Indian Economy - News & Updates - Archive

[Contrarian]

With futures loaded, fall in markets seen

NEW DELHI: With investors having invested heavily in the futures & optins segment of the market, a further fall in the stock markets in the coming days is not ruled out by brokers and fund managers.

With equity markets taking a U-turn on Monday, investors are expected to sell in the F&O segment to contain losses. At the same time, the fall in this segment will prompt investors to put in margin money for which they might liquidate their position in the cash segment.

"The viscious circle will put pressure on the market as a whole," said Investshoppe CEO Ashish Kapur. According to estimates, the open position in the F&O segment is around Rs 50,000 crore. The trend was evident even on Monday, when investors rushed to the cash segment as the NSE Nifty fell so that they could square up their positions in the F&O segment.

While this increased the selling pressure in the F&O segment, there were very few buyers. So, prices of future contracts dipped. Futures based on Nifty index, which would mature in December 28, 2006, fell to close at 3,839 points, while Nifty 50 closed at 3,849 points in cash market. This indicated that the market expected Nifty to fall further — albeit marginally.

The NSE index for banking stocks fell to 5,181 points, while in the cash segment the index closed at 5,244 points. That means, the fall in banking stocks is likely to continue for a few more days. Besides, the difference in the F&O segment and the cash market for bank shares — which was nearly 1% — was more than the overall market.

But, the situation is not as grim as it was in May 2006. Investshoppe's Kapur said in May 2006, the open position was very large. Besides, small retail investors too had taken large position. This time, these investors are not so active in the F&O segment.

As a result, analysts said, the selling pressure due to F&O segment could soon be a thing of the past.

 

[Contrarian]

L&T bags Rs 5400 crore deal for IGI upgrade

NEW DELHI: Delhi on Monday moved closer to becoming home to a world class airport. Engineering major Larsen & Toubro (L&T) has been awarded the Rs 5,400 crore contract to build the new passenger terminal — replete with 130 check-in counters, 50 emigration and 48 immigration counters, besides a multi-storey car park to accomodate 4,300 cars under the modernisation exercise for Delhi's IGI airport. L&T will also construct a new 4.43-km runway — one of the longest in Asia — under this contract.

IGI's owner — Delhi International Airport Ltd (DIAL) — has also given L&T the mandate to carry out associated work for the airport, which is scheduled to be commissioned before the Commonwealth Games in 2010.

The new terminal (Terminal 3) would come up near the existing international terminal and will be equipped to handle 37 million passengers per annum. Spread over 4.4 million square feet, it would have 74 aerobridges and 30 remote parking stands for aircrafts. Besides, 56 passenger travelators will make commuting within the terminal easy. The contract also includes installation of elevators and escalators, baggage handling systems, IT, security, Electrical & Mechanical systems.

The new runway would be operational in 2008, and would be equipped with a hi-tech system enabling landing even with a runway visibility of only 50 meters. This runway will be able to handle Airbus A380 superjumbo.

The contract also involves construction of connecting taxiways, satellite fire lighting facilities, cargo terminals, aircraft maintenance facilities, utility services and other primary infrastructure support facilities. In addition, L&T will also build a six-lane road connecting the terminal and national highway NH-8, a multi-storey car park to accommodate 4,300 cars and a forecourt for the new terminal.

 

[Contrarian]

Jet Air charts expansion abroad

NEW DELHI: Naresh Goyal's Jet Airways has penned an ambitious flight plan for 2007, which includes spreading its wings into three North American destinations besides entering Bangkok, China and Africa. "By August next year, we will be flying to New York from Mumbai via Brussles and in October we expect to start our flight to San Francisco from Mumbai via a point in China, which could be Shanghai," Jet Airways CEO Wolfgang Prock-Schauer said.

"By 2007 or early 2008, we expect to operate to Toronto from Delhi," Prock-Schauer said while announcing the airline's non-stop flights to Bangkok from Delhi and Kolkata starting January 23.

Besides, the carrier is planning to fly to the African continent, mainly to South Africa and Kenya in the later part of 2007. Prock-Schauer said Jet Airways was looking at flying to the Gulf region, which is currently not open to private carriers.

"As per government policy, we are not allowed to fly to Gulf now. But by 2008, this sector is expected to be opened up and we are looking at flying there," he said adding that all the major destinations in the region were on its radar.

