Thread: Indian Economy

Reliance Info, China Telecom tie up for direct service

Mumbai , Dec. 12

RELIANCE Infocomm has entered into an agreement with China Telecommunications Corporation for direct service, including a global hubbing service, to subscribers in India and China.

The agreement will pave the way for the first direct telecom connectivity between Asia's two largest economies, said a news release from Reliance Infocomm. "Currently, there is no direct connectivity and calls between the two countries are routed via the US or Europe. Not only is this expensive, the routing of calls over diverse networks also results in a loss of signal quality," it said.

Through global hubbing, the agreement will enable both the companies to develop their relationships with other telecom carriers and also enhance profitability.

The companies will explore all possible connectivity options between the two countries, seeking to utilise those that are cost-effective and of the highest quality.

"This far-reaching agreement will provide a high-quality, direct connection between the world's two fastest growing economies for the first time," said Mr Leng Rongquan, Vice-President, China Telecom group, a state-owned enterprise.

"This investment will enable India and China to effectively support the enormous increase in international communications traffic into, from and between our two countries. Customers will immediately benefit from better quality connectivity, providing a solid platform for the rollout of advanced communication services," he said.

"The coming together of two of Asia's telecom giants is a historic event that will have a far-reaching effect, not only for the customers of the two countries, but also for both economies," said, Mr B. D. Khurana, Group President of Reliance Infocomm.

Following the agreement, Reliance Infocomm will now route communications traffic directly between India and China on the global network of its sister company, FLAG Telecom.

An interconnection between FLAG and China Telecom's domestic infrastructure has been established at Hong Kong.

Worbus acquires orders worth $1 bn from US

Our Regional Bureau / Pune December 13, 2005

Worbus Management Consultants has bagged outsourcing orders worth more than $1 billion from North America and Europe to be executed in India and China.

The Pune-based company is a division of the American global management consultants, Worbus, which specialises in acquisitions, joint ventures, investment banking and supply chain management.

“At present, we have 50 employees at our Pune office. We will open two more offices at Delhi and Mumbai in six months. We will hike our manpower to 200 by the end of next year,” said George Molakal, international director, Worbus.

Worbus has recently concluded a joint venture (JV) between an American precision metal parts conglomerate, Humanetics and Pune-based engineering company, Shree Ganesh.

“We are now looking forward to concentrate on emerging opportunities in global supply chain management (SCM). We are looking at expanding our operations on a larger scale. We have started getting contracts from various offshore companies to provide SCM service. We have recently bagged a contract worth $80 million from a US company working in industrial gears and looking at starting it’s operations in the Mumbai-Pune belt,” Molakal said.

“Indian companies have good potential for JVs with European and American companies to help them grow into major conglomerates in the dynamic economy of India. In the near future we will see more such deals from the Indian SME sectors. The presence in UK, US, Canada, India, China, and Middle-east is an added advantage to Worbus in serving the SME sector. Owing to this the company can initiate and facilitate several outsourcing orders, strategic alliances and JVs for their Indian clients with a turnover ranging between Rs five crore to over Rs 500 crore,” said Molakal.

Aviva to shift 3,500 BPO jobs to India

Tuesday, 13 December , 2005, 09:12

Bangalore: European insurer Aviva Plc proposes to step up its outsourcing initiatives and is sending around 3,500 more business process outsourcing (BPO) jobs to India by 2007-08.

Sources at Aviva Offshore Services said the new jobs being outsourced by Aviva's Norweich Union subsidiary would be split among the three India vendors - EXL Services, WNS and 24/7 Customer. By 2007-08, Aviva plans to have around 7,800 jobs outsourced to India.

About 2,400 of these jobs are likely to land up with 24/7 Customer, which is setting up a 1,800-seat dedicated centre for the insurance major in Chennai. 24/7 Customer handles Aviva's British and Canadian operations from its Bangalore centre, which has some 1,100 people to service the insurance firm. The company recently set up a 1,700-seat dedicated centre at Brookefields in Bangalore to provide services for the life and motor insurance business of Aviva. The centre being set up in Chennai is expected to start operations in February 2006.

S. Nagarajan, Founder and COO of 24/7 Customer, said, "We are confident that expansion to Chennai will take us a step further in addressing Aviva's requirement and exceeding their expectations. With this addition, 24/7 Customer will provide a variety of back-office and customer facing services with a total of 3,500 seats across Bangalore and Chennai dedicated to Aviva."

