situation certainly impacts countries. rary movement and because of that we ing that since the government has gone
are just three months into the year. there is no doubt that there will be new But I think we get a lot of comfort from the don’t need to substantially increase limits through the process so it’s cast in stone. So, if
demands or new needs that we had not coordinated action the G-20 brings to the here. It’s not appropriate also. there are issues which are impacting the
While growth is robust inflation contin- anticipated. So , we’ll have to see what is table to address the issue. So the general corporates, or markets or stakeholders then
ues to remain sticky. Do you see a case to be done about it. Fiscal consolidation sense we have is that the situation will not There still are issues preventing take off we are certainly willing to look at those and
for a sharper interest rate increase? remains a priority and this will certainly be allowed to go out of control with this of corporate bond market. What is the make necessary changes. So we are now
Inflation is sticky. There is no doubt about help in achieving it. group monitoring and taking action. For de- government proposing? awaiting more specific responses or difficul-
it. But it is substantially because of supply- veloping countries some impact will be Recently we had a meeting of the high-level ties from corporates, from the public sector,
side problems. So interest rate hike is not We are almost into the last leg of first there, but it will be marginal. coordination committee on financial mar- private sector.
going to have an effect on inflation. So you quarter but there is no clarity yet on pe- kets only for a discussion on corporate bond
will only end up curbing growth. While troleum subsidy.... G20 discussed the currency volatility in market and what came out was that there Will Sebi decide on a case to case basis
RBI has to look at inflation, it also has to While eGoM will take a decision hopefully in emerging economies. There is a sugges- are certain basic operational issues. There on this issue…
look at various parameters. To raise policy the next month or so on this issue of how to tion to have financial safety nets such are some issues about stamp duty; that’s one No, the guidelines are there so Sebi cannot
rates just because of inflation is not the handle the prices, I don’t think every seg- as regional currency swap agreements. part, which we need to address. We all say decide on a case to case basis. We will see if
most appropriate policy option. ment will be taken care of. That is not the Is India planning to enter into such corporate bond market is not well devel- the government needs to make some
recommendation of the Kirit Parikh com- arrangements? oped. But numbers indicate it is not that amendments or some change that will be
But RBI has been saying that inflation- mittee. There certainly will be under recov- The issue is more relevant to a country market is non-existent. It also points to the made in the notification.
ary expectations are high and food in- eries of the oil companies that shall have to that doesn’t have adequate foreign ex- fact that till today banks have been able to
flation is becoming more genaralised... be met to some extent by the government change reserves. Reserves are the first lev- take care of the needs of corporates. But There is demand from some quarters
We all are worried. We have to do our best in and to some extent by the upstream oil com-
resolving supply side constraints, whether it panies. Now what is the amount and what is
el of buffer. We have the fourth largest re- that’s not to say that corporate bond market
serve in the world. Conceptually there can should not be there. We should have a ro-
on removing the minimum 5% dilution
every year to reach 25%...
is in wheat, rice or pulses, which are sticky the apportionment will be decided as we go be a possibility of regional swaps or multi- bust corporate bond market, which would We could, if that is one of the issues that is a
items. The government has put out open along. But the fact is that we’ll have to pay lateral arrangements through IMF. So give another window to companies for rais- concern. I have said we are willing to look at it.
market measures for wheat and rice. We are something for which we did not budget at these are three levels. So far as India is ing good amount of debt.
having stocks far more than we need by way the beginning of the year. So these things are concerned, we are comfortable with the On the Ulips , both Sebi and IRDA are
of buffer. We would want that food grains go always there. So get benefit on the plus side first level itself. Otherwise, we support the The other point is if all the good corpo- yet to file a joint application in a high
into the market so that prices are moderat- and something on the negative side. concept of financial safety nets so that sud- rates are borrowing from banks then it court. What is the status?
ed. In any case prices are showing a down- denly if there is huge difficulty for some denies credit to smaller companies... We are considering that. In today’s complex
ward trend. But I don’t think we can expect Concerns have been expressed in vari- country then its knows where to go to get What should actually be happening is AAA world of financial instruments there can be
miracles in next few months. ous quarters on rupee volatility. What is hard currency. borrowers should move to the other win- and will be such issues. This happens in for-
your view? dows because their paper can sell. Every- eign countries also. That’s what has hap-
With the successful 3G and BWA auc- I wouldn’t say it has been volatile. If you see In the first five months of the current body’s paper cannot sell. You will not take pened in this case. Now we have to see this
tions, the government is in a more com- the movement over a period of time it has calendar year we have seen FII invest- paper of an unknown company. So those in terms of legal position. We also have to
fortable situation on the fiscal front. been around Rs 45 a dollar and there been a ments far more in debt than equity... (AAA) should gradually move so that there make sure that this does not go into a huge
How will you utilise these funds? movement of plus minus 5%. So it works FII limit in debt has been revised in the past. is more space as you go along. sort of process that takes a very long time
This is a bonanza that we have got. And both ways. It helps somebody and does not So, I think it’s a reasonably good limit. I and unsettles the markets, insurance com-
the government and the finance minister help somebody. As long as it is not a contin- don’t think we need to take a call on it now. GST is looking difficult to crack… panies, investors. We are handling that. I am
are committed to fiscal consolidation. So, uous one way movement, I do not think it is Certainly, not the limit on government No, I think it is looking suddenly doable. Af- sure you will soon see something in the next
I am reasonably certain that a good part of that much cause for concern and RBI is cer- bonds. These are periodic swings that hap- ter finance minister’s announcement that month or so.

FUNDING GROWTH
China,Equador stand by India at WTO INDIA
INFRASTRUCTURE
DEBT FUND*
The government has proposed the creation of a $11 billion
(Rs 50,000 cr) fund that would raise low-cost long-term
resources to refinance risky infrastructure projects, which
Amiti Sen a big producing country of generic drugs, therefore it country destinations. These included drugs produced are past the construction stage.
NEW DELHI has substantial interest in these relevant consultations. by reputed Indian companies like Dr Reddy’s Labora-
While the countries will not directly participate in tories and Aurobindo Pharma Ltd.
CHINA and Equador have come out in support of In- the discussions India has with the EU, their presence in While these drugs had become off-patent in India WHO CAN SET UP THE FUND WHO CAN BORROW FROM FUND
dia in its fight against the European Union at the World the consultations would add weight to India’s position, and the countries they were being supplied to, some ● One or more sponsors or ● Infrastructure projects
Trade Organization (WTO) for ‘wrongful’ seizure of its a commerce department official told ET. companies held patents to these in the EU. partners such as IIFCL, SBI, based on public-private
generic or off-patent drugs in transit to third countries. “We welcome their participation in the discussions India said that the action went against the provi- ICICI, LIC, IDFC, UTI, an partnership (PPP) model
Both have requested to be allowed to be par- as it would give EU an idea about the kind of sions of the WTO’s intellectual property regime Trips
infrastructure NBFC or a bank ● Eligibility will be restricted to projects,
ticipants in the consultations between India interest that developing countries are taking which allows India to produce generics (medicines
and the EU that is expected to begin soon as in the dispute,” the official said. that have become off-patent in India) which may have ● They may form a consortium which have completed at least one year
they too stand to be affected by the outcome. DRUG Brazil, which too has sought a separate patent holders in other countries and sell them to de- ● Foreign entities such as IFC or ADB in commercial service
“Ecuador has a substantial trade interest in consultation with the EU on the same issue of veloping countries on public health grounds if they do FROM WHOM
these consultations as shipments of generic SEIZURE drugs seizure, has also requested for permis- not have the capacity to produce it.
could also join
WOULD THE FUND
● EXAMPLES
drugs destined for the country have been sion to participate in India’s consultations. While India had tried to sort out the issue with the ● A sponsor must invest a minimum of BORROW Road, railways, port, metro rail, airports
seized in transit in the territory of the Euro- Last month, India requested formal con- EU outside the WTO, it asked for formal consultations 10% of the total investment in the and power
pean Union in 2008 and 2009,” the country’s repre- sultations with the EU at the dispute settlement body at the dispute settlement body when the EU failed to form of subordinate debt DOMESTIC
sentative at the WTO said it in its submission to the of the WTO against the repeated seizures of consign- make amendments in its customs regulations after INSURANCE/ WHAT WILL BE THE
chairman of the dispute settlement body of the WTO. ments of generic drugs originating in India at ports and several months of dialogue. If the WTO consultations HOW MUCH CAN BE PENSION FUNDS INTEREST RATE
China pointed out in its submission that since it was a airports in the Netherlands on the ground of alleged do not yield result, India will ask for setting up of a dis- BORROWED FROM IT ● The fund will try to earn
significant bilateral trade partner of the EU and the infringement of patents subsisting in the Netherlands pute settlement panel which will hear the arguments ● Refinance will be available up to
Rs20,000cr a long-term spread of about 100 basis
Netherlands (where most of the seizures took place) and while these consignments were in transit to third of both sides and give its judgement. points above the rate of interest paid by
85% of the outstanding project debt
FOREIGN INSURANCE it to its investors
from senior lenders
/PENSION FUNDS ● This will cover, operating costs including

ICAI confronts SBI on single auditor ●

Souvik Sanyal our efforts to stop SBI from going ahead
NEW DELHI on the matter,” said Pankaj Jain, member
ICAI council looking into the case.
WHAT WILL BE THE
TENOR OF LENDING
Minimum 10 years. Projects
requiring debt for less than 10 yrs can
Rs10,000cr
FOREIGN SOVEREIGN
●
the premium payable to sponsors
The balance will be held in a corpus for
meeting the liabilities from of any non-
performing asset (NPAs)
other prevalent international practices,” the rely on bank funds FUNDS ● Higher interest rates could be charged
ICAI said in its letter to SBI Chairman OP
Rs10,000cr
● Maximum tenure of debt will from projects with higher risks
Bhatt, opposing the bank’s move to find a
be 20 years

T HE Institute of Chartered
Accountants of India (ICAI) has
opposed State Bank of India’s
(SBI) decision to appoint a single audit
firm for its tax audit for the current
SBI had recently issued a request for pro-
posal (RFP) calling for applications from eli-
gible firms for doing its tax audit for the
fiscal 2010-11. While SBI’s decision to
appoint a single firm to do its tax audit is
single CA firm to do its tax audit.
Banks have been allocating their tax
audit job to their statutory auditors, the
fees in respect of which is included as part
of their total audit fees. ICAI feels the
WHO WILL REGULATE
THE FUND
WORLD BANK/ADB

fiscal, a move which it says could
compromise its quality of audit as
opposed to the bank’s present practice of
getting the work done by multiple firms.
The ICAI, which earlier approached
SBI’s top management raising its
objection on the issue but did not got a
favourable response, is now planning
to approach the Reserve Bank of India
as it fears that the move could see other
ZAHID banks following suit. “We will intensify
aimed at cutting down on its total audit fees,
the ICAI feels that the bank’s decision could
compromise on the ‘larger public interest’.
Tax audit, which is a specialised activity
that looks to find the taxability of an entity
and screens through its transactions, is
presently done by statutory auditors of
banks. SBI has nearly 3,000 branch auditors
and 14 statutory auditors. “In the Indian
context, the work done by large number of
firms has stood the test of time compared to
Rs5,000cr
●
HOW TO RECOVER
Through equated monthly
instalments (EMIs) spread
over the remaining tenure of the bonds
● The fund will be managed
present practice of getting the tax done by as a trust and regulated by ● Entire repayment shall be completed
statutory auditors is the best option as SPONSORS
Sebi under the modified venture two years prior to the expiry of the
Rs5,000cr
such firms by virtue of their work on the fund guidelines respective project contracts
banks’ financial audit are better equipped
to do the tax audit also.
According to an official, 15% of the fees WHO WILL MANAGE THE FUND
given to statutory auditors of SBI are ● By a fund manager of international repute, ● Remuneration could be linked to resource
towards the tax audit. This portion of the who should be neutral and free of any mobilisation, disbursements, returns, subject to
fees could be saved once the bank takes conflict of interest maximum of 25 bps on the outstanding debts
away the work of tax audit from the pres-
ent lot of statutory auditors. * As proposed by the Deepak Parekh Committee
JAYEETA
 The end game in Europe Citings
THE WISDOM OF
A lasting solution to the crisis calls for a new level of statesmanship that would work out a political bargain CROWDS
James Surowiecki
among the EU members to maintain support for the monetary union, says U R Bhat
MONDAY 14 JUNE 2010 *
T HE wisdom of crowds is at

S
OON after the global financial A lasting solution to the crisis would work all around us, alth-
meltdown of 2008 and the therefore require working out a new po- ough it's easy to miss. It helps
Unleash BSNL and MTNL spectre of corporate bankrupt-
cies in the US and elsewhere, the
litical bargain among the EU member
countries to maintain support for the
explain why the economy
works well at getting people
Remove Their Chains First possibility of sovereign defaults, espe-
cially in some countries in southern Eu-
monetary union. Needless to say, such a
political bargain would certainly require
what they want as cheaply as
possible, even though no one

I N THE old fable, once you killed the golden goose, your
supply of future eggs of gold came to an end. In the
modern era, you haven't entirely cooked your own
goose, even if you allowed your greed to overcome sense.
With its spectrum auctions, the government chose up-
front money over diffusion of technology and fast con-
nectivity via cheap spectrum, leading to faster economic
growth. Diffusion of third and later generation communi-
cation services has been slow in western markets, where
the needed spectrum cost the service providers a bomb,
while it has been fast and extensive in countries like Ko-
rea and Japan where spectrum costs are small and carriers
are free to use their funds to invest in the infrastructure,
instead of being forced to feed the government. Without
further government intervention, 3G and wireless broad-
band spectrum winners are unlikely to roll out ultra-fast
mobile data connectivity services in a hurry, and if they
do, these services are unlikely to be cheap. Unfortunately,
there is a conflict between this commercial rationality and
public welfare, which calls for extensive deployment of
fast, inexpensive data connectivity, to enable ground-
breaking advances in the delivery of healthcare and edu-
cation, governance, rural development. So the state must
intervene. It has the needed instrumentality in the form
of two state-owned operators, MTNL and BSNL. They
have, between them, a pan-India footprint, in terms of
both operations and spectrum. These companies must be
asked to roll out fast data connectivity — with a minimum
speed of 4 megabits per second, right now. The govern-
ment could use a part of its spectrum bounty to infuse fur-
ther capital in these companies, if needed, to let them exe-
cute this mandate at a low cost to the consumer, defraying
capital costs over a long period. Simultaneously, the gov-
ernment should enforce number portability without de-
lay. These strong-arm tactics would force private telecom
companies to not delay roll-out of next generation net-
works, and to keep costs down.
But first, the government should unshackle MTNL and
BSNL, give them the freedom to buy and deploy equip-
ment and take operational decisions with autonomy.
Industry on the recovery path
Nourish The Growth
rope, have become all too real. The bai-
lout of banks, insurance and automobile
companies in the developed world by
massive infusion of liquidity by govern-
ments has, in effect only ended up with
unsustainable corporate debt being sub-
stituted by sovereign debt that is now be-
ing increasingly seen as unsustainable.
In Europe, the underlying problem with
potential sovereign defaults is essential-
ly one of excessive borrowing during the
good times that cannot be serviced dur-
ing the present difficult times. Credit
downgrades among southern European
countries are gathering momentum and
rollover of maturing sovereign obliga-
tions is becoming difficult even at in-
creasingly higher yields.
The consequences of a sovereign de-
fault are too serious to comprehend giv-
en that the big global banks — who are
themselves passing through an existen-
tial crisis — hold a significant portion of
these debts. With even the recent un-
precedented $1 trillion bailout commit-
ment from the eurozone and the IMF
being increasingly seen by the market as
insufficient to address the problems at
hand, it is time to examine how the end
game in Europe may play out.
Fear and confusion about the eventu-
al endgame in Europe is causing the euro
to steadily depreciate and is down 18%
against the dollar in the last six months
alone. The text book solution to a sover-
eign debt crisis and loss of competitive-
ness — as is the case with Greece, Spain,
Portugal and Italy — is a substantial cut
in government spending and a deep
enough currency devaluation that
makes the country's exports competi-
tive. In addition, structural reforms to
address the problem of inflexible labour
markets and loss of competitiveness are
needed. If there is enough appetite for
the country's exports in the rest of the
world, fiscal consolidation and a stable
C H AT R O O M
Create IP liberalisation has more or less
died. The once shining ITI has no
economy should be the end result. This
economic prescription is difficult to fol-
low in crisis-ridden Europe because the
eurozone countries are unable to indi-
vidually depreciate their currency. This
robs these countries of a very potent tool
to address the crisis and regaining com-
petitiveness sans currency depreciation
would be harder and more painful in-
volving recession and deflation.
The continuing depreciation of the
euro should boost European exports but
it is unlikely to change the relative com-
petitive position of say Greece — for
whom tourism accounts for 70% of to-
tal exports — against the other euro-
zone nations. The flip side of the euro
depreciation is that it is largely aiding
German competitiveness vis-a-vis the
non-euro world to which 40% of Ger-
man exports are directed. The net result
would be a further increase in Germa-
ny's current account surplus from 5% of
GDP in 2009 to probably double the
number by 2011 thus accentuating im-
balances within the eurozone. The im-
balances, if left unchecked, could soon
become global in nature as the eurozone
would convert a small current account
‘Indian petrochem firms won’t lose out’
SALAM
deficit presently into a large surplus in
the future at a time when other devel-
oped countries are themselves not in
good economic health either. A compet-
itive beggar-thy-neighbour policy all
around may well be the end result.
S URPLUS countries like Germany
would need to substantially expand
domestic demand and help boost ex-
ports from the distressed southern euro-
zone countries. Instead, austerity mea-
sures are being imposed in these very
countries. If the integrity of the Europe-
an Union has to be maintained, a full fis-
cal integration necessitating a substan-
tial weakening of the power of national
parliaments and an effective one-time
wealth transfer from the surplus coun-
tries may well be required. However, the
ground reality is — far from a potential
wealth transfer — the German taxpayer
views the recent $1 trillion bailout pack-
age involving guarantees and soft loans
as an elaborate ploy where the financial-
ly prudent are being asked to pay for the
profligate. There does not appear to be
much sympathy for the distressed fel-
low eurozone countries.
a level of statesmanship that is not visi-
ble on the horizon as yet.
The current stability and growth pact
requiring EU member countries to
maintain a minimum level of fiscal
health has clearly not worked. Unless a
new deal is forged soon enough among
member countries, the risks of sovereign
defaults and a possible break up of the
EU are rising. A fast weakening euro and
increasingly volatile markets are the
sure signs that these risks are not being
ignored by the markets any more. How-
ever, markets cannot be trusted to get
Europe out of the mess in which it finds
itself in a non-disruptive manner. Given
that the current state of flux in Europe is
clearly untenable in the medium term, a
sovereign debt restructuring initiative is
urgently required that would involve
some sacrifice from creditors in ex-
change for serious economic restructur-
ing in the distressed countries involving
reforms in taxation, benefits and entitle-
ments, labour and public spending. In
addition, a credible arrangement to sus-
tain the single currency system should
be firmly put in place soon.
If there are irreconcilable differences
among the EU member countries in
forging a new deal, it is time to start
working on arrangements for an orderly
default and a planned exit of some coun-
tries from the European monetary
union well before the markets assume
the worst outcome and cause further
disruption. There would hardly be any
winners in this case because if the weak
nations exit, they are likely to have mas-
sive debts in euro to be repaid in a highly
depreciated new currency and if the
strong nations exit they will be far less
competitive on account of their rapidly
appreciating new currency. Either way
it is best that some peremptory and cred-
ible action is taken to end the virtual
stalemate that the markets abhor.
is in charge of the economy as
a whole. It helps explain why
people in a healthy society
cooperate with each other by
doing things like paying taxes
and contributing to charities.
And it explains why, if you're
trying to solve a problem with
a definitive answer, you're
better off with the group than
with even the most well-in-
formed expert...And in the
stock market, for all of its cra-
zy swings, it's very difficult
for even the best money
managers to do better than
the market as a whole.
So what's the catch? Simply
this: not all crowds are wise.
Groups can only be smart if th-
ey're made up of people with
diverse information who are
making decisions relatively in-
dependently. Groups that are
too much alike get stuck be-
cause they don't have access to
enough information and beca-
use they favour harmony over
dissent. The wisdom of crowds
isn't about consensus or com-
promise, so groups in which
everyone agrees are likely to
be less intelligent. Similarly,
when people are worried too
much about what others
think, groups get dumber, too.
The real paradox of the wis-
dom of crowds is that the way
for the group to be smart is for
each person to act as an indi-
vidual. When they don't —
like during a stockmarket bub-
ble, where people buy stocks
only because they think they
can dump them on someone
else — groups go wrong.

T HE threat of cheap petrochemicals from technology-driven products that are not

ET
■THEgovernment of India is product of its own and is buying Gulf floodining India has been looming available in other regions. A clear trend is

I NDIAN industry is firing on all cylinders, after marked

deceleration last year. But there is no sign of overheat-
ing and the cost of funds need to remain reasonable, even
as policy innovates incentives for innovation and produc-
tivity gains. The index of industrial production (IIP) for
April has gone up by a whopping 17.6%, over April last
year. However, the latest growth number is on top of a
lacklustre 1.1% increase in industrial output notched up
during April, 2009. The lowly base figure needs to be kept
in mind for policy purposes. Overall, industrial growth
during April-March 2009-10 is now put at 10.4%: credit-
able, not heady. Manufactures, which have a 79.3%
weightage in IIP, have grown an impressive 19.4% during
April. Though, again, the high growth this time around
follows on a mere 0.4% rise in manufacturing output dur-
ing April last year. Also, mining, with a 10.4% weightage
in the index, has been buoyant this past year thanks to in-
creased oil and gas production. There's also a welcome
6% growth in electricity generation.
More importantly, disaggregated figures for April in-
dustrial production reveal unprecedented robustness in
capital goods output, with growth up by a huge 72.8%
year-on-year (y-o-y). Now capital goods output, which
have a weightage of 9.3% in the index, point to invest-
ment demand, and so is doubly significant. It is true that
output last April, which serves as the base for computing
the growth this April, had registered an actual decline of
5.9%. Further, given that car and truck sales have been
zooming and since ‘transport equipment' is included un-
der the capital goods head, the growth in the segment
needs to be appropriately qualified. However, the break-
up also shows that while transport equipment and parts
did grow 32.3%, the production of machinery and equip-
ment other than transport equipment increased by
55.6% in April y-o-y. It suggests genuine stepping-up of
investment activity. This has to be sustained.
Cricket versus football
Which Is The Beautiful Game?
T HEY have both been called ‘the beautiful game'. They
both involve a playing side of eleven. But that apart,
football and cricket are about as similar as chalk and
cheese. One is so global, involves so many playing nations,
is so universally popular that it makes the other seem like
a little provincial game indulged in by a handful of nations
united by little else except the history of British colonial-
ism. Football is fast, even frenetic, a game lasting a mere
ninety minutes, and even a drawn match, if the teams
play well, can be as exciting as little else on earth. Cricket,
by comparison, seems positively day-stretching, even
though Twenty20 has emerged as the new, faster kid on
the block. And Test matches! Would anyone who didn't
know ever believe that a game can last as long as five
whole days? And there used to be a ‘rest day' in between.
That used to make a Test match last one whole week. Tell
that fact to someone unfamiliar, and observe the look on
their face. Truly a game invented by gentlemen of leisure
to while away colonial times. And the rules. Were we to
ponder for a brief second, cricket is governed by and
played according to a whole litany of laws and rules, were
one to write them all down, it'd surely fill a medium sized
legal dossier. Football on the other hand is absurdly sim-
ple. Take ball, score goal. And all you need to play is a patch
of land, a ball and a few stones or twigs or anything else as
goalposts. So, is it football that's the beautiful one, really?
Well, its zillions of fans may aver so. But the cricket afi-
cionado would demur. The sheer joy of batting, the
thwack of hitting a ball with sweet timing, the elegance of
a cover drive well executed, the trill of a soaring sixer...
One could go on. Or bowling, the web of spin, the fury and
aggression of fast bowling. Even fielding has its pleasures,
the run as the ball streaks through the turf, the triumph of
a well-aimed throw... again, one could go on. Zillions may
not play it, but millions do. And it's in their bloodstream.
So, go ahead and watch the football world cup if you so
please. Then we can go back to the other beautiful game.
getting more than Rs 1,06,000
crore from the broadband access
(WiMax) bids and 3G spectrum
technology from China.
It will be a shame for a large
nation like India with a great
large over the last few years, but remains
elusive so far. Indian petrochemical companies,
that predominantly use naphtha, have been
visible now with mature economies such as
Europe and North-East Asia — Japan,
South Korea and Taiwan — focusing on spe-
sales. When the services are rolled economy if it does not create IP wary of gas-based capacities coming up virtual- ciality polymers. The GCC, India, China and
out, it will also get ashare of the and merely imports what it needs. ly in their backyard. Ilana Djelal, managing South-East Asia, on the other hand, are
revenues. The telecom and IT If about 5-10% of the Rs 1 lakh editor of Platts for Europe, however, contends looking at commodity polymers. Consolida-
sectors are creating no crore that the government has got that such perceptions may be misplaced as strong tion is the mantra for naphtha-based petro-
intellectual property (IP) for is utilised to set up mission- domestic demand will help India and China re- chemical producers in mature economies.
utilisation by our entrepreneurs. oriented R&D centres, we would main competitive. European firms are also increasingly loo-
We are importing about Rs be doing justice to our country king at forming strategic partnerships in In-
40,000-crore worth of telecom and to the lakhs of engineers that The country has been a net importer of dia, more of licensing technologies. “ONGC
network equipments alone every we are producing every year only petrochemicals including polymers. But INTERACTIVE Petro-additions (OPaL) is using Ineos' met-
year. There is almost no R&D to be employed for other this is changing gradually, with the govern- allocene catalyst technology for LLDPE res-
work by any Indian company and countries' benefits. ment launching petroleum, chemicals and
ILANA DJELAL ins, that is a premium product with better
what used to exist till the More than Rs 30,000 crore of
petrochemicals investment region (PCPIR) lost considerable time in scaling up its oper- specifications”, said Djelal. She foresees
the Universal Service Fund that schemes and the SEZs. Many domestic ations. Unlike India, the concept of a SEZ more such deals happening in coming years.
has accumulated, is not being companies including RIL, ONGC, MRPL was introduced in China a long time ago. To- While new capacities are being created,
BLINKERS OFF utilised. It should be immediately and BPCL plan to add new polymer capaci- day, China has over a dozen petrochemi- the world is also becoming more interested
utilised to extend broadband ties within next 2-3 years. In parallel, anoth- cals-specific SEZs. India has, however, im- in recycled plastics. “There is growing in-
SALAM internet connectivity to all
er 2.6 million tonnes of polyethylene capac- provised the concept by allowing the SEZ terest in Europe about recycled plastics for
colleges and universities and ities is set to be added in the Gulf region units to procure raw materials from domes- certain non-critical uses. At the moment,
institutes of R&D in the between 2010 and 2013. tic tariff area, that enables them to ensure we publish recycled PP prices in Europe,
government as well as private All new polymer capacities in India will be raw material security. but we are getting enquiries to publish re-
sector. If we add to these the high naphtha-based, while those in the Middle The capacities commissioned in the Mid- cycled HDPE prices as well,” said Djelal.
schools and public libraries we East will be gas-based. Will India remain dle East so far have been absorbed mostly by The world is yet to see the full impact of
would further enhance our
competitive? “I don't see Indian naphtha- the strong Asian demand. Some projects gas-based polymer capacities in the Gulf re-
ability for the creation of based players becoming uncompetitive. In have, however, been bogged down by de- gion. This will unfold in next couple of years.
knowledge and information fact the threat they face is far less than Eu- lays. The situation is gloomy in Europe There could be oversupply, albeit for a tem-
society. Politicians are competing rope or South-East Asia, because India has where petrochemical manufacturers are porary phase. However, the demand for po-
only to keep the poor on a the benefit of a very strong domestic mar- preparing for the worst. “There is a realisa- lymers is growing as it replaces wood, metal
survival diet. They ought to ket,” says the managing editor of Platts, a tion that eventually there will be some sup- and glass. At present, all gas that can be ex-
compete for creating world class global provider of energy and metals infor- ply indigestion and Europe will prove un- plored in the Gulf region appears to have al-
Indian HR which can create mation. India's five kg per head polymer competitive. This means reduced rates of ready been tied up with petrochemical pro-
wealth besides helping find consumption is less than a quarter of China's naphtha crackers and polymer plants. We jects and new projects are unlikely to come
gainful employment. and a tenth of the Europe's consumption. have seen some tough decisions being tak- up in foreseeable future. Indian petrochemi-
TH CHOWDARY Strong domestic demand will help India and en, but there are more to come,” said Djelal. cal players have to keep their fingers crossed.
SECUNDERABAD, JUNE 11
China to remain competitive. Besides India What lies ahead for the petrochemical (With inputs from Quintella Koh, Platts
Letters to the editor may be addressed to can impose anti-dumping duty, if need be. producers in advanced economies? Eventu- managing editor, Asia)
editet@timesgroup.com The country's petrochemical industry ally, the region will have to move towards RAMKRISHNA KASHELKAR
Innovation as game-changer The Lord God
T HE great thing in the world is not so
much where we stand, as in what di-
rection we are moving, noted the sa-
NOW&TH EN
back, when corporates here had little appe-
tite to globalise and think big. But it's clearly
no longer so. And as corporates in India made them all
vant contemplating growth and change.
That was then, in a far more sedate era and
decades before regular data series and
growth numbers. Fast-forward to the here
and now, and the latest estimates, for April,
JAIDEEP MISHRA chalk out plans to expand and shore up op-
erations, even venture into promising, sun-
rise sectors, it is basically about striking a dif-
ferent growth path and “not going with the
herd.” Also, this time round, there's much
L ISTING various joyful
manifestations, Cecil Fra-
nces Alexander conceives
of the “Lord God” who has
“made them all”. Indeed, her in-
dling a baby or whatever — the
quality and contours of these
can assume a new significance,
conferring also the needed ben-
efits. During outings or even am-
do reveal heady industrial growth over the possibility for upside gains across borders. spirational narration is also ap- bling along, one can observe th-
like period last year. Although, considering Which is why continuing with the risk-re- plicable even to agnostics, who ings around, including the resil-
that growth in the previous April was en- duction mindset of old when it comes to in- too can discern and be sensitised ience of not just persons but also
tirely lacklustre, the buoyant year-on-year novation and enterprise would be debilitat- to a moving force — God or call “all creatures great and small”.
increase this time around is also statistical ing, and backfire. In any case, risk-reduction what you will. This force mani- This also is acceptance of not
mirage. The way ahead is to compile both as an innovation practice is often meant to fests as things of goodness and just oneself but situations and
leading and lagging indicators, so as to have cover up underperformance and to wriggle beauty, making things, accom- things around, because in this
a much more composite picture of the va- out and avoid accountability. But while risk plishments and ultimately, civ- broadness of outlook, one's
garies and interstices of growth. ● The larger objective ought to be to rev up reduction as innovation strategy does not ilisation possible. own problems and
innovation, across industries and sectors quite make sense in our large, high-growth
And better growth estimates and more This also is the limitations would
up-to-date figures should lead to more and fast globalising economy, achieving real process of becom- appear less horrify-
● The fact remains that novel product
considered, proactive policy and attend- offerings and sustained innovation by breakthroughs also calls for focus that's high- ing aware and ing. He would then
ant industry response. Anyway, the larger our leading corporates across the board ly coordinated across enterprise and settings. mindful of and be more sensitised
objective ought to be to rev up innovation, have been few and far between It's possible to envisage innovation that is de- thus being sup- to others' goodness
across industries and sectors. centralised and diffused activity that takes ported by such and problems and
Besides, the economic case for innovation ● How India Inc strategises to innovate and place on umpteen fronts, in many different soothing, support- less obsessed with
is unexceptionable, for multiple reasons. update would make all the difference to directions. But it can also mean just not ing and healing in- his own. This also is
Consider, for instance, the issue of pricing, the quality of industrial growth enough coagulation of resources for path- fluences. Other- the commencem-
returns and the greater good. Sans innova- breaking innovation and “breakaway sta- wise, one could
COSMIC ent of the dropping
tion, product offerings in the marketplace However, the ground reality is unlikely tus”. The fact remains that novel products easily bypass these and shedding of
tend to become more similar and predict-
able. Such a scenario can mean consumer in-
to be either stylised or prosaic. For corpo- and sustained innovation by our leading cor-
rates and institutions are more likely than porates have been few and far between.
to be denied finally
those blessings
UPLINK the ego — a singu-
lar service, which
difference, and scope to “play off” one ven- not to encounter innovation underper- Could it be because we simply avoid putting and benefits, which he could ef- one does to himself, where he
dor against the next, to strike a price bargain. formance, and a panoply of other subopti- all our eggs in one basket, or that we prefer to fortlessly have received by be- himself becomes the principal
Prices would then tend to stabilise at not mal outcomes. Hence the vital role of lead- traverse the beaten track and hedge bets? ing just positive and receptive. and prime beneficiary.
much above costs, stultify investor returns ership, to take calculated risks, prioritise The point is to bring about proper align- Having divined the potential Cecil Frances concludes,
and reduce customer choice. tasks and bring about much-needed fo- ment of institutional resources for break- inherent in tapping such reso- “How great is God Almighty,/
But when innovation does take place, it cus. But then, it cannot be gainsaid that a through innovation. It is not enough to have urces around, the question Who has made all things well”.
can result in more differentiated products general risk-reduction mentality can a sprinkling of innovative activity enter- arises as to how to practically go This also is the practical realisa-
and offers, with the real possibility that dif- mean routinely avoiding “bold actions,” prise-wide, if there's no real direction and fo- about doing the needful. The tion of Robert Browning's con-
ferent goods and services become the pre- so as not to unduly affect existing ‘going' cus. After all, innovation is more like vector process commences with being cept (Pippa Passes), “God's in
ferred choice of different market segments assets and transactional relationships. It's addition — complete with arrows that show observant and watchful, guard- His Heaven –/ All's right with
in the pecking order. It would imply rea- herd behaviour really, of keeping close to the direction and magnitude of a given force ing against laxity, drift and un- the world!”
sonable pricing power for producers, and the norms and rule-book. of action. So if innovative resources are dif- productive habits or routine. Ev- Indeed, that “Lord God”, in-
demand would likely stabilise at prices well Such a risk-reduction strategy can even fused and thinly spread or otherwise un- ery activity, including volved with every true seeker
above costs, thus giving rise to attractive ec- be deemed sensible, especially when the pe- aligned, it could well mean suboptimal out- mechanical ones, could spring to of worthy living — regardless
onomic returns and so boost investments. nalties for faulty operations and implemen- comes. The Centre needs to firm up leading life as vibrantly joyful ones of his faith in a God or lack of it
Also, innovation designed to cost-reduce tation are significant, but nevertheless, and lagging indicators of economic growth through this attentiveness and — has made them all, and
routine processes, for instance, can shore there are no built-in rewards and upside for for a more composite index. But how corpo- awareness. Acts of even simply made them, in the ultimate
up productivity gains and bring about effi- brilliant performance. Such a state of affairs rates here strategise to innovate and update getting up, attending to chores, scheme of things, well too!
ciency improvements going forward. may well have been the case a decade or two would make all the difference. bathing, eating, sleeping, cud- ■ K Vijayaraghavan
THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010
*
VIEWPOINT 13

Be wary of the gold bugs

LET TER F ROM LONDON
SU DESH NA SEN

What makes Bhopal

One cannot rule out the possibility of the yellow metal
experiencing a melt-up similar to that in 1980
Ruchir Sharma
mand for gold got a boost during all of them.
While history suggests that gold will hold its
own if sovereign credit risks keep increasing,
many myths surround the performance of gold.
For one, the widespread belief that gold is a great
hedge against inflation is a relic of the 1970s — a
period of very high inflation and the best decade
for gold prices. But the relationship between
gold prices and inflation has been more erratic
in subsequent decades when cyclical rises in in-
flation have not always supported gold.
The main reason for the strong price perform-
ance of gold in the 1970s was central banks were
behind the curve on inflation with interest rates
typically lagging inflation. A catch-up element al-
so played a role in gold’s 20-fold rise in that decade
and BP different
high-yielding currencies such as the Australian
dollar have also been declining in value of late.
The main factor driving gold purchases by
some central banks is TINA (There is No Alter-
native). Of course, as long as real interest rates
are low, gold will likely find many interested
parties but it is important to distinguish be-
tween absolute and relative performance.
Gold appreciated by 25% in 2009 but under-
performed most global stock markets as risk
aversion was on the decline and the low real in-
terest rate environment that propelled gold
higher benefited stocks and other industrial
commodities even more. In 2008, gold ended the
year marginally changed but was seen as a star
given the carnage in other asset classes.

