Indian Economy - News & Updates - Archive

[Screaming Skull]

TCS, Wipro, Infosys among cos hiring people: Forbes​

9 Apr 2009,

NEW YORK: In these times of dwindling job opportunities, American magazine Forbes has named Indian IT majors, Tata Consultancy Services, Wipro and Infosys, among the companies which are either hiring or laying off lesser number of employees.

The three Indian entities along with the likes of UK retailer Tesco and Finnish mobile phone maker Nokia are part of the Forbes list titled 'Global 2000 Companies That Are Hiring'.

In addition to these five companies, UK's Compass Group, IT entity Accenture, Germany-based Metro AG, Mexico's Femsa and France-based Veolia Environment also feature in the list.

"Jobs openings are scarce, but these companies are either hiring or laying off relatively few workers," it said. The magazine noted that technology and service firms dominate the "list of job creators".

These firms are among the world's 2000 biggest companies compiled by Forbes and the league is topped by American industrial conglomerate General Electric. It also includes 47 Indian entities.

Forbes said TCS has about 1,30,000 employees whereas Wipro has a total employee strength of 97,000 and Infosys' has nearly 1,03,000 employees.

 

[Screaming Skull]

Bharti's $750-m IBM IT deal touches $2.5-b mark​

9 Apr 2009

NEW DELHI: India’s largest private telecom company, Bharti Airtel’s 10-year $750 million outsourcing deal with IBM has touched the $2.5 billion
mark as of March-end 2009, a top executive familiar with the deal told ET. This week, Bharti and IBM are set to kick off celebrations in Delhi to mark the halfway tenure (five-year mark) of this first-of-its kind IT outsourcing deal.

Riding on the success of this deal with Bharti, IBM had also signed similar outsourcing deals with Vodafone and Idea Cellular last year, worth $1.2 billion and $900 million, respectively. In February this year, IBM also announced an IT outsourcing deal with Malaysia’s leading operator Maxis. Executive familiar with this partnership said that the Maxis deal was too, similar to the ones IBM has with the Indian operators.

“The Maxis deal is estimated to be worth around $300 million and was largely handled by the IBM’s Indian team that had handled similar projects here,” explained an executive who tracked the development. Additionally, leveraging its partnership with Bharti, the US-based software major is in talks to extend this IT outsourcing model with Africa’s largest telco MTN in a deal that is estimated to be worth about $2 billion, this executive added.

In 2004, Bharti and IBM had expected that the IT outsourcing deal would yield revenues to the tune of $750 over the 10-year period. But, projections proved to be widely underestimated as Bharti experienced record growth over the last couple of years.

The growth is best understood if we consider the figures. Bharti had about 6 million mobile customers when the deal with IBM was signed in 2004, but the telco’s subscriber base has reached over 94 million at present. Bharti is also adding close to 3 million new customers per month, equivalent to 50% of its subscriber base in 2004.

IBM has bagged and executed several telecom projects globally over the last two decades, but until recently, it was involved only in three end-to-end IT infrastructure transformation projects, all of which were in India. The Maxis-deal, the latest addition to the IT’s major’s kitty is a clone of its deals here.

Bharti, which recently launched mobile services in Sri Lanka, has outsourced all its IT requirements in the island nation to IBM. It also handles the IT operations for Jersey Airtel, a subsidiary of Bharti which offers mobile services in Channel islands in Europe.

Last year, IBM’s BPO arm in India bagged a six-year contract to provide voice and back-office services including customer service, collections, and customer retention for Bharti’s premium customers. After that Bharti and IBM also signed a $150-million deal under which the software major would handle all IT operations for the telcos’ direct to home (DTH) television and Internet protocol TV (IPTV) services.

Beyond IT outsourcing, Bharti and IBM have also put together an unique model and invested $100 million to build a service development platform (SDP ) to tap increased revenues from valueadded services. In fact, Bharti has already roped in over 200 companies including Infosys, Indiagames, Mobile2Win, Versa, Symbiotic, Pyro, Hungama and OnMobile amongst others on its service development platform (SDP ).

