Indian Economy - News & Updates - Archive

[Contrarian]

Heidelberg expands biz in India

MUMBAI: German cement major, Heidelberg Cement, is strengthening its position in India. After buying a controlling stake in Mysore Cement in July, it has now acquired two grinding units in Kerala for Rs 40 crore.

Heidelberg officials in India were not available for comment. An industry analyst said, "Although these grinding units are small in size, it will help Heidelberg consolidate its position in one of the most stable markets in the south. It is more a strategic fit for Heidelberg's plans for India which include both organic as well as inorganic growth." Cement prices in Kerala are usually higher by around Rs 5-7 per bag, compared with prices in other southern states, he added.

Indian cement industry is in the midst of a consolidation, with construction and infrastructure demand fuelling the demand. "With the region witnessing one of the highest growth rates in the world after China, global majors like Holcim, Heidelberg and Lafarge have set up shop here to tap the potential demand,' an industry expert said. "The domestic cement sector has witnessed an average growth of around 8-10% in the last couple of years and the trend is likely to continue for the next 2-3 years," he added.

 

[Contrarian]

IT buyouts to grow bigger in size

NEW DELHI: As the Indian IT majors grow bigger, their average acquisition size in the international market will become larger. Azim Premji — CMD of the India's third largest IT company Wipro — said the size of average foreign companies that are being acquired by Indian companies would go up from around $50 million to around $100 million.

Premji, confident of the bright future prospect of Indian IT companies, said, "Indian companies are growing faster than their counterparts in foreign countries. And because of this faster growth, domestic giants TCS, Infosys and Wipro may soon join the league of the top 10 most valued firms globally in terms of market capitalisation in the next two-three years."

Speaking at the India Economic Summit organised by CII and World Economic forum, India's third richest person Azim Premji said , "Currently, Infosys, TCS and Wipro come in the top 16-17 companies globally in terms of market capitalisation." At present,Infosys and Wipro have a market cap of $29 billion and $22 billion respectively based on their ADR prices.

He said the driving force for acquisitions would be to buy new technologies. Though, chairman of NIIT Rajendra Pawar speaking at the seminar said, in learning space the acquisition of brand in foreign firms would also be important.

Premji said Indian firms are better placed as compared to their foreign counterpart because of availability of man power. He said while the attrition ratio in developed countries is over 17%, in India it is below 15%. He said India produces around four lakh engineers every year. IT companies employs around 30% of that. But this does not fulfill the requirements.

Premji said Wipro is now hiring non-engineering professionals and give them training to fit in the company's requirements. Premji said, to address the shortages of professionals, IT firms would have to go for hiring non-engineers professionals.

 

[Neo]

Thanks for the update man!
Imho Indian all over growth this year could easily exceed 9%, you've recorded very strong growth in Q1 and Q2.
What do you think?

Neo

 

[Contrarian]

I agree. If the Q3 and Q4 show as good results, our growth would be 9% avg.
This could be because of the govt's effort to pump money and develop the country's infrastructure on a war footing

You really should read up on the airports that are comming up all over India!!, the delhi one is gonan become one of the bets woldwide, all international companies have bid, there have been proper calculations, same for mumbai, channai and kolkota! Not to mention all the tier 2 cities are also getting new airports, completely new!!all at par with the best in the world today, all with capaciy to handle the next 20 years load easily!
refer here: http://www.pakistaniforces.com/forums/showthread.php?t=2783

And also the roads, any1 who has visited Delhi recently should see, more than 50 flyovers were there already 2 years back, as many more planned!, delhi metro and stuff. Its going good!

Though there is one serious dissapointing peice of news, the agricutural growth has slowed down.I am very concerned on this issue. The neglect of the agricultural sector during the NDA govt played no small part in their getting kicked from power last time.

And when UPA came to power, their motto everyday in the newspapers was that they are gonna transform the agriculture sector, put land reforms in place, etc. I am yet to see that happen satisfactorily. Though it always happens that Q2's agroicultural output is always less. I rather expect that this is the key to unlocking >10% growth of the economy EASILY if this sector performs half as well as the rest.

