Fin Weekly 2nd August - 8th August

Sunday, August 15, 2010 Posted by sauravtibrewal

Group 14 of Cashonova 2012 members


Tata set to pick up successor; Reliance eyes shale extension

Friday, August 6, 2010: The hunt for the Ratan Tata’s successor is very much on. Vice chairman RM Krishna Kumar’s statement on the election of the successor by March 2011 has set the stage for the biggest corporate announcement. Now will it be the celebrated CEO Pepsi co. Indra Nooyi, the conservative Citibank CEO Vikram Pandit, popular Arun Sarin or the next Tata- Mr. Noel Tata, only time will tell…

On the other hand, the oil giant Reliance goes on to acquire its third shale gas asset for $392 mn. The amount of $340 mn would be paid up immediately, allowing Reliance access to a source of 3.4 trillion cubic feet of estimated gas.

Corruption clouds CWG

Thursday, August 5, 2010: It seems IOA is on a hunt for fresh talent and the deals for the big CWG coming this October seem to be the means deployed for it. For how else, can one explain an interior design firm D Art winning a Rs 93 cr deal for furniture. This aside, the political unity seems to be the benchmark for the CWG. Head IOA, Mr Kalmadi, extended an overlay contract worth Rs 231 cr . to Deepali Design and exhibits, linking long to the BJP person Sudhanshu Mittal. Now this is not all, luxury spans the games like never before, with rented water jugs costing Rs. 2145, the treadmills for Rs. 9.75 lakh which cost Rs 7 lakh for the buyout and rented tables Rs. 8776 apiece.

Fiscal deficit Cut: Govt. asks Rs 54589 cr more

Wednesday, August 4, 2010: The Rs. 1 lakh cr earning from the spectrum sale is less than enough for the government. It has asked parliament for an additional Rs 54589 cr for spending on unforeseen items like special police force for the naxal hit area, rural development, education and compensating oil companies for selling fuel below market rates. The government had actually asked for Rs.68294 cr out of which Rs. 14000 cr is to be funded from internal savings.

SEBI asks ADAG top officials to depose

Tuesday, August 3, 2010: SEBI has asked top executives from ADAG companies Reliance infra and RNRL, including Mr. Anil Ambani, to depose before it after the officials could not reply to the show cause notices issued to them. The issue seems to be concerned with Pluri, a foreign institutional investor in the two companies via participatory notes (PN). The company seems to be involved In the erstwhile investigation pertaining to siphoning off funds from the foreign accounts of the two cos and being invested in the companies via PN.

CEOs do self appraisal; IRDA puts an axe on margins

Monday, August 2, 2010: CEOs of India Inc probably are very happy with their performances. Top executives pay rose 33% against 25% profit growth in 2009, a year where employees faced salary curbs and bonus withholds. The big names include Apollo Tyre’s Omkar Kanwar, JSW Steel’s sajjan Jindal and Crompton Greaves’ Thapar among others. In an another development, private insurers face IRDA axe on margins via new Ulip guidelines. The impact could be severe as many private insurance cos look to offload nearly a million agents this year.


GMR to raise $200 mn from Macquarie SBI Infra

Friday, August 6, 2010: GMR airports Holding Ltd, the wholly owned subsidiary of GMR Infrastructure, is set to raise $200 mn from MSIIL as compulsorily convertible preference shares. The equity then can be as high as 39.05% for MSIIL. GMR Airports Holding is valued now at Rs 2400 cr based on this transaction. It holds 9% in Delhi Airport. The money it will et from this investment will be spend on expanding the airport business further.

M&M may bid for Ssanyong

Thursday, August 5, 2010: M&M may bid for South Korean SUV maker Ssanyong in which it had showed interest 7 years ago but had backed out. The board is observing the movement and after some more information is obtained, the decision is likely to come up by August 10 deadline. The Mahindra group with this acquisition aims to establish as the most dominant player in the UV segment with its Scorpio, Xylo and Bolero already there in the market. Also the range of the cars made by Ssanyong is higher and hence does not clash or competes against that of the Mahindra’s existing offerings.

Tatas, Mizuho to float growth fund

Wednesday, August 4, 2010: Tata Capital and Japanese Mizuho will tie together to float growth fund in India. For investment $100 mn out of a total $500 mn will come from the partners and for the rest Japanese and the companies from the Middle East will be targeted. The fund will be managed by Akhil Awasthi along with MD Praveen kale and six other members. The companies also plan to raise another $500 mn for its other three themes, i.e. healthcare, special situation and innovation.

