The key to India's economic boom

It seems that notwithstanding the global financial crises, India is set to become a high-growth state and more of a welfare state under the new government.
The so-called work programme of 2009-2014 has already been chalked out in the Congress party manifesto and there should be no political or other constraints in pushing it through.
There is a good chance then that by 2014, the economy would be comfortably chugging along towards a double digit GDP growth rate or may even have reached it. At the same time, the footprint of the state would be much larger in the welfare space.
Here are the key elements of that journey to 2014:

The GST boost

While there may or may not be another stimulus package, the move to a "moderate" goods and services tax (GST) in about ten months would provide a big boost to the economy.
As much as $15 billion of additional output could annually be added to India's trillion dollar economy as a result of the tax which would subsume all other central and state level indirect taxes and lead to the all-India common market.

The productivity push

The plan to invest Rs 30,000 crore (Rs 300 billion) or a whopping $6 billion on a nation-wide skill development programme focused on the youth of the country should enhance national productivity, even if one assumes a low efficiency of the spend.
Similarly, the plan to connect each and every one of the 600,000 odd-villages of the country to a broadband network within three years would yield productivity gains even if one takes into account the fact that many of these villages continue to be denied the most basic facilities like electricity and water.
There is also the odd chance that broadband connectivity would expedite the provision of other basic support infrastructure.

A welfare state

Having sensed that its aam aadmi thrust has yielded results, there is going to be no holding back the Congress government on its welfare agenda. There is a plan for enactment of a Right to Food law. There is a commitment to provide 25 kilograms of rice or wheat monthly at Rs 3 a kilogram for families below the poverty line.
Subsidised community kitchens are proposed to be set up in all cities for the homeless people and migrants. And of course, the rural employment guarantee programme is to be strengthened.
There is also a plan to extend rural health insurance to every family living below the poverty line in three years. Social security cover for urban homeless, elderly and backward communities is proposed. Educational loans or scholarships are to be extended to all students.
There is talk of more schools with better trained teachers. There are special incentives planned for survival of the girl child aimed at correcting the adverse sex ratio.
There are also plans to take forward the scheme of monetary incentives to female students on the completion of various levels of schooling. The spends on these initiatives are certain, even though the outcome may not be.

Welfare agriculture

In the case of agriculture, what is proposed to be done to boost industralisation of agriculture is not so clear though the welfare aspects of the government's agricultural plan are clearly marked out.

All small and marginal farmers in the country will have access to soft loans. To check the moral hazard that arises from the massive loan waiver programme, there is a plan to extend interest relief to farmers who repay their loans on schedule.

Crop insurance, direct income support to farmers in ecologically vulnerable areas and procurement at the doorstep of farmers are some of the other measures that are proposed in this term.

Missing the SME beat

The one sector which would boost employment and growth together would be the small scale industry, which contributes 40 per cent to the national manufacturing output and accounts for about a third of the country's exports.

The small scale units are among the worst hit by the financial crunch though they are yet to get a serious relief package.

The Congress party has however promised a "new deal" for the small units, as well as first generation entrepreneurs, which would include access to collateral-free credit and freedom from multiplicity of laws and inspectors.

There is also a plan for a cluster-based approach to growth of SMEs though one needs to see how quickly it would be put in place.

Plugging the Infra gap

The new government needs to work out a focused plan for the infrastructure sector if it is to meet its overall objective of high growth.
It is not immediately clear how much of the targeted $500 billion investment planned in the current five year plan has been managed in the two years that have passed, though one can be sure that it is inadequate.
Investment in infrastructure needs to be enhanced and tracked, even though it is not part of the work programme. The only thing mentioned there is the aggressive target of adding 12,000-15,000 Mw of power generation capacity every year without any explanation of how it will be done.
What is nevertheless welcome though is the stated intent of creating a new model of urban administration with financially-viable self-government institutions.

Land @ market rates: Market rates for agricultural land required for industrial projects and an option for the farmers to become stakeholders in the industrial ventures on their land, which is part of the work programme, would finally set to rest the controversies on land acquisitions.

Dabbawallahs 'deliver' their success secrets

It is not only former railway minister Lalu Prasad Yadav who caught the attention of Harvard Management School for turning around Indian Railways.

Now dabbawallahs, known for their food-supply network across Mumbai, are being asked to impart lessons on management and business skills to the corporate world.

One such presentation by dabbawallahs on time management, customer satisfaction, loyalty, error-free methods and other skills was given to top industry professionals in Mumbai recently.

Nutan Mumbai Tiffin Box Supplier's president Raghunath Medge, who delivered the presentation, said, "The method we adopt is simple and easy. For us, customer satisfaction matters a lot and we are here to deliver services to them."

"The dabbawallahs deliver tiffins at their destinations travelling by trains, bicycles or carts and do not seek help of modern gadgets in their business," Medge said.

Pawan Agrawal, who has researched on dabbawallahs, told PTI that recession has affected all businessmen but the dabbawalahs were not hit.

The slowdown has discouraged people to eat in hotels and most prefer to have home food, he said.

The Dabbawallahs do not go in for high-tech equipments but adopt easy and simple modes to perform their job, he said.

Agrawal has penned a book Dabbawallas of Mumbai-Masters of Supply Chain Management which was released at a function organised by Bombay Chambers of Commerce and Industry in Mumbai recently.

"We have latest technology with us, we give appraisals to our employees and several other benefits to them, yet we have several issues within our organisation.

"But Dabbawalahs work in a simple manner with no such benefits and yet they give the best performance as workers," Agri Science (India) Pvt Ltd's chairman Limji Nanabhoy, who attended the presentation, said.

The century-old supply chain of dabbawallahs is operated by 5,000 semi-illiterate men and women who pick and deliver 2,00,000 tiffin boxes to office goers per day.

The average turnover of the dabbawallah industry is to tune of Rs 40 crore (Rs 400 million) per annum, Medge said in his presentation.

"The recognition that we received from Prince Charles have made us very much famous worldwide. We are happy to receive such appreciation from all of them. It feels good that people are recognising our efforts and hard work," Medge said.

Professionals from various companies, including ICICI Bank, IDBI Capital Market Services, Forbes & Co Paramount Health Services Ltd; Dynamic Logistics, Chowgule Ports & Infrastructure, Blue Dart Express and Fortress Financial Services, participated in the presentation.

Does India need to police the Internet?

It is hard to fault a government when it tries to regulate the Internet in the larger interests of the country.

Under the newly-proposed draft rules (Section 69A) of the IT Amendment Act of 2008, the government will have a blanket power to block news portals and other websites for 'offensive' content -- in the interest of the sovereignty and integrity of India, defence of India, security of the state, friendly relations with foreign states and public order (all conditions that restrict freedom of speech under Article 19-1A of the Constitution).

The devil, however, is in the detail.

Consider this. Most websites, internet service providers and social networking sites have a lot of user-generated content and provisions for bloggers to post their views. While the online content of newspapers is generally subject to proper supervision, most blogs -- by their very nature -- are not moderated.

Social networking sites too, by their very definition, thrive on user-generated content which is unregulated. YouTube, Orkut, Facebook and MySpace are classic examples.

Now, government-appointed officers, not below the rank of a joint secretary, will determine the nature of the offence and levy a penalty. But government officers are not judicial officers. Are they qualified to define, for instance, what goes against 'friendly relations with foreign states' and what is 'offensive' content?

In the offline world, it is judges who do the job, and the government has no power to (for instance) cancel a newspaper's registration merely because it has criticised a friendly country (do we have any countries that are officially listed as unfriendly?). The potential for misuse is therefore obvious.

Meanwhile, there could be more bad news to follow in the form of draft rules that pertain to Sections 43A, and 79 of the IT Act. These rules will cover telecom operators, internet service providers, business process outsourcing units, IT services providers and banks too, since Section 43A asks companies dealing with third-party data to adopt reasonable security practices, failing which they are liable to pay a substantial Rs 5 crore (Rs 50 million) as penalty.

The protection of sensitive data is of course a must. However, telecom operators who deal with third-party data may require a different level of security from, say, banks. So will a car dealer or retailer, who collects third-party data which is not as sensitive as that collected by the bank. Should the law tar everyone with the same brush?

Section 79 of the IT Act poses another problem. It deals with the liability of third-party service providers. For instance, the social networking site Orkut (which belongs to the Internet search giant Google) was held responsible when a user insulted the Indian flag with a 'Hate India' campaign.

With terabytes of data being unleashed on such websites in the form of posts, it's not practical to monitor them. The servers may reside in one country while users may be present across the globe. The administrators can remove the post only when alerted.

The absurdity of such a rule can be gauged from the fact that, in the eight years since the IT Act was instituted, not a single case of cyber fraud has been registered. Surely, a more nuanced approach to the issues posed by the Internet is in order, not the use of a hammer for every minor infringement.

Investing in an MF? Choose the right plan!

Looking to invest in mutual fund but don't know which mutual fund plan to go for? Are you confused by the recommendations given by various investment advisors about which mutual fund plan to select?

Don't worry. Here we cover the different mutual fund plans and how to choose the one that will help you benefit.

Different mutual fund plans

Every mutual fund scheme offers 3 types of plans. They are:

Dividend plan: The investors opting for the dividend plan get dividend whenever the mutual fund declares dividend in the particular scheme. As a result, NAV of the fund falls by the amount of dividend declared. For example, if the NAV of the fund is Rs 100 and the fund house declares a dividend of Rs 10 per unit, then the NAV of the fund will go down by Rs 10, i.e. new NAV becomes Rs 90.