And unless this sector is tackled effectively, there are going to be serious problems indeed.

 

[Contrarian]

Indians to get 15% salary hike in 2007

NEW DELHI: Despite the shortage of human resources leading to a large attrition rate in India, the salary hikes in the country have stabilised in the range of 11.9% and 15% in 2006.

Hewitt Associates — a global human resources services company — in a survey reveals that the salary hikes in 2007 will remain same in Asia including India. Though moderate, salary hikes will be maximum in India among the Asian countries.

In 2007, according to the 7th annual Asia-Pacific Salary Increase Survey by Hewitt Associate, it would be in the range of 12.3% and 15%. Survey says, "Though the employers are reporting pay hikes, these hikes are modest when compared with the previous years. This trend looks set to continue in 2007."

China will continue to be at number three position in the average salary hike, ranging between 7.1% and 8.5% in 2007 as against 7.5% and 8.4% in 2006. Other countries in the region have also shown a marginal increase in the salary.

Head of Hewitt’s Talent and Organisation Consulting Analytics practice in Asia, Nischae Suri says, "While organisations are increasing their spendings on compensation to counter retention challenges in Asia, many companies are reassessing HR strategies and business goals."

The sample size of the survey was 1400 companies. Hewitt study indicated that variable pay continues to be an important mean of attracting and retaining talent, as 78% of the responding organisations used them as a tool to retain talent.

Individual performance award is the most popular variable pay plan as 56.2% of organisations say they prefer it more.

The study says individual performance awards have the highest impact on business results, followed by business incentive plans and team awards.

It adds that companies hiked variable payout in 2006 to 14.9%, up from 14.5% in 2005. Target variable payout was highest for top management at 21.8% and is expected to rise to 22.3% in 2007.

Study highlights that the prime challenge faced by organisations in implementing variable pay plans is poor communication to employees.

 

[Contrarian]

Thomas Cook to buy TCI for Rs 175 crore

MUMBAI: Travel services company Thomas Cook (India) is close to buying the 40-year-old Travel Corporation (India) for about Rs 175 crore. TCI, which has a significant presence abroad, will give Thomas Cook access to business from the increasing number of travellers visiting India for both business and pleasure as the country integrates closer with the world.

Udayan Bose, chairman of Thomas Cook (India) could not be reached for comments as he was travelling. TCI has been on Thomas Cook's radar for quite some time. Ashwini Kumar, who headed the company until recently, had made a pitch for TCI in the nineties. However, the two companies could not agree on a price and one of the three families that own TCI was hesitant to sell its ownership.

TCI is equally owned by the Katgara, Parikh and Kotak families. It is managed by the Katgara family with MD Jehangir Katgara in the saddle. TCI's web site says it has a team of over 1,000 people working in 25 offices in India and 11 offices in US, Canada, the UK, Europe, China, Korea, Japan and Australia catering to 2,000 agents and tour operators.

Thomas Cook (India), which was taken over by Dubai Financial early this year, employs over 1,300 staff in 71 offices. It had a turnover of Rs 142 crore in 2004-05. The company, which is a major forex dealer, has also purchased LKP Forex to consolidate its leadership position in the business.

An analyst with a domestic brokerage firm said,"For Thomas Cook a significant portion of its revenues comes from the forex business. The company has been increasing its thrust on the travel business. The acquisition of TCI is in line with that strategy. TCI is a strong brand name in the inbound travel segment."

Brand building and expanding its network abroad are the current priorities for Thomas Cook (India). While Dubai Financial has taken over Thomas Cook's businesses in Thailand, Egypt, Lebanon and West Asia, besides India, Sri Lanka and Mauritius, it does not have much presence in the regions that TCI has offices in.

