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2008-04-29T13:44:00.001-07:00

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Polaris Software: A Time to Sell?

2008-04-25T13:13:00.000-07:00

By Priya Nigam

A number of companies are opting for buybacks these days. We’ve heard more buyback announcements since the beginning of this year than during the whole of last year. Over the past four months, majors like Reliance Energy, Patni Computers, Madras Cements and Gujarat Flourochemicals have been in the news with buyback plans.

What happens in a buyback? A company repurchases its outstanding shares, which reduces the number of shares on the market. This reduction in supply boosts the value of shares. Moreover, it lifts the per share earnings. Buyback is one of the ways in which a company invests in itself. If a company has cash and does not have a better investment option, it may opt for a buyback. Buybacks are widely considered to be a sign that a company has faith in its future and that its share price is low.

A buyback often lends upside to a company’s share price. And, as we have just witnessed with Polaris Software Lab Ltd, disappointment on this front can take shares down dramatically. The Chennai-based company, which provides customized software solutions and products in the BFSI (banking, financial services and insurance) segment, saw its shares plummet close to 5% on news that it had deferred a proposed share buyback plan. Polaris would instead focus on its real estate investments and explore how leverage from this could maximize shareholder value. The company’s board has now appointed a committee to help make the decision in this regard. The decision could be announced at the next board meeting.

Investors were disappointed and could not be appeased by comment that the buyback had only been deferred and not cancelled. Investors have already been on tenterhooks, with the plummeting dollar having a huge impact on companies that outsource services to the US. In fact, Polaris Software’s consolidated after-tax profits plunged almost 28% to Rs73.215 crore in the year ended March 2008. The company’s performance was impacted by the appreciation in the rupee versus the dollar as well as the impact of the sub-prime crisis on the banking sector.

While Polaris has not escaped the impact of the US slowdown, it has been taking initiates to overcome weaknesses. It did report 14 new contract wins in the fourth quarter.

The company’s wholly-owned subsidiary Polaris Retail Infotech launched Smart Store last month. This is a retail software product for the small retail segment and a first of its kind for these businesses. With this, Polaris Software targets the SME retail market of the Asia-Pacific region, which is booming. The company also entered into a strategic partnership with City Networks in February. This alliance would provide product development and support services to City Networks. Moreover, Polaris Software is targeting 20% annual dollar revenue growth in the year ending March 2009 and about 30% net profit growth in dollar terms.

If you’ve held Polaris shares since early last year, you know what bungee jumping feels like! Having plummeted from Rs200 in April last year to Rs62 in January this year, shares are trading around Rs100. This is definitely not a time to dump Polaris shares. If you can be patient, it may be worthwhile to hold onto these shares for some time.

Suggested reading

Why Price, Volume and Common Sense Matter Now

2008-04-25T08:57:00.000-07:00

Life is really simple, but we insist on making it complicated.

Guest Post:Deepak Singh Market Analyst, State of the Market

"How many legs does a dog have if you call the tail a leg? Four! Calling a tail a leg doesn't make it a leg."....Abraham Lincoln

We see and hear this too often in markets. There are millions of technical indicators that have been developed to call a tail a leg. I am not painting all technical indicators with the same brush but most of them are no good. It only leads to poor trading experience and results. After going through number of indicators, I reached a conclusion - it is much better to stick to Price, Volume and Common Sense (the most difficult indicator). There is saying - "Price and Volume are fact, and everything else is a distorted version of the two".

The market requires you to be much more objective most of the times even if that means a long wait. It pays to wait for clear signals than interpret confusing signals. The moment we start looking at technical indicator that's what we attempt to do - fall in trap of confusing signals and make wrong trades. If the trade is successful, it's generally more luck than design, though we want to believe the other way.

Even common sense is very difficult to trust because emotions destroy common sense. Most of the times I have found - the common sense indicators tells - just keep quiet and do nothing. But the urge to trade and prove that I am smart - we make stupid mistakes.

Right now - Nifty is trading in a small band with no directional bias....period. We need to respect this and wait till Nifty gives a directional move. The key to trading is not to argue with it, but try to take advantage of the moves that it makes. Right now, there are plenty of reasons (event risks) to stay patient and let the market decide where it wants to go. Easier said than done

Read the complete State of the Market Trading Notes –

 Cartoon of the day – Market Sentiment

 Global Cues

 Nifty – Range Expansion probable

 State of the Sectors (NEW)

 Market Observations – on sector, stocks, my portfolio, and trading philosophy

All Charts have been published with permission from www.chartalert.com

Disclaimer - The trading notes is Deepak's perspective on the market. The stocks listed here have been selected based on recent performance, and have probability of success in near term. But remember, it's still a probability, and chances are that stock may still not perform as expected. The column is purely for educational purpose. Please use your own discretion in trading. Trading Futures and options involves significant risk. You must consult your own financial advisor before trading to determine if it is suitable for you. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers

The Business Of Cricket

2008-04-24T12:45:00.000-07:00

By Aditya Rao

For a sport that is played by just 12 countries on a regular basis, the amount of money it generates is simply phenomenal. Cricket is no longer about being that elitist sport played by the members of the East India company.

It’s about cash, plain and simple and when it comes to that India runs the show.

The current experiment in this cash creation exercise is the brain child of the BCCI and marketed by its chairman, a man described by many as some sort of a marketing genius. It’s called the IPL (Indian Premier League) and it’s about 20/20 while the man in question is named Lalit Modi.

While you can read about the nuances of the game by blogger Amit Varma, consider the business side of it. The BCCI has overtaken England’s Cricket board in terms of the amount of money that each generates thus making it the #1 Cricketing body in India and the World.

With the IPL, it is slated to make even more. Not only did they sell the rights to the 44 day tournament to Sony Entertainment Television for a whopping $1.03 billion but also everything else that they possibly could to a number of franchises. That means licensing and merchandising rights, copyrights and trade licenses.

That’s just the start of it. The IPL consists of 8 teams filled with the best possible players in World Cricket. They auctioned the best players to those teams which were purchased by some of the World’s richest including Mukesh Ambani of Reliance and Vijay Mallya of UB.

By selling the teams and players, they managed to raise another $723 million.

The IPL has been created to provide obvious entertainment to cricket lovers but more so to take the sport and make it a worldwide phenomenon. The IPL will be seen by more countries than any other similar tournament before and it will definitely raise more than any tournament like it. Simply because the hype is paying off. A mere ten second commercial on Sony sells for at least $6000.The investment for Sony seems to have paid off, for this season alone they’re expected to make about fifty million dollars. One down, nine to go.

The sport has gotten so big that no longer is it about the cricket lover and his interests. The players themselves get paid for everything and I mean absolutely everything. Hitting a six or a four .Being the man of the match or simply appearing for one garners an appearance fee.

Playing gear has been designed by some of India’s best and most expensive designers while Reebok,Adidas And Nike officials were waiting in line just to have their logos displayed on the shirts of the players.

Everyone who is anyone has turned up to watch their local team win with more interest than for the national team. The past few days have had filmstars, politicians, other sportsmen and women in addition to the owners themselves showing up in the stadium. While the entire event across eight cities has been sold out, the BCCI is still finding more ways of making this bigger.

Cricket or not, the hype has definitely worked.

Suggested Reading

India’s Bazaar going Bizarre?

2008-04-24T07:16:00.000-07:00

By Priya Nigam

I keep reading about the high inflation rate India is reeling under. Does that really stop us from some well deserved “retail therapy”? No, not really.

Over the past decade, India has pulled up its socks and decided to make its presence felt in the global economy. This is not only in terms of outsourcing and exports, but also consumption. We have certainly taken steps in the right direction over the last ten years and the resultant high economic growth rates have boosted the middle class and our spending power. Income has more than doubled in the last 20 years. With that, India has become the retailer’s dream come true! India is a huge and lucrative market. Around 72 million cell phones and 10 million automobiles are estimated to have been sold in the country last year. Now there is talk of the iPhone (8GB version) being launched at a price of up to Rs28,000. If you consider that too high for the Indian market, think again. We are already buying the much-hyped, touch screen device from the gray market for around that price!

According to DNA Money, an industry survey indicates that India’s retail business would continue to grow over the next five years, despite the global consumer slowdown. In fact, the survey conducted by retail consultancy firm Technopak shows that the Indian retail sector could attract an investment of $30 billion over the next five years, with about 50% of this going into the top eight cities of the country. And this figure does not include investments in malls and other ancillary industries. This investment could come from both foreign direct investments (FDIs) and investments from domestic majors.

UK-based Marks and Spencer has entered into a 51:49 joint venture with Reliance Retail, headed by Mukesh Ambani. The British chain store plans to invest £29 million to set up 50 or more stores across India over the next five years. The Wall Street Journal’s Mint quoted Marks and Spencer CEO Stuart Rose as saying that “the biggest opportunities we see are in India.” Meanwhile, Bharti Enterprises plans to spend up to $2.5 billion on its retail venture by 2015. Earlier this week, the company, which is a wholly-owned subsidiary of the Bharti Group, launched its first food and grocery store (called Easy Day) in Ludhiana.

Earlier this month, Aditya Birla’s retail arm, Aditya Birla Retail Ltd (ABRL), unveiled its plans to add around ten hypermarkets across India this year. This expansion plan involves an investment of Rs250 crore. The company also aims at launching several superstores under the “More” brand name.

In AT Kearney's annual Global Retail Development Index (GRDI), India has maintained its position as the most attractive market for retail investment for the third consecutive year. So, we are sure to hear about more investments pouring into the retail sector in the near future.

Suggested reading

Signs of Bulls on the NIFTY?

2008-04-23T20:11:00.000-07:00

Chaos is not dangerous until it starts to look orderly. The job description of Technical Analyst is to find order in chaos.

Guest post by Deepak Singh Market Analyst, State of the Market

Last day of Series Expiry

The breakout above 4800 persists and bulls can take comfort from the fact that Nifty has been able to hold on to its gains above 5000. Even the non performing sectors like Real Estate and Banking made a good move this week to cover up for mild weakness in Technology and Oil and Gas Sector (For details, See State of the Sector below). But last few trading session behaviour on frontline stocks and indices does not smack of great strength. Reason - There are too many event risks in next few days and Nifty is just few points below strong resistance levels.

In last few days, Nifty has become completely trendless and choppy and with expiry day, this trend may persist today. Today, I thought let me do a study on Nifty behaviour on expiry day and post expiry.

This is what I came up reading last six months of series expiry

 Nifty generally closes flat (+/- 1%) on expiry day.

 The true range compresses by 40-60% of the average on expiry day. It means expiry days are not volatile.

 Nifty generally makes a directional move one day after expiry (first day of Jan series was an exception)

 Average True Range as of yesterday = 122. A 40% compression means a Nifty range of 70-75 points today. Does that mean - Nifty will move between 5000-5010 and 5070-5080 today? It is highly probable...no guarantees.

 It is best to avoid trading Nifty on expiry day as moves are choppy and less volatile.

As the data in table suggests, nifty makes a directional move only post expiry. With inflation data tomorrow and monetary policy on Tuesday - the event risk is also pretty high over next few days. All this will make Nifty trading very difficult. It is much better to buy tea and sugar stocks and relax than get trapped in two way moves in Nifty.

Read the complete State of the Market Trading Notes –

Your feedback is important to me :-)

Happy Trading

Cheers

Deepak Singh Market Analyst, State of the Market

YAHOO IM - stateofthemarket

All Charts have been published with permission from www.chartalert.com

The Bull Market is Over - What's Next?

2008-04-23T08:48:00.000-07:00

Curiosity  Trading Opportunity

Live markets can only be understood backwards, but it must be lived (traded) forwards

Guest Post by Deepak Singh

Plain Vanilla Bull market is over...and now everyone is concerned - What next?

To exploit this curiosity - There is a new Television program on CNBC called HUNT for the Bottom. The best minds on market are going to share their opinion and help Indian public at large on what should they do - Get scared by Shankar Sharma or Get overly bullish by Sameer Arora or Get confused. Now, first thing first - the rationale behind that program is not to discover - where is the bottom? Because nobody knows where the bottom is. The objective - Generate huge viewership interest because there is a natural human tendency to look for relief in times of uncertainty.

But does this all matter. After few years of trading and making and losing money - Here are my learnings -

You cannot predict the market - The financial markets are generally unpredictable. So that one has to have different scenarios...The idea that you can actually predict what's going to happen contradicts my way of looking at the market...George Soros.

You have no control on market. So, why think what the market is going to do. It is much better to think what you are going to do if market behaves in a particular fashion. Trading and Investing is not a game of conviction. It is a game of scenario planning and executing trades and investment once a particular scenario plays out as one anticipates.

There is always bull market somewhere - The best way to identify bull market is to track money flow. Hence, always keep track of stocks that make a new 3 month high or 6 month high or 52 week high to identify areas of strength.

Be ready for surprise - The market makes the strongest move in direction of surprise. Hence, if majority of people are bullish - the sell off can be brutal; as it takes time for people to adjust to new reality. And similarly, it can happen in reverse direction also.

Prefer Discipline over Conviction - Market has its own view. The key to trading is not to argue with it, but try to take advantage of the move that it makes. One should always have an open mindset on the market and should always keep asking the question - How can I make money by taking acceptable risk?

I think - A Hunt for bottom is more of an academic exercise and not something one should be really concerned about. There are always reasons to be pessimistic and optimistic; and generally most of them are good one. For me, a successful trade makes me optimistic and a bad trade makes me pessimistic. At the end of day, that's what counts - not bottom or top.

Happy Trading

Cheers

Deepak Singh

Market Analyst, State of the Market

YAHOO IM - stateofthemarket

All Charts have been published with permission from www.chartalert.com

Disclaimer - The trading notes is Deepak's perspective on the market. The stocks listed here have been selected based on recent performance, and have probability of success in near term. But remember, it's still a probability, and chances are that stock may still not perform as expected. The column is purely for educational purpose. Please use your own discretion in trading. Trading Futures and options involves significant risk. You must consult your own financial advisor before trading to determine if it is suitable for you. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers.

Microsoft Corporation Sues Mother for "Anti Chat Programme"

2008-04-21T21:49:00.000-07:00

By a Staff Reporter

That's what a closely guarded circulation from Unicaresoft Corporation, read this morning. To avoid misquoting the official word, here's a verbatim copy:

- - - ->START<- - - -

HOOFDDORP, The Netherlands: Microsoft's lawsuit against Unicaresoft BV is scheduled to take place on 23 April. Unicaresoft is a joint initiative of Carola Eppink, developers and entrepreneurs. Carola, mother of three, designed a solution against excessive chatting and Internet use from her home and wanted to name the product MSNLOCK.

The name derived from the idea behind the software - regulating the use of various chat programmes. Carola thought MSNLOCK to be an appropriate name for a product that provides a solution for such a large-scale social problem.

Shortly after registering the brand and domain name, Microsoft Corporation demanded through their lawyers that the name was withdrawn and the domain name deregistered.