Growth plan: In growth plan, the investor does not get any dividend. Rather the NAV goes on increasing, generating capital appreciation. For example, if you have invested Rs 100 in a fund, whose NAV is Rs 50, you are allotted 2 units of the scheme. In the growth plan, if the NAV appreciates to Rs 60, the worth of these 2 units would be Rs 120. So while the number of units remains the same, the worth of your investment has gone up. The only way you can benefit from this increase is by redeeming your investment.

Dividend reinvestment: If you want to buy more units of the mutual fund scheme without paying for them, then dividend reinvestment is for you.

Mutual funds let you choose between taking the dividend or reinvesting it. If you select this option, the dividend is reinvested into the fund to purchase more units. As a result, the number of units you possess will increase. This doesn't happen in either growth or dividend option.

Factors affecting the choice of plan:

Are you looking for income? Do you want to ensure your investments provide you with regular income? If so, then opt for dividend option. It will also help you book profits and thus protecting your investment from a sharp fall, caused by market crash.

On the other hand, if you are saving for some future long term goal like retirement planning, always remember growth plan is ideal for you. Want to purchase more units of the fund but don't want to put your own money? Then let mutual fund pay for your purchase, by opting for dividend reinvestment plan.

Ultimately, which plan you will choose will be decided by your specific condition and your goal. Remember dividends from the mutual funds are not guaranteed.

So if you are depending on mutual fund dividends for regular income, you will be disappointed as these are not assured.

Similarly if you think growth plan will keep your capital appreciating for good, it is not true. A sharp stock market crash can wipe out any increase in capital. So always consider these factors before deciding which plan to choose.

Money market funds: Making your money work harder

Do you have excess cash stashed away in your regular bank account? Are you aware that instead of earning measly 3.5% interest that banks pay you on this sum, you can get far higher interest on this amount?

Are you aware of money market schemes offered by mutual funds that let you earn interest as high as high as 7-7.5% per annum on this investment? Read on to know more about this lucrative investment option:

What are money market funds?

Money market funds are mutual fund schemes that invest money in fixed income securities, whose maturity period is below one year. These securities can consist of treasury bills, commercial papers, certificate of deposits, short-term fixed deposits; and call money market.

Most of these securities have a very short maturity period, typically below 182 days. As most of these securities are highly liquid, these funds are also called as liquid funds.

What are the time constraints for these funds?

The maturity period of most of the securities is 182 days. However with effect from May 2009, SEBI has mandated that the funds cannot invest in securities whose maturity exceeds 91 days.

You can withdraw your money anytime by giving a day's notice. At the time of redemption, you get the money invested, along with the interest calculated on daily basis. However remember, some funds do have a lock-in period of 15 days.

What are the returns I can expect?

While no investment assures guaranteed returns, even money market schemes do not assure guaranteed returns. This is because the returns generated by these funds depend on the interest rate on the underlying securities.

As the rate changes, so do the returns generated. However currently, they are offering a rate of return of 7-7.5%.

What are the pros and cons of these funds?

Pros

• Higher returns than bank fixed deposits
• Liquid
• Safety of capital
• Low expense ratio, thus allowing you to earn higher returns

Cons

• Reinvestment risk, as the money can be reinvested at lower rate because of reduction in interest rate
• No capital appreciation
• Likelihood of loss of capital because of default of underlying security like commercial paper
• Has very high investment requirement, as most liquid funds expect a minimum investment of Rs 1 lakh (Rs 100,000). Hence it is suitable for corporates and high net worth individuals.

Is it suitable for me?

If you have surplus funds that you want to use very soon, then liquid funds are for you. These funds should be used only as short-term investment plans.

For long term, it is advisable to invest in equities that will fetch you far higher returns. Before investing any such liquid scheme, always check the CRISIL rating awarded to the scheme. This is because some schemes may take undue risk to generate higher returns.

Also unlike equities, it is difficult to check the reliability of the debt instruments. Follow these instructions and you will benefit from these schemes.

Major MTN shareholder opposed to Bharti deal

The South African securities' regulation panel rules and the Companies Act, which requires a mandatory offer to minority shareholders once an investor crosses the 35 per cent shareholding threshold, are not applicable to the Bharti Airtel-MTN deal.

According to sources close to the deal, this is a transaction based on 'a scheme of arrangement.' This entails an understanding between two companies which would eventually require shareholders' approval through a special resolution.

Some of the minority shareholders of MTN have raised questions on the deal or are keeping quiet now and might do so.

Investing in right instruments can make you rich

Are you confused about where to invest your hard-earned money? Do you want to earn high returns while ensuring the security of your capital? Then here are some hot investment options that will help you maximize the returns on your investment.

Equities and equity mutual funds: Equities are at the top of the list of hot investment options. Despite the market slowdown and crash in stock markets, Indian economy is still strong and the companies are still making profits.

Moreover the Indian economy is not dependent on exports, thus shielding it from the global economy problems. Also the conservative policies followed by the RBI and Indian government have provided the necessary security to the Indian economy.

So despite all the surrounding doom and gloom, Indian equities and mutual funds remain your best bet to make money. However don't make the mistake of buying when the markets are up. Instead wait for the market to crash, which will help you buy good companies with strong fundamentals at bargain prices.

Income funds: Do you want to earn a regular income? Are you looking for safety and security of your capital? Then income funds should form a part of your portfolio. They are mutual funds that invest in various debt instruments in order to generate regular income.

With the inflation showing downward trend, the interest rates are set to fall. This in turn, will cause an increase in the value of the units of the fund. However don't expect your capital to appreciate.

Gold: Looking for stability and reasonable returns? Then gold must form a part of your portfolio. While you will not get any income from gold, you can always sell it at the current market rate and get money, as it is the only investment people turn to in case of crisis.

However as in the case of equities, gold can be very volatile and so makes sense to buy only when the prices are down. Also instead of buying physical gold, it makes sense to opt for gold ETFs, as they are more cost effective. You just need to visit your broker to buy or sell gold ETFs.

Real estate: Does the thought of considering real estate as an investment actually scare you? Don't be. With many reputed builders facing liquidity crisis, and banks reluctant to lend money to this sector, you can drive a hard bargain if you are considering purchasing a home either for residential or investment purpose.

Not only, the real estate prices have started crashing and the banks have already lowered their interest rate. So it makes sense to look at real estate as an investment option at this rate. However it will take some time for this sector to rise.

So ensure you can hold on to this investment as real estate is not a highly liquid investment, unlike equities and gold.

Conclusion: While these are some good investment options for those looking for long term investment, it is always important for you to understand your goals as well as your risk appetite.

Don't be taken in by the high returns offered by equities or gold if your goal is short term (within 2-3 years of investment), or if you cannot withstand the volatility of these assets. Similarly, just because income funds tend be safe, don't put your entire corpus in those funds, as inflation tends to erode the value of your investment.

In case of real estate, don't be swayed by the falling property prices and low interest rates, if you cannot bear the other expenses associated with this purchase. Also remember you should be able to hold on to your purchase as real estate cannot be liquidated easily.

So weigh the pros and cons of these options, find out your risk appetite and then diversify your portfolio to get the best returns from your investment.

India firm on duty-free access to EU market

India will stick to its demand for duty-free access to 95 per cent of the outward trade from India to the European Union, against 90 per cent of that from the EU to India, for a free trade agreement, a top government official from the commerce ministry said.

While admitting that the persistent stand on the issue might delay the agreement, the official said the talks were on track.

"We will maintain a hardline stand and it is crucial to the talks," said the official.

It is to be noted, the sixth round of EU-India trade negotiation in Delhi in March ended without any substantial progress because of the tariff-related issues.

The EU is India's largest trading partner and the total bilateral trade stood at over $70 billion in 2008-09.

Apart from the EU, India is also negotiating an FTA with the European Free Trade Association that includes Switzerland, Norway, Iceland and Liechtenstein.

The India-EFTA two-way merchandise trade touched $4.1 billion in 2008. Some of the major items imported by EFTA from India are organic chemicals, precious stones, textiles and clothing, machinery and mechanical appliances, among others.

Citigroup to hold fast in China and India

The head of Citigroup's Asian operations ruled out selling the US group's stakes in Chinese and Indian banks.
Ajay Banga, chief executive of Citi in Asia-Pacific, told the FT that the bank, which the US government rescued last year, also planned to expand lending across the region in spite of the "challenging" economic environment.

The Asia-Pacific region, which for Citi includes Japan and Australia, accounted for 30 per cent of the bank's revenues last year, spanning corporate and consumer lending, credit cards, trading and private banking.

"It is in US taxpayers' best interests that we continue to grow in a region which is delivering strong profits across all its business lines," Mr Banga said in an interview.

His comments will serve as a riposte to sceptics who believe that Citi will be forced to cut back its Asian operations amid domestic political pressure to focus on lending to US clients.

Citi this month sold its Japanese domestic securities business to Sumitomo Mitsui Financial Group in a $7.8bn deal that helped bolster its battered balance sheet.

A US government stress test of the country's banks later found that Citi still required a further $5.5bn in capital to guard against losses if the recession worsened.

This has prompted speculation that Citi could be forced to follow some of its western rivals and raise cash by selling lucrative stakes in Chinese banks.

Citi owns a 20 per cent stake and has management control of Guangdong Development Bank, a lender focused on the industrial heartland of southern China, and owns a 3.75 per cent stake in Shanghai Pudong Development Bank.
Citi is also the leading shareholder in India's HDFC Bank, holding an 11.7 per cent stake.