The company also needs to build new brands as it can use the Thomas Cook name only for a few more years. It recently launched 100% Holidays, a brand under which it sells packages to travellers from India. Acquiring brands such as TCI and LKP Forex is part of of its preparation to phase out Thomas Cook.

 

[Contrarian]

Wal-Mart shows way for retail biggies

NEW DELHI: The Bharti-Wal-mart agreement is expected to energise other global retail majors to firm up their India plans, with many companies also deciding to advance their entry into the country.

Retail majors such as French giant Carrefour, Hongkong-based AS Watson and UK-based Tesco have been eyeing the retail opportunity in India for sometime now.

These companies are expected to spring into action and formulate their strategies now, with the world's biggest retailer Wal-mart finding a way to set shop in the country. Eyeing the $300 billion retail opportunity, domestic majors like Reliance, Tatas and Aditya Birla group have either entered the retail segment or have announced plans to do the same.

"The Wal-Mart deal is likely to be viewed as a positive move by foreign retailers, which will reinforce their interest in India. Certain large European retailers have been evaluating the Indian market for the last few years and have deferred entry plans due to regulatory constraint," NV Sivakumar, ED, PricewaterhouseCoopers said. "Entry of Wal-Mart through the available route could result in more structured deals within regulatory framework of government policy," he added.

The Bharti Wal-mart deal would also serve a sort of endorsement for many to make a decision on India. "The confidence expressed by Wal-mart in entering the Indian market may lead the others, who are sitting on the fences, to actually advance plans of entering the country", Technopak India chairman Arvind Singhal said, adding "they would make up their minds, this way or that way, but a decision would be made".

Retail biggies like Home Depot of the US, Ikea of Scandinavia and Carrefour will advance their plans of setting shop only as and when markets mature, experts further pointed out.

Ranjan Biswas, partner, Ernst & Young, says "Wal-Mart is one of the global leaders in organised retail. The fact that they have decided to enter India with Bharti as a joint venture partner shows that India is clearly an attractive destination for global retailers to consider. Additionally, the new venture also shows that India has companies which can be potential partners for big international retailers".

European, Japanese and American retailers, like Ahold, Carrefour, Tesco, Makro, Metro, Aeon and Wal-mart have made their presence felt in several Asian countries.

 

[Contrarian]

Funds keep pouring in for realty

NEW DELHI: FDI in real estate is pouring in. After Unitech's decision to raise $700 million to invest in realty, on Thursday, US-based Redhawk Investment Group announced an investment of $1.2 billion to develop a 500-acre township in the country.

In recent times, a number of real estate funds have been formed across the world to invest in India. ICICI Securities' Ravi Sardana said if one has a project, raising funds is not a problem.

In realty, funds are chasing projects. The CEO of Redhawk Investment Bipin Agarwal said the group would develop a township in one of the three cities — Bangalore, Hyderabad and Greater Noida. The group is negotiating with authorities to buy land.

Agarwal said the township will have 6 mini campuses and one main campus. Each mini campus will have an office complex to accommodate around 2000 people. To provide housing needs of these employees, the campus will have residential accommodations. Besides this, each campus will also have shops, hospitals and other recreational facilities like swimming pool, gym and playgrounds.

The concept is to make home to office a 20-minutes walk. In the main campus there would be office and residential complexes for around 8,000 people. Agarwal, who was co-founder and director of US-based Tanning Technology Corp, said the facilities would be leased out to US-based financial services companies, which want to shift back office operation to India to tap its workforce.

The facilities would also be used by the financial services firms to support IT operations in US. Agarwal said it would raise $ 200 million initially to start work. The rest would be raised later as the work progesses.

 

[Contrarian]

US fund, LN Mittal to buy stake in Indiabulls

MUMBAI: Karrick, an investment firm owned by steel baron LN Mittal and FIM Holding B, an arm of US-based investment advisor Farallon Capital, have bought 13.3% equity of Indiabulls Infrastructure Development (IIDL) for Rs 447 crore.