Bharti’s SDP, which is the first-of-its-kind in India and perhaps even globally will allow these 200-plus companies to develop and offer services related to content, messaging and applications to all Airtel customers across services such as mobile, landline, broadband services or DTH service.

Bharti Airtel’s director, technology and customer service Jai Menon is of the view that over 1000 companies from India and abroad, which also includes individual developers, are likely to partner its SDP by 2010.

 

[Screaming Skull]

BSNL may bid for telecom licence in Tunisia​

9 Apr 2009,

NEW DELHI: State-run BSNL is planning to bid for telecom licence in Tunisia and get a footprint in the African market which has immense
potential.

"We are considering a proposal to bid for licence in Tunisia with Telecommunications Consultants of India Ltd," BSNL CMD Kuldeep Goyal told PTI. The management is still in the process of taking a decision, he said.

Goyal said poor tele-density of Africa and the growing mobile usage there are the key attractions to explore the region.

May 5 is the last date for submitting bid for the licence, which would be valid for 15 years, officials said, adding that the lincence is a composite one for fixed-line, 2G and 3G.

Analysts said the new operators trying to enter the Tunisian market have to face tough competition from the two existing operators.

They added that the minimum bid price may be a low $10 million.

The Tunisian market is well-penetrated with 80 per cent of the population owing mobile phones. Its total tele-density, including fixed lines, is 90 per cent.

 

[Screaming Skull]

Rupee touches 50 per dollar as share rise​

9 Apr 2009,

MUMBAI: The rupee rose to its strongest close in more than a month as the share market extended a winning streak into a sixth session on Thursday, raising expectations of sustained capital inflows that would support the currency.

The partially convertible rupee ended at 50.00/02 per dollar, its strongest close since Feb 25, having risen to 49.85 during trade, according to Thomson Reuters data

It had ended at 50.19/20 on Wednesday. The market will be closed on Friday for a holiday.

"With stocks remaining in positive territory at the close of trading, It was a sentiment-driven rise for the rupee," a trader with a state-run bank, said.

"But, there was dollar buying by a public sector bank, which could be for a defence-related payment. This cut the day's gains for the rupee," he added.

Indian shares rose 0.6 percent on Thursday to a six-month closing high. The benchmark 30-share BSE index has risen 12.9 percent in six sessions, and is up over 34 percent from its 2009 low hit on March 6.

Foreigners have been net buyers of more than $270 million of stocks in early April but are still net sellers of $1.4 billion so far in 2009.

Foreign fund flows have been a key factor for the rupee's fortunes. Last year foreigners were net sellers of more than $13 billion of stocks, and the rupee fell 19 percent.

Offshore one-month rates were quoting at 50.14/50.24 per dollar, slightly weaker than the onshore spot rate.

 

[Neo]

India’s first shariah fund collects Rs50m ​

Thursday, April 09, 2009

MUMBAI: India’s Taurus Asset Management has collected about 50 million rupees in the country’s first actively managed Sharia-compliant equity mutual fund it launched in February, Chief Executive Waqar Naqvi said on Wednesday.

“Around 5 crores, not bad given the fact that even very large fund houses collected some 2 crores or 3 crores,” Naqvi said, referring to the mop-up. Taurus held average assets of about 2 billion rupees in March, making it one of the smallest players in India’s 35-member mutual fund industry.

“While the enthusiasm was there, the market condition was really tough,” he said, referring to a volatile Indian stock market that has led to a pause in inflows into the industry. New equity funds, not including Taurus, collected about 60 million rupees in the first two months of 2009, according to data from the Association of Mutual Funds in India.

Taurus’ fund joins the fast-growing Islamic investments industry estimated to be managing about $65 billion globally with nearly half of the money invested through mutual funds.

