Indian Economy - News & Updates - Archive

[Contrarian]

Sahara to be rebranded as Jet Lite

MUMBAI: Finally, Jet Airways broke its silence. At a packed press conference addressed by the airlines top brass, the company said that the aircraft that will join its fleet on account of acquiring Air Sahara will be redeployed as a low cost carrier.

To be called Jet Lite, it will be "somewhere between a full service airline and a low cost one,"said Naresh Goyal, chairman, Jet Airways.

Towards end of this year, Goyal added, Jet will launch an international cargo airline and a maintence, repair and overhaul (MRO) facility.

So what really is an airline that's somewhere between low cost and a full service carrier? For starters, it means you don't pay for the food on board.

"In any case, that costs just Rs 40-50 per meal,"said Goyal. Costs, he explained, will instead be driven down by leveraging synergies that will come into play when both Jet and Sahara come together. For instance, training facilities for crew will now be shared between both airlines and prices with suppliers will be renegotiated.

"It is a new segment that we will be catering to,"he said. "The market is growing and our yield per passenger will be higher than that of the so-called low cost airlines," he continued.

Goyal, however, declined to talk on what kind of prices the consumer can expect out of the airline. "We will come with the right product at the right price for the market,"was all he said.

An official at the airline explained that tickets on Jet Lite will definitely be cheaper than that on Jet. He pointed out, that with the induction of new aircraft into the Jet fleet that have been fitted with a lot of next generation creature comforts, the airline may possibly be able to charge a premium on the routes these machines fly.

Jet is taking delivery of 20 wide-bodied aircraft between April and October 2007, besides 10 Boeing 787 Dreamliner aircraft between July 2011 and December 2012. It also plans to negotiate better prices for the 10 Boeing 737-800 aircraft that Sahara ordered last year, Goyal said.

Goyal hinted that the airline may not hesitate to get out of sectors where the pay offs aren't as good. "The two airlines will aim for an annual growth of 15% even though the domestic market is growing faster. We want to grow at a steady rate and are more interested in profitability and managing margins than market share,"he said.

The company also plans to raise up to $400 million over the next couple of months to fund its internatinal expansion plans. Officials at Jet said the amount could be even higher if market conditions were suitable.

The airline is also evaluating various options to fund the working capital requirements it will need to to overhaul Sahara. "We were already talking to bankers before the acquisition was finalised,"said Vic Dungca, a member of Jet's board.

 

[Contrarian]

As rupee gains, Indian tourists rejoice


MUMBAI: Ravi Kapoor (name changed) and his wife had booked on Monday a six nights and seven days trip to China at the rate of $749 per person. Had the Kapoors booked their annual vacation in March, the trip would have cost them a little more.

Thanks to the weakening of the dollar against the rupee (it touched a nine year high at Rs 41.85 on Monday), they would have had to shell out only Rs 31,346 per person as against Rs 33,158 in March when the rupee was at Rs 44.27. Add to it, they could buy more foreign exchange and have more cash at their disposal.

With the peak season (April to July) on, a globally distressed dollar is turning out to be good news for Indian travellers in terms of cheaper holidays abroad.

"For individuals and corporate travellers opting for tour packages (listed in dollar pricing) would result in cost savings," said the spokesperson of Thomas Cook (India), whose business is skewed in favour of corporate travellers.

Unlike individual travellers who plan in advance, corporate travellers are impulsive. According to Arup Sen, ED of Cox&Kings,"Holidays could get cheaper by 3-4% and that too for people traveling to US."

The preferred currency for Indian travellers is either the US dollar or the euro keeping in mind the destination they intend to travel to. The falling of dollar against the Indian rupee would mean travellers could buy more foreign exchange. Bear in mind though that RBI rules do not permit buying forex more than 60 days in advance of the date you intend to travel.