While Karrick has picked up 3.3% equity for Rs 112 crore, Farallon has paid Rs 335 crore or Rs 447 per share for a 10% ownership in the company which hopes to build roads, ports and special economic zones as India tries to remove infrastructure constraints to sustain a booming economy.

Farallon is one of the biggest shareholders in the group's flagship Indiabulls Financial Services (IFSL), which has one of the fastest growing share broking businesses in the country.

For Mittal, this is the third investment in the Indiabulls group. He made his first investment in Indiabulls six years ago when he picked up a 7.5% stake at Rs 6 per share. His second investment in the group was an 8.4% stake in Indiabulls Credit Services, an unlisted consumer-loans subsidiary of IFSL.

Sameer Gehlaut, chairman, IFSL said, the formation of IIDL completes the suite of real estate services that the group would be able to offer. Indiabulls Real Estate (IREL), an IFSL arm which is in the process of being demerged, develops and manages offices and residential properties and some hospitality-related businesses.

The demerger of IREL is expected to be completed within a month. Shareholders will get one share of IREL for every share of IFSL they hold. IFSL shares ended 4.35% higher at Rs 572 on the BSE. However, the announcement came after the close of the market.

 

[Contrarian]

Hero to enter car-making, retail

NEW DELHI: The conservative yet diversified Hero Group is turning a new leaf. As part of plans to expand its portfolio, the cycles-to-infotech Hero group is now preparing a new growth blueprint which includes forays into manufacturing cars and auto parts besides entering the high-growth organised retail market.

Strategies for these diversifications are being finetuned and most of these ventures would be in place over the next 2-3 years, Pawan Munjal, managing director of the $2-billion Hero group's flagship company Hero Honda, told TOI.

"We have been known to be a conservative group, but now we are becoming more aggressive in the market. The Hero group is now looking at new opportunities across various industries," Munjal said.

A foray into manufacturing passenger cars is among the new strategies that's on the active burner, he said adding: "We are looking around. As soon as we get a good partner and a good product line, we will foray into this segment."

This would mark a second coming for the Hero group in the car market. More than half a decade ago, it had joined hands with BMW to enter the car market. However, the project was shelved after a detailed feasibility study.

The Munjal family's proposed car venture, industry watchers said, is expected to look at targeting the entry-level segments in India to take on Maruti, Hyundai and Tata.

Like its counterparts in the Indian automobile industry, the Hero group is also entering the automobile components market. And acquisitions would be among the preferred routes for expanding its footprint in this market.

"Till now, we were producing components mostly for our internal consumption. But now, we have decided to look externally and build our presence in the component sector, both through the organic and the inorganic routes," he said.

The other big diversification will be a foray into the organised retail market — a segment that has caught the fancy of business houses like Reliance and Bharti. "This (retail) is one sector that we feel offers huge opportunities for growth. We are studying the various options," Munjal said.

"I can't give any details now. All I can say now is that these ventures will be in place much before 2010," he said.

 

[Contrarian]

Once again, domestic air fares rise

NEW DELHI: A steady decline in fuel prices in the global market notwithstanding, India's airline companies have decided to go ahead with a flat Rs 150 hike in domestic air fares from Friday in a desperate attempt to wash some of the red ink off their balance sheets.

And the pretext for hike: The growing congestion in the skies, which is leading to high fuel burn and an increase in operating costs.

India's domestic airlines — led by Jet Airways, Indian Airlines, Kingfisher and Air Sahara — have decided to impose a fresh congestion surcharge of Rs 150 on all air tickets with effect from Friday. The decision was taken at a meeting of the recently-formed airline industry body, Federation of Indian Airlines (FIA).

This would be the fifth time that airline are hiking domestic fares this fiscal. Prior to this, the airlines had effected hikes on fuel surcharges and even tinkered the basic fares to shore up their margins. The industry stated that every airline is losing around Rs 20-30 crore every quarter on account of the growing traffic congestion, which forces aircraft to hover over a city before finding a landing slot.