Gail net jumps 35%; HCL Consortium wins 1k cr project

Tuesday, August 3, 2010: Gail India has reported a net jump of 35% in profits despite paying subsidies of Rs. 445 cr this year. Going forward, the company plans to invest Rs 23k cr in expanding its existing pipeline structure. HCL Consortium is set to provide food coupon based public distribution in Madhya Pradesh. It will address nearly 10 million families and the data will be share with the UIDAI.

Biyani restructures financial services biz; HCL eyes growth

Monday, August 2, 2010: Kishore Biyani is keen to restructure its financial services business. The current equity holding in the NBFC will be divested to a new holding company, Future financials which will have ICICI veteran V Vaidyanathan as a co-promoter. Sameer Sain, the VC for the financial arms has already resigned to pave way for Mr. Vaidyanathan. HCL, a top IT company, will not compromise on margins going forward with the growth plans. The company further wishes to be proactively present in Europe to spot opportunities early and aims to bring its BPO business to profitability going forward.


Foreign individuals may enter market directly

Friday, August 6, 2010: Foreign individuals may enter the market directly, if the recommendations of a report by UTI AMC chairman Mr. Sinha are to be accepted. The report suggests stricter disclosure norms with a permanent bank and trading account, but proposes to open the market directly to foreign investors. It also suggests freeing the limit structure of the sectoral investments of these players. The norm will bring about greater transparency in the system as against the already existing concept of participatory notes..

India and 4 other nations to revive Doha talks

Thursday, August 5, 2010: India has formed 11 panels which will try and expedite the failed negotiations of the Doha round. The panels will report to the various committees already in place, which will take up the matter along with China, Brazil, US and the EU team to reach a mutually beneficial agreement. Whereas India has tried earlier to bridge his gap in 2008 and via a mini minister meet in 2009, the attempts have till now eluded India. But the effort merits consideration as the expected benefit from the talks lie in the range of $282 bn.

Government keen on implementing Saral GST

Wednesday, August 4, 2010: Government is all keen to implement Saral tax regime for indirect tax es, as in the case of direct taxes so that there is high compliance. Earlier, where all the big corporate businesses were required to go mandatory audit, government now seeks to have a selective audit, which is seen as a breather. But getting the results audited by CAs would be the onus of the corporate tax players. However whether there is an agreement in the meet of the State FMS needs to be seen.

Post offices to be future banks

Tuesday, August 3, 2010: the concept of post offices bank can soon be a reality. RBI which has emphasized the need for financial inclusion sees post offices as the next big opportunity. With 1.55 lakh branches, functioning as a quasi bank taking savings and transfer of money will soon be able to provide credit. The decision however needs to be taken in consultation with the cabinet.

GST poised for further delay after BJP states opposition

Monday, August 2, 2010: BJP controlled states Gujarat and Madhya Pradesh opposed the constitutional changes required to implement GST. Currently states levy taxes on the retails levels of the goods, while Centre levies taxes on the factory gates and services. With GST, constitutional amendments need to be in place to change the structure. Government has proposed a joint council of representatives from state headed by Union finance minister to decide on the rates of GST. But this has evoked opposition from the states raising concerns of autonomy of the states in raising taxes.


Wooing the customers

Friday, August 6, 2010: Retailers now don’t just wait for the customer to enter and buy, or for that matter, only advertising to bring them to their stores. They now seek to build deep rooted relations with the customers. While Spencer’s has started recipe classes for the neighborhood women, Shoppers Stop is busy giving shopping and fashion tips. Another variation has the followers in Bata and Wills Lifestyle, which provide free delivery of the size of a model not found on a store and exists at any other store. The steps may have been different; the underline is still the same, wooing the customer to the stores.

Ambush marketing: a sound marketing strategy

Thursday, August 5, 2010: An interesting war of opinions is in place over the recent ambush marketing of dove over P&G’s Pantene. While one set of thinkers believe that it is the long term plan that helps the company’s brand image and these sorts of marketing tactics are just diversions. The contradiction however comes in the fact that nearly 60% of the population is below 30 in a country like India, and the youth surely does not like tired boring products. The move has to be fast and the brand should be cheeky.