I
T IS hard to drown in a sea of liquidity.
That's the notion the bulls are keeping
their faith in despite the myriad of struc-
tural problems in the global economy. But
in what’s reflective of the widespread opti-
mism on gold, even the bulls want to hold on to
the yellow metal as a lifebuoy — just in case.
Gold is the best performing asset class this year
and while most other financial assets have strug-
gled to make their way back to pre-Lehman lev-
els, the yellow metal is up by more than 50%
since September 2008. As a result, gold is cur-
rently trading well above the long-term average
levels relative to stocks and bonds and also in
Gold prices comparison to its own historical trend-line.
Flows have been flooding gold exchange-
will likely traded funds, or ETFs; they nearly doubled last
year, thereby taking the current stock of gold in
ETF holdings to an equivalent of a whopping
remain well 186 days of global demand. ETF holdings for
copper total 50 days of demand for the com-
bid as long as modity in contrast while aluminium and zinc
ETFs represent around 100 days of underlying
demand. The daily turnover in gold ETFs —
real interest now at $3-$4 billion a day — is up nearly 10fold
from levels of three years ago.
rates are close Investment demand currently represents the
largest component of overall demand for gold
compared with a mere 4% just a decade ago.
to zero. But Traditionally, jewellery purchases constituted
the overwhelming majority of demand for the
keep in mind yellow metal, with India, China, Turkey and the
Middle Eastern countries being the largest
buyers. Jewellery demand has been on the de-
that gold is cline over the past two years in reaction to the
price surge caused by strong investment de-
currently mand. In fact, jewellery demand contracted by
as much as 20% in 2009.
trading at very The price increase suggests that supply has
fallen way short of demand even though gold
miners are making huge profits with the mar-
expensive ginal cost of production estimated at $700 an
ounce. The demand-supply dynamic is largely
levels and irrelevant in the case of gold at least in the
short-term as it largely is an indestructible
commodity. Almost all the gold that has ever
has under- been mined still exists and is 65 times the
amount of annual mine production. With 51%
performed of the 165,000 tonnes in above-ground stocks
of gold held as jewellery, a large part of the gold
holdings are not traded, thereby limiting the
most other supply on the marketplace.
So is gold a worthwhile investment? It has ef-
financial fectively functioned as a store of value for many
centuries, which literally means it has held its
value after accounting for inflation. Over the
assets over the past century, the price of gold has been virtually
flat in inflation-adjusted dollar terms. It has
long term. therefore underperformed most other asset
classes; US stocks and bonds yielded annualised
real rates of return of 7% and 2% respectively
over the past hundred years.
Some of the best periods of gold outperform-
ance have come about when the yellow metal
has held its value when other asset classes have
fallen. No surprise then that the most ardent
gold bugs are folks who have a dire view of the
world and little confidence in the financial sys-
tem. Gold has done particularly well during cri-
ses dating back to the US civil war in the
mid-19th century right up to the more recent fi-
nancial meltdown. The IMF cites five major
sovereign risk defaults since World War II; de-
as its price was fixed at $35 an ounce under the
Bretton Woods system that prevailed from the
mid-1940s to the early 1970s. From the 1980s on-
wards, inflation targeting became more popular
and central banks maintained much higher real
interest rates to anchor price expectations and
prevent a repeat of the 1970s inflation malaise.
Some investors are currently again buying
gold in the belief that inflation will rise sharply
in the years ahead on the back of ultra-lax mon-
etary policies. However, other financial instru-
ments such as inflation-protected bonds cur-
rently have very little long-term inflation
expectations embedded in their prices and so
represent a much cheaper way to buy insur-
ance against an outbreak of inflation. Gold only
performs well when real interest rates are ei-
ther very low or negative. After all, gold is vir-
tually a zero yielding asset and the opportunity
cost of holding it is negligible only when real in-
terest rates are meagre.
The other myth surrounding gold is that it an
‘anti-dollar’ play given the negative correlation
between gold and the dollar during some peri-
ods. But as the past few months have shown,
this relationship is tenuous with gold rising
even in the face of a stronger dollar. Although
some Asian central banks have been diversify-
ing their foreign exchange reserves to include
gold as it constitutes just 2% of their total re-
serves, such diversification is not necessarily
taking place at the cost of the dollar. Other cur-
rencies from the euro to the much-sought-after
Some gold bugs are throwing about very ag-
gressive price targets of $2,000 or $3,000 an
ounce, from levels of just over $1,200 an ounce
now. If the yellow metal does reach those levels,
it would form a bubble of epic proportions.
Gold’s peak at $850 an ounce in 1980 marked
one of the biggest bubbles in post WWII history
and the yellow metal then fell by more than 70%
in the following two decades as real interest rates
rose and the global economic environment im-
proved significantly. At $1,800 an ounce in cur-
rent dollar terms, gold would be at the same level
as at the absolute peak in 1980.
The possibility of gold experiencing a melt-
up similar to that in 1980 cannot be ruled out.
SALAM
Multi-year trends often end with a buying cre-
scendo as bubbles are based on some funda-
mental development that eventually turns into
a fad with prices varying significantly from the
underlying reality. Gold is not yet in a bubble
stage but is indeed expensive, trading well
above the marginal cost of production and that
was not the case for much of the previous dec-
ade when gold prices rose fourfold.
From an asset allocation standpoint, owning
gold at current levels makes sense only if an in-
vestor's view of the world is outright bearish. If
not, gold is likely to underperform other asset
classes from hereon, in line with its long-term
performance history.
(The author is head of emerging markets at
Morgan Stanley Investment Management)
I ’M LEARNING to live with the fact that I’ve become some kind of historical
archive consultant. Usually when something from ‘before’ resurfaces,
given that most of today’s Indian media are in their venerable 20s.
But the Bhopal gas tragedy was way before my time, so I can’t claim to have
covered it in any way. Still, I wasn’t dribbling on my baby toys, so I was trying
to dredge up memories of the time. You know what? I can only remember
some pictures and avidly scouring newspapers for sketchy details.
1984 was a different world. We didn’t have 24/7 news television. We didn’t
have cellphones, twitter, 20 flights a day to Bhopal, a vibrant pharmaceutical
and medical industry, an aggressive domestic media, and nobody had heard of
crisis or image management. Nobody knew much about health or safety; con-
cepts like CSR didn’t exist. Most importantly, we didn’t have that 8% GDP
growth rate. We had no money, resources, or experience to tackle a tragedy of
this kind — so yeah, every mistake in the book was made.
The verdict has been greeted with howls of outrage, as too little, too late. I’m
going to argue that it may or may not be too little — but it isn’t too late. The timing,
thanks to the accidental convolutions of India’s judiciary, is historically bang on.
Twenty five years is how long it has taken for the world and India to ready to
put Bhopal back on the global centrestage. To tell a new generation the truth
about one of the darkest chapters in the history of MNC colonial imperialism.
(It happened, all the time. Remember the Banana republics?). Take a poll in
America today, if you can retell the whole story, and chances are many would
agree Warren Anderson should have been held accountable for his role.
Twenty five years ago? Holding an important American citizen, backed up
battalions of lawyers, diplomats and spin doctors in an India jail? It would
have blown up all over the western world as something akin to the Taliban
kidnapping an American diplomat. Let’s be real.
Today, India can pick and choose the quality of FDI we want, we can even
argue and negotiate about nuclear liability. Back then? The backlash would
have been brutal. Beggars can’t be choosers.
There’s always been anger about Bhopal. But it was the hopeless kind of an-
ger of the permanently poor; that’s what makes the Bhopal gas victims life-
long struggle for justice so unique and remarkable.
It has taken 25 years of struggle, and independent research by thousands
to even piece together the real story; Union Carbide went into spin doctor-
ing and denial overdrive, something Indians had no idea how to counter.
Dow Chemicals, which now owns the erstwhile Union Carbide, is distanc-
ing itself — perfectly within its legal rights. But there’s no reason to step
down the activist pressure.
We now live in a world that’s a lot more open, inter-connected and sensitive
to corporate bullying. Morals and ethics are back in fashion. Not to mention
that MNC worldview has changed — third world countries are no longer loca-
tions with lax laws to outsource ‘dirty’ manufacturing jobs to, we’re customers.
Whether a group of old men are actually sent to jail or not, in my view, mat-
ters less than the fact that the timing makes it a perfect opportunity to notch up
the pressure. For the victims, the suffering is still not over; there’s reportedly,
toxic waste still lying around the plant site. So why should there be closure?
I’d recommend that everyone who’s involved with Bhopal or the nuclear
liability bill keep a very close eye on the BP and Gulf of Mexico case. The paral-
lels — right down to diplomatic and political ramifications are eerily familiar.
Faced with crashing political ratings, Obama has gone after BP. On this side
of the pond, Brits are furious about what they perceive as anti-British rhetoric
that’s wiped more than a third off the value of one of its most valuable compa-
nies. American politicians insist BP cancel its dividend, want to retrospective-
ly change laws to raise its total liability, capped at $75 million after Exxon, go
on calling it British Petroleum, (a name the company dropped a decade ago),
and Mr Obama has promised to keep the American ‘boot on BP’s throat’, kick
ass, and so on. British Premier Cameron has been dragged into the battle, and
come out in support of BP, saying it is in nobody’s interest to bash the compa-
ny. Why? Because BP is a core component of UK’s largest pension funds, and if
it goes bust, it will decimate lots of little old widows here. It’s threatening An-
glo-American relations, and we’re talking about close allies.
The difference is: the parent company is being held responsible, not some
local subsidiary. BP has said it will pay for the clean-up and damages — the ar-
gument is how much, and where that liability stops. It’s an important prece-
dent because international law is so vague that MNCs can usually squirm out
of most overseas liabilities. Compared to 25 years ago, they’re finding it just
that little bit more difficult.
sudeshna.sen@timesgroup.com

P E RS P ECTIVES

Europe’s determination to decline

and India’s refusal to go along with Europe’s plans
green energy technologies is really the only viable
long-term strategy for reducing fossil-fuel con-at last December’s global climate summit in Co-
sumption without crippling the world economy. penhagen. The German magazine Der Spiegel re-
European politicians instead seem to have be- cently got hold of a tape of the final negotiating ses-
come increasingly committed to the notion that sion. It is instructive to hear the baffled reactions of
global warming is the world’s most urgent prob- European leaders like Germany’s Angela Merkel,
lem. Some conspiracy-minded commentators France’s Nicolas Sarkozy, and Britain’s Gordon
Bjørn Brown as their developing-country counterparts
even suggest that this is related to Europe’s lack of
Lomborg competitiveness: instead of trying to keep up, served notice of their refusal to consign their pop-
ulations to continued poverty in order to solve a
they say, Europe has decided to find a way to slow
problem that the rich countries created.

I N A heroic case of finding a silver lining in the

bleakest of all situations, the European Union
climate commissioner has concluded that the
global economic crisis and recession actually pro-
vided a lucky break for everyone.
Commissioner Connie Hedegaard says that the
slowdown in economic activity will make it easier
for the EU to achieve its 2020 goal of ensuring that
greenhouse-gas emissions are 20% below their
1990 level. In fact, Hedegaard believes that cutting
emissions has become so easy that European lead-
ers should be more ambitious and unilaterally aim
for a 30% reduction below the 1990 level — an
idea that has won support from David Cameron’s
new British government.
This may seem like good news, but it is not, be-
cause there is a strong correlation between eco- recognise that trying to cut back on the use of fossil likely wreak, they would have a negligible impact
nomic growth and carbon emissions. For almost all fuels in the absence of practical alternatives is a rec- on global temperatures. The widely used RICE
countries, higher emissions come from higher ipe for economic stagnation.
growth rates. And if you restrict carbon emissions
without providing affordable alternative energy
sources, GDP will falter. In other words, by advo-
cating even deeper cuts in emissions, Hedegaard is,
in effect, calling for an even deeper recession.
It’s worth noting that even before its current ec-
onomic difficulties, Europe was unable to keep up
with the growth rates of the US, not to mention the
emerging economies of India and China. To stay in
the game, the EU acknowledged a decade ago that
it needed to become uniquely inventive. Hence,
the European Council’s Lisbon Strategy of 2000,
which centred around a pledge to increase general
research-and-development spending by 50% over
the following decade. Unfortunately, Europe has
done no such thing; if anything, R&D spending has
actually declined slightly since then.
This is especially regrettable because R&D in
EU’s unilateral emission
restrictions are not only
economically destructive —
likely to cost Europe an
estimated $250 billion a
year by 2020 — but are also
astonishingly ineffective
everyone else down.
One needn’t accept this Machiavellian view to economic havoc that such carbon cuts would
This seems to be a driving factor behind China of 0.05 degrees Centigrade over the next 90
Attempts in 2010 to rekindle commitment to a
global carbon-emission deal have failed. Both the
outgoing head of the UN climate-change secre-
tariat and Commissioner Hedegaard have admit-
ted the obvious: a deal is extremely unlikely to be
reached at the next major summit in Mexico at
the end of the year.
Nonetheless, Europe has continued to pursue its
quixotic course, even without a global treaty on re-
ducing carbon emissions. And make no mistake
about it: the EU’s unilateral emission restrictions
are not only economically destructive — likely to
cost Europe an estimated $250 billion a year by
2020 — but are also astonishingly ineffective.
Climate models uniformly show that for all the
climate-economic model shows a miniscule drop
years. Despite the huge outlay, the difference in
climate by the end of the century would be practi-
cally indiscernible.
Unfortunately, it seems as if Europe has decided
that if it can’t lead the world in prosperity, it should
try to lead the world in decline. By stubbornly pur-
suing an approach that has failed spectacularly in
the past, Europe seems likely to consign itself to an
ever-dwindling economic position in the world,
with fewer jobs and less prosperity. Even the most
optimistic-minded would struggle to find a silver
lining in that outlook.
(The author is head of the Copenhagen Consensus
Center, and adjunct professor at Copenhagen
Business School)
(C): Project Syndicate, 2010
14 BANKING & FINANCE * THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010

It’s crunch time in bond market this week

Liquidity Woes To Get Worse As Over Rs 68K Cr Expected To Flow Out Of System In The Form Of Advance Tax & BWA Fee
Our Bureau commercial papers and short-term them. Last fortnight, banks have ness in the loan market — both as a
WITHDRAWAL SYMPTOMS MUMBAI loans since no one is flushed with jointly disbursed Rs 35,000-45,000 result of reduced liquidity and the
Experts’ Take On Money
funds as the case was a fortnight crore to telecom companies to fi- sharp jump in bank exposure to

T HE crunch in the money

market may worsen this
week with over Rs 68,000
crore flowing out of the system into
the government’s coffers. Of this, Rs
30,000 crore would be by way of
advance tax payments by various
businesses and another Rs 38,000-
crore outflow being payments
made by successful bidders at the
broadband wireless access auction.
Even without this outflow, banks
were forced to borrow in the range
of Rs 50,000-Rs 60,000 crore on a
● Banks were forced to borrow in the range of Rs 50,000-Rs 60,000 crore daily basis from RBI. This has result-
on a daily basis from RBI, even without this outflow ed in the cost of borrowings rising
for corporates. Banks are expected
● This has resulted in the cost of borrowings rising for corporates. to resort to higher borrowing from
● Banks are expected to resort to higher borrowing from the central bank RBI may be next week. “Interest
from next week rates are expected to go up, at least
for short-term instruments like
Aviva Life Insurance managing director & CEO TR Ramachandran
says he is happy with 20,000 agents giving better productivity & being
tightly monitored for quality rather than focusing on a huge force
ago,” said a money market dealer.
Telecom companies who have
won the BWA spectrum have to
jointly pay Rs 38,500 crore to the
government in 10 days from the
time the auction closed (by June
21). However, they will
have to arrange during the
week. Dealers say telecom
companies looking at rais-
CASH
ing more money may be
charged higher interest
CRISIS
rate on two counts. First,
the tight liquidity in the system and
secondly, banks already have huge
exposure to the telecom sector to fi-
nance third generation (3G) spec-
trum licence. Loans to telecom
companies are classified as unse-
cured loan and therefore, most
banks are cautious in financing
nance the 3G spectrum.
Even corporates other than those
in the telecom sector, may have to
pay a higher price to raise money
this month, due to tight liquidity
conditions. Credit conditions have
worsened as the crises in
the European markets ag-
gravated. Most overseas
banks are not very com-
fortable lending as liquidi-
ty tightened overseas,
making it difficult for Indi-
an companies to access the ECB
route.
Although telecom companies
were individually prepared to bid
higher, none of them had expected
that the total bids would add up to
such high amounts. Most had,
therefore, not foreseen the tight-
telecom. With a week in hand to
arrange for funds, corporates are
more likely to use internal accruals
or raise short-term money. Rating
companies can look forward to rais-
ing funds through the issue of debt.
In the money market, there will
be an outflow of Rs 11,000 crore on
Monday because of Friday’s auction
of dated government securities. But
at the same time, on June 15, banks
expect an inflow of Rs 12,000 crore
as cash management bills issued by
the government will mature. An-
other, Rs 2,000 crore will flow in as
interest payment on bonds. Besides
this, there will be a net inflow of Rs
6,000 crore as Rs 9,000-crore treas-
ury bill matures while only Rs
3,000-crore T-bills will be auctioned
this week.
Trends For The Week
RUPEE
Rupee could close
above Rs 47.30
Recent economic data
releases across the globe,
including Asia have
surprised markets on the
upside and indicates that
markets may somewhat
be underestimating the
strength of global
SOUMYO DUTTA recovery. However,
MD, HEAD- TRADING & headwinds continue to
RISK TREASURY, CITI remain strong and fresh
concerns on a potential slowdown appears
to be building once again. The European
Central Bank (ECB), last week, surprisingly
paid little heed to the recent turmoil and
did only the bare minimum in terms of a
modest extension of its liquidity provisions.
This could serve a bigger blow to risk
appetite in general over the coming week,
thus even impacting the Asian currencies.
The dollar-rupee on a daily chart has
formed a pennant and appears to be

Policy clarity needed

consolidating after a break of the critical
resistance at 45.30 and the ensuing sharp
up-move last month. A weekly close above
47.30 could be concerning and may open
the pair up, for a move all the way up to
49.25.

for better volume play

BOND
Ten-year bond yield to range
between 7.5% and 7.65%
The sentiment in the G-
SBI may fix base rate Sec market over the

F
within 7.50-7.75%
The country’s largest lender, the State Bank of
India, is likely to announce a base rate in the
range of 7.50-7.75%. The bank has already
announced that it would be finalising its base rate
by June 15, way ahead of the July 1 deadline by
when all banks have to abandon the prime
lending rate and migrate to the new benchmark.
Unlike the PLR, which could be an arbitrary
number decided by the bank, the base rate is
calculated, based on a cost-plus formula
prescribed by RBI. Sources in the industry say in
a gathering of bank CEOs, SBI chairman OP
Bhatt indicated that his base rate will not be
more than 8% and not less than 7.5%. However,
the CEO of a small-sized private bank said it
plans to peg its base rate at 6%, which annoyed
other bankers present in the meeting. How can a
bank justify its cost at 6%? they asked. But all
this goes to show that interest cost for borrowers
is unlikely to go up after the introduction of the
new loan pricing mechanism.
IN A NUTSHELL
Mediclaim portability to
become a reality soon
NEW DELHI: Mediclaim policyholders, who are not
satisfied with the service of their existing service
providers, will be able to switch to another insurer
soon without any change in the premium outgo.
However, this facility will be available to those
policyholders who are insured for a sum of Rs 1 lakh
and above, to begin with. It has been decided to
widen the cover, according to the recommendation
submitted by the General Insurance Council, an
association of non-life insurers. Issues have been
sorted out and it has been suggested that portability
would be allowed for a sum insured over Rs 1 lakh,
General Insurance Council secretary-general SL
Mohan said. Insurers will be able to sell such health
covers once the regulator has approved it, he added.
The policyholders will be able to switch their health
cover providers with the same benefits retained once
they have bought this cover.
Dhanalaxmi Bank plans to raise
Rs 350 cr via QIP in July
MUMBAI: Dhanalaxmi Bank plans to raise Rs 350 crore
through a qualified institutional placement (QIP) by
the third week of July, a top bank official said. “We
plan to raise Rs 350 crore through a QIP by the third
week of the next month. We will be diluting around
23% of our equity,” Dhanalaxmi Bank managing
director & CEO Amitabh Chaturvedi said here on
Sunday. The resources raised will be used to fuel the
bank’s business. “We want to up our advances from
the present Rs 5,100 crore to Rs 9,000 crore in FY11.
The funds raised will be used towards this,” he said.
The bank now plans to strongly focus on the retail
segment and by end of this fiscal, it aims to lend at
least 30% (of its total advances) to this segment.
OLLOWING the change in the charge coming week would be
structure, Aviva Life Insurance India clouded by concerns over
has dramatically changed its strategy. the release of inflation
The focus is now on increasing productivity numbers for May 2010
and maintaining a tight leash on quality. In and apprehensions over
an interview with Mayur Shetty, MD & tightness in
CEO TR Ramachandran speaks of the
changes that have taken place:
We have to S SRINIVASARAGHAVAN liquidity,
VP, HEAD-TREASURY, IDBI GILTS following further
increase the outflows towards advance tax. Over the
The life insurance industry in India coming week too, we expect the liquidity
appears to be going through a tumul- share of to remain in a tight mode due to outflows
tuous phase, given the regulatory towards advance tax of Rs 25,000-Rs
changes. How do you see it? protection. That 30,000 crore. We expect this tightness to be
I think it will fundamentally redefine short term and temporary in nature. We
the industry. Two things are going on. will mean not just expect the government having around Rs
On one hand, there is this whole move
to increase public disclosures. This change in 50,000-crore surplus in its kitty to
gradually start spending and this should
means that the media and analysts will
have access to much more nuanced data
products but soothe the sentiments of the G-Sec market
from the fourth week of June. Bond
rather than just first-year premium. This
and the build-up to IPOs will see compa-
change in the movements could also depend on global
developments. The European crisis is still
nies focus more on other parameters
than just new business premium. On
way distributors looming large. Hence, the G-sec market
sentiment could improve from the present
the other hand, there is the direction
that products are taking. We have to in-
are trained. I levels. Over the coming week, we expect
the benchmark 10-year yield to hover in
crease the share of protection in our don’t think the range of 7.50%-7.65%.
portfolio. That will mean not just change
in products but change in the way dis- traditional
tributors are trained and incentives. I
products are the CALL RATES
don’t think traditional products are the
Call rates to range between
answer, it is not about replacing one
type of product with another. answer, it’s not 5.10% and 5.35%
Do you see sales being hit? about replacing Call rates are likely to
Fortunately, the first quarter of the year
is the weakest part. The way the cycle
one type of range between 5.10%
and 5.35% and major
happens is that products are launched in
the first quarter, start selling around the
product with outflows are the advance
tax, estimated at around
second quarter and sales picking up after
Diwali, Dusserah. But volumes could
another Rs 30,000-35,000 crore
and Broadband Licence
take a hit if some of the issues are not re- TR RAMACHANDRAN payout of 35,000-
solved soon. Maintaining status quo on MD & CEO, AVIVA LIFE RK GURUMURTHY 40,000 crore. Further,
Ulips is all right for the time being be- HEAD- TRADING & ALM, we may have to add
cause one of the unintended conse- ING VYSYA BANK anything that comes
quences of the change in charge struc- under regular government bond auctions.
ture was that a whole lot of new prod- We are now trying to do version 2.0 of cause of the cap on charges, how do der for that to happen, it is important Cash management bill (CMB)-related
ucts were launched in January 2010. what the agency channel should look you plan to bring down costs? that the insurance amendment bill goes inflows of Rs 12,000 crore is the offset.
But sooner than later, the situation has like. We are applying much more ana- If you keep all the expenses of an insur- through and Irda gets the power to CP/CD rates have likely peaked or worse,
to change. lytics to find out who our successful ance company on one side and keep your change the rate of renewal commission. close to a peak in the short end. There is
agents are and we found a few interest- people costs and distributor costs, the lat- some speculation that we may see further
Aviva India was seen to be badly hit ing things. For instance, in Karnataka ter will be higher. There will be short-term How is Aviva doing internationally? relaxation in the repoable component of
after it lost its bancassurance part- and Tamil Nadu, people over 50 make
ners. How has that changed your better agents whereas in the Hindi
pain for the industry but the cost of distri-
bution will have to come down.
Last year, analysts were tracking capital
conservation position of companies. The
SLR should LAF numbers move
significantly higher from the current 60
strategy? heartland, females above 35 have a solvency surplus as per the EU Insur- odd thousand crore. We have also heard
That was a couple of years higher level of success. So Do you see agency commission com- ance Groups Directive rose to £4.4 bil- from authorities about gradual spending by
ago. We can’t ignore our rather than have a large ing down? lion. Aviva is in a strong position, having the government, which should buttress
strengths in bancassur- number of agents, I am It will depend on the new regulations. partially hived off its Delta Lloyd (a system liquidity. Overall, while LAF
ance. Globally, Aviva’s happier with 20,000 What the Life Insurance Council and Dutch subsidiary) stake and sale of Aus- numbers will continue to trade negatively
model is the bancassur- agents giving better pro- Irda have been trying to convey to the tralian business. The group is again look- in the higher end of recent ranges and
ance model. But the na- ductivity and being tightly public is that over the tenure of the poli- ing to grow out. possibly higher, call market should hover
ture of the beast in India is monitored for quality. Our cy, the charge structure is not high but around recent ranges.
that it is a multi-distribu- agents have come down the pain comes because of the front- Do you see any further capital infu-
tion model. Therefore, we have done a from a peak level of 45,000 to around loading of charges. I think the sion?
lot of stuff on the agency side. But with 22,000, but our sales have increased groundswell of charges is that because Our paid-up capital is Rs 1,880 crore. We
3.5 million agents already in the market, 40%. Last financial year saw our topline commission is front loaded, charges are are unlikely to need capital this year. If
hiring the next one lakh agents will not grow by 15% while expenses went front loaded and the customer who does we do, it will be marginal. It will ulti-
make a difference. Also, having a large down 30% and persistency improved. not last out the tenure of the policy loses mately depend on how the charge struc-
agency force has a great significance on out. Maybe, there is a case for spreading ture changes.
how your costs ratchet up. Now there is pressure on margins be- out over the life of the policy, but in or- mayur.shetty@timesgroup.com

FORCES THAT LED TO EURO’S DROP HAVE PUSHED EUROPEAN STOCK PRICES SHARPLY LOWER & ITS FALL TO $1.21 EXACERBATED THOSE LOSSES

Don’t change your portfolio just on basis of euro’s decline

Paul J Lim ing for only about seven months, a short pe- real and the South Korean won, for example,
ments in the Standard & Poor’s 500 index of
riod on which to base long-term portfolio it has lost value against currencies like the
domestic stocks and the EAFE.