Mr Banga pledged that Citi would keep its stake in HDFC, which he described as among India's "best run financial institutions".

He added: "Selling our stakes in Chinese banks does not make sense either. How else would we gain access to the opportunities in an area such as the Pearl river delta?"

Several distressed western lenders, including UBS and Royal Bank of Scotland, this year cashed in their Chinese banking investments, while Bank of Americahas pocketed more than $10bn by offloading half of its 20 per cent stake in China Construction Bank.

Mr Banga cautioned that Citi's revenues in the region would be under strain this year, given the "challenging" economic backdrop and uncertainty over the sustainability of the stock market recovery.

"It could be another nine to 12 months until the US economy shows signs of real improvement, which is key to the export-orientated economies of Asia-Pacific," he said.

Will Bharti have to pay Rs 33,000 crore more for MTN?

Contrary to assertions by Bharti Airtel's management, the share-swap deal with South African telecom major MTN may trigger the open offer clause, according to a senior official in the Securities and Exchange Board of India.

Sebi has based its assessment on Bharti Airtel's official announcement, since the company has not yet approached the market regulator with a formal proposal.

Under the takeover code, an open offer for 20 per cent of a company's shares has to be made in two circumstances -- either the promoters buy more than 5 per cent in the company within a year or another entity acquires 15 per cent.

The reason the takeover code is triggered, the Sebi official said, is that Bharti Telecom, Bharti Airtel's promoter company, would end up indirectly buying a little over 12 per cent in the Indian telecom company via its investment in MTN.

Under the deal announced on Monday, Bharti Telecom will be buying 49 per cent in MTN. In return, MTN is buying 25 per cent in Bharti Airtel. Calculated on a pro-rata basis, this means that Bharti Telecom will end up buying about 12 per cent in Bharti Airtel, triggering the open offer code.

On whether MTN is liable to make an offer to Bharti Airtel's shareholders, sources close to the transaction argue that although MTN is buying 25 per cent of Bharti Airtel's shares, Bharti Telecom is also buying 49 per cent of MTN. Effectively, therefore, MTN is buying less than 13 per cent of Bharti's shares, so the open offer code does not get triggered.

Sebi is examining whether this argument holds.

Investment bankers handling the transaction also argue that since MTN is acquiring the stake through global depository receipts, in which the voting rights are vested with the custodian and not the GDR holders, it is exempted from the takeover code.

Others bankers argue that it is not correct to equate the MTN issue with an ordinary GDR issue. "A GDR issue is like a public issue in which the company issues shares to a large number of investors. But in this case, the GDRs are issued to the strategic investor -- MTN -- which will also have a board position in the company and therefore have voting rights that GDR holders do not have."

The Bharti-MTN deal has already become a test case for whether the new foreign direct investment rules can be circumvented. Now, it could also become a test case for future takeovers.

Should the takeover clause be triggered, the Bharti group may end up paying as much as Rs 33,000 crore (Rs 330 billion) more than the deal originally bargained for, based on the company's share price of Rs 900 on Monday, the day the announcement was made. The company has 1.9 billion shares, so 20 per cent will entail a payout of more than Rs 33,000 crore (Rs 330 billion).

If the deal goes through in its current form without triggering the open offer code, all future mergers and acquisitions will adopt the same route.

6 worst things to do in a recession

Are we mired in a long-term recession or will the "green shoots" of economic growth we're seeing be the real thing?

Without a crystal ball we can't predict an official end date to the downturn but we can safely tell you the six worst things you could do in the meantime:
Ignoring the situation. If you're not paying attention to your personal financial situation it's time to start. Has your credit limit been slashed or your APR spiked? Has your credit score dipped? How long could you live off your savings if you lost your job? The ostrich method to money management never works well. That's particularly true if lenders are contacting you about delinquent accounts (i.e. your mortgage).

Take a deep breath and open those bank and investment account statements, review your budget, pay your bills on time and keep in touch with creditors.

Pulling money out of investments. If money's tight it can be tempting to dip into investments to maintain your lifestyle. Doing so, however, will cost you - in several ways. You may have to pay early withdrawal penalties and fees; you'll have to pay taxes on the funds you receive and, you may miss the market recovery and fail to recapture your losses.

If you're considering cashing out because of fear that you'll lose more by keeping it in the market, let cooler heads prevail. Instead remind yourself how much time you have before you need the funds, check to make sure you're diversified and consider wise defensive investment moves instead of stashing it all under your savings account.

Borrowing more money. Do you carry a credit card balance? That's a clear sign that you're spending more money than you earn each month. Until legislation is passed, credit card companies can continue hiking interest rates, tacking on fees and penalties and put you further behind. Get financially healthy and lay off the credit spending before it spirals out of control.

Slacking off at work. It's time to get serious about staying employed. Nearly six million jobs have disappeared in 17 months (since the recession's start in December 2007) and the national unemployment rate is at its highest since 1983. Companies are facing serious cash crunches and making drastic changes to trim costs.

For example, FedEx, which touted a "no-layoff" policy for years, recently let more than 1,000 employees go to save the company $1 billion. The days of assuming your job is secure are over. Get there early, work hard and add value any way you can - your livelihood increasingly depends on it.

Co-signing a loan. With banks tightening lending guidelines, fewer people are able to qualify for a loan on their own. If a friend, partner or family member really needs the funds, they may approach you to help. Remember that co-signing makes you legally responsible for repaying if the other borrower can't (or won't). Can you afford that? If not, risk the relationship and walk away for your own financial safety.

Jumping in to the real estate market. With attractively low home prices and interest rates, the real estate market is enticing for novice real estate investors. Before racing in, accurately assess your risk tolerance - what would happen if you lost your job? Could you float the loan? Do you know how to manage real property assets? What type of return do you need to make? Learn from the housing bust that created the current recession and move cautiously.

The ten fastest cars in the world!

While modest budgets, shaky nerves and the sad state of Indian roads will likely prevent many of us from ever topping the mythical 200 miles per hour barrier, wouldn't it be fun to drive as fast as F1 champ Lewis Hamilton?

We're talking 0-60 mph in less than 4 seconds. We're talking 800+ horsepower. We're talking V12 engines.

In short, wouldn't it be fun to own and drive a supercar?

Well, since dishing out several crores for a single vehicle is not the most practical of aspirations, here's the next best thing: a run-down of the world's top 10 fastest street legal supercars. Enjoy!

Number 1: SSC Ultimate Aero

SSC Ultimate Aero
Maker: Shelby SuperCars
Top Speed: 257 mph+
Base Price: $654,400 (Rs 3.26 crore)

 

Number Two: Bugatti Veyron 16.4

Bugatti Veyron 16.4
Maker: Bugatti
Top Speed: 253 mph+
Base Price: $1,700,000 (Rs 8.47 crore)

 

Number Three: Koenigsegg CCX

Koenigsegg CCX
Maker: Koenigsegg
Top Speed: 250 mph+
Base Price: $695,000 (Rs 3.46 crore)

 

Number Four: Saleen S7 Twin-Turbo

Saleen S7 Twin-Turbo
Maker: Saleen
Top Speed: 248 mph+
Base Price: $555,000 (Rs 2.77 crore)

 

Number Five: McLaren F1

McLaren F1
Maker: McLaren
Top Speed: 240+
Base Price: $970,000 (Rs 4.83 crore)

 

Number Six: Ferrari Enzo

Ferrari Enzo

Maker: Ferrari
Top Speed: 217 mph+
Base Price: $670,000 (Rs 3.34 crore)

 

Number Seven: Jaguar XJ220

Jaguar XJ220

Maker: Jaguar, now owned by Tata Motors 
Top Speed: 217 mph+
Base Price: $345,000 (Rs 1.72 crore)

 

Number Eight: Pagani Zonda F

Pagani Zonda F
Maker: Pagani
Top Speed: 215 mph+
Base Price: $667,321 (Rs 3.32 crore)

 

Number Nine: Lamborghini Murcielago LP640

Lamborghini Murcielago LP640
Maker: Automobili Lamborghini S.p.A
Top Speed: 213 mph+
Base Price: $430,000 (Rs 2.14 crore)

 

Number Ten: Porsche Carrera GT

Porsche Carrera GT
Maker: Porsche
Top Speed: 209 mph+
Base Price: $440,000 (Rs 2.19 crore)

Railway enquiry? Now, just an SMS away!

Opening up more options for travellers seeking details of train services, Indian Railways have started an SMS service on the 139 passenger information system.

The service would enable one to know the passenger name record status, current train running positions, accommodation and availability and fare enquiry.

"All that a passenger needs to do is SMS the queries to 139 and the information would be provided within minutes," a senior railway ministry official told PTI.

The official said the SMS service would basically supplement the existing facilities available in 139 and reduce the burden of the network flooded with calls every day.

The round-the-clock enquiry service 139 is a call centre number and run by Indian Railway Catering and Tourism Corporation Ltd. Estimates suggest it receives over 10 million calls per day.

However, the SMS service would come at a premium and would be charged at Rs 3 per message.

Railways are contemplating to incorporate some more passenger-friendly features on the 139 platform like booking hotel rooms etc.

Recently, IRCTC had introduced 'book a taxi' service enabling passengers to hire the taxi from their home to the railway station by calling 139.

The official said the SMS service can be availed from all mobile networks, except BSNL and Reliance networks where it will be available soon. While seeking information on PNR status, one simply has to write PNR (give space) (type PNR number) and SMS to 139.