In line with the expansion plans, Prock-Schauer said Jet would almost double its number of pilots. "Currently, we have about 750 pilots. By 2007, we are looking at increasing it to 1,200 and by the end of 2008-09 we expect to have a total of 1,400 pilots," he said. The new Bangkok flights would operate 14 flights a week, seven each in the Delhi-Bangkok and Kolkata-Bangkok sector. It announced an inaugural return fare of Rs 6,500 (plus Rs 4265 taxes) on Kolkata-Bangkok sector for two months. On Delhi-Bangkok sector fares start at Rs 13,500 for economy class.

 

[Contrarian]

Times Group, Mid-Day sign strategic pact

NEW DELHI: Mid-Day Multimedia, publishers of Mid-Day in Mumbai and Bangalore, and the Bennett, Coleman Group, publishers of The Times of India and The Economic Times, have signed a business cooperation agreement to jointly approach various markets in the country to mutual benefit.

This alliance will benefit both organisations through cooperation in printing, circulation and advertising sales.

In order to support Mid-Day's plans for growth in print and FM radio in metro markets across the country, its promoters are enhancing their investment in the company, and the Bennett Coleman Group is undertaking to subscribe to a preferential allotment of Mid-Day shares, subject to shareholder and regulatory clearances.

The promoters of Mid-Day are proposing an incremental investment of Rs 22.56 crore, and the Bennett Coleman Group, an investment of Rs 21.11 crore at a share price of Rs 60 each.

After both rounds of investment, the promoters of Mid-Day will hold a 51% stake in the company, while Bennett Coleman will have a 6.67% shareholding.

"The Times of India, with its leadership position in the morning broadsheet market, and Mid-Day with a successful formula for the middle-of-the day, are, in fact, complementary plays," Bennett, Coleman and Co Ltd executive director Ravi Dhariwal and Mid-Day Multimedia managing director Tariq Ansari said in a joint statement in Mumbai on Monday.

"With this alliance, we will endeavour to garner a larger market share of both readers and advertising in major metros of the country," the joint statement added.

 

[Contrarian]

Tracmail to change handsAdd to Clippings
Reeba Zachariah
[ 12 Dec, 2006 0032hrs ISTTIMES NEWS NETWORK ]
RSS Feeds| SMS NEWS to 8888 for latest updates

MUMBAI: Tracmail, a pioneer in the Indian BPO business, is all set to change hands. California-based buyout firm, HandsOn Ventures, is close to acquiring TWS Holdings, the largest shareholder in Tracmail, a source familiar with the development told TOI. The valuation of the deal could not be ascertained.

TWS Holdings, with facilities in India and Canada and a capacity of over 1,500 seats was formed in October 2003 after the merger of Tracmail, Webhelp and Spherenomics. Tracmail was originally founded by Adi Cooper, a former TCS hand in 1999 when the BPO business was just about beginning to take root in the country. Among the first investors in the company was the View Group which picked up a 50% stake in the company for $7-8 million. Subsequent to this, Cooper sold another 20% to eTec Ventures for an undisclosed sum.

Later, differences cropped up between Cooper and the investors on a fresh line of funding to the tune of $5 million. To make matters worse, Webhelp, one of Tracmail's key partners in the business was close to bankruptcy. If Webhelp closed down, Tracmail's future looked bleak.

That's when, Cooper suggested Webhelp merge with Tracmail to create a stronger entity. The View Group got Spherenomics, a North American BPO and a three-way merger happened. Then, the View sold a part of its stake to Stream, a US BPO that got into a JV with Tracmail to create Stream Tracmail. HandsOn Ventures' move is similar to strategy adopted by Oak Hill Capital Partners and General Atlantic Partners buying majority interest in GECIS (now known as Genpact) about a year ago.

 

[Contrarian]

Art of Living to help BPOs

KOLKATA: The programme which business process outsourcing (BPO) majors based outside Kolkata has been relying on to retain staff is finally set to make an entry here.

The Art of Living Foundation's 'wellness programme' targeted specifically at call centres and BPO outfits employees, which has already become highly popular in the NCR, is likely to be rolled out in Kolkata early next year.

"Young people working in BPOs have to put up with a lot of stress and we believe that this would benefit them immensely," its coordinator (Kolkata) Bharati Ganguly said, while explaining the rationale for launching a programme for the ITeS community. "We will soon finalise the modalities for introducing our courses at as many companies as possible," she added.

Although the attrition level in the city is still far less than in Bangalore, Hyderabad or Gurgaon, call centre employees here also complain about experiencing the same levels of stress as their counterparts elsewhere. Irregular working hours, particularly the graveyard shifts, and a concept of low career prospects in BPOs have often been identified as causes responsible for bringing on stress.