 

[Gabbar]

India yet to decide on $11-billion lending to IMF

New Delhi:


If India takes part in USD 500- billion resource raising programme of International Monetary Fund, as decided at the G-20 summit in London last week, it will cost the country up to USD 11 billion (Rs 55,000 crore).



"If the government decides to participate in the new arrangements to borrow, then based on the quota, that (USD 11 billion) could be the amount which the country will have to commit in principle to IMF," Economic Affairs Secretary Ashok Chawla said in New Delhi on Thursday.



However, Chawla did not elaborate as to when the decision on the issue would be taken.



Leaders of 20 advanced and developing countries decided to treble the resources of IMF from USD 250 billion to USD 750 billion, so that the multilateral institution could help the poor and developing economies, which have been hit by the global credit crisis.



India has already said that it would not require any IMF support in the wake of comfortable foreign exchange reserves of about USD 250 billion.

 

[DarkStar]

I don't even know why Bharat is thinking about this.

Of course it should invest in the IMF, World Bank, ADB, and all institutions. It will accrue good interest, and have political leverage over countries and institutions.

It would be extremely stupid to let this opportunity pass.

 

[Screaming Skull]

India may see 75, 000 IT job cuts this year​

10 Apr 2009,

MUMBAI: The Indian IT industry, already under pressure since the downturn began in the US financial, banking and insurance markets last year, is likely to see close to 75,000 job losses this year, according to senior executives of leading software companies.

US president Barrack Obama’s policy on outsourcing had prompted some technocrats to estimate the extent of possible job losses in India at about 50,000 jobs in the first half of the new year itself. These job losses would be across sectors such as IT, ITeS and BPO, they added.

“As on March 31, 2008 there were 550,000 direct jobs created by the IT industry in Bangalore,” said Infosys board member TV Mohandas Pai. “I would estimate close to 30,000 IT professionals, earning an average salary of Rs 5 lakh per annum, would have lost their jobs between April 2008 and March 2009 in Bangalore.”

Mr Pai also said that for fiscal year 2009-2010, an additional 25,000-30, 000 jobs may be lost in Bangalore alone. “These job losses are due to the fact that many companies have shed excess capacity as the growth rates of industries have decreased. It is possible that a fair number of these people would have found jobs in other industries too during this time at a lesser salary,” he added.

Mr Ravi Ramu, CFO of realty firm Puravankara and former CFO of Mphasis says about 50,000 jobs could be at risk next year. However, what worries him more is the spin off effect that will see a lot more losses. “Every direct job in the BPO is supported by 6 indirect jobs. In reality, the spin-off will be even more negative.” Even though, IT bigwigs are concerned about the high rate job loss, IT lobbying body Nasscom, doesn’t think so.

According to Nasscom president Som Mittal, earlier the retrenchment was not on such a large scale as attrition was high. “Companies are stressing more on performance issues in these times as they want to increase productivity. The coming times are uncertain and people are not hiring in large numbers as before. There is already a wage moderation that is happening across the industry and this will definitely reflect on the spending,” he told ET.

 

[Screaming Skull]

IBM bags another outsourcing deal from Bharti​

10 Apr 2009,

CHENNAI: Global IT major IBM has bagged yet another outsourcing deal from Bharti Airtel, the country’s largest private telecom company. IBM will
manage the IT requirements of Bharti’s hived-off tower arm, Bharti Infratel. The deal is estimated to be worth around Rs 250 crore, according to executives in the know of the development.

When asked on the IBM deal, the Bharti spokesman confirmed the development: “Bharti Infratel has outsourced its IT platform to IBM to bring in a comprehensive architecture that provides benefits to its customers, suppliers and employees. This is a continuation of Bharti’s strategic partnership with IBM across its various businesses, including
Bharti Airtel and Bharti Retail.” But he refused to comment on the deal size and the duration.