Carola sought legal help, turning to lawyer Marc de Boer of Boekx Advocaten. His standpoint is that the use of the name MSNLOCK is not illegal. "The name simply clarifies the intention of the product. What's more, MSN messaging has become a generic term for chatting."

Faced with the threat of a lawsuit, Unicaresoft relinquished the product name MSNLOCK. Unicaresoft did approach Microsoft to discuss the matter and to explain the positive effects of the developed product on the use and perception of chat programmes. However, Microsoft declined and summoned Unicaresoft to also transfer all claimed Internet domain names and the name MSNLOCK to Microsoft.

Carola comments: "I always assumed that MSN stood for Messenger. It says so literally in the Van Dale dictionary, I quote: MSN messaging is sending messages through a messenger."

Carola believes the case is not so much about the brand or domain name as it is about the product she developed. In fact, there are numerous examples of domain names that feature the abbreviation MSN in combination with other words. Considering the popularity of Windows Live Messenger and the income it generates through MSN-related advertising revenue, it seems that a product aimed at providing a solution for a large-scale social problem is being prevented from coming onto the market.

In the past few years, Microsoft has made quite a lot of court room appearances in Europe. Last February, the company was issued to pay the European Commission EUR 899 million for misusing their monopoly position to bar other companies from the market.

Meanwhile, Unicaresoft has marketed its product under the brand name Benzoy (R), which is now available in stores. Gerard Ghazarian, on behalf of Unicaresoft, says: "Benzoy (R) meets the needs of a large number of parents who want to stop their children from spending an excessive amount of time on the Internet or chatting. Parents do not want MSN to be banned or to spy on their children. Instead, research has shown that they would like online computer use and other activities to be well balanced."

The preliminary injunction proceedings will take place on Wednesday, 23 April 2008 at 14:00 in The Hague.

For more information on Unicaresoft Corporation, please see one of the following links.
http://www.unicaresoft.com/, http://www.benzoy.com

- - - ->END<- - - -

The India Street Verdict:

To quote Unicaresoft Corporation - "Carola, mother of three, designed a solution against excessive chatting and Internet use from her home and wanted to name the product MSNLOCK. The name derived from the idea behind the software - regulating the use of various chat programmes."

Even a lousy net novice would declare at first read, that the Product's name has more to do with restricting MSN or MSN related products and services, rather that Unicaresoft Corporation's intended explanation i.e. regulating the use of various chat programmes. Moreover by citing "Carola, mother of three", the Co. in question is caught off guard, trying to strike an emotional quotient from readers.

"Carola believes the case is not so much about the brand or domain name as it is about the product she developed. In fact, there are numerous examples of domain names that feature the abbreviation MSN in combination with other words. Considering the popularity of Windows Live Messenger and the income it generates through MSN-related advertising revenue, it seems that a product aimed at providing a solution for a large-scale social problem is being prevented from coming onto the market."

The India Street is uncertain as to what Yahoo or even GTalk has to opine on this front; they'd be off minding their own businesses. After all it's MSNLOCK and not YAHOOLOCK or GTALKLOCK, what say?

Either way Out

Since - "Faced with the threat of a lawsuit, Unicaresoft relinquished the product name MSNLOCK" - It's obvious that Microsoft Corporation is almost on way to win it's claim over the said brand/domain name.

So all you developers and entrepreneurs out there who refer to the "Van Dale dictionary", and think that "MSN messaging is sending messages through a messenger" need to find a much appropriate definition, if not, a very precise one.

The India Blog Celebrity Top 10

2008-04-21T18:32:00.000-07:00

The India blogging industry is still nascent with many still trying to reach a large audience. Unfortunately, India has been slow to adopt the internet with some estimates as low as 42,000,000 for both dial up and broadband. There are still some early blogger “celebrities” that are making an impact and we highlight them below using a five point criteria. In order to make the list, the blog subject matter needed to be primarily about India or related to India. We examined 100 India related blogs and scored them using the criteria in the table below:

The Criteria
1	Alexa Rank
2	Subscription Count
3	Google Page Rank
4	Technorati Authority & Buzz
5	Information Value (subjective)

Our number one India blog site ContentSutra is run by a Rafat Ali and is part of a larger network called PaidContent.org The company's news sites chronicle the economic evolution of digital content that is shaping the future of the media, information and entertainment industries. While the site takes much too long to load, its content is king and so by the way is its traffic - recording the highest website traffic in the group.

Number two on our list is VC Circle which chronicles India’s deal economy - venture capital, private equity, investment banking, mergers, acquisitions, corporate law, and entrepreneurship. VC Circle is run by Sahad P.V. (formerly of Business Today). If you want to keep tabs on Indian’s venture capital, private equity, mergers and acquisitions, investment banking space, then you need a subscription to his site.

At number three is a twenty two year old Indian blogger named Rajiv Dingra. If you’re looking for a tech savvy blogger with a sense of humor then turn to WatBlog. Dingra seems to have his finger on the pulse of India’s younger crowd and isn’t afraid to voice his opinion.

When Amit Varma founded the India Uncut site in December 2004, he thought the site would be an interesting hobby. The site quickly consumed most of his time and it paid off for him with ever increasing traffic. India Uncut checks in at Number 4 on our list.

Our Number 5 DesiPundit site lays its claim as India’s official opinions and observations daily site. Their motley crew of bloggers scattered across four continents and six time zones that keep the blog humming 24/7. They attempt to keep us informed of opinion India by linking to posts they find need a wider audience and discussion. According to the owner, “we are merely a reflection of the Indian blogosphere; we do not create content, we just link to it. Don’t be surprised if they come laced with our snarky and erudite comments though.”

The rest of our top 10 are listed below. These sites range from the ever more popular Trak.in which cleverly tracks technology and other India issues in an engaging way to the Indian Economy Blog which covers in depth India economic news and analysis.

Rank	Blog	Alexa	Subscription Count	Google Page Rank	India Tchnrti Buzz	Information Value
1	ContentSutra	42,574	8000 +/-	6/10	209	High
2	VC Circle	67,217	7123	5/10	133	High
3	WatBlog	76,904	NA	5/10	240	High
4	India Uncut	141,686	4029	4/10	406	Medium
5	DesiPundit	87,874	2550	3/10	317	Medium
6	Trak.in	65,344	1822	5/10	118	High
7	Pluggd.in	112,631	NA	5/10	168	High
8	The Indian Economy Blog	238.831	NA	5/10	184	High
9	Gautam Ghosh	377,812	1540	3/10	153	High
10	Startup Dunia	143,471	NA	4/10	81	High

Too Good to Miss

Unofficial Prime Minister Blog – Hilarious “unofficial” blog purportedly from Manhoman Singh. The writer has a great sense of humor and is willing to confront the powerful.

Rakesh Jhunjhunwala Blog – This spicy, no holds bar blogger throws punches at the biggest names in India. Ostensibly a secret journal of Jhunjhunwala, many think the site is run by a Mumbai insider who is getting ready to spill some real Dalal Street secrets.

India Inc. By Amit Agarwal – Arguably India’s most famous blogger, Amit did not make our list due to it being nearly impossible to distinguish his huge Digital Inspiration stats from his India Inc site.

Latest BIAL Update: Bangalore Airport Pictures

2008-04-21T15:45:00.000-07:00

I received an email from BIAL directly today. They asked me to post the latest pictures shown below. The new scheduled opening date for the airport is May 11, 2008. While some have been critical of the airport's design (which I don't share), my contention is with not providing high speed rail service to the airport from Bangalore CBD. Not having the rail will make the trip for any new arrivals difficult and long. As I have stated before, the roads in India are not smooth and make the ride excruciating for the uninitiated. Overall however, the new airport will give new business people entering Bangalore for the first time more confidence in the area and it signals that India is serious about rebuilding its infrastructure.

-----

The façade of the Terminal Building and pick up/drop off canopy

The baggage claim area looks very spacious, I’m quite certain we can now say goodbye to crowding around the belts

View of the 53 Check in counters, there will also be an additional 18 self check in kiosks for speedy check in. No more standing in winding queues, worrying about missing your flight

Parking facility to accommodate approximately 2000 cars and 700 employee cars, no hassles finding parking or getting stuck in a jam trying to get your vehicle out here!

Check out the plush Oberoi lounge, Illy café and the Kingfisher Sports Bar in the international section

View of the departure lounge and the departure concourse

Dabur Pharma: Is it undervalued?

2008-04-21T15:00:00.000-07:00

By Priya Nigam

“Consolidation” has been the name of the game across the world this year. The news so far in 2008 has been dotted by mergers and acquisitions. Despite the US credit crisis and the tight global financial situation, the value of M&A deals this year has surged passed the $1 trillion mark. Closer to home, however, the story has been different. In India, the value of M&A deals has plummeted almost 72% year-on-year. This is notwithstanding Tata Motors Ltd’s offer to take over Jaguar and Land Rover from Ford Motor Co.

Another interesting deal in the Indian market involves the offer to buy a 73.3% control of oncology major Dabur Pharma. The company has announced that its promoters (the Burman family) and certain other stockholders have agreed to sell their shares to Singapore-based Fresenius Kabi Pte Ltd for Rs76.50 per share. Fresenius Kabi is a 100% subsidiary of the $12 billion German healthcare group Fresenius SE. The deal, which costs the global giant Rs878.2 crore, values Dabur Pharma at about Rs1,198.8 crore. Regulatory approvals are still pending.

Following the sale of its non-oncology business for Rs159 crore last year, Dabur Pharma is now fully focused on oncology and has a presence in over 40 countries. The deal marks the Burman family’s exit from the oncology segment.

Now Fresenius Kabi has made a public offer to purchase another 20% stake in the Dabur Pharma. The price remains the same, at Rs76.50 per share in cash. What does this mean for shareholders? If you are holding Dabur Pharma shares, here are some points you should consider:

The offer price is not very much higher than what the shares were trading at prior to the announcement of the public offer.
Dabur Pharma has a healthy pipeline of drugs.
The company has about 12 ANDA (Abbreviated new drug application) filings in the US.
Dabur Pharma is a focused company.
It focuses on a high-margin segment.
There are only a handful of generic players in this segment.

The Economic Times quoted Dabur Pharma’s founder and director Anand Burman as having said in an excusive interview that the deal would “expedite the growth of the company.” Fresenius Kabi has announced that it has plans to invest around $70 million in expanding its activities in India.

The first three months of the year have been quite something for Dabur Pharma shares. They jumped to a high of more than Rs92 in January only to decline steadily to a notch above Rs48 in mid-March.

To me the offer price seems a little too low. After all, Dabur Pharma is a domestic major in an attractive segment and that too with a good management team and the prospect of some ANDAs materializing. I would really think twice before rushing into tendering shares for anything below Rs90.

Suggested reading:

MySpace India Launched; The Fizz Ain't In

2008-04-19T09:10:00.000-07:00

Guest Post By TechSadhu

Extending its business ties with the sub-continental nation Rupert Murdoch's Fox Interactive Media, a division of News Corp., made the company's online foray by launching yet another product. MySpace, a premier lifestyle portal for connecting with friends canoed through the quirky shores of Indian Social Networking arena, amidst much sea-side fanfare at the Taj Lands End, Mumbai, to officially launch the India edition of the website on April 17.

The Mumbai launch, followed by a rock concert event at the historic Land's End Amphitheater, had MySpace's Chief Operating Officer Amit Kapur and Managing Director of International Travis Katz flown in. As part of MySpace's rapid expansion which includes a network of 29 international territories; MySpace India would be a community designed for Indian users.

The launch comes on the heels of the recent MySpace Korea which was ushered, earlier this week, by CEO Chris DeWolfe and Travis Katz in Seoul.

"We're thrilled today to be launching MySpace in one of the world's most vibrant cultures," said Travis Katz, Managing Director of International for MySpace. "We will be providing the people of India the tools they need to live their lives online and empower them with a launch pad for Indian creators from developers, to musicians to filmmakers, to showcase their talents on the global stage."

"MySpace has become the largest and most dynamic social platform in the world and continues to be a leader in defining the emerging global social web," said Chief Operating Officer for MySpace, Amit Kapur. "We will continue driving innovation and creating forwarding-thinking business models that foster a more personal, portable, and collaborative Web as we continue to grow our international community."

Sources suggest that an alliance with Star TV, an India television network, for television program "Campus Star" is underway. News, that's making rounds, hints that on April 21, the MySpace Developer Platform team will be on-site in Bangalore to welcome local developers onto the open MySpace platform.

TechSadhu had first reported of the proposed MySpace India launch at - MySpace India launch on April 17th, Chris DeWolfe's attendance likely . Tech Sadhu Verdict:

Design
Now we know who'd hired the 1980's designer, who was all this while under hibernation. Cool! We've got a piece of history here. They need to work on the restoration, though.

Expansion: "As part of MySpace's rapid expansion a network of 29 international territories; MySpace India…."
Blah Blah Blah! Dude, you're telling me before this Launchy Business happened, Indians didn't knew what's MySpace is? Give me a Kit-Kat, and I'll get the Break!

MySpace India: "… a community designed for Indian users"
Hold on, hold on. You don't make communities designed for Indian users by placing Amitabh Bachchan videos on the homepage. I bet you can't have that Teacher's Profile, who gave me to write the whole chapter 50 times, for not doing my homework, while in School - Can you?

Namaste! Welcome to India, meet you at Orkut!

This article is brought to The India Street readers in association with TechSadhu: The Technically Noble Sadhu.

Samsung SGH-i450 review

2008-04-17T22:25:00.000-07:00

By Vipin Agnihotri

The design of Samsung SGH-i450 is truly a cross between the Nokia N81 and the N95. The i450 possesses enviable looks. A subtle theme of cool blue runs along the sides of the phone, sandwiched between off-white. The best part about this model is that there is no unnecessary sparkle, no useless ridges. With dimensions of 101 x 52 x 17.8 mm, the phone's not took bulky, and at 114g, it's not too heavy either.

The dual slide of Samsung SGH-i450 may not be original, but it works smoothly nevertheless, and appears quite sturdy too. A cool touch-sensitive navigation pad amidst the speakers gives you a much-needed cushion to use it while surfing your music folder. This latest model of Samsung runs on Symbian 60 series version 3.1.

The 2.4-inch screen boasts 240 x 320 pixels and isn't very reflective. The phone has 40MB of built-in memory, which can be extended using microSD cards. The i450 is a quad-band phone that supports 3G. The inbuilt browser is cool. Even better, the phone supports plenty of third party applications.

The external speakers provided with Samsung SGH-i450 certify that it's a music phone. The music player supports wma, mp3, aac, ogg and asf formats. It supports A2DP profile. The 2MP camera is very basic. The battery is decent if there's minimal usage. In case if you use the phone for browsing you will be left with very little battery. The phone costs Rs 13,250.

Rating: 7/10

Country Codes of the World on a Map

2008-04-17T18:09:00.000-07:00

Click Here to enlarge

I found this world map displaying the country codes displayed by size of population by country. The map would look much different if the actual internet users were displayed (India's .in would be much smaller). You can order a full size poster here.