The core of its teaching mechanism revolves around a technique known as 'Sudarshan Kriya'. Proponents point out that this form of meditation flushes out negative emotions and makes a person feel good.

"Apart from the general wellness programme, we are also planning to starting HIV/AIDS awareness for the BPO set," Ganguly said. The Foundation would collaborate with the West Bengal AIDS Prevention Society for this purpose, she added.

 

[Contrarian]

BoI buys 76% in Indonesia's Bank Swadesi

MUMBAI: Bank of India will acquire 76% stake in Indonesia-based Bank Swadesi for close to $25 million (Rs 112.5 crore.) The deal follows State Bank of India's acquisition of controlling interest (76%) in PT Bank IndoMonex.

Bank Swadesi is a small retail bank listed on the Jakarta Stock Exchange. The bank has eight offices including four branches in Jakarta and Surabaya. It also has a forex licence and a strong retail presence in Indonesia.

Bank of India (BoI) will acquire management control in the bank. It has received the Reserve Bank of India's and government of India approval to acquire the listed Indonesian Bank.

BoI has now applied to the stock exchanges in both countries and is awaiting approvals from regulators in Indonesia.

"We have signed an agreement with the bank's largest shareholder to acquire controlling 76% stake in Bank Swadesi. We will make an open offer for acquisition in the next two days," said Bank of India chairman and managing director M Balachandran. "This will enable the bank to strengthen its footprint in the country and leverage the trade flows between the countries," he added.

"Many Indian manufacturing companies are planning to set up operations in Indonesia. Our presence in the country will help us work with these corporates better," Balachandran added.

 

[Contrarian]

Deutsche Bank to infuse fresh capital in India

MUMBAI: Deutsche Bank will infuse Rs 1,125 crore into its Indian operations. This will boost its capital funds to Rs 2,411 crore, and is largely to support investment banking business in the country.

A remittance of Rs 500 crore has been effected and the balance of approximately Rs 625 crore will be brought in the near future. ''We are a very strong investment bank. We want to do large ticket size financing for Indian corporates,'' said Gunit Chadha, managing director and CEO of Deutsche Bank.

 

[Contrarian]

India may pay 50% more for Iran LNG

NEW DELHI: India is willing to pay 50% higher price than the one agreed in June last year, to buy five million tonnes of Liquefied Natural Gas (LNG) from Iran.

GAIL (India), Indian Oil Corporation and Bharat Petroleum, which had in June 2005 signed a deal with National Iranian Gas Export Company to buy five million tonnes of LNG at $3.125 per mBtu cap price, are now willing to pay $4.775 per mBtu.

"Iranians have been insisting that the June deal is off unless price is revised. Though we have a water-tight legal case against them for not honouring a deal, we do not want to rock the boat now," an official said.

As per last year's formula, Iran was to charge India 6.5% of the Brent crude oil price at the time of loading of each consignment plus a fixed price of $1.2 per mBtu. Price was to be capped at $3.215 per mBtu at $31 a barrel Brent price. For initial two years, a 10% discount was allowed leading to a price of $2.9 per mBtu from 2009 to 2011.

"We are willing to raise the $31 cap to $55," the official said adding Tehran had sought a higher ceiling of $65 per barrel. At $65, the free-on-board price would come to $5.425 per mBtu.

To this $0.30 per million Btu would be added for transporting the gas in its liquefied form in specialised tankers from Phase 12 of the gigantic South Pars as field.

Of the five million tonnes per annum, LNG to be imported from Iran, GAIL will be responsible for marketing 40%, IOC 35% and BPCL the remaining 25%.

The official said the fixed price component ($1.2 per mBtu) would have an escalation of 2% every year after the second year of the contract delivery.

New Delhi wants Iran to maintain C2 (ethane) content in the LNG at 5%.

 

[Contrarian]

Reliance Life plans Rs 900 cr biotech foray

NEW DELHI: Mukesh Ambani is poised to add 'life' to his retail operations, with his biotechnology venture Reliance Life Sciences gearing up to pump Rs 900 crore into four facilities for producing home-grown clinical and generic products such as plasma proteins that are imported for crucial treatments.

Industry sources said the company plans to spend the money in the next 6-12 months for setting up the facilities. It will have at least one unit in north India, probably in Haryana, Punjab or Himachal Pradesh. The other three units will be located in Maharashtra and Gujarat, where the firm is looking for sites.

Sources said products developed and produced by Reliance are expected to be at least 40% cheaper than the imported life-saving stuff.