"Fuel prices may have softened, but the fuel bill has not dropped because of the high fuel burn due to growing congestion. This fresh surcharge is being imposed to reduce the impact of growing operating costs due to this high fuel burn," an airline official said.

 

[Contrarian]

For '06-'07, growth seen at 8.5%

NEW DELHI: As Indian economy shines, most economists are betting on 8-8.5% growth during 2006-07, while RBI has forecast around 8% growth.

A beaming FM P Chidambaram refused to enter into the prediction game. "There are no limits to my expectations. Just savour the moment," he said. He acknowledged that there were some concerns on inflation and described the situation as "worrisome".

According to latest data, WPI-based inflation grew 5.29% during the week ended November 11. RBI expects inflation to range between 5% and 5.5%, but Chidambaram said the desire was to move below 5%. "A growing economy must learn to tolerate some inflation. The tolerance level is around 4%," he added.

In recent months, rise in price of essential commodities like wheat, pulses, fruits, vegetables, eggs and milk have been a cause of concern for the government and it is under pressure to take more steps to keep inflation under check. The continued growth momentum is expected to raise inflationary expectations in the economy, as was evident from the drop in bond prices soon after GDP data was released.

There have also been growing concerns from the central bank which only last month said it was necessary to watch the economy for signs of overheating. But the FM said it was premature to say the economy was overheating. Since January, RBI has raised short-term lending rate by 100 basis points and the short-term borrowing rate by 75 basis points, in a bid to curb inflation.

Prices apart, a slowdown of sorts in agriculture could prove to be another sticky point for the government, especially when it has already been accused of ignoring farmers and doing little to boost productivity.

The sector, which accounts for nearly 20% of GDP, grew 1.7% in Q2 as against 4% in last year. While FM said government would analyse the reasons for slowdown, economists blamed the rains. "Average rainfall was normal, but distribution was skewed geographically and in timeliness, which seems to," said Crisil's DK Joshi.

 

[Contrarian]

Sebi turns tech-savvy to track market

MUMBAI: From Friday, keeping tab on the bulls and the bears on Dalal Street will become hi-tech. Market regulator Securities and Exchange Board of India (Sebi) is launching an integrated online system for market surveillance that would capture data from a host of sources on real-time basis to look for any irregularities.

Christened Integrated Market Surveillance System (IMSS), the system is capable of capturing market transaction data and reference data from sources as varied as stock exchanges, depositories, clearing bodies and newswires, R Ravichandran, CGM, Sebi said.
In a presentation to the media at Sebi House, the regulator's new headquarters, Ravichandran said although IMSS will be launched on Friday, it would take a few months to standardise the surveillance system.

One of the important functions of IMSS is the generation of surveillance alerts, on real time basis as well as when the markets are closed. About 39 different parameters have been set into the system which could generate these alerts, which in turn will be looked at by Sebi's surveillance department manually for further action.

Among different types of market irregularities, the system is capable of generating alerts if there is any creation of an artificial market in a stock, insider trading, synchronised trading, front running, high concentration of shares available for trade and price manipulation.

 

[Contrarian]

Once again, domestic air fares rise

NEW DELHI: A steady decline in fuel prices in the global market notwithstanding, India's airline companies have decided to go ahead with a flat Rs 150 hike in domestic air fares from Friday in a desperate attempt to wash some of the red ink off their balance sheets.

And the pretext for hike: The growing congestion in the skies, which is leading to high fuel burn and an increase in operating costs.

India's domestic airlines — led by Jet Airways, Indian Airlines, Kingfisher and Air Sahara — have decided to impose a fresh congestion surcharge of Rs 150 on all air tickets with effect from Friday. The decision was taken at a meeting of the recently-formed airline industry body, Federation of Indian Airlines (FIA).