India's Population to hit 1,111,111,111 before 08-08-08

2008-04-17T10:20:00.000-07:00

An interesting statistic for interesting times, India's population is about to reach a series of #1's. If that is an omen India is in for a good ride. I recently noticed this numeric anomaly when analyzing the Census Bureau's India Population Projection page. Ironically the World's population at (World POPClock Projection) is going to hit 6,666,666,666 by June 1, 2008 which means India will have exactly 1/6th of the world's population this quarter.

The numerologists must be having a field day with all of the numbers lining up this year. The last big numerology scare was 06/06/06 (June 6, 2006). Which we plowed through without any incidents, so don't expect much from all the 1's. Also, last year's 07/07/07 did not provide any additional luck to those in Macao or Las Vegas.

Of course the Census Bureau doesn't know the exact amount of people on the earth at one time and if you are tracking this religiously lighten up as it's just fun.

Does Ceat Ever Tyre?

2008-04-17T09:37:00.000-07:00

By Priya Nigam

All that glitters is not gold. Well, this idiom does not really fit Ceat Ltd. The company is celebrating its golden jubilee and is still shining!

Of course, the global surge in the prices of commodities and oil has had an impact on the flagship of RPG Enterprises. Ceat expects rising raw material prices to hurt margins, despite a hike in tyre prices. Rubber constitutes 60% of the cost of tyres and prices for this raw material have appreciated steadily over the past few months. Faced with soaring rubber prices and skyrocketing oil prices, the company has decided to increase tyre prices by 5%, with effect from April 18. Despite this move, higher raw material costs are expected to negatively impact margins by at least 100 basis points in the financial year ending March 31, 2009. While margins may contract, Ceat expects to be able to protect its overall profit through growth in volumes. Managing Director Paras Chowdhary has projected 20% volume growth for the year. Sales in the financial year ended March 2008 are expected to be Rs2,600 crore, taking the company’s profit to record levels.

The rise in raw material prices, albeit significant, has not deterred the company from planning a huge investment into facilities. Ceat plans to invest Rs900 crore in two plants over the upcoming two to three years. One of the plants is likely to be set up in Gujarat to manufacture truck radial tyres, and have a capacity of 120 tonnes per day. This would require an investment of Rs560 crore. The other plant would be a speciality tyre facility at Ambernath, near Mumbai, requiring an investment of Rs340 crore. Earlier plans were for an Rs800 crore investment, but with inflation at four-year highs, the plan has been revised upwards. While land sale in Mumbai is expected to contribute Rs130 crore towards the total investment, the remaining funds would be raised via internal accruals and debt. The tyre manufacturer plans to shift its entire facility at Bhandup to Ambernath, which would allow the company to lower its headcount by about 500 employees. The two facilities are expected to results in a 50% increase in capacity. Ceat also plans to invest heavily into setting up an R&D centre at the Ambernath facility.

Although the company faces a huge market opportunity, catering to the $4 billion Indian tyre market, it also faces significant competition from high-end tyre manufacturers as well as from low-cost manufacturers in China. Ceat is addressing these issues. Firstly, it exports to around 110 countries (last year exports contributed Rs500 crore in revenue). Secondly, it has initiatives in place to enhance its product mix by increasing the production of high-margin speciality tyres. Thirdly, the company is seeking a technology tie-up with a foreign partner for expanding in the radial technology arena.

While the company is taking steps to lower costs, enhance its product mix and boost its profitability, shares have plunged from their 52-week high of around Rs244. At these levels, I believe Ceat shares represent good value.

Inflation: Can They Kill the Beast?

2008-04-16T16:38:00.000-07:00

By Priya Nigam

The Earth seems to be burning up with the heat of inflation. High inflation is a global phenomenon, with world food prices skyrocketing 40% last year. Commodity prices have also soared. And India has not been spared. With the spiraling prices of grains, oils and metals, India's headline inflation jumped to 7.41% in late March, hitting a four-year high. Against this backdrop, the government’s attempts at duty cuts on imported products and export bans appear rather feeble. So, we are now faced with the possibility of the government resorting to more aggressive measures to cool inflation. What’s next in store?

Finance Minister Mr. P. Chidambaram warned that the government may have to undertake fiscal, monetary and supply-side measures to stem the rising prices. The Finance Minister urged individual states to take stringent steps to curb the hoarding of food items. Moreover, Mr. Chidambaram accused cement and steel manufacturers of “behaving like a cartel,” adding that the government “will not hesitate to take tough measures” to break the cartel. The Finance Minister also stated that it would consider sacrificing revenue to control prices. The stock market is already showing signs of worries over what the government will do to contain inflation.

There is widespread speculation of the RBI announcing another hike in the cash reserve ratio (CRR) at its upcoming policy meeting on April 29. The central bank, which was targeting inflation at near 5% for the fiscal year ended March 31, 2008, had raised the CRR by 50 basis points each time in June and October last year. The CRR, which is currently at 7.5%, is the percentage of deposits that banks have to maintain with the RBI. An increase in this ratio curbs liquidity, which in turn curtails inflation. The other weapon in the hands of the central bank is the short-term benchmark rates, which may be hiked to control inflation. A combination of the two tools is also a possibility.

The government should act fast. Having said that, I thought it prudent to add that there isn’t a great deal that the government can do. Inflation or prices are impacted by demand and supply. While demand can be controlled in various ways, the demand side does not seem to be the core of the problem. And there is not much that can be done to immediately increase supply. There is no easy solution. Amidst all this, what is clear, however, is that India's economic growth would bear the brunt of any measure to contain inflation.

The Top 10 India Real Estate Professionals that Matter

2008-04-16T14:51:00.000-07:00

We've extensively covered India real estate professionals here before, now we turn our sites to Professionals working outside of India that are involved in India Real Estate. The list only includes those that are non-Indian or NRI's that have been out of country for 5 years or more. We highlight those that are making India an easier place to invest, shedding more visibility in India and working with India focused groups to bring the world to India. The top 10 are in no particular order and come from many different industries.

1. Ron Somers President - US India Business Council (USIBC), Washington D.C.

According to one top India business leader Ron is, "one individual who is the primary link between the United States and India and is promoting open access, free trade, and is strengthening commercial relations between the two countries." Ron has known India for 20 years and has may strong ties to Indian community leaders. Ron was a resident of India for over 11 years and is fluent in Hindi and Urdu and even speaks a little Malayalam and Tamil. If you're looking for the bridge to India, Ron is your man.

2. Ashesh (Alex) Shah, Entrepreneur and Global Head - Trikona Trinity Capital, London, U.K.

Trikona's India fund was Tue first to be traded on the AIM stock exchange in the UK. Shah has been involved in many ventures outside of real estate including a start-up involved in creating one card to replace all of your loyalty cards. Why he made this list is that Shah specializes in raising funds for India infrastructure and real estate. He's had a successful record of achievement in this area, and is poised to become one of India's leading capital fund raisers.

3. David Jackson, Founder and CEO - Seeking Alpha, New York City, NY

David launched Seeking Alpha in early 2004. Seeking Alpha has since grown to be the top destination for stock market opinion and analysis on the Internet, and is widely read by finance professionals and serious individual investors. Seeking Alpha consistently tracks the best India investment content on the web and blogs and posts them on his site in an intuitive way. He's important because he is attracting more investor interest in India and providing the transparency India needs in order to provide foreign investor confidence in the future.

4. Mark Fidelman, Co-Founder and Vice President - The WIRE Group, Los Angeles, CA

Mr. Fidelman has worked in technology and real estate related ventures and worked at A.T. Kearney as a Director. Fidelman has been involved in India for the past four years and is one of India's biggest cheerleaders. He helped start one of India's first real estate funds focused on providing US quality commercial buildings in India. He is also one of the most well connected real estate professionals in the US rubbing shoulders with some of the biggest names in India real estate. His Rolodex of Global 3000 real estate executives allows him quick access to those moving or expanding into India. He's important because of his ability to connect aspiring India investors and Corporations to the right people.

5. Sanjay Bhatnagar , CEO - Thot Capital Group, New York, NY

Don't hold the fact that Sanjay was the former India head of Enron and its controversial attempt to bring power to India. Bhatnagar's THOT Capital Group is now active in green-field infrastructure development and asset buy-outs mainly focusing on energy and water sectors. He is a regular investor in India and has a lot of experience in both venture capital and infrastructure. He's important because of his work in Green infrastructure improvements and his connections to the green industry in India.

6. Ash Lilani, President, India and China - SVB Financial Group, San Francisco, CA

Ash Lilani is the president of India and China for SVB Financial Group as well as managing director of the company's India-focused investment fund, SVB India Capital Partners. Lilani is responsible for the strategic direction and management of the company's operations and real state pursuits in Asia. He is currently director and treasurer of the U.S.-India Venture Capital Association. Ash is important because of his myriad connections to companies in the US and India. Silicon Valley Bank is a very important business link to India.

7. Sant Singh Chatwal, Chairman and Chief Executive Officer - Hampshire Hotels & Resorts LLC

Currently Chatwal is building two Dream boutique hotel properties in India, one in Kochi on the west coast and another in south central Hyderabad. By 2012, Chatwal expects to have 10 Dream properties around India. He's a major fundraiser for the Democratic Party, including Hillary Clinton's presidential campaign and if she wins, he will have even greater influence in the coming years. Chatwal continues to proclaim his innocence in India and the US on numerous charges of ill-doing. He's important (really important if Hilary wins) due to his vast and powerful network of people in the US and India.

8. Jonathan Yap Neng Tong, CEO - India Funds, Ascendas and CEO of the Trustee-Manager of Ascendas India Trust, Singapore
Over his 15-year real estate career, Mr. Yap has held positions in fund management, investment management, asset management, development management, marketing, leasing, sale and valuation. He has worked in Singapore, India, Australia and Hong Kong. As some of you know, Ascendas created India's true international class buildings in Bangalore, India named ITPB or International Tech Park, Bangalore. Mr. Yap is important because he recognizes that quality construction in India matters and he's willing to spend more to create international quality commercial buildings.

9. Brian Guzman, Managing Partner - Indus Capital Partners, New York, NY

Brian Guzman is a Partner and General Counsel of Indus Capital Partners, LLC (“ICP”). Brian joined ICP in August 2005 as a Managing Director and Counsel. He operates in stealth mode but is well connected within the US. If you're looking to finance a real estate deal in India, Brian should be at the top of your list.

10. Tarun Jotwani - Managing Director - Lehman Brothers India, New York, NY

Tarun Jotwani serves as Chairman and Chief Executive Officer of India of Lehman Brothers Inc. Mr. Jotwani serves as Chief Executive Officer of India and co-head of fixed income for Europe of Lehman Brothers Holdings Inc. Jotwani is looking to raise Lehman's first dedicated India real estate fund this year and is looking to build a quality portfolio. If you're looking to sell quality projects in India or want a fantastic financial partner, then Jotwani is your man.

We'll keep the list updated over time and are interested in your comments. Do you disagree with above? Please let us know.

2008-04-14T21:04:00.000-07:00

Microsoft Surface coming to India?

The first commercial application for Surface can be found in the US at local AT&T stores. The video below shows how it is being used.

The big question is when will the Microsoft Surface arrive in India? I see a company like Reliance Communications being the first to use Surface in India due to the many applications and uses of the technology. Imagine a Reliance Communications using Surface to help non-tech-savvy villagers select the right mobile phone. Imagine Reliance Power using it to track power outages on a large surface screen instead of a smaller computer screen. Imagine a Reliance Health using it to review medical images. The options are endless.

According to Microsoft, it will manufacture the machine itself, and sell it initially to corporate customers the first being AT&T.

The company will sell the 'Microsoft Surface' for $5,000 (Rs 2,03,170) to $10,000 (Rs 4,06,400), but says it will bring prices down to consumer levels in three to five years, and introduce the surface in various shapes and forms.

Indian Oil Corp: Keeping the Lamp Burning

2008-04-14T10:54:00.000-07:00

By Priya Nigam

You can’t touch this! It’s not that I am a big fan of MC Hammer. But the song keeps playing in my mind every time I go out to buy something these days. Food prices have hit the roof, and inflation (currently at a three-year high of 7.41%) is definitely a cause for concern. Against this backdrop, it seems strange to mention that the blow has been softened by the government’s cap on fuel prices. In fact, fuel prices have been kept so low that refiners are unable to meet their costs. Take for instance, Indian Oil Corp (IOC), which is losing Rs320 crore on fuel sales every day! The state owned refiner said that if the current trend continues for more than a year, its projects would be in serious trouble.

While global crude prices surged almost 60% last year, India’s refiners were not allowed to raise fuel prices at all. The government agreed to a rise in fuel prices in February this year, marking the first hike since June 2006. Refiners receive bonds as compensation for their losses, but these are by no measure sufficient. Refiners cumulatively received Rs23,460 crore worth of bonds for the year ended March 31, 2008. This accounts for a little over 40% of the forgone revenues. IOC, along with Bharat Petroleum and Hindustan Petroleum, is seeking higher compensation from the government. IOC currently loses Rs10.78 a litre on petrol, Rs17.02 a litre on diesel, Rs316.06 per LPG cylinder and Rs25.23 a litre on kerosene.

The net sales of the nation's largest oil firm had risen in the three months ended December 31, 2007 to Rs58,571, from Rs51,905 recorded in the same period a year earlier. IOC had reported 17% growth in profit at Rs2,090 crore for the third quarter. The company’s profit from processing crude oil had more than doubled to $10.43 per barrel in the quarter, from $4.50 per barrel a year earlier. In comparison, IOC has indicated that it earned $7.7 per barrel from processing in the three months ended March 31, 2008.

IOC plans to invest Rs7,500 crore in refinery and pipeline projects in 2008-2009. This includes expanding and upgrading refineries in Gujarat, Panipat and Haldia. Moreover, its debt at the end of the previous financial year was Rs34,000 crore and the company expects its borrowings to rise to as much as Rs3,000 crore a month.

Bears have been ruling the roost in the stock market and shares of the company have been rather volatile. They surged from below Rs400 in October last year to Rs810 on December 31 and plummeted subsequently to Rs349 in late January. Trading around Rs450, I believe there is limited downside to the shares currently, even considering the uncertainties surrounding its outflow of cash.

Infosys Technologies: To Buy or Not to Buy

2008-04-12T14:09:00.000-07:00

By Priya Nigam

India’s IT services and BPO sector has burgeoned into a $40-billion industry, backed by a thriving US economy. The US contributes about 60% of the revenues for this industry and, with the US now struggling, there is widespread concern over how well this industry can manage to stay afloat. IT firms that export to the US have not only been hit by the downturn in demand, but also by the plummeting dollar. Bearish sentiments triggered by these factors have been maintaining constant pressure on the Sensex.

Infosys Technologies, India's second-largest exporter of software services, had reported slightly disappointing results for the seasonally weak third quarter. The market is now eagerly awaiting the fourth quarter results. The company has guided to revenues of between Rs4,477 crore and Rs4,501 crore for the quarter ended March 2008. This represents 4.8% - 5.4% growth. Market expectations are for a slightly higher 6% growth in revenues. The guidance for EPS is at Rs21.38, or 5.3% growth. In comparison, rival Tata Consultancy Services and Wipro are expected to report similar revenue growth, but lower net profit growth for the quarter.