Bharti Infratel is the second-largest telecom tower company after Indus Towers, which is a JV between Bharti, Vodafone and Idea Cellular. It has 42% in Indus and is estimated to have 65,000-70,000 towers across the country. In 2008, Bharti had offloaded up to 12.5% in Infratel to a clutch of PE players for about $1.25 billion, valuing the company at around $12.5 billion.

This is IBM’s seventh deal with Bharti Airtel over the last five years. In 2004, the US-based IT major had bagged a $750-million outsourcing deal from Bharti and this deal has already touched the $2.5 billion mark as of March-end 2009. IBM also handles the IT operations for Bharti’s recently launched operations in Sri Lanka and also for the telco’s operations in Jersey where a Bharti subsidiary offers mobile services.

Last year, IBM’s BPO arm in India, IBM Daksh, bagged a six-year contract to provide voice and back-office services, including customer service, collections, and customer retention, for Bharti’s premium customers.

Bharti and IBM also signed a $150-million deal under which the software major would handle all IT operations for the telcos’ direct to home television and Internet Protocol TV services.

Beyond IT outsourcing, Bharti has also developed a $100-million service development platform in a tie-up with IBM for companies to develop and offer applications to Airtel customers across mobile, landline, broadband and DTH services.

 

[Screaming Skull]

Plans on track, 1st car to roll-out before summer 2010: Nissan​

10 Apr 2009,

MUMBAI: Japanese auto major Nissan, which is setting up a Rs 4,500-crore car-manufacturing facility with Renault in Chennai, said that the
project is on schedule and that its first car would roll out before summer 2010.

"There is no delay, our plans are on track and Nissan India will come out with its next-generation A-segment car- Micra, on schedule before summer 2010," Nissan Motor India's Managing Director and CEO Kiminobu Tokuyama said.

The 50:50 joint venture between Nissan and Renault at Oragadam near Chennai, will have a capacity to manufacture four lakh cars annually and Nissan will initially produce two lakh cars, which it then proposes to scale-up to manufacture up to three lakh cars in about four years time.

The Micra hatchback car is named March in Japan and the Indian version would be christened either Micra or March, he said.

As of now the joint venture stands, though Renault, which was to originally roll out its models by mid-2010, has not yet indicated when it would now launch its vehicles from the facility.

"As of now, we only know that their launch has been postponed," Tokuyama said.

Tokuyama said Nissan proposes to manufacture 4-5 models from its stable in the next 4-5 years.

The Micra would be available in both petrol and diesel engines, he said, adding that nearly two-third of its production would be exported.

The Ennore port in north Chennai would have a dedicated jetty for exports of Nissan cars and the company hopes to export 2-2.5 lakh cars annually in 3-4 years and sell 90,000-1,00,000 units in the domestic market.

Tokuyama made it clear that Nissan has no plans to manufacture a small car to take on the Tata's Nano at this facility, but Nissan-Renault would be collaborating with Bajaj Auto to manufacture a small car in the country.

He also said that Nissan's plans to manufacture light commercial vehicles with Ashok Leyland was on but its launch has been delayed because of the prevailing economic environment.

This would be at a different facility, which was coming up in Chennai, and the proposal is that Nissan India would market the vehicles, he said.

 

[Screaming Skull]

Market may correct 15% post election: Merrill Lynch​

7 Apr 2009

MUMBAI: Over the next 6-8 weeks, Merrill Lynch expects concerns of a hung Parliament post-election and expected slowing in corporate earnings will likely worry the market. “We believe this could lead to a 15% correction in the markets,” the investment bank says in a report.

On the elections, the brokerage believes (a) there will likely be a hung Parliament i.e. none of the three combinations - Congress-led UPA, BJP-led NDA and the Third Front - will be able to come to power (b) post-election results new alliances are likely -regional parties like BSP and AIADMK will be important (c) the probability of a Third Front government coming to power is still low but increasing in its view.

“Our best case scenario would be a Congress government but with the Left being a key ally in it,” it adds.