Last year, Indians spend $7.5 billion abroad. They splurged largely on confectionery, perfumes and fashion accessories. Says Rajeev Nangia, associate director of TRAC Representations, a company that represents seven international tourism boards like Spain, Sri Lanka, Seychelle, Jamaica and Korea, "The Indian traveller can expect offshore activities to be less expensive while for the travel trade, it could lead to renegotiation of their contracts with their respective overseas partners."

Market expects 5 million Indian tourists to travel during the peak season for overseas holidays - generating an estimated business of Rs 3,250 crore.

If this trend continues, cost of packages of many countries could be slashed, Nangia added. Says Frederick Divecha, senior V-P, SOTC, "Appreciating rupee has benefited Indian travellers."

 

[Contrarian]

Ringing loud: Telecom user base swells to 189.9m

NEW DELHI: If global telecom majors are battling tooth and nail for a share of the Indian telecom business, it is with good reason.

The latest numbers from telecom regulator Trai show that for the quarter ended December 2006, a little over 20 million people got themselves cellular phones.

What it means is this: Close to 190 million Indians now have acess to either a landline or a cellular phone. More importantly, over 6.5 million people are buying new phones every month. It's the kind of explosive growth no other nation in the world has seen for a long, long time.

While the subscriber base still has to catch up with China's XXXX million, one thing is clear — the elephant has learnt to run.

The data also shows that the average revenue per user (ARPU) per month for the hugely popular GSM services has declined to Rs 337 from Rs 316 in the previous quarter. As far as CDMA services are concerned, ARPUs were a little lower than what GSM operators could manage.

They earned only Rs 196 per subscriber as against the Rs 215 that they did in the previous quarter.

For Indian telecom operators, this means, they have among the lowest ARPUs anywhere in the world. But most of them aren't too worried yet.

The argument is that as the base of users grow, average ARPUs are bound to decline — at least for a while. In any case, they point out, the volumes of people more than make up for the low amo unts that each of them spend.

Surprisingly though, the number of people getting on the internet in India isn't much to write home about. For the period under consideration, it grew barely 6% and Trai estimates there are only 85.47 lakh subscribers yet.

These subscribers generate an ARPU of Rs 205 for service providers by spending, on average, 190 minutes online. As for broadband services, Indians account for just a little over 20.19 lakh.

The dichotomy in growth is explained by analysts as a function of price. Cellphones are cheap. PCs aren't. They haven't reached the kind of price point yet that will attract a few million people each month, they argue. And what would that price point be? Sub-Rs 10,000 say industry observors.

Computer manufacturers though think selling machines at that kind of price isn't worth their while.

For telecom operators that is good news. Because eventually, most of them hope, people will get on the internet using their cell phones. In turn, that is expected to drive their ARPUs up.

Rural Wireline subscriber base has reduced from 12.56 million in quarter ending September 2006 to 12.48 million in December quarter by registering a negative growth of 0.64%.

The number of Village Public Telephones (VPT) in the country has increased to 5.59 lakhs from 5.52 lakhs recorded a growth of 1.26%. The tele-density in the quarter has reached 17.16 compared to 15.41 at the previous quarter.

 

[Contrarian]

Videocon to tie up with French co for biotech SEZ


KOLKATA: Videocon group will form a joint venture with a leading French company to foray into biotech secor. It has already announced plans to set up a biotech special economic zone (SEZ) near Siliguri in West Bengal.

Venugopal Dhoot, chairman of Videocon group, told TOI that the top level officials of the French outfit will call on chief minister Buddhadeb Bhattacharjee on April 28 to elaborate the project.

"We shall form a 50:50 JV with the French outfit. But at this point of time I cannot disclose the name," he said.

Videocon chairman informed that it will invest over Rs 150 crore in the biotech venture, which has already got SEZ status.

The consumer electronics major and the French outfit will bring in Rs 75 crore each into the project. Videocon has already diversified into hydrocarbon sector and now it is hoping to make it big in the biotech arena.

