Industrial Growth will remain robust in 2007-08

Allaying apprehensions of a slowdown in the face of inflationary expectations and high interest rates, the government has said industrial growth will remain robust in 2007-08 on the back of impressive performance by the capital goods sector. ‘‘High rate of 14.1% growth of manufacturing in March and 12.3% in the whole of 2006-07 is expected to be sustained in this year as well,’’ department of industrial policy and promotion secretary, Ajay Dua said.

He said major contribution to manufacturing sector has come from a sharp increase in production of capital goods and intermediates in contrast to consumer goods. The capital goods sector registered a 17.7% growth while production of intermediate goods was up 11.7% in 2006-07. ‘‘High rate of growth of capital goods indicates that new production capacity is being added driven by consumer demand. Both the consumer demand and investment in capacity will continue to grow,’’ Dua said. “Increasingly liberal attitude to FDI in manufacturing and infrastructure is being adopted by the government. We are reviewing the ceilings on FDI in various sectors every year and reducing the number of clearances required,” he added.

In 2006-07, FDI inflows have witnessed an increase of 284% to $15.7 billion from $5.5 billion.“This year, we are expecting FDI of $25 billion in equity and $5 billion of earnings reinvested by existing companies,” he said.

The Index of Industrial Production (IIP) compares the growth in the general level of industrial activity in the economy with reference to a comparable base year. In order to capture the structural changes in the industrial sector, the base year of the all-India IIP which was commenced in India in 1937 was revised in 1946, 1951, 1956, 1960, 1970, 1980-81 and 1993-94. The current series of all-India IIP (base 1993-94) was released in May 1998. It covers the Mining, Manufacturing and Electricity sectors with weights of 10.47%, 79.36% and 10.17% respectively.

The Quick Estimates of IIP are compiled on the basis of data furnished by the source agencies located in various Ministries/Departments/Subordinate Offices of the Government of India. The index is released within six weeks from the reference month and are subsequently revised in the next and the third month based upon the revised production data furnished by the source agencies. For wide accessibility by the users, the copies of Press Release on Quick Estimates of IIP released through the Press Information Bureau are also put on the website of the Ministry of Statistics & Implementation (http://www.nic.in/stat) on the day of release.

• An overview of revision of Base Year of All-India Index of Industrial Production (IIP)
• Comparison of weights by item group in the manufacuring sector
• India Economic Growth Probably Fastest in Three Years - Bloomberg

Indian consortium strikes oil in Iran

A consortium of Indian oil companies, led by ONGC, has struck it rich in the Persian Gulf: a find of an estimated 10 trillion cubic feet of natural gas and one billion barrels of oil in the Farsi block. This development comes in the wake of US warnings against making military and energy deals with Iran. The consortium of Indian oil majors, led by ONGC Videsh (OVL), the overseas arm of ONGC, has IOC (40%) and OIL (20%) as members.

Pressure has been mounting on India to take a more cautious approach on Indo-Iran bilateral ties. The US had, in September 2006, extended the scope of economic sanctions under the Iran-Libya Sanctions Act, by which foreign companies making an investment of more than $20 million in one year in Iran's energy sector would be blacklisted. Although Indo-US nuclear deal has always had political overtones that had little to do with energy, it is difficult for energy-starved India to ignore the hydrocarbon potential of Iran. India has signed a $20 billion deal to buy Liquified Natural Gas (LNG) from Iran and is also pursuing a pipeline project along with Pakistan to bring Iranian gas to India.

The consortium of oil companies which began work in 2003 found the first traces of oil and gas in late 2006. Production from these fields is estimated to begin in another five years. As per the understanding with Iran, the Indian companies can buy back the oil and gas as well as earn a margin on their production.

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Inflation rate reduces to 5.27%

Inflation fell for the fourth consecutive week in a row in May, 2007. It fell to 5.27 percent for the week ended May 12, as against 5.44 percent last week. However, since the wholesale price index has gone up, the decline is due to higher base during the same period of last year. The official figure shows that the inflation was 4.63 percent during the corresponding period of the previous year.

The contradiction in the situation is also brought out by the fact that even as the inflation figures show a down turn, the official data shows that prices of several essential food products had gone up.

Tata Tea sells its stake in Glaceau

Tata Tea has announced the sale of their 30% stake in the US-based vitamin water maker Glaceau to Coca-cola for $1.2 billion, making a profit of $523 million in the deal. Mr. R.K. Krishna Kumar, vice-chairman of Tata Tea and a director of Tata Sons, the investment arm of Tata Group, said that they would use the funds to make Tata Tetley debt free. The total debt of Tata Tetley is estimated at $600 million.

Tata Tea paid $677 million for the acquisition of the 30% stake in Glaceau which was held by TSG Consumer Partners in August, 2006. Mr. Krishna Kumar said that they were looking at launching a whole range of products and health drinks. in the future. He said that they had learnt a lot from their experiences at Glaceau in the ready-to-drink market space. They were now open to further acquisitions upto $100 million and more, most of them in US market. "which is most attractive". He however didi not rule out acquisitions in Europe. Tata Tea would like to be a significant and leading player in the ready-to-drink, enhanced tea segments ridding on the health platform.

Coca-cola is seeking to bolster its portfolio of non-carbonated beverages in the face of slowing soft drink sales in its home market said Reteurs in a report. The company will start offering Glaceau products, which include vitamin water, smart water and vitamin energy drinks.