According to ML, most of the present alliances are fluid and many parties would be willing to reconsider their alliances post-elections. “We think 2 regional parties - Mayawati’s BSP and Jayalalita’s AIADMK would play a crucial role in deciding the Government. The role of the Left parties, though weakened, should also be important,” ML says.

Despite the break-down of seat sharing with Mulayam Singh’s SP in Uttar Pradesh and Laloo Yadav’s RJD in Bihar, ML thinks both will continue to be part of the Congress-led UPA. The investment bank thinks the UPA still has a slight edge since they can get Left support again. The BJP-led NDA, on the other hand, could need the support of BSP, Jayalalita’s AIADMK, Naidu’s TDP as well as its old ally BJD.

Commenting on the Third Front, Merrill Lynch says, “We think it would be extremely implausible that a Third Front government is formed without the support of Congress or BJP, because Congress plus BJP should gain nearly 50% of the total seats. However, if the Congress/BJP can’t form a stable Government, they may support a Third Front Government. While we think this is a lower probability event, the possibility has been increasing past few weeks.”

The brokerage also expects that Third Front government will be negative for the Indian stock markets.

“We think a positive scenario for the market is a BJP or Congress led government without the Left parties but has a low probability event in our view. Historically, markets have been edgy ahead of elections. We think concerns of a hung Parliament could lead to a 15% correction in markets this time,” the report adds.

“We would be defensive (Buy Hero Honda, Bharti) in the run-up to elections. We think infrastructure would be a priority for all Governments - Jaiprakash could be a gainer in the post-election scenario. We believe a Congress or BJP government without the Left could lead to reforms in (a) privatization and oil reforms (b) banking reforms (c) FDI in retail, aviation, insurance etc,” ML said.

 

[Screaming Skull]

BSE, United SE in talks for strategic alliance​

8 Apr 2009,

MUMBAI: More Indian bourses are talking to each other to survive a long, fierce battle for business that's beginning to unfold in the local
financial markets. The country's oldest exchange, Bombay Stock Exchange, has had preliminary discussions with United Stock Exchange of India, the youngest of the bourse, for a strategic alliance.

A possible deal, that may take some time to consummate, could include equity participation, product sharing, marketing and distribution tie-ups and a common clearing house.

Senior officials of the two exchanges had first explored the idea a few months ago and had met more recently to discuss the possibility. But there's a string of tricky issues that have to be sorted out before the exchanges can move ahead with the deal. For instance, BSE, as a strategic player, would like to hold more than 5% in the new exchange. According to exchange officials, while United SE is now open to offering a higher stake to BSE, formal negotiations are yet to take place on the finer points.

"No final decision has been taken on the proposal," Jagdish Capoor, chairman of BSE, told ET.

United SE received SEBI approval to launch trading in rupee-dollar futures. A strategic alliance with BSE would help United SE market and distribute its products through BSE's existing member brokerages, while BSE's clearing house, set up with Bank of India, which is also a stakeholder in United SE, can be used to manage the margin requirements of currency derivatives brokers on a real-time basis. However, the two exchanges must arrive at a common risk management approach, technology platform and a management policy before a deal is signed.

United SE is the fourth currency futures bourse after National Stock Exchange, MCX-SX, promoted jointly by commodity bourse MCX and Financial Technologies, and BSE, which received SEBI's in-principle approval to offer rupee-dollar trading in the latter half of 2008. The new stock exchange has been promoted by key PSU lenders such as Bank of India, Bank of Baroda, Canara Bank, Andhra Bank, Allahabad Bank, Indian Overseas Bank and Oriental Bank of Commerce jointly with MMTC, that together will hold 48% in the bourse.

Other shareholders include Standard Chartered Bank, Federal Bank, Delhi-based brokerage Jaypee Capital and Tata Consultancy Services and, who will jointly own between 40 and 45% and national-level brokers and international exchanges with the remaining stake.