F or Americans with significant expo- decisions. To be sure, fears are growing that
sure to foreign stocks, the euro’s 16% the euro could slide for several more
decline against the dollar this year may months, and some economists say it could
lead to second thoughts. even fall to parity with the dollar. But re-
After all, the same forces that led to the member that only six months ago, many
Mexican peso and the Thai baht. That explains
why, since the start of the year, the MSCI
Emerging Markets index has lost around 6%
in local currencies and 8% in dollars.
But Peng Chen, president of Ibbotson As-
sociates, the investment advisory firm,
notes that currency fluctuations are one as-
pect of foreign investing that has been
In Japan and Canada, currency fluctua-
shown to be essentially unrelated to move-
euro’s drop — namely, the region’s mount- economists were concerned about the dol- tions have worked to the benefit of American
ments in the S&P 500. In fact, over the past
ing debt and credit problems — have lar’s weakness and the euro’s strength. investors. Although the MSCI Japan stock in-
20 years, the correlation between move-
pushed European stock prices sharply low- And while foreign currency fluctuations dex is down nearly 7% this year, those losses
ments in European currencies and the S&P
er. And the currency’s fall to $1.21 last week have served as a headwind for Americans amount to less than 5% when converted into
500 has been just a negative 0.07, he said.
from $1.43 at the start of the year has only investing in Europe lately, they have been a dollars. Young argued that this shows the risks
(Negative correlation implies that when
exacerbated those losses. tailwind for Americans investing abroad for of abandoning a foreign investing strategy
the currencies rise against the dollar, the S&P
Although the Morgan Stanley Capital In- much of the past decade. simply because of euro’s woes. Perhaps the
500 may fall, and vice versa, but the 0.07 fig-
ternational EAFE (for Europe, Australasia Over the past 10 years, the EAFE index best case for maintaining overseas holdings,
ure is so small that the two movements can be
and the Far East) index of foreign shares is has fallen around 4%, annualised, in local though, is that exposure to different curren-
seen as virtually independent.)
down nearly 7% in 2010, the losses have currencies. But because the dollar was cies has been shown to make a portfolio more
Of course, currency exposure can bolster
been twice as large for Americans after fac- weakening against the euro and other stable, and not more volatile, in the long run.
returns in some years and hurt them in oth-
toring in the strengthening dollar. world currencies for much of this period, those that mainly hold domestic stocks. Standard & Poor’s Equity Research Services. ers. It’s hard to predict. But that’s the point of
But before investors start changing their Americans suffered milder losses, just 2% a Keep in mind, too, that while the dollar Young points out that while the dollar’s rise HOW IS THAT POSSIBLE? diversification — maintaining broad-based
portfolios because of concerns over curren- year, on average, in EAFE stocks. This may has strengthened against the euro this year, has been a huge burden on European stock Stock markets around the world have exposure to various assets, even if some might
cy risk, market strategists advise them to partly explain why investors in recent years it hasn’t necessarily gained that much holdings, “there’s been much less currency grown more correlated, thanks to the effects lose value, because it’s impossible to tell when
consider several things. have poured more money into stock funds ground against other currencies, said Alec B drag when it comes to the emerging markets.” of globalisation. In fact, there is now a corre- one investment will fare better than another.
For starters, the euro has been weaken- with mainly foreign holdings than into Young, international equity strategist for While the dollar has risen against the Brazilian lation level of about 0.9 between move- (New York Times News Service)
THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010 *
PERSONAL FINANCE 15

QUERY CORNER

PANKAJ MATHPAL
CERTIFIED FINANCIAL PLANNER

OUR PF EXPERT HELPS YOU
NAVIGATE THE COMPLEX
WORLD OF FINANCE. EMAIL
YOUR QUESTIONS TO
etquery@indiatimes.com
I am 29 years old
and my current
CTC is Rs 4.5 lakh per
annum. My family
includes my sister (35
yrs old) and wife (25
yrs old). Her income is
Rs 3.5 lakh per annum.
How much should I
invest in one mutual
fund/scheme? Should
the maximum amount
be based on the family
as a whole? For
example, if I invest Rs 1
lakh per scheme and
another 1 lakh each in
my wife’s and sister’s
name or collectively Rs
3 lakh in one scheme?
— JIM PATEL
I would recommend
you to have limited
number of schemes in
your portfolio. If money is
being invested from three
individual accounts and
you are going to manage
the entire family portfolio,
I would recommend you
to select two different
schemes in each
individual’s name. You will
have a total of six schemes
you far,valuations do
cannot be assured yet if
you assume a return of
10% per annum from
your portfolio, you can
expect around Rs
10,00,000 after 4 years.
You can raise loan for
balance amount to buy
your house.
M EET any money manager and ask him
My PPF a/c is
going to mature
with a corpus of Rs 15
lakh. Please give some
investment options for
the next 5-year period.
— DINESH JAIN
Your investment
objective, investment
horizon and risk-taking
ability, all will play a role
in determining the
investment instrument
you choose. If you are a
risk-taking investor and
looking for capital
appreciation, you can
invest in a diversified
portfolio of equity and debt
mutual funds; else you can
extend your PPF account
for further block of five
years with or without
contribution.
Themes don’t take
Investors need to get behind the real drivers of investment themes. Nikhil
Walavalkar & Prashant Mahesh list out some to help position you better
“What are your best ideas?” Invariably,
he would talk about the India con-
sumption story. Rationale — 7% GDP growth, fi-
nancial inclusion, low interest rates and no de-
SCRATCH THE SURFACE
pendence on exports. This is probably the most-
talked about theme in Indian equities market
now. For sure, an increase in disposable income
will drive consumption and companies may
make huge profits from this consumption.
But the stock market performance is an alto-
gether different ballgame. Themes can help in-
vestors identify big wealth creation ideas, but
playing themes is not easy. Blindly following
themes can prove Benjamin Disraeli right —
‘What we learn from history is we don’t learn
from history’. Let us take a look at some of these
themes and what they mean:
REPLACEMENT COST THEORY
In modern times — read post liberalisation in 1991
— the Indian equity markets saw many such
themes playing out. The first bull market started
with Harshad Mehta’s replacement cost theory
which argued that old and depreciated companies
ought to be valued on the basis of the cost of re-
placing them. Using leverage stock prices were
rigged to the sky. ACC in those days recording a
high of Rs 10,000 is a case in point. As the liquidity
dried up, the artificially rigged up prices came
crashing own. Blind followers lost out as few could
High net worth requirement for
MFs may not be a great idea
DHIRENDRA KUMAR
CEO, VALUE RESEARCH
ABOUT a month ago, I wrote
about Sebi’s proposed enhance-
ment of the net worth that a mu-
tual fund company needed to
THEORIES ABOUND
have. Currently, the limit is Rs 10
crore, but Sebi is planning to in-
crease this to Rs 50 crore. As I’d
written at that time, this may appear to be something
that would help make investments safer. However, this
THEORY WHY IT IS BEING FOLLOWED is an illusion, just a comfort factor that will play no role in
Buy stock if its value is less than an actual crisis. In reality, the net worth will just end up
REPLACEMENT digging a moat around the business, making it difficult
COST THEORY what it would take to replace its
assets for more players and limiting competition.
Over the past few weeks, I’ve had many interactions
Given that the economy is likely to with people in the mutual fund community on this issue
DOMESTIC which have convinced me that increasing the net worth
grow at more than 7% per annum,
CONSUMPTION requirement will do tangible damage to the future of
there is a huge middle class which
THEORY mutual fund investing in India in ways that will directly
will indulge in discretionary spending
impact investors. In its current form, the Indian mutual
Given the acute shortage of power fund industry is now effectively almost two decades old.
POWER THEME in the country, companies associated
Over this period, the industry has grown to 39 currently
with power, transmission and distri- operating mutual fund companies managing about Rs 8
bution find favour with investors lakh crore of investors’ money. However, when you
stand back and try and look at Indian mutual funds, one
The government has earmarked a is stuck by the essential sameness of all major players.
INFRASTRUCTURE huge sum for the infrastructure seg-
There is a basic template for what kind of funds an as-
ment , as good infrastructure helps set management company runs, how it deals with in-
propel growth vestors, how it deals with advisors and what kind of a
Retail has emerged as a total new message it carries about itself to the world. Practically,
REAL ESTATE sector, guzzling a lot of real estate, the entire fund industry is stamped out of this same tem-
plate, with any new approach to the investor limited to
while increasing incomes lead to
attempts to tinker a little bit with the AMC’s public im-
people moving in to bigger houses, age. Even with the upheaval that mutual funds are fac-
leading to higher demand for ing because of the abolition of entry loads and the ava-
real estate lanche of reforms that Sebi has unleashed, there isn’t

in your portfolio.
Proportion of investment
can be decided based on
investible surplus in
individual account.
I am 25 years old
and I am working
as software
professional. My
monthly savings are
around Rs 16k-18k. I
am planning to buy a
flat for approximately
Rs 30-35 lakh in 3-4
years. Please suggest
an appropriate
investment option so
as to achieve my goal.
— VAIBHAV AGARWAL
Invest your savings
in diversified equity
mutual fund and balance
mutual fund schemes
through SIP route.
Though returns from
mutual funds are market
linked and therefore,
I am around 52
years old, I want to
invest up to Rs 40,000
per annum. Kindly
advise on what is the
best and safe
instrument for 5-6 years.
— JANGAM CS
If you consider
yourself a risk-taking
investor, then I would
recommend you to invest
some amount in diversified
equity mutual fund for
better capital appreciation
and the balance you can
invest in assured returns
schemes like bank FD and
Company FD. Returns
from mutual funds are
market linked and
therefore, cannot be
assured; The possibility of
capital erosion cannot be
ruled out, but equity has
always given better returns
in the long term.
SARFARAZ
manage a timely exit. “For retail investors, it is very any revolutionary thinking about whether mutual
difficult to time these themes and it is best left to the funds can offer a new deal to its customers and to finan-
fund manager,” says K Ramanathan, chief invest- cial advisors.
ment officer ING Mutual Fund. globally. It also turned that prices of a large ries. There are instances where stocks of compa- What could this new deal be? Perhaps, it could fi-
number of stocks were artificially manipulated nies with almost no operating businesses saw nally be a comprehensive investment solution rather
ICE THEORY and stockbroker Ketan Parikh was indicted by multifold price rise on the back of land banks. than products that are sold piecemeal? Or a new ap-
After Harshad Mehta, investor risk appetite was the regulator for stock manipulation. Along with real estate, energy played a key proach to investor education and investment selec-
subdued for several years until the new millenni- role. As crude neared $150 mark per barrel, the tion? Or a radically different type of customer service
um brought with it the ‘new economy’ stocks. In- INFRA, REAL ESTATE AND POWER power starving economy searched for all pow- delivered in an innovative low-cost way? What do all
formation technology, communications and en- The markets took a breather for a couple of years, er generation stories. Power turned out to be these have to do with net worth? Only that small,
tertainment (ICE) was the theme in 2000. Players though the corporate growth was on track. BRIC one of the sought-after sectors. Reliance Power new fund companies are much more likely to try and
such as Infosys Technologies, Wipro, Aptech & report by Goldman Sachs broke the silence in In- hit new records in terms of valuations. break the mould rather than just rely on size to be a
NIIT grew at a very high rate. Even the mutual dian equity markets. From 2003 onwards, Indian me-too business.
fund industry took note of the growing interest in stock markets primarily moved around infra- DOMESTIC CONSUMPTION THEORY Even in recent years, it’s been the smaller or at least
this sector. Mutual funds launched sector-specific structure theme. Global investors on the back of Today, investors are of the view that the India newer AMCs like Benchmark or Quantum or Peerless
funds. Investors rode the rally and more than dou- low interest rates got into the carry trades. Bor- growth story is intact and the middle class dispos- that have tried to do something differently. Ideally, a
bled money in one year even in mutual funds. rowing in a weak currency such as the yen with able income is growing, which will lead to more fund manager or another investment professional with
But there were more disasters than outper- very low interest rates and investing in a country spending. So, whether it is white goods like air- a good track record should be able to get hold of some
formers in the business. For the investors in such as India with a strong currency with poten- conditioners, refrigerators or plasma TVs or eating start-up capital and start a specialty AMC. That would be
those days, anything that carried a dot com in tial to earn superior return turned out to be the at restaurants or eating pizzas, or spending a nice that much more difficult if a capital Rs 50 crore is need-
the name of the company needs a different price most important strategy for foreign money. holiday, the consumer is going to spend money. ed just to buy an entry ticket.
tag. Valuations hit through the roof. At one end, Within the theme, capital goods were one of Hence, one sees stocks such as Mahindra Holidays, The net worth idea basically arises from the notion
Infosys Technologies quoted at Rs 50,000 a the most preferred destinations for many. The Jubilant Foodworks, Whirlpool witness a lot of in- that a fund house’s own capital has some connection to
piece. At the other extreme, stocks like Hi- companies saw phenomenal growth in both vestor interest and trading at a premium to market the fund’s capital; that in some sense, the AMC’s own
machal Futuristic, Silverline and DSQ Software business performance and stock prices. Rally till valuations. “Blindly buying any theme may be capital stands behind the fund. This is wrong, to put it
also quoted at four-digit price tags. It was once 2007, along with bull market in equities, en- risky as the popular themes in most cases price in very simply. It should be crystal clear to all investors that
again proved that those who believe in the compassed many other sectors such as financials growth prospects. It is better to take a stock-specif- the fund is there only to provide investment manage-
phrase ‘it is different this time’ run the risk of and real estate. Real estate stocks could fetch ic approach looking at growth in light of valua- ment services to its customers. All the returns and gains
losing their shirt. As investors started looking for dizzy valuations on Indian bourses. Analysts tions,” says Alok Ranjan, head PMS, Way2wealth. as well as the risks and losses are the customers’ alone.
cash flows rather than eyeballs, stocks crashed found solace in businesses with land bank sto- nikhil.walvalkar@timesgroup.com

MUMBA! HOUSING AND AREA

I5I
DEVELOPMENT BOARD
(A Regional Unit MHADA) -
_ _ _ _

INVITATION OF TENDER FOR SALE OF COMMERCIAL TENEMENTS

The Chief OfficerIMumbai Housing and Area Development Board (MHADB) Mumbai, invite sealed tenders for sale of
commercial Tenements at Pratiksha Nagar-Sion, Sahakar Nagar-Chembur, Turbhe Mandale-Mankhurd , Shashtri
Nagar-Goregaon, Siddhartha Nagar-Goregaon,Ashokvan-Dahisar, Chandivali-Powai & Malavani-Malad. Details of
L’ F_ II_ . commercial Tenements(Shops).
l1!— available
the

H Sr.
No.
1
Location

2
Total
Shops
3
CarpetAreaof
shop In Sq.ft
4
Offset price
in Rs.
5
EMD perShop
In Rs.
6

.
1 Pratiksha Nagar , Sion 99 !) f.II
92.00 11 ,31 ,400 !- 1 ,13,140/-
to to• to
p1 1 l;1q

.
—
164.00 19 ,64
. ,500/
•IiY - 1,96,450/-
2A Sahakar Nagar,Chembur 24 92.00
9’ ‘II &93L
7, ,800/-
III7 79,380/-
to to to
VIII BE ALLOWED 126.00 [•I’J
11 ,21 ,400/- 1 ,12 ,140/-
t. rni’ i;r —1,24 ,849/-
__ _
2B Turbhe Mandale , Mankhurd 16 181.00 12,48,486/-
LAVATORY. Me7
—

.
3A Shastri Nagar, Goregaon 4 212.00
Y4 III 14,15,106/- 1,41 ,510/-
to• to• to
IATORY WILL 239.00 i:tsJ
15,94 ,780/- 1 ,59• ,778/-
(AT THE END OF 3B .1Ii11i 1Nagar
Siddhartha , Goregaon
F I ]LtCI.] I.tijt1j J 3 89.13 6,48 ,413/- 64 ,842/-

U 3C Ashokvan , Dahisar 4
—i•
to•
100.32
I• ’
90.09
to•
7,29• ,856/-
7,88,670/-
to
72 ,986/
i; ,867/-
78 YI

U 3D Chandivali, Pawai 14
to
137.13
90.92
12,01
to•
I ,420/-
I
5,28 ,791/-
to
1,20 ,142/-
_ _ _ _ _ _ _ _ _ _ _ _

52,879/-
bldg .No . 1 to to to

—) — 3E S. No.263 , Malavani Malad 4 —180.00

i:i.x.i.
ei&;
397 69e 23,12 ,965!-
10,
L 52 ,000/- 1,05
IIIIIY — !ø j ,200/-
eI’7
2 ,31 ,297/-

:;
______________________

For each shop sealed tenderalongwith EMD should be submitted.

Before filling the tender the applicant should personally check the carpet area and super builtup of the

::- :;;
commercial Tenement.
, •
-
- • of
I - information
Detail • shops - & conditions of allotment are given in brochure.
• • & terms S S

The above shops will be allotted on “As iswhere is basis”.

:
::‘.:
‘ The tender document alongwith tenderform will be made available for Rs. 1000/- (Non Refundable)
-

I
Sale of Tenders from
. 21/06/2010 to 03/07/2010 Between 11 00 a.m. to 1.30 p.m. at Room No. 203, 1St Floor,
: - - Mumbai
I _
n , Bandra (East), S - -400
III 051.
I
•- -
Griha Nirman- Bhava 1
ACCEPTANCE & OPENING OF • TENDERS Place 4- :- Gulzarilal Nanda Meeting HaIl, 3rd floor , Griha Nirman
P• , Bandra (east), Mumbai
Bhavan U • i •— 400
- •k
.i 051.

Date ‘r flh!
Details Times
iiiit
Sr. No. 1
:: :i:
05/07/2010
06/07/2010
Acceptance
Opening
11.00 am . to 1.30 pm.
11.00 am . onwards
Sr. No.2
A, B :: :ii:
06/07/2010
07/07/2010
Acceptance
-•
Opening:“•
11.00 am. to 1.30 p.m.
11.00 am. onwards
Sr. No. 3
A, B,C, D, E :: :i:
06/ 07/ 2010
07/07/2010
Acceptance
Opening
______
11.00 a m . to 1.30 p.m.
11.00 a m . onward s
e Allotment shall be made to highest tenderer.
-
The Sale Price of the Shop is tentative & the rights of change in sale price is reserved with the Chief Officer,
MHADB , Mumbai.
‘.- If higher biddercould not deposit the cost or breach of any conditions the EMD will be forfeited..
Note : The right to reject any or all the tenders without assigning any reason are reserved by the Chief
Officer
• • ,MHADB
1. 41.
,Mumbai.
4 II • -

Dr. Satish Bhide (lA S)

Chief Officer/Mumbai Board
Notice : Mumbai board has not appointed any organisation , mediator, broker or authorised person for sale or
allotment of these commercial tenements. Applicants are hereby cautioned not to deal with such persons , or
organisation and the board shall not be responsible for any such transaction.
16 MARKETS * THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010

QIPs fizzle out as market turns volatile

Shares Of Many Cos That Raised Funds Via QIPs Trade Below Issue Price
Vijay Gurav & Apurv Gupta
MUMBAI
F UND-RAISING through
qualified institutional
placements (QIPs) has
slowed down sharply in the past
couple of months due to uncer-
tain market conditions. Stock
markets around the world, in-
cluding India, have been volatile
since late April, as nervous in-
vestors reacted to news flows
from European countries reel-
ing under a sovereign debt crisis.
Fund managers have turned
risk averse, while companies
feel they may not get a
good enough price in the
present market.
Shares of many companies
that recently made placements
to institutional investors, are
trading below the issue price.
This, according to investment
bankers, may be a blessing in
disguise for investors who can
take advantage of the discount to
buy more shares and increase
their holdings. The possibility
looks stronger particularly in
fundamentally sound, high-
growth companies where re-
turns expectations are quite
high, they feel.
Reflecting the lacklustre
trend in the QIP mar-
ket, three companies
raised only Rs 948
crore between May
and mid-June. This
BEAR
is less than half HUG
of Rs 2,107 crore that
five companies raised
in April. The month before,
four companies raised
Rs 1,600 crore.
Abhay Bhalerao, director
of Mumbai-based investment
banking firm Equirus Capital,
attributes the lull in fund-raising
to adverse market conditions.
He, however, feels institution-
al investors are unlikely to take a
bearish view on their invest-
ments in existing companies.
“They, in fact, will take advan-
tage of cheaper valuations to
raise their holdings in funda-
mentally strong companies
with better prospects,” said
Mr Bhalerao.
Even though funds
are available, in-
vestors are not very
keen on deploying
them in riskier assets,
said Fortune Finan-
cial Services joint
managing director and Group
CEO Devesh Kumar. “Risk
aversion has risen due to nega-
tive news flows from devel-
oped economies and the re-
sultant uncertainty in the
stock market. We expect the
market to be volatile in the
near term,” Mr Kumar said.
MID-TERM PICKS
While many companies, partic-
ularly in realty and infrastructure
sectors successfully mopped up
large funds in the past, most of
them are now quoting substantial-
BROKING HOUSE: BONANZA PORTFOLIO
HCL TECHNOLOGIES
ly below the QIP prices. Out of the
15 offers since January this year, as MARKET PRICE: Rs 369
many as 10 are quoting at a dis-
BUY TARGET PRICE: Rs 428
count ranging from 4% to 23%.
For example, 3i Infotech mo- THE COMPANY reported a good growth
bilised Rs 180 crore through in topline in Q3FY10. Order inflows in the coming
placement of shares to qualified
institutional buyers at Rs 78.6 a
quarter would further aid the company in
reporting higher revenue. We estimate that the
share while the stock closed at company would report a topline of close to
Rs 62.5 on Friday. Welspun In- Rs 12,600 crore (consolidated) in FY10 with a
dia is another company which consolidated EPS of Rs 21.4.
made a Rs 156-crore placement
at Rs 100 per share in April this
year. Since then, the share price
has been on a decline and it IFCI
closed at Rs 77.3 on Friday.
vijay.gurav@timesgroup.com MARKET PRICE: Rs 54.3
BUY TARGET PRICE: Rs 65

Global cues, tax code ‘We continue to be

IFCI HAS maintained its growing trend for FY10
with a rise in the prime business of lending. IFCI
has further strengthened its position and growth
momentum is expected to be sustained. IFCI has

draft to chart course

Harish Rao faces a double dip and that structural
bullish on pharma’
good prospects of getting a banking licence. At a
CMP of Rs 54.3, the share is trading at forward
earnings multiple of 5.43x of FY11E and P/BV of
1.08x for FY11E.
MUMBAI issues, such as sovereign debt, will keep

INDIAN stocks may continue to look

overseas for direction in the week ahead.
But analysts see limited upsides from
these levels, as investors are expected to
book profits since uncertainty about Eu-
rope’s health is yet to recede. Investors
will closely watch the contents of the re-
vised direct tax code draft, which is likely
to be published by the finance ministry
this week for public opinion.
“The market (Nifty) has
5000-5050 acting as a strong
support zone and will have to
look for positive cues from
global markets to build on re-
cent gains,” said Dipan Mehta
of Dipan Mehta Shares and
Stock Brokers. Last week, the Nifty shed
0.3% to 5119.35.
With local economic data, including
last week’s industrial production reading
for April, which is at a 20-year high, re-
maining robust, investors have little
doubts about the recovery in the Indian
economy. But they fear India’s economic
growth would be affected, if problems in
Europe are not solved.
“A mood of depression pervades glob-
al equity markets. Most investors we
speak to believe that the global economy
TODAY’S BETS
global growth sub-trend for a prolonged
period,” said Garry Evans, global head of
equity strategy at HSBC.
But the bank thinks such fears are
stretched. “We are happy to stick to our
view that this is a normal correction, not a
new bear market, and that some coun-
tries’ equities, especially in emerging
markets, now offer interesting opportu-
nities,” said Mr Evans.
Barclays Capital, in a re-
port, said, “We believe that
markets have overreacted
assuming that the recovery
is losing strength. But we do
underestimate the existing
difficulties from the Euro-
pean sovereign issues to the
risks of a Chinese bubble.”
Analysts expect shares of Reliance
Industries (RIL) to surge further this
week on news of its Infotel Broadband
acquisition. The stock rose 3% to close
at Rs 1,046.25.
“This could be a good diversification
strategy, as RIL was looking for opportuni-
ties to deploy free cash, but it will also
intensify competition as existing players
will have to deal with a large player with
deeper pockets,” said Gaurav Dua, head-
research, Sharekhan.
With ongoing Euro crisis, overseas fund ASHOK LEYLAND
managers will be compelled to raise exposure BUY
MARKET PRICE: Rs 63
TARGET PRICE: Rs 70
to India, says Reliance MF’s Madhusudan Kela ASHOK LEYLAND, with recovery in the commercial
vehicle (CV) industry during H2 FY10, has posted a
good result for FY10. Margins are better than that of
its closest peer, Eicher Motors. At a CMP of Rs 63, the
stock is trading at 15.9x FY11E and 13.7x FY12E EPS.
Much of the bad We recommend a ‘buy’, in view of sales in April-May
being better than our estimates.
news in the telecom
sector is behind us. If
ICSA INDIA
telecom stocks see
MARKET PRICE: Rs 129
any sharp correction, BUY TARGET PRICE: Rs 165
we would definitely THE MANAGEMENT has stated that the company
plans to maintain its margins at 19-22% for FY11, in
buy them line with our estimates. The high margin embedded
MADHUSUDAN KELA domain, which currently contributes only 35% to the
HEAD-EQUITIES revenue would increase its contribution to the
RELIANCE MUTUAL FUND revenue post-FY11. EPS for FY11 is expected to be at
26.37 (diluted). Investors can buy the counter with a
target of Rs 165 in medium term.
HIS rise within the organisation as well as in the loan demand. The stocks are available at 1.2-1.5 times
fund management industry has been dramatic. But for the their book value, and you can’t go wrong if you have
past few months, there has been speculation that a 2-3-year perspective. SKF
Madhusudan Kela, head-equities, Reliance Mutual
MARKET PRICE: Rs 447
Fund, is quitting. Untrue, insists Mr Kela. In an interview
with Santosh Nair, he says that he is still bullish on the
There is a lot of pessimism about the telecom
sector, more so after the recent 3G bids. Would BUY TARGET PRICE: Rs 485
big picture India story. However, in the short term, globalyou take a contrarian view?

Nifty expected to get sentiment will prevail, he cautions. Much of the bad news in the sector is behind us. If OWING TO its large size and the leadership
these stocks see any sharp correction, we would defi- position, the stock has always commanded
How do you see the market playing out near nitely buy them. The stock prices may have underper- premium valuation over its peers. Growth potential
term in light of global developments? formed over the past couple of years, but the customer in auto and engineering sectors creates an upside

support at 5020 level
THE creation of positions in Nifty options
indicates traders are expecting limited up-
side, but are not ruling out a sharper
downside. Open interest in Nifty call op-
tions was 1.25 lakh shares while that in
put options was 37.75 lakh shares on Fri-
day, analysts said. This shows the pes-
simistic bias of traders towards the mar-
ket. But analysts point out there is a strong
support for the index at 5020, which is the
200-day simple moving average. Among
stocks, SAIL has seen some call writing at
higher levels. Though this means stock
upsides could be capped, analysts are not
ruling out the possibility of a sharp move
before the June series expiry. Harish Rao
suggests an options strategy that captures
a rangebound Nifty and one that captures
a volatile SAIL.
NIFTY
CMP: 5,119.35
Strategy: Long call butterfly
Buy 1 June 5000 call @ 157 Rs 7,850
Sell 2 June 5100 calls @ 86.40 Rs 8,640
Buy 1 June 5200 call @ 35.35 Rs 1,767.50
Net premium paid (50* 19.55) Rs 977.50
This strategy involves limited risks, but
will fetch only commensurate returns.
The maximum profit is when the Nifty ex-
pires at 5100. This will be Rs
4,022.50 (50 * (100-19.55).
The maximum loss will be
limited to the extent of the
net premium paid (Rs
977.50), which will occur
when the Nifty goes below
5000 or above 5200 at expiration. At 5000
levels, all the options will expire worth-
less. Above 5200, the gain from two long
calls will be neutralised by the selling of
two 5100 calls.
WHAT TO
WATCH OUT FOR
INDIA
Results: Bimetal Bearings,
Gokul Refoils, Lancor Holdings and
Responsive Industries will declare
quarterly & annual earnings on
Monday.
WORLD
London: Office for Budget
Responsibility (OBR) economic
forecast. The newly-formed OBR
will publish its first pre-budget
forecasts for the economy and
public finances on Monday.
SAIL
CMP: 196.30
Strategy: Long straddle
Buy 1 June 200 call @ 4 Rs 5,400
Buy 1 June 200 put @ 6 Rs 8,100
Net premium paid (1350 * 10) Rs 13,500
This options strategy involves simultane-
ous purchase of at-the-money call & put
options of the same strike price
and expiration date. This is a
limited-risk strategy as the
maximum loss will be to the
extent of the net premium
paid (Rs 13,500). This will oc-
cur if the stock expires at the
strike price (Rs 200). To profit from the strat-
egy, the stock should move beyond 210
(200+(6+4)) on the upside or 190 (200-
(6+4)) on the downside.
harish.rao@timesgroup.com
In the next 6-12 months, the market will still be ruled base has more than doubled during the same period.
by global sentiment. The ongoing debt crisis in Europe
can have a meaningful impact on markets globally as What about mid-cap stocks in general?
in India, if the situation worsens. If one or two Euro- Would you still go for them in current market
for the stock. It is currently trading at a forward P/E
of 14.3x on CY10E EPS. The stock has potential to
reach Rs 485.
zone countries were to default or the euro as a curren- conditions?
cy breaks down, there will be chaos. Similarly, if there Yes, if there are opportunities, we will continue to in- DISCLAIMER: The views expressed in these pages are from brokerages, analysts and fund
is slowdown in China, the Indian market will be im- vest in companies with scalable business models, with
pacted. Currently, the Indian market is trading at a earnings growth faster than large-caps, and available
managers. Readers should seek professional investment advice before acting on any
recommendation. ET does not associate itself with the choices.
25% premium to China. If China’s earnings multiple relatively cheaper to large-caps. Check out the ET Code of Ethics at www.economictimes.com
contracts, there could be a valuation challenge for In-
dia as well. However, we have seen over the past six Your strategy of betting on mid-caps in a big way
years that the market has produced significantly better has been criticised by your peers. They accuse you
returns than most countries in the world. of boosting portfolio returns by buying IN A NUTSHELL
The India story is getting stronger. For in- into firms with low-floating stock.
stance, this year, you will see a significant fis-
cal consolidation, which was a major worry FUTURE Companies like Siemens and Jindal Steel &
Power were mid-caps when we first bought
Over four lakh investors exit mutual funds
for the market. Over the next 2-3 years, the
gas and oil reserves will materialise and this
SIGNS them. Not only have they delivered better re-
turns, but are now ranked among the large
in three months; MFs seek Sebi help
will further improve our fiscal position. And caps. But I must admit that there have been NEW DELHI: Hit hard by the mass exodus of investors, amounting to an
the real dark horse could be the UID project which can some wrong bets as well. We have tweaked our mid-cap average of over one lakh a month, mutual fund houses are knocking on the
significantly prune the subsidies and improve tax strategy a bit. We will not buy into very small compa- doors of Sebi, which in turn is mulling over possible remedial actions,
collection. And hopefully, the pilferage will reduce. I nies, and would focus on companies with a minimum including an expanded distribution model for these investment products.
believe a 8-9% growth with more reforms from the m-cap of Rs 1,000-1,500 crore. Over four lakh investors are estimated to have closed their mutual fund
government looks real in the next five years. accounts, as determined by the change in the number of MF folios in the
Locally, what are the factors that could dampen past three months, largely driven by redemption in equity-focused MF
How steep do you expect the correction, if it does sentiment for stocks? schemes. At the same time, the debt market-focused schemes saw a rise in
come through, to be? Below average monsoon would rank high on that the number of folios (investor accounts) during the period, but such
If the situation in global markets worsens, we could even list. The reforms process needs to be accelerated. The schemes account for under 10% of total number of MF accounts.
see a 15-20% correction in Indian shares. But since government has shown resolve, but it needs to build
India’s fundamentals are only getting better, and viewed on it, especially in terms of attracting more FDI flows.
in the global context, overseas fund managers will be Rising instances of Maoist and Naxalite attacks could
compelled to increase their exposure to India. Any make foreign fund managers nervous. We are highly
meaningful correction will be a great buying opportuni- dependent on inflows at this stage, because there is
ty for retail investors with a long-term view on equities. not much money coming in locally.
Which are the sectors that interest you? How much cash on an average would you be
We continue to remain overweight on the pharma keeping in your portfolio? Your strategy of
sector. We are bullish on companies which will bene- aggressive cash positions last year was criticised
fit from the domestic consumption story in India. We in industry circles.
like public sector banks. They have underperformed We will use it more as a tool to improve the portfo-
the market for a while due to concerns over rising lio mix. We will not shy away from keeping a
bond yields and hence marked-to-market losses on higher cash level than our peers if market condi-
the bond portfolio. Our view is that PSU banks can tions warrant. But it will not be as high (25%) as
grow their loan books 25% for each of the next three was the case last year.
years, and they have the capital adequacy to meet the nair.santosh@timesgroup.com

TOP PICKS OF THE DAY READING THE CHARTS

SIEMENS ADANI POWER BIOCON INFOSYS UNITECH

BUY BUY BUY SELL SELL

LAST CLOSE Rs 717 LAST CLOSE Rs 121 LAST CLOSE Rs 300 LAST CLOSE Rs 2630 LAST CLOSE Rs 68
TARGET Rs 751 TARGET Rs 130 TARGET Rs 323 TARGET Rs 2516 TARGET Rs 62
STOP LOSS Rs 692 STOP LOSS Rs 116 STOP LOSS Rs 289 STOP LOSS Rs 2689 STOP LOSS Rs 72

Gautam Vora
DIRECTOR
ULJK FINANCIAL
SERVICES
(Views expressed are
personal. The chartist
may have interest in some
or all the stocks.)
Siemens has given 50-DMA
resistance breakout above
Rs 704 levels on the daily
chart with a good volume.
Technical indicators like Sto-
chastic & RSI show the
buying strength in this stock.
exhibits a ‘buy’ signal.
Adani Power has given a
trendline breakout on the
daily chart with a huge
volume. Accumulation was
seen in the past 5-trading
sessions. MACD exhibits buy
signal. Hence, one can go
‘long’ by keeping a stoploss
of Rs 116.
Biocon has given a
consolidation breakout at
Rs 292. It is trading above all
its short and long-term mov-
ing averages. Short-term
oscillators have given a ‘buy’
signal. Volume in this
stock witnesses the
buying strength.
Infosys has given a close
below its short-term moving
averages on the daily chart.
Technical Indicator ADX
shows the weakness in this
stock. Short term oscillator
like stochastic is also negative.
One can sell the stock keeping
the stop loss of Rs 2,689.
Unitech is making lower
tops & lower bottoms forma-
tion on the daily chart. This
stock is in strong downtrend
so any rise in this stock can
be used as a selling opportu-
nity. Technical indicators,
like RSI and MACD, are
looking weak. Ltd RS S hi P gn N INR 010996S39 IC
546 gd Capit J & Debt N1adet Ltd: IN B/NSEENO INF23I279838fNSE MwCe Code: 12
THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010 *
MARKETS 17

Govt may tweak 25% holding rule Domestic focus to

SPICEJET STAKE SALE

New Rule Seen Clashing With Guidelines Like Lock-In On Promoters’ Equity, Fund-Raising Routes
Reena Zachariah
MUMBAI
Sharing a similar view, Prithvi Haldea of
Prime Database says the government has to re-
help co retain edge
lax the lock-in clause, especially for the first Rajesh Naidu December 2008. The fact that some of these

T HE government may have to dilute the

recently announced rule requiring com-
panies to maintain a minimum public
shareholding of 25%. That is because the new
rule contradicts some of the existing regulato-
year, in the case of companies planning a sale
offer. “If the company is raising fresh capital,
then the existing lock-in on promoters’ hold-
ing can continue,” Mr Haldea says.
The new rule requires companies to in-
ET INTELLIGENCE GROUP

THE acquisition of a 37.75% stake in low-

ry guidelines like lock-in on promoters’ equity
and restriction on fund-raising routes.
There is also lack of clarity on how a pre-ini-
tial public offering (pre-IPO) placement to pri-
vate equity funds will be classified. Will it fall
under the promoter group or public share-
holders? Also, sick companies cur-
rently under the Board for Industrial
and Financial Reconstruction (BIFR),
will struggle to comply with the 25% REVERSE
rule as there won’t be any takers for
their shares. GEAR
Present Sebi rules require the pro-
moter of a company to continue own-
ing at least 20% of the post-issue capital for
three years from the day it goes public. The
rule also stipulates that the remaining equity
stake of the promoter be locked-in for one year
from the time of listing. These conditions re-
strict the promoter of a newly-listed company
from diluting his stake further.
“Sebi needs to address the lock-in on pro-
moter’s equity holding,” says Daiwa Securities’
director Ambrish Singh.
crease their public shareholding by 5% every
year till it reaches the 25% level.
Investment bankers say the new rule on
minimum public shareholding is unfair on in-
vestors who have participated in the initial
public offerings (IPOs). This is because their
stake will be reduced further in case
the promoters decided to dilute their
holding through issue of new shares.
The Finance Ministry last week
said that those planning an IPO can
sell just 10% of the company, pro-
vided it has a market value of
Rs 4,000 crore. But they have to raise
their public shareholding to 25% gradually.
The new norm calls for amendment in the list-
ing agreement by stock exchanges.
Another problem for the promoters is that
Sebi rules bar companies from selling shares to
institutions through a qualified institutional
placement (QIP) within a year of having raised
money from the market. This means promoters
will have to sell shares either in the open market
or through a follow-on public offer.
“Considering that it is not in the interest of
shareholders, flexibility should be given to is-
suers in terms of choosing instruments that are
suitable for certain market conditions,” said a
senior banker with a leading domestic invest-
ment bank.
Mr Haldea said that the follow-on public offer
(FPO) is one of the most difficult routes for stake
dilution, as seen from the response to the FPOs of
NTPC and NMDC. There are at least 179 compa-
nies listed on the stock exchanges where the
public float is below the new norm, according to
Crisil Equities estimates. At current market
prices, these companies will collectively raise Rs
1.6 lakh crore if promoters sell their stakes. This
will be nearly double the funds raised through
share sales in FY10. If they attempt to achieve the
25% limit through sale of new shares, they will
raise Rs 2.1 lakh crore, the report says.
“Excess supply in the market will create an
overhang in stocks, putting pressure on the
share price,” said an investment banker with
a transnational bank, adding, “too much sup-
ply in the primary market will depress the sec-
ondary market.”
reena.zachariah@timesgroup.com
cost or budget airline Spice Jet by Sun TV
Network’s chief Kalanithi Maran, including
the holdings of strategic investor Wilbur Ross
and Bhulo Kansagra, one of the promoters
of the company, at Rs 47.25, augurs well for
the company. In an industry which bleeds
cash, SpiceJet should be better off with an in-
vestor such as the promoter Sun TV Net-
work, which has deep pockets and is doing
well in the South.
Retail investors stand to gain
a lot from this deal. By holding
on for a while they may be in a
position to secure a better price
either in the form of the open
offer of 20%, which Mr Maran
has to launch or let the market
factor in the development in the company’s
stock price and then unload it at a better price
than the current ruling price
of Rs 56.
In the past one year, the company’s stock
price has nearly trebled in value (163%).
These returns have come at a time when the
low-cost carrier turned profitable on a full-
year basis for the first time in five years. Gold-
man Sachs Investment Partners Mauritius
built up a 6% stake through conversion of
institutional investors have stayed on reflects
their belief in the long-term viability of the
low-cost carrier business model in India.
Spice Jet’s low-cost carrier business mod-
el appears to have worked well on the effi-
ciency scale as after close to a decade it has
been able to generate a profit on a full-year
basis. This is quite a feat considering the fact
although all the full service carriers have
been able to prune their losses, they are still
in the red.
Going forward, it is only the low-cost car-
rier that may flourish in the local aviation
business. If SpiceJet chooses to
commence overseas opera-
tions like its airline counterparts
— Jet Airways (Rs 16,000-
crore debt as of FY09) and
Kingfisher Airlines (Rs 5,665
crore debt as of FY09), its bal-
ance sheet will be saddled with a huge debt
burden compared to relatively light debt
burden (Rs 488 crore debt as of FY09). Also,
even if it flies abroad, it will end up having to
participate in a cut-throat price war. That is
why its domestic operations would be a cru-
cial revenue driver and in the Indian market,
this business model should continue to do
well. SpiceJet would be better off focusing on
rendering its domestic operations efficient
even as it looks to take wings abroad.