Related Articles:-

1. Tata Tea harvests Rs 4,900 cr as Coke takes over of Glaceau - Financial Express - 26-05-2007

2. Coca-Cola to buy Glaceau for $4.1 billion - Reuters - 26-05-2007

Lintas India selling its 51% stake to IPG

In one of the biggest delas that the Indian advertising sector has seen so far, Lintas India is selling its 51% locally-owned stake to its international partner, the Interpublic Group (IPG). In a deal believed to be worth any where between $ 100 to $300 million. Prem Mehta, Chairman and Managing Director, said that the move "will further strenghten Lintas India's readiness to meet the challenges of the new marketing environment". He pointed out that the decision to integrate Lintas India more closely into the IPG network was based upon the needs of the increasing importance of expertise in integrated communication services and the opportunities it would afford Indian managers in the Lintas system.

Industry sources also believe the final stake buyout by IPG could perhaps have been hastened by the imminent arrival of creative hotshop Bartle Bogle Hegarty (BBH) in India. BBH has an excellent track record with Unilever, one of Lowe Lintas's largest clients and handles several of its flagship brands in many international markets.

Source:- Lintas India to offload 51% to Interpublic - The Economic Times

Investment bankers reap in bonus heaps

Investment bankers never had so good time. With the entry of Wall Street firms and a rush to lure talent, bankers are lapping up unheard of bonuses. Brokerages within the banking groups have been the biggest gainers, besides M&A advisory and structured finance divisions. A surge in stock volumes, increasing number of deals and a growing appetite for new financing structures are driving pay-outs in a segment that is scounging for talent.

Bonuses this time have been in the range of 100-300% of salaries in most well-known investment banks. Some of the bigger brokerages that have seen an increase of 50% in their top line also doled out hefty pay packages to their key employees. According to the market sources, one of the biggest bonuse payoffs went to a head of a foreign brokerage. The amount: over $3 million. The research head of the organisation also received an equally impressive bonus.

The secondary market has witnessed an impressive growth in trading volumes this year. On the Bombay Stock Exchange (BSE), total volume rose nearly 18% in F.Y.07. On the larger bourse National Stock Exchange (NSE), the turnover rose nearly 24%.

While bonuses may have surged, the numbers have widened between Indian banks and overseas players. Bonuses amongst the larger overseas players range between 175-300% while those for the bigger Indian outfits are lower at 125-175%. Some of the bigger Indian players like Kotak Mahindra are yet to announce their bonuses for the last year.

Some of the biggest paymasters include CLSA, Deutsche Bank, Barclays, Merill Lynch, Citi and UBS. Media sources further add that while Deutsche has given a bonus in the range of 250% to 300%, in the case of Merill Lynch, it has been 150% to 270%. JP Morgan has also rewarded most of its bankers with nearly 300%. ICICI Securities' bonus payout has been in the range of 100% to 175%. In the treasury side of business like forex, derivatives and structured financing (in areas like real estate), payoffs were fatter compared to past years, but the numbers are much smaller than those given on the brokerage and research side. While there has been a rise in the number of people who received bonuses of over $1 million, the sharpest rise has been in the range of between $0.5-1 million. The number of bankers who received bonuses in this range is said to have more than doubled. In order to attract talent, newer foreign players have paid hefty sign-on bonuses. In the recent past, players like Goldman Sachs, Lehmann and Credit Suisse have entered the Indian market.

Source : The Economic Times

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Sun Pharma to acquire Israel firm for $454 million

Sun Pharmaceutical Industries Ltd., has signed a definitive agreement to acquire the Israeli firm Taro Pharmaceutical Industries ltd in an all-cash deal of $454 million. This acquisition will be financed with internal accruals and proceeds from it ealier $350 million FCCB. The deal values Taro's equity at $230 million or $7.75 per share which is at a 27% premium to its May 18,2007 closing price of $6.10.

Sun Pharma will also refinance $224 million in debt of Taro. In addition, it will provide interim financing to the extent of $45 million to provide liquidity for Taro. This is Sun Pharma's 14th acquisition.

In the words of Dilip Shangvi, Chairman and Managing Director of Sun Pharma, "We intend to build on Taro's expertise in dermatology and paediatrics, along with speciality and generic pharmaceuticals and over the counter (OTC) products. With the addition of 170 scientists to our team, we look forward to increasing the number of product filings of higher complexity".

Taro is a multinational generic manufacturer with subsidiaries, manufacturing and products across the US, Israel and North America which represents more than 90% of Taro's sales. Taro, headquarted in Haifa, Israel, operates through three entities, namely Taro Pharmaceutical Industries Ltd, Taro Pharmaceuticals Inc., Canada and Taro Pharmaceuticals USA Inc. Sun Pharma is a leading speciality pharmaceuticals company with revenues Rs. 2,357 crore, PAT Rs. 774 crore and market cap of over $4.8 billion for the financial ending March 31, 2007.

Meanwhile the minority share holders who own nine percent of Taro's equity namely Franklin Advisors, Inc., and Templeton Assets Management Ltd., have filed a motion in Tel Aviv district court for a temporary injunction to prevent Taro from entering into any transaction which might result in dicrimination against minority public share holders.

Source : Deccan Chronicle

The brief financials of Sun Pharmaceutical industries Ltd for the last three years (source: Myiris.com)

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Reliance Capital Limited market cap beats blue chips

The recent report released by CLSA reveals that the market capitalisation of Reliance Capital Ltd at Rs. 245,390 crore has pushed the comapny into the top 20 slot occupied by private comapnies in India. The market capitalisation of Reliance Capital Ltd (RCL) has pushed the company ahead of blue chip comapnies like Maruti, Grasim, Hindalco, Bajaj Auto, HCL Technologies, Siemens, ABB, I-Flex, Tech Mahindra, Gujarat Ambuja, ACC, Mahindra & Mahindra, Hero Honda, Ranbaxy etc.