Dhoot pointed out that the French outfit is convinced on the potential of North Bengal in biotech sector.

"The hilly region offers number of unexplored herbs which we can use for biotechnology. We shall have a strong research facility at Siliguri," he added. According to Videocon chief, the project will generate employment for close to 1,000 people.

Dhoot is hoping that the project will kick off by June 2007. "We need close to 100 acres for the project and the land acquisition will not be a problem. I hope that by May we shall buy the required land," he added.

Besides, the biotech SEZ, Videocon has also proposed to set up an IT SEZ in North Bengal and two SEZs in south Bengal.

 

[Neo]

GM to buy more auto parts from India

NEW DELHI: General Motors Corp is looking to buy more auto parts from India for its global operations and also wants a bigger share of the Indian car market, Chief Executive Rick Wagoner said on Tuesday.

GM, the world’s largest auto maker, aims to have 10 per cent of the Indian market by 2010 and expects sourcing to rise by as much as five-fold over the next two years.

“We are not only focusing on leveraging our supply base to suit our local needs, we are also looking to source more parts out of India to supply our global operations,” Wagoner said at a business conference in the Indian capital.

Wagoner, who launched the mini Chevrolet Spark, said he expected India would be the world’s second-fastest growing auto market over the next decade.

“Half of the population is under 25 years, so there’s a lot of potential buyers for everything,” Wagoner said.

Annual passenger vehicle sales in India are forecast to nearly double to 2 million units by 2010, on the back of rising incomes and new launches from the world’s top car makers.

GM, which makes the Corsa, the Chevrolet Optra and Aveo sedans and the Tavera multi-utility vehicle in Gujarat state in a plant with a capacity of 85,000 units, is building a second plant in Talegaon in western Maharashtra state with an initial capacity of 140,000 units.

It has said it may build an engine and transmission plant as well, and that India could become an export hub for mini cars.

“With India growing its domestic industry, it is going to increase the possibility of India exporting more,” Wagoner said.

But he cautioned there were risks to focusing on exports from low-cost manufacturing centres like India and China.

“I don’t rule out that products may be shipped to other centres, but there are exchange rate risks, and you can get different types of trade issues,” he said.

GM is a late entrant to the small car segment in India, which makes up more than two-thirds of annual car sales.

Its Spark, priced at Rs309,000 to Rs389,000 ($7,375-$9,284), will compete with models from Suzuki Motor Corp.’s Maruti Udyog Ltd, Hyundai Motor Co. and Tata Motors Ltd.

GM will make 2,000 to 3,000 Sparks a month initially, until the Talegaon plant becomes operational in 2008.

“This product is in the mainstream, where most units are sold in India,” said Wagoner, who met the Indian prime minister and is scheduled to visit GM’s engineering centre in Bangalore. “It gives us a chance to go after a much bigger volume base.”

GM said earlier this month it would begin producing a mini car “very soon” for Europe and Asia. At the New York Auto Show, GM unveiled three concept mini cars, designed in South Korea and assembled in the United States and India.

GM’s other Asian rivals Honda Motor Co and Toyota Motor Corp are also aiming for a significant share of the Indian market, while Volkswagen will begin making up to 110,000 vehicles a year from 2009.

France’s Renault, which rolled out its no-frills Logan sedan earlier this month with joint venture partner Mahindra & Mahindra Ltd, has said it may work with its Indian partner on other low-cost options.

http://www.thenews.com.pk/daily_detail.asp?id=51707

 

[Neo]

Turn down your A/C, power firm tells Mumbai

MUMBAI: Businesses in India’s financial capital, Mumbai, are being asked to keep down air conditioning use, change light bulbs and put computers on sleep mode in a drive to conserve energy and prevent severe power shortages.

Power supplier Tata Power Co Ltd said the city, which aspires to be a global financial hub and normally enjoys uninterrupted electricity, faced potential power cuts as demand peaks in April and May the hottest months in the Mumbai calendar.

