Thread: Indian Economy

The good news is that the FM, PM, Industry Min, Montek Singh etc have mentioned that the next 3 years will be the most important for India, it either reaches out and grabs the moment or it looses out. The momentum and all the requirements are here on our side, we can handle infrastructure with forex and private public parternerships but now its time for the Indian middle class, especially the urbanites to go and vote and make sure our Govt does not screw up.

Bush asks India to lift FDI caps

NEW DELHI, MARCH 3: US President George W Bush on Thursday allayed fears free trade was under threat and said India’s growing market could not be ignored. “The US will not give in to the protectionists and lose these opportunities,” Mr Bush said in a speech at the historic Purana Qila fort in New Delhi.

India has been facing a backlash in the US with several states attributing job losses there to outsourcing of businesses to India by US companies. Mr Bush, however, said, “For the sake of workers in both our countries, America will trade with confidence,” he said.

Outsourcing and software exports are forecast to earn India more than $20 billion in the current fiscal, with about 60% of that coming from US companies. Mr Bush said Americans were benefiting from an expanded market for US goods in India.

Addressing a select gathering of business leaders, politicians and diplomats, the President, however, said India too had responsibilities and needed to do its bit. “India needs to continue to lift its caps on foreign investment, make its rules and regulations more transparent and to continue to lower its tariffs and open its markets to American agricultural products, industrial goods and services,” Mr Bush said.

He asked America to see this rapidly growing nation as a land of opportunity instead of a threat. “America’s best response to globalisation is not to erect economic barriers to protect workers, but educate them to make sure they can compete on any stage,” he said.

AES lines up $1.2 bn for power sector

American power major to develop 1,000 Mw plant in Chhattisgarh.

American power major AES today said it would develop a 1,000-Mw coal-fired power plant in Chhattisgarh with an investment of $1.2 billion.

The company has signed a memorandum of understanding with the Chhattisgarh government. This is so far the biggest foreign direct investment lined up for the Indian power sector.

The 1,000 Mw pit head-based plant is expected to be operational in the next 48 to 60 months and will have a captive coal mine. AES has begun a feasibility study to identify a location for the project. Chhattisgarh would be entitled to buy 7.5 per cent of the power generated at “favourable terms”, a company release said.

This is not AES’ first exposure to India. It had entered the power distribution business in Orissa in 1999. It held 51 per cent stake in the joint venture distribution company, Central Electricity Company (Cesco). However, it has been out of the Cesco management since 2001 after disagreements with the state government. As part of power sector reforms, distribution of power has been privatised in Orissa.

AES, the majority stakeholder in Cesco, distributed power in eight coastal districts, including Bhubaneswar and Cuttack. The state-owned Grid Corporation of Orissa held 49 per cent stake in the company.

Sanjeev Agarwal, AES’ director of business development, told Business Standard that the firm was also aggressively investing in other power projects in India.

“We have just sent expressions of interest for two ultra mega-power projects in Madhya Pradesh and Gujarat,” he said.

The Centre invited bids for these two projects last month. The company has also bid for the Rs 4000-crore 1,000-Mw Anpara thermal power project in Uttar Pradesh, for which a decision is expected by June.

In addition, it is also putting up two more plants for Orissa Power Generation Company (OPGC) of 500 Mw each with an investment of Rs 4,000 crore. AES holds 49 per cent in OPGC and operates two 210 Mw power plants at Ib Valley in Orissa.

Said Agarwal, “The Indian power environment is changing fast today, with the government going in for competitive tariff-based bidding and generators being allowed to choose whom they are selling to. The sector is indeed very attractive to us as many new opportunities are opening up,” said Agarwal.

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India Inc buys 100 foreign firms for $2.4 bn in 2005

Mumbai: Aided by a booming economy and a sizzling stock market and fuelled by a passion to establish a global footprint, India's once insular corporate firms went on an overseas shopping spree like never before in 2005.

The past calendar year saw Indian companies striking as many as 100 acquisition deals in the overseas market by spending a whopping Rs.106.70 billion ($2.37 billion).

This compares with 60 acquisition deals worth Rs.76.50 billion ($1.7 billion) in 2004, according to India Advisory Partners, a London-based database firm on mergers and acquisitions.

The latest report, made available to IANS, showed that the total number of overseas acquisitions made by the Indian companies had touched a meagre 28 in 2002 and 49 in 2003.

According to the report, one of the largest takeover deals in the first half of 2005 was struck by electronic appliances maker Videocon after it inked a deal with Thomson for buying its colour picture tube business for $290 million.