Infosys will likely meet the market expectations for the fourth quarter. It would not be surprising, however, to see the company announce disappointing guidance for fiscal 2009. CNBC-TV18 quoted Bhavin Shah of JP Morgan as saying in an interview, “We think they (Infosys) will guide to somewhere around Rs91-92 per share (the current EPS is at Rs94.80) and anything above Rs90 is good enough in terms of expectations and where they are, it should not show any disappointment. We are expecting them to guide to about 17% EPS growth in rupee terms.” JP Morgan has a Rs1,875 price target for Infosys.

Investors are hard to impress these days and it would take a lot for Infosys to really amaze the market and witness a surge in its share price. This is because the market is overly cautious due to fears of a US recession as well as record inflation in the domestic market. Moreover, the company’s PEG has crossed 1, which is not a very good sign for investors.

Trading significantly below their 52-week high, the company’s shares are already feeling the heat. With the share price having declined by about 19% over the last three months, the market has already accounted for the challenging environment. So, it may seem that a good earnings report by Infosys will boost shares. However, I doubt this. Since the concerns that are exerting pressure on the shares are not company specific, even a good earnings report may not do much to push the stock higher. The stock market as a whole is likely to exhibit inflation-related concerns at least in the near term. This situation, however, creates a good opportunity (for the brave-hearted!) to buy the shares of a healthy company at a reasonably good price.

India to Remain Strong - Despite US Recession

2008-04-10T08:56:00.000-07:00

"The financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression," the IMF declared.

According to the IMF the global economy is quickly tanking. Don't believe the hyperbole though and examine the facts. "Economic growth in the United States is expected to slow to a crawl of just 0.5 percent this year, which would mark the worst pace in 17 years, when the country last suffered through a recession", the IMF said. Now folks that statement alone is misleading. A recession is two consecutive quarters of negative growth. While 0.5% growth is not spectacular, it's not negative growth, it's not a recession and it's not even close to a depression. Let's continue with the IMF statements.

"The United States will not fare much better next year (2009); the IMF projected the U.S. economy will grow by a feeble 0.6 percent in 2009, when measured by an annual average." First of all, no one, let me repeat no one can predict what is going to happen a year from now. I recommend you live by the motto, "plan for the worst hope for the best" because US growth is certainly not as strong as it was a few years ago, but tumbling into a recession? Maybe, and if the media had it their way the US economy will plunge right into the toilet. In fact, these things have a way of becoming self-fulfilling prophesies if all of us choose to listen.

The good news in the IMF report is that countries like China and India will remain strong despite a US recession. "Global powerhouse China, which barreled ahead at an 11.4 percent pace last year, would see growth moderate to 9.3 percent this year and then strengthen a bit to 9.5 percent next year. India, which grew by a blistering 9.2 percent last year, is expected to grow by 7.9 percent this year and 8 percent next year. Russia, which logged growth of 8.1 percent last year, will see growth moderate to 6.8 percent this year and then 6.3 percent next year.", the IMF report said.

7.9% growth is still fantastic growth and will propel India's economy upward and create additional jobs. As I have mentioned however, don't believe forecasts that are projecting to know what's going to happen beyond 6 months as their are millions of factors that effect an economy. Moreover, as many of us know, Americans are very innovative and take action when facing a crisis. The Fed has cut rates and the government is providing stimulus checks to its citizens to spend on goods and services. There are a lot more ideas and some are in the works.

As I led off this article, I quoted the IMF proclaiming this to be the worst financial disaster since the US depression. The facts today clearly don't support that assertion and you can bet someone is either trying to make a name for themselves by getting the media to pick up the quote, or financially profiting from the statement in other ways.

Suggested Reading

Social Networks for Investing - Make money?

2008-04-09T13:00:00.000-07:00

I've recently been part of a discussion around the social networking space and investing. In fact we have a very early Facebook application on hot or not stocks application that has drawn a lot of interest. We are finishing our version 2 fantasy stock picking application which will be ready by the first week in May.

The discussion has been around how social networks and investing can work together. As one reader has commented, "This is an interesting question - on a theoretical level, supporting open and transparent markets through a social netoworking flow of information would appear a laudable goal. However, aside the regulatory issues already raisedin other answers (and which are truly non-starters), there are a number of reasons why a single unified "ecosystem" of information is not likely to emerge anytime soon."

I am not an attorney but the regulators should not be getting involved in any peer to peer communication or investment decisions. My right to information from my network is my right and should not be regulated. Moreover, if I am simply measuring how my network responds to information in the public marketplace then how is that different than traders on the floor?

I think a social network play in the investment world will happen. It's a matter of defining an eco-system that works for all investment participants. It's also an eco-system that can level the playing field for te average investor that does not have the resources of the major investment houses. Also, one's network may have more actionable information at the ground level of a company (may be my network has a lot of employees at Oracle and I know they are selling due to issues with the company) then an analyst does at the big investment houses.

What are your thoughts?

Editor Musings - 25 Most signifcant India events

2008-04-07T10:27:00.000-07:00

I came across an amazing compilation of the 25 Most Significant Events in India (After Independence) at the Breaking news blog. It's a very good compilation but it misses a few key events that have forever changed India. First and foremost is Y2K. Y2K you ask? What is the significance of Y2K to India's post independence? Y2K was the catalyst for India's foray into providing BPO services to the US and the rest of the world. Without Y2K, India's ascension on the world stage would have been delayed by a decade or more. Y2K provided the opportunity for India to showcase its programming prowess and to get the Fortune 1000 to focus on cost reduction opportunities in India. Thereafter, India's economy and economic input have grown at an amazing 7-9% second only to China.

The 2nd event not mentioned in the compilation are the 2005 FDI reforms that allow foreigners to invest in India directly under certain conditions. The increase in FDI after the reforms were in place are tremendous and soon India will be seeing the fruits of this reform measure in the form of infrastructure improvements, Class A buildings, better retail and greater inflows of foreign tourists. The India Street has highlighted some of the economic events in this video.

Rajiv Gandhi International Airport, Shamshabad UPDATES

The airport has successfully completed 12 days of commercial operations and its highlights / performance are given as under:
The airport has handled around 2,30,000 passengers consisting of 36,000 international and 1,94,000 domestic passengers.
A total of 2944 ATMs (1472 landings and 1472 take offs) were handled.
Dr. A.P.J Abdul Kalam, Former President of India on his way to Delhi by a scheduled flight has spent few minutes in our terminal at Rajiv Gandhi International Airport. He was greeted by passengers and warmly welcomed by the Airport CEO, Mr. P.S Nair. Dr. Abdul Kalam appreciated the ambiance and commended the efforts of all the concerned in building the wonderful airport with world-class facilities.
Regarding King Fisher Airlines Cargo incident, Mr. S A Nambi, Asst. Commissioner, BCAS – Chennai and BCAS local representative are investigating the matter.

See our other Hyderabad Airport coverage

Hyderabad International Airport

In PICTURES: Hyderabad Shamshabad International Airport Begins Operations

New Chennai International Airport (Pictures)

Updated Picture of the New Chennai International Airport Terminal

New Kolkata International Airport High Resolution Pictures

Video: New Delhi International Airport Terminal 3

Updated Pictures of the New Delhi Indira Gandhi International Airport

The Green Movement Hypocrisy

2008-04-05T09:49:00.000-07:00

A friend of mine sent me the following email yesterday. I thought at first it was another fake email sent around the world to evoke an emotional response and get me to forward it to 5000 of my friends, but it turned out to be true! Please review it and see my comments at the end.

House #1

A 20-room mansion ( not including 8 bathrooms ) heated by
natural gas. Add on a pool ( and a pool house) and a separate guest house, all heated by gas. In one month this residence consumes more energy than the average American household does in a year. The average bill for electricity and natural gas runs over $2400. per month. In natural gas alone, this property consumes more than 20 times the national average for an American home. This house is not situated in a Northern or Midwestern "snow belt" area. It's in the South.

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House #2

Designed by an architecture professor at a leading national university. This house incorporates every "green" feature current home construction can provide. The house is 4,000 square feet ( 4 bedrooms ) and is nestled on a high prairie in the American southwest. A central closet in the house holds geothermal heat-pumps drawing ground water through pipes sunk 300 feet into the ground.