Rajnish Virmani, CEO of Aviva Offshore Services, said, "The Chennai centre demonstrates our commitment to grow in India and provide world-class services. We are confident that Aviva will continue to derive the desired benefits from the partnership with 24/7 Customer."

Aviva has some 4,300 people at these three vendors handling its BPO operations from their centres in India and Sri Lanka. EXL Services Aviva from its centres in Pune and Noida, while WNS handles the operations from Pune and Colombo. Aviva also outsources its IT operations to two Indian vendors - TCS and Wipro - between whom 1,100 jobs are split.

Aviva's first move to outsource BPO jobs in 2003 had attracted the wrath of Amicus, the conglomeration of British trade unions. Amicus had then claimed that about two lakh finance jobs could leave the country in five years.

GM bets on India lab for its global operations

Bangalore: The India Science Lab (ISL), the research and development (R&D) facility of General Motors Corporation (GM), has emerged as a strategic centre for the global operations of the US-based largest automaker in the world.

"Some of its programmes have helped us in optimising maintenance and reducing operational costs significantly," GM vice-president for R&D and strategic planning Lawrance D Burns told reporters here Tuesday.

Set up in 2003 with an upfront investment of $20 million, the Bangalore-based lab has started contributing to the advances GM has been making in product innovation and automotive technologies, he said.

"We have a cross section of researchers from different nationalities, education and experience levels with inter-disciplinary skills. The lab has been selected for the GM R&D McCuen awards in recognition of its contribution to product innovation and automotive research," Burns said.

Betting on some of the world's best scientific and engineering talent in the sub-continent, GM plans to ramp up its headcount at the ISL to over 100 from the present 75 during the next 12 months to widen its scope and collaborate with the company's global research network.

"The importance of India operations is evident from the fact that the GM has a global technical centre here working in tandem with some of the country's best science and technology institutes like the Indian Institutes of Technology (IIT), Indian Institute of Science (IISc) and the Council for Scientific and Industrial Research (CSIR), he said.

As GM's only R&D lab outside North America, the ISL collaborates with its six other global labs in material sciences and advance technologies.

The lab has expanded its activities to work on diverse research projects including chemical reaction modelling, product design tools, manufacturing enterprise information systems modelling, vehicle communication and information management, and control systems engineering methods.

India forms coalition of eight nations on NAMA

Hong Kong, Dec. 14 (PTI): Mounting pressure on developed countries, India on Monday formed a core group with seven other developing countries on industrial tariffs to ensure that the principle of "less than full reciprocity" is fully reflected in any deal at the WTO Ministerial, which kicked off yesterday.

"We want our concerns to be taken on board. Market access is not an issue of tariffs alone. Market access for India means elimination of tariff peaks and tariff escalation in developed country markets as also end of abuse of anti-dumping laws and removal of non-tariff barriers used to block goods from developing nations," Commerce Minister, Kamal Nath, said.

Criticising the EU proposal on Non-Agriculture Market Access, Nath said the formula in itself was not important, but what it actually translated into in real terms.

The Group, which is co-chaired by India and South Africa, includes Argentina, Brazil, Indonesia, Namibia, Venezuela and Egypt with more expected to join, he said.

The alliance had also written a letter to the Chairman of sixth Ministerial conference John Tsang, pointing out that the draft text had not adequately reflected the three elements of "less than full reciprocity, special and differential treatment and non-tariff barriers," he added.

"Less than full reciprocity" means developing countries would have proportionately lower reduction commitments than developed nations like the US and the EU.

Eleven more cos enter $1 billion M-cap club

MUMBAI, DEC 13: The journey of the Sensex from 8,000-levels to the current levels of over 9,200 has witnessed the addition of 11 new companies in the elite club of companies having market capitalisation (M-cap) of $1 billion or more.

Interestingly, the list of new entrants also includes the newly-listed Suzlon Energy. The other entities that have made to the list are NMDC, Dabur India, Indian Hotels, Biocon, Tata Chemicals, SCI, DSP Merrill Lynch, Petronet LNG, HMT and Jindal Steel& Power.

Among the new entrants, a significant rise in the M-cap was seen in the case of Dabur India (23.8%), Indian Hotels (30.3%), DSP Merrill Lynch (66.5%), HMT (27.7%) and Jindal Steel & Power (21.0%). Incidentally, the total M-cap of the Bombay Stock Exchange (BSE) in the same corresponding period witnessed an increase of 21.2% or Rs 4,29,528 crore to Rs 24,52,198 crore.