The benefit of the SMS service is that passengers can access information even on the move, the official said.

For instance, if a passenger wants information about his train running behind schedule and the expected arrival at the destination, he can type the station code or station name along with his train number and SMS to 139.

The SMS service would be available across the country.

Housing projects are back with a vengeance

Top real estate developers are trying their best to make up for lost time. Buoyed by encouraging response from home-buyers for their marked-down properties, companies such as DLF, Unitech, HDIL and others have lined up housing projects of over 60 million square feet -- all in the current financial year.

This is more than double the sales bookings in the past financial year.

Presentations by these companies to analysts show that Unitech is leading with 27 million square feet of new launches. DLF's tally is 15 million square feet, roughly the same as last year's. Puravankara and HDIL follow with 6 to 9 million and 8 million square feet respectively.

Mid-income housing is the flavour of the year and accounts for around 90 per cent of the projects. After a prolonged lull in the property market in 2008, which saw sales declining 70 per cent from their peak, the big developers moved into the mid-income segment and cut prices 20 to 30 per cent to generate liquidity.

With their apartments selling quicker than expected, liquidity constraints easing with debt roll-overs, the stock market rally and improved bank credit, realtors are now planning more such launches.

"We have sold 2,500 units in three to four projects in the last one-and-a-half months. The company has decided to go aggressive with new launches because we are quite confident of selling quickly," said a spokesperson of Unitech, the country's second largest developer.

DLF will launch 8 to 9 million sq ft of city-centre projects in Chennai, Kochi, Delhi and Gurgaon and around 5 to 8 million sq ft of mid-income housing projects in the National Capital Region (Delhi's suburbs) and southern cities, DLF Vice-Chairman Rajiv Singh told analysts recently.

"We have met with good response for our projects wherever we have launched. If the product is good and price is right, it will sell irrespective of market conditions," said Rajeev Talwar, group executive director , DLF.

The company sold 1,356 apartments at its Shivaji Marg (better known as Najafgarh Road) project within a day in early April as the price was nearly 25 per cent lower than the existing market price.

Aditi Vijayakar, executive director-residential, Cushman & Wakefield, said most developers were making good sales as they have cut prices. "The new projects are certainly attractive for home buyers," he said.

Unitech added the cut in prices was inevitable since it's clearly a buyers' market. So a lot of marketing and sales efforts went into selling space. The efforts, he said, were worth its because the company was selling more flats now that what it sold even during the peak of 2007.

Unitech has cut its home prices by roughly 25 per cent and reduced ticket sizes. Currently, the average size of apartment is 700 to 800 sq ft against 1,500 sq ft a couple of years ago.

Analysts, however, said developers had taken huge hits on their margins. Mid-income apartments have a margin of 25 to 30 per cent versus 50 to 70 per cent in premium housing. For instance, DLF's EBITDA (earnings before interest, tax, depreciation and amortisation) margins have been falling continuously.

"The days of 70 per cent margins are over. They have to be happy with 20 to 25 per cent margins now since liquidity is the bigger issue than profits today," said an analyst from a Mumbai-based brokerage.

Apart from sales in the mid-income housing category, several other factors have also given developers confidence to move ahead, the primary being relief from immediate debt payments.

All the top developers have rolled over their short term liabilities by 12 to 18 months after the Reserve Bank of India allowed commercial banks to restructure their debt.

Unitech has cut debt by Rs 2,000 crore (Rs 20 billion) and DLF, the country's biggest developer, has repaid Rs 1,700 crore (Rs 17 billion) of loans in the past year. Between them the top three realtors -- DLF, Unitech and HDIL -- have restructured as much as Rs 4,100 crore (Rs 41 billion) worth of loans with commercial banks and mutual funds.

Developers have also benefited from the recent surge in the stock market, which has given many of them the opportunity to tap institutional investors to reduce debt and investing in new projects.

After Unitech raised Rs 1,625 crore (Rs 16.25 billion) from a qualified institutional placement in April, DLF's promoters sold 9.9 per cent in the company for Rs 3,860 crore (Rs 38.6 billion) and Indiabulls Real Estate raised Rs 2,656 crore (Rs 26.56 billion) through a QIP. Now, smaller realtors such as Sobha, Puravankara and Parsvnath have lined up QIPs to raise money.

Foreign buyouts: Is India Inc on right path?

If it pans out, it will be the biggest M&A deal involving an Indian company. The proposed $23-billion mega deal between Bharti Airtel and South Africa's MTN is even bigger than Tata Steel's takeover of European steel major Corus for $12.2 billion. Other mega M&As have been taking place over the last few years.

In their book, India's Global Powerhouses. Nirmalya Kumar with Pradipta K Mohapatra and Suj Chandrasekhar explore how India is becoming an incubator for multinational firms poised to take on the world. From this new India, they say, major players are emerging not only as customers, but also as collaborators, competitors and acquirers.

Yet, in their hurry to become global powerhouses, Indian companies often prefer the acquisition route...

Under the radar, numerous smaller deals are also taking place -- for example, DLF, a leading Indian property developer, bought the luxury Aman resorts; Dr Reddy's acquired Germany's Betapharm; Vijay Mallya, India's liquor baron, bought the Spyker Formula One team and renamed it Force India; and Videocon purchased Thomson's picture tubes business.

Containing ambition

Some of the reasons for the spurt in foreign acquisitions, such as the desire to compete on the world stage and the need to grow beyond the scale possible in India, are solid. The favourable Indian economic environment, fat profits, higher valuations and weakening of government regulations on overseas acquisitions have all helped in successful takeovers.

However, the recent spate of high-profile acquisitions by Indian companies has led to a national euphoria. For example, 'The Empire Strikes Back' was a common headline in Indian press coverage of the purchase of the iconic British brands, Land Rover and Jaguar, by Tata Motors.

This national pride means that Indians have also been quick to take offence when they have encountered resistance by target companies such as Arcelor, Jaguar or Orient-Express. The Indian newspapers have been full of reports of perceived racism and high-profile Indian politicians have weighed in on the issue.

More reflective Indians may have noted that hostile takeovers of Indian companies by foreign companies are almost impossible within the current regulatory framework in India.

The current nationalistic euphoria prevailing in India sometimes appears more like jingoism. It needs to be tempered as it can induce corporate overreach.

The tribalistic rivalry between the large family-controlled groups that dominate Indian business (most recently observed when Mukesh Ambani foiled his brother Anil's bid to take over South Africa's mobile operator MTN) has the potential to turn into a race to win status by snapping up ever-larger trophy assets.

In India's closely knit business community, it is almost becoming a kind of fashion statement for companies to make foreign acquisitions.

The result may be that Indian companies embark on ever more audacious international megadeals, inspired by aggressive empire-building ambitions rather than by the solid commercial logic and a careful appraisal of investment returns that have characterised past Indian acquisitions abroad.

The impetus for many of the acquisitions in 2006-2007 was not that the Indian companies were particularly globally dominant in their industry or rich. Rather, one of the primary facilitators was the easy liquidity prevailing in the markets.

Big deals based on easy liquidity, however, tend to load a company with debt or dilute shareholders' equity through the needed issuance of new stock.

Both Tata Steel and Hindalco were put on a credit rating watch after they announced their foreign acquisitions. For both companies and for Suzlon, announcement of cross-border deals saw immediate drops in their stock price.

As a result of the financial crisis of 2008, one can safely say that for the foreseeable future, gone are the days when acquirers could use the assets, and sometimes even the cash flow, of the target company as collateral.

We are back to the traditional conservative practices for now -- when lending institutions will ask for the core assets of the acquiring company, at 50 to 90 per cent of actual valuation, as the collateral. This will slow down the cross-border M&A activity that we have seen from Indian firms between 2001-2007.

The academic research is pretty unambiguous on the success of mergers and acquisitions. Approximately half of all M&A deals fail, and the casualty rate increases with the size of the deal as well as for cross-border deals versus domestic deals.

The foreign acquisitions experience of other Asian countries, like Japan and China, also indicates a high failure rate. Therefore, there is no reason to believe that India's success rate will be significantly different.

Integrating capabilities

Indian foreign acquisitions have typically sought access to technology (product innovation capabilities), brands, and distribution. However, product innovation and branding are creative functions, which have to be managed differently from the efficiency-driven manufacturing function.

Indian firms are excellent at optimising existing businesses by squeezing economies and managing costs. But innovation, and even branding to some extent, requires 'waste' as it is hard to predict which idea will ultimately succeed. Several dead ends must be pursued in order to find one successful new product.

Furthermore, unlike the quick payback one can obtain by pursuing efficiency gains, product innovation and branding have to be managed with much longer time horizons.

These are finely tuned functions, and integrating them smoothly into existing businesses is hard enough even for experienced operators; doing so across borders is harder still.

The short-term business culture combined with a typically top down corporate model controlled by a single all-powerful leader still prevail too frequently in Indian companies.

These attributes work well for serving the volatile local market, which requires speedy decision making, and for managing efficient manufacturing systems.

But these are not the ideal attributes for firms seeking innovation with a creative workforce and inspirational processes. Nor are they appropriate for complex multinational organizations, staffed by a culturally diverse workforce with their own values and a perplexing habit of doing things their own way.

Indian managements, never very deep, are becoming seriously stretched as they integrate complex acquisitions in different time zones while managing their businesses in a domestic market under attack from foreign competition.

Foreign acquisitions increase execution risk dramatically, especially since Indian companies lack experience in absorbing international businesses with different corporate cultures and employment rules.