The water (usually 67 degrees F.) heats the house in the winter and cools it in the summer. The system uses no fossil fuels such as oil or natural gas and it consumes one-quarter the electricity required for a conventional heating/cooling system. Rainwater from the roof is collected and funneled into a 25,000-gallon underground cistern. Wastewater from showers, sinks and toilets goes into underground purifying tanks and then into the cistern. The collected water then irrigates the land surrounding the house. Surrounding flowers and shrubs native to the area enable the property to blend into the surrounding rural landscape.

~~~~~
HOUSE #1 is outside of Nashville , Tennessee ; it is the abode of the "environmentalist" Al Gore.

HOUSE #2 is on a ranch near Crawford , Texas; it is the residence of the President of the United States ,
George W. Bush.

An "inconvenient truth."

And, yes ... I DID check Snopes prior to posting it.

You can verify it at: http://www.snopes.com/politics/bush/house.asp

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Some of you may be surprised by above but in the real world, most politicians are in search of power first then money. Since Gore lost his bid for President he chose the green money path. Unfortunately, Gore seems not to practice what he preaches. As the leader of the Green movement, Gore's hypocrisy is akin to Mother Theresa not believing in God or Gandhi turning his back on the poor.

India Companies in The Global 2000

2008-04-03T08:32:00.000-07:00

Forbes released its annual list of the Global 2000 this week with a number of Indian companies on the list. The largest Indian company (Reliance Industries) checks in at #193. What's interesting is the top 8 out of 10 Indian companies are all "old industry" (steel, utilities, oil and gas), with only two communication comapnies representing New India. I suspect this will change in 5 years, but for now the old industries still rule.

Global 2000 table (Top Indian companies shown)

Rank	Company	Country	Industry	Sales ($bil)	Profits ($bil)	Assets ($bil)	Market Value ($bil)
193	Reliance Industries	India	Oil & Gas Operations	26.07	2.79	30.67	89.29
198	Oil & Natural Gas	India	Oil & Gas Operations	18.90	4.11	33.79	54.11
219	State Bank of India Group	India	Banking	15.77	1.47	188.56	33.29
303	Indian Oil	India	Oil & Gas Operations	42.68	1.82	25.39	16.36
374	Icici Bank	India	Banking	9.84	0.64	91.07	29.85
411	NTPC	India	Utilities	7.84	1.60	20.34	41.57
647	Steel Authority of India	India	Materials	7.88	1.45	8.05	26.37
738	Tata Steel	India	Materials	5.83	0.97	11.48	14.63
826	Bharti Airtel	India	Telecommunications Services	4.26	0.94	6.61	39.16
846	Reliance Communications	India	Telecommunications Services	3.13	0.65	13.08	29.63
927	Tata Consultancy Svcs	India	Software & Services	4.32	0.97	3.03	21.38
949	HDFC-Housing Devel	India	Banking	1.49	0.40	16.97	19.07
961	Larsen & Toubro	India	Capital Goods	4.68	0.52	5.72	24.94
967	Bharat Petroleum	India	Oil & Gas Operations	22.77	0.50	8.67	4.16
1012	Bharat Heavy Electricals	India	Capital Goods	3.99	0.56	5.17	27.92
1040	Infosys Technologies	India	Software & Services	3.21	0.89	3.08	22.09
1093	HDFC Bank	India	Banking	1.96	0.27	21.09	12.87
1102	Wipro	India	Software & Services	3.47	0.68	3.26	15.87
1111	Tata Motors	India	Capital Goods	7.27	0.50	5.77	6.75

To see the entire India Forbes list click here

Maruti Suzuki: Still in the Race

2008-04-02T08:27:00.000-07:00

By Priya Nigam

I guess we all have certain childhood memories that stick with us through the years. Mine is of my 6-feet-4-inches uncle trying (with great difficulty and a lot of help from relatives!) to get out of a Maruti 800. We were still in the era when “having choice” meant we could choose between an Ambassador and a Fiat. This was the first time we laid eyes on a Maruti 800 and my (adventurous) uncle had somehow managed to squeeze himself in. However, getting out was another story and we feared he would have to live in it forever!

Japan's Suzuki Motor Corp took the Indian market by storm and the cars quickly became extremely popular. But soon, stiff competition came knocking on the door. Sales of Maruti Suzuki India Ltd, which is mainly owned by its Japanese parent, fell to 64,421 units in March 2008, from 64,556 units in the same month last year. Total sales for the month dipped 2.1% year-on-year to 70,296 vehicles, with exports plummeting 19% to 5,875 vehicles. This decline came despite price cuts on small cars, following the latest Budget’s 4% excise duty reduction.

While Maruti Suzuki suffered a decline, India's second-largest car manufacturer, Hyundai Motor India Ltd (HMIL), recorded a 52% jump in sales to 29,401 units in March, and its total sales surged 66.4% to 47,001 vehicles. India's largest vehicle maker Tata Motors Ltd also disappointed, with a 4% decline in sales to 24,737 units, resulting from Indica sales slumping 14.7%.

Although the March figures were dismal, Maruti Suzuki has been doing well. For the year 2007-2008, the company reported record high annual sales of 7,64,842 vehicles, representing a more than 13% rise from the 6,74,924 units sold in the previous fiscal. Domestic sales of the country's largest carmaker climbed 12% in the year to 7,11,818 vehicles, while exports jumped 40% to 53,024 units. While sales of the Maruti 800 slid, growth was led by the A2 (Alto, Zen Estillo, Wagon-R, Swift) and A3 (SX4, Swift Dzire) segments. The company launched Swift Dzire in the A3 segment earlier last month, and its upcoming models include Suzuki Splash and Suzuki A-Star.

Now Maruti Suzuki has plans to invest Rs2,500 crore to triple the annual capacity at its plant in Manesar by the end of October. The company had earlier decided to hike its overall capacity in India to 10,00,000 units by 2010. Plans have been expedited and it now hopes to be able to take its overall installed capacity in India to more than 9,00,000 units by the end of October. Despite the performance and plans, Maruti Suzuki shares have been on a downturn since October last year, when they crossed the Rs1,200 mark.

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VIDEO: New Hyderabad Airport Opens!

2008-03-31T19:57:00.000-07:00

Someone has already created a video of the new airport opening. Finally, India has a new world class airport. See the Video Below

In PICTURES: Hyderabad Shamshabad International Airport Begins Operations

2008-03-31T19:49:00.000-07:00

The new Hyderabad International Airport which began its operations early Sunday, has handled 93,000 passengers in the past five days. The new airport, with world-class facilities, handled around 15,000 international and 78,000 domestic passengers till March 27. “Thus the airport is handling an average of 18,500 passengers per day,” said a statement by GMR Hyderabad International Airport Ltd (GHIAL) here Friday.

Most people travelling to the new international airport at Shamshabad prefer the route connecting High Court and Zoo Park as it helps them save six to seven kilometres. The route helps them reach the airport faster when compared to roads connecting Attapur-Rajendranagar or Chandrayangutta.

Most of the cabs are also taking the High Court-Zoo Park route to reach Aramghar, particularly before the peak hours from 8 am to 10 pm. Interestingly, the route has been consistently ignored by authorities for long. No repairs or improvements have been carried out though it is witnessing much traffic now. Between Zoo Park and the National Police Academy, the condition of the road is really pathetic. There are huge potholes as the road had been dug up for laying pipelines. The condition of the road is also bad between Petlaburz and Lal Darwaz.

On the positive side, there are four petrol stations in the five-km stretch and several motor workshops. "I used this route and it fell short by seven km," said Mr Janganna, driver of the DAV School, who went to the airport to pick up his boss.

(Pictures courtesy of user Hindustani, Jagan, Barrykul, and Indrajal.com)

Front View from inside Terminal

View from outside the Hyderabad Airport on Rainy Day

International Terminal View

View of the Arrivals and Departures Decks

Road to airport

Ticketing Counter

The Bears in Action – Why is the Indian Stock Market Down?

2008-03-31T13:47:00.000-07:00

By Priya Nigam

The sun has not been shining too brightly on Dalal Street recently. Monday witnessed a sharp downturn in shares, with broad-based selling. Heavyweights, like ICICI Bank Ltd, Reliance Industries Ltd, Infosys Technologies Ltd and Punj Lloyd Ltd, slid. This was not simply Monday blues! So, what is impacting the Indian share market?

Exports hit – The rupee rallied 12.3% in 2007, hurting the country’s exports. Growth in India's goods exports decelerated to 17.7% a month last year, from 21.2% in 2006. Exports have not only been hurt by the strong rupee, but also by the slowdown in the US, which is a huge market for India’s exporters. [A ray of hope comes from a CII (Confederation of Indian Industry) survey of CEOs, according to which India’s merchandise exports are expected to hit $200 billion in 2008-2009, representing an annual 30% jump.]

Weak domestic demand – The culprit is inflation. A surge in food, fuel and metal prices have pushed India’s inflation to alarmingly high levels. Inflation galloped to a 13-month high of 6.7% for the week ended March 15.

Interest rates – In the face of high inflation, it is unlikely that the central bank will cut interest rates. With no cut in interest rates, the rupee may appreciate further.

Economic growth versus inflation - Mr P. Chidambaram has already indicated (without mincing his words) that some growth may have to be sacrificed in order to contain inflation. The Finance Minister stated, “The Government is determined to take all steps - fiscal, monetary and supply side - to moderate inflation. If that means, we have to live with slightly lesser growth, so be it.”

The ICAI impact – The Institute of Chartered Accountants of India has issued an Accounting Standard, AS 30-Financial Instruments, detailing methods for accounting for derivatives. The ICAI has urged companies to reveal their mark to market (MTM) losses of all outstanding foreign currency derivative contracts for the fiscal year ending March 31, 2008. Currently, there is no regulatory requirement for companies to disclose their financial derivatives position. So, the ICAI guidelines have brought in a lot of apprehension about the upcoming reporting season. While the ICAI impact is positive, investors may still not be ready to deal with a clear perspective into the magnitude of MTM losses on the balance sheets of various companies. What a lot of investors may not understand is that MTM losses are not necessarily going to be booked or incurred by the companies.

Negative global cues – Market sentiment is negative, with limited good news about the global economy. Weakness in the US stock market, following heightened concerns over consumer spending, has caused Asian and European markets to tumble.

Suggested reading:

Highest paid CEOs of India

2008-03-31T10:36:00.000-07:00

By Vipin Agnihotri

The India Street is back again with some interesting information for their readers. This time around, we are going to give you the list of highest paid CEOs of India. Take a look.

Mukesh Ambani-

With a package of Rs 24.51 crore, on top of the ladder is Mukesh Ambani. In the last fiscal ended March 2007, Mukesh Ambani took home a total Rs 24.51 crore as chairman and managing director of Reliance Industries Limited.

Kalanidhi Maran & Kavery Kalanidhi

The annual remuneration of Sun TV chairman and managing director Kalanidhi Maran and joint managing director Kavery Kalanidhi stood at Rs 23.26 crore each in 2006-07.

Sunil Bharti Mittal-

Bharti Airtel's chairman and managing director Sunil Bharti Mittal has an annual pay packet of close to Rs 15 crore.

K Anji Reddy-

Dr Reddy's Laboratories executive chairman K Anji Reddy has an annual compensation package of Rs 14.4 crore.

Brijmohan Lal Munjal & Pawan Munjal

Hero Honda's chairman Brijmohan Lal Munjal and the company's managing director and chief executive Pawan Munjal annual salaries is Rs 13.99 crore and Rs 13.88 crore respectively.

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Will India Escape the Global Slowdown?

2008-03-27T19:57:00.000-07:00

By Priya Nigam

As a child, I was quite fascinated by the supposed habit of ostriches burying their heads in the sand, believing they were protected from any danger. (To my great disappointment, I later learnt that this was a myth!) Anyhow, it seems like I have been somewhat of an ostrich myself lately. Talks of the US slowdown turned to recessionary fears and I thought this would not really impact India’s growth momentum. Speculations of a global slowdown were also not enough to dampen my bullishness about India’s prospects. But, Mr. P Chidambaram’s latest comments shook me out of my euphoria.

India’s Finance Minister said during a speech at the Lee Kuan Yew School of Public Policy in Singapore on Wednesday that the nation’s ability to sustain record growth may be affected by a slowdown in the global economy. India’s exports have been under pressure for some time now, with the US being one of the most important markets and the greenback having plummeted against the rupee. Exports are not the only area that is affected. Given the clear signs of a slowdown in the world economy, global investors are being dissuaded from making investments in developing countries, Mr. Chidambaram explained. Global investors are adopting a “wait and watch” policy, deferring their plans to invest in India.

At a little over $900 billion, India is Asia's third-largest economy. The country has been able to sustain high GDP growth over the past five years. The Finance Minister said India’s economic growth is likely to be close to 9% in the fiscal year ending March 31, 2008. “Global slowdown, rising inflation and subdued interest in investment make for a combination that can have only negative consequences for developing countries,” the Finance Minister said.

Meanwhile, Citigroup has cut its forecast for India's 2008 economic growth to 7.7%, from its earlier projection of 8.3%. Citing the “recent rapid deterioration in economic and financial conditions” in the US, Citigroup trimmed Asia's economic growth outlook for the year from 8.2% to 7.6%. JPMorgan has cut its forecast for India's economic growth in the fiscal year starting April 1 to 7%, from its earlier projection of 7.5%. This would mark India’s slowest growth rate in six years.

Any slowdown in economic growth would have a direct impact on the already-troubled stock markets. India is facing high food prices, rising commodity prices and soaring oil prices. Against this backdrop, there is unlikely to be any rate cut announcement. Moreover, India's industrial production figures were unsupportive. The stock market should definitely see significant volatility in the upcoming weeks.

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Profile of Lakshmi Mittal

2008-03-27T19:53:00.000-07:00

By Vipin Agnihotri

Age: 57
Fortune: inherited and growing
Source: steel
Net Worth: $45.0 billion
Country Of Citizenship: India
Residence: London, United Kingdom, Europe & Russia
Industry: Manufacturing
Marital Status: married, 2 children
Education: St Xavier's College Calcutta, Bachelor of Arts / Science

Lakshmi Mittal is the President of the Board of Directors and CEO of ArcelorMittal, widely been regarded as the world's biggest producer of steel, with assets in France, Belgium, Romania, Bosnia-Herzegovina, South Africa, Poland, Czech Republic, Indonesia, Kazakhstan, Canada, Bulgaria, United States, Trinidad, Brazil and Mexico. Recently, Forbes Magazine has declared Lakshmi Mittal as the fourth wealthiest person in the world ahead of Mukesh Ambani and Anil Ambani.

Lakshmi Mittal started his career working in the family’s steel making business in India, and has more than 30 years of experience working in steel and related industries. The main specialty of Mittal is that he has mastered the development of integrated mini-mills and the use of Direct Reduced Iron as a scrap substitute for steel making.

Lakshmi Mittal was awarded “Steel maker of the Year” in 1996 by New Steel in the USA. Furthermore, he was given “Willy Korf Steel Vision Award” in June 1998, for outstanding vision, entrepreneurship, leadership and success in global steel development from American Metal Market.

Following the creation of Arcelor Mittal, the world’s number one steel company, Lakshmi Mittal was awarded “Business Person of 2006” by the Sunday Times’, “International Newsmaker of the Year 2006” by Time Magazine and “Person of the Year 2006” by the Financial Times for his outstanding business achievements. In January last year, Mittal was presented with a Fellowship from King’s College London; their highest award. At present, he is interested in purchasing failing Bulgarian steel-maker Kremikovtzi, which has been owned since 2005 by his brother Pramod Mittal.

Suggested reading:

Top 3 dirtiest Asian cities

2008-03-27T19:51:00.000-07:00

By Vipin Agnihotri

Despite gaining so much in the recent years, it’s a matter of shame that when The India Street decided to come up with top 3 dirtiest Asian cities, two comes from India, namely, Mumbai and New Delhi. In my opinion, Dhaka is the dirtiest Asian city followed by Mumbai and New Delhi.

Dhaka, Bangladesh-

Located in southern Asia, between Burma and India, Dhaka, the capital of Bangladesh battles with the constant threat of water pollution. Point to be noted here is that surface water is often thick with disease and pollutants from the use of commercial pesticides. With an estimated 150 million people living in a relatively small area, cleaning up the problem is real tough.

Mumbai, India-

Indian government has to work quite hard if they want to transform Mumbai back into a burgeoning metropolis. A recent private-sector report, Vision Mumbai, proposed changes in infrastructure, pollution control and economic growth strategy, which contributed to the seeking of approximately $1 billion of aid from Indian government.

New Delhi, India-

You'll find just about everything except marine life in New Delhi's Yamuna River. As a matter of fact, garbage and sewage flow freely, creating a rich environment for the growth of water-borne diseases contributing to extremely high rates of infant morbidity.

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Welspun Gujarat is proving its mettle

2008-03-25T10:13:00.000-07:00

By Priya Nigam

Companies across the globe are struggling with high raw material prices. With steel prices skyrocketing, it has become imperative for companies manufacturing steel products to capitalize on global demand opportunities. One company that is proving its mettle is Welspun Gujarat Stahl Rohren Limited (WGSRL).

The youngest member of the Welspun group has bagged an order worth Rs1,075 crore for the supply of spiral pipes in Northern Africa (Algerian market). The latest order comes in the wake of last month’s announcement of pipeline orders worth Rs120 crores for the supply of ERW line pipes in Southern Europe. These orders are extremely well timed for Welspun Gujarat, which has been investing in capacity expansion. Welspun Gujarat, which currently has an annual capacity of about 1 million tonnes, may be able to produce approximately 1.75 million tonnes every year after it is through with its expansion plans.

Welspun Gujarat won the Northern African order against stiff competition from European companies and this order will take the Mumbai-based company’s order book position to more than Rs5,900 crore. The order can be executed over 17 months, which offers Welspun Gujarat greater operational freedom.

The export market has been a significant source of revenues both for the Welspun Group and for Welspun Gujarat. Welspun Gujarat has strong ties (preferred vendor status) with several major oil and gas companies across the globe.

The company has not been able to make its presence felt in countries like the US and those in West Asia. The latest order win marks Welspun Gujarat’s expansion in a newer market. With Europe feeling the heat of the US slowdown, this development is of greater significance. The company is likely to face robust demand in the global market, with oil and gas companies spending more and more on exploration and production (E&P) activities. Welspun Gujarat maintains a conservative foreign exchange policy.