The report also indicates that RCL has proved to be tha largest asset manager in India in the past two years. The company is expected to become the fourth largest private insurance company in India by increasing market share from 4.5 percent to 10 percent in next two years. The company is also expected to to be amongst the top two to three players in all its businesses over a period of time.

The retail broking arm of RCL, RMoney has the potential to become one of the top retail brokers of India with an estimated market share of 7 to 8 percent in the financial year 2008-09, the CLSA report said. It would also be the largest distributor of the financial products into the country driving its fee income.

The RCL is also proposing to enter foray into the consumer finance sector to offer unsecured loans and the two-wheeler finances to the salaried and the professional people is expected to leverage its balance sheet further.

The top-10 leaders in market capitalisation are tabulated below.

Source : Deccan Chronicle

GDR/ADR route unlikely for realtors

Real esate companies are likely to be barred from issuing American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). The reason: it may be difficult to enforce the conditions attached to foreign direct investment in real estate, particularly, the stipulation that investors must lock in their investments for a minimum period of three years.

This condition, which would be appliable to foreign institutional investments as well has been introduced to artificial inflation of prices and sudden flight of capital in this sector. The RBI is particularly cautious about the nature of capital invested in this sector, as it is easy to build up asset bubbles that could prove dmamaging for the entire economy.

The government is expected to come out with guidelines for pre-IPO placement in the realty sector soon. ADRs and GDRs are completely fungible and can change hands and defeat the verystipulation of the lock-in period which is present in the FDI guidelines. In fact, the government may keep a three-year lock-in period for even foreign institutional investment (FII) which comes in through the pre-IPO route.

Real estate is a sensitive sector for which the government has put in place certain conditions for FDI such as a three year lock-in period, minimum capitalisation of $ 5 million for joint ventures and $10 million for wholly-owned subsidiaries and development of at least 10 hectares of land. Though the government had fully opened FDI in real estate in 2005, it imposed these restrcitions because of the sensitivities involved with the sector.

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LIC leaps with its highest premium in March, 2007

Life Insurance Corporation of India has mobilised Rs. 12,361 crore of new business premium in Mrch, 2007 - the highest recorded by the corporation in any single month. This has enabled the corporation post new business premium of Rs. 55,934 crores in 2006-07 a 118% growth over the previous year. LIC's has been the growth driver for the the entire life insurance industry which grew 110.7% to Rs. 75,406 crore in current financial year from Rs. 35,897 during the previous year.

The rise in premium gives LIC a market share of over 74% of the total new business premium mobilised in India, which is substantially higher than the 72% as on March 31, 2006. The rise in premium is mainly on account of unit-linked policies which account for nearly 70% of the total individual premium.

The corporation faces a challenge in growing its business during the current fiscal given the huge base. Also a large portion of the policies are in the nature of single premium policies, which contributed an amount of Rs. 24,927 crore, a nearly 44% of the premium raised by the corporation during the F.Y. 2006-07.

Meanwhile, the private life insurance industry has recorded a growth of 89% with total new business premium of Rs. 19,471 crore as against Rs. 10,252 crore in the corresponding period last year. ICICI Prudential continues to be the largest private life insurance player with a market share of 7% followed by Bajaj Allianz Life Insurance which has a market share of 5.7%.

The comapnies that have recorded fastest growth in the fiscal '06-07 include Reliance Life Insurance, which grew 381%, followed by SBI Life Insurance which grew 209%. The high growth has enabled SBI Life to move into the number three postion after Bajaj Allianz Life Insurance.

The Gross Margin in oil sector

The quarterly results of oil companies indicate that oil sector has done well during the financial year 2006-07. The real succes story revolves around Gross Refining Margin, nowadays around $ 13 per barrel. Put crudely, refining margin is the money a comapny makes by buying an unprocessed commodity and selling the refined product. deduct the price of crude oil from the price of refined oil and you get the gross refining margin.

For instance, if a petroleum refinery buys crude oil for $100 /bbl and sells refined oil for $113 /bbl, then $13 is the gross refining margin. This $13 is what the market is willing to pay for the value addition created by the company.

Vertically integrated oil companies , such as BP, Chevron, ConocoPhillips, ExonMobil and Shell produce their own crude oil. Since several costs are shared, the margins are higher for vertically integrated companies comapred with stand-alone refineries, which buy crude from the open market. Moreover, the more efficient companies can refine the same crude oil at lower cost. So their margins are higher than those with old technology or poor economies of scale.

Sine the margin depends on the difference between price of refined product and price of crude oil, any factor which disturbs either of the two impacts gross refining margins. As a result, if higher demand or low supplies raise the price refined product, then refining margins will increase. If more refineries come up and flood the market, the margins will reduce.

The change in refinery margins is also seasonal. For instance, in end March and April, prices rise because of a tightening of supplies as refiners start normal spring maintenance and turn-aound operations at various refineries. At this time of the year, refiners are also gearing up for summer demand. That temporarily limits the availability of the supply, putting upward pressure on prices, which in turn increases refining margins until the market balance back. Finally, the margins also depend on the kind of refined products taht a comapny can produce from the feed stock. Often, a company realises different gross margins from its plants located in different locations / countries.