Wealthy investors exit stocks,get debt for safety

warrants issued by the low-cost carrier in rajesh.naidu@timesgroup.com

HNIs Now Prefer Short-Term Schemes That Invest In Instruments With Maturity Of Less Than A Year
Harish Rao
MUMBAI
THE uncertainty in equities has
prompted wealthy investors to re-
duce exposure to shares and invest
in short-term debt schemes that
invest in instruments with a matu-
rity of less than one year. Wealth
managers said that drying up of
money supply in recent weeks has
pushed up yields of short-term
instruments, boosting return
prospects from funds that invest
in such paper.
“The portfolio yield on these
funds are 6.5-7%, which is very at-
tractive in the current scenario,”
said Om Ahuja, head-wealth
management, Emkay Global Fi-
nancial Services. “Investors are at-
tracted to these investments as
they provide a cushion to their
portfolio while giving them steady
returns,” he said.
Short-term debt funds, which
constitute over half of the mutual
fund industry’s assets of roughly Rs
8-lakh crore, invest in commercial
paper, bank certificate of deposits
and money market instruments.
Returns from these instruments
have gone up, as withdrawal of
money by telecom companies and
banks has made funds scarce.
Wealth managers said that yields
on one-month paper have risen to
6.5% from about 4% recently.
Mr Ahuja recommends invest-
ing in Kotak Short-Term Debt
Fund which gave an annualised
return of 8.15% and Birla Dynam-
ic Bond, which returned 7.2% an-
nually. But some warn that Sebi’s
recent move directing mutual
funds to mark their short-term
debt paper to daily closing prices
from July 1 will increase volatility
in short-term bond funds.
Some investors are putting
money in gilt funds, which invest
in government paper. While some
are investing as part of their long-
term plan, a section of investors ex-
pects short spikes in government
bond prices. “The current rally in
the bond market seems to have
caught the imagination of many
market participants where the
benchmark 10-year government
securities rallied from 8.1% to al-
most 7.5%. So, debt funds were
able to give a return of more than
12% while large-cap funds gave a
negative return of 0.36% in the
past two months,” he said.
Equity mutual funds are yet to
see a huge redemption yet, but
flows into these schemes have fall-
en significantly in recent months.
“Incremental flows in equities
have dried up over the past three
months, suggesting many in-
vestors have shifted a part of their
portfolio to short-term corporate
bonds as the interest rates have
spiked up,” said Shuja Siddiqui,
V-P, wealth management, Motilal
Oswal Financial Services.
harish.rao@timesgroup.com

Safe play: Ignore that IPO ANG

rating at your own risk A DD’ ‘G •
,“
INDUSTRIES
MOVING YOUR BUSINESS FORWARD

A Rating Below 3 On A Scale Of 5 Could Leave Your Funds In Trouble HEAVY STEEL
Shailesh Menon tain the background of promoters, quali- said, “We have seen an increased aware-

IN OUR DOMAIN
MUMBAI ty of independent directors, legal cases ness on the part of independent directors
against key management personnel, ac- of their roles and responsibilities. But, the
WHEN you invest in public issues with a counting & reporting standards, manage- inability of independent directors to exer-
rating of less than three on a scale of five, ment quality and compliance & litigation cise adequate oversight over manage-
beware: you are handing over your hard- history while rating the overall corporate ment is one of the major factors for lower Installed fabrication capacity of 24,000 metric tonne per annum with state-of-the art equipments
earned money to a poorly-managed
company. According to IPO raters, com-
governance structure of the company.
“We do a thorough check on the pro-
governance assessments in a few IPO
companies,” he added. Like independent Boiler Support Structures including H-Beams , I-Beams, Star Beams and General Fabrication for Power Plants
panies with a rating of one and two not moter, top management personnel and directors, the functioning of internal audit Fabrication capabilities for Steel Mills , High Rise Buildings , Metro, Railway Overbridges etc.
only have bad business models, but also independent directors while grading a committees too are weak for most small-
weak senior managements and inade- company. Poor accounting practices, sized companies. Frequent changing of
AUD if ED FINANCIAL RESULTS FOR THE YEAR ENDED ON MARCH 31, 2010
quate corporate governance. weak management and compliance external auditors, presence of large num-
(Rs, in Lacs)
In certain cases, rating agencies assign and a long litigation history could impact ber of inactive promoter group members
remarks like ‘frequent change in owner- the overall ranking of the issue,” said and a long list of subsidiary companies CONSOLIDATED STANDALONE
ship structure’, ‘below average inde- DR Dogra, managing director and CEO, without any functional roles also weigh Year to date Year to date Year to date Year to date
pendent directors’ and ‘payment de- Care Ratings. down on ratings, IPO raters said. SI. Part cuIars flgures for figures for figuras for figures for
No. current penod previous current previous
faults’, among several other smaller re- According to Mr Dogra, the quality of Rating agencies also check the an-
ended period ended period ended period ended
marks, while grading an IPO. According independent directors still remains a ma- tecedents of promoters — their earlier (3110312010) (3110312009) (3110312010) (31103/2009)
to raters, there is more to such remarks, as jor problem in small- and mid-sized is- business and banking and finances. as- Audited Aud ited Audited Audited
they actually mean ‘weak promoter sues. In most cases, an independent direc- pects. However, at times there is tinge of a) Net Sales/Income from Operations I I , I3.ua I IUU Q.IQ III IO. UW
structure’, ‘dubious management’ or the tor is either a distant relative of the pro- bias in rating promoters as companies b) Other Opera ng Income 0 0 0 0
company has been a historical defaulter moter, a friend or a close relative of a floated by known promoters get a higher 12445.35 11719.69 11063.78 11719.69
of debt repayments. senior company official. Echoing Mr Do- rating than an unknown promoter. Expenditure
Raters like Crisil, CARE and Icra ascer- gra, Chetan Majithia, head-Crisil Equities shailesh.menon@timesgroup.com a. Increase/decrease in stock in bade and work in progress -486.61 -1076.23 -28.68 -1076.32
b. Consumpton of raw materials 8239.60 7558.43 6441.96 7558.56
c. Purchase of traded goods
d. Employees cost 675.07 727.46 675.07 727.46

Fuel price hike, monsoon may 3.

e. Depreciation
f. Other expenditure
g. Total
(My tern exceeding 10% of the total expendture to bes iiseparate
Profit from Operations before Other Income,
515.94
2089.25
11033.25
427.58
2558.12
10195.36
515.94
2065.36
9669.65
427.58
2553.98
10191.26

trigger next phase of growth 4.

5.
6.
Interest & Exceptional Items (1-2)
Other Income
Profit before Interest & Exceptional Items (3+4)
Financial Expenses
1412.10
1412.10
1356.42
0
1524.33
0
1524.33
1312.02
1394.13
0
1394.13
1356.42
1528.43
0
1528.43
1515.58

V OLATILITY ruled the stock

market all of last week. Though
the week saw a weak start,
markets recovered later as robust
industrial production numbers came in.
14.14% for the corresponding period
earlier. The greenback did not move
much against rupee over the week and
crude prices were also steady.
In the government securities market,
7.
8.
9.
10.
11.
Profit after Interest but before Exceptional Items (5-6)
Exceptional Item s
Profit (+)/ Loss (-) from Ordinary Activities before tax (7+8)
Tax expense
Net Profit (+)/Loss(-) from Ordinary Activities after tax (9-10)
55.68
699, 10
754.78
249.58
505.20
212.31
212.31
130.40
81.91
0
37.71
926.97
964.68
239.65
725.03
12.85
0
12.85
130.40
-117.55
12. Extraordinary Item (net of tax expense Rs
Positive sentiment in international yields inched up on the 8.24% GoI 13. Net Profit (+)/Loss(-) for the period (11-12) 505.20 81.91 725.03 -117.55
markets on the back of strong exports by bond maturing in 2018. As the price of 14. Paid-up equity share capital race \l lue of the Share shall be indicated) 1254 1254 1254 1254
China improved sentiment among the bond fell from Rs 103.13 to Rs 15 Reserve excluding Revaluation Reserves as per balance sheet
domestic equity investors. 102.84 over one week, investors who of previous accounting year 7884.09 7354.75 7880.68 7155.29
The benchmark Nifty lost marginally had invested Rs 1 lakh in bonds last 16. Earnings Per Share (EPS)
to settle at 5119.35 compared to 5135.50 week saw the value for their investment a) Basic and diluted EPS before Extraordinary items for the period,
for the year to data and for tie previous year (not to be annualized)
a week ago, resulting into a loss of fall to Rs 99,717, a loss of 0.28%. b) Basic and diluted EPS after Extraordinary items for the period, for
0.31%. Investors investing Rs 1 lakh in Investors who would have invested the year to date and for the previous year (not to be annualized) 4.03 0.65 5.78
Nifty a week ago could get back only Rs 1 lakh a year ago would have Public shareholding
Rs 99,686. Though short-term investors lost Rs 4,300. - Number of shares 6473122 6473122 6473122 6473122
have seen some loss here, those who The trouble in European markets con- - Percentage of shareholding 51.62 51.62 51.62 51.62
have invested for a year, would see their tinued. Investors are now cautious about Pr omot ers a nd Pro mot e r Group Sh areh olding **
money grow from Rs 1 lakh to Rs 1.10 Spain. The problem with Greece is a) Pledged / Encumbered
- Number of shares 750022 550022 750022 550022
lakh — a gain of 10% in the past expected to spread all over Europe. - Percentage of shares (as a % of the total
12 months. A volatile investment environment is shareholding of promoter and promoter group) 12.36 9.07 12.36 9.07
Telecom remained in focus during the a good case for the yellow metal’s rise. - Percentage of shares (asa% bthh ecaç taoft company) 5.98 4.39 5.58 4.39
week. RIL announced its re-entry into The ultimate currency rose to Rs 18,640 b) Non - encumbered
the telecom space. It acquired a 95% from Rs 18,335 per 10 gram in Mumbai, - Number of shares 5316856 5516856 5316856 5516856
- Percentage of shares (as a % of the total
I ;
stake in Infotel by infusing Rs 4,800 a gain of 1.66%. Rs 1 lakh invested over
shareholding of Promoter and Promoter group) 87.64 90.93 87.64 90.93 I
crore. Infotel has emerged as the success- the past one year in gold has already - Percentage of shares (as a % of the total
ful bidder in all 22 circles of the auction grown to Rs 1,27,278, outperforming share capital of the company) 42.40 43.99 42.40 43.99
for broadband wireless spectrum other asset classes.
conducted by the department of As the Empowered Group of
telecommunications. Reliance Ministers meets over the fuel pricing,
Communications shares climbed up as things may change in domestic
the company announced in-principle
approval of its board for induction of a
ASSET WATCH markets. A price hike will earmark the
reform process but at the same time
strategic investor or a private equity boost inflation in the short term. The
player by way of stake sale up to 26%. industrial production were positive, monsoon has arrived on schedule and a
The week also saw the listing of inflation still remained a cause for good follow-up and fair distribution of
Standard Chartered Bank’s Indian concern. The food price index rose rains can propel the Indian economy
depository receipt (IDR) issue — the first 16.74% for the year to May 29, 2010. into the next phase of growth. Market
offering of such a security. Success of this This was slightly higher than the observers will be observing inflation &
issue could add more depth to the Indian previous week’s annual reading of monsoon in domestic economy and
capital market. Although 16.55%. Fuel price index also followed credit crisis in Europe before deciding
macroeconomic numbers in respect of suit and settled at 14.23% against its path ahead.
18 COMMODITIES * THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010

SWEET OR BITTER? DEMAND & SUPPLY LINES MORPH

While Maharashtra Millers Are Unhappy About Having Lost Their Market Share In Punjab likely to see CARDAMOM
Bengal, Shree Renuka Sugars MD Says His Company Is Just Filling A Public Need
increase in maize
Our Haldia unit has curbed acreage as farmers
price volatility: Murkumbi bet on monsoon
Madhvi Sally prospects of crop. “During 2009-10,
Says Sugar Available Despite Crop Shortage In WB CHANDIGARH the prices in the state ruled well
above the minimum support price

NARENDRA MURKUMBI
S UGAR factories in Maharashtra are said to
be sore at having lost market share in the
east and northeast markets to Shree Renu-
ka Sugars’ new refinery in Haldia, which they say
ket. Our refineries have been built on an import
model and clearly they are meant to re-export .....
but that is a model when India is self-sufficient.
MAIZE acreage in Punjab is expect- (MSP) of Rs 840 per quintal. Overall,
ed to increase by about 1.50 lakh the price is affected by the supply and
hectares to 2.82 lakh hectare this demand structure, the MSP an-
season. The crop, mainly grown nounced by the government and the
Low output to keep
SHREE RENUKA SUGARS MD has been set up to import raw sugar, process and
re-export it. However, Shree Renuka Sugars’ MD
Narendra Murkumbi tells ET’s Ram Sahgal &
Do you think sugar prices will fall further
considering the upbeat estimates for sugar
year 2010-11?
during kharif, largely depends upon government import-export policy,”
monsoon rains and the sowing he said.
starts from May end and the harvest With monsoon expected to be
prices at a high
Kausik Datta that while the refinery has been
built on an import model, its presence has curbed
excessive price volatility and actually made sugar
The range of estimates is huge, from 20 to 26 mt.
One lesson we learnt last year was that crop esti-
mates even end of January turned out to be very
is in September-October. In the last normal this year, production is ex-
few years, maize is also grown in pected to increase significantly as
spring, particularly in the potato compared to last year which was hit
till harvest
available at a time of crop shortage...... wrong. If it had been known that the 2009-10 crop belt of the state. by a drought. “After analysing the 00:00 Prices to stay high in short term
would be close to 18 mt initially, the The current prices are hovering market price data as well as current The outlook for cardamom is quite bullish with the
Your Haldia refinery is causing SRS’ PRICE whole speculative spike in India and around Rs 900 to Rs 950 and past market senti- spice setting new records in price and exports in the
woes for Maharashtra’s sugar CHALLENGE the world market may not have hap- per quintal. The area ments, the maize prices last few weeks. The auction prices in Kerala and
co-operatives..... pened. We have seen how sharp the under maize in Punjab during current year are Tamil Nadu are ruling around Rs 1,640 per kg after
For the first time after Independence, Thanks to our unit, correction has been once the size of has declined from 1.65 expected to prevail in rising to an all-time high of Rs 1,700 per kg in the
West Bengal has its own substantial the retail price of this year’s crop was known (the price lakh hectare in 2000-01 the range of Rs 850 to previous week. Traders feel it could stay around this
sugar production and we have created sugar in Kolkata is has fallen from an average of Rs 35-36 to 1.32 lakh hectare in 950 per quintal in Sep- level in the coming weeks given the fact that the
more than 2,000 jobs directly or indi- in the March quarter to Rs 27 current- 2009-10 but the in- tember-October and availability is low. The prices have shown an ascend-
rectly in the state. Thanks to the refin- lower than that in ly). Generally, the industry, having crease in yield from are likely to increase by ing trend since last December when it crossed the Rs
ery, for the first time, the retail price of Mumbai and Delhi got the crop too low last time, is tend- 27.93 quintal to 34.16 Rs 50 to 100 per quintal 800 per kg mark. Subsequently, it remained at
sugar in Kolkata is lower than that in ing to overestimate the 2010-11 crop. quintal per hectare dur- afterwards,” said Dr around Rs 1,200 per kg for some weeks before
Mumbai and Delhi even though these two cities I think it is too early to tell. ing the period has been Bumper outlook Sidhu while adding shooting up again aided by low supply. With the
Duty-free white sugar are closer to major production centres. I believe this able to arrest the decline With monsoon that bold grains were new harvest to begin only by July, traders predict
imports are creating a has been in public interest. Cumulatively, the Do you think the government will reimpose in production in the expected to be fetching better prices. that the prices should remain high. While the June
country has imported 6 million tonnes in two duty on raw as well as white sugar? state from 4.61 lakh During 2008-09, the futures is around Rs 1,956 per kg, the July futures is
bearish sentiment to the years, almost a million tonnes of which have been ISMA has asked for an immediate duty imposition tonnes in 2000-01 to
normal this year, crop was grown on 8.17 around Rs 1,900 per kg.
production is
extent where local prices imported into Haldia port, processed and sold on white sugar because we don’t see it as having 4.51 lakh tonnes in million hectares in India
expected to increase with the total produc-
mainly in West Bengal and the north-east market. solved any problem. A bulk of imports have been of 2009-10. 00:15 Speculators ruling the market now
have fallen below the This has in fact dampened price volatility and creat- raw sugar that has been processed in the country According to Dr JS International Grains tion of 19.73 million At present, arrivals to the auction markets hardly
world market price. Today, ed on-the-spot availability there. That’s the reason and given the industry running at 60% capacity Sidhu, in charge of the Council is predicting tonne. However, during touch 15 to 20 tonnes compared to over 50 tonnes
the landed price of imports we have a high market share there. We have filled some additional business. A bulk of the problems Agricultural Market that the global maize 2009-10 the production during the peak season. With planters having al-
a public need and a public gap. have been solved by imports of raw sugar whereas Intelligence Centre production will is being estimated to de- ready exhausted their stock, it’s the speculators who
is about Rs 27 a kilo white sugar imports have not contributed much to (AMIC) of the Depart- increase to 809 m cline by about 2.43 mil- are ruling the market now. Some of the auctions will
whereas the ex-mill price For how long do you think the government the solution. Duty-free imports of white sugar are ment of Economics and tonne in 2010-11 lion tonne due to lack of stop in June and re-start in July when the fresh har-
in Maharashtra is about Rs will allow domestic sales of imported sugar? now creating a bearish sentiment to the extent Sociology, Punjab Agri- rains during the mon- vest begins. The arrivals are expected to increase
Currently, there is 0% import duty on raw sugar up where current domestic sugar prices have fallen be- culture University, market prices in soon season. Sidhu said that due to from August.
25 a kilo to December 31. Till then, we will continue to im- low the world market price. Today, the landed price the state start rising after October an expected increase in area under
port and supply of imports is about Rs 27 a kilo whereas the ex-mill when the peak season is over and re- maize in the USA, former Soviet re- 00:30 Good monsoon to boost production
the Bengal mar- price in Maharashtra is about Rs 25. mains high up to April, when the publics, South America and China, In the last season, though the demand was quite
rabi crop from southern states arrives the International Grains Council is high, the supply was below normal. Though esti-
in the market. The AMIC analysed predicting that the global maize mates vary, the produc-
Indian Pharmacopoeia Commission , Ghaziabad the prices of maize that prevailed production will increase to 809 mil- tion is pegged around
eClerx Serv ices L im ited (Standards Setting Institution For Drugs in India)
during past years in Shaheed Bhagat lion tonne during 2010-11 that 11,000 tonnes. Growers
Regd. Office : Sonawala Building, 1 ’ Floor, MINISTRY OF HEALTH & FAMILY WELFARE Singh Nagar and Hoshiarpur mar- are six million tonne more than in are pinning their hopes on
29 Bank Street , Fort , Mumbai - 400 023 Government of India
kets and national and international 2009-10. the southwest monsoon
NOTICE NOTICE INVITING TENDERS (NIT)
NOTICE is hereby given, inter-alia, pursuant to Companies (Passing
for a better crop. The car-
of the resolulion by Postal Ballot) Rules, 2001 , that postal ballot notice S U P P L Y O F LAB O RAT O RY E Q U I P M E N T damom crop in Idukki,
dated June 7, 2010 containing special resolution(s) along with Tender Enquiry No.:HLLIPCDIIPC-01i1O.11 Dated: 14.06.2010 the largest cultivated area,
explanatory statement(s) for items set Out therein, inter-alia, increase Procurement & Consultancy Services Division of HLL Lifecare received good rains towards the end of summer af-
in authorised share capital and issue of bonus equity shares, postal L i m i t e d , for a n d on b e h a l f of I n d i a n P h a r m a c o p o e i a
ballot form and self addressed postage pre-paid envelope have been commission , Ghaziabad invites sealed tenders , fro m eligible
ter an initial dry spell. With the prediction of a nor-
dispatched to the members of the company on/before June 12 , 2010
and qualified bidders for supply of Laboratory Equipment. 4./RFQ No.: 1607(HCLJKCC/PUR/1OISPMI14) t R t/Dated: 14.06.2010 mal monsoon, growers expect the peak produc-
under certificate of posting for seeking their assent/dissent on tion period of August to October could see a
resolution(s) required to be passed under various sections of the The eligible bidders may submit their bids in bid document
Companies Act . 1956. Duly completed postal ballot form should reach to be purchased from the office of HLL Lifecare Limited on r Supply of 2 Nos. Load Haul Dump Machine Complete (LHD) bumper output.
the scrutinizer on or before July 12, 2010. payment of Rs. 3000.00 or US $ 75 per set by Demand Draft 3 Nffif TILast Date: 16.07.2010 (1430 hrs.)
drawn in favour of “HLL Lifecare Limited ” payable at New 00:45 Surging exports to keep demand at a high
For eClerx Services Limited
Sd!- Delhi on all working days from 14th June 2010 to 14th July Last year the export demand was also buoyant with
Date: June 12, 2010 (Gaurav Tongia) 2010 or download the tender documents from official websites the largest cardamom producer, Guatemala, record-
Place: Mumbai Company Secretary of HLL Lifecare Limited , M O H & F W , PC & submit the bid
KIOCL Limited
ing a shortfall in production. India thus became a
along with a Demand Draft of Rs. 3000.00 or US $ 75 per set major supplier in the international market. Exports
payable in favour of HLL Lifecare, Limited , New Delhi. (A Government at India Enterpnse)
1 1 ci FIT Pre Bid Meeting is scheduled to be held at 1100 hrs 1ST on II Block , Koramangala , Bangalore-560 034.INDIA touched 1,750 tonnes till February 2010 and could
_ _ _ _ _ _ _ _ _ _ _
24.06.2010 and techno-commercial bid opening at 1430 hrs Tel : +91 80 25521160, Fax +91 80 25535941 reach 2,000 kg, which is another record. The total
i ft i 0514 f r 4T T 51 T-316PT 1ST on 15.07.2010 at HLL Lifecare Limited , Procurement & In f lj exports for 2008-09 stood at 750 tonnes.
Consu ltancy Services Division , B-14A , Sector-62 , E.maRid.. IfItIA . Id.com
il : bcornrn kudr eor corn WGb. it eI Iww;idoci
f4 T’ t 9510505 09T 7IRIT
9105OIT T05# t, U9f I1T f s4 sir f if r Noida -201 307, Gautam Budh Nagar, Uttar Pradesh , INDIA. 1 ISO 9001 , ISO 14001 & OIISAS 18001 COMPANY 01:00 Low import helped maintain quality
f p fo 10T 411191 9105 54 051 05 54
r if szr 51L 1. fk1 oi (Email: pcd © lifecareh ll.com. PHONE: 0120-4071500 , No . : KIOCLJCOMISAMPLINCI2O1O-1 1 Date : 14.06.2010 As a result of the shortage of crop in Guatemala,
FAX: 0120-4071513).
Ull9T/45P1 #51 11Ff : 0551/ 2010—2011/58 f1 - T 3T4t111T 1 4 Interested bidders may please visit websites of HLL Lifecare NOTICE INVITING TENDER there was hardly any import of Guatemalan car-
3W111T51 05147 057k * 9651 311 14 * 94 0Tf T 7 l 51T * Limited (www.lifecarehll.com), MOH&FW (www.mohfw.nic.in) SAMPLIN G AND ANALYSI S OF IRON O RE PELLET S damom to India, which helped maintain the hold of
0151149T t T ?511519 311 t 1 310511TT11f f 51’T T10 51it 05 05T I 3Fj’fft I51 and IPC (www.ipc.gov.in) for further details. AT NEW MAN GALORE PORT Indian cardamom in the markets. Earlier, when the
71T4 11: 106415799/— ZIT1fl 41fti : 682080/— #514 ¶4 051 451 415111: i i KIOCL Limited invites sealed tenders from reputed & experienced Indian crop was poor, the Guatemalan cardamom
4 — 159623699/— 3F.1 I4: — 37245530/—0111151 14 f 1 issnJ #SI companies who have carried out sampling and analysis works of used to flow to India through legal and illegal routes.
* similar commodities and having well equipped lab with qualified
— RCC framed structure construction f If liT 1 6 4 f 1t T 16 .07 .10 This would be mixed with the Indian cardamom
fkt i11511 114 4 31P11’T f f T: 150710 #5.41 . 2. fkTh oi n/#ri4 #51 manpower within Karnataka, with a valid EIC certificate to take up leading to a decline in the quality of the spice. This
11P1 :0171/ 2010—2011/ 59 15115105 1lN3 51* 51I T HALDIA ENER GY LIMITED sampling and analysis work at its plant at Mangalore .
Please visit our website www .kioclltd.com for tender documents.
trend was not seen for the last one or two years and
05 31057 Th 9/0?t05 05 #4 * (1500 t) unlikely to continue this year too.
3J [[f 51f ff 14f: 89142/— 151fI J: 1790/— 4514 t uf 451 4514 lFf: 121105 NOTICE INVITING TENDER Last date for receipt of sealed tenders is 28.06.2010 at 02:00 PK Krishnakumar
(Domestic Competitive Bidding) PM (1ST) Executive Director (Commercial)
514 - 3T I51: - 419151
* #si4 #rr Th#o r fkf r rk
-

fM : 16.07.10 Th1 51T 11514 114 ZtlfkPT f I1 4: 15.07.10 #5 4I 3. f rf r

TENDER .
I ‘]1;INO: HAL-P2-O1A
r FOR TURNKEY
iii :i Ii’H[s1.
iEXECUTION Gold set to scale
451 pj : 050/20 10-2011/60 505 7 15171- f 5115fti o .
h1
511Tf 05 619191# f I05#4 05 0514 1 39 J11 t11 TFT1f: 534996 / — ?IT111 INTAKE WATER SYSTEM FOR I
4111
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10700/— 45111
#SI4 #51 f
451 411p1: 24 1105
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514 3*4w: — J4: — 419111114 ft1
3J
# ffif j : 16.07.10 f t 1 1511f ‘ w #ft !1;h 1 Government of Kamataka facing resistance
* THERMAL POWER PROJECT AT
3Tt 4Tf ffit 1
: 1507.10 #5 4 f ff 1 4144ff/4514 451 51111 3171/ : KIADB KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD
HALDIA , WEST BENGAL
41
L od of Oppo,tuniti,s DUBAI: There is scope for gold

:
2010—2011 /61 #5135 s 1 11 (05) 057T 7 ,
i 1U,9c
Nrupathunga Road, Bangalore
* WI 51161
prices to set record highs again
51 19614 Complete details of the scope
‘ I of work, general
!IJlNLlLterms
lIJ&J

::.-i
0579T #FR11 R314 005’t05 k conditions and bidding‘ process may be downloaded from SUVARNA KARNATAKA DEVELOPMENT CORRIDOR (SKDC) this week. That said, gold is
;, :‘in, the
31 111I05

:
1433336/— mTi
* 1T51 1: •
facing strong resistance as it
28670/— #5111 ¶4
45514 451 411111:2 #151 #4 34451: — 3T 151: — #11111111#5f 1
* www.haldiaenergy.co.in and is also available _
Expression of Interest (EoI) trades near $1,250. Profit-taking
45T4 451 f #o oI: — f If i1T l 51f’ 4 ffif : 16 .07 . 10 f fl 51i 0514 #4 # t 3ll 1Tf issue dated 09.06.2010
• of Indian Trade Journal. Invitation for Imp lementation of PPP Projects in Karnataka

:
by short-term investors and
15.07.101. 0514115131 151 95151705 ( 1451 i) Non-transferable
S — .S bid
I S S documents
S — may
I . be
1 collected
S — — , from
• No. KIADBISKDC -091 -B/2009-10 Date
iFl : 14.06.2010
!II W IIIl I technical traders has weighed on
05140577 05710 #l ## 054 07 #T9 11I 7,
duringI Inormal
I
* * ZI6T 5 15.06.2010
S to 18.06.2010
1 office hours CORRIGENDUM gold soon after it has moved to
51317 j5151r94 1000/ -, 5 61TI Tf 515 714T 20 against payment of Rs.10
_ : s ,000/- only vide banker ’s

.
trade around this level. Early last
p : i .
‘ This is with reference to the advertisement published on 17.05.2010 in various national dailies
2000/— 7120 31161 34445 171 50 311010515 # 3111151 f T17 5194 3000/— 0550
* * :.
cheque I demand draft payable at Kolkata favouring•
. ; _
for the Information of interested parties. The last date of receipt of EoI has been extended to week gold managed to briefly

. “i.!
.-
71101434445 51 2 054517196
* 7115151 * W 5194 5000/- 052054514 61f 105 Haldia Energy Limited. -
02.01.2010. A pre-app lication meeting is scheduled on 18.06.2010 at 3.30 pm at: break above $1,250, setting a
31 f 517 0094 10000/- T 07 9151T record intraday high of
f I54 3110515* I 051 517 $105 4 #1* 35194 1111* f i1 500/- 94 or#i All correspondence
. I inqu iry w it h respect to above sha ll
.1— Administrative
- Research Institute (ARI) $1,253.50 on 8 June on the
10 be addressed
-5, to: (lAS. Officers Association)
. .
Dubai Gold and Commodities
4 511491 t74
41#517431714 9 519T 3Tt 17lTZt 4 ’ 2. f f94r oli4 f3ii*o o i* # Mr. Sanjoy Infantry Road, Bangalore - 560 001
• Mukherjee
L I:
_ _ _ _
- Exchange, but fell soon after to
4 18.00 #4 0195#4 3114 I Thf#451,P11I0T7371* * f i1i#* 15.30 Manager (E&l) Landmark : Near Bangalore DCP Office settle below this level that day.
#4 5105 9105 P.14 31T05 16.00 #4 74 OIT#4 3. 3514971 f f 10T34 4 CESC House , 4th Floor , For any fu rther information regarding the projectI including any corrigendum Iclarifications Despite high gold prices and
1 11091 05451 471 01T 51 htt p:Uwww .northwesternra ilway.gov.in Ch owr i ng hee Square , Kolkata - 700 001 etc ., issued subsequent to this adver t isment , please refer to www .kiadb.in volatility, investment demand
7 / 9 9 1 9 151r 4141*4 l Phone: +(91 33) 2204 0723 , Fax: +(91 33) 2225 1352 All other I L and conditions of the Eol Invitation remain unc hanged.
terms remains strong. Combined
-
i

Email: sanj oy .mukherjee @cesc .co .in Sd!- Chief Executive Off icer and Executive Member , KIADB exchange traded fund gold
holdings were a record 64.59
million ounces on 10 June.