The company’s net profits surged 136% to Rs97.40 crore in the quarter ended December 2007. Its revenues climbed 39% to Rs1036.40 crore. Over the past few years, Welspun Gujarat has been able to achieve high realisations. However, its margins certainly remain an area of concern, in view of the rising steel prices.

If you are an investor with a long-term horizon, Welspun Gujarat could prove to be a good bet. I guess the company’s stock deserves to trade at the premium that it does to its peers like JSW Steel. Compared to its peers, it has:

1. Greater geographic diversification – This is good for any company, since it protects a company from a downturn in any particular economy.

2. Greater presence in the export market – This is beneficial since the export market affords higher margins than the domestic market.

3. A wider product mix with a focus on niche products.

4. Capacity expansion initiatives – While other companies are dealing with capacity constraints, Welspun Gujarat has plans to almost double its annual production capacity. This would position the company to capitalize on rising global demand.

5. Better growth prospects - Welspun Gujarat’s order book position underlines the company’s growth prospects.

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Indians are the world's top remitters

2008-03-25T10:10:00.000-07:00

By Vipin Agnihotri

It’s official; Indians are the world’s top remitters. According to latest World Bank report, India received a whopping $27 billion in remittances, beating the likes of China and Mexico. Point to be noted here is that the inward remittances to India has more than doubled from about $12.89 billion in 2000 to $27 billion in 2007.

It is worth mentioning in this regard that in 2006, inward remittances were $25.43 billion, while the outward flow constituted around $1.58 billion. The top five recipients of remittances in 2007 were India ($27 billion), China ($25.7 billion), Mexico ($25 billion), the Philippines ($17 billion), and France ($12.5 billion).

In my opinion, majority of the remittances happen by traditional channels such as Western Union and Moneygram. Online money transfer has also gained momentum in India with the increasing reach of the Internet. The pivotal factor here is that remittances can come in real handy during disasters or emergencies.

It has been noticed that rich countries are still the main source of remittances with the United States heading the list. Most of the experts feel that the recent effort to stop funding of terrorist organizations has had a negative impact on the sending of remittances.

Remittance can be termed as the sum of money paid to someone at a distance. On the other hand, a 'remittance transfer' refers to the transfer of money from an individual, normally a person who has emigrated from her city or country of origin, to another individual, normally a relative who remains at home.

Generally speaking, remittance transfers are basically person-to-person payments and of low monetary value. Two basic categories of remittance transfers are domestic and international. The World Bank and the Bank for International Settlements have developed international standards for remittance services.

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Invest in longer-term bond instruments as lending rates dips in India

2008-03-24T10:20:00.000-07:00

By Vipin Agnihotri

Number of public and private sector banks in India has recently lower their lending rates for consumer borrowings. In my opinion, such a scenario gives investors who have invested in longer-term bond instruments a much-needed opportunity to make decent gains on their investments.

Point to be noted here is that even if Reserve Bank of India holds rates steady, as it is pretty much expected to do, given the increasing rate of inflation, they will still stand to make a neat packet. The pivotal factor here is that even if the inflation rate increases to 5 per cent, from about 4.07 per cent now, there will be enough liquidity in the system to keep growth on track.

As bond fund managers is all set to take a call on the interest rate movements and come up with a portfolio on the basis of their assessment, interest rates is going to play a pivotal role in determining the composition of paper in their funds. In the last two or three months, as interest rates have tended to harden, fund managers are focusing more on longer term bonds, essentially ones that mature in five, 10 or 15 years.

Generally speaking, bonds are of two types, namely, short-term and long-term. It is worth mentioning in this regard that the bonds with higher tenures always have coupon rates that progressively increase. On the other side of the coin, bonds with a maturity of 10 or more years have higher coupon rates to signify the uncertainty of the future as well as the risk of inflation.

The other significant factor on bond price is inflation. When the inflation rate dips bond prices rise even as coupon rates fall. In case if the inflation rate rises, the income from bonds will fail to compensate for the loss of buying power. It has been noticed that exchange rates also affect bond prices, as do international interest rates. In my opinion, money tends to get arbitraged between countries. Big institutions tend to make much of currency arbitrage, borrowing at one rate, earning interest at a higher rate

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Top 3 richest women in the world

2008-03-24T10:19:00.000-07:00

By Vipin Agnihotri

The India Street is back once again with an interesting bit of information for their readers. Do you know top 3 richest women in the world? If you don’t, take a look.

Liliane Bettencourt

With a wealth of $22.9 billion, Liliane Bettencourt is the world's richest woman. Bettencourt has a controlling stake of 27 per cent in L'Oreal since four decades. From what I have gathered, she prefers to be away from public attention. Her main objective is to assist and support projects in the medical and humanitarian areas. Liliane is also the second richest person in France.

Christy Ruth Walton

With a wealth of $19.2 billion, Christy Ruth Walton is the second richest woman in the world. According to Forbes, she is also the world's 26 richest person. Christy Ruth Walton, the wife of late John T Walton inherited his fortune of $15.7 billion after John’s death in a plane crash. Wal-Mart at this moment of time is the world's biggest retailer, with 6,500 stores in 15 countries and 1.8 million employees.

Alice Walton-

Alice Louise Walton, the Wal-Mart heiress is the third richest woman in the world. Daughter of Wal-Mart founder Sam Walton and Helen Walton, Alice has an estimated net worth of about $19 billion. According to media reports, she was the 20th biggest individual contributor to 527 committees in the US presidential election in 2004. Alice loves art; she once paid $35 million for a painting.

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Hyderabad International Airport: Some important information

2008-03-24T10:17:00.000-07:00

By Vipin Agnihotri

Bad news for International passengers as they have to pay $ 28 as user development fee when the new Hyderabad International Airport start operation. According to sources, user development fee will be collected by the airlines and given to Hyderabad International Airport Ltd (HIAL). HIAL on his part would pass on this fee to the Indian Government.
Although, there is no change in landing and parking charges at the new Hyderabad International Airport but the issue of ground-handling charges are bothering low-cost airlines quite a bit. I have a talk with few of them and they are fearful that the cost of operations would go up significantly. Ground handling includes cabin service and replenishment of catering requirements. I have full-proof information that majority of the private airlines, including domestic and international carriers, are yet to enter into an agreement with the new airport's two ground handlers, namely, Menzies Aviation & Bobba and the consortium of Singapore Airport Terminal Services, Air India and Indian Airlines.
The real issue with the new airport in Hyderabad is neither the distance nor the higher costs. In my opinion, it’s the abysmal condition of the roads that connect the new airports to the city.
According to sources, the airport management has organized bus service from four different points in the city and passengers can use the service to reach the airport. This is commendable. Moment passenger gets into the bus he is at the airport. If there is a traffic jam, it's no more his problem. It’s the responsibility of airport management to make sure that they bring the passenger to the terminal on time.

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New Chennai International Airport (Pictures)

Updated Picture of the New Chennai International Airport Terminal

New Kolkata International Airport High Resolution Pictures

Video: New Delhi International Airport Terminal 3

Updated Pictures of the New Delhi Indira Gandhi International Airport

US sub-prime crisis comes too close to home

2008-03-18T20:41:00.000-07:00

By Priya Nigam

The weekend gone by witnessed the collapse of Bear Stearns in a shocking deal in which the 85-year-old US-based investment bank was bought for only one third its IPO price in 1985. The US Federal Reserve cut interest rates in a meek attempt to restore confidence in the financial markets. This led to widespread speculations of global funds pulling out their local share holdings. The panic-struck Sensex plummeted in the face of intensifying global fears. And the rupee plunged to a six-month low.

While we are still trying to digest this, Mr P Chidambaram claims that the impact of the US sub-prime mortgage crisis on India has been moderate. He noted that none of the state-run banks have any direct exposure to the sub-prime mortgage market.

So, what does the sub-prime crisis mean? Banks in the US had offered loans to a number of domestic "sub-prime" borrowers (or borrowers with low repaying power). Then the housing bubble burst and the US economy began to decelerate. The sub-prime borrowers started to default (not pay back their loans) and banks were forced to write-off such loans. The US sub-prime crisis has so far caused the world’s 45 biggest banks to declare losses of around $181 billion.

So, on one hand we have the Finance Minister saying that the impact of the US sub-prime crisis on India “is second order impact and a moderate impact.” On the other hand, we have ICICI Bank reeling under the sub-prime pressure. India's largest private bank is faced with a loss of Rs1,056 crores till January 2008. ICICI did not have exposure to the US sub-prime market. Its profits were hurt by depreciation in the value of securities it bought in the international markets. The sub-prime crisis led to a rise in global interest rates, which in turn caused a decline in the value of securities, leaving ICICI with the task of making up the difference from its profits. While ICICI’s loss may seem small compared to what US banks have aggregated, it is a huge amount for India.

What I must point out here is that these losses have not yet been “incurred,” since ICICI has not sold these securities. The bank did mention, however, that the investment losses resulting from the sub-prime crisis could eliminate approximately 9% of its profits this year.

AOL India News quoted analysts as saying that other Indian banks with exposure to credit derivatives include the country’s largest bank, the State Bank of India (SBI) - Rs4,000 crores, Bank of India - Rs1,200 crores and Bank of Baroda - Rs600 crores. Applying the same rate as ICICI’s 7.6% to the exposure of these government-run banks, we have a loss of Rs704 crores for SBI, Rs211 crores for Bank of India and Rs108 crores for Bank of Baroda.

Hope seems to be pinned on the US government’s latest measures to curb the economic slowdown. Are we behaving like Ostriches… burying our heads in the sand and believing there is no danger? Or will India get through this relatively unscathed?

Suggested reading:

HDFC not impacted by slowdown in mortgage market

2008-03-18T20:38:00.000-07:00

By Vipin Agnihotri

Slowdown in the mortgage market has not impacted HDFC, as their growth rates have not been affected at all. The third quarter result of the company clearly proves this point. During this period, HDFC excelled on most parameters, delivering strong top line and bottom-line growth.

As a matter of fact, loan portfolio of HDFC expanded 27 per cent over the previous corresponding quarter, it gained market share and spreads expanded 12 bps to 2.3 per cent. What’s more, its disbursements grew 30 per cent and net interest income was up 62 per cent.

In my opinion, HDFC has beaten its nearest competitors, posting growth rates of over 25 per cent in disbursements. The main reason behind all this is that the goals are clearly laid down by the HDFC management. It is worth mentioning in this regard that there is a four-pronged thrust—growing approvals and disbursements between 20 per cent and 25 per cent, increasing RoE by a percentage point annually, ensuring consistent reduction in the cost-income ratio, and keeping gross NPA levels at less than 1 per cent. So far, HDFC have been able to meet these targets consistently.

According to company sources, HDFC are catering to end-users; 95 per cent of their retail loans are to this class of buyers. It has been noticed that HDFC don’t encourage lending to investors and speculators. In my opinion, this strategy has yielded it rich dividends, as its typical borrower is a first time homebuyer looking for self-occupation.

Point to be noted here is that HDFC’s housing loan portfolio is dominated by individual loans, which by the way makes up 67 per cent of its disbursals. In terms of figures, in the third quarter of 2007-08, non-individual loans grew 39 per cent, on the other hand retail individual lending moderated to 22 per cent.

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Rupee loosing aura of invincibility

2008-03-18T20:35:00.000-07:00

By Vipin Agnihotri

In my opinion, rupee has lost some of the aura of invincibility that surrounded it over the last 15 months. According to my estimations, between the end of January and the second week of February, rupee has shed around 3 per cent of its value against the dollar.

Interestingly, this period has seen tremendous major shift in market perceptions. For example, traders are reconciling to the prospect of medium-term decline in the exchange rate. Generally speaking, depreciation is a shot in the arm for beleaguered exporters. I have a talk with some financial experts and they were of the view that the economic cost of sharp depreciation in the present global environment will outweigh the advantages.

Point to be noted here is that an appreciating currency more or less act as a shield against "imported" inflation arising from high global commodity prices. In my opinion, domestic inflation has increased due to a combination of local price impulses and global pressures.

The question now arises: Will rupee depreciate any further? The answer of this question will solely depend on how the global risk environment pans out. Carry trades will also be an important factor. It has been noticed that investors are borrowing cheap in low-interest markets such as Japan and investing in higher-yielding assets such as Indian stocks. You may not believe at first but its 100 per cent correct that more than 40 per cent of incremental flows into India last year came from carry trades.

According to official SEBI data, FIIs actually bought a net amount of $773 million between January 1 and February 10. The pivotal factor here is that FIIs is more or less turning into net sellers, dumping Indian stocks and rushing to safe havens such as US treasury market.

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Is there an alchemist in the house?

2008-03-15T13:58:00.000-07:00

By Priya Nigam

East is East, and West is West, and never the twain shall meet. Well, that’s what Rudyard Kipling said. Unfortunately, the “slowdown” monster emanating from the West seems to be digging its fangs into the Indian economy. It wasn’t too long ago when all we seemed to be talking about was the Indian stock market boom and the bright prospects of Asia's third-largest economy. Now, the stock market and the economy are unable to keep pace with expectations. And there is talk of a sharp slowdown in the Indian economy in the coming year.

Moody's Economy.com said India's industrial production (IIP) rose only 5.3% in January. This not only represents a slowdown from the year-ago levels of 11.6%, but also a downturn from December’s 7.7% growth. Moreover, the growth recorded in January 2008 was lower than expected. Compared to December, industrial output was down 1.5%. Following aggressive monetary tightening (nine interest rate hikes since 2004), borrowing costs are now close to the highest they have been in a decade. This has dampened the domestic demand for goods that are sensitive to interest rates. And with inflation on the upswing, the central bank may not loosen its monetary policy in a hurry.

Moreover, the global slowdown has impacted India’s manufacturing production, which forms the lion’s share of the industrial output. With exports suffering, manufacturing production has taken a hit. The US, which is barely managing to keep its head above the water, is one of India’s most important trade partners. With the US economy sliding fast and the rupee having surged against the dollar, things are not really going in favour of exports.

In fact, India’s GDP growth has moderated to 8.4% in the October to December quarter, from 8.9% in the July to September quarter.

Indian investors did not digest the news too well and the Sensex plummeted nearly 5% in afternoon trading on Thursday, led by heavyweights Reliance Industries and ICICI Bank. The broader NSE index plunged 5.4%.

Needless to mention, these developments don’t go in favour of the Congress-led coalition government, with the general elections due next year.

“Softening in industrial production - if it continues at this pace - would pose a serious problem to the Indian growth outlook down the year,” said HSBC economist Robert Prior-Wandesforde. The government forecasts a slowdown in economic growth to 8.8% in the current fiscal year, from 9.6% last year. This would be the first deceleration in three years. Also, GDP growth could slow further next year. Even with these expectations, India would likely remain the world's second fastest growing economy after China.

So, what’s the elixir of life for the Indian economy? Infrastructure, vocational training and sound government policies are areas that definitely need to be addressed. Whatever the recipe for success is, I hope India can whip it up!

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Lanvin: Latest global luxury brand to open shop in India

2008-03-15T13:57:00.000-07:00

By Vipin Agnihotri

Latest in a long line of global luxury brands to open shop in India is Lanvin. In my opinion, Lanvin is one of the most revered couture brands and with Albert Elbaz at its helm at this moment of time the brand is quite good. Most of the high-profile people around the world wear it. It includes, Nicholas Sarkozy, Vijay Mallya, Katie Holmes, Demi Moore and Julia Roberts. In other words, people who really understand fashion wear it.

The question now arises: Whether Indians will respond favourably to Lanvin or not? The answer of this question is a bit tricky but once Indian buyers get authentic information about the brand, I am sure they will react positively to it. The best part about Lanvin is that they know fully well how to provide complete range of products while keeping the essence of the brand intact. According to experts, Lanvin is famous for its lounge wear for both men and women, something that you wear when you step out to the supermarket and still want to look trendy.