In a good year for refiners demand for their products grows by more than the additional capacity created and margins stay healthy. In a bad stretch, capacity can outgrow demand for several years in a row and margins get stuck in the doldrums. When the price of crude oil and the refined product are decided by outside forces, it can maximise profits only by reducing cost to the minimum. Attempts to source crude oil as cheaply as possible and trying to sell the refined product at maximum price further add to margins. Proper inventory mangemnt, hedging against foreign exchange fluctuations, and deciding the best product mix can stabilise the gross margins in the situation where demand and currency fluctuate.

The Government is liberalising the FDI policy in Real Estate MFs

The government is considering allowing Foreign Direct Investment (FDI) up to 49% and tax benefits for real estate mutual funds. SEBI is in final stages of framing guidelines for products that will alow retail investors enjoy the benefits of owning a slice of the ever booming Indian real estate market. Internationally, real estate mutual funds are called Real Estate Invetsment Trusts - REITS in short. REITs are companies that buy, sell manage and develop real estate assets.

Much like mutual funds, REITs put together the investments of many individuals and institutions and then deploy this money in real estate. So, people wanting to have a pie in the real estate growth phase mo do so now by buying hsares in REIT or units in real estate MFs.

The main area of concern is disclosure norms and valuation of real estate assets of these mutual funds. It is difficult to value a property on regular intervals like day-to-day unlike other equity and money market instruments. Besides, valuations would depend on the valuer. The market regulator is expected to extend some of the strict disclosure and valuations proposed for real estate IPOs to real estate mutual funds as well. The advisory committee is suggesting a period not more than two months for declaring net asset values and portfolio. In line with real estate IPO norms, the projection of the value of the land may be made only on the present "realisable" value instead of the future projection.

Officials from the legal department of SEBI, a couple of key officials of HDFC Mutual, representatives from the Institute of Charted Accountants of India (ICAI), The Association of Mutual Funds in India (AMFI) and a SEBI nominated independent CA have been meeting over the past few months to finalise rules about disclosures and accounting standards to be adopted. The SEBI is also expected to announce which entities would be allowed to launch such a fund and the minimum investment amount for the investors.

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Canara Bank hits a century

Canara Bank has completed a glorious 100 years of service to the nation. With 2,578 branches spread across length and breadth of the country, the Bank is serving a diverse clientele base of over 29 million. For the financial year ended March, 2007, the Bank crossed an aggregate business level of Rs. 2,40,000 crore. The Bank also recorded its highest ever net profit of Rs. 1421 crores, recording YoY growth rate of 5.78%. Canara Bank envisions emerging as a global bank with best practices. The Bank's strong and sound fundamentals were well reflected in Earnings per Share (Rs. 34.65), Book value (Rs. 197.83), Capital Adequacy Ratio (13.50%) and above all a low net NPA ratio of 0.94% as on March 31, 2007.

In the technology arena, besides 100% branch computerisation, the Bank has 1132 ATMs, 1550 branches under 'Anywhere Banking' and 1156 branches offering Internet and Mobile Banking services as on March 31, 2007. "As the Bank is emerging as a global bank with best practices, its commitment for creating enhanced value for all its stakeholders remains the key factor in all its future business endeavours", aptly put by M.B.N. Rao, Chairman and Managing Director of Canara Bank.

The brief financials of Canara Bank for the last three financials years are tabulated as under

Market details (NSE)

Last traded price on 18-05-2007 - Rs. 252.80
52 week low - Rs. 152.10
52 week high - Rs. 318.40
Volume of trading - 6,90,095

Financial Performance of Andhra Bank in 2006-07

Highlights of Andhra Bank's performance in the financial year 2006-07 are

• Operating profit up by 32.43%
• Net profit of Rs. 537.90 Crores, a YoY growth rate of 11%
• The bank's total revenues have grown to Rs. 3,762 crores
• Interest income has increased by 23.97% to Rs. 3,315.32 crores
• Interest income on advances rose to Rs. 2,304 crores
• Net interest income has increased to Rs. 1,417.54 crores
• Total deposits of the bank have shown a growth of 22.20%
• Low cost deposits grew to Rs. 14,314 crores
• Gross bank credit has gone up to Rs. 28,233 crores
• Credit deposit ratio stands at 68.28%

The bank is targeting a growth of 25% in advances and 20% rise in deposits. A comaparative summary of financials of the bank for the last three financial years is tabulated as under

Last traded price of Andhra Bank on BSE on 18-05-2007 ------> Rs.88.10

Aditya Retail launches 'more' brand of retail stores

RETAIL COMPETING: Mr Kumar Mangalam Birla, Chairman, Aditya Birla Group (right), and Mr Sumant Sinha, CEO, Aditya Birla Retail, at a press conference in Mumbai (From Hindu Business Line)

Aditya Retail, promoted by the Aditya Birla Group has announced the launch of 'more' brand of stores on May 18th, 2007 to sell fresh fruits, vegetables and groceries through a chain of retail outlets across the country. They would not have any joint venture for this purpose. While unveiling the 'more' brand in Mumbai, Aditya Group Chairman Mr. Kumar Mangalam Birla said: "we intend to invest at least INR 9000 crores over a period of three years to set up 1000 'more' brand stores across the metros and in the tier 1 cities of India.

Recently Birla Group acquired South India based Trinethra supermarket chain. It is expected that Birla Group wants to grow inorganically by such more acquisitions in the future.The funding for the expansion comes as a mixture of debt and equity. However, the chairman does not rule out the option of tapping capital markets in future for raising resources.