The M-cap as on September 8, 2005, when the index closed above the 8,000-mark for the first-time ever, was pegged at Rs 20,22,670 crore.

On the other hand, the M-cap of the National Stock Exchange (NSE) increased by Rs 3,76,080 crore or 20.2% to Rs 22,34,138 crore on December 13 from Rs 18,58,058 crore as on September 8, 2005.

Meanwhile, there was a significant rise witnessed in the M-cap of many A group companies also. Stocks like Titan Industries (72.9%), Siemens (51.4%), Torrent Pharma (46.6%), Engineers India (45.9%) and Bajaj Auto (37.6%) witnessed an impressive rise in M-cap between September 8 and December 13.

However, an opposite trend was seen in the case of Ispat Industries (-52.8%), Ranbaxy Lab (-27.9%), IndusInd Bank ( -27.2%), Ramco Systems (-24.8%) and Sterlite Optical Techno ( -22.5%). In cumulative terms, the M-cap of A-group companies increased by 11.99% from Rs 16,98,463 crore as on September 8 to Rs 19,02,041 crore as on December 13. In the same corresponding period, the Sensex increased by 1211.34 points or 15.04% from 8,052.56 to 9263.90.

Canada eyeing India as major carbon credit seller

Mumbai December 14, 2005

Canada is now emerging as a potentially major buyer of Carbon credits from Indian companies which are exempted from emissions cut imposed on industries in developed nations.

Slashing their greenhouse gas output, these companies can sell the resulting carbon credits to Canada which is striving hard to reduce its greenhouse gas emission from 2008.

Though the country has set up a fund with (Canadian) $ 1 billion corpus for encouraging domestic industry to produce carbon credit, it still needs to buy credit from the international market worth (Canadian) $75 million to $ 115 million every year as it needs to reduce emission every year by 270 million tonne between 2008 and 2012.

This was pointed out by Gilles Potvin, a senior program officer from government of Canada’s climate change and energy division.

Speaking on the sidelines of a seminar organised by the Confederation of Indian Industries (CII) and Canadian consulate, Potvin said, “As per the latest information, Government of India has cleared 107 projects which include 62 projects from renewable energy sector, 28 from energy efficiency, six fuel switching projects, three solid waste treatment projects and one project from the processing industry which have the potential to collect carbon credits worth $ 2.6 billion.”

Besides this, a Canadian company which wants to set up a project in India which would earn them carbon credits, has registered the project design document (PDD) with department of climate change,” he added. Three other companies are already in the process of setting up similar plants in Chile , he said.

Destination India for global players in MRO segment

With domestic carriers placing aircraft orders of over Rs 100,000 crore, a slew of international maintenance, repair and overhaul (MRO) companies are drawing up plans to set up shop in India.

According to industry analysts, the market for MROs in India, excluding Air-India and Indian Airlines, is estimated at over $100 million per annum.

Putting up an MRO facility that offers complete technical services solutions can cost anywhere between Rs 750 crore and Rs 1,500 crore.

In addition to Airbus and Boeing, global MRO majors Jordan Aircraft Maintenance Ltd (JorAMCo), Singapore Technologies Aerospace (ST Aerospace), Lufthansa Technik AG and Singapore International Airlines Engineering Company (SIAEC) are in talks with Air-India and Indian Airlines for setting up a facility in the country.

A senior Air-India executive confirmed that several MRO companies were in talks with the national flag carrier but nothing had been finalised so far.

The Foreign Investment Promotion Board has cleared the proposal of Lufthansa Technik for setting up a wholly-owned subsidiary, One Stop Airline MRO Support Pvt Ltd, to undertake provision of spare parts and consumables to be used in the maintenance, repair and overhaul of aircraft.

According to industry sources, Lufthansa is targeting legacy carriers, start-up and low-cost airlines of India and West Asia who do not want to invest heavily on technical services.

They said JorAMCo, an MRO firm that specialises in Boeing and Airbus aircraft, was in discussion with Indian government and companies to set up an independent MRO facility in the country.

"The aerospace arm of Singapore Technologies Engineering (ST Engineering), ST Aerospace and SIAEC are also exploring all possible routes for setting up MRO facilities in India. Airbus and Boeing are also in the process of finalising the project," the sources added.

Airbus and Boeing are all set to sell aircraft worth Rs 45,000 crore to Air-India and Indian Airlines and each of the two rivals might set up a MRO to service these aircraft.