Another challenge for Lanvin is going to be the fact that Indians are notoriously sensitive to price points and this can affect the progress of the company. Taking this into account, it is of paramount importance that at the initial phase, company explain to the people that why the product is priced at the price point that it is. A shirt, for example, is available anywhere, so why buy an expensive shirt? In other words, everyone is price point sensitive. The beauty of a luxury brand like Lanvin is that they give a lifetime guarantee.

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Tata Motors: A Bumpy Ride

2008-03-12T08:43:00.000-07:00

By Priya Nigam

Over the last 12 months, Tata Motors shares have been acting like my daughter on a sugar high. Jumping up and then sliding down in the blink of an eye. Tata Motors is part of the Tata Group, which is India’s largest private sector conglomerate with companies like Tata Steel, Tata Chemicals and Tata Power under its umbrella.

Tata Motors has recently been in the limelight for its Nano. India's largest carmaker unveiled the Nano (also known as “the people’s car”) at the Auto Expo held in the capital earlier this year and then in Geneva earlier this month. Priced at Rs1 lakh, the car seems to have huge sales potential. On one hand, the car targets the market that would have otherwise purchased a motorcycle. Although a premium motorbike would cost only half as much as the Nano, people may go that extra mile to get into a four wheeler. On the other hand, the four-seater minicar would be an attractive buy for those who would have otherwise bought the Maruti 800 (the cheapest car after the Nano). And to top it all, the Nano promises a mileage of 24kms for every liter of fuel. While all this is good news, the fact remains that the sales of the car would have to break speed limits to ensure profitability.

Meanwhile, Tata Motors has entered the final stages of talks for taking over the Jaguar and Land Rover brands from Ford. The company plans to raise Rs4,000 crore to part finance its expansion and acquisition activities. Tata Motors said it would raise this money via the “issue of appropriate securities in foreign or domestic market.” The company added that it has major plans for expanding its position in India and abroad in the commercial vehicle as well as the passenger vehicle segments. Tata Motors aims to achieve this through upgrading and enhancing its product portfolio, expanding its domestic manufacturing facilities and making strategic acquisitions. While the potential deal with Ford is resulting in a jump in Tata Motors’ liabilities, there is also concern over how smoothly and effectively the company would be able to integrate the British luxury brands. Nonetheless, a confirmation of the deal with Ford may be only days away.

Tata Motors’ earnings growth has slowed and its margins have been under pressure. While the company is facing an upturn in raw material prices, demand is also being affected by interest rate hikes.

Domestic car sales were lackluster last month. Tata Motors reported total sales of 54,181 vehicles (including exports), which was almost flat versus the February 2007 figures. March is likely to be better, with the Budget’s 4% reduction in excise duty on small cars (small cars account for nearly 70% of new car sales). Tata Motors responded to the reduction in excise duty by joining its peers Maruti, Hyundai and General Motors in announcing price cuts.

So, Tata Motors’ earnings growth has lost its recent momentum and profits from the Nano appear questionable. Moreover, the company faces integration challenges. However, the carmaker addresses a huge and growing domestic market. One thing is for sure, Tata Motors shares are not for the faint hearted.

Indian companies all set to report double-digit salary increase

2008-03-12T08:39:00.000-07:00

By Vipin Agnihotri

In my opinion, Indian banking industry has been seeing annual wage inflation in the range of 12 to 15 per cent over the last two years. Most of the experts feel that it’s unsustainable as any economy, which has to sustain a wage CAGR of 6-7 per cent, slips into recession within 15 to 20 years.

But all this doesn’t really matter for India Inc as for the fifth consecutive year; Indian companies are all set to report double-digit salary increases. According to my estimates, the salary increases this year are likely to be 15 to 25 per cent more as compared to 2007. It is worth mentioning in this regard that China will take the second spot behind India with projected raises of around 8.5 per cent.

Generally speaking, a salary of $100,000 (around Rs 40 lakh) may seem low when one compares it with Western standards. But on the basis of buying power parity, a $100,000 salary in India is quite identical to $225,000 in the West. I have no doubt in my mind that the traditional gap between salary hikes provided by locally-owned and multinational companies has closed with Indian private sector companies are almost ready to increase salaries by 15.5 per cent this year compared with 14.9 per cent offered by multinationals. According to one report, ICICI Bank gave an average salary raise of 10 per cent in the last financial year.

In 2007, real estate including infrastructure, energy, retail, telecom and banking & finance were the top five sectors in terms of growth in average pay packets. Talking about real estate and infrastructure sector, the average pay hike was staggering 25.2% in 2007. This year too it will remain the same.

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One million new jobs in India this year

2008-03-12T08:36:00.000-07:00

By Vipin Agnihotri

The India Street has good news for Indian students who are going to pass out from the college very soon. There is going to be one million new jobs in India this year. This is also great news for people who are interested in changing their job profile. One of India’s biggest HR consultancy firm, Ma Foi has predicted in his Ma Foi Employment Trends Survey (METS) that there is going to be a 3 per cent increase in employment in 2008.

In my opinion, the majority of new jobs would be generated by hospitality sector, which by the way is riding high with the tourism boom in India. In terms of city, Ma Foi has predicted that Mumbai will generate the highest number of jobs, followed by Delhi, Chennai and Kolkata.

Apart from hospitality sector, health sector and education training sector will also generate quite a bit of new jobs this year. According to experts, India is all set to have around 40 international hotel brands by 2011. The pivotal factor here is that the boom in the tourism industry has had a cascading effect on the hospitality sector, which was a result of the increase in the occupancy ratios and average room rates.

Information technology (IT) and information technology-enabled services (ITES) sectors will also create new jobs this year but it will not be that high as compared to hospitality and health sector. The Indian health services sector is estimated to be around Rs 75,000 crore and is all set to grow by 170 per cent by 2012.

Slowdown in the Indian economy will not affect the employment growth of the country. According to Ma Foi, demand for freshers is more than 30 per cent in sectors like hospitality, energy generation and supply sector, ITES, and mining and extraction.

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Blackout of BlackBerry on the cards in India

2008-03-10T11:45:00.000-07:00

By Vipin Agnihotri

The Indian government objection over Tata Teleservices application for giving advanced BlackBerry services has left other mobile operators already offering this service unnerved. According to my estimate, any blanket ban on the service could have an impact on around five-lakh subscribers who at present are using the BlackBerry service. This development has brought into fray other service providers who provide identical facilities.

BlackBerry is a product of Canadian firm ‘Research In Motion’ (RIM) and it is a patented service that offers wireless e-mail solution to mobile professionals and individuals. I have a talk with top officials of Indian home ministry and they are interested in getting access to all communications made through a mobile device at any given time.

This is not the case with BlackBerry device at this moment of time that works with the help of a server. Furthermore, data is transferred in an encrypted format. Point to be noted here is that Blackberry does not allow for any interception, therefore Indian government seeing BlackBerry as a security threat, more so in the present scenario where terrorist organizations are taking the assistance of World Wide Web to communicate.

While leading mobile operators such as Bharti Airtel, Vodafone-Essar and Reliance Communications are already giving BlackBerry services; denial to Tata Teleservices in my opinion will not only have an impact on the telecom market growth but also widen differences between number of operators.

As a matter of fact, Tata Teleservices has already sought a clarification from the Department of Telecommunications (DoT) as to why they are the one who has got a refusal while others are running the services without any hassle. Taking this into account, DoT has written a letter to other BlackBerry service providers stating that they will have to give monitoring facility for lawful interception of data transferred through the device.

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VIDEO: New Bangalore Update Still has a Few Bugs

2008-03-10T08:52:00.000-07:00

As the new Bangalore Airport prepares for its first landing, there are still a few bugs to be worked out. I don’t know about you, but I don’t want to be one of the first flights to land or take off from this airport.

Review of LIC Health Plus - It's reasonably healthy

2008-03-08T14:14:00.000-08:00

By Vipin Agnihotri

Life Insurance Corporation, with its big data bank has come up with a health related unit linked policy, Health Plus, that gives you number of advantages. Even better, it is reasonably priced. It is worth mentioning in this regard that Health Plus offers a lump sum payment in case if the policyholder has to undergo surgery for critical diseases. Furthermore, the sum assured is capped at Rs 5 lakh.

Another good thing about Health Plus is that it gives hospitalization cash benefit of a maximum of Rs 2,500 per day for 365 days. This is extremely useful when hospitalization does not relate to surgery or the surgery is out of LIC’s ambit. What’s more, family members can be co-opted into the plan. Only limitation of Health Plus being that seniors more than 65 years of age have no cover. Similar to a traditional ULIP, the scheme keeps the unutilized portion of the premium after deducting all expenses in the form of units.

In my opinion, the best part about this scheme is that it allows inclusion of new members at a later date in case of marriage or remarriage of the insured or children who are subsequently born. Point to be noted here is that no claims are entertained in the first 180 days of the Health Plus policy—the exception being accidents. Apart from that, in the first year, the hospital cash benefit is restricted to 18 days, including nine days in the ICU. Last but not the least, you can make claims of up to three times the sum assured in this scheme.

The India Street Rating: 9/10

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Global slowdown: Not a problem for India

2008-03-07T18:21:00.000-08:00

By Vipin Agnihotri

In my opinion, Indian capital markets are increasingly taking their cues from global markets. Generally speaking, no sector is completely insulated from the impact of a US and global slowdown, but there are obviously few sectors that are more protected as compared to others.

According to experts, sectors such as textiles, auto ancillaries, IT and pharma, which are quite dependent on US demand, are the ones that investors have to be careful about. It has been noticed that big investors have been pulling money out of stocks that are heavily reliant on US demand. For example, IT at this moment of time is the most underweight stock in the portfolio of big investors.

Point to be noted here is that India’s domestic growth story is still quite robust, making the capital goods, consumer products, banking and financial services, infrastructure and telecom sectors great investment propositions. There are some experts who feel that the impact of the US slowdown has already been discounted in the top-tier IT and pharma companies, which are basically US-dependent.

In my opinion, IT companies such as Wipro, TCS and Infosys Technologies are trading at price-earnings (P/E) multiples of 10 to 13, on the basis of 2010 earnings, and their returns on equity (RoE) and cash flows are strong. Another intriguing thing is that global investors facing a slowdown are likely to have a reduced tendency to take the risk of investing in the Indian real estate sector. However, I am pretty sure that construction companies doing contractual work are good investments.

The pivotal factor here is that as the US slows down, investors there are bound to look at India as an attractive investment destination. Therefore, there is quite a good chance that liquidity will remain strong. ONGC, HPCL, JP Associates, GMR, L&T and NTPC can deliver returns because of their reliance on the domestic economy, which continues to be strong.

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Lakshmi Mittal, Mukesh Ambani, Anil Ambani and K.P. Singh in the top 10 richest list of Forbes

2008-03-07T18:19:00.000-08:00

By Vipin Agnihotri

It’s official. Four Indian industrialists, namely, Lakshmi Mittal, Mukesh Ambani, Anil Ambani and property tycoon K.P. Singh are among the top 10 richest individuals in the world, according to a survey conducted by Forbes magazine.

In my opinion, a phenomenal surge in the sensex last year took them to the top of the totem pole. Point to be noted here is that India has the maximum number in the top 10 followed by US, which has two. On the other hand, Germany, Mexico, Sweden and Russia have one each.

It is worthwhile pointing that in 2007 there was only one Indian, Lakshmi Mittal in the top 10. According to Forbes survey, Warren Buffett, the legendary investor with a $62-billion net worth, is the world’s richest man. Buffett dislodged Microsoft chief Bill Gates ($58 billion), who tumbled to the third spot after a hostile bid for Yahoo that sent the software giant’s stocks plunging by more than 15 per cent.

The second spot has gone to Mexican telecom czar Carlos Slim Helu who is worth $60 billion. After Gates, the pecking order has three Indians: Lakshmi Mittal ($45 billion), Mukesh Ambani ($43 billion) and Anil Ambani ($42 billion).

Although, Anil Ambani’s Reliance Power Ltd made a torrid start on the bourses but interestingly Anil Ambani is the biggest gainer among all the billionaires. In terms of statistic, his net worth has soared $23.8 billion.

Talking about his brother Mukesh Ambani, Mukesh’s fortune has risen $22.9 billion since last year and he is the world’s second biggest gainer in dollar terms. DLF chairman K.P. Singh, who figures in the eighth place, is worth $30 billion.

Forbes used number of parameters to arrive at the wealth of each billionaire. The pivotal factor here is that stock prices were calculated using market prices and exchange rates as of market closings on February 11. In addition, Forbes also went through holdings of publicly traded companies, private investments, real estate and art collections.

According to experts, rise of Indians, particularly the two Ambanis and Singh, on the rich list is not surprising especially when one takes into consideration the fact that their individual businesses have performed admirably over the past year.

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How India's 2008 Budget is going to affect Indians?

2008-03-05T06:35:00.000-08:00

By Vipin Agnihotri

With today’s budget, plenty of things in India have gone cheaper while others have become expensive. If you are a chain smoker, there is bad news for you. P Chidambaram has raised duty on non-filter cigarettes. So it will obviously cost you more from now on. As Finance Minister has not proposed anything regarding liquor prices, you do not need to worry about the price of your favorite drink.

In case if you are planning to buy a new car, wait till April 1. This is because of the fact that P Chidambaram has proposed a reduction in the customs duty on small and hybrid cars. Auto manufacturers of hybrid cars are quite happy as Finance Minister has lower the excise duty on them from 24 per cent to 14 per cent. Hybrid cars are presently not on sale in India but come April, likes of Honda Siel, Toyota India and Mahindra & Mahindra is going to launch their vehicles.

If you are interested in buying new washing machine or refrigerator then there is good news for you. Indian Finance Minister believes that the manufacturing sector is the backbone of Indian economy and that is why he has given a 2 per cent general cut in excise duty on all consumer goods.

Brilliant news for Indian students, Chidambaram has announced a 20 per cent hike in education budget this year from Rs 28,674 crore (Rs 286.74 billion) to Rs 34,400 crore (Rs 344 billion). However, for mobile phone industry, news is not that encouraging. In my opinion, mobile phone users would now have to shell out more money for buying new handsets, with Indian government all set to levy one per cent excise duty on them.

Chidambaram has proposed to lower customs duty on specified life saving drugs from 10 per cent to 5 per cent. Furthermore, Anti-AIDS drugs have also got excise duty exemption. News is not that good for software industry, as Finance Minister has increased the excise duty on packaged software from 8 per cent to 12 per cent.

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Some more information about Bengaluru International Airport

2008-03-05T05:42:00.000-08:00

By Vipin Agnihotri

Yesterday, we gave you first hand information that Bengaluru International Airport is ready for first flight. Today, we are going to give you more information about Bengaluru International Airport.

The runway of Bengaluru International Airport is designed to easily accommodate the B-747 aircraft. It is 4,000 metres long and 60 meters wide, including shoulders. Point to be noted here is that the airport layout design provides a second parallel runway within the site.

Another intriguing thing about this new airport is that it has four airfield fire fighters that have been procured from Austria. These crash fire vehicles, commonly known as the Panthers, have been procured for security purposes and a special capability for off road driving. Generally speaking, crash fire vehicles can go from 0 kmph to 80 kmph in less than 30 seconds. I have a talk with airport authorities and they were of the view that Panthers consists of long-range monitors, fire-fighting equipment, infra red cameras and reverse cameras.

Bengaluru International Airport will also have retail centre, a multi-cuisine food court area, an adventure play area, and a day care facility for the children of the passengers. At the domestic terminal passenger will find Tommy Hilfiger, Odyssey's books, music, flower, and toy shops. What’s more, there is going to be 35 check-in counters and seven passenger gates to facilitate multiple flights coming in at around the same time.

According to sources, the first of the international flights to take off from Bengaluru International Airport will be the Air India flight to Singapore and Dubai. Talking about the domestic circuit, both Bangalore-based airlines Kingfisher and SimplyFly Deccan will be part of the pre-launch tests in the first week of March.

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Don’t panic when the stakes are down

2008-03-04T07:48:00.000-08:00

By Priya Nigam

Indian stocks have been highly volatile over the past couple of months. It’s going to take us a long time to forget last month’s Sensex crash. The “Saare Jameen Par” joke was quite funny (on hindsight). But at that time I wasn’t exactly laughing. Actually, I couldn’t… was too busy chewing all ten finger-nails off.