To assure cost effective and freshest supply of fruits and vegetables, the Aditya Retail is in a process of building direct linkages with the farmers to eliminate the costs incurred in the supply chain. Within a year's time, the retail chain is expected to hire skilled manpower of not less than 10,000 people to operate the 'more' brand stores across the country. The first 'more' store is scheduled to open in the Pune city in June.

Aditya Birla Retail will compete with the other large industrial groups such as Bharti and Reliance Industries, which have announced plans to invest, over time, Rs 10,000 crore and Rs 25,000 crore respectively in their retail ventures.

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B-schools catching up with emeging SME sector

The SME (Small and Medium Enterprises) sector, which has witnessed rapid growth in recent years, has been drawing attention from every possible quarter - global businesses eyeing India and private equity firms et al -, is now at the centre of focus for business institutions who see an opportunity to hawk short-term courses to this segment.Institutes such as IIMs, ISB and IIFT have rolled out courses and modules aimed at small and medium businesses. Existing programs are also suitably modified for the changing needs of this segment.

ISB is the latest to offer training for professionals in the sector. The business school has launched three-day workshop in three cities - Delhi, Mumbai and Chennai - starting in June (details). The programme, titled "The Global Growth Entrepreneurship Programme", is targeted at senior executives from SMEs in industries that are poised for growth like auto components, textiles, food processing, pharmaceuticals, chemicals and engineering. "The SME sector is witnessing huge growth and there is immense scope for executice training programmes here. Though there are similar programmes available, we will try and differentiate on the content. Trying to understand the global impact on SMEs is one such efforts", says Deepak Chandra, Assistant Dean, ISB's Centre for Executive Education.

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IT companies to go non-linear manpower-revenue growth

In a significant shift from traditional business model, IT companies, both big and small, are looking at de-linking manpower growth from revenue growth. Companies are targeting higher revenue per employee rather than simply adding more manpower with the same productivity. This process results in more innovation, higher productivity and better use of resources in the medium term. It may not reduce the employee intake in near term but it has overall effect of reducing the new employment opportunities in the IT sector in the medium to long term.

The $4.3 billion TCS, with a head count of 89,419, does not intend to become, say, a 5,00,000 people company. Even Infosys is looking at business models that bring in higher per capita revenue and de-link revenue from manpower growth. This is more important as these companies earn substantial revenue in dollars and there is a likelyhood of appreciation of Rupee against Dollar in the medium to long term, bringing pressure on the gross margins.

At present, the revenue per employee in the domestic industry is much lower than what global players are able to extract: it ranges from Rs. 25 lakh to Rs. 40 lakh. On the other hand, for global companies, the revenue ranges from Rs. 70 lakh to Rs. 130 lakh.

To change the linear relationship betweeen manpower and revenue, the companies have to move up in the value chain. In TCS, for instance, till a few years ago, almost 90% of the the revenues came from the application space. This has now come down to 50-55% as the company has scaled up new service lines and provides end-to-end solutions to the clients. High growth services like infrastructure management, consulting and BPO now account for 18% of TCS revenues comapred to 10% in 2005-06.

Some of the small and medium sized companies aiming at reducing manpower dependence by using productivity tools and automation. Pune-based Zensar Technologies has built a model known as "solution blueprint" (SBP) to reduce dependence on manpower and scale down maintainance costs. SBP is a collection of work flows, design models and protocols that allows automation of the software engineering process.

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Office space prices may tapper off

India's buoyant economy would expect prime office-space rentals in the metros to spiral further. However, according to a recent survey conducted by real estate consultancy firm DTZ India, the ongoing boom in the prices in the A-Grade leasehold space is likely to flatten in the near future due to over supply situation that will arise in major cities across the country. DTZ India estimates the supply situation across 7 major metros for 2007 - Banglore, Delhi NCR, Chennai, Pune, Kolkota, Hyderabad and Mumbai - to be in excess of 90 million sq ft, while the estimated cumulative absorption for the year would hover around 55 million sq ft.

Pune tops the list with an estimated over supply of 208%. Next in line is Chennai with an estimated over supply of 192%. In Bangalore, this estimated excess supply stands at 38 per cent, in Kolkata at 66 per cent, in Delhi NCR at 20% and Hyderabad is at 33 per cent. Mumbai is the only market which has an undersupply. It’s going as strong as ever, with growth in the financial services business in the city driving this demand. Over the next three years though, there might be some significant sized developments that will come up in new places such as Navi Mumbai and Vashi.

To view the complete survey report, you can click on 'Research' and register at DTZ India

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Govt. to tighten the grip on FDI inflows

The government is considering various proposals to redraft the Foreign Direct Investment (FDI) norms to plug the existing loopholes. Presently there are sectoral caps for various sectors for FDI in India. These limits are maily in the form of caps by way of equity or share capital. Now, the want to include indirect holding of foregn entities in Indian companies as well as the definition of indirect holding. But these changes will be prospective and will not applicable to existing investments.

It is likely that interest-free loans given by the foreign partner (or loans for which it has stood guarantee) to the Indian partner for investing in the joint venture (JV) as well as fully convertible preference shares issued to the foreign partner will be treated as indirect foreign holding and will come within the purview of the FDI sectoral cap. In addition, if the foreign investor has an equity stake in a domestic company which, in turn, holds shares in the JV, the loans advanced by the domestic company to the JV will also be considered as indirect holding.

If these proposals are implemented, it could have sweeping effect on sectors such as retail, insurance, aviation, defence and stock-broking where there are FDI sectoral caps. At the moment, there are four distinct FDI slabs — ranging from 100% to a complete bar in some sectors. The telecom sector has a 74% sectoral cap, the aviation sector has a 49% sectoral cap, and the insurance sector has a 40% sectoral cap.