The hunger to become a global powerhouse may not always be matched by a company's current capabilities.

In the case of both Japan and Korea, it took several decades to build the required capabilities. But, sometimes, one wonders whether this patience exists in India.

Pranab Mukherjee on reforms and Indian economy

The World has changed many times since Pranab Mukherjee first became finance minister 27 years ago. But right now he is in the midst of the most momentous changes.

With an Interim Budget and an election victory behind him, and a full-year budget ahead, Mukherjee would presumably have lots on his mind, but understandably be coy of revealing much. Saubhadro Chatterji of Business Standard caught up with the finance minister and tried to decode the signals. Edited excerpts:

What are your priorities?

In short, my priority areas will be to make efforts to bring the economy back on track and into a higher growth trajectory.

Naturally, all necessary measures will have to be taken to ensure that. The financial crisis, which started in the middle of last year, had its adverse impact on our economy, like on many other economies.

Although we maintained a reasonably high level of GDP growth, it was not anywhere near the 8.9 per cent that was the average between 2004-05 and 2007-08, and much less than the 9 per cent-plus that was our objective.

But how much time it will take for us to get back to that growth is yet to be seen, because the information we have says that the process of recovery is not yet visible, particularly in the major developed economies.

Our exports sector and the external sector are badly hit. The manufacturing sector has also slowed down. But we were able to sustain growth of 6.5 to 7 per cent last year. The latest figure will be available after May 29. So, growth is our top priority. All other issues are related to that.

In your interim budget speech, you quoted Amartya Sen and talked about the need for commitment towards 'Downturn with security'. What did you mean and how do you propose to achieve it?

I won't be able to say much on this because that is to be spelt out in the forthcoming Budget. In principle, I agree to do it but that will be spelt out in concrete terms in the Budget. We require growth and for that we require money. If all government resources are not adequate, you have to borrow.

Naturally, the fiscal deficit would increase. Therefore we have to strike a balance between these two competing requirements -- of growth and prudent fiscal management. And it will be my effort to strike this balance.

Your last Budget, in 1984, was presented much before the start of the economic reforms era. What is your idea of economic reforms?

Economic reform is a continuing process. One set of reforms or proposals becomes outdated after its implementation and with the passage of time.

So, this is a continuing exercise. I do not believe it can be stop-go-stop-go. It can't be like that. So, in various sectors necessary changes relevant to the requirements of the situation are reforms to me, as I understand.

How do you rate the growth impulses in the economy?

The problem is, as I mentioned to you, that there is an adverse impact. Recovery is not yet visible. Naturally, growing market economies like India and Brazil are also affected. Our external sector, exports, the information technology sector, and the flow of resources from external sources have been adversely affected.

And these have slowed our growth. Now we have to see and analyse the impact of the three stimulus packages we announced to overcome the adverse impact. The first package was announced on December 7 by the prime minister.

This was followed by the second package in January.

We had a two-pronged approach: On the fiscal side, we made necessary corrections and, on the monetary policy side, the Reserve Bank of India reduced the CRR, SLR and certain other rates like the repo rate.

I announced the third stimulus package during the Interim Budget, which also gave around Rs 30,000 crore worth of concessions. The full impact of these packages could not materialise because for the last three months no new and major initiative could be taken, as there was the Code of Conduct in place.

As these were the Lok Sabha elections, the states too were affected by the Code of Conduct. For instance, to give a boost to the automobile industry, we decided to buy 15,000 buses under the JNNURM scheme. Funds were allotted, and even released, but procurement could not take place during this period because the Code of Conduct was in force.

Now what we have to do is to make an assessment of how quickly these things can start. Practically for three months -- March, April and May -- we could not do anything. I cannot reveal the assessment because all these things will come in the Economic Survey.

Is there a need for another stimulus package?

We shall have to work that out because I have already said on this same question that whatever is necessary for the improvement of the economy will be done. You may give any nomenclature for that step. But the step will be taken. But I can't spell out in what form and to what extent.

What role do you see for public sector enterprises?

The public sector has to play an important role in the Indian economy. Public sector enterprises in the banking sector and the insurance sector have played a vital role during the recent global financial turmoil, so that our system didn't collapse totally.

The UPA government's two key initiatives -- special economic zones and the public-private partnership model for developing infrastructure -- have raised a lot of debates. . .

PPP is the most important mechanism through which we can build large projects, particularly in the infrastructure sector. And SEZs, too, have made substantial contribution, particularly to exports. But some areas of weakness have been noticed in the SEZ policy. Those will be rectified.

There is a demand to extend NREGA to urban areas, too. . .

Employment is the most important instrument for alleviating and eradicating poverty. Various schemes have to be implemented for that. The schemes which are applicable to rural areas for the rural economy may not necessarily be applicable to urban areas. But variations can be made.

What reasons do you think were instrumental in the Congress' victory in the elections?

One, successful completion of the UPA coalition government under the leadership of the Congress. People believed that the Congress only wanted to go it alone and did not know how to share power with other parties.

We have proved that this general perception is wrong. Our party that ran India's government for 45 years from 1952 can also complete five years of a coalition government.

Second, the performance of the government. Never before in three consecutive years was  there over 9 per cent economic growth.

Third, ambitious programmes like the debt waiver scheme to the extent of Rs 65,000 crore (Rs 650 billion), benefitting over 35 million farmers in villages.

Why did the Congress get so many seats in Maharashtra? Maharashtrian farmers committing suicide drew our attention to this aspect and this was one of the reasons why we undertook the debt waiver scheme. Then there was NREGA. People earned Rs 6,000-8,000 while living in their own villages. These were massive exercises.

The United Progressive Alliance government's three reform initiatives in the insurance, pension and banking sectors were blocked by the Left. Now that you do not need the Left for support, will you pursue these issues?

All that I will say is, wait.

Cricket loses to politics on results day

For a country that considers cricket as a religion, it comes as a surprise that its viewers would prefer politics to the game. On May 16, a decisive day in the history of Indian politics, the cricket worshiping country preferred the Loksabha election results than to the Indian Premier League (IPL) matches.

According to the TAM Peoplemeter System, as many as 45 million people tuned the national Hindi news channels to watch the election results, where as around 15 million people saw the results on the English news channels. On the other hand, around 29 million viewers watched the first IPL match played between Kolkata Knight Riders (KKR) versus Deccan Chargers (DC). The second match played between Mumbai Indians (MI) and Chennai Super Kings (CSK) got over 21 million viewership.

It may be mentioned here that data the IPL matches was collected from audience above four years, whereas for the election results, it came from viewers above 15 years of age.

The Television Viewer Ratings (TVR) was 10 per cent for election results coverage on Hindi news channels and 1.08 per cent for English news channels. On the other hand, the survey recorded 3.4 per cent TVR for the KKR vs DC match and 2.7 for MI vs CSK.

Chandrasekaran, new TCS CEO from Oct 6

Tata Consultancy Services on Tuesday said the company's chief operating officer N Chandrasekaran will succeed S Ramadorai as the CEO and managing director on October 6.

Chandrasekaran would be taking over the reins from Ramadorai, who is retiring on October 5, TCS said in a statement.

"The board of directors has named N Chandrasekaran, COO and executive director, as CEO designate, with the intention that he would be appointed CEO and MD with effect from October 6, on retirement of S Ramadorai," the statement said.

TCS' board has re-appointed Ramadorai as CEO and MD till October 5. His current tenure was to end on August 8, 2009.

Ramadorai has been at the helm of affairs at TCS for five years. He was appointed as the CEO and MD on August 9, 2004.

BCCI scores high on IPL-2 revenues

The Board of Control for Cricket in India (BCCI) is expected to see a 30 to 40 per cent jump in revenues from the second edition of the Indian Premier League (IPL) tournament over the first edition held in India last year. Profits, however, are expected to increase marginally.

Early assessments by senior IPL executives show that the cricket body is expected to earn Rs 450 crore to Rs 500 crore as revenue. But owing to higher expenses incurred on the 36-day tournament, which was relocated to South Africa owing to security concerns in India, profits could be Rs 300 crore to Rs 350 crore, against Rs 305 crore in IPL-1.

Together with other tournaments, BCCI's profit for 2008-09 touched Rs 500 crore.

"We are still in the process of compiling the financial numbers and our accountants have stayed behind in South Africa for this purpose. Revenues should be around double last year's. But we have to factor in our expenses, which were higher," said a top IPL executive, requesting anonymity.

The BCCI's main source of earnings will also come from the renegotiated broadcasting rights with Multi Screen Media or MSM (owners of SET MAX channels) and World Sport Group (WSG). In March, BCCI and MSM-WSG reached an out-of-court settlement under which BCCI will be paid Rs 8,200 crore over the next nine years for the telecast rights of IPL.

The telecast rights are shared in an 80:20 ratio in favour of the eight franchise teams for the first five tournaments. Later, the ratio changes to 60:40, also in favour of the franchise team owners.

A back-of-the-envelope calculations show that BCCI will earn around Rs 183 crore in broadcasting rights and another Rs 190 crore as franchise fees, plus Rs 100 crore to Rs 150 crore from advertising. However, IPL sources said that the accountants will have to factor in the conversion cost of the rupee to the South African rand.

Meanwhile, the eight franchisee teams are said to have collectively made a profit of Rs 225-240 crore, early estimates show.

"We have made money courtesy an increase in the broadcasting rights. I think, everybody has made money," said P K Iyer, managing director, Deccan Chronicle Holdings, the owners of Hyderabad Deccan Chargers, the winners of IPL 2.