This would be the fifth time that airline are hiking domestic fares this fiscal. Prior to this, the airlines had effected hikes on fuel surcharges and even tinkered the basic fares to shore up their margins. The industry stated that every airline is losing around Rs 20-30 crore every quarter on account of the growing traffic congestion, which forces aircraft to hover over a city before finding a landing slot.

"Fuel prices may have softened, but the fuel bill has not dropped because of the high fuel burn due to growing congestion. This fresh surcharge is being imposed to reduce the impact of growing operating costs due to this high fuel burn," an airline official said.

hehe, im proud of the airports being developed. This is one of the reasons, there SIMPLY WAS NOT ENOUGH PLACE TO PARK THE AIRCRAFTS! and the new airports, awsome! Most of them bigger than heathrow, many of them greenfield projects!. And one of the added spin off benifits is that in many of the tier 2 cities, HAL shared its airport with the city for flights. So HAL always had trouble testing its own things. Now every tier 2 city is going to get a new airport, HAL gets all its airports decongested!, so they are able to test more. A major boost to the aviation R&D in India. Benifits the IAF immensely!

Not to mentio Mumbai is getting 2 airports!! The current one is begin upgraded to a BIG size, and getting a world class infrastructure keeping in mind the growth in size for atleast 20 years. And another one, which is proposed to be of the same capacity!

BTW any1 who is a frequent air traveller in India, knows hwo bad the situation is! Oh one of the bets parts is that all the airports have been bidded for by International consortium's, by a transparent tender. Some of the airports have already passed ownership from the govt. to the private consortium. Delhi airport for eg, the new owner is GMR group. It is planning to invest USD 1Billion in the process! of this 1 airport alone. Frapport organisation, which runs the frankfurt airport is going to handle the daily runnings of the airport along with the frankfurt airport. The GoI is no longer in charge of it! And the rest of the consortium is of other similar players!

 

[Contrarian]

Nokia mobile TV tech for Doordarshan

AMSTERDAM: The Finland-based Nokia on Thursday announced that it had tied up with Doordarshan in India for a pilot project to roll out mobile TV technology in India. The mobile TV pilot will see the use of Nokia's open standards based Digital Video Broadcast-Handheld (DVB-H) solution.

The Nokia mobile solution is expected to be delivered to Doordarshan through SHAF Broadcast Private Ltd early next year.

During the pilot period, Doordarshan will test the reception quality of the broadcast coverage and explore various options of supporting different service schemes such as advertising and interactive services. The pilot is expected to help Doordarshan understand consumer needs.

Mobile TV broadcasting helps users to watch their favourite TV programmes on their mobile devices.

Digital TV broadcast signals from the air are optimised for mobile devices in much the same way as television at home.

Addressing Indian media here, Ilkka Raiskinen, Senior Vice-President, Multimedia, Nokia, said Vietnam was the first country in Asia where Nokia had rolled out its Mobile TV technology. Nokia had operationalised this technology in Italy and Finland as well. Trials were on in the U.K. and Spain, he said.

Mr. Raiskinen said the Mobile TV application required a DVB-H enabled device. At present, Nokia had N92, a high-end device for mobile TV application.

The company was now implementing mobile TV application only on 3G enabled devices.

He, however, pointed out that mobile TV application did not require a 3G device and that it could work on 2G devices as well. The cost was not a key issue in rolling out the mobile TV infrastructure. It required a few base stations.

The DVB-H solution was an efficient one and did not need more capacity as more consumers were added, he said.

He said similar pilots, carried out elsewhere in the globe, found that, on an average, the mobile TV was used for 20 minutes by any user on the mobile in a day to check on sports, news and soaps. To a question, he said it took 12 months for Nokia to roll out the mobile TV technology in Finland since the commencement of the pilot.

It was possible to deliver a totally new kind of content via the mobile TV.

For Doordarshan, adoption of DVB-H standard was a logical extension of its DVB-T services. DVB-H over IP (Internet protocol) based on open standards is expected to provide mobile phone users discerning broadcast experience.
http://www.hindu.com/2006/12/01/stories/2006120104011800.htm