Air-India is planning to set up a ground handling and cargo engineering facility for its own aircraft as well as for others in Bangalore. In view of its fleet acquisition programme, Air-India is also planning a engineering base at Bangalore International Airport Ltd.

"India must grow at 8% for 20 years to remove poverty"

Mumbai, Dec. 15 (PTI): India needs to grow at a rate of eight per cent for the next 20 years to eradicate poverty, RBI Chief Economist Narendra Jadhav, has said.

India's growth rate in the second quarter stood at 8 per cent, slightly down from 8.1 per cent in the first quarter of the current fiscal.

"To eradicate poverty, dependence on agriculture should be brought down and more thrust should be laid to employment generation in the manufacturing and services sector," Jadhav told PTI.

Agriculture used to contribute about 50 per cent to the gross domestic product in 1951, which has been reduced to 21 per cent now.

"On the other hand, 60 per cent people of the country are still dependent on agriculture," he said, adding a certain dichotomy gradually cropping up.

"While the contribution of industry in the GDP is going up every year, it is not absorbing the surplus labour from agriculture. It may cause a serious problem for India," Jadhav said.

Employment growth in the organised sector decelerated after the mid-1990s and turned negative by the late 1990s, he said.

However, the number of people living below poverty line has come down to 26 per cent from 36 per cent in the pre-reforms era, Jadhav said.

Pointing out that creation of rural infrastructure is one of the key answers to the problem, he said, the 'Bharat Nirman' initiative taken up by the government is an appropriate step in the right direction.

L&T eyes $1 bn from Mid-East

Aims at achieving this revenue by 2010

MUMBAI, DEC 14: The $3.2 billion engineering and construction major Larsen & Toubro (L&T) is eyeing a four-fold growth in its revenues from the Gulf region, from $250 million at present to $1 billion by 2010. L&T is giving final touches to its foray into the Middle East, the comprehensive plan for which will be in place by June 2006.

Though investment figures for the Gulf foray were not available, the company said that funds are not a constraint as L&T generates around Rs 13,000 crore of cash flow from its engineering and construction business. The company is targeting operations in ten countries in the Middle East, either through joint ventures (JV) with local companies in case of executing government orders or through branch offices in case of undertaking private work.

The company has just appointed an executive vice-president to manage its Gulf operations, that will focus on the hydrocarbon, power, infrastructure and construction sectors in these countries. "We are in the process of reworking our entire Gulf strategy to address the burgeoning business opportunities there.

We will have a final plan in place in the next six months," L&T's chairman and managing director AM Naik told FE. The company will compete with the likes of ABB, Alstom, GE, Schneider in this region. L&T is at present targeting Oman, Dubai, Abu Dhabi, Saudi Arabia, Doha, Kuwait, Bahrain, Qatar and Yemen in the Gulf region. By 2007, it also plans to enter Iraq and Iran. "We have put Iran and Iraq on watch. Iraq has a lot of oil wealth and faces a dearth of skilled work force. But it is still not a very safe place. On the other hand, geopolitical factors are making us go slow on Iran," said Mr Naik. The business seems promising, but companies normally find it tough to convince employees to migrate due to the terror threat.

In Oman, Abu Dhabi and Saudi Arabia, the company is planning to set up JV companies (as it is mandatory) with local firms to bid for government projects there. The company will have a majority shareholding of 65% in the JVs in Oman and Saudi, while it will hold 49% in the JV in Abu Dhabi. It is setting up branch offices in Doha and Dubai. Its plans for Qatar and Kuwait will be firmed up by May 2006.

OVL may get nod for $2-bn Nigeria venture

The Cabinet Committee on Economic Affairs (CCEA) will tomorrow consider a proposal of ONGC Videsh Ltd to buy 45 per cent stake in a Nigerian oil and gas field for $2 billion. It may also clear Air India’s plans for acquiring 68 aircraft for Rs 30,000 crore.

OVL, the overseas arm of the state-owned Oil & Natural Gas Corporation (ONGC), beat rival CNOOC of China in the race for South Atlantic Petroleum’s 45 per cent stake in the Akpo Oil and Gas field, which is said to have an estimated 1.6 billion barrels of oil reserves and a yet-to-be-determined gas reserve portfolio.

The Cabinet is also likely to take up the issue of amendments to the Competition Act. The proposed amendments have far-reaching implications for industry and will pave the way for making the Competition Commission functional.