The company also plans to spare capacity in these facilities for contract-manufacturing of biotech products for other companies.

Reliance has a pilot-scale research and production facility near Mumbai conforming to WHO-GMP and FDA standards of the US. The move to foray into full-scale manufacturing seems to have been triggered by two factors.

The first: a successful use of a plasma protein, Factor VIII, developed by the company to make a knee-replacement surgery possible on a haemophiliac patient in a Delhi hospital last month.

This anti-haemophiliac protein is imported at present. Besides high costs, patients suffer from uncertainty of supply and short expiry periods. Surgeries like knee-replacement are near-impossible on haemophiliacs as their blood does not clot easily. Many patients are left with no choice but to live in pain as they cannot afford the imported biotech products.

The second trigger is the launch of Reliance retail operations. The company's retail chains and malls are expected to have medicine counters. A Reliance biotech foray, thus, has a readymade staging theatre in the retail chain.

 

[Contrarian]

China may rival India in gems & jewellery industry

MUMBAI: The news is sure to add to the gloom in the Indian gems and jewellery industry hit by a downturn. While global jewellery sales are expected to grow 4.6% year-on-year to touch $230 billion in 2015, India's share of the diamond processing industry in value terms is predicted to drop 8% to 57% by 2015.

China, on the other hand, will emerge as a strong player with 21.3% of the diamond processing share. The good news is that cutting and polishing centres would be primary beneficiaries of the fall in rough prices and value addition will increase from 29.3% in 2005 to 34.1% in 2015.

These are a part of a KPMG report released by Gems and Jewellery Export Promotion Council (GJEPC).

According to the report, by 2015, around 9% of the world's diamonds, in volume terms, will be processed locally by mining countries, with Angola, Namibia, and Botswana emerging as profitable cutting, polishing and distribution centres in Africa. Equally, India and China together will emerge as a market equivalent to US by 2015.

The US is currently the world's largest market for jewellery and accounted for an estimated 31% of world jewellery sales in 2005. However, India and China are the emerging centres of jewellery consumption and have steadily increased their share of the pie to 8.3% and 8.9% respectively. The report predicts that both India and China will be the new centres for fabrication of studded jewellery as the US's share will decline.

 

[Contrarian]

India, Japan set to boost air link

NEW DELHI: India and Japan have agreed to quadruple the number of flights between the two nations from the current level of 11 a week to 42, starting next year. A formal announcement of this enhanced air connectivity will be made when PM Manmohan Singh visits Japan mid-December.

Government sources said both the nations have also agreed to designate multiple carriers to operate flights between India and Japan, a move that would allow private airlines like Jet Airways and Air Sahara access to the land of the rising sun.

"This marks a revision of their bilateral aviation pact for the first time in 13 years," a source said. "Under this liberalised agreement, carriers from both nations can add more flights and even connect to more destinations within the two countries. Direct connections to Buddhist destinations like Bodh Gaya have also been proposed under the revised agreement."

The revised agreement would be presented to Japan's prime minister Shinzo Abe during the meeting with Manmohan Singh. Sources said this is a step towards boosting business ties between the two Asian powers.

"Besides increasing connectivity between the two countries, the move will help in increasing competition and bring down international air fares on this route. Our experience with other international destinations have shown that air fares have dropped once the routes were opened up to more players. A similar nearly 15-20% drop in air fares can be expected by this liberalised arrangement with Japan," a source said.

Prior to this, India had eased air links with US, Britain and China

 

[Contrarian]

Airlines Bluecasting?

NEW DELHI: Airlines the world over have not taken to providing too many newer customer services based on the technologies that have become mainstream.

Forget technologies, most are yet to start even providing good choice of palatable food onboard and comfortable leg space in the cattle class, or ask you to switch off all your electronic devices once onboard which may well be classified a carry-over habit from the past century.

Barring a few, most global airlines have for instance have not yet made good use of technologies for communicating with, and engaging, the customer. There is little chance that the scenario will change anytime overnight with bankruptcies and low-cost aviation looming large on the horizon. But there will always be players who will try out something new and interesting.

A case in point is KLM Royal Dutch Airlines launching a trial at Schiphol airport Amsterdam which can best be classified as Bluecasting.

Simply put, it involves the airline communicating with its passengers who are carrying Bluetooth phones. It works on the presumption that they keep Bluetooth switched on at all times without being scared of being Bluejacked.

KLM's BlueCasting system perhaps signifies the dawning of realisation among airlines that they should connect with customers via innovative channels of communication, and provide services like these which technology can easily provide today.