Demand for power has risen with shopping malls, cinemas and new luxury apartments springing up across the city, reflecting an economic boom that encourages spending on everything from refrigerators to plasma televisions.

In a letter sent to businesses this week, Tata Power Co urged office workers not to use electricity at peak times, switch the air conditioning on an hour after starting work and flip off televisions and mobile phone chargers at the plug.

The company called on office workers to replace incandescent bulbs with compact fluorescent lamps to save electricity.

“Severe power shortage together with Mumbai’s unprecedented lifestyle boom has pushed the city’s electricity demand beyond availability,” managing director Prasad Menon wrote.

Efforts were on to plug the power deficit, “yet this summer the city is faced with the spectre of power cuts,” he said.

Mumbai, home to many of India’s leading bankers and industrialists, normally has power all year round because of a decades-old network designed to keep going even when supplies are disrupted elsewhere in the region. Tata Power says it has procured 300-350 megawatts more power from other states to meet the shortage during the summer months.

http://www.thenews.com.pk/daily_detail.asp?id=51706

 

[Contrarian]

WTF, Mumbai gets uninterrupted power?

Here i am in Delhi with friggin power cuts ranging from 2-4 hours everyday in my earlier locality. I dunno how much they cut power now, cuz where i live now in delhi, there is no power outage.

 

[Neo]

April 19, 2007

India enjoys record level of takeovers

LONDON, April 18: The value of Indian-backed foreign takeovers hit a record in 2006 due to Tata Steel's purchase of Anglo-Dutch steelmaker Corus, according to data published on Wednesday that highlighted the financial firepower of corporate India.

Market researcher Dealogic revealed that Indian companies spent a record $23.126 billion (17.025 billion euros) in foreign acquisitions last year.

That marked an increase of 417 percent compared with $4.469 billion in 2005.

Around 57 per cent of the total value of Indian takeovers in 2006 were in the steel and metals sector, according to Dealogic.

Tata Steel snapped up Anglo-Dutch steelmaker Corus last year for $13.7 billion in what remains the biggest-ever foreign takeover by a company in the Asian emerging power.—AFP

http://www.dawn.com/2007/04/19/ebr10.htm

 

[Neo]

WTF, Mumbai gets uninterrupted power?

Here i am in Delhi with friggin power cuts ranging from 2-4 hours everyday in my earlier locality. I dunno how much they cut power now, cuz where i live now in delhi, there is no power outage.

You're still better off compared to karachi or Lahore.
Only city in Pakistan with uninterrupted supply is Islamabad, population approx. 525.000.

 

[Contrarian]

Wait till i show you this article. The Mofos, the private companies(mofos in this case) actually SELL electricity to other states from Delhi, saying that the demand in Delhi is low during that period, SO they have to sell it, when there are powercuts. This is an exclusive from Times Of India. chk it out...

Power punch to discoms
Saurabh Sinha
[ 19 Apr, 2007 0206hrs ISTTIMES NEWS NETWORK ]
RSS Feeds| SMS NEWS to 8888 for latest updates


NEW DELHI: The citizens of Delhi have called the bluff of those who run the city’s power sector. In an extensive exclusive poll by TOI, they have exposed that the argument being peddled by private distribution companies and the city power regulator, DERC, to sell 600 MW of Delhi’s power to other states is badly flawed.

At a time when the city is reeling under power cuts, power is being sold to Uttar Pradesh and Maharashtra on the ground that Delhi experiences a ‘lean period’ in demand between midnight and 6 am and then again from 9 am to noon. Hence, only ‘surplus’ power is being sold and big bucks are being earned for the Delhi consumer.

But this ‘lean period’ argument seems to be specious. A citywide survey done for The Times of India by top market researcher.

TNS has thrown up startling results: an overwhelming majority of Delhiites is experiencing power cuts — ranging from one to three hours — during these so-called lean periods. The situation seems to be particularly acute in east and west Delhi, but south Delhi too is not much better off.