Last year, only two IPL teams, Kolkata Knight Riders and Rajasthan Royals made cash profits. This year, the main source of income for the eight franchisee teams comes from the revised broadcasting rights fees that works out to around Rs 70 crore per team. The main expenses of the eight teams were only two  -- franchise fees to BCCI and player fees, said an executive involved with Delhi's IPL team.

Govt likely to double set price of natural gas

The government is likely to double the price of natural gas sold through the administered price mechanism to $4.2 per million metric British thermal unit (mmbtu), which is equivalent to the price that Reliance Industries is getting for its K-G basin gas.

The gas price revision will add to the bottomline of the two public sector companies -- Oil and Natural Gas Corporation and Oil India Ltd -- and will also yield additional revenue for the central and state governments.

Selling gas at an administered price has resulted in huge losses for these companies. ONGC, for instance, suffered a loss of Rs 2,140 crore (Rs 21.4 billion) in 2007-08 for selling natural gas at the set price.

The central exchequer is also likely to earn revenues worth Rs 4,400 crore (Rs 44 billion) in royalty, dividend and dividend distribution tax from the price revision. Outgoing petroleum minister Murli Deora said on Saturday that deregulating fuel prices and revising natural gas prices were the ministry's priority.

The gas price revision will also generate revenues worth Rs 1,196 crore or Rs 11.96 billion (from ONGC) and Rs 178 crore or Rs 1.78 billion (from OIL), respectively, for the state governments on account of royalty, sales tax and value added tax.

At 45 million metric standard cubic metres a day (mmscmd), APM gas currently accounts for over 34 per cent of the country's 130 mmscmd gas availability (which includes the latest production from Reliance Industries' K-G basin). However, the share of APM gas in total availability has been coming down gradually.

"Though the last gas price revision is due from 2005, it is not possible to revise it with retrospective effect, as the differential price would have to be recovered from a large number of consumers. Moreover, the fertiliser subsidy has already been paid and retrospective revision would mean additional subsidy burden for the government," said an official in the ministry of Petroleum and Natural Gas.

All natural gas produced from existing fields in nominated blocks of ONGC and OIL is treated as APM gas. However, both ONGC and OIL are likely to get the freedom to sell any production from new fields in their nominated blocks at market price. This will make viable the huge investments incurred by the two companies in developing such fields.

Over a period, the government plans to link natural gas price to the market and completely do away with the APM. The purpose behind this would be to ensure greater investment in exploration and production activity in the sector.

Wipro Infotech to invest Rs 200 cr in data centres

With the aim of playing a bigger role in the Indian market, information technology major Wipro Infotech is investing Rs 200 crore (Rs 2 billion) to set up its own data centres in India.

Wipro Infotech, the India and West Asian IT business of Wipro, aims to use its data centre platform to offer a host of services, including cloud computing and software as a service on a pay-per-use model, Anand Sankaran, senior vice-president told Business Standard.

The company has already announced opening of one enterprise data centre in Mysore. Built over 4,000 sq ft in the first phase, it has already been sold out.

The company is in the process of setting up data centres in Greater Noida and Pune. At Greater Noida, the plan is to have a data centre of 14,000 sq ft, of which 4,000 sq ft will be ready for commissioning by next month. The company is yet to decide the location in Pune.

"Wipro has been addressing the IT needs of customers for over two decades now, and we are now launching the Wipro Enterprise Data Centre to complete our portfolio of offerings.

"Enterprise customers today are seeking services beyond simple hosting and co-location. This will position us uniquely to cater to the lifecycle needs of enterprises as a single face," said Sankaran.

To be or wannabe a superpower?

History will regard the Indian boom years of 2003-2008 as one big squandered fiscal opportunity. Seldom was there a more favourable alignment of stars for strengthening the public sector balance sheet.

The global savings glut meant that interest rates and hence borrowing costs of government were low. The rapid overall growth rate meant that revenues were buoyant.

This combination of 9 per cent real growth and 3-4 per cent real interest rates should, over the boom years, have led to rapid declines in government debt as a share of GDP.

India should have entered the crisis with a debt-to-GDP ratio closer to 60 per cent than 80 per cent. Instead, debt failed to decline, and crisis-induced developments (collapse in revenues and escalation of spending) are only likely to worsen the fiscal situation.

To be sure, the commodity boom beginning in 2006 was a strong negative fiscal shock. But this shock came towards the end of the boom years and cannot explain or justify the fiscal situation spinning out of control.

But spinning out of control it is: deficits are mounting, and, even though the RBI is valiantly providing succour by monetising government debt, the market is reluctant to digest large and growing amounts of government IOUs.

Interest rates are heading north, and as the recovery gains momentum and the demand for credit grows, the crowding out effect of the fiscal deficit will bite even further.

The contrast with China is instructive. China too enjoyed rapid growth, in fact 2-3 per cent points greater than India's, and China too did not bring its public debt down as a share of its GDP.

But, at about 20 per cent of GDP, China had very little debt to bring down in the first place.

More significantly, China used its soaring revenues to build up assets in the form of public infrastructure, which has provided the basis for further growth. India neither reduced government liabilities nor built up assets. Instead, revenues went toward greater government consumption and subsidies.

The problem, of course, is that the crisis is skewing the fiscal policy discourse. Achieving fiscal consolidation will be seen and stated as a medium term project, while providing more stimulus will be acted upon as a short term imperative.

It is this imbalance that must be rectified in the July budget that the new government will present.

A dream budget would pay lip-service to short term stimulus but spell out the concrete actions to rein in spending and boosting revenues as soon as the crisis has passed.

It is not the case that the government does not know what to do.

The key ingredients of medium term fiscal consolidation are well-known: on the revenue side, a major boost to tax revenues and buoyancy would be provided by implementing the goods and services tax; and on the expenditure side, subsidies would have to be pared down.

Sales of public sector assets, while not a permanent means of fiscal improvement, can provide one-off relief and help retire some of the stock of existing government debt.

The problem for the government is political. Implementing the GST, difficult as that will be, pales in comparison to the challenges of eliminating the various subsidies. As Devesh Kapur and I argued in these pages on Saturday, politicians can contemplate action against subsidies only if they are seen to be providing a simple and more effective alternative that is seen as helping the poor.

Developing such an alternative -- for example, a direct cash transfer scheme to households below the poverty line -- will take time and political effort, which must begin now to provide even the ghost of a chance of any medium term improvement in the fiscal situation.

But where can the government find the resolve or the inspiration to take on the fiscal challenge? It need look no farther than China and its experience in the global crisis.

Even before this global crisis, China was building up its superpower credentials courtesy of its size, spectacular growth and integration, not to mention its military might.

The crisis has allowed these credentials to be consolidated further. China has moved beyond being the super-power-to-be. One important reason for this consolidation relates to China's public sector balance sheet.

There is considerable alarm in the United States over the potential loss of pre-eminence stemming from the precariousness of its fiscal future. This theme is dominating the popular economic discourse.

The cost of acting to avert current economic disaster has been the impairing of future government finances.

In this respect, the fate of the US is not unique: it is shared by the United Kingdom, Japan, and Italy, and even France and Germany will look weaker once they admit to the full scale of the problems in their financial systems.

The one major country that has had the ability to take short term action to offset the effects of crisis without remotely jeopardising its long run economic strength has been China.

Its public debt will remain at close to 20 per cent of GDP after the crisis while the corresponding number for the United States is estimated to be close to 75 per cent of GDP.

China seems to be the one fiscal safe haven even as all the other powers wobble under the weight of their fiscal burden. As the mighty fall, China is standing economically and fiscally tall.

The lesson for superpower-aspiring India from superpower-arriving China is simple: a strong fiscal situation, undergirding the ability to respond to a crisis, is an essential ingredient for any global leadership role.

So, when India goes through its next growth spurt, it should be mindful of avoiding the mistake of the previous one. Good boom-time fiscal management provides the firepower for times of bust. The reasons for doing so are and must be overwhelmingly domestic.

But there may also be strategic, external benefits from doing so. Fixing the fiscal roof when the sun was shining was China's way out of this crisis and way to solidifying its superpower status. That is a lesson that strategically-minded Indian policy makers should take away from China's experience in the crisis. And that should be the thrust of the budget that Mr. Pranab Mukherjee will present to Parliament in July.

Commonwealth Games organisers to promote India as the biz hub

The organisers of next year's Commonwealth Games in the capital will try to use the mega sporting event as a platform to promote India as a perfect destination for business opportunities.

The Confederation of Indian Industries has joined hands with the Commonwealth Games Organising Committee to host business promotion meets across all the 71 Commonwealth countries before the event commences in October.

"The CII will organise business promotion weeks in all the countries where the baton relay of the Games takes place," according to a senior official of the Organising Committee.

The official said the sporting extravaganza will provide India an opportunity to showcase its strength and the Committee will try to exploit it to the hilt.

"In London, we will have a business meet, the day after the baton relay takes place. The business meets will be held in all the countries," the official said, adding the business meets will be very helpful for promoting tourism.

The relay will start from Buckingham Palace in London from November and from there it will go to other Commonwealth countries before reaching Delhi in October next year.

CII and the Organising Committee have also partnered together to develop and institutionalise Business Club India, for furthering the economic and business interest of India globally.

Business Club India will strive to draw high-powered business delegations from offshore to India during the event and allow them to leverage this opportunity for transacting business and enjoy the Games.

Asked about security arrangements, he said foolproof security will be put into place during the event.