GPPC I\
‘ ‘
j
NOTICE OF TENDER
Data is lost when
GSPC PIPAVAVPOWER COMPANY LIMITED 1. DESCRIPTION & SPECIFICATIONS : The Admiral Superintendent, Naval
memory crashes
INTERNATIO NAL CO MPETITIVE BIDDIN G
Dockyard, Mumbal - 400 023 invites sealed tenders in two bids System
(Technical & Commercial) for horizontal metal cutting band saw machine,
Don ’t let it happen with your career
TECHGIIL Do More. Do IT,
Uty. 03 Nos. for C. No.37 , SYS Department at Naval Dockyard,Mumbai.
Global Tender Notice for invitation of bids for Design,Construction & Commissioning for Sea-water Intake & Outfall join techgig.
System of 700 MW (2X350 MW) Combined Cycle Power Plant , Pipavav, Dist. Amreli, Gujarat, India. 2. PERIOD & TERMS OF DELIVERY : The estimated duration of work
06 months on placement of order. Log on to: www .techgig.com
GPPC invites the sealed techno commercial bids from orosoective biddersforfollowina EPC works:
3. WEBSITE & COLLECTION: The tender documents can be downloaded fro rr
Sr Last Date for Bid Submission the website www.tenders.pov.in The tender document can also be collected
Particulars Tender No. Sale of Tender upto one day prior last submission date from the following address on receipt
No. Documents Date & Time
of written request forthe same through Post/Fax or Courier:
1 CIVIL WORKS FOR THE SEA MANAGER COMMERCIAL
TCE .54 8A- H 00- 002
WATER INTAKE CHANNEL SYSTEM July 5 2010 July 15 , 2010 till Naval Dockyard, Mumbai - 400 023.
till 15.00 hrs 1ST 15.00 hrs 1ST Phone No 22752066. Fax No 22666985
2 CIVIL WORKS FOR OUTFALL
TCE.5478A-H-500-003 4. COST OF TENDER DOCUMENT : The bidder is to forward a sum of PROJECTS DIVISION : CONTRACTS DEPARTMENT
SUBMARINE PIPELINE
Rs 100/- (Rupees One Hundred only) intheform of a DD payable to PCDA(N), NOTICE INVITING TENDER (NIT)
Note: GPPC has already received the CRZ Recommendation from G0G and CRZ clearance from MOEF, GOl is awaited . Mumhai , along with the T-bid, as the cost of the tender document. Bids Corri gendum No.1 dtd:1O. 06.2010 to Open Tender Notice
GPPC reserves the right to reject or accept , in whole or in part , of any bid document, waive formalities in the qualification received withoutthisamountwill be rejected. Thisamountis non refundable. No. VSP-11 of 2010-11 DL11.05.2010
process , orto negotiate contract terms with any individual firm when such is deemed by GPPC to be in its best interest . 5. PLA C E & DEADLINE FO R TENDER SUBMISSION: Application fortender Name of the Work: Design, Manufacture, Supply, Erection,
GPPCwiII be under no obligation to provide reasons foraccepting or rejecting any bid . will be accepted fill 08 Jul2010 . Sealed tenders maybe dropped in the Box Testing & Commissioning and Performance Guarantee
marked INCOD kept at the liger Gate, Naval Dockyard upto 1200 hrs on Test of Pressure Reducing Stations for Oxygen and
Interested parties can view and download tender documents along with related technical reports from GSPC website Argon ( S pecification No .V S P-A S U-V- 1 6-UTL-004 ( Ri )
08 Jul2010.Late tenders will not be accepted.
(www.gspcg roup.com) or the same can be collected during office hours from: Shri R. B. Shindo, 0GM (Commercial, • Last date and time of collection of tender documents:
GSPC) , 2nd Floor, GSPC Bhavan, Sector-Il , Gandhinagar,Gujarat , lndia-382011. Email: rbshinde©gspcJn and 6. PLACE DATE AND TIME FOR OPENING OF TENDERS : Tenders will Extended up to 16.30 hrs . (1ST) on 28.06.2010
be opened on 08 Jul 2010 at 1400 hrs at Tiger Gate , Naval Dockyard ,
neelam.b@gspc.in. • Last date and time of receipt and opening of Tenders:
Deputy General Manager (Commercial) Mumbai -400 023. Extended up to 14.30 hrs. (1ST) on 30.06.2010
7. AMOUNT AND FORM OF EARNEST MONEY DEPOSIT : The firm would be Contact Person: Shri A Behera , AGM(Mech)/Proj .Cont., Ph:+9 1
GSPC PIPAVAVPOWER COMPANY LIMITED required to submit Earnest Money Deposit of Rs. 1,08 ,000/- (Rupees One 891 2518277 & 429; Fax: +91 891-251 8764
Block No. 15, 3 Floor, Udyog Bhavan, Sector-Il , Gandhinagar-382 011, Gujarat , INDIA. Lakh Eight Thousands Only) in the form of a Bank Guarantee /TR / IPO/ FDR Emad:hodjx jcont@vizagsteeI.com arid projcont@vizagsteel.com
Tender documents for the above tender are available at
Phone: +91-79-66701212/32, Fax: +91-79-66701211 / Bankers Cheque (Not firms cheque) !DD along with the T-bid in favour of www .viza gsteel .com and corrigendum no.1 to detailed NIT
wwW.pspcgroup.com PCDA (Navy), Mumbai. The offers received without Earnest Money Deposit is also available at Govt . website www.tenders.gov.in
would be rejected outrightly. GM (Pro lect) - Contracts
 * THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010
19

www.shippingbiz360.com

Step up indigenisation of ship design R&D: Panel Major port traffic

The task force report has also laid much stress on developing self-reliance on dredger design and manufacturing
V AYYAPPAN designing of passenger ves- cused projects and pro- For this to happen, the report
posts 2.5% growth
MUMBAI 13 JUNE sels (particularly 200 to 400
Pax) for Lakshadweep and A
grammes.
The panel has also pro-
said, that each project should
have an industry buyer and
P ort traffic at major ports of the country registered
2.5% growth on a sequential basis, a tad lower than

T he task force appointed
by shipping ministry to
look at funding patterns
of ship design and research
has called for stepping up in-
digenisation of designs and
equipments for various ves-
sels that are currently being
procured by the country.
More importantly, the panel
is said to have laid much
stress on developing self-re-
liance on designing and man-
ufacturing of dredgers. It also
talked about attracting pri-
vate funding for the promo-
tion of research and develop-
ment (R&D) activities in the
sector.
The task force, under the
chairmanship of Prof SC Mis-
ra, director of Indian Mar-
itime University, Visakhapat-
nam campus, was constituted
in November last year. After
five consultative meetings, it
is expected to submit its re-
port to the government with-
in a fortnight.
Some of the important
projects that the panel has
identified for R&D funding
are indetification of the type
and size of coventional cargo
ship based on shipping fore-
cast in the next 5 to 10 years,
& N Islands, Trailing Suction
Hopper Dredger and Cutter
Suction Dredgers of medium
capacity, coastal and short sea
ships of limited draft suitable
for medium ports in India
and river sea vessels.
The task force has identi-
fied dredgers as one of the
important areas for concen-
trated action through fund-
ing as it has been seen that
India is losing heavily due to
the lack of capability to de-
velop them.
"Unless we develop our
own R&D we can never be in
the forefront of technology.
In that respect indigenisation
of design efforts is absolutely
essential," said Prof Misra.
"Even after 50 years of
containerisation, which is
growing remarkably well in
the country, we cannot say
that we have built one con-
tainer ship. Therefore we
have to always look at other
countries for this. Today we
have LNG shipping, but we
will have to wait for another
30 years to build one LNG
ship. The same applies to so-
lar powered vessels. Should
we go to the West to give us
such vessels?" he asked.
posed a School of Maritime
Design and Research at IMU
Vizag which will have a
board responsible to the in-
dustry as a whole. The board,
the panel suggested, will
have the shipping secretary
as chairman and 7-8 mem-
bers from the industry, uni-
versity and ministry. The
board is conceived as operat-
ing as a cell for funding and
for which it will be assisted
by a technical expert com-
‘Unless we develop our own R&D we mittee of people with sound
can never be in the forefront of background on R&D in ship-
ping and shipbuilding.
technology. In that respect "The expert panel will be
indigenisation of design efforts is in-charge of projects which
are given to various parties
absolutely essential.’ primarily on a research ori-
ented basis. It will not fund
research projects of funda-
For the various activities, report also points out the mental nature but only to
the report has recommended government could link in- those with an applied na-
an initial funding to the tune digenous design with ship- ture," said Prof Misra,
of Rs 20 crore. building subsidy, which every adding, "It will also monitor
"We are insisting the gov- shipbuilder in the country is projects and find a methodol-
ernment that if they have to seeking from the govern- ogy of how to translate the
provide R&D funding, they ment. outcome of the research into
must do it quickly. We are The panel has proposed the industry."
asking the R&D funding to that ministry should transfer After the initial funding
come to indigenous design its funding to the sector thor- from the government, the
promotion. We already have ough IMU Vizag campus, task force suggested, private
a base and we should build which will be in-charge of funding should also come to
on it," he said. providing funding to various research and development.
According to sources, the research organizations for fo-
later the industry be request-
ed to come and fund the
project. "It is mandatory and
depends on a case to case ba-
sis. If the model works, the
panel recommended that a
PPP mode of R&D infrastruc-
ture in shipbuilding should
be thought of in due course,"
he added.
According to the panel,
R&D funding in shipbuilding
is rather poorly managed and
the new mechanism provid-
ed in the report would help
to carry out the funding more
efficiently and effectively.
In order to attract local ex-
pertise in design, the panel
has also recommended inclu-
sion of smaller colleges and
institutes for promotion of
maritime activities.
"What we have said in the
report is that if the base is
broadened, we may get much
better results. The maritime
sector in the country suffers
from very little awareness.
Unless awareness is increased
it will be very difficult to get
meaningful R&D output and
make an impact on the sec-
tor," he concluded.
(For more shipping stories,
visit www.shippingbiz360.com)
the 2.7% growth it registered during the first month
of the fiscal year 2010-11.
According to Indian Ports Association (IPA), the overall
port traffic for May stood at 4.78 million tonne against 4.66
million tonne in April 2010. The association data revealed
that traffic volume at India's 12 major ports grew, albeit
modestly, on a yearly basis to 9.44 million tonne in April-
May, from 9.11 million tonne in the same period last
month, up 3.6%. The data chiefly includes movements of
products like iron ore, petroleum, oil and lubricants, fer-
tiliser and coal, besides container cargo.
Most of the commodities handled by the ports reported
growth during the two-month period, compared with the
previous year, barring raw fertiliser and coal. For April-May,
while coal volumes declined 14%, fertiliser traffic slumped
22% on a year-on-year basis.
On a yearly basis, port traffic at Kandla and Chennai re-
mained robust, up 20.22% and 12.51%, respectively. En-
nore saw a decline in traffic by 23.29% at 0.16 million
tonne, which is the lowest among the 12 major ports.
During April, while container cargo posted a growth of
22.7% compared with the same period in 2009. According
to IPA, the increase was mainly on account of a higher
growth in container cargo traffic. (Our Shipping Bureau)

Volcanic ash Laid up box Wärtsilä installs unique fuel cell technology in ship
detection Oilmeals exports down 9% fleet falls 3.5%
S hip power major Wärtsilä Marine. major harbours. gramme.
sensor to during April–May 2010 Corporation has taken a The fuel cell unit, which has a Installation of the fuel cell The project aims to vali-

help airlines
E
s international ship-
xport of oilmeals during May 2010 declined 3% to
173,604 tonnes from 178,350 tonnes, according to A ping trade is picking
up pace, the num-
major stride towards more
environmentally sound shipping
and cleaner seaborne trans-
nominal output of 20 kW, is
based on planar solid oxide fuel
cell technology (SOFC), and fu-
unit onboard the Undine is
the result of a joint project by
the international METHAPU
date and demonstrate new
technologies for global ship-
ping that can reduce the en-

T he unprecedented
shutdown of European
airspace in April, fol-
lowing eruption of Icelandic
volcano Eyjafjallajokull is
prompting airlines to devel-
op solutions to minimise
such disruptions, should ash
return. For example, budget
airline Easyjet is testing a
new technology to warn
both pilots and the airline's
flight control centre of an
oncoming volcanic ash cloud
up to 100 kilometres ahead,
at altitudes of between 5,000
- 50,000 feet.
Images from the new
Avoid (Airborne Volcanic
Object Identifier and Detec-
tor) that installs infrared
technology onto an aircraft
data compiled by Solvent Extractors’ Association
of India.
Due to lower crushing and disparity in last few
months, the overall export of oilmeals for April-May
ber of idle box ships is seen
decreasing. The idle con-
tainership fleet has de-
creased by 66,000 TEU to
482,000 TEU, or 3.5%, of
portation with the installation of
its WFC20 fuel cell unit onboard
a car carrier. The power unit is
the first of its kind in the world,
elled with methanol. Methanol
is particularly suited for fuelling
the WFC20 since it can be easily
reformed to a composition suit-
consortium. The participants
in the consortium are Wärt-
silä, Wallenius Marine,
Lloyd's Register, Det Norske
vironmental impact of ves-
sels. In addition, it aims to es-
tablish necessary interna-
tional regulations for the use
2010 is reported at 377,950 tonnes compared to 416,935 and will, during the test period, able for the unit. Methanol can Veritas, and the University of of methanol onboard com-
tonnes i.e. down by 9%, the association said. the existing cellular fleet, provide auxiliary power to the be produced from natural gas, or Genoa, each of whom is mercial vessels, and to allow
During the oil year, starting from November 2009 to the lowest level of idling vessel while producing close to from renewable raw materials globally active in the field of the use of methanol as a ma-
March 2010, export of oilmeals declined continuously since December 2008. zero emissions. such as gasificated biomass. fuel cell system integration, rine fuel.
due to steady decrease in production of meat and partly A total of 234 container The car carrier ‘Undine’ is Methanol is a commonly used sustainable shipping, classifi- The 'Undine', with the
due to reduction demand for compound feeds and crisis vessels are currently idling, owned by Swedish Wallenius liquid in the oil and process in- cation work or environmen- Wärtsilä FC20 unit, sailed
in the livestock industry, which has contributed to low- according to Alphaliner's Lines and managed by Wallenius dustries, and is available in all tal assessment. out from the German port of
er consumption of soya meal and other oilmeals, re- latest survey, with only sev- The project has been fund- Bremerhaven in May. From
flecting in lower export from India. en units above 5,000 TEU, ed with EUR 1 million from there it has headed for the
However, the association said, the export has revived compared to 533 idle ves- To Adve rtise in the European Union, and is USA, via Sweden and the
to some extent in the last two months due to revival of sels, including 52 ships of part of the European Com- UK.
economy and demand coming from South East Asian above 5,000 TEU in the munity Framework Pro- (Agencies)
countries. (Our Shipping Bureau) same month last year.
(Agencies)
JOURI ’JAL I t 4
Please Contact: 9819582402 —
sameer sonwane@timesgroup.com

NationalCarriersCorporation ii Ii\11 F i \i ii I1TII1

could give pilots 10 minutes'
advance notice of any ap-
proaching dense ash cloud.
EasyJet CEO Andy Harri-
son said, "This is a huge step
forwards. This pioneering
technology is the silver bul-
let that will make large-scale
ash disruption history."
The shutdown of Euro-
pean airspace in April was
estimated to have cost the
air transport industry up to
$2 billion after flights were
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20 FREEDOM FROM ECONOMICS * THE ECONOMIC TIMES MUMBAI MONDAY 14 JUNE 2010

When love
turned gray
Every human ball being kicked around has to be stopped. A new show by artist
Riyas Komu that kicked off in Mumbai, tells us how we cannot move any
goalpost because we are turning grass into concrete, says Manoj Nair

Let’s carve him as a dish fit for the gods,
Not hew him as a carcass fit for hounds
s you know we are about to enter a
state of apoplexy. We will soon be
mouthing nationalist slogans though
we don’t belong to any of the nations
we will be shouting hoarse for. We will
be screaming profane anthems,
though most of us would not know the
meaning of any of the syllables we pronounce. We
would nearly pretend that the world is at stake. And the
ball is not at our feet. Our feet would rather be hanging
from our safe perches in our drawing rooms and our
dreams drinking the latte of the sporting spectrum.
Don’t you think then we should be inviting attention
of those glued to the universal spectacle to our own back-
yard where some forlorn feet are kicking up dusts of de-
spair as they push an iron ball around? As we hear a spate
of eggheadery from the lips of wonks, don’t you think we
ence, you may ask. That is precisely why we should look
at this game that is as close as we can come to a metaphor
for our nation that is at the threshold of globalization —
not looking in but looking outside — waiting to welcome
the trotting visitor who is bringing soccer to the smart set.
This is why we should ask what a football fan says
about the self. Does it mean looking for a hero elsewhere
while there are possibilities of having a homegrown one?
It is true that our infectious interest is a reflection of our
faux-cosmopolitanism as the game itself is so interna-
tional. Ironically, we do that at the expense of our own
local flavour. Anglophilia if we have an Arsenal in us;
Catalania is we have a Barcelona in us; Italia if we have
an Inter inside… But then our own clubs are cloud-
capped constellations and our players are the ones who
came to our last party and we chose to ignore.
Most of our children within these geographical
boundaries play football. At the age of 4,5, 6, … they kick
around a ball like thing … till the age of 10 when destiny
decides for them that there are no more throw-ins. ‘It is
Have you ever wondered to what we can attribute the
total orphaning of our oldest sport? Perhaps it is difficult to
point fingers as those fingers are more functional chang-
ing channels and spending 90 minutes before the telly.
The one and half hour that defines our identity. An iden-
tity that is shared among a universal group of faceless peo-
ple. Franklin Foer says that it is scary that soccer allows
you to be no longer just born into who you are. You
choose it, which in turn can become a commercial prop-
erty that can be exploited by corporations. But, according
to him, when slipping into an identity becomes easier
then slipping out of it becomes equally easier.
So, shouldn’t a beginning be made by slipping into an
identity that squeals more about our immediate sur-
roundings? The guys kicking a ball around the nearby cor-
nershop or the ones springing from a community culture.
Have you noticed how football is a very obvious plat-
form for political, social and ethnic conflicts to play out?
Every religion it seems begins from the centerline and
moves in the direction the better team takes it to. And the
seas (or Cs). In the alphabetical order C comes before S
even as the C in Cesar and the S in Subrata make the
same sounds. The difference, sadly, is that Cesar sounds
more familiar than Subrata until he is your cousin, class-
mate or colleague.
This report could have sounded like a legal document
devoid of emotion or any decorative effect. But then like
a free kick it took its own curve and is airborne even as
the local lad struggles to liberate himself from his isola-
tion and open the penultimate phase of his inner and
outer ‘homecoming’ with a characteristic interplay of
dream and reality. The World Cup is a dream. The banal
bylanes back home is the reality.
The human tragedy is taking a spiral down the vortex
of cultural amnesia. If only he was part of that team that
had to give the World Cup a go by because of the team
members’ bare feet. Beneath those the feet the grass
might have turned into thorns.
And thorns is what he can expect nearly half a centu-
ry later as he is a member of the discounted population
there is respite or some solace in art which could exam-
ine a post ideological aesthetics of football. It could per-
haps remove his anxiety at the penalty kick.
But that isn’t just enough. He is dreading those thou-
sand odd balls rushing towards him that may take him
with them behind the goal line. Subrata has a long and
lonely walk back to fetch the ball back from the net.
And as he returns we can once again recall those
words from Julius Ceasar:
How many ages hence
Shall this our lofty scene be acted o’er
In states unborn, and accents yet unknown!
Published for the proprietors, Bennett, Coleman & Co. Ltd. by R. Venkata Kesavan at The Times of
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should be looking at the ground beneath our feet? time to move from the flat green goals to a wicket to goalkeeper on either side has one task. To keep the ball out. battling a stifling denial and comfortable forgetfulness Subscription rates: US $ 500 (annual), US $ 250 (half yearly) US $ 125 (Quarterly).
Volume 50 No. 72
Where we are and where were we. Is there any differ- wicket swing or perhaps a net practice.’ Between Subrata and Cesar lies the chasm of several that pervade his country’s cultural landscape. May be

What seeps out from Building a Smarte r Planet : 1 in a Series

me; and Why? I /

S‘
On a day when we are short of everything, can we even think of a new

/
blood for a new world, asks Rajiv Singh
Blood in the water
Dark and red and raw
These are lines from the hit Amer-
ican comedy Legally Blonde which
said Shakambhari Thakur, man-
ager, corporate and community
affairs, Applied Materials India.
Similarly, Tech Mahindra, the
‘
make us think of the blood that we information technology (IT) serv-
don't shed otherwise. ices provider to telecom sector,
conducts blood donation camps

A diti looks like any other

eight-year-old kid: spunky,
talkative and full of energy.
Like any other child, she too has a
dream. She wants to become a
sprinter and fastest woman on the
Earth. But Aditi is not like any other
eight-year-old kid. She is
thalassemic and needs blood
transfusion twice a month.
Undergoing blood transfusion in
one of the private hospitals in Delhi,
Aditi has become immune to the
pain of the needle but one can easily
see discomfort in her father's eyes. "I
don't know whether I would be able
to get blood the next time," said her
father with a chocked voice.
India needs 9-10 million units
of blood every year but only 7
million units of blood are collect-
ed. "We have had Green and
White revolution. Now, it's time
for Red revolution," said Dr R N
Makroo, director, department of
transfusion medicine, In-
draprastha Apollo Hospitals.
And Red indeed is the colour
that's close to the heart of India
Inc. So whether it's Tech Mahin-
dra, Tata Steel, Microsoft India
GTSC, EXL Service, or Applied
Materials India, companies are
pitching in with their efforts by
organising blood donation camps
among employees to help India
tide over the crisis.
We have had Green and
White revolution. Now, it's
time for Red revolution...
What India badly needs is
repeated blood donors
DR R N MAKROO
DIRECTOR, DEPT OF TRANSFUSION
MEDICINE, APOLLO HOSPITALS
The BPO firm EXL Service reg-
ularly organises blood donation
camps at its Noida and Pune
units. "Blood donation is an inte-
gral part of our Corporate Social
Responsibility (CSR) pro-
gramme," said Shruti Jain, vice-
president & global head, corpo-
rate communications and brand,
EXL Service. "We promote blood
donation by encouraging our
employees to participate in such
camps and sending internal com-
munication when employees,
their relatives and friends are in
urgent need for blood."
Bangalore-based Microsoft In-
dia GTSC, which is part of Mi-
crosoft's customer service and
support organisation, is organis-
ing blood donation camp on June
14-15 as a part of its annual com-
munity services week. Binu
Philip, director-HR, Microsoft In-
dia Global Technical Support
Centre (GTSC), said: "We have al-
ways encouraged employees to
work towards giving back to the
society. We have been organising
an annual blood donation camp,
and this year we already see more
enthusiasm and employee in-
volvement."
Applied Materials India, a sub-
sidiary of US-based nano-manu-
facturing technology services
provider, was recently awarded
TT Vasu Memorial Trophy for co-
ordinating and running blood
drives in Chennai and Bangalore,
every two months at its various
locations. "We do not wait for
Donor's day to join in this noble
cause. It is a regular activity at
Tech Mahindra," said a Tech
Mahindra spokesperson.
And it's not only India Inc that
believes in the policy of blood and
iron. IIM (Ahmedabad), one of
the top business schools of the
country known for grooming fu-
ture entrepreneurs, has been en-
thusiastically participating in ush-
ering Red revolution. Between
2004 and 2009, IIM-A collected
3053 units of blood during 38
camps organised at its campus. "
When these IIM grads walk out of
the campus and join business
houses or start their own venture,
they take with them this culture
of blood donation to their respec-
tive organisations," said Ishita
Solanki, head, global partnership
Welcome to the decade of smart.
and corporate affairs, IIM-A.
A year ago , we began a conversation about how our planet transmission system that drastically reduced loan approval
In fact, IIT Delhi chapter of Na- can become smarter. A year into this new era, the signs of a processing time and increased their served customer base
tional Service Scheme (NSS) has
smarter planet are all around us. Smarter systems are creating of 70,000 to over 400,000 in less than three years. Indian
gone beyond blood donation
value in every major industry across the world. Railways implemented an automated Crew Management
camps and started a website,
System to manage its workforce of over 100,000 employees,
bloodconnect.org, containing
database of all interested blood
Intelligence is being infused into systems and processes that resulting in new efficiencies in daily operations.
donors. "Blood donation camps make the world work—cars , appliances , traffic systems , power
grids , even natural systems such as agriculture and waterways. We ’ve learned a lot over the past year about what it takes to
are not enough. You need to have
a pool of interested blood donors build a smarter planet . We ’ve also learned about the issues
who could be contacted any Trillions of digftal devices, connected through the internet , it raises in India and elsewhere— like protecting personal
time," said Nitin Garg, general are producing an ocean of data. And that information can now information and securing critical infrastructures.
secretary, NSS IIT Delhi. "Every be turned into knowledge because we have the computational
youngster must donate blood power and advanced analytics to make sense of it all. Business leaders , policymakers and government officials
regularly. This is how we can around the world are currently stepping up to these challenges.
build a strong India," said Nitin, In a study of 439 cities, those with transportation congestion The time to act is now , and the way to act is together .
who is the brainchild behind systems reduced average travel delays by more than 700,000 The decade of smart is under way.
bloodconnect.org. hours annually. Leading retailers reduced supply chain costs
But in the end, blood donation by up to 30% and increased sales by up to 10%. Let ’ s build a smarter planet. Join us and see what others
is a community-based move- are doing at ibm.com /smar temlanet lin
ment. "There's no point in donat- It’ s happening in India as well . Grameen Koota, a
ing blood once in a life," said Dr micro-finance organisation , employed a real-time data
Makroo, who has donated blood
109 times. "What India badly IBM , the IBM I o, iL e. e, Se e,ter Ptheet Bnd The p eet c em Aedeme 1m o I lerea n Bueeme B hnee CAP., egelped
needs is not blood donors but re- many Jedthcedns em dnede. Ather oThmI and seMce naeem m rd be Aademajks 01 IBM an otha r coaparns A canroan lot of IBM
boiaoarlss is sealable an the WW at Csp OiAht arof badeanark irdocoal
an ot wrkvibm MegaVcoyfthade.obtrrrl, 0 rdemabonal
peated blood donors. All of us thalemo Manhicon Canyrathon 250. =rk
owe something to the society, to
our fellow human beings. And
it's time to pay back not in cash,
but in blood."
 THE ECONOMICTIMES

InvestorsGuide MUMBAI | MONDAY 14 JUNE 2010 | 4 PAGES with ET

Melting
such companies going forward.
After attaining the lifetime high lev-
els around mid-2008, commodity
prices — that of steel, base metals,
crude oil, cement, etc — crashed
substantially amidst the global
meltdown. The fall in prices was in the
range of 55-75% from the peak and
the prices bottomed out in December
2008. The bear-run in commodities
was, however, short-lived. On account
of easy liquidity, signs of economic
recovery globally and return of risk ap-
petite amongst investors, commodity
prices once again rallied from March
2009 onwards fuelling a run-up in the
stock price of steel makers, aluminium
makers, iron producers and sugar
manufacturers.
Base metals such as copper,
aluminium were up almost 72% and
150%, respectively, while crude oil was
up 123% from the bottom, which they
had attained earlier. Prices of regionally-
Although commodity-based
’
commodities, such as cement and on third party sources for raw ed on exchanges and their prices
steel, which are regionally traded and materials, will be the most insulated, fluctuate widely on a daily basis.
hence don’t have much speculative except for the fortunes of its much big- Hindustan Zinc, the world’s least cost
demand, are also on a downward jour- ger European subsidiary. Companies producer, is most protected from a fall
ney. The prices were beaten so badly such as SAIL and JSW Steel that buy in zinc prices. And if you are looking
that it is now time to review what is in coking coal or iron ore from third party for a contra-pick in aluminium sector,
store for commodities going ahead. could take a bigger hit. Hindalco seems to be the best bet. The
As the European economic A similar fate lies in store for base country’s largest aluminium producer
problems unfold and the Chinese metal producers such as Hindalco, has the most diversified product base
economic juggernaut slows down, the Sterlite, Nalco and Hindustan Zinc. and with the acquisition of Novelis, it
genuine as well as speculative demand In fact, these companies could now has a big presence in the
for commodities is expected to remain experience greater volatility in their consumer market for aluminium prod-
depressed throughout FY11. In fact, quarterly profits as unlike steel, ucts. This cushions it from the
a further 10% correction in commod- base metals, such as fluctuation in the commodity price of
ity prices could put them in a aluminium, copper and aluminium.
phase of consolidation in the first zinc, are actively trad-
half of FY11. CEMENT
Provided the economic prob- The cement industry, unlike other
lems are contained, the high commodity industries, is largely
level of global liquidity may dependent on domestic demand
enable commodity prices to gain and supply factors. The cement
momentum in the second half of industry has been grappling
FY11. However, considering the with a difficult operating envi-
high base of last year, commodity ronment, especially in the

W
HEN clouds start
companies have fallen in gathering in the sky,
it always pays to run
line with the overall market for shelter. Be it the
monsoon clouds in
in the past one month, India or the clouds that are gathering
over the prospects of the world’s so-
earnings growth prospects called advanced countries. Just like In-
dian consumers are making a beeline
for them in FY11 appear to umbrella shops, the investor
limited as the global community is going towards safer
assets. It is no wonder, therefore, that
commodity prices stay we saw gold as well as US dollar appre-
ciating strongly in the past one month.
under pressure. Investors Global commodity prices, which had
run up substantially, thanks to the sus-
should ask for solid tained growth in liquidity, cooled off
justification before suddenly last month. As speculators
rush away, commodity prices are
investing in commodity unlikely to revive in the near future,
which has put the FY11 earnings
stocks, say Pallavi Mulay forecast of commodity companies
under pressure. Investors are advised
and Ramkrishna Kashelkar to be extra cautious while investing in
traded commodities such as cement and
steel have also shown a smart recovery
in the past one-and-a-half years. In
short, the year gone by proved to be a
boon period for commodities. A strong
rally in commodities took the prices
within striking distance of their earlier
historical high levels by April 2010. (See
chart)
However, the party got disrupted as
the world abruptly woke up to the
European debt crisis. The cautious
efforts by the Chinese government to
cool down their own economy further
added to the worries. Commodity
prices fell around 10% in May 2010
and continued to fall further.
Last month, we saw crude oil prices
falling from $85 level to $70 per barrel.
Other internationally traded
commodities, such as base metals,
have also started softening. The S&P
Industrial Metal Index lost 12.5% in
the past one month. Prices of
prices may not rule higher on a y-o-y southern region due to slug-
basis. As a result, companies selling gish demand conditions, at
these commodities could see their a time when output has
realisations almost stagnant been expanding in this
throughout the year. Any profit region.
growth, therefore, can come only from The industry’s total
volumes growth. But given the high capacity utilisation at
fixed cost of commodity producers, the end of March 2010
volume-led profit growth will not be was at 85% levels, at a
juicy enough to excite markets. time when its capacity
Although a number of brokerage had grown 12.4% on
houses are reiterating their buy a y-o-y basis to nearly
recommendations on metal or cement 245 million tonne.
companies, their EPS growth
projections for FY11 are stagnant. In
Losing Sheen: P 3
fact, they are cleverly pitching their
investment ideas based on earnings
estimates for FY12.
METALS
The steel industry has wit-
nessed prices easing while
the iron ore prices are
strengthening, of late.
Although the domestic
demand remains strong,
global uncertainties are
affecting the pricing
environment. While a further fall
in prices may not take place due to
high costs, the margins are expected
to remain under pressure
throughout the year. Tata Steel,
which is only partially
dependent

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 PORTFOLIO 2 Investor’s Guide MONDAY
14.6.10
ILARGE .
CAP
G
.V ‘
AII
1Growt h •Div.Va lue .Contra
C
I
D

SPARKLING BRIGHT
Considering that Indian Oil commands a premium over
BYLL’S
BHARTI AIRTEL
RAMKRISHNA KASHELKAR RESEARCH: HSBC
ET I N T E L L I G E N C E G R O U P its peers, long-term investors can bet on this stock RATING: SELL
CMP: RS 274.55

A T A time when the

government is actively
considering a decision on
deregulating fuel prices, investors
should consider taking exposure to
IOC controls a 52% stake in
Chennai Petroleum, which has two
refineries with a total capacity of 10.2
mt. It has also picked up
stake in 12 domestic E&P
tain extent, if not fully — that can
reduce the industry’s under-recovery
burden. While the government
continues to dither on
price revisions, IOC has
blocks, where IOC holds a stake. In the
next 2-3 years, IOC will see some
revenues coming from this business.
The company is setting up a 15 mtpa
refinery with integrated
from the government and its practice
of issuing it in the form of special oil
bonds till last year, which had no
buyers, IOC had to depend heavily on
borrowed funds to run its day-to-day
HSBC maintains `Sell’ rating on Bharti Airtel (Bharti). Bharti’s Zain deal
in Africa is expected to be earnings dilutive in the near term (dilution es-
timated at 14% for FY11 and 10% for FY12). The challenges before it
include tariff cuts and elasticity, high taxes and the need for a gener-
alised approach when it will be important to provide a local flavour in
the industry. And what better stock
to invest in than the industry leader,
Indian Oil (IOC), particularly when
it is attractively valued compared to
its peers.