The survey, covering 200 respondents spread across north, south, east, west and central Delhi, showed that 60% had faced power cuts in the wee hours of the morning and two-thirds said they had experienced power cuts between 9 am and noon. If there was, indeed, surplus power at these times, there shouldn’t have been power cuts.

Delhiites aren’t just lamenting the sorry state of affairs. They also seem to be quite clear on what the way out of this mess is. Almost nine out of 10 respondents — 89% to be precise — said consumers should have a choice when it comes to deciding who they buy their power from. Having reaped the benefits of competition in sectors like telecom, they are now demanding that there be some competition between power suppliers too.

Coming back to power cuts, roughly two-thirds said the power outages lasted about an hour or more, which is a fairly clear indicator that most of these cuts were due to load-shedding rather than breakdowns or faults.

 

[Contrarian]

April 19, 2007

India enjoys record level of takeovers

LONDON, April 18: The value of Indian-backed foreign takeovers hit a record in 2006 due to Tata Steel's purchase of Anglo-Dutch steelmaker Corus, according to data published on Wednesday that highlighted the financial firepower of corporate India.

Market researcher Dealogic revealed that Indian companies spent a record $23.126 billion (17.025 billion euros) in foreign acquisitions last year.

That marked an increase of 417 percent compared with $4.469 billion in 2005.

Around 57 per cent of the total value of Indian takeovers in 2006 were in the steel and metals sector, according to Dealogic.

Tata Steel snapped up Anglo-Dutch steelmaker Corus last year for $13.7 billion in what remains the biggest-ever foreign takeover by a company in the Asian emerging power.—AFP

http://www.dawn.com/2007/04/19/ebr10.htm

Neo, please see the next few articles as well

 

[Contrarian]

Emaar, MGF buy Singapore company

MUMBAI: Dubai-based real estate major Emaar Properties and India's MGF group on Wednesday acquired majority stake in Singapore-based RSH Ltd in a deal valued at Sg $227 million (about Rs 630 crore).

The acquisition was done by Golden Ace Pte Ltd, a joint venture of the two companies. It got 61.3% shares at the close of the conditional cash offer, taking its total control in RSH to 87.3%. This includes 42.5% of undertakings it had secured at the beginning of the offer.

MGF group director Siddharth Gupta said "Asia and Middle-East-North African region today is witnessing a retail revolution and this move marks our entry into niche segment of fashion and lifestyle, wherein we aim to address the needs of evolved and discerning customer."

"We will be reviewing RSH's current operations, strategies and future plans, which will take into account the combined strengths of RSH, Emaar Properties and MGF Retail," he said.

http://timesofindia.indiatimes.com/...buy_Singapore_company/articleshow/1922739.cms

 

[Contrarian]

Essar Global buys Minnesota Steel


MUMBAI: In just under a week, the Ruias who control the Essar group have run up a shopping bill of $4 billion buying up two steel companies in North America.

Barely 48 hours after they entered into an agreement with Canadian steelmaker Algoma Steel, the Ruias have made yet another acquisition in the US. On Wednesday, Essar Global, the investment arm of the group, executed an agreement to acquire Minnesota Steel LLC, a US-based company for $100 million.

Minnesota currently has operations in iron ore mining and has made plans to invest $1.65 billion to setup an integrated steel making facility - a first of its kind in the US. Essar will pay close to $100 million in a phased manner as it stands today.

The $1.65 billion that will be needed to build the steel making unit with an annual capacity of 2.5 million tonnes, will be deployed over two years. A vital aspect of this acquisition is that Minnesota controls iron ore reserves in excess of 1.4 billion tonnes.