They also provide for setting up an appellate tribunal over and above the Competition Commission of India (CCI) to hear all adjudicatory matters.

An agency report quoted government sources as saying that South Atlantic Petroleum is selling the stake in the field, which after 2008 will pump in 225,000 barrels of sweet crude oil a day. Its development will cost OVL another $4 billion.

Total SA of France holds 24 per cent of the field that lies about 200 km off the coast of Port Harcourt. Brazil's Petroleo Brasileiro SA owns 16 per cent, while the remaining is with state-owned Nigeria National Petroleum Corporation.

Total is the operator in the field. OVL's bid to acquire the field comes close on the heels of its sister outfit ONGC Mittal Energy signing an MoU with the Nigerian government for operatorship of at least two blocks and assured supplies of 650,000 barrels of oil per day for 25 years.

The Akpo field was discovered in 2000 and is located 200 km offshore in water depths ranging from 1,100 to 1,700 metre.

Energy consultancy Wood Mackenzie estimates Akpo has condensate reserves of over 600 million barrels and commercial natural gas reserves of 2.5 trillion cubic feet.

Stock market set to end year with $10 bn inflow

Net FII inflow of $9.3 billion till 13 Dec.

After the tremendous response to the ICICI Bank issue from qualified institutional investors, India should easily close 2005 with a net foreign fund inflow of $10 billion. On December 13, the net foreign institutional investor inflow stood at $9.3 billion.

ICICI Bank’s Rs 5,000-crore domestic issue is likely to allot about Rs 1,500 crore (about $325 million) to FIIs. Besides, the $750-million India-dedicated fund from Merrill Lynch in Japan may want to do some Christmas shopping.

India’s market capitalisation at $525 billion is now way ahead that of China and Taiwan. India is also one of the most expensive markets in the world. A study by a foreign brokerage noted that in terms of price/book (4.8 times calendar year 2005), India was the third-most expensive market, while in terms of price/earnings (21.1 times calendar year 2005) it was the most expensive, though it could be said that the returns on equity (RoE) were high.

Since there really have not been any significant earnings upgrades, the market has become even more expensive. At 9,200, the Sensex now trades at nearly 15.5 times the 2006-07 forward earnings and 3.1 times the P/B. But money continues to flow in.

Analysts point out that the earnings growth is clearly slowing down. The Sensex earnings growth in the second quarter of 2005-06 (free-float adjusted) has been 23 per cent, down from 31 per cent in the first quarter and still lower if exceptionals are adjusted for.

Even for a bigger sample of nearly 2,000 companies, operating profits have grown by just about 10 per cent compared with a growth of 13 per cent in the June quarter.

Besides, thanks to increases in the cost of raw material, operating margins have been under pressure with margins contracting on an average by 100-150 basis points.

Why then is money continuing to flow in ? The fact is that India will continue be one of the fastest growing economies for the next four or five years with the GDP expected to post a 7-8 per cent growth annually.

The second quarter GDP growth at 8 per cent, driven by a 9.2 per cent growth in manufacturing, has given a boost to the confidence of investors. Given this, foreign investors, whether private equity firms or pension funds, are not too concerned about near-term valuations.

The response to the ICICI Bank issue ( the applications reportedly totalled $10 billion) bears testimony to this. Investors believe that against the backdrop of a relatively benign world economic environment, the fundamental India story continues to be a good one and should remain this way for another five years.

With the large domestic market being driven increasingly by favourable demographics, the competitive advantages in both manufacturing and services, and availability of skill sets, are reassuring. Besides, the big universe of investible stocks makes India a very attractive investment destination.

The US ownership of Indian assets is still very small compared with the ownership in countries such as South Korea. This is slowly changing since even from these levels, returns are expected to be superior to those from other emerging markets. That is probably why countries like South Korea have seen outflows of foreign funds this year.

Originally Posted by Endangered

India urged to open capital mkts to Arabs

Monday, 12 December , 2005, 08:18

Dubai: India should open its capital markets and other investment avenues to individual Arab investors who are keen to invest in attractive ventures overseas, Sheikh Sultan bin Saud Al Qasimi, a leading UAE businessman and Chairman of Barjeel Geojit Finance Company,

That my ex comopany and alqassemi is a very very down toearth guy

Originally Posted by bull

That my ex comopany and alqassemi is a very very down toearth guy

what happened to ur english ?? had a daroo party kya ??