BUSINESS
blocks, which include 2
CBM blocks, apart from 9
blocks overseas. It has
been losing heavily due to
the government’s policy to
control retail prices petrol,
diesel, kerosene and LPG despite
{IDEA}
STOCK been expanding its non-
oil portfolio, which
contributed an
insignificant Rs 360 crore
to its FY10 profits. Its
naphtha cracker and
petrochemicals complex can go a great
petrochemicals complex at Paradip,
which is scheduled to be
commissioned by March 2012. It is
also expanding the capacity of its Pani-
pat refinery by 25% to 15 mtpa.

IOC operates eight refineries across
the country with a total refining
capacity of nearly 50 million tonne per
annum. The company controls nearly
55% market share in retail sales of pe-
troleum products. It is also a leading
producer of downstream petrochemi-
cals such as linear alkyl benzene (LAB)
and purified terephthalic acid (PTA) in
India. The company recently commis-
sioned 1.5 mtpa naphtha cracker and
downstream units to produce polyeth-
ylene and polypropylene at Panipat.
rising crude oil prices.
GROWTH DRIVERS
The government’s intent to act upon
Kirit Parikh committee report is the
most important growth driver for the
company, which will emerge the
biggest beneficiary of deregulation.
The Centre’s recent decision to revise
APM gas prices and its aim towards
cutting the fiscal deficit are indications
that it is serious about decontrolling
the retail fuel prices — at least to a cer-
FINANCIALS
business. As a result, its debt-to-equity
ratio, which stood at 0.6 in FY04,
crossed 1 in FY09. The interest cost too
rose at a CAGR of 50% to Rs 4,282
crore in FY09. FY10 was, however,
significantly better with oil prices
falling, which enabled IOC to curtail
each market. News reports mentioning Bharti’s plans to join hands with
other tier-2 telecom operators in Africa to share radio access networks
can be a positive, as it will enable the company to expand network rap-
idly with minimum capex and operating expenditure. However, due to
lack of details on this matter, HSBC is not changing its forecasts. On the
other hand, network sharing is considered a double-edged sword as op-
erator loses independence. HSBC’s cautious view on Bharti is driven by
way in augmenting this. IOC has been one of the most stable interest cost by almost 60%. weak earnings growth and the hurdles it will likely face in replicating
In the E&P business, hydrocarbons public sector refiners in India, growing the minute factory model at Zain.
have been discovered in some of the its net profit at a CAGR of 13.3% over VALUATIONS
the past five years, while sales grew at At the current market price, the scrip JINDAL STEEL & POWER
Sections Numbers 13.6%. In the past seven years, after is trading at a price-to-earnings
the erstwhile administered pricing multiple of 7.7, which is lower RESEARCH: MORGAN STANLEY
Beta 0.7 mechanism (APM) was dismantled, compared to its peers, BPCL and RATING: HOLD
Institutional Holding 6% the company has received nearly Rs HPCL. Considering the fact that the CMP: RS 640
Dividend Yield 3.5 160,000 crore as assistance from company historically commanded Morgan Stanley upped its target price to Rs 666 but maintained its
Current P/E 7.7 upstream companies and the premium over its peers, thanks to its ‘Hold’ rating on Jindal Steel & Power (JSPL). Although JSPL’s growth
government and still it lost over Rs stability in profits, sizeable non-oil trajectory is steepening for both its power and steel businesses, its array
Current M-Cap Rs 82,222.5 cr 30,000 crore on under-recoveries. business and size, the low P/E is an of projects remain high-return Morgan Stanley doesn’t find much up-
CMP Rs 338.7 Due to delays in receipt of assistance invitation to long-term investors. IOC side from the current levels. According to MS, the company is among
declared a dividend of Rs 12 per the best-positioned steel companies with 100% self-sufficiency in iron
share, translating in a dividend yield ore and growing proportion of value-added products. Steel business
of 3.5% — the highest among its EBIDTA is expected to grow at a CAGR of 31% with volume CAGR of
peers. The market value of 16% over 2010-2013E. The EBIDTA growth estimates for next two
company’s investments in the listed years have been upped following a higher forecast for steel prices, jump
companies, such as Chennai in JSPL’s pellet production from Orissa plant, commissioning of Jhark-
Petroleum, ONGC, Gail and hand steel project and a 1350-MW power plant.
Petronet LNG, stands at Rs 23,700
crore, which is 28% of its current
market capitalisation. MORE RESEARCH REPORTS ON

CONCERNS
www.etintelligence.com
The government’s inability to
introduce any solution to the issue
of under-recovery in the near future TVS MOTORS
could deprive Indian Oil of any RESEARCH: MORGAN STANLEY
immediate growth trigger. RATING: EQUAL-WEIGHT
ramkrishna.kashelkar@timesgroup.com CMP: RS 103.65
Morgan Stanley assumed coverage on TVS Motors with `Equal-weight’
rating as the recent run-up in the stock has priced in much of the upside

In Safe Waters On Fast Track from demand recovery. TVS was a strong outperformer in FY10, as
margins have expanded through overall volume recovery and the ben-
efits of operating leverage. On the back of its new launches of Jive and
Wego in FY11, MS projects strong 23% CAGR EBITDA growth from

{
Given the anticipated upturn in the global shipping industry in the Sundaram Finance is expected to grow at a high rate and its FY10 to FY12. However, the company’s performance will depend on
the success of new launches amid competition and input costs. While
medium term, SCI seems to be an attractive bet valuations are reasonable. Investors can consider this stock the new launches are expected to grow its domestic volumes by 18% in
FY11E, it is expected to disclose around Rs 50 crore loss towards its op-
A M R I T E S H W A R M AT H U R acquisitions is approximately $1.5 billion (nearly Rs profit from continuing operations increased erations in Indonesia for FY10. MS estimates the company to ramp up
ET I N T E L L I G E N C E G R O U P 6,900 crore). These acquisitions will be financed
MID G D
by 34% in FY10. This comes on the back of margins to 7.1% in FY11 via higher operating leverage.

ILUJ
through combination of internal resources and 29% growth in disbursements.
STATE-OWNED Shipping Corporation of India
(SCI) appears well positioned to take advantage of
the much-awaited upturn in the global shipping in-
external commercial borrowings.
SCI’s leverage ratio was just 0.33 at the end of
FY09, one of the lowest in the industry and it leaves
CAP V C
What makes Sundaram Finance an
interesting story is that the segment it
finances, primarily CV, tends to grow at a
NAGARJUNA CONSTRUCTION
RESEARCH: RBS
dustry. That’s because the US economy, a key deter-
minant of the global shipping industry, is on the
enough headroom to fund the company’s
expansion plans. Also, as per the recently • Growth -Div -Value .Contra much higher rate than the industry in times
of economic boom. And since the industry is
RATING: BUY
CMP: RS 187.05

{ Two
growth path and demand for crude oil is also show-
ing signs of a revival. This, in turn, should help
freight rates in the key tanker segment of the
shipping industry, where vessels are
announced rules related to shareholding pattern cyclical in nature, it is expected that the RBS retains ‘Buy’ rating on Nagarjuna Construction (NCC) and raises
and ensuring 25% public float, it does appear that KARAN SEHGAL recovery, which started last year, will contin- the target price to Rs 215.20. For the March ‘10 quarter, normalised PAT
SCI will need to come with a follow-on issue to ET I N T E L L I G E N C E G R O U P ue for a year at least. For instance, last time, of NCC rose 46% q-o-q and 83% y-o=y to Rs 69.9 crore on an 28.3% q-
dilute the government stake, going the bull run in CV market lasted from FY04 o-q and 38.7% y-o-y increase in net sales to Rs 1520 crore, thanks to a

TAKE
utilised for transporting petroleum forward. However, details regarding SUNDARAM Finance is a non-banking to FY07. So, Sundaram Finance will surprise of 6% in net sales and 40 bps EBITDA margin. The consolidat-
products. Indian shipping companies a follow-on offer are still sketchy. financial company (NBFC) primarily continue to grow at high levels for the next ed entity’s FY10 performance beat the guidance thanks to improved
have a majority of capacity utilised in focused on commercial vehicle (CV) and car one year at least. profitability from NCC’s Dubai subsidiary. Execution by NCC’s build-
the tanker segment. FINANCIALS finance segments. The company’s business operate-transfer (BOT) portfolio of subsidiaries improved in FY10 de-
In addition, strong demand for The shipping industry experienced a follows the up and down in the automobile VALUATIONS spite lack of new orders. The Bangalore Elevated bridge started collect-
crude oil from emerging markets, very difficult operating environment, sector and in FY10, about 55-60% of its loan At current prices, Sundaram Finance’s stock ing tolls in April, while remaining three projects will start toll collection
such as China, and a revival in other especially during the year ended book came from CV loans and 25-30% from by September ‘10. Thanks to its existing large portfolio of assets ready
emerging economies, will help the shipping March 10, due to sluggish global demand for car finance. Sections Numbers for securitisation, the company is in a better position to win more BOT
industry emerge from the slump during the year transporting crude oil. As a result, for players such When the auto sector was going through Beta 0.5 projects from NHAI.
ended March 10. We had recommended this stock as SCI, operating profit margin during the previous turbulent times in FY09 due to the Institutional Holding 12.8%
in our issue dated June 22, 2009 and since then the financial year declined 1110 basis points y-o-y to slowdown, Sundaram Finance was also KPIT CUMMINS
stock has gained 41.6%. Also, this stock trades at 15.5%, at a time when its net sales also fell 16.9% affected. The growth in its net profit from
Dividend Yield 1.5%
about 1.1 times its book value for the year ended to Rs 3,463.1 crore. That’s because in the key tanker continuing operations fell from 35% in FY08 Current P/E 11.2 RESEARCH: PRABHUDAS LILLADHER
March 2009, while it has traded in a range between segment, for crude carriers, their average freight to 11% in FY09. However, it must be noted Current M-Cap Rs 2,339 cr RATING: ACCUMULATE
0.64 times and 0.8 times between March 2005 and rates had dropped to $23,800 per day levels, in the that the slowdown was severe, as many top CMP Rs 421.1 CMP: RS 132.65
March 2008. However, given the anticipated first quarter of FY10, a sequential decline of nearly CV manufacturers saw their net Prabhudas Lilladher reiterates ‘Accumulate’ rating on KPIT Cummins
upturn in the global shipping indus- profit evaporating. For instance, with a 11% higher target price of Rs 140. PL remains optimistic on the
try in the medium term, we believe TRYING TO STAY AFLOAT Tata Motors reported a loss of Rs BRIGHT FUTURE success of the company’s recently launched product ‘Revolvo’, which is
that there is still upside potential in Financia ls of Shipping Corporation of India 2,800 crore approximately in Sundaram Finance’s Financials an indigenously developed hybrid technology solution for automobiles.
this stock. FY09. Despite such an economic Mar TTM ending Y-o-Y
KPIT announced a 50:50 joint venture with Bharat Forge to manufac-
environment, Sundaram Finance 2010 Qtr Mar 2010* Change ture and market the same. The company, which is currently focussed
FLEET SIZE managed to grow its bottom line in on the retrofit market for 130 million vehicles in India, is trying to tie up
Shipping Corporation’s owned fleet Net Sales 889.4 3462.6 -16.9 FY09, which shows the resilience Total Income 343.2 1,248.7 12.0% with OEMs and service stations. This new product is expected to have
capacity was 75 vessels with a capac- [•
Other Income
III 4 ]II I 116.4 435.2 -20.3 in its business. Employee Expenses 28.3 100.1 6.4% a material impact on the revenues and margins, improving the revenue
ity of 5.35 million dead weight Come FY10, the recovery in Provisions & Write Offs 46.2 86.7 87.7% mix and de-risking the business model for KPIT.
tonnes (DWT) as on August 2009, a Employee Expenses 138.9 466.3 -6.8 auto market started. Sundaram Fi-
rise of 12.4% from two years earlier. Other Expenses Other Expenses 14.8 59.9 -16.4%
574.7 1991.4 -2.5 nance grew at a higher rate than HINDUSTAN UNILEVER
Shipping Corp, like other players, in the industry. For instance, the Interest Expense 169.6 633.8 -1.8%
this sector has a majority of its
Operating Profit .8
P4.1
175 536.5
li 1.
. -51.6 company reported a growth of RESEARCH: MACQUARIE
Profit After Tax 54.2 209.2 38.8%
capacity utilised for the tanker Depreciation 99 380.1 17.4 51% in disbursements in the RATING: UNDERPERFORM
* for the trailing twelve months ending March 2010 (Rs. crore) Source: Capitaline
segment. At the end of March, 2010, NetUProfIt 7 I1 135.9
i.
1 76.9
3IL.1.’ -59.9 medium & heavy commercial CMP: RS 252.50
SCI had a fleet of 76 vessels with a vehicle (M&HCV) segment vis-à- Macquarie has initiated coverage on Hindustan Unilever with `Under-
capacity of about 5.14 million DWT.
Extraordinary
r Items
lO1II 28.3 99.52 WA vis the industry growth of 33% in FY10. is trading at a price-to-earning multiple perform’ rating. In view of the intensified competition, the company
Rival GE Shipping’s fleet capacity Adjusted Net Profit 107.5 L277.4
lI -70.6 Similarly, it grew its disbursements in car (P/E) of 11. Other NBFCs are trading at can avoid losing market share only at the cost of margin erosion due to
was 2.71 million DWT in May 10. finance at a higher than industry rate. This much higher valuation. This shows that the aggressive price cuts and increase in promotional expenses. Since ‘05,
However, the underlying helped it improve the market share in car stock is reasonably priced. Since the HUL has lost 15% market share in certain categories due to lack of prod-
problem related to SCI’s fleet was the age profile of 27.7%. However, with a pick-up in the global econ- finance segment to 4% in FY10 from 2.5% company’s business is in a recovery mode, uct differentiation in its core categories. Soaps and detergents that rep-
its vessels — at the end of August 2009, SCI has omy, especially in the US and China in the second two years ago. thanks to general recovery in automobile resent 45% of HUL’s sales are unlikely to provide strong growth due to
highlighted that 85% of its dry bulk fleet capacity is half of the financial year, freight rates for crude ves- The company boasts of the best asset qual- sector and specifically to CV segment, the already high penetration. Macquarie believes competition will force
over 15 years old and it has handymax vessels sels recovered and averaged about $29,000 in the ity in the industry. At the end of FY10, net profit growth will remain high going HUL to pull back its investments and management’s focus away from
which are even over 20 years old. As a result, quick fourth quarter of FY10. Nevertheless, its adjusted non-performing assets (NPA) formed 0.45% forward. This means that the stock price can future growth categories. This could hamper HUL’s new product
deployment of these vessels with clients is difficult, net profit declined 70.4% to Rs 279.9 crore for year of advances. In fact, at such levels, its asset post gains without stretching the valuations. launches and innovations that may have helped drive stronger growth.
as users typically prefer younger vessels. ended March 10. GE Shipping’s consolidated quality is comparable to the best Indian Moreover, the stock has earlier traded at
operating profit margin also declined 740 basis banks. It maintains a strict control on its asset high valuations. In the run up to the peak of
EXPANSION PLANS points y-o-y to 37% in the previous financial year. book, as none of the loans it has financed are last bull run, its P/E ranged from 15 to 20. So Disclaimer: Investor’s Guide does not accept responsibility for
SCI has an ambitious programme to modernise its unsecured. This gives a cushion to investors the stock price can post gains due to increase consequences of financial decisions taken by readers on the
fleet and to take advantage of the growth VALUATIONS as bad assets can wipe out a financial institu- in valuations too. Moreover, the valuations basis of information provided herein. The aim is to provide a
opportunities over the next few years. As part of SCI trades at 18.8 times on a trailing four-quarter tion’s profits. Moreover, a good asset quality in other NBFCs look a bit stretched. The
that strategy, it had earlier got government basis, while rival GE Shipping trades at 8.8 times on allows a financer to press the lending liquidity can move to this stock as the reasonably accurate picture of financial and related opportuni-
approval for a total capex of Rs 13,135 crore to a consolidated basis. One of its peers in the private accelerators in the recovery phase. This is ex- company is expected to grow at a high rate. ties based on information available with us. The Times of India
induct 62 new vessels by the end of the 11th plan sector, Mercator Lines, trades at 19.8 times on a actly what Sundaram Finance has done in This makes it a compelling case for investors Group has invested in several companies; a list of the names
(which ends 2012). SCI has 30 vessels on order and consolidated basis. Investors could consider SCI on FY10. to consider this stock from one year’s of some of the investee companies can be viewed at
these vessels will be delivered at various time points a long-term basis. The company posted good numbers all perspective. http://www.privatetreaties.com
by 2012. The total capex involved for these amrit.mathur@timesgroup.com through the year ending March 2010. Its net karan.sehgal@timesgroup.com

VALUATION

Negative Side-Effects
cephalosporin range of antibiotics. Its product
portfolio comprises 44 APIs and 7 API intermedi- HEALTH IS WEALTH At the higher end of the price band, Parabolic
ates. It has two manufacturing facilities located at Parabolic Drugs’ Financials Drugs seeks a P/E multiple of around 17.5x,

It’
Derabassi, Punjab and Panchkula, Haryana. The adjusted for IPO equity dilution. This is
company has also started the operations at its expensive compared to its listed peers such as
custom synthesis and R&D centre at Barwala, Aurbindo Pharma, Surya Pharma, Orchid and
Given Parabolic Drugs’ presence in the API segment and its debt-laden Haryana from January 2010.
Sales 346.1
Nectar Lifesciences among others. The company
Total Income 350.0
balance sheet, the issue looks expensive and investors can give it a miss The proposed facilities include a
manufacturing facility for non-antibiotic Operating Income 61.6
has also entered into the CRAMs space from Jan-
uary 2010 and the players in this segment, such
J W A L I T V YA S promoter’s holding falling to 40% from 63% cur- products at Chachrauli, Derabassi and another Depreciation 4.1 as Dishman Pharma and Divi, have a higher P/E
ET I N T E L L I G E N C E G R O U P rently. Of the total net proceeds, the company custom synthesis and manufacturing site at multiples than the company seeks for its shares.
will use Rs 115.5 crore for funding Panchkula. This will add to about Interest 29.6
Profit Before Tax 27.9

NORTH INDIA-BASED Parabolic Drugs is
IPO details
Company Name:
Parabolic Drugs
coming out with an initial public offer of around
23.5 million shares to raise around Rs 200 crore.
The issue is being made through a 100% book
Ltd. building process in the price band of Rs 75-85 per
share with a face value of Rs 10 each. The issue
Issue Size: includes offer for sale of little over 2 million
Rs 200 crore shares by its two private equity investors — BTS
and Alden Global. These two investors are
Price Band: offloading nearly one-third of their holding in
{ }
its capital expenditure and Rs 39
crore for repayment of loans.
Given the company’s presence in
the API segment of the pharma
IPO
industry and its debt-heavy laden
balance sheet the issue looks expen-
WATCH
sive and retail investors can give it a
miss.
BUSINESS
80% of the total existing capacity. It CONCERNS
has also filed 17 dossiers with
various regulatory authorities.
In FY09, exports accounted for
Provision For Tax
Profit Aft er Tax
6.5
21.4
The company has a negative operating cash
flow and is dependent on lenders and investors
to funds its working capital as well as capex
nearly 25% of the company’s total
revenues of Rs 430 crore.
plans. In contrast, most of its listed peers have
strong internal accruals. The silver lining is
reported operating margins of 18%. In FY09, PAT that, the company has a better return on capital
FINANCIALS margins were hurt due to increase in interest employed than most of its peers. Top five
In the past four years, Parabolic Drug’s net sales burden and foreign exchange losses. Post issue customers contribute about 40% of the total
have expanded at a compounded annual growth the debt-equity ratio would improve to 1.3x revenue and represent a high dependency on a

I
Rs 75-85 the company and post issue the combined Incorporated in 1996, the company rate (CAGR) of 68%. In the same period, net from around 3.3x at present. This calculation ex- handful of clients.
holding of these two funds will decline to little manufactures active pharmaceuticals ingredients profit has grown at CAGR 59%. The operating cludes the gains from repayment of debt of worth
Issue Date: over 11% from 23% currently. The fresh issue is (APIs) and API intermediate for unregulated and margin during the period has fluctuated from a Rs 39 crore which the company has promised af- ★
AVOID AT ALL COSTS BELOW AVERAGE ★★
Jun 14 to Jun 17 equivalent to around 37% of the company’s regulated markets. It currently manufactures low of 10% in FY05 to high of 16% in FY08. In ter to do after the IPO. AVERAGE ★★★ ABOVE AVERAGE ★★★★
post-IPO equity and the issue will result in the semi synthetic penicillin (SSP) and the first nine months of FY10, the company MUST HAVE ★★★★★
 14.6.10 MONDAY
3 Investor’s Guide FINANCIAL PLANNER

G
V
D
C SURE AND STEADY
Highly Bruised J W A L I T V YA S
ET I N T E L L I G E N C E G R O U P
SBI Magnum COMMA’s high beta and theme-specific portfolio
make it unsuitable for a conservative investor
S MALL-CAP FMCG player Jyothy Lab-
oratories has continued its streak of
outperforming the broader market in-
dices since August 2009. The stock has near-
ly tripled in value in the past one year
against a 15% rise in the Sensex and a 34%
appreciation in ET FMCG Index. The
company’s robust financial performance
and its foray into new businesses are the
major reasons for its superior
Investors looking for a business with steady earnings growth and strong
free cash flows can accumulate Jyothy Laboratories’ stock, albeit on dips
brand Maxo has an all-India market financials. The net sales have grown at a
share of 22%. Exo, its dishwashing compounded annual growth rate
product, has a 24% market share in
Southern India and has been raising its
market share across the country
following its national roll-out in
October 2009.
(CAGR) of 12.5% since FY06 to touch
Rs 574 crore in the year ended FY10.
The net profit jumped by over 11.6% to
Rs 80 crore in the same period. To main-
tain its dividend pay out ratio of 42%,
The company has also forayed into the company increased its dividend per
laundry business by launching a share to Rs 4 from Rs 2 last year. But
laundry service through its 75% considering the increase in stock price,
subsidiary Jyothy Fabricare Services dividend yield has fallen from 2.9% to
(JFSL). The company 1.8%.

{IDEA}
performance on the bourses. expects net revenue of Rs 50 The contribution from fabricare,
Investors interested in
companies in the small-cap
space can consider this stock as
STOCK crore from this subsidiary
this financial year.
The company’s most
mosquito repellent, dishwashing
products and other is 46%, 31%, 16%
and 7% of the revenues, respectively.
a safe bet. recent venture is the Brandwise, Ujala has shown a growth
purchase of DEPA technolo- of 22.7%, Maxo has shown 28.6%, Exo
BUSINESS gy from DRDO (Defense in the year ended March 2010. JFSL is plan- has shown 50.8% in revenues in FY10.
The Kerala-based company, which has Research & Development Organisation). ning to enter Hyderabad, Chennai and Pune According to the management, JFSL will be
evolved from a single product proprietary This technology offers a repellant and explore franchise route from FY12. able to break even by the end of FY10
firm to a multi-brand company, involved formulation that acts as a protection against The purchase of DEPA technology gives
in the manufacturing and marketing of all blood sucking insects and mosquitoes its access to Rs 90-crore outdoor mosquito VALUATIONS
products in fabric care, mosquito when applied. This product is slated for a repellant market, which it expects to touch The company is at present valued at slightly
repellant, surface cleaning, personal care launch in the second quarter of this fiscal Rs 200 crore in another two years. With the less than three times its revenues. It is
and incense sticks. and it will be marketed across India and oth- launch of its product, the company would trading at a price-to-earning (P/E) multiple
The company’s flagship brand Ujala (fab- er countries. be able to capture most of this market. It of around 21.5. The stock seems to be fairly
ric whitener) is enjoying a market expects this business to contribute 4% to its valued at the current levels. It’s a right
leadership in its category. Over the years, GROWTH DRIVERS top line. investment for long-term investors looking
the company has extended this brand to With an aim to increase pan-India presence for a company with steady earnings growth
other product categories such as washing of its products, the company has increased FINANCIALS and strong free cash flows.
powder and stiffener. Its mosquito repellent its spend on advertisements by almost 50% It is a cash-rich company with sound jwalit.vyas@timesgroup.com

When the cover ceased to exist

ti AXA Life Insurance. “Investors can
conveniently track their accounts through
call centers of these companies,” he adds.
In case of Ulips, where investors need to
B A K U L C H U G A N TO N G I A scheme, the fund’s objective and update themselves with the performance
ET I N T E L L I G E N C E G R O U Pinvestment mandate brings it rather S K A N D I TA A G R A W A L Though withdrawal of insurance plans is a common of their investments, insurance companies
close to being a thematic fund — the ET I N T E L L I G E N C E G R O U P are required to update the net asset values
IF THERE is one sector that has really theme here being commodities. This phenomenon in the insurance industry, it does not mean any (NAVs) of these schemes on their websites.
faced the heat in the current market fund thus has no exposure in sectors IN THE recent dispute between the However, to avoid any confusions and
turmoil, it is the commodities space. Be it such as financial services, healthcare, insurance regulator Irda and the market loss of investment or inconvenience to policyholders hassles, investors need to take care of the
metals, oil & gas or power, commodities consumer durables, automobiles and IT, regulator Sebi over the regulation rights, following.
— one of the high beta sectors — have which relatively reduces its sectoral Sebi had put a ban on the sale of unit- ■ The policy number acts as a unique
been badly bruised in this year. And the diversification. Of these, healthcare and linked insurance product, raising an alarm identification number of the policy and
impact of volatility in the commodities consumer durables are in fact low beta among investors of these schemes. the policyholder needs to safeguard till
space has been clearly felt in the sectors, which balance the risk quotient However, even banning these schemes the end of the policy term. Without this
performance of SBI Magnum’s commod- of the fund’s portfolio. would not have meant an end to the exist- number, it will be very difficult for the
ity fund — COMMA, which has indeed Prominent sectors that this fund ing product. It simply implies that the policyholder to keep track of the policy,
had an unfortunate start in 2010. invests include metals, oil & gas, energy, particular insurance scheme stands especially in cases where the policy has
cement and sugar among others. The withdrawn and no new investor can invest been withdrawn from the market.
PERFORMANCE companies in these sectors are reckoned in the scheme. The scheme, however, ■ Policy document is of utmost
Magnum COMMA is clearly a bull- to be cyclical and highly volatile. operates as usual for existing investors. importance and a hard copy of the
market-friendly equity scheme. While Magnum COMMA’s portfolio thus boasts Withdrawal of insurance plans is a com- same needs to be maintained by the
the fund has done wonders in favourable of a beta of 1.07, which implies that the mon phenomenon in the insurance indus- policyholder till the end of the policy
market conditions, it has been equally fund’s portfolio is 7% more volatile than try and thus investors need not panic and term. Investors would do well to note
battered in the downturns. the market. As far as the fund’s stock should switch to other plans. In fact, many that only the original hard copy of the
Since its launch in July 2005, the fund picks are concerned, nearly 40% of its a times, investors are not even aware of policy document is considered a legal
has had an outstanding performance in current investments have been made in the fact that the scheme they have document. A soft copy or a print out is
the years 2007 and 2009 — two of the 2005 when the fund was launched, invested into has been withdrawn by the considered invalid.
most bullish years since the launch of this though the fund has been actively insurance company. While it is quite ■ The policyholder also needs to keep a
fund. In 2007, it clocked in about 86% churning this portfolio by common for insurance companies to with- copy of the proposal (application)
gains as against 60% returns by its increasing/reducing their exposure draw the existing plans and replace them launched product may either have a new manufacturers of these products, form, filled in at the time of taking the
benchmark index the BSE 200 while in depending on the market situation. with new products, this does not mean serial number or may be suffixed with say however, ensure that interests of these policy. As this document contains the
2009 – the fantastic year of market recov- While this does construe that the fund any loss of investment or inconvenience to a “plus” to its name. For instance, LIC’s investors are safeguarded. “Though features of the policy as accepted by
ery after the financial crisis, the fund’s has profited from the benefits of long- the policyholder. Jeevan Akshay has been re-launched withdrawn, the records of these policies the policyholder, it can be referred
net asset value appreciated by about term holding and most of these nearly six times with the first five versions are maintained by insurance companies back by the policyholder especially if
99% returns as against 89% gains made investments are currently in the profit REASONS FOR WITHDRAWAL been withdrawn and the sixth version Jee- and investors can easily track their the policy has been withdrawn from
by BSE 200. The Sensex and the Nifty re- zone, these high beta stocks, however, Inadequate sale or non-profitability of van Akshay VI currently running in the accounts through their valid policy the market.
turned about 81% and 76% returns, are still trading below their all-time product is one of the major reasons of market. numbers,” says V Shrinivasan, CFO, Bhar- skandita.agrawal@timesgroup.com
respectively in 2009. highs. Some of these include Tata Steel, withdrawal of these plans as cited by Similarly, Market Plus, one of the most

ANUGRAH
However, having said that, one cannot Hindalco Industries, Hindustan Zinc, Bal- insurance companies. Off the entire popular Ulips by LIC was withdrawn in
ignore the battering the fund has rampur Chini Mills and Gujarat Alkalies bouquet of products launched by an insur- April 2008 only to be re-launched as
received at the hands of the bears during to name a few. Its current top holdings ance company, the company would keep Market Plus I in May 2008. Now Market
market meltdown. In 2008, for instance, like RIL and ONGC were also invested running and marketing only a selected few Plus I is set to be withdrawn with effect
when the global financial crisis took the into before the market rally of 2007 and based on their popularity and from June 30 2010. Now with the new
entire equity market in its stride, thus are currently trading at a price high- compatibility with investors. insurance guidelines pertaining to EQUITY • DERIVATIVES • COMMODITIES • CORPORATE FINANCE • PMS • IPO • ME • INSURANCE • REALTY
Magnum COMMA’s net asset value
(NAV) collapsed by about 60% against
er than their investment cost. Other schemes, which the insurance
company feels have not gelled well with
increase in the lock-in period from 3-5
years and compulsory sum assured for all “Enter into a lifetime friendshi p that
57% decline in the returns of the BSE OUR VIEW investors and are uneconomical to run are the Ulips set to hit the markets with effect bears growth. N
200. Similarly, in the current calendar Magnum COMMA is definitely an gradually withdrawn from the market. from July 1, 2010, it should not be a
year, with uncertainties surrounding the outperformer in market rallies. But its New schemes, with different product surprise to see if LIC happens to re- Hey, it ’s Brok erBudd y. Be my
European sovereign debt market and its high beta and theme-specific portfolio feature are launched in its place with launch its most popular Ulip as Market buddy as an Anugrah sub-broker
subsequent impact on the equity
markets globally, the fund’s NAV
make it unsuitable for a conservative
investor as the fund is highly susceptible
aggressive and revised marketing
strategies so as to keep investors clued in to
Plus II incorporating the revised the
structure.
and Grow.” /‘
declined by nearly 6% since January this in downturns. As commodities have
year against less than 3% decline in the already been badly bruised in the current
the bouquet of products that the company
has on their platter. This is very unlike the NOTE FOR INVESTORS WHERE FRIENDSHIP (
BSE 200 index. Major sectors that the
fund has invested into, namely, metals
market volatility, those bullish on the
commodities space in the near future
mutual fund industry where despite new
products being launched at regular
Withdrawn insurance policies are definite-
ly a closed door for new investors. But for
DRIVES GROWTH
and oil & gas have fallen by about 20% may consider investing in Magnum intervals does not result in withdrawal of existing investors, these policies continue
and 5%, respectively during this period. COMMA. This fund is, however, a high any existing product. to exist, as they did, before they were 5th Floor , Ecospace IT Park , Andheri (East) , Mumbai -400069.
risk one and thus a conservative investor Many a times, the guidelines issued by withdrawn from the market. While it is Tel: +91-22-6780470918301844. Email: anug rah@anug rahsb.com Website: www.anugrahsb .com
PORTFOLIO: would rather do well to stick to a pure di- Irda, like the recent one on capping the quite natural for investors of these We have branches at: Thane 022-25345780I81 Ahmedabad 079-65106510
Though Magnum COMMA is versified equity scheme. overall charges on Ulip, also compel insur- schemes to get sceptical about the future Valsad 02632-241642 I43 I Sikar 01572-271008 I Hyderabad 040-66323366
categorised as a diversified equity bakul.chugan@timesgroup.com ance companies to reissue the product prospects of their investments, especially if
Regd. Office: 1st Floor, Nisarg Apartment , Beasant Road , Vile Pane (West), Mumbai 400056.
with the revised structure. The re- they are withdrawn from the market, SNaP N.r. N,;-BSE SN; O1h1S64,oPF&O: INFQIISNSNS I F C S N N N,. MCLMOKPTCW tO SlSS I COSL Rn N.: IN CSNLnSSOS

Losing sheen

From: P 1

In the cement industry, where players typically raise prices

when capacity utilisation crosses 85%, witnessed prices ac-
tually wilt in southern and western regions.
The industry is expected to see addition of 50 million
tonne capacity in FY11, followed by another 30 million
tonne in FY12, which could depress capacity utilisation
levels and pull the prices lower.