These moves to tighten the FDI guidelines come in the wake of controversy sorrounding the Hutchison Essar shareholding, while acquired by the Vodafone.

Related Links :-

SECTOR SPECIFIC GUIDELINES ALONG WITH CAPS FOR FOREIGN DIRECT INVESTMENT

MANUAL ON FOREIGN DIRECT INVESTMENT IN INDIA

Innovation - Key to securing a competitive advantage for Indian manufacturing

"Made in India" may well be espoused in the future by consumers around the globe. While the pace of change in the Indian manufacturing sector has been at a blistering pace over the last decade, there remain significant challenges ahead for the industry to achieve world-class prominence. However, according to a new report released today on "Globalizing Indian Manufacturing. Competing in Global Manufacturing and Service Networks," overcoming these hurdles is well worth the effort and will help manufacturing in India to thrive by fostering further expansion of domestic enterprises and boosting investments by global manufacturers from abroad.

Developed in collaboration with the Center for Global Logistics and Manufacturing Strategies (GLAMS) of the Indian School of Business, Deloitte Research, the Global Business Institute of the Stern School of Business at New York University and the Krannert School of Management at Purdue University, with support from the National Science Foundation, the new report highlights the discussions at the Summit of Indian Manufacturing Competitiveness now it its second successful year. The Summit, held last August in Hyderabad and attended by 200 business executives, industry experts, government officials and academic researchers from around the world, set out to map the challenges and opportunities of manufacturing in India.

"Innovation is probably the most underexploited strategy for the Indian manufacturing industry," says Kumar Kandaswami, India manufacturing industry leader and a director with Deloitte Touche Tohmatsu India Private Limited. "To become a global powerhouse and remain competitive over the next 15 years, local manufacturers need to cultivate innovation capabilities not just in product development, but also in the areas of processes, technologies and business model innovation. We have highly-skilled talent locally, especially in engineering, with good English language capabilities, and we should take more advantage of this."

The research presented at the Summit suggests manufacturers operating in India – domestic and multinationals – need to rethink their operating models to take advantage of the spectacular growth rates. The research also indicates that many leading manufacturers in India today enjoy an average annual revenue growth of nearly 20 percent. If investment rates keep up with those growth rates, this would mean that in just a few years the vast majority of investments in those companies will consists of new investment – not old ones. This massive "greenfield" opportunity is rarely matched in any other manufacturing economy. Indian manufacturers, however, are lagging behind their global peers in investing in research and development (R&D). But this is starting to change. Grabbing the opportunity and rethinking the design of a new business model for manufacturing in India can provide a fertile ground for innovation in global manufacturing in the coming years.

While there is still a long way to go for Indian manufacturing to transform itself through innovation, India as a destination for R&D is well recognized. Recent trends support this with many multinational companies in all manufacturing sectors, including automotive, life sciences, process and industrial products, establishing or increasing investments in R&D centers in India. In fact, India is a top destination in the world for R&D investment. Due to the availability of low-cost, well-educated and highly skilled talent, in some sectors, the cost of R&D in India is as low as a third of what would be spent in a developed country in the west.

Despite a modest 17 percent share of gross domestic product (GDP), the Summit organizers and attendees view a bright future for manufacturing in India. But to succeed, India must follow a balanced approach of developing its manufacturing and operational capabilities and supporting infrastructure and other required services.

"Improving the global competitiveness of the manufacturing industry is critical to India's growth," says N. Viswanadham, executive director of the Centre for Global Logistics and Manufacturing Strategies at the Indian School of Business. "This growth, however, will require the strong collaboration of industry, government and academia alike to effect significant changes. We need to take action to address our local infrastructure, which is the most critical concern, raise productivity and quality levels at the plant levels, and to create more incentives to attract private investment."

Indian School of Business's Centre for Global Logistics and Manufacturing Strategies

The Centre for Global Logistics and Manufacturing Strategies (GLAMS) at ISB was created with the vision of being a knowledge partner of choice to both government and industry in the areas of manufacturing, logistics and supply chain management. Its focus is to engage in innovative research, conduct training programs and work with government and industry to become the driving force for the growth of global logistics and manufacturing in India. Two top industry houses TAFE and Hero Group support some of the Centre’s activities. GLAMS intends to develop partnerships and collaborations with leading industrial institutions and work closely with the industry in disseminating information. The research activities at GLAMS include: Developing frameworks and techniques for analysis and design of global supply chain networks, lean supply chain design for various industry sectors, retail in emerging markets and developing strategies for rural business transformation.

Full Article :-

Innovation key to securing a competitive advantage for Indian manufacturing

Full Report :-

Globalizing Indian Manufacturing. Competing in Global Manufacturing and Service Networks

ISB keen on self sufficiency in teaching faculty

The Indian School of Business (ISB), the five-year-old premier B-school founded and supported by leading lights of the Indian corporate world and global companies and relying mostly on visiting faculty from all over the world, has as its ultimate objective increasing its resident faculty to two-thirds or even three-fourths, according to M. Rammohan Rao, Dean.

The present structure of predominance of visiting faculty offers scope for building the reputation of the ISB, in which Wharton School, Kellogg School of Management and London Business School are leading associates. It also helps Indian students and faculty to familiarise themselves with the global business and academic environment at a time when India is in a stage of transition to a globalising economy, Prof Rao said.