Apart from the obvious advantage that Essar will gain from this acquisition of building a presence in the North American market, the fact that Minnesota owns iron ore resources is an advantage for the group. An industry expert said, "Essar will not only have an assured supply of raw matrial for the Minnesota Steel unit, but will also feed the Algoma Steel plant, which is at a distance of 200 km from the mines."

Essar Global Chairman, Shashi Ruia said his company was looking forward to expanding operations into North America. "Our investment in Minnesota Steel gives us a cornerstone in the North American market. From this we will further expand our global steel business," he said. Essar has also lined up investments in Iran, Trinidad and Tobago and Vietnam in the steel business.

Essar's buyout of two relatively small companies in North America signals the desire of Indian steel companies to grow in size. Earlier, Tata Steel made paid $12.9 billion to acquire UK-based Corus, which came after steel majors like Mittal Steel consolidated their businesses a few years ago.

 

[Contrarian]

IA flies high with higher market share

NEW DELHI: For the first time in five years, Indian Airlines has managed to go ahead of its nearest rival — Jet Airways — in terms of revenue passenger kilometre (RPK) per day share. The March figures show that IA has a 21.9% RPK share, which is slightly ahead of Jet's share at 21.7%. In addition, the airline's official statement says it enjoyed the highest seat factor in March at 71.8%, which is higher than the industry average of 69.5%.

While IA is ahead in RPK share, the passenger market share figure shows that Jet is still the leader at 22.9%. But IA claims to be closing in on this front too as the gap is now exactly a percentage point at 21.9%. This is way below the gap they had in January when Jet enjoyed a 25% share while IA was at 17%.

Moreover, IA has witnessed a 20% growth from last March, while some other big airlines have suffered a negative trend.

IA CMD V Trivedi said: "Inspite of our concessional fares that even match those offered by low cost carriers, we have been doing two things — maintaining ourselves as a trustworthy full service airline. Our aggressive marketing and passenger-friendly offers like giving executive class tickets at slightly more than full fare economy fare will only get better now."

But the RPK market share of its main competition could soon become a major challenge for IA. Once Jet and Sahara start flying as one airline, the shares would add up and give IA a reason to worry.

 

[Contrarian]

Re appreciation: Centre plans rescue operations


NEW DELHI: After industry fears of the rupee affecting their exports, the government too acknowledged the impact of the appreciating currency on the competitiveness of Made-in-India goods and services in global markets.

"The appreciation of rupee by 9% is hurting our exporters. They have brought it to our notice. The government will hold a meeting with them to see a way around the situation," commerce minister Kamal Nath said a day ahead of the annual supplement of Foreign Trade Policy.

The rupee has appreciated by over 9% between August 2006-April 2007, raising fears that Indian service providers, including technology firms, and merchandise exporters may lose orders to competitors from other countries. The rupee closed at 42.05 a dollar on Wednesday, up 5.2% in 2007. On Tuesday, it hit 41.62, its strongest since May 1998. The rupee has risen about 5% this year and about 12% since hitting a three-year low last July.

While Nath will deliberate on policy intervention with export promotion bodies next week, how much impact his interventions would have is unclear since the RBI has refused to step in the forex markets as part of its strategy to make imports more attractive and combat inflation.

But Nath believes that with the US dollar becoming cheaper, there could be serious repercussions on imports and also affect the overall balance of payments situation. Already imports have been growing at 35% while exports have registered a growth of 22%. Over the last three months, exports have grown at single digit rates compared to nearly 30% at the start of 2006-07.

The UN Economic and Social Commission For Asia and Pacific (Escap), in its 2007 survey released, said the US dollar was expected to weaken further this year against currencies of east Asia and south-east Asia despite efforts to keep the local currencies down.

On Wednesday, the rupee eased slipping further away from a nine-year high, as oil refiners stepped up dollar purchases and traders pared positions on concerns that the Indian unit's recent rally was running out of steam. The prospect of RBI's intervention also weighed on sentiment, traders said. But traders expect a breather of sorts for the time being, which could spell good news for Nath and exporters.