Lt Governor of Delhi Tejinder Khanna is looking after the security aspect with help from the Union Home Ministry.

The official said 25,000 volunteers would be employed for the mega event and their recruitment will start from July.

The volunteers will be the face of the Games as they will help the authorities in extending various services to athletes and spectators.

The official said the organising committee also expressed satisfaction over the pace of infrastructure projects taken up in the city for the event.

He said almost all the infrastructure projects would be ready by end of the year and remaining ones would be completed by March 31.

In a major relief to real estate firm Emmar-MGF, which is developing the Games Village, the DDA on May 11 decided to invest over Rs 700 crore (Rs 7 billion) in the Games Village.

Sensex may touch 19,500 level this year: Analysts

Driven by the election outcome, the benchmark index Sensex could catapult to 19,500 level this year, provided the government pushes

through the reform agenda, analysts said.
Market experts believe that the reforms expected to be carried out by the new government may keep the market sentiment upbeat and propel the index to regain the levels, it had seen in 2007, in the months ahead.
"Our upside target for the Sensex is 19,500 this year which the index may climb if the government surprises us with a phenomenal budget," Morgan Stanley Managing Director Ridham Desai said in an investor summit arranged by a television channel here.
However, more probability for the index is to remain in mid-15,000 levels or about 10 per cent higher than current levels, he said.
The financial sector reforms which are there before the government include raising FDI cap from present level of 26 per cent from 49 per cent through amendment in Insurance Act, pension reform and banking sector reforms.

Echoing similar view Reliance Capital Asset Management equities head Madhusudan Kela, 19,500 levels were possible this year but would depend if the government aggressively carries out the expected reforms.
Meanwhile, if the global market turn downwards and the government fails terribly to keep up public expectations, the index may see a level of 8,500 on the downside, Desai added.
Further, if the S&P 500 index falls below the 666 points level then the domestic stock indices may give in to pressure and plunge into negative territory, analysts said.
The benchmark index Sensex has climbed around 40 per cent to 13,800 levels, so far, this financial year.
Besides, Foreign Institutional Investors have also turned bullish on Indian equity markets and have made net investments to the tune of Rs 14,586 crore (around 3 billion dollar) in May so far.
According to Ramesh Damani, member BSE, financial sector reforms as well as disinvestment should take place as it will be good for the sector and the economy as a whole.
The coming Budget should give some signal as far as reforms are concerned, Damani said.
Last year, the government tabled the Insurance Reforms Bill in the Rajya Sabha aimed at increasing the cap on foreign investment in private companies in the sector from 26 per cent to 49 per cent.

Oil prices could spike to $150 a barrel: Saudi Arabia

Saudi Arabia warned oil prices could spike to beyond the near $150 record high of 2008 within three years as it joined other energy to boost production over the long term.
Energy ministers and officials at the Group of Eight energy summit wrapped up the two-day meeting by urging the industry to pump money into projects to expand capacity despite the credit crisis, which has put the brakes on investment.
The meeting came as oil prices hover at a six-month high of over $60 a barrel, but producers fret that it remains below the $75 level needed to spur investment while consumer nations fear further rise in prices could hurt global economic prospects.
The recent rally in prices is expected to have eased OPEC concerns about high inventories and weak demand, and OPEC officials have suggested an output cut is unlikely at a Thursday meeting, though Libya says that possibility still exists.
Saudi Arabian Oil Minister Ali al-Naimi said the world was heading for a fresh spike after the current phase of faltering demand and lower prices, which he said reflected the economic downturn rather than being an indicator of things to come.
"We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions," he said in prepared remarks at the summit.

"However, if others do not begin to invest similarly in new capacity expansion projects, we could see within two-to-three years another price spike similar to or worse than what we witnessed in 2008."
Naimi painted a bleak picture of the investment scenario, saying low prices, weak demand, high costs, tight credit markets and energy policies focused on alternative fuel sources had all combined to hurt spending on new projects.
GLOBAL OIL AGENCY
The Saudi warning was echoed by a top IMF official, who forecast price spikes over the medium-term would follow relatively stable markets in the short-term.
"With long time-to-build lags, significant setbacks to oil investment today could set the stage for future sharp price increases," IMF First Deputy Managing Director John Lipsky said.
He said energy investments were likely to remain subdued in 2010, after an expected decline in 2009. The International Energy Agency predicts investment in oil and gas exploration and production will fall 21 percent in 2009.
Paolo Scaroni, CEO of Italy's Eni, said a solution could be to create a global oil agency representing producers and consumers that would combat price volatility and ensure investments keep flowing into the energy sector.

STPI withdrawal may hit Infosys, Wipro net profit

Top Indian software exporters - Infosys and Wipro - have cautioned investors about a potential impact on their profitability because of higher tax rates, as the country’s over $40 billion IT industry prepares to cope with removal of tax holiday under the Software Technology Parks of India (STPI) scheme due to expire by March 2010.
“Our net income would decrease if the government of India imposes additional taxes or withdraws or reduces tax benefits or other incentives ,” India’s third biggest software company Wipro said in a recent regulatory filing with the US Securities and Exchange Commission (SEC).
Indian exporters have made significant tax savings under the STPI scheme during past few years, which allows them to enjoy tax holiday for a duration of ten years. For instance, these tax incentives resulted in a decrease in Infosys’ income tax expense to the extent of $325 million and $282 million for fiscal 2009 and fiscal 2008.
“Few of our STP units have already completed the tax holiday period and for the remaining STP units the tax holiday will expire by fiscal 2010,” Infosys said in its regulatory filing with SEC.
“In the event that the Government of India or the government of another country changes its tax policies in a manner that is adverse to us, our tax expense may materially increase, reducing our profitability ,” Infosys added.

Experts such as Partha Iyengar, head of research at Gartner India say that any ambiguity around extension of STPI scheme could impact India’s attractiveness as an outsourcing destination. “STPI is an important and critical issue to be addressed; hopefully the new government will do it soon. They need to rationalise the SEZ scheme and provide more clarity on tax incentives. Many of our customers are not sure if they should move their captive operations to SEZs, etc., because of lack of clarity,” he said.
The special economic zone (SEZ) policy of the government provides five-year tax holiday for the IT units, followed by gradual taxation after the fifth year.
“There have been demands to impose strict conditions which need to be complied with before an economic zone developed by a private entity is designated as special economic zone. If such regulations or conditions are imposed it would adversely impact our ability to set up new units in such designated special economic zones and avail ourselves of tax benefits,” Wipro added in its SEC filing.

Exports may have dropped 33percent in April-FIEO

India's exports may have fallen by a third in April as a world-wide slump continued to hurt overseas demand for local goods, the head

of exporters' body said on Wednesday.
Job losses in the export sector may have reached 5 million in the year that ended on March 31, said A. Sakthivel, president of the Federation of Indian Export Organisations (FIEO), adding that the body will seek government relief in the forthcoming budget.
"Indian exports are estimated to be down by 33 percent in April mainly due to the continuing impact of global recession," he told Reuters in an interview.
"Exports can grow by 15 percent this fiscal if the government provides necessary support in the budget," he added.
Earlier this month, government data showed India's exports declined by a third in March, its sixth straight fall, dragging down the full year's growth to a paltry 3.4 percent at $168.7 billion during 2008/09.
Exports contribute close to a fifth of India's gross domestic produce, and its contraction have impacted factory output and the overall economic growth.
Since October, the central bank has aggressively lowered its lending rate by 425 basis points while government offered interest subsidies to help ease the pain of exporting firms.
But Sakthivel said FIEO would soon meet finance ministry officials and seek more incentives for exporters.
"We expect relief in income tax, more interest subsidy on bank loans and enhanced input tax credit in the budget," he said. On Tuesday, India's new Finance Minister Pranab Mukherjee said the government was considering more relief measures for sectors like textiles, leather, gems and jewellery.
Policy makers fear worsening of economic situation in the United States and Europe may continue to slash India's exports.
The World Bank has forecast global trade to shrink 6.1 percent this year as a result of the crisis while World Trade Organisation forecast a 9 percent contraction.

Gold finds buying at lower levels

COMEX futures hover around $950
Gold rebounded from lower levels today as some buying emerged in the mid London trades. The continuous fear over hyperinflation in the medium term once the economic recovery gathers steam continued to underpin the commodity after early setbacks. In Asia, Gold drifted sharply lower on COMEX, sliding well below $950 per ounce levels as the commodity market participants eyed the sharp rebound in the US dollar following the weakness in the economic data from the other side of Atlantic.
The First-quarter German real GDP shrank 3.8% from the fourth quarter, data from the Federal Statistics office confirmed Tuesday. The drop was in line with the flash estimate, which was published May 15. It was the sharpest decline since records began in 1970.
The familiar cues of dollar strength swung in the action to keep the yellow metal under check after the data as the US currency continued to extend its gains after hitting two-month low levels of 1.4000+ against the Euro last week. The dollar topped 1.3865 against the Euro in the London trades today. This pulled the crude oil futures down by around 2 dollars and kept the entire commodities complex under check.
COMEX Gold futures for June lost out big time in London to slip to a low of $936.6 per ounce levels. The counter currently trades at $949.80, down $9.10 from the previous close.
MCX Gold futures also slipped sharply in tandem with the global cues and slumped near Rs 14500 in the intraday moves. However, there has been an impressive recovery in the counter thereafter and the contract currently trades at Rs 14627, up Rs 39 per 10 grams.