Interacting with a group of invited journalists from different parts of the country at its sprawling 260-acre campus here on Friday, Prof. Rao said once the school was firmly established on the world map, it would raise its cadre of resident faculty from about 20 at present to about 45, constituting the majority of the faculty. He said that in the task of attracting world class talent, the ISB faced the task of competing with business schools in Singapore which had greater financial resources and certain tax advantages.

Ajit Rangnekar, Deputy Dean, ISB, said that in addition to the four Centres of Excellence that the ISB had already started, namely, those dealing with entrepreneurship development, analytical finance, capital market and microfinance, global logistics and manufacturing strategies, it proposed to open two centres devoted to strategic marketing and leadership training and management. From a student strength of 126 in its first batch of MBA, the strength of the outgoing batch was 418 and the students also represented ever greater diversity in terms of industry sectors in which they had worked. The share of women students was also increasing. Emphasis on research and combination of world class quality with relevance to the Asian and Indian contexts were important features the school's programmes and syllabus, Dr Rangnekar said. Apart from its one-year residential flagship PG programme in management, it offered general as also customised executive programmes for corporates and a post-doctoral fellowship programme.

According to V. Chandrasekar, Executive Director of the ISB's Wadhwani Centre for Entrepreneurship Development, the centre is working with the Department of Science and Technology of the Union government and the Andhra Pradesh government under two different programmes for developing business models for technological innovation and engineering design, respectively. It is also helping projects to find venture capital support with the involvement of U.S.-based TiE (The Indus Entrepreneurs).

Courtesy : The Hindu

Class of 2008 - An example of Ugaadi Pachadi

Indeed! the Class of 2008 at ISB is an awsome mixture of varied fileds and personalities just like our Ugaadi Pachadi, a taste of sweet, sour and bitter, with its motley crowd of students with wide variety of work experience. About 58 per cent of the students are from the pharma, manufacturing industry, shipping, FMCG, healthcare, media, medicine, civil services, armed forces, education and research and advertising. While students with engineering degree constitute 59 per cent.

Class 2008 is very stimulating with a diverse group- journalists, architects, scientists, advertising executives, IAS officers, film producer, MTV Model Hunt winner, chartered accountants, people from armed forces, entrepreneurs, radio jockey, and a host of other professionals. The number of doctors and professionals from the media industry, in the class has gone up to ten each this year from the previous year's six.

The number of women students has increased from 20 per cent in the Class of 2007 to 25 per cent in the Class of 2008, making the ISB, the leading Indian B-school with the largest percentage of women in its class. In addition to the 23 international students,the class has 63 NRIs.

Courtesy : The Hindu

ISB - Placement Summary - 2007

Summary of the placements at ISB in 2007

For the first time since the last five years, the ISB has attracted companies from Australia and Italy. Leading companies based in Germany, Switzerland, Middle East, USA, UK, Singapore etc are visiting the campus. This year, a company recruited two groups of students as core management teams to run stand alone businesses. These groups of 4/5 students will responsible for setting up the project from Ground Zero and leading it to become a success.

In a press release to The Hindu, Dr. Rammohan Rao said: "Now on a sharp growth curve, the Indian economy provides opportunities for our students to grow with it. Taking a balanced view and opting for strong roles irrespective of compensation is a mark of maturity. I am glad to see that the youth of India are demonstrating confidence in their abilities and in our economy," he said. Among the `non-traditional' sectors increased are several international and domestic companies and of particular interest are micro-finance companies, NGOs, real estate, retail, infrastructure like steel, cement, oil and natural gas. Companies looking to make offers for senior management roles include Holcim Ltd (a leading Global player in cement industry), Tischman Speyer (a leading real estate and consulting agency), Italcementi S.p.A (fifth-largest cement producer in the world), Arcelor Mittal (Largest steel producer in the world) and Santos (A major Australian oil and gas exploration and production company with presence in Australia, USA, Papua New Guinea and Egypt).

HIGHLIGHTS

Class Size 416
Average Age 27 Years
Average Work Experience 5 Years
Total number of participating students 414
Total number of companies that participated 202
Total number of offers 581

Highest International salary USD 2,69,000
Average International salary USD 135,000
Highest Indian salary INR 43,91,000
Average Indian salary INR 15,03,000
Highest International salary for a woman student USD 161, 000
Highest domestic salary for a woman INR 2, 700, 000

A word of caution:- When ISB computes the average domestic and international salaries, it takes into account all offers that have been made to the students independent of whether they have been accepted or not. For example, a student gets three offers - two domestic offers of INR 2 million and INR 3 million per annum and one international offer of USD 150,000 per annum and he accepts only the domestic offer of INR 3 million per annum, then ISB takes into account all the three offers for computing averages and not the one that has been accepted by the student. Please be careful while understanding the averages as these averages refer to the offers made rather than to the offers accepted. The above figures are based on the Cost to the Comapny (CTC) which may include monetary benefits that could be realised only after a lapse of time like two to three years. It also includes the signing bonus, which may not recur subsequently.

ISB - Upcoming Executive Programs - May & June, 2007

The ISB also regularly offers short term executive education programs for career development. These details are collected from the website of ISB. The upcoming programs for the month of May & June, 2007 are as under.

1. Accelerating Sales Force Performance, May 18-22, 2007

The Coverage:

The programme combines frameworks to understand, diagnose, and enhance the sales system with practical insights gained by the faculty and co-participants.

The participants:

Senior sales and marketing leaders and general managers of companies in which the sales organisation is a substantialinvestment and a key driver of company success.