CRUDE OIL
Crude oil prices crashed to $70 level from $85 during May
2010 as uncertainties about oil demand re-surfaced amid
concerns about impact of Europe’s
debt crisis. Speculative activity in
the crude futures market declined
as money managers cut net long po-
sitions by almost 60%, as mentions
OPEC’s latest report.
The global crude oil industry is
facing an oversupply situation that
can keep its prices under pressure
throughout FY11. Global oil
inventories have grown substantial-
ly to near-historic levels, while the
OPEC’s production capacity has
grown substantially higher than
what is necessary.
India’s largest oil producer ONGC is little affected by the
changes in oil prices since it has to share part of the market-
ing companies’ subsidy. However, the net realisation of pri-
vate producers, such as Cairn India, can remain depressed
if the oil prices stay range-bound.
The stock market performance of commodity companies
have strongly been linked to the commodity price cycles in
the past. The reversal in the cycle has pulled the valuations
of these companies lower. However, a further downside Canara RobecoAssetManagennent Company Ltd. 4th Floor,Construction House,SWa lchand Hirachand Roa d , Ballard Estate,Mumbai -400001. Tel : ‘-91 2266585000 Fax: +9122 66585012. Toll Free No. 1800-209-2726Website www.canara rodeco.com Nameofthe Fund: Canara Robeco InDiGo (INconefrom Debt
still remains for them. Further clarity is also needed on Eu- Instruments & GOld) Fundlype: Open Ended Debt Scheme. Investment Objective—To generate incomefrorn a portfolio constituted of debt 8 money market securities along with investments in Gold and Gold related Instwrnents. AssetAllocation: Indian Debt and Money Market Instruments : 65 90% and Gold ETF5 :
rope’s health and China’s growth momentum. Hence, 10-35%. Terms of issue: Sale atface value of Rs.10/- during the new fund offer period andthnreafter redemption of units at NAV based price on all business days subject to exit load. Load Structure: Entry toad: Nil,Exit Load: 1% - if redeemed / switched-out within 1 yearfrom the date of allotment. Nil - if redeemed /
switched-out afterl year from the date of allotment. Options available undenthefund: Growth,Quarterly Dividend Payout and Quarterly Dividend Reinvestment. Minimum application amount — Initial Purchase — Rs. 5,000 and multiples of Re.1 thereafter and Subsequent Purchase — Rs. 1000 and multiples of Re. 1
investors should postpone their investment decisions in thereafter. NAy: AMCW iII calculateand publish thefirst NAV of the Scheme not laterthan 30 days from the closure of the newfund offer. Subsequentlythe NAVswiIl be calculated and disclosed atthec lose of every business day. Stheme specificRisk Factors :Price-Riskor Interest-Rate Rislç Credit Risk,ReinvestmentRisk ,
these companies till the second half of FY11, when some Liquidity Risk, Riskassociated with investing in Securitised Debt , Riskassoci ated with Mortgage Racked Secuntics (MBS) - Housing Loans,Risk associated with Asset Backed Securities (ABS)-Auto loans,Risk associated with Asset Backed Securities (ABS) Corporate loans,Risk associated with investing in Derivatives, Risk
reversal is expected. factors relating to investments in Gold EIFs . For Further details on scheme specific risk factors ,please referto scheme information document. Canara Robeco InDiGo (INcome from Debt Instruments & COld) Fund,is the name o(the scheme and does not in any manner indicate the quality of the scheme,the Mum
pallavi.mulay@timesgroup.com prospect sor returns.Statutory Detail5: Canara Robeco Mutual Fund (CRMF) has beenset upas aTrustunder IndianTru stAct ,1882. CRAMC istheassetmanagem ent companyregistered underThe CompaniesAct ,1956.Sponsors :Canara Bank,Head Off ce,112J C Road,Bangalore; RobecoGroep NV., Coolsingel 120,3011
Rotterdam,The Netherlands.RiskFactors: Mutual Fundsandseairitiesinvestmentsaresubject tomarketrisksandtherecan be noassuranceo guaranteethattheobjectivesof theschemew Ibeachieved.Aswithanyinvestmentinsecurities,the NAVoftheunits issued undertheschememay goupordown depending
With inputs from Amriteshwar Mathur on the varioustactors andforces affecting capital markets and money markets. Past performance of the sponsors / Investment Manager! Mutual fund does not indicatethefuture performance of the scheme and may not necessarily provide a basis of companson with other investments. The Sponsors of the Fund are not
responsible or liable forany loss or shortfall resulting from the operations of the schemes of CRMF,beyond the initial contribution of a sum of Rs. 10 lass made towards setting up of CRMF. Investorsshould read the Scheme Information Documentfor scheme specillc dskfactors and otherdetails before investing.
 OVERVIEW
Markets still holding out
THE stock market managed
to bounce back after a pound-
ing at the start of the week,
with the Sensex finishing
with a modest loss of 0.31%
or 52.74 points. The Nifty
also lost 0.31%, while the
CNX Midcap Index inched
up 0.03%.
Cipla was the biggest
winner among index stocks
with a 3.8% gain. The other
index stocks to go up
included Mahindra & Mahin-
dra, HDFC Bank, Reliance
Communications and BHEL
with gains between 3.3%
and 2.6%.
DLF was the biggest loser
among the index stocks with
a 6.9% loss. The other index
stocks to go down included
Hindalco, Infosys, Tata Steel
and ICICI Bank with losses
falling between 5.7%
and 2.4%.
ARSS Infrastructure
Projects was the biggest
winner among the more
heavily traded non-index
stocks with a 16.4% gain. The
other non-index stocks to go
up included Fortis
Healthcare, Pipavav
Shipyard, Rural
Electrification, Bajaj Auto,
Areva T&D, Ruchi Soya
Industries and Dr Reddy’s
Laboratories with gains
between 7.7% and 4.3%.
BPCL was the biggest loser
among the more heavily
traded non-index stocks with
a 6.8% loss. The other non-
index stocks to go down
included Indiabulls Real
Estate, Aban Offshore,
Balrampur Chini, HPCL, HCL
Technologies, IOC and
Indiabulls Financial with
losses falling between 6.4%
and 4.4%.
INTERMEDIATE TREND
The intermediate uptrend has
remained intact, despite
another heavy sell-off at the
beginning of the week. The
level below which a
downtrend would be
triggered remain 16,525 for
the Sensex, 4,950 for the
Nifty and 7,625 for the CNX
Midcap Index. (Figures
rounded down to the
nearest 25).
Almost all the global
indices are in intermediate
downtrends, but had started
rallying quite strongly in the
second half of the week. The
survival of our intermediate
uptrend will depend on
whether global markets can
convert the current rally into
a new uptrend, or whether
they start to tumble again.
LONG-TERM TREND
The market’s long-term trend
can still be taken to be up, as
the indices have managed to
maintain a sequence of rising
intermediate tops and
bottoms. However, these tops
and bottoms have typically
been 2-3% above their
preceding ones, and the long-
term trend could be
interpreted as sideways too,
particularly from September
last year. The Sensex would
enter a bear market if it falls
below 15,300, the Nifty
under 4,500, and the CNX
Midcap below 6,350.
The lowest of the last three
intermediate bottoms for the
indices has been taken as
their bear market trigger,
since these are very close to
each other. This would
anyway be the approach if
the market’s long-term trend
is seen as sideways.
This is no longer a broad-
based bull market, as nearly a
third of the more heavily
traded stocks are in longer-
term downtrends. The
number has been increasing
with each intermediate
downtrend.
TRADING & INVESTING
STRATEGIES
Increasing portfolio exposure
should be avoided for now, as
the bull market has run for
over two years, making this a
little too late to get in. Even
the intermediate uptrend is
almost three weeks old, so
fresh long-term exposure is
best avoided.
Investments should be
switched to stocks which are
still in longer-term uptrends.
The sectors which are still
holding out include banks,
automobiles,
pharmaceuticals, and some of
the FMCG stocks.
GLOBAL PERSPECTIVE
Most of the major global mar-
kets are now in intermediate
downtrends. A few indices
have moved close to their up-
trend trigger levels, though.
The Dow would enter an
uptrend if it crosses 10,350.
Quite a few indices includ-
ing the Shanghai Composite,
Brazil’s BOVESPA, Tokyo’s
Nikkei and the French CAC-
40 went below their last
intermediate bottoms during
the preceding downtrend,
which is considered to be a
bear market signal. So we
now have mixed longer-term
trends in global markets, and
this makes the global bull
4 Investor’s Guide MONDAY
14.6.10
Focus on efficiency
and brownfield projects. It has chalked out plans to crore last year to Rs 3,925 crore. The sharp increase in
commission an aluminium capacity of 359 kpta by the profit was mainly due to a unrealised derivative gain of
Hindalco Industries has seen a gradual decline in its second quarter of FY12. This will give Hindalco a about $578 million and improved margins at Novelis.
stock price in the last two months, following concerns much-needed higher capacity to meet growing Hindalco operates in a volatile commodity market
over growth in the European industry demand. It expects to where margins are dependent on demand for a
market a little Argentina, economy and weaker then fulfill 40% of the concentrate commodity and prices. Any bad news on the demand
vulnerable now. Indonesia and expected recovery in the US. demand internally through its side can affect stock prices in the short term. Having
The Dow would Denmark follow. However, the company, one of own mines and is also looking said that, the long-term growth outlook for Hindalco
enter a bear The Dow Jones In- the top five aluminium producers out for acquiring copper mines. seems positive. Given the forthcoming capacity expan-
market if it closes dustrial Average in the world, is poised to benefit Hindalco reported sion projects, Hindalco will gear itself for the likely
below 9,750. has gained 16.0% from its expansion plans and all standalone sales of Rs 19,536 higher demand in emerging markets and South Ameri-
The Sensex had and the NASDAQ round efficiency improvement in the long term. crore in FY10, reflecting a year-on-year growth of 7%. ca. The company’s profitability in the next two years is
gained 9.8% in the twelve months Composite has gained 19.1% over The company has a presence in two fast-growing Net profit was down 14% to Rs 1,916 crore, mainly expected to increase significantly because of lower
that ended on Thursday, keeping it the same period. (These rankings do non-ferrous segments including aluminium and due to higher coal cost and lower international prices. cost of operation, higher volume and increased
at the 24th place among 35 well- not take exchange rate effects into copper. It has increased its focus on process efficiency On a consolidated basis, net profit rose from Rs 484 margins. –Abhineet Singh
known global indices considered for consideration). apart from volume growth. This has helped the
the study. Deepak Mohoni company to achieve better operating margin for its
Sri Lanka continues to head the (The author is an independent subsidiary Novelis.
list with a 102.5% gain. Turkey, technical analyst) The company is investing heavily in both greenfield
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I
PARAbOLiC DRUqS LiMiTEd
O r Company was incorporated on February 22, 1996 under the Companies Act, 1956, with the Registrar of Companies, Punjab, Himachal Pradesh and Chandigarti. For
detailsof change in ourRegistered Office, see ”Historyand Certain Corporate Matters”ori page l300fthe Red Herring Prospectus (“ RHP” ). Registered Office: S.C.O. 99-100 ,
Top Floor, Sector 17-B, Chandigarti 160 017, India. Tel: + (91 172) 391 4646; Fax: + (91 172) 391 4645. There has been no change in the name of our Company since
incorporation. CompanySecretaryand Comp lianceOfficer: Mr.Ani l Kumar; Email: pdI.ipo@paraboIicdrugs.com; Website: w.paraboliodrugs.com
PUBLIC ISSUE OF [•1 EQUITY SHARES OF FACE VALUE RS. 10 EACH (THE “EQUITY SHARES”) OF PARABOLIC DRUGS LIMITED (“ OUR COMPANY”
pjOR THE “ISSUER”) FOR CASH AT A PRICE OF RS. (•J PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF RS. (.J PER EQUITY SHARE) AGGREGATING
j TO UP TO RS. 20,000 LACS (THE “ ISSUE”). THE ISSUE COMPRISES A NET ISSUE OF UP TO [.] EQUITY SHARES AND A RESERVATION OF 5,00 ,000 EQUITY
SHARES FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (THE “EMPLOYEE RESERVATION PORTION”). THE ISSUE COMPRISES A FRESH ISSUE OF I•1
• EQUITY SHARES BY OUR COMPANY AND AN OFFER FOR SALE OF 20,25,702 EQUITY SHARES BY BTS INDIA PRIVATE EQUITY FUND LIMITED AND EQUITIES I DERIVATIVES I COMMOD ITIES* I CURRENCY I MUTUAL FUNDS C I IPOs 5 I INSURANCE # I PMS I DP
j ALDEN GLOBAL (MAURITIUS) LIMITED (TOGETHER , THE ‘SELLING SHAREHOLDERS”). THE ISSUE WILL CONSTITUTE (•J ¼ OF THE FULLY DILUTED POST
ISSUE PAID-UPCAPITAL OF OURCOMPANY.
PRICE BAND: RS. 75 TO RS. 85 PER EQUITY NIRMAL BANG
SHARE OF FACE VALUE OF RS. 10 EACH. ‘ a r e l a t i o n s hip beyond b r o k i n g
THE FLOOR PRICE IS 1.5 TIMES OF THE FACE VALUE AND THE CAP PRICE IS 8.5 TIMES OF THE FACE VALUE
SMS’BANG SUB’ to 54646 1 www .n i rma Ibang .com
BIDS CAN BE MADE FOR A MINIMUM OF 80 EQUITY SHARES AND IN MULTIPLES OF 80 EQUITY SHARES THEREAFTER.
In caseof revision in the Price Band, the Bidding Period will be extended foratleastthree additional Working Daysafterrevision of the Price Band,subject to the Bidding Period
not exceedingatotal oflOWorking Days. Any revision in the Price Band and the revised Bidding Period,if applicable , will be widely disseminated by notification tothe Bombay Ahmedabad: Dharmesh Patel - 9376126075; Bengaluru : Shantila l Rakheja - 9341217298; Bhopal:
Stock Exchange Limited (the “B SE” ) and the National Stock Exchange of India Limited (the NSE”), by issuing a press release, and also by indicating the change on the
9826263534/ 9303377661; Bhubaneshwar . Kolkata: Joydeep Mukherjee -
websites of the Book Running Lead Managers (the ‘BRIMS’) andthe Co-Book Running Lead Manager (the “CBRLM”)and atthe terminals of the Syndicate. The Issue is being Prafu l Jam -
made through the book building process (the ‘Book Building Process ”) wherein upto 50% of the Net Issue will be available forallocation on a proportionate basis to Qualified 9830859341; Chenna i, Kochi : AT Han - 9940109035; Hyderabad: P V Siddhartha - 9849029992;
Institutional Buyers (“QIBs’) (the ‘QIB Portion”). Further 5% of the QIB Portion shall be available forallocation on a proportionate basis to Mutual Funds only. The remainder Indore : Manoj Bang - 9425052151; Jaipur: Atul Agarwal - 9314007738; Kanpur : Nitesh Malani -
shall be available forallocation on a proporlionate basisto QIBs and Mutual Funds, subject to valid Bids being received from them at orabove the Issue Price. Further, not less
than 15% of the Net Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue will be available for 9307933100; Lucknow: Shehzad Rizvi - 9335036335; Mumbai: Gaurav Mohta - 9820896015/
:
allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received atorabove the Issue Price. Further,5,00 ,000 Equity Shares shall be made 9321116015; Nagpur: Suresh Sharma - 9890440374; New Delhi: Aparna Kohli - 9716710410 ,
available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received at or above the Issue Price. Any Bidder may participate in the Priyank Raj - 9917850933; Patna: Agam Umang - 9304834441; Pune: Ritesh Muthiyan/ Srinivas
Issue through the Application Supported by Blocked Amount (‘ASBA”) process by providing the details of their respective bank accounts in which the corresponding Bid
aniountswill be blocked bySelf Certified Syndicate Banks (the ‘SCSBs”). Fordetails in this regard, specificattention is invited to “IssueProcedure ” on page 271 of the RHP. Jakhotiya - 9921811114/9922211114; Punjab: Inder Pal Singh -9814026174 ; Rajkot : Hiren Nathwani
— 9824530306; Surat : 0 P Mohta 9727997979.
Simple , Safe , Smart way of Application
-
Make use of it !!!
-
*
-
Applications Supported by Blocked Amount (ASBA) is a better way of applying to issues by simply blocking the funding dD $D( b Oby C OOOOdiIC DOS, 00010,0 (Odeo Tho MS SD O-iTo0Tolie 010 Ooo d 0 , o T O I ’T hTdq SNOOd SOD C odi1 ,OTT 0 t h 0 0900
the bank account investors can avail of the same. For details, check section on ASBA below. REGD. OFFICE 36 - 6:39 K bat a, Bldg . 2n d Oft , A l kes h Dine h g od S MarT , Font . 06016, 400 00’ S- nai l: con la c lm n :r mel bx nq corn : Tel: 022 - 226 -11234 , 3:227200: 0, 2222 , Fax: 022 - 302 7200 6 .
,
650900 REDO ND IUB DI 107 27 59 01FX1 1073751 & 194011072739 , NSESEEI 00019 ND 108230939139 , 1002309 301 39 & 16029 49391 3907 906 lEON NO USD0: IN OP NS DL -136 2000 , 003 01 IE - DP - CDS L-97’RR ,
OUR SOON NO 00th 49454 NO DES REDO. 5000362 , PVC CTdr - 40 95 , OCX COON. 00 6990 , FMCCTO C MC070CMICOBFI0490 , 1,0CC 5N- 1U676093 913R PM S - 1NF00 0007991
OPEN S T O DAY
FOR QIB BIDDER S JUNE 16, 2010
FOR RETAIL AND NON-INSTITUTIONAL
:] I ‘I’iC
BID 1L.OS E S1.
I-14 O]N BIDDER S (IN CLUDIN G ELI G IBLE E M P L OYEE S
B I D D I N G IN THE EMPLOYEE
RESERVATION PORTION) JUNE 17, 2010
PROMOTERS OF OUR COMPANY: Mr. Pranav Gupta, Mr. Vineet Gupta, PNG Trading Private Limited and Parabolic Infrastructure Private Limited
:
LISTING: The Equity Shares issued / offered through this Red Herring Prospectus are proposed to be listed on the BSE and the NSE. We have received in-principle approvals
from the BSE and the NSE fortho listing of our Equiyt Shares pursuant to letters dated February 11,2010 and March 22, 2010 , respectively. Fortho purpose of the Issue, the
Designated Stock Exchange shall be the BSE. DISCLAIMER CLAUSE OF SEBI: SEBI only gives its observations on the Offer Documents and this does not constitute
approval of either the Issue or the Equity Shares or the Red Herring Prospectus. DISCLAIMER CLAUSE OF BSE - (THE DESIGNATED STOCK EXCHANGE): ‘It is to be
distincty understood that the permission given by Bombay Stock Exchange Limited should not in anyway be deemed or construed that the Red Herring Prospectus has been
cleared orapproved by BombayStock Exchange Limited nordoes itcertifythe correctness orcompleteness of anyof the contents of the Red Herring Prospectus. The investors
are advised to refertothe Red Herring Prospectusforthe full text of the Disclaimerclause of the BornbayStock Exchange Limited.” DISCLAIMERCLAUSEOF NSE: “Itisto be
distincty understood that the permission given by NSE should not in anyway be deemed or construed that the Red Herring Prospectus has been cleared or approved by NSE
nordoes itcertifythe correctness orcompleteness of anyof thecontents of the Red Hening Prospectus. The investors are advised to refertothe Red Herring Prospectusforthe
full text of the Disclaimer clause of NSE.” IPO Grading: This Issue has been graded by CreditAnalysis and Research Limited (‘CARE”) and Brickwork Ratings India Private
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BANKERS TO THE ISSUEAND ESCROWCOLLECTION BANKS: State Bankof India,HDFC Bank Limited, UCO Bank, Punjab National Bankand ICICI Bank , The unitsareavailable attheface valueof Rs,1OI- perun’dduring the New Fund Offer Period.TheAMCwilI calculate and disclosethefirst NAVnot
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IN ASSOCIATION WITH

THE E CONOMIC TIME S

A CONSUMER CONNECT INITIATIVE
THE ECONOMIC TIMES
• MONDAY
• 14 JUNE , 2010

RSP t ROUP
L e a d e r s in E n e rg y
Ii rin Puw r Mirung Trad in] Lu isIics Dons ultanny
www.rs ph ome.com
Mumbai • Kolkata

Rising importance of Extensive efforts are be

the ‘Black Diamond’ by government-run cor
Minister of state for coal (IC),Sriprakash and captive coal block
Ja iswal,talks to Rakesh Dubey about the to i ncrease pro d uct ion
challenges and issues the sector is facing

I
( / i t h the to introduce popular mm-
econo- Ing technologies?
\, m y Public sector coal companies
making giant h av e al read y adopted state-
strides towards of-the-art technologies for
recovery the ris- coa l production with a view
ing importance of to improving production , pro-
coal, the precious b1ack dia- ductivity and safety.
mond’, is at the centrestage of Seven new projects have
India ’s economic issues. With been identi fied in CIL for
all industries, including the adoption of mass production
largest consuming sector of technolog ies lik e longwa ll and
power, planning huge expan- continuous miners technolo-
sions, the demand for coal is gy involving global players.
set to rise in t
he near future. SCCL is al so implementing a
coup le of new projects by
What step s are being taken adopting longwall technology
by the government to and continuous miners.
ensure that our coal corn-
pan ies produce enough to Who is responsib le for the
meet the rising demand? delays in environmental
Coa l demand , which grew at clearances for new
about 5% (CAGR) till the end projects?
of the Xth Plan, is en v isaged It is a fact that due to delays in
to grow at ab out 9 % in t h e obtaining f orestr y cl earances
XIth Plan and beyond. in case of 17 projects , a loss of
The government is fully production of about 54 mu-
aware of the facts and we are lion tonnes (MT) in 2011- 12
making all efforts to augment is inevitable. The state gov-
production by undertaking a emments are mainly respon-
number of new projects. We sib le for these delays.
are allotting coal blocks under However, the coal and envi-
the captive mining policy to ronment and forest ministries
increase the number of play- are pursuing the matter with
ers and to quickly develop the the state governments for a
blocks. Moreover, efforts are time bound approach and to
also being made to increase expedite the pending
coal imports to overcome the clearances.
shortfall between domestic
availability and the envisaged What has been the result
demand . Also efforts are of your talks with the
being made to acquire coal MoEF for faster clearances
properties abroad . for coal mining projects?
The one-to-one discussions
Coal consumers often between the ministry of coal
comp lain that they are not and the ministry of environ-
getting sufficient linkages. ment and forests are helping
What is your message to in serisitising the peop le
ay back in 1774, Sumner
and Heat ley of the East
India Company carried
out coal mining in the
W Raniganj Coa lfield along
the Western bank of river Damodar. This
marked the beginning of a long history of
commercial coal mining in India , span-
flin g nearl y 220 years.
Right from its genesis, commercial coal
mining in India has been dictated by
domestic needs. However, unscienti fic
mining practices by private coal mine
owners and poor working conditions of
the miners prompted the government to
nat ionalise the coal mines in two ph ases
from 1971 to 1974. After several phases of
restructuring, it resu lted in the present-
day Coal India Limited (CIL) and its eight
coal-producing subsidiaries.
At the time of nationalisation, India ’s
coa l production stood at around 79 mil-
lion tonnes (MT) per annum , hut since
then production has grown and in 2009-
10 it stood at around 560 MT, including
431.36 MT by CIL , 50.43 MT by the
Singareni Collieries Company Ltd and
44.47 MT by other mining companies.
Coall is the most important and abundant
Coa
fossil fuel ijin India and accounts for 55% of
countr’ ’s energy needs. However, the
the country
growth in coal production , w h ich was
almost at par with growt h in demand till
as late as 2004-05, has started dwindling
since then. Till then India did not depend
much on imported coal, and on ly small
quantities of coking coal, which is rarely
avai l ab l e in
ir India , used to be imported by
steel companies.
comp
Howeve growth in power generation
However,
capacities prompted
i by increased demand
of electricity
electricil in the country over the past
fiv years, has created a situation
four to five
where domestic
don coal production is just not
enou gh and a large quantity of even ther-
mal coal has to be imported from coun-
tries like Indonesia , Sout h Africa and
Australia.
The situation is such that India ’s tota l
coal import in 2009- 10 stood at around 77
MT, of which thermal coal alone was
around 53 MT. This is as per a compilation
of India Coal Market Watch (ICMW), a
high-end report on the Indian coal indus-
try pub lished by mjunctioned ge , the
k now led ge division of mjunction services
ltd.
Indian coal import (both coking and
non-coking) has been increasing steadil y
from a low of around 20 MT in 2004-05 to
25 MT in 2005-06 , to 39 MT in 2006-07 ,
to 50 MT in 2007-08 , to 59 MT in 2008-
09 , and to around 75 MT in 2009-10.
ICMW has predicted that the country ’s
total coal import will be somewhere near
105 to 110 MTb y 2012-13.
As India ’s power generation capacity is
likel y to increase by another about 60, 500
MW between 2010-1 1 and 2011-12 , the
termina l year of the XIth Plan, thermal
coal import is likely to touch around 65
MT in 2010-11 from around 53 MT in
2009-10 and may cross even the 80 MT
mark in 2011-12.
However, coking coal import , which
was estimated to be around 24 MT in
2009-10 , may not increase that much as
most of the planned capacity expansion in
the steel industry has been delayed a bit.
Extensive efforts are being made not
onl y by government-run companies, but
a l so b y captive coal block allottees to
increase production. However, it remains
to he seen whether the efforts would he
enoug h to meet the country ’s coa l
demand or our dependence on imported
coal will increase further.
CoalInsights Bureau

Meeting India ’s
these consumers? responsible for resolving the
The priority of the govern- issues . In the last few months,
ment is to comp letely meet the MoEF has extended stage-

energy securit y
the power sector demand. I forestry clearances to three
H owever, due to production projects and stage-il clear-
constraints, even the power ances to four projects.
sector is being advised to
import coal. What is the status of the

Chairman , CIL , P S Bhattachar yya

The requirements of other Coa l Regulator that has
sectors are also being taken been pending for almost
care of to the extent possible. three years?
It should be noted that coal is The draft bill has alread y speaks to Rakesh Dubey on the
on open general licence with been submitted in Parliament.
a minimum import duty (5% Setting up of an independent company ’s future plans

for thermal coal and zero duty regulatory bod y f or coa l is
for coking coal) and major expected to facilitate optimal
industries like cement and development and conserva-
sp on g e iron sh ou l d a l so tion of coal resources, more
explore the option of import- effective regulation, adoption
ing coal instead of insisting on of best mining practices, bet-
the entire requirement to be ter distribution , evolution of a
met throu gh domestic more competitive market
sources. with level playing field etc.
However, this may take a few
What steps will you take more months.
to bring Indian companies
at par with global mining What are you doing to
com p anies? ensure that all the captive
Indian public sector coal com- coal blocks come to pro-
panies have to fulfil social duction as per plan?
responsibilities and thus can- The government is strictl y
not be compared with the monitoring the progress and
global companies which oper- taking action against the non-
ate on a completel y commer- starters in order to bring the
cial basis. The coal companies allotted blocks into produc-
are also under constant vigi- tion . The progress made by
lance of various government captive coal blocks is not real-
agencies like the Central ly satisfactory and they need
Vi gilance Commission (CVC), concerted efforts in increasing
Centra l Bureau of the production.
Investigation (CBI) and the
Comptroller and Auditor What is your assessment
Genera l (CAG) . on India ’s coal import by
They have to abide by the the terminal year of the
Ri ght to Information Act and XIth Plan?
are answerable in Parliament. As per the mid-term appraisal
Thus , their decision making of the XIth Plan , the gap
process cannot be compared between demand and supply
to that of a multinational from domestic sources of coal
company. However, the gov- in the terminal year of 2011-
ernment is empowering them 12 works out to 81 MT, which
so that they can expedite their needs to be met throug h
decision-making process and imports. The gap between
delivery mechanism. demand and domestic supply
is likely to increase in the
India is under p ressure times to come.
from developed countries
to re duce its carbon emis- How is the M0C planning
sion levels. What will be to popularise other dean
the coal ministry ’s strategy coal technologies?
to handle this? The government has time and
Coal has to continue to play aga in l aid emp h as i s on cl ean
its role as a major energy coal technologies. It is
source in India and different because of this that washing
actions have been initiated to of coal for power generation is
address the issue of em issions taking place in a significant
resulting from its use. manner . A p olicy f or CBM
As far as the coal sector is exploration and exploitation
concerned , it is concentrating has been put in place. So far
on pre-combustion dean coal 26 b l ock s h ave been off ered
tec h no l ogies like coal wash- after thre e rounds of bidding
ing, development of CBM , for CBM and 10 more blocks
CMM , UCG and CU , w h ereas have been under considera-
the power sector is focusing tion in the fourth round of
on the post combustion tech- bidding. Appropriate incen-
nolog ies . tives have alread y been
extended under this policy to
What is our ministry doing the industry.
C
oal India Ltd (CIL) is the single largest
__________ coal company in the world and pro-
duced over 430 million ton in the last
fiscal. GIL accounts for 82% of country ’s coal
r
production and meets 42 % of the country ’s
I —
_: primary commercial energy requirement
compared to 39% by gas and oil sectors corn-
blued.
bined .
Will you please elaborate on CIL ’s proposed alliances
with overseas companies?
The proposed alliances with the companies, identified for
strategic alliances are being pursued under two models. The
first is equity investment by CIL in brownfield coal assets
with long-term offtake contract at a price less than prevail-
ing import price. The other is formation of JV for explo-
ration , development and operation of greenfield coal assets
in any of the destination countries. The due diligence
process has been initi tted for estimation of coal reserve or
resources and technical attractiveness of the identified coal
assets, subsequent to which different investment options
will be framed by the merchant banker for consideration
of CII.
Is there any progress on strategic tie-ups with
overseas companies?
CIL has identified some US coal companies for strateg ic
partnerships. Out of these CIL has started a discussion with
one company regarding taking up a resource position in
their coal assets throug h investment in equity. A team from
CIL visited the US in the last week of May for onsite due
diligence. From this coal asset , about 2 to 3 MT of coal can
be sourced annua lly.
Why do you think investors will subscribe to CIL ’s
IPO?
CIL supp lies coal at hugely discounted prices and insulates
Indian coal consumers against price volatility enhancing
their global competitiveness. Thus, Coal India is at the cen-
trc of India ’s growth story and its strategic relevance is
immense in meeting the energy security of the country.
Our coal resource is around 83 billion tons of which 63 bil-
lion tonnes is under the proved category. No company in
the world has so much reserve. Considerin g the growing
energy requirement of the country, we will not face any
constraints in demand for coal in the foreseeable future. All
these factors will encourage investors to participate in our
proposed issue.
Do y ou think, any increase in 10% limit of total
production to be sold through e-au ction will help the
non- linked consumers?
Yes. e-auctions have definitel y helped a number of con-
sumers who had earlier no opportunity to buy coal directl y
from the coal companies. Now since the efficiency of e-auc-
tion has alread y been p roven , there is definite scope for
widening its ambit further. The Expert Committee of the
Plannin g Commission , also feels the same way, and has rec-
ommended that the share of e-auction should be expanded
tO 2O% of the production of coal companies. As a matter of
f act , consumers of all sectors, other than power utilities and
fertilizer , whose pricings are being controlled by the regula-
tory authorities , should be offered coal through
c -auction only.