The airline has started sending messages to travellers who use Bluetooth phones. If they are within the range of the Bluetooth transmitter anywhere at the Schiphol airport, they automatically receive messages from KLM, but only if they have activated their Bluetooth.

For instance, passengers receive an animated image encouraging them to make use of internet check-in facility to avoid long queues at the check-in counter.

KLM's trial has been developed in collaboration with the Amsterdam-based Lost Boys company. A typical message from the airline at Amsterdam airport includes the text: "Check in online, avoid queues."

A slight downside of the present pilot project is that passengers will receive the message only once. If they have momentarily been outside the transmitter's range, they will not receive the message a second time.

KLM's BlueCasting trial will run until February 4 next year. According to the airline, it will then assess whether passengers appreciate being approached in this manner and if more functionalities can be added to Bluecasting to enhance the customer service.

With the number of annual international air travellers slated to grow up from the present 806 million to an astounding 1.5 billion by 2020 as per the International Civil Aviation Organisation (ICAO) projections, it can be anybody's guess if passengers would rather give up a little bit of privacy than wait endlessly in silly queues.

It is time for technology to come to the rescue and minimise the painful experience of air travel to a more pleasant one for all.

 

[Contrarian]

Chinese cars eye India

NEW DELHI: The Dragon's getting ready to sashay down the Indian asphalt ramp all over again. Three of China's leading automobile companies — SAIC (or, Shanghai Automotive Industry Corp), Chery Automobile and Foton (shortened for Beiqi Foton Motor Co) — are gearing up for a drive on the Indian roads.

Auto industry sources say officials of two of these three firms had recently visited India as part of an initial groundwork study to ascertain the market potential and explore opportunities for a local tie-up.

These companies are exploring the feasibility of establishing a presence in India — among the fastest growing automobile markets in the world.

While two of the Chinese companies — Chery and SAIC — are likely to target the burgeoning passenger car market in India with compact and mid-sized cars, sources said Foton intends to enter the commercial vehicle and SUV markets.

Chery — which is being wooed by DaimlerChrysler to source sub-compact fuel-efficient cars for US to fend off Japanese rivals — may look at introducing its compact cars, including the Daewoo Matiz lookalike QQ in India.

Chinese firms are emerging as a threat to the Japanese car makers the world over. If the ventures take-off, this would be the first big attempt in nearly five years by the Chinese auto industry to enter India after the misadventures by a dozen-odd two-wheeler firms from China.

"Representatives from two Chinese auto firms — Chery and Foton — visited India recently and held discussions with local players and the industry body, Society of Indian Automobile Manufacturers. India is among the fastest growing auto markets in the world today and is a high interest market for these Chinese firms, which are looking at expanding their overseas presence," a source said.

Though discussions have been initiated, sources said a full-fledged Chinese auto venture is still over a year away. "These were preliminary meetings to check the ground realities and understand local laws," a source said.

This, incidentally, comes at a time when Chinese investors are facing an uphill task in India with the government keeping several investment proposals at bay citing security concerns.

 

[Contrarian]

Chinese business in India worth $2 billion

NEW DELHI: When it comes to Chinese business interests in India, is it a case of ‘Left doth protest too much’? Industry and government figures indicate Chinese firms have established a substantive presence in key Indian infrastructure sectors worth nearly $2 billion and climbing rapidly.

Chinese companies, almost all state-owned, have marked out a distinctive space for themselves across India. Even in north-eastern states like Manipur, which is still deemed sensitive, Chinese firms are bidding for, and winning contracts. It’s something the Manmohan Singh government plans to showcase during the forthcoming visit of Chinese president Hu Jintao.

However, there are deep reservations about allowing foreign companies in some strategic sectors, and port
development is one of them, particularly because they would be uncomfortably close to naval and other strategic facilities, said sources in the government who are assigned to track trade ties with China.

These sources, who insisted on anonymity, said there is very good reason for India rejecting the bid of China Harbour Engineering Company for the Vizhinjam port near Thiruvananthapuram. The Chinese company in question is also developing Pakistan’s Gwadar port. Even an optimist strategist would have second thoughts about this, they said.

The sources gave examples of Chinese firms being involved in a host of other projects. The China Petroleum Pipeline Co, a subsidiary of CNPC, is building a 1,000-km-long gas pipeline from Kakinada to Bharuch for Reliance Gas Pipelines, a Mukesh Ambani company. Chinese telecom major ZTE Corp has tied up with government telecom companies BSNL and MTNL as well as Tatas and Reliance Infocomm in India’s fast-growing telecom sector.