Time for cash and carry retail

Wednesday, August 4, 2010: Bharti Walmart, which has two stores in Punjab, is set to open 12 stores in the next year. Carraefour, the French giant has also secured property in various cities to open cash and carry stores. Tesco, with its Indian partner, is also set to open up its retails stores this year. Currently where the organized retail market is only $25 bn of the total $450 bn, the scope for getting a pie in the market is huge. The current norms allow 100% in wholesale, 51% in single brand retail and none in multi brand retail. Metro however sees even this as a huge distribution. The wholesale market is big and there are numerous retailers in the form of the kirana owners, small restaurants and small and medium businesses.

Cars the buzz this July; VW faces supply crunch

Tuesday, August 3, 2010: July has been the month of sales for most car companies. While Maruti crossed the 1 lakh sales figure second time this year and a 33% rise in sales YoY, Hyundai registered second with a 24% growth. Toyota, due to launch Etios this December, on the other hand recorded a thousand bookings for its newly launched model Altis Diesel. VW which launched Polo seems to be facing supply crunches in India as it did not expect monthly demand to be as high as 2500 units. The company has asked the vendors to scale up capacity, but the task is difficult considering the impact on quality

Designed to Succeed

Monday, August 2, 2010: Design thinkers like Aditya Dev Sood and Manoj Kothari-who founded Onio Design- are changing the board room structures. Design thinking or changing and consolidation of brand around design and mapping of company functions is a concept in the current business scenario. Traditional problems of branding have been addressed by the thinkers by continuously engaging with people and designing a perceptual mapping which finally leads to the brand architecture. But the onus lies not only in graphical designing, but the creation of equity.


Politics of protest in Kashmir

Friday, August 6, 2010: Author Najeeb Mubarki, in this editorial on Kashmir emphasizes that the recent crisis in Kashmir is a reflection of the Indian political and the public aspirations. The sheer use of force this time and the perseverance of the Kashmiris alert everyone that the ordinary Kashmiri wants a long standing solution to its sufferings and problems. The presumption that the language of force is the only one that is going to work is a misinterpretation of the young learned Kashmiri mind. The author feels that the brute force used this time, especially on children and old people is way too much and it seems that the force may have settled down this issue this time around, but is not going to be the solution going ahead.

Where the world got it wrong, India got it right

Thursday, August 5, 2010: World economy is in the fear of a double dip recession, feels Roubini, who predicted the financial crisis in the first place. The non-tightening of the policies, and rising debt in the advanced countries could lead in another panic situation as of Greece. Nearly 91 banks in Europe carry this debt and should this be defaulted, a recession is in vogue. In India , on the other hand, the scenario is just the opposite. Savings are rising and the growth is poised at 8.5 – 9%. This is going to be all the more better because this time Indian banks have reduced their exposure to foreign debt and the belief in the Indian growth story is strong.

Stocks vulnerable in short term, set to rebound

Wednesday, August 4, 2010: Author Sunil Kewalramani believes that the short term indicators of US defaults, sovereign rescheduling may have an impact on the growth of the companies and hence stocks in the current short term scenario. He however believes that like Spain’s football team, companies have also planned, thought and implemented themselves. With quarterly results of various companies rising, potential growth of the emerging economies and easy interest rates, stocks are bound to give increasing returns next quarter onwards.

Technology Vs Security

Tuesday, August 3, 2010: The growing use of technology in terrorist activities whether it be the 9/11 incident or the 26/11 Mumbai incident demands attention. With technology, a few individuals can sabotage the freedom of the whole country. Numerous examples of such concerns are visible in today’s world- ban of mobile phones, the ban of pencil export to Iraq for fear of use of graphite are some of these. But the author still remains bon-committal saying that where a knife can kill somebody, in the hands f a surgeon can save a life too. The debate meanwhile remains inconclusive.

Confused Signals

Monday, August 2, 2010: The RBI’s move to increase differentially the repo rates and reverse repo rates draws a critique from the author Mythili Bhusnurmath. The author says that the actions do not seem to reflect the commitment of controlling inflation. The reason for promoting growth doesn’t seem to go in sync as the inflation on the demand side needs to be constrained. The banks will obviously not resort to borrowing from RBI as the first resort as there are options of inter-bank borrowing already available. The fear of draining liquidity after the spectrum allocation is only a short term concern, as demand will pick up once the government starts to spend. In light of the growing monster of inflation, according to author, the issue of short term liquidity should not have impacted the long term concerns of modest inflation growth


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