‘No plans to import coal’
CMD ,SCCL , S Narsing Rao, shares
P1
ingareni Collieries Com-
pany Ltd (SCCL) , a joint
undertaking of govern-
ment of Andhra Pradesh and
________
the Central government is
mining coal from 1889, bu tthe
existing name is in place from
____________
December 23, 1920. The Nizam of Hyderabad
purchased shares of Singareni in 1945 and it
became a government company since then.
It is currentl y operating 50 mines (36 un-
derground + 14 opencast) spread over four
districts of Adilabad , Karimnagar, Warangal
and Khammam.
SCCL has achieved a record coal produc-
tion of 50.425 million tonnes (MT) in 2009-
10. This is the best ever production achieved
by SCCL in its history.
What is the production capacity of SCCL
and what are your p lans for
expanding capacity?
In the last 10 years starting 2001-02 , the com-
pany ’s production grew from 30.811 MT to
50.425 MT in 2009-10 . The production
plannedforthey e ar2 ol O- 1I is5I .33MT , in-
cluding underground and opencast mines
andfurtherto 53.00 MTby 2011-12.
What is the current supp ly-demand ra-
tio for SCCL?
According to our latest estimate, by 2011-12
Win-win situation for coal importers
A spurt in the number of suppliers and importers has ensured transparency in the system
T
ill very recentl y, the su pp ly of
imported coal was largely dominated
by and restricted to a few very
strong, old and established players.
Though these players were all separate
entities, the import happened through
suc h a sma ll group that the general
impression was that these few players con-
trolled the entire activity. However, the sit-
uation has changed drastically over the
last 10 to 15 years. With the growth in the
demand for imported coal, there has also
been a spurt in the number of suppliers
and importers. This has brought about
some kind of transparency in the whole
system.With the entry of new players,
mjunction and McCloskey present
Indian Coal Markets
Confe rence 2010
August 31 — September 1, 2010, Hyatt Regency, New Delhi
Unique networking opportunity
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Sponsorship and branding options:
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Tel: +91 33 66133144, Mobile: +91 9231000232
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PRESENTS
PRESENTS
COalrE O.It
his plans for the company with Arusha Das
we are expecting a total demand of 57.42 MT opencast mines on cost plus model to meet
— 33.41 MT from power sector, 3.84 MT the demand and also to start a total of 16 new
from captive power producers and another projects in the XLtth Plan.
20.17 MT from other Sectors like steel and ce-
ment. Against this, our production is estimat- Please elaborate on your diversification
ed at 47.00 MT, leaving a gap of 10.42 MT. programmes.
But the total aggregate of various linkages SCCL has ambitious plans of expanding its
issued by ministry of coal and Letters of As- activities by forward and backward integra-
surance (L0A) issued under New Coal Distri- tion. The government of Andhra Pradesh
bution Policy on SCCL works out to 69.01 has directed SCCL to set up a 2 X 600 MW
MT in2 OIl - 12. thermal power plant to meet the power
We expect that actual market demand demand.
could be much more during a particular peri- Accordingly, we have planned to set up
od and with a view to sustain the present rate the plant in the next three years. Mean-
of production and to grow further , SCCL has while, SCCL is preparing its comprehensive
been requesting the allotment of coal blocks business plan.
outside Andhra Pradesh throug h govern- After stud ying the report and based on the
ment dispensation route. availa hilityof reserves , further decisions will
We are not importing coal and we do not be taken up on diversification activities.
have any plan to import at the moment.
What are the challenges in increasing
What are your expansion plans? coal production?
The expansion programme undertaken by The proved coal reserve of SCCL , as on April
SCCL in brownfield underground projects is 1, 2010 , is 9435.78 MT. Challenges in in-
in the final stage and plans are afoot to im- creasing coal production are many, but
plement a few greenfield projects. In addi- speeding up the exploration activities to
tion , proposals are under active considera- prove coal reserves , getting approvals for di-
tion to adopt longwall technology on a PPP version of forest land and implementing
business model for which modalities are to R&R and successful imp lementation of con-
be worked out. tinous miners technology in geologically dis-
There are further plans to start a few turbed areas , are some of them.
there has emerged a competition among MMTC or for that matter STC for their
the suppliers , which in turn is benefiting small requirements. For consumers of
the consumers of imported coal, who now imported coal, it is a win-win situation all
have the option of looking at an entire the way. The whole concept now is to let
basket of suppliers as opposed to a select people who are well equipped and are
few. experts in the area to handle the import
The new entrants broug ht drastic and supply the coal. This way the con-
changes in the role of the traders too as sumers are not exposing themselves to all
information is readily available and traders the risks pertaining to the import business.
no longer have any advantage with regard The role of the private sector importers
to knowledge of their customer. Had there in a developing country like India is thus
been no private sector suppliers , the small far more than what meets the eye, as they
and medium-sized consumers of imported are better placed to mitigate the volatility
coal would have found it extremely diffi - risks on the coal price side, shipping side
cult to get their supplies as they could not and currency fluctuations.
have afforded to approach companies like !ns!ahts Bureau
Coal Insights
POWE
CONFERENCE
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v India ’s current power scenario-
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‘ Report card-i lth Five year plan target
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‘ Upgrad ation of existing generation
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A CONSUMER CONNECt INITIAIIVE
THE ECONOMIC TIMES • M
THE
IN ASSOCIATION WITH
0 N DAV • 1 4 J U N E 2010
RSP GROUP
L a d c r s in Et/crc y
flienrn PU WEF ’ Min ng T’acIri [ogi ot s or lsu NoI in
www.rsphome .com
Mumbai . Kolkata
oal India Ltd is the world’s single largest coal
producing company. Its vision is to emerge
CIL is planning strategic partnerships
overseas compan ies for coal blocks. What is
with
-
from the position of a domestic leader to the the status?
ding global player in the energy sector. For acquisition of stakes in overseas mines, we had
hector technical of GIL , what do you
invited Expression of Interest (1101) for having
strategic partners from four countries US , South
c has been CIIfs major achievement? Africa , Indonesia and Australia. We received
ave been able to put in place a proper system around 48 proposals from them and shortlisted I 2.
ocurement of explosives and OTR tyres and Afterthis, we invited proposals from them and cate-
managed to bring in effective changes in Re- gorized them into three different models - equity
ment and Rehabilitation (R&R) policy. These participation with coal offtake arrangement, purely
ped streamline production and achieve our offtake arrangement and JY formation for acquisi-
q meet the country ’s growing demand for tion of blocks abroad.
For the first and the third models, we have now
settled down to five proposals and these are from
en planning to increase production listed companies in three countries - US, Indonesia
rground mines for pretty long and Australia. Technical due diligence is on for
is the status ’ these.
thrust on underground mine pro
g echping trend was arrested in What is the latest on the Mozambique front?
We have alread y formed a JV with government of
Mozambi que — Coal India Africana Limitada.
This JV has been given the prospecting license for
Al and A2 blocks. We had sent two geologists re-
cently, andthough they did someprelimhiary work,
they could not reach the site due to heavy rains. To-
wards end of July, we will send our team again and
this time they will set up our office there. We will in
p. vite tenders from companies within Mozambique
—
for doing exploration work. They wilido the drilling
07-08 and part and our team will do the rest of the geological
______
re ained so in work. Hopefull y fromAugustor September, we will
2008-09. be able to deploy some resources there.
I
Unfortunatel y in
2009-10 , we have By when do you expect to start production at
slipped behind as some the Moza rn bique blocks?
of the mines had to be Since that area is totally unexplored and we do not
closed owing to fire and have any data on coal availability, except some geo-
________
________ other problems.We had a plan logical mapping, our first priority will be to do some
to increase production from un- scattered boreholes and we plan to do this on re-
derground mines to 66 million gional basis.
tons per annum in five years , but Once we find out the coal resources in adequate
the implementation of these schemes quantity, we will take our own machines there for
is getting delayed. So may be it will not drilling. It will require some time to start produc-
fructify in the next five years, but in the tion.
next seven years or so, we will meet the
Is there any development on EoIs for UG
mines?
What is CIL’s average wst ol producti o n? We had identified seven UG mines and h ad several
Most of the underg ound mim c Id CII. an r .in ni ng interactions with nine shortlisted prospective bid-
at huge losses. I do not ha c e’ aci liguics . bu t last ders, but when we floated the NIT, surprisingly no
“ear . a loss ill soiiieLhiii d r l ) U J ] d R ‘1500i to r i VvdS offer came for any of these blocks. This was probably
in curred in un derground mining. because, there were some clauses in the NfL which
The cost ol opt ncast mines varies IrA liii ifliflC IA were not acceptable to the bidders. Therefore , we
mine and w mId be something liki Rs 501° d U n An have advised the coal companies to discuss these
an average to somethin ’ around Rs 700 a I n b r with prospective bidders and then try to relax the
some mines which are snr kin at high er stni pp iu terms and conditions. ECCI has interacted with
ratio. Bur inUG mines, inv ar i 11 11 the cost ol mining these bidders and they have also come out with a re-
is between Rs 2200 per tori and Es 2500 per U n on vised bid document. WCL and NCL will follow.
an average.
What is the latest on development of the is
abandoned/ closed UG mines?
The NIT for these 18 mines have been fi rmed up and
sent to subsidiary companies. They have been ad-
vised to float tenders for individual rrnnes The ten
ders may be floated together for all the mines but
mthwdua1 compames will do it
But they have not yet floated the tender priman
ecause the technical part of that document will
j to be made mine specific That work is being
very soon we will float the tenders
The port powe r ‘Availabilit y of
coke has become
Senior V-P, Merchant Shipping Serv ices
a challenge’
(a Samsara unit),M K Palanivel, expresses his
v iews on issues re late d to coa l transportat ion
amsara , a leading solutions provider in the
shipping and logistics industry and a mem-
her of the Sharaf Group Network of Dubai , WT Director, President & CEO, Ennore Coke
commenced its Indian operations in 1996. It of-
f ers services encompassing shipp ing, rail move- Ltd, Ganesan Natarajan,shares his views on
‘.y.: ments, CFS/ICD management and road transport
the prospects of Indian LAM coke industry
with a fleet of vessels, trucks and other infrastruc-
IE:
ture in India.
nnore Coke Limited (ECL) is one of the
What are the major issues related to port infrastructure largest low ash metallurgical coke produc-
in India? ers and second B SE listed company in its do-
The major issues for many ports in India are insufficient drafts , main. ECL has its own manufacturing facility at
higher frei ght and demurrage , huge berthing delays and ab- Haldia and another group subsidiaryy h as its plant
sence of proper shore/mobile cranes. Some ports are also facing at Cuttac k. Moreover, ECL has conversion/con-
shortage of pilots. tract manufacturing agreement with two plants in
Orissa, one in Jams h edpur , two in the east coast of Asansol and
What needs to be done to improve the situation? one with the same arrangement in the west Coast.
We need to work out a well planned , concerted and sustained In an exclusive interview, Ganesan Nataraj an, whole time
dred ging programme at ports like Haldia/Ko lkata , Paradi p, director, president and CEO of ECL , shares his views on the
Vizag, New Man gal ore , Goa and some other ports and execute prospects of Indian LAM coke industry.
it in a fixed time frame. We also need to install off shore coal dis-
charge facilities , similar to what exists in Indonesia . Ports may How do you see the current situation in the coke market
lease out waterfront to private port terminal operators to aug- in India and abroad?
ment existing capacity and set up newer ports with higher Currentl y in India the availability of coke has become a chal-
dra fts , better shore handling facilities at respectable distances ’
without overcrowding like in the case of Vizag and Gan-
lenge rather than price. Coke prices in India are a little volatile
due to iron ore prices. But looking at the coking coal prices
gavaram , which has a distance of less than 25 km between
which recentl y got settled for $22 5 per tonne FOB for the cur-
them.
What steps do you feel need to be taken on the logistics
rent q uarter , coke price will remain in the same price range
without any changes.
Internationa lly coke is very much in demand and most of the
front to handle the additional volume of coal to be internationa l buyers are scouting in India for coke. Currentl y
m ined in the coming days and also to handle increased low ash coke is being exportedat a price of $5 10 per torme FOB.
coal imports?
First of all, I think over dependence on rail movement should be What according to you are the main problems/concerns
reduced. Secondly, we should encourage road and coastal/in- ofthe industry?
land river movements depending on logistics, availabilit y of var- The main problem of the industry is the price absorption. In In-
ious modes of transport and cost considerations. Thirdly, we dia it ta kes little more time as compared to the international
need better and wider road network with m inimum lead p eriods market. Infrastructural facilities are not good in the eastern part
or project delays. I would say more public private participation of India. Ports like Haldia have not been dred ged proper ly in the
(PPP) and fast track development are the need of the hour. last few years and heavy waiting period in Paradip is creating
problems.
How do you see the prospects of new ports that have Second ly rake availability is also a big concern. As most of the
come up recently? iron ore mines in Orissa are cl osed , iron ore export movement
Port operators build ports based on certain supply-demand cal- has come to a halt. Conse quentl y, no outward rake movement
culations. Whether their port facilities are utilized well or not
depends on pricing of port services, the development of hinter-
is affecting transportation of coal from the ports.
land the new ports serve and cargo generation for these ports.
Other factors include proximity of nearby competing ports and
Do you think any policy changes are required to improve
the condition of the industry?
facilities like drafts , cargo handling equipment etc. Current ly coke industry is catering to stee l plants but doesn ’t
enjoy the priority or core sector Status in terms of rake allot-
What is your outlook on vessel charter rates for FYi i?
China, India , Indonesia , Russia and Australia , the countries in-
ment . The Railway ministry has to change its policy in allotment
of rakes and movement of empty rakes towards the port.
volved in movements of five major bulks, hold the key. The first Paradi p port current ly has a policy of allotting bert h on first
few months will be good, but we have to wait and watch the come first served basis instead of priority bert hing like other
coal and iron ore price movements. Future policies b y India
(iron ore control) and Indonesia (coal control), port congestion
ports . The coal ministry should also change its policy on allot-
ment of indigenous cokin g coal blocks or linka g es f or merchant
in various countries, ship-breaking and new deliveries will also coke plants according to their capacities.
play a key role in determining frei ght levels in FYI 1.
Cool Insights Bureau CoolInsights Bureau
 junction ho lbc r

PRESENTS
COal1 IOc!”t THE ECONOMIC TIMES
CONSUMER C NNECT INITIST]VE
THE
• M 0 N DAY • 1 4 iU N E 20 1 0 III
Pd qiwid Puwo, ’ Ltd Pagai ia Enet g Ltd
RSP
W
‘D J
I , l tl It I I I

Sii Aj ian d Viiiayak Coalfielci s Ltd RDUP

I’ 1 1/ 1’ 1 . I Fl E i
I I 1 V

540 MW CFTPP Th rm PD r Min q Tra d r q Lnq sti s [‘or ufton [y

__
RSP fltisiriess Pi www.rsphome.com
Mumbal S Kolkata

KISPL to secure C&O Group to meet India’s coa l import needs Gupta Coa l
supplies for IPPs
With GDP on a positive growth
Keep ing i n v iew t he stra in on tra dit iona l sources ,In dian cos may nee d to re design bo ilers
to accommo date LRC,says founder president & CEO of C&O Group, Ahmed A R Buhari vying for 25%
path, power and allied sectors will
continue to propel increased Group,
he

Oil
Dubai-
based Coa l 6-
(C&O)
which
How would you describe the
role of private coal supp liers
in the Indian context?
The current and future fuel
mar ket s hare
requirement of coal,feels chairman, operates in India requirements of the country

KISPL ,Rahul Bhandare

through ‘Coastal
Energy ’, is o n e o f
cannot be satisfied by the
domestic sources of coal as of Cha irman , Gupta Corporation Ltd,
nowledge Infrastructure
the earliest players in the sea
borne coal market in India. In an
now. In such circumstances, it is
only the private coal suppliers , Padmesh Gupta, speaks on the
imported coal scenario in India
Systems Private Ltd (KISPL) is interview to Coal Insig hts , which can step in to keep the
‘_ 1_ a major player in the Indian founder , president and CEO of power plants running and sup-
coal import scene. In an exclusive the company, A h med A R port India ’s growth.

w
I
interview to Coal Insights, chair- Buhari , shares his views on the
man o f KISPL Rahul How do you see the coal he Nagpur-How do you see the
piospe cts of the Indian coal
-
shares his company ’s plans and infrastructure facility in b a s e d overa ll market scenario
speaks about the overall coal market
market.
India? T G u p t a in future?
scenario. Cor poration has Worldwide annual seabome
w1
What is your view on the Current infrastructure facilities
view the expected strain on tra- challenges in India?
_______

overa ll coal market scenario in the country leave much to be interest in coal, trade in thermal coal is about
How is KISPL prepared to meet India’s future ditiona l coa l sources , Indian We are targeting between 15 mining, power, 650 MT. About 400 MT of it
in India? companies may have to look at desired. We need severa l deep
coa l demand? India will require over 100 mil- MT to 20 MT o f coa l, to be sup- draft port s to get the coal into In frastructure 6- Logistics. is in Asia. This scenario will
KISPL h as a clear ly defined two-pronged strategy. On redesigning their boilers , etc.. plied to consumers in various Gupta Corporation , throug h continue for the next few
lion tons (MT ) of imported ther- the country as quickl y as possi-
the one hand, we are working to secure long-term mal coal shortl y. Low rank coal
to accommodate such coal sectors. We will also supp ly ble. Rai lways will also have to its ope ating company Gupta years .
Sul)pliCS for IPPs and on the other, we are expanding qualities. about 5 MT of coal to our own Coal (India Ltd., is in the If China and India boom in
(LRC) from Indonesia may be s p ruce up infrastructure to
our infrastructure footprint, which includes plannin g available in abundance if cus- 1200 MW power plant that is move 100 MT of coal into differ- business of supplying import power use continues. the net
How is your company gear-
for a measured progress on backward integration to tomers are open to it. Keep ing in ing up to meet the future coming up in Tamil Nadu. ent parts of the country. ed coa l from Indonesia , South coal imports to China could
soar to 170 MT or more in
bring about effidency in the supply chain. Africa and Australia. 2010 and that of India’s more

Focus on energy, power sectorr needs

Go ing f orwar d, w h ere d o you see Indi a’s In an interview to coal than 75 MI, boosting coal
demand for imported coal? Insig hts , Gupta Corporation prices globall y.
With the GDP maintaining a positive growth, power Ltd ’s, c h airman , Padmcsh Besides this the various
and other industhal sector growth will continue to Gupta , speaks about the com- recent mining accidents in
propel the increased requirement of coal. pany ’s agenda going f orward C h ina , West Virg inia , Turkey,
However , the demand for imponed coal (not talc- Director,Maheswari Brothers Coal Limited, Amit Mandhani , feels that the demand
nd for imported coal in and views on imported coal Russia will force the respec-
ing into account UMPPs ) will still double in the next scenario in the country. tive Governments to enforce
five years. India is going to cross 100 million tonnes in the next five years Excerpts: safety checks and take up
wherein you may lose or make are following a fixed tonnage proper safety measures.
Psu companies generally buy imported ther- ahe swari the Indian and international This may lead to closure of
B ot he is coal markets. lots of money, but it also gives a based contracts with a flexible Where do you see India ’s
mal coa l t hroug h the limited tender route. _ _ _ _ _ _ _

demand for imported unsa fe mines affecting

Your comments. C o a l chance to a lot of peop le who pricing system based on various
Limited is a leading Where do you see India ’s wish to enter and experience tools available in the market, thermal coal in the next domestic production and will
State power corporations are public sector enterprises ‘1 fi ve y ears ? lead to more imports of coal.
and must avoid the limited tender process as it is in coa l trading, pro demand for imported ther- the market , which makes the like indices of various coals and
cessing and benefi- mal coal in next four years? market very dynamic. hed ging mechanisms and some The demand for thermal coal
______

violation of the principles of equality as well as the
doctrine of a level playing field . transparency and rea-
sonableness enshrined in our Constitution. The
award of contracts to public sector enterprises by
inviting limited tenders where only PSU companies
can participate requires urgent attention and abroga-
non since this process is evidently unconstitutional
and goes against the laws and policies of the govern-
ment. An open, transparent and non-discriminatory
procurement i rocess is the best tool to achieve value
for money as it optimizes competition among suppli-
ers. The attainment of value for money, public access
to information on govemment contracts and fair
opporturntics for suppliers to compete fur govern-
ment contracts are all essential requirements of an
efficient government procurement system.
ciation and logis
tics service provider for the last
28 y ears . Head quartered in
Hyderahad the com p any pro-
v des h igh qua lity coal rnp ort
and trading services fo indus-
trial and domestic clients with
its end-to-end solution delivery
model or coal handling, cus
torn learance and Iog stks
services .In an exclusive inter
y e w with Co a l Ins g hts, Amit
Mandh ani , director,Maheswari
Brothers Coal Limited, shared
his views on various aspects of
in India wi ll s h ow upward How is Gupta Coal gear ing
We see that the demand for complicated structures which
imported coal in India is going W hat has been the recent give the flexibility of deferring trend due to addition of new up to meet the future
to cross 100 million tons in the Indian trend in procuring the month, quantity and price , generation capacities. The challenges in coal sup-
next five years because most of imported coal? and hedging the risks on all plies?
domestic production is not Gupta Coal has set a target to
t h e p lanned power p l ants t h at India till now has been follow- three basis, depending on the able to meet demand due to acquire at least 25% of mar-
are based on imported coal will ing a role of securing cargo internationa l scenario. This was various reasons like environ- ket share and in order to meet
consume a substantial amount either for a couple of months on not available so far. Our compa- ment and land acquisition etc. this target we have made long
of coal themselves. a short-term basis or a year long fly is trying to understand these Considering all these and var- term arrangements wit h
contract on a fixed price basis scenarios and incorporate some ious other factors , India ’s reputed coal mines in
What is your view on the with minimum fle xibility of the models for lon g-term thermal coal demand, in my Indonesia , South Africa and
current coa l market sce- involved on the price change contract where the interests of opinion may be in the range Austra lia , besides owning
nario? side . the supplier or the receiver are of 75-1 10 million tonnes about 200 MT coal reserves in
The overall market scenario is Of late it has been observed not harmed and a minimal risk
very positive. The fluctuations that most of the European port folio can be created so that (MT) in the next fi ve years if India and overseas. Some
all the power projects come more acquisitions are in the
in the market have a flip side power houses and firms abroad no defaults occur.
on stream as per schedule. pipeline.

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 junction
IN A SSOC IATI O N WITH

ho, 1 TITE Eeoxo mi TIMES

A CONSUMER CONNECT INITIATIVE
NOMIC TIMES S MONDAY .1 4 JUNE , 2010

www.rsphome.com
Mumbai .Kolkata

Better coke rate expected ‘CESC likely to import 0.6 MT of coal this year’
Director (commercial), , ,shares with Anisha
C talks
SAIL Shoeb Ahmed
V-P (systems operations), , Chakrabarti , ESC Ltd is
CESC BB depend on the mar ket index and expects to import around
Das his take on the company’s plans to ensure coal security to Arnab Mallick on general market trends
eastern In-
dia ’s largest
rather than negotiation power.
About shift in future strategies
0.6 MT in FY11 - On the status of
CBSC’s expansion projects , he

S e e 1 said. On SAIL’s ;AIL’s own producers worldwide. private sector of domestic power producers for said work has started at Chan-
t
Aut hor it import of coking:ing coa
coal,
l, hand the company’s plans
hee However , the steel corn- c power generator coa l procurement , Chakrabarti drapur and there has been some
y o f :onsumption
said the total consumption panics have not been full y __________ and distributor said some big players are acquir- progress at Haldia and Balagarh
1 India
_________ India
(SAIL)
Ltd
is
of coking coalI for SAIL in
2009-10 was about 13 .5
able to absorb the cost
increase as the global
and plans to increase its genera-
tion capacities substantia lly in
price will depend on the interna-
tiona l demand and supply posi-
increase is signi ficant , so will be ing mining fields in Indonesia
the impact. On what should be and Austra lia. He said currentl y,
However, there are land and
coa l issues in Orissa , Jharkhand
’s lar gest million tonnesS (MT), and economy is still recovering coming years. tion. The way India and China the strate gy of Indian consumers around 10% of CESC’s tota l coa l and Bih ar . On new coa l bl oc k s,
steel maker nearly 75% of this was from the economic shocks The company ’s VP (systems are going in for coal based gener- to negotiate prices , he said glob- requirement is sourced from he said , state-level prospecting
and the largest importer met throug h imports. since 2007-08. operations) B B Chakrabarti ation , it is bound to increase sub- al mining companies operate in overseas market and it imported license (PL) is awaited for Jhark-
and consumer of co k ing Ahmed said SAIL AlL will con- “In the event the said internationa l thermal coal stantia lly. Consequent ly, if the a free market and thus price will about 0.5 MT coal in 2009- 10 hand as well as other states.
coal. It is also among the tinue to depend lepend on demand for steel and the

wor ld’s top 10 stee l pro-
ducers in terms of installed
capacity.
SAIL’s director (com-
‘Changes in MV &
imported coa lI as most of price level do not pick-up
its new capacities
ties in Phase significantl y, we do not see
- I e x pansion is coming any reason why raw mate-
through thee BF/BOF ria l prices should go up

Mining Acts needed’

mercia l ) S h oeb A h med
said the quality of coking
coa l avail abl e in India is
not suitable for production
of steel throug h the blast
route . further , “ h e said .
“However, as we are On SAIL’s efforts to
bui lding facility
ity for coal reduce dependence on
dust injection in almost all imported coal, Ahmed
our new BFs and also due said , SAIL already has a
MD , RSP Group, Rajesh Pagaria, discusses with

furnace route . For this rea-
son most of the Indian
steel producers have to
depend on imported
coking coal.
“Given the composition ,
chemistry and ash content
of domestic coking coal,
which is available from
Coal India , we have to use
between 70-80% of
imported coal in our steel
plants for production of
co k e , but for many it is up
to 100 p ercent ,” Ahmed
NRG?
to the fact that
lat with the few blocks of coal and is
new technology gy we aim to also activel y on the look
achieve significant Out for new blocks of cok- Lokenath Tiwary the sector ’s problems & solutions
improvement in our coke ing coal in the domestic
rate , the requirement
uirernent of market. On overseas What according H ow can th ese probl ems b e
:oa l will not acquisitions , he said cok-
hard coking coal to you are the solved?
grow proportionate
onate ly with ing coal assets are not that maj or p robl ems Apart from providing the deserv-
our hot metal ta l capacity easy to come by. “We must of the coal indus- ing status with bankers , a few
addition but would be not only be able to find the tr y at this point? sma ll er issues lik e ch ang es in
lower than that ,” he said. right asset but also get it at
at,” Availability of existing Acts can improve domes- Indonesia..Russia..the Globe
p rice the righ t p rice ,” he said.
On co k ing coa l price finance is the major tic production , stop pilferage and
out look , the rise in the ICVL is evaluating some hurdle for the industry even as it illegal mining
price of cokingrig coal and properties and there may is among one of the most prof- Moreover, tenders relating to
rough t a sig- be some development in
iron ore h as broug itable infrastructural businesses. outsourced intra mine work done Ideas have the energy to drive people past all frontiers. Ours
ush for steel the future , he added.
nificant cost-push A number of bankers still talk by contract management cell
have take n us to 20 diffe rent countries including South Africa ,

Virtual is realit Ly
MD & CEO, mjunction services
Itd,Viresh Oberoi , points out
the conveniences of e-auction
negatively about the industry. In
absence of organised finance, the
sector is more dependent on pri-
vate finances.Existing MV Act
and Mining Act is more general-
(CMC) of Coal India Ltd, known
as T1 ansport contract , are still Australia , Indonesia , Vietnam , Russia , China and the USA.
mostly guided by the unwritten
codes and need serious review.
We have saved millions of dollars for our customers by

How has coaljunction for their future requirement through

ist in nature and has no consid- How are you preparing to ide ntifying the most suitable coals, using the most optimu m
II helpe dytoin bring eration for coal sector resulting serve the coal consumers?
-

in trans- forward auctions. into creation of a lot of undesired We are well-placed to expand by supply chain , helping them increase their bottom
parenc the coal supp ly line phenomenally.
_______

system barrier. Overdependence offering imported coal and con-

I chain?
The wave of liberalisation
_________
which swept the Indian
indu stry in the early nineties
did not penetrate the underground mines
of the coal industry. While the steel indus-
try was unshackled from an administrative
control regime, that did not happen to the
What additional services is coaljun c-
tion planning to launch for the benefit
of the consumers?
Coaljunction launched India’s only coal
spot price inde x on September 23, 2009 in
association with NCDEX . An improved
version of this index will be launched in
the next couple of months.
on private coal washery, coa l pil- sultancy services with our infra-
f erage and illegal mining are also structural and manpower pres-
major issues. ence; and value added services. This means higher outputs, cleaner skies and happier
customers like Tata Power , Reliance , CESC,ACC , MCL
m d mining
Muscle behind mining and TNPL among others , (and you)

Our aim is to provide the ‘power to grow ’ through reliable

coal industry.
As a result , the coal mining companies
continued to make losses and the middle-
men huge profits. The losers were of
course the actual consumers of coal. This
Recognising the fact that there are over
500 million users of mobile phones while rv i ces , An
Director, P&H MinePro Services, Anirudha Gupta,,
irudha Gupta energy management solutions that are eco-friendly. So if you
on ly lO% of this number access the
Internet , coaljunction is planning to pro-
talks about the industry’s future and prospects are looking for energy solutions to power your progress ,
vide an opportunity to its 10,000-strong What are the cost mining technology and sys- there ’s only one place you need to go C&O. -

was corrected when coalj unction conduct-
ed its first c-auction for BCCL on February
19, 2005 , and broke the back of the coal
mafia in the process.
Since then, coaljunction has sold over 75
million tons of coal for Coal India and
Singareril Collieries Company Ltd. This
coal has been sold to 10,000 registered
buyers who participate in the spot and for-
ward e-auction that are conducted by
coaljuncti on.
It is possible for any coal consumer in
India - whether large or small - to partici-
pate in these c-selling events and book
directl y with the coal miners their require-
ment of coal. Through coaljunction , they
can not only buy for their immediate
requirement on a spot basis, but also book
coal buyer base to participate in c-auctions
over their mobile phones. In other words,
coaljuncti on will introduce rn-commerce,
or mobile-commerce, in a B2B environ-
ment which will greatly assist the con-
sumers of coal.
Indian coal consumers are increas ing-
ly looking at imported coal to meet
their demand. What role does
coalju nction plan to play here?
We are working with the small buyers of
coal to aggregate their requirements which
can then be met from imported sources.
Sourcing of imported coal and making the
same available to the small consumers in a
transparent and efficient way will further
add value to the coal consumers of India.
major hurdles for tems compared to India.
t he growth of However India is likely to launch
Indian coal min- into a similar, more aggressive
ing indust ry?
_ _ _ _ _
mining technology and systems.
Optimum utihsa
tion of resource What potential do you see in
rich land while balancing social,
India as a market for mining
economic and cultural issues andequipment? a— -r ,
how to promote equitable Out- India represents a potentiall y
comes for stakeholders , in the good market for mining equip-
best fashion are major issues at
this point of time.
ment due to its rapidly growing
economy and ongoing efforts to
COASTAL ENERGY PVT LTD
increase private-sector mining
What are the maj or differ- operations.
ences between the Indian and The transition to a growing pri-
Chinese markets? vate sector mining industry is
China is more quick in adopting graduall y moving f orward and Call us on + 91(22) 4211 4211 / (44) 43974397 or log on www.coalandoil.com
modern h igh-production , low- that offers tremendous scope.

A role that ’s trul y I I

multi-dimensional / /COKE LIMITED Comp lete third party

Chairman ,SIMA , N K Patriaik, highlights issues inspection services with
related to coal and the Indian sponge iron industry
ndia took its first tentative step towards economic Laboratories at Indonesian &
L liberalisation in 1991 . In the midst of a radical
change in the Indian economy, the Sponge Iron
___________ Manu facturers Association (SIMA) was constituted ,
South African ports
which started operations from February 1992.
SIMA has come a long way since then to bring all
sponge iron manufacturers together ( 101 members as
on date) . It also represents the Indian DRI industry and p rovides a
common plat form for regular interface with the government and
other regulatory authorities .
What was India ’s DRI production in FY10 and expectation
for FY11? Whatever work we do in darkness ,
Total production inFY lO was22.9 nilhion tons (mt) andwe expect to
grow by 5 percent to produce 24 mt in FYi 1.
shows up in brig ht light!

What are the problems of the industry as far as coal is At Ennore Co ke we are grateful to Mother
concerned? Nature for her vast resource. So its our duty to
Both availability and constant increase in the prices of vital inputs return the same favour to her.
are major issues. Iron ore cost of production is Rs 5 50 per ton, but we
are procuring it at Rs 5000 per ton. Transportation and power cost Playgrounds and green strips in the vicinity of our factories
also need to be suitably reviewed. Availability of coal has come down
to about 40% ofthe requirement . • ISO certification for environment-friendl y practices
• Scientific recycling of all waste
What are SIMA’s prescriptions for solving the problems
b eing faced by the indust ry in this respect?
The government must ensure and facilitate consistent supply in both
Promoting growing green among our people
Seven decades of experience
short and lon g term of vital raw materials like iron ore, coal and nat -
ura l gas to attract future expansion and investment in sponge iron
sector. Some mechanism to control iron ore prices is definitel y re- in Coal & Coke
quired to make sponge iron available at respectable prices and final-
ly steel to common man at affordable prices. At the same time, ex-
port of iron ore should be discouraged and brought down to zero in
the next four-five years. In addition, to optimise use of iron ore fines ISO 9001:2000 NABL accreditation for ISO 17025
and lower grade iron ore, incentives in the form of tax and financial for Central Laboratory, Kolkata & Cuttack Laboratory
benefits must be given to the industry. Mining companies should
also be forced to set up pellet and beneficiation plants. Indonesia - Ports in Kalimanthan ,
Sumatra , Java and others
Do you think sponge iron makers are likely to face any pr ob- South Africa - Richards Bay, Durban
lemin securing coa l supp lies? India - Haldia , Paradeep, Vizag,
The matter is becoming very serious every day with no clear policy on Chennai , Tuticonn, Mundra ,
already linked quantities. Imported coal from Indonesia with high Navlakhi
moisture content and volatile matter is not suitable. South African
coal is goodbut prices in the long run are not viable. All powerhous- t
es in coasta l areas, who are major consumers of coal, should be
forced to import coal & domestic coal of right quality and quantity
>
(t Mitra S.K. Private Limited
Tele.:+91 3340143000, Fax: +91 3322650008 ,
S
must be made available to sponge iron industry for its growth. cv

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