FII inflow crosses Rs 18000 crore in 2009

Inflow of Rs 3046.10 crore on 25 May 2009
Foreign institutional investors (FIIs) bought shares worth a net Rs 3046.10 crore on Monday, 25 May 2009, as against an outflow of Rs 694.70 crore on Friday, 22 May 2009.
FII inflow of Rs 3046.10 crore on 25 May 2009 was a result of gross purchases Rs 5092.60 crore and gross sales Rs 2046.50 crore. The BSE Sensex rose 26.07 points or 0.19% to 13,913.22 on that day.
FII inflow in May 2009 totaled Rs 17288.50 crore (till 25 May 2009). FII inflow in calendar year 2009 totaled Rs 18001.10 crore (till 25 May 2009).
There are a total of 1657 foreign funds registered with the Securities & Exchange Board of India (Sebi).

Nagarjuna Constructions

We recommend a sell in Nagarjuna Construction Company from a short-term trading perspective. It is apparent from the charts of Nagarjuna Construction that it has been on an intermediate-term uptrend since its one-year low of Rs 34 recorded in early March. The stock’s uptrend accelerated in mid-May and it conclusively penetrated the key resistance at Rs 90, which has now turned in to a key support. However, around Rs 135, the stock met with significant resistance. On May 26, the counter tumbled 6 per cent, forming a bearish engulfing candlestick pattern. A negative divergence in the daily relative strength index triggered this reversal. Both daily and weekly RSI are declining from the overbought territory. Besides, the volumes have gradually dropped over the past six trading session. Our view for the stock is negative from a short-term perspective and we anticipate it to dive further until it hits our price target of Rs 110 in the trading sessions ahead. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 128
via BL

Bharti Airtel may see action

Bharti Airtel is reportedly learnt to have received a commitment from Standard Chartered Bank to raise a $4-billion bridge loan to finance its deal with MTN. According to reports, Standard Chartered has agreed to fully underwrite Bharti's net acquisition cost. However, it has not yet been decided whether the UK-headquartered bank will put together a syndicate to finance the deal.
Seperately, global rating agency Standard & Poor's on Tuesday said it has affirmed its ‘BBB-' long-term corporate credit rating on Bharti Airtel, with a stable outlook, following the company's renewed efforts for a partnership with South Africa-based MTN Group.
State-run banks reporteedly plan to cut lending rates by 100-150 basis points within a fortnight following a finance ministry directive to lower interest rates in line with falling cost of funds.
ITC will reportedly have to suspend production at all its factories to introduce pictorial warnings on cigarette packs from 1 June 2009, but it will make sure there was no supply gap in the market.
Wipro's chairman Azim Premji said the company's operations were expanding fast in the Middle East, which it sees as a main growth area. The Middle East's share of Wipro's total sales is 6%, said Premji, adding that this was set to increase in the future. He did not give figures.
Sobha Developers sold stake in projects in Bangalore and other cities for a total consideration of Rs 225 crore from Bangalore-based Purna Partners. The firm entered into a term sheet with Purna Partners and has received Rs 25 crore from the investor on Tuesday, 26 May 2009.
The government may reportedly dilute stakes in power sector firms such as NTPC, NHPC and Power Grid Corporation of India to 51% over the next few years for about Rs 60000 crore.
India is reportedly likely to double the price of natural gas sold through the administered price mechanism to $4.2 per million metric British thermal unit, which is equivalent to the price Reliance Industries gets for its KG basin gas, a move that could boost profits of ONGC and unlisted Oil India.
Unitech has reportedly sold its under-construction hotel in Gurgaon for Rs 200 crore to an unidentified individual and is close to selling a service apartment for Rs 200 crore.
Reliance Power, a unit of the Reliance-Anil Dhirubhai Ambani Group, has reportedly achieved financial closure for its 1,200 megawatt, coal-fired Rosa power plant in Uttar Pradesh by raising at least Rs 2400 crore from a domestic consortium.
Monnet Ispat & Energy has bought back 12.8 lakh shares at an average price of Rs 141.52 a share. The buyback begun on 8 December 2008 and closed effective 22 May 2009. The total amount invested in the buyback was Rs 18.20 crore, which is 24.27% of the maximum offer size authorised by the buyback.
Coromandel Fertilisers is reportedly in talks to invest Rs 3000 - Rs 4000 crore to set up a urea and ammonia manufacturing plant in a West Asian country, the details of which will be finalised close to December 2009. Net profit of Cummins India rose 56.32% to Rs 118.18 crore in the quarter ended March 2009 as against Rs 75.60 crore during the previous quarter ended March 2008. Sales rose 53.39% to Rs 1027.68 crore in the quarter ended March 2009 as against Rs 670.00 crore during the previous quarter ended March 2008.
Net profit of Tata Communications rose 439.66% to Rs 302.37 crore in the quarter ended March 2009 as against Rs 56.03 crore during the previous quarter ended March 2008. Sales rose 3.67% to Rs 886.93 crore in the quarter ended March 2009 as against Rs 855.53 crore during the previous quarter ended March 2008. The company earned a profit of Rs 347 crore during the latest March quarter from the sale of shares in group firm Tata Teleservices.
Cairn , BHEL (Audited), Britannia Industries, Godrej Industries, Jindal Steel & Power, Garware Wall & Ropes, NIIT, Shanti Gear, Tamil Nadu Newsprint & Papers, among others will declare March 2009 ended quarter results today, 27 May 2009.

Market likely to open flat

The market may witness cautious trend as US indices were closed on account of Memorial Day and Asian indices are exhibiting mix trends in the morning trades. Although the bias remains positive, investors should maintain caution as profit taking at higher levels may pull down the market. Among the local indices the Nifty could test 4200 and 4150 on the downside while on the upper side it may move up to 4300. The Sensex has a likely support at 13750 and may face resistance at 14050.
U.S. financial markets are closed Today for the Memorial Day holiday, while British markets are also shut for a bank holiday.
Daily trend of FII/MF investment in equities
On May 22 2009, FIIs were net sellers of stocks to the tune of Rs695 crore (purchases worth Rs2412 crore and sales of Rs3107 crore).
Stocks with +ve bias: Neyveli Lignite (SL 129), Suzlon (SL 87), REC Ltd (146)
Stocks for Short Term delivery: Orbit Corporation
Stocks for Investment: Man Industries, Godrej Consumer, BEL, Orient Paper
Important Results : Tata communications.

Oil Prices could hit 150$ again

Saudi Arabia warned oil prices could spike to beyond the near $150 record high of 2008 within three years as it joined other energy
leaders on Monday to call for more investment to boost production over the long term.
Energy ministers and officials at the Group of Eight energy summit wrapped up the two-day meeting by urging the industry to pump money into projects to expand capacity despite the credit crisis, which has put the brakes on investment.
The meeting came as oil prices hover at a six-month high of over $60 a barrel, but producers fret that it remains below the $75 level needed to spur investment while consumer nations fear further rise in prices could hurt global economic prospects.
The recent rally in prices is expected to have eased OPEC concerns about high inventories and weak demand, and OPEC officials have suggested an output cut is unlikely at a Thursday meeting, though Libya says that possibility still exists.
Saudi Arabian Oil Minister Ali al-Naimi said the world was heading for a fresh spike after the current phase of faltering demand and lower prices, which he said reflected the economic downturn rather than being an indicator of things to come.
"We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions," he said in prepared remarks at the summit.
"However, if others do not begin to invest similarly in new capacity expansion projects, we could see within two-to-three years another price spike similar to or worse than what we witnessed in 2008."
Naimi painted a bleak picture of the investment scenario, saying low prices, weak demand, high costs, tight credit markets and energy policies focused on alternative fuel sources had all combined to hurt spending on new projects.
GLOBAL OIL AGENCY
The Saudi warning was echoed by a top IMF official, who forecast price spikes over the medium-term would follow relatively stable markets in the short-term.
"With long time-to-build lags, significant setbacks to oil investment today could set the stage for future sharp price increases," IMF First Deputy Managing Director John Lipsky said.
He said energy investments were likely to remain subdued in 2010, after an expected decline in 2009. The International Energy Agency predicts investment in oil and gas exploration and production will fall 21 percent in 2009.
Paolo Scaroni, CEO of Italy's Eni, said a solution could be to create a global oil agency representing producers and consumers that would combat price volatility and ensure investments keep flowing into the energy sector.
While major producer and consumer nations debated the right oil price to spur investment without hurting the chances of an economic recovery, the World Bank urged leaders not to forget the poor in Africa.
The G8 energy summit had aimed at tackling climate change, promoting investment in new projects, spurring dialogue between producers and consumer nations and boosting energy resources in poorer countries.
It brought officials from major producer and consumer nations ahead of Thursday's OPEC meeting, when the producer group is expected to keep output levels unchanged.
Saudi Arabia's Naimi has previously said he expects OPEC to "stay the course" when it meets, and Algeria says all members agree that there is no need for an output cut.
Libya, however, says the possibility of a cut still remains, as the group considers whether the recent price rise is a trend or simply volatility.
Consumer nations like the United States have urged OPEC to keep its focus on price stability to prevent an oil spike that could derail hopes of an economic recovery.
The two sides ought to agree on a "respectful band" for prices that prevents volatility and allows for investment in the sector, Egypt's oil minister said, echoing the concerns of consumer nations who fear a spike in prices.
"Yes, there is an economic and financial crisis, but in the oil and gas sector you cannot sleep," Sameh Fahmy told Reuters. "When the high prices come back again what are you going to do?"
via ET