The faculty: Prabha Sinha – Visiting faculty, Kellogg
The fee : INR 125000

For requesting a brochure, please click here.


2. Accelerated Management Programme: Transitioning into General Management, May 20-June 4, 2007


The coverage:

Facilitate the transition of senior functional executives into highly effective general managers. Develop a broad understanding of how to integrate across functions, optimise manpower and resources to get work done more efficiently and with superior results.

The participants:

Senior functional managers moving into positions where firm - wide multi-functional perspectives are required.

The faculty: Faculty who teach on similar general management programmes are : Atul Nerkar – University of North Carolina, Suren Mansingka – University of California, Irvine, Prabha Sinha – Visiting faculty, Kellogg, Don Sexton – Columbia, Ananth Iyer - Krannert School of Management, Purdue University

The fee: INR 300000

For requesting a brochure, please click here.

3. Brand Management, June 3-6, 2007

The coverage:

The programme talks about how to build and sustain brands and also manage them over the product's life cycle.

The participants:
Brand managers & anyone whose role involves touch points with brand management.

The faculty: Don Sexton – Columbia
The fee: INR 75000

For requesting a brochure, please click here.

4. Global Growth Entrepreneurship Programme, June 14-22, 2007

The coverage:

Strategies for small and medium sized companies to succeed in a globally competitive market.
The programme is brought to you by the Wadhwani Centre for Entrepreneurship Development and the Centre for Executive Education at the ISB, in cooperation with the Wadhwani Foundation and the National Entrepreneurship Network.

Funding is available from the Wadhwani Foundation to all selected participants as a part scholarship for the programme fees.

The participants:
Founders and senior decision makers of small and medium sized businesses.

The faculty: Gerry George – London Business School, Mason Carpenter – Wisconsin Madison

Venue :

Delhi June 14-16, 2007 Location to be announced
Chennai June 17-19, 2007 Location to be announced
Mumbai June 20-22, 2007 Location to be announced

The fee: INR 24000

Download Application

Request for a Brochure

5. Coaching Programme for Top Management: Empowering Senior Teams,
June 18-21, 2007

The coverage:

This programme aims to help CEO & top management to hone their ability to coach highly able managers and professionals to achieve consistently high levels of work performance and raise their full potential.

The participants: CEOs & top managers who are managing managers
The faculty: Steven Sonsonni– London Business School
The fee: INR 75000

For requesting a brochure, please click here.

6. Aligning Your Business and IT Strategies: Stability, Agility & Disruption,
June 25-28, 2007

The coverage:

Billions are invested in IT worldwide. IT enables many companies to gain operational efficiencies (stability), shorter product life cycles, negative cash conversion cycles (agility), and game changing disruptiveness (Think VoIP and Skype). Yet a majority of firms fail to realise the full potential of their IT investment. This programme will focus on aligning a firm's IT capabilities with business strategies and superior business processes to create value for all stakeholders. The programme will use a variety of case studies to show how to measure the risks of IT investment.

The participants:
CIOs and senior managers who need to have a clear understanding of how to make the business and financial case for new IT enabled initiatives.

The faculty: Ravi Bapna – ISB, Anitesh Barua - University of Texas, Austin
The fee: INR 75000

For requesting a brochure, please click here.

Appreciation of Rupee - Is it real & sustainable

Hai friends,

I am back to blogging. I am continuing in my Department in the Central Government. I wish the very best to all the GMAT takers who wants to attain the success through MBA education in famous international schools like ISB, Wharton, Kellogg, London Business School etc.

Now coming back to the topic, everyday we are seeing in the newspapaers that Indian currency appreciated more than 2% since January 2007 against US Dollar. The main reason being that Reserve Bank of India has reduced its role in absorbing the dollars coming in the form of capital inflows mainly FII inflows. This is because the Government wants to reduce inflation. One of the ways to reduce the inflation is to reduce the money available with the public. RBI used to buy the Dollars in exchange of Indian rupee so as to maintain the parity vis-a-vis the US dollar. This in turn increased the money supply. Now, the RBI has reduced the above activity so as to reduce the money in the hands of the public to contain inflation. But, this has a side effect i.e. the demand for dollar reduces and in the result, the Indian rupee appreciated against US Dollars. In fact, our currency is fully convertible on current account i.e to buy goods and services across the border but not an capital account like investments to be made by Indian abroad and vice versa. Now imagine how the Rupee will appreciate if the RBI has no role in this sterilisation process.

In fact, with the economic growth momentum picking up in future, - GDP growth rate of 8-9% expected in the next 10 years - it may not be far off when One Dollar can be bought for as few as Ten Rupees. As per the Report titled "Dreaming with BRICs - The path to 2050" prepared by Goldman Sachs, an international consulting agency, India's economy could be larger than all but the US and China in next 30 years . As per the Report, India has the potential to grow that could be higher than 5% for the next 25 to 30 years. The appreciation in the currencies of BRICs may to the extent of 300% in 50 years, an average of 2.5% a year. Rising exchange rates could contribute a significant amount - as much as 1/3 rd - to the rise in US dollar GDP in the BRICs, report says. In fact, due to recent appreciation of Rupee vis-a-vis US dollar, our present GDP in dollar terms crossed US $ 1 trillion. In fact, if the projections in the report come true, the real GDP of India in dollar terms will cross that of Italy, France, Germany and Japan by 2035.

Related Reports :-

1. Dreaming with BRICs - The Path to 2050 - A report by Goldman Sachs

2. How solid are the BRICs? - A report by Goldman Sachs