The latest Economic Survey 2007-08, presented by Finance Minister, Mr. P Chidambaram, reminded us that the Indian stock market volatility is not new. Over the past two years, Indian stocks have been more volatile than those in several global markets. “In the period January 2006 to December 2007, the volatility of weekly returns of Indian (stock) indices was higher as compared to indices outside India such as S&P 500 of US and Kospi of South Korea,” the survey report said. While the stock markets may have taken us on a roller coaster ride, having scaled new heights and then crashing in October last year and again last month, Indian bourses did do well overall. The BSE Sensex jumped 47.1% in 2007.

Market capitalization, which is an indicator of investors' wealth, nearly doubled last year to $1,683 billion, according to the survey report. While this is good per se, it still stands short of China’s $4,459 billion and substantially below the US figure of $17,773.05 billion. Having said that, it is also worth noting that India's market capitalisation was 150% of the country's GDP, while this figure stands at 137.3% for China and 128.8% for the US.

“Individual investors need to take informed decisions and remain cautious,” the annual report added, while warning against “herd mentality” and “panic.” There is some concern over a slowdown in capital inflows, which would exert pressure on stocks. But there is reason to be bullish. Expectations are for companies to report strong earnings, which should support the stock markets. India has already grown into a trillion dollar economy, with GDP growth being close to 9% for the last three years. This fiscal also, the economy is expected to record 8.7% growth. The survey did identify some challenges to this growth, including India’s weak infrastructure, the rupee appreciation, inflation and the US slowdown. And to boost this growth rate to double digits, India will need additional reforms, the survey added.

One obstacle that India will definitely need to tackle is its shortfall of skilled personnel. Companies are already struggling with high wages and attrition. India needs to have a significantly larger number of institutions offering professional education and vocational training. “If we get our skill development act right, we will be harnessing a ‘demographic dividend’,” Mr. Chidambaram said.

Despite the uncertainties and shortfalls, it was good to hear the Finance Minister say, “If you wish me to sum up in one phrase the outlook for 2008-09 then I would say 'optimism', but with caution as the 'watchword'. There are a number of things going in favour of India.”

China wants FTA and MES from India

2008-03-02T13:43:00.000-08:00

By Vipin Agnihotri

The Chinese Dragon is on a new invasion mission, but this time in disguise. After becoming India’s third biggest trade partner, China now wants to enter into a Free Trade Agreement (FTA) and get a Market Economy Status (MES) from India.

In my opinion, both FTA & MES are sensitive issues that need greater deliberations, primarily due to reasons both political as well as economic. Entering into a FTA could create mayhem in Indian industry’s profit margins, as ‘Made in China’ products are already economical than the cheapest Indian products, granting MES would further entangle the situation.

It is worth mentioning in this regard that till now, prices of Chinese products in the US or European market are used for calculating dumping, but the grant of MES would make the Chinese domestic market prices applicable for calculation of dumping and this would refrain India from accusing China of flooding Indian markets.

According to experts, till the time there is complete transparency, there is no need for a FTA or granting MES. As a matter of fact, trade can always be done without that. As per the recent FICCI report, the Chinese Renminbi is 25-40 per cent undervalued against the US dollar and there has been barely any appreciation over the past one-year.

In addition, lower rate of interest at 2.8 per cent, inflation at about 3 per cent and scores of subsidies extended by the Chinese government to the industry contribute towards lowering the cost of production drastically in comparison to India. Because of all this, the Indian business is already suffering both in the domestic as well as international markets. Therefore, going for either of the two, would be nothing less than a blasphemy, causes of which could be very severe, remains the bottomline.

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Review of Suzlon

2008-03-02T08:27:00.000-08:00

By Vipin Agnihotri

For so many years, Indian companies have loved the colour green, but only when it meant the US dollar! But Suzlon is one rare Indian company, which saw the potential of ‘green’, as in environmental friendly businesses, well ahead of time, ventured into wind energy and went on an expansion spree with success.

After a bad first quarter, bogged down by component shortages, Suzlon posted record turnover of Rs 16.8 billion and net profit of Rs 3.95 billion for the quarter ending September 2007. In other words, the wind is blowing stronger than ever.

Suzlon is gung-ho with huge expansion plans such as adding an extensive 3,000 MW of wind power, increasing total production capacity to 5,700 MW by the end of this year. According to sources, to increase ROI from acquired companies, Suzlon is all set to list them as separate entities on number of stock exchanges.

For example, Hansen Technologies, which Suzlon acquired in 2006, will be listed on London Stock Exchange. According to experts, it might not directly assist them in their expansion plans but will help them managing the entities separately. Furthermore, performance of any unit won’t disturb the others.

The pivotal factor for the brilliant second quarter performance was due to sales of 684 MW of wind turbines, which were part of the carry over inventory, and were not delivered due to shortage of components.

In my opinion, listing companies in separate stock exchange might assist the balance sheet for the time being but if such issues are not addressed in future, Suzlon will have to see more downfall. The company must ensure such issues don’t occur in future, or the wind could start blowing in the opposite direction.

The India Street rating: 8/10

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Real Estate Perspective of the Finance Budget by Jones Lang LaSalle

2008-03-01T14:30:00.000-08:00

This budget has not given much direct attention to the needs of the real estate sector, except in peripheral ways. While the focus on upliftment of the common man is definitely positive, it would seem that a general waking-up to the sector’s potential and ongoing contributions to the country’s economy is still pending. There has been no mention on granting the sector industry status.

The fact that no decisive announcement has been made on the extension of the STPI scheme is discouraging, and of definite concern to and IT/ ITES occupiers and developers, given that a large number of SEZs will take beyond 31^st March ’09 to be fully functional.

The industry expected that service tax on rent would be scrapped.

There are no specific direct benefits available for the retail industry in this budget. However, reduced overall taxation in various areas will result in higher disposable incomes and will have some positive effects for this sector

The fact that short term capital gains tax has been raised to 15% will not have a significant bearing on future investments in real estate, which in any case is not a suitable route for investment horizons below 3-5 years.

The budget seems to have overlooked affordable housing in urban areas

However, there are some positives:

The fact that Green development has been given a special focus is positive. It indicates that sustainable real estate development has now been recognized as the wave of the future in real estate. The introduction of an institutional mechanism in this field is a step in the right direction.

The increase of rural infrastructure funding will help alleviate the burden on urban areas by boosting development in rural areas and therefore reducing migration to the urban cities, and the burden on urban infrastructure.

The raising of allocation for the Bharat Nirman Yojana to Rs 31,280 crore is a step forward. This project, meant to develop infrastructure, was way behind schedule and definitely needed a shot in the arm. We can anticipate increased supply of land across all sectors of real estate as a result of this investment in infrastructure, which will open up large parcels of land for development in the mid-to-long term.

Commercial space will benefit from the fact that there is a focus on national knowledge centres. The weightage given to knowledge outsourcing spells good news, since it will encourage manpower for the KPO sector, thereby propagating KPO business and hence office real estate demand.

The special focus on education and healthcare is encouraging. It will have a positive impact on the inherent value of townships developing in many parts of the country. The availability of educational and healthcare facilities always adds great value to such projects, and to any location in general. Moreover, better education results in higher professionalism and more opportunities in every sector, including real estate. However, what we need is an increased focus on vocational skills, and we see no time-bound prospects in terms of implementation in this regard.

We see value for the real estate sector in the fact that a 5-year tax holiday has been granted to Tier II/III city-based hospitals and 2/3/4 star hotels in UNESCO-specified heritage districts.

Reverse mortgage will not amount to transfer of property and is therefore not taxable. This will help popularize the very progressive concept of reverse mortgage and encourage purchase of property by/for senior citizens.

It is laudable that the Finance Minister has advanced the concept of rationalization of Stamp Duty across all states. However, he has not clarified how this rationalization will be structured.

The Budget is good news for Tier II/III cities, where infrastructural development will ensure that they continue to boom. We must remember that Indian real estate is, after all, not only about the metros but to a significant extent also about anonymous areas that are transforming into new real estate destinations.

Three most influential Indian Americans

2008-03-01T08:09:00.000-08:00

By Vipin Agnihotri

Fareed Zacharia-

The editor of Newsweek International, Fareed Zacharia is well known for esoteric thoughts such as the future of freedom, where he contends that triumphant democracies will need to build independent institutions, disconnect religion from politics and build its image globally. Fareed is famous for his pro-Republican views on Iraq and Afghanistan. But his most important contribution is the manner in which he is selling the idea of India in the US.

Ashley Tellis-

Ashley Tellis is possibly the main Indian-American face of the US-India nuclear deal. He believes in Condoleeza’s Rice observation that bilateral civilian nuclear cooperation will be the key in expanding Indo-US relationship. According to Tellis, as the centre of gravity shifts towards Asia and as Asia’s share of the global economy threatens to become 50 per cent by 2025, its imperative for Indo-US partnership to construct a stable geopolitical order in Asia that is conducive to peace and prosperity.

Jagdish Bhagwati-

Economics professor at Columbia University, Jagdish Bhagwati is an expert at trade, WTO and multilateralism. He professes free trade in a multilateral context. He thinks that the current crop of US senators and Congressman are a deplorable disappointment to proponents of multilateralism. In the last few decades Bhagwati has propounded path-breaking theories relating to globalized trade. According to Jagdish, the breakdown of the Doha round of WTO talks has less to do with India and Brazil’s protectionism than with the US’s paralyzing inability to respond to long standing world-wide demand for the reduction of its agricultural subsidies.

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Salient features of Indian budget 2008

2008-03-01T08:05:00.000-08:00

By Vipin Agnihotri

Indian Finance Minister P Chidambaram today presented his fifth annual budget. All through out the day, The India Street analyzed this year budget for their readers. Find below some of the salient features of Indian budget.

First and foremost, threshold of exemption for all Income Tax assesses increased from Rs 1,10,000 to Rs 1,50,000.
Indian government will provide five-year tax holiday for setting up hospitals in tier II and tier III regions in rural areas from April this year.
Short-term capital gains increases to 15 per cent.
On the lines of Securities Transaction Tax, Commodities Transaction Tax to be introduced.
There is going to be no modification in corporate income tax.
Plan expenditure fixed at Rs 2,43,000 crore and non-plan expenditure at 5,74,000 crore.
Fiscal deficit pegged at 3.1 per cent and revenue deficit at 1.4 per cent.
In terms of statistic, Tax to GDP ratio increased from 9.2 per cent in 2004-05 to 12.5 percent 2007-08.
Excise duty on small cars has been lowered to 12 per cent from 16 per cent and hybrid cars to 14 per cent.
Asset management service under mutual funds, services by stock exchanges to be brought under Services Tax net.
Risk Capital Fund to be set up in SIDBI.
Eleventh Plan started on a robust growth.
Gross budgetary support to be raised to Rs 2,43,386 crore. This by the way is an increase of more than Rs 38,000 crore from the present level.
It has come to the notice that GDP growth has slowed down to 8.4 per cent during quarter ended December 31, 2007 as compared to 9.1 per cent a year ago.
Services and manufacturing sectors expected to grow by 10.7 per cent and 9.4 per cent.

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CNBC India: India Finance Budget 2008

2008-03-01T07:47:00.001-08:00

We're starting to add some of the local India CNBC investment channel video to the India Street as we come up on our new website release this month. Below, we have added a recent CNBC segment on the Finance Budget for your enjoyment.

Some Highlights:

*No changes for Corporate Income Tax * Small cars and Hybrid incise tax cut

Future of Indian consumer durables market

2008-02-28T11:07:00.000-08:00

By Vipin Agnihotri

In my opinion, Indian market is fast moving towards high-end customized products, which are aesthetically designed to complement the modern households. The need at this moment of time is to continuously innovate and come out with product variations across categories to meet the expectations of a varied class of customers.

This year, the leading consumer durables players forecast 15 per cent growth for the sector. In 2006, the consumer durables and home appliances sector experienced growth of 14 per cent and was pegged at Rs 3.7 billion.

According to sources, dismantling of quantitative restrictions on imports of consumer electronics has let to customer tariffs gradually coming down. In such environment, the industrial units could only survive by improving the efficiency and productivity.

India is a fast developing country and is proving to be a major challenge to the already established countries of the world. The industry expects to grow by 10 per cent for refrigerators and 60 per cent for washing machines this year. In a sector, where new products are being introduced with increasing frequency and lifecycle of products getting shorter, research and development plays an important role.

I believe that this area needs to be regularly updated with newer technologies, so that the innovations are meaningful to the customers. Setting up of manufacturing facilities by MNCs in India, which not only meet international standards but also reduce trade barriers between two countries and give a thrust to the exports of the company, which is very important.

At this moment of time, the consumer electronic industry has come a long way and is making state-of-the-art products and quality is earmarked immense importance. Point to be noted here is that the quality of any product is directly linked with exports from India to other countries. India has lately become a manufacturing hub for many companies to make quality products. In the last few years, this sector has shown tremendous growth, resulting in annual growth rate of close to 50 per cent.

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Review of Jet Airways

2008-02-28T10:47:00.000-08:00

By Vipin Agnihotri

Having started flights to the United States last year, Jet Airways have all the potential to become the world's best airline. Jet Airways at this moment of time has 90 planes -- Boeing 737s & 777s and Airbuses. In addition, the carrier has ordered 30 more planes for $2.5 billion.

Jet Airways employs 10,000 people and its revenue during the fiscal year 2006-07 was $1.4 billion. By 2011, the revenue of Jet can grow to $3.5 billion. In other words, Jet Airways as a brand is pretty much established.

Between Jet Airways and Jet Light, company has about 70 Boeings. Out of which, few are Airbuses. Company also has some 8 ATR. By next year, Jet Airways will have 120 planes. Of these, 20 planes are wide-bodied 777s while 10 are Boeing 737s. The domestic market of Jet Airways is growing by 40 percent. On the other hand, their international business is growing by 18 to 20 percent. In terms of statistic, the domestic revenue of Jet Airways was $1.1 billion in 2006-2007. The total revenue of the company was $1.4 billion.

The hub of Jet Airways is Brussels as there are no slots at the Paris, Frankfurt or Amsterdam airports. It is worth mentioning in this regard that these airports are very busy and very congested in the morning. But that is not the case with Brussels, which is a very friendly airport. More importantly, there's not too much traffic. Furthermore, the airport has the capacity to handle 30 million passengers.

In my opinion, Jet Airways has created the best model in India. Point to be noted here is that it connects the smallest towns in India. Thanks to their frequency, services, standards, Jet Airways are the first choice for anybody traveling in India and out of India.

The India Street Rating: 9/10

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Exclusive: Bengaluru (Bangalore) International Airport is ready for first flight

2008-02-27T17:13:00.000-08:00

By Vipin Agnihotri

After number of years of deliberation, the Bengaluru International Airport is finally ready. I have full-proof information that the first flight to take off from the newly constructed airport in Bengaluru has been decided as 0001 hours, March 29, 2008.

The pivotal factor here is that up till now Bengaluru did not have a full-fledged airport and was relying on the services of the Hindustan Aeronautics Limited airfield. Land for Bengaluru International Airport was first identified at Devanahalli. In terms of statistic, the estimated cost of the project was in the range of Rs 13.34 billion. However with the passage of time the project cost went up to Rs 14.12 billion. And now when everything is completed, the cost stands at Rs 19.30 billion.

Bengaluru International Airport is going to be the third busiest in India with at least 7.5 million passengers using it annually. Furthermore, the airport is expected to have at least 900 domestic flights a week. Another good thing about this airport is that it will have a fully air-conditioned passenger terminal and a two-level building that will play a prominent part in accommodating both international and domestic operations.

According to sources, the arrival and departure portions of Bengaluru International Airport are separated vertically through a straight-ahead flow system for straightforward operation and minimum maintenance. The terminal is designed in such a way that it can easily accommodate around 2,733 passengers during the peak hours.

In terms of design, out of the total 4,300 acres of land earmarked for Bengaluru International Airport, 2,000 acres is occupied by the runway, terminal, air traffic control towers and buildings. On the other hand, the apron area covers 182,000 metres and there shall be 40 aircraft stands.

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