"For BSE," said Jaypee Capital managing director Gaurav Arora and an anchor investor of USEIL, "it would make sense to partner with USEIL since Jaypee is among the top three volumes contributors on NSE and MCX-SX currency segments. This apart, Jaypee also has a substantial share of volumes on NSE's equity derivatives segment, while BSE lags NSE by a wide margin in generating volumes on equity derivatives and both MCX-SX and NSE in the currency derivatives space."

 

[Screaming Skull]

Wadias to raise debt for Danone buy​

7 Apr 2009,

BANGALORE / MUMBAI: The Wadia family is raising debt from ICICI Bank for buying out Danone stake through a combination of corporate guarantees
and pledging of direct and indirect promoter holdings in Britannia Industries, people close to the situation said.

ICICI Bank’s $200 million five- year facility comes with a ballooning interest regime — 425 bps for first two years and 675 bps for remaining three years. However, the Wadia group will explore ways of repaying the loan facility within two years, one source added.

The Wadia family is offering pledge the entire shareholding of the acquirer Leila Lands, a Mauritius-based entity, and another investment firm Naira Holdings, BVI.

It is believed that promoters have also gone for collateral pledging of their entire 50.96% stake in Britannia — routed through UK-based Associated Biscuits International Holdings — with an undertaking not to sell the stake without lender consent.

A Wadia group spokesperson declined to comment on financing details calling it speculative at this of time. Citibank is advising Danone on the transaction.

Sources said five Singapore-based investments vehicles of Wadias, which were used to mop up the shares of the late Rajan Pillai, have also given a non-disposal undertaking to the bank.

The loan covenant also stipulates that the value of shares in the custody of the lender and the investments portfolio of Naira Holdings — estimated at $70 million — should not be less than 1.7 times the outstanding facility at any given point of time.

And if the security created falls below the threshold value, the Wadia family will have the option to reduce the outstanding loan amount, or sell investments charged to the bank for prepaying the entire amount.
According to the loan schedule, Wadias will have to pay $40 million at the end of the first year, $20 million at the end of the second year and $140 million at end of the fifth year.

 

[NSG_BlackCats]

India among top 5 developing nations: UN​

New Delhi: India ranks among the top five developing countries in production of six major industrial items, including textiles, motor vehicles, chemicals and basic metals, according to a UN agency UNIDO.

In four out of the six industrial products - textiles, chemicals and chemical products, basic metals and electrical machinery and apparatus - India figures at number two only behind China.

India's annual growth rate of manufacturing value added (MVA) has risen from 6.9 per cent in the period 2000-2005 to 12.3 per cent between 2005 and 2007, according to the year book of the United Nations Industrial Development Organisation (UNIDO).

It found that the share of MVA in India's gross domestic product (GDP) has risen to 14.8 per cent in 2006 from 13.8 per cent in 2001.

UNIDO found that the developing countries now produced almost 30 per cent of the world MVA compared to 16 per cent in 1990.

"The increasing share of developing world vis-à-vis industrialised countries is also explained by the shift of location of manufacturing, especially assembling of final products from industrialised countries to developing countries," the UNIDO said.

LINK

 

[Screaming Skull]

Duty-free white sugar imports allowed: Sources​

10 Apr 2009,

NEW DELHI: India has agreed to allow duty-free imports of white sugar and exempt overseas purchases of raws from an export obligation, trade and
government sources said on Friday.

The government sought permission from the Election Commission to let three state-run trading firms and a farmers' cooperative import up to one million tonnes of tax-free white sugar and waive an export obligation on imports of raws at zero duty, officials said.

"It has been decided that both- white sugar imports and waiving the export obligation of imports of raw sugar- will remain in vogue till July 31," a senior trade official said.

The State Trading Corp of India Ltd, MMTC, PEC and National Agriculture Cooperative Marketing Federation of India (NAFED) would be asked to import white sugar totalling one million tonnes, a top government official said.