This was followed by drug maker Matrix Laboratories' acquisition of DocPharma of Belgium in a $263-million deal.

The diversified conglomerate Tata Group was aggressive with overseas acquisitions throughout the last calendar year. Various companies of the group announced 10 deals worth $653 million.

The largest deal announced by the group was the $178 million acquisition of Teleglobe International Holdings by Videsh Sanchar Nigam Ltd. (VSNL), India's leading international telephony and Internet service provider.

"A large number of Indian business groups are now realising the advantages of expanding their operations overseas," said Sridar Swamy, a partner with India Advisory Partners.

"Apart from IT companies that have been active acquirers in the past, now there are companies in a number of other sectors, such as pharmaceuticals, auto components and textiles, also looking at overseas markets," he added.

Experts say acquisitions have now become an important driver in the evolution of the Indian multinational companies, who not too long ago shied away from global competition.

The acquisition drive in 2005 was not restricted to traditional markets like the US and Britain alone - companies went to markets as diverse as Australia, Romania, Germany, and Belgium.

On the domestic front, 2005 has been a record year for merger and acquisition activities in Indian corporate history, showed the India Advisory Partners report.

The year ended with 625 merger and acquisition deals valued at Rs.734 billion ($16.3 billion). As many as 325 deals worth Rs.474.8 billion ($10.5 billion) were recorded between June and December 2005.

The total deal value for the second half has shown a growth of 83 percent over the first half and a phenomenal 286 percent over the corresponding period in 2004.

"The telecom sector was back in reckoning this year with consolidation in full swing. The top three deals of the year, accounting for 20 percent of total deal value, were all from the telecom sector," said Swamy.

The largest telecom deal was the 10 percent effective stake acquired by Vodafone in New Delhi-headquartered fixed-line and mobile telephony services provider Bharti Tele-Ventures for Rs.67 billion ($1.5 billion).

The other major sectors were financial services, which accounted for 15 percent of the total deal value, IT (11 percent), and cement (five percent).

Looking ahead, analysts said the financial services, pharmaceutical, and some manufacturing sectors such as auto components were likely to see continued high levels of merger and acquisition activities.

"If the Indian government alters regulations on ownership of banks, this sector could see some large deals," said Swamy.

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India to launch Italian satellite

Indian rockets will launch satellites of Italy, Singapore, Indonesia and Argentina into the outer space in the coming years with the country eyeing a market share of 5 per cent of global launches.
After launching two micro-satellites for Germany and one each for South Korea and Belgium in 1999-2001, the ANTRIX Corporation, the commercial arm of the Department of Space, is looking for more.

Agreements have been signed with Italy, Singapore, Indonesia and Argentia for launching their satellites, said Prithviraj Chavan, Minister of State in the Prime Minister's Office, in the Lok Sabha today.

ANTRIX uses Indian Space Research Organisation's Polar Satellite Launch Vehicle for providing launch services for other countries.

''The commercial launches will benefit industries which take part in supply of various components and sub-systems of launch vehicles,'' said Mr Chavan.

Considering the current market scenario and heavy competition for satellite launches, India has targeted a maximum of 5 per cent of global share, he added.

India, however, sees its launch vehicle programme primarily for meeting domestic needs, he said. Residual capacity is used for commercial launches for other countries, he added.

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Russian majors eye Indian ore

NEW DEHI, MARCH 8: Russia’s leading metal companies Rusal and Magnitogorsk Iron and Steel Company (MMK) have zeroed in on India for big-ticket investments in the aluminium and steel sectors.

The $5.25 billion MMK is poised for billions of dollars in Orissa to set up a 10 million tonne greenfield steel plant. It has sought the Centre’s assistance for land procurement in the iron-ore rich state.

Alongside, Rusal, the $6.1 billion aluminium giant, has also evinced interest in investing in an aluminium venture in India. It is the world’s third largest primary aluminium producer, providing primary aluminium and value-added products in 50 countries. Rusal accounts for 75% of aluminium production in Russia and 10% globally.

These, coupled with the recently announced investments by South Korean steel major Posco in Orissa and London-based Mittal Steel in Jharkhand, will make India a hot investment destination for global steel and metal companies.

For the proposed 10 mtpa facility in Orissa, MMK is expected to pump in about $10 billion, based on the investment estimates of Posco and Mittal Steel in similar-sized steel plants in the country. While Posco has proposed a $12-billion investment for its 12 mtpa steel plant, Mittal Steel is planning to invest $10 billion for an equal capacity in Jharkhand.

A senior government official told FE that investments by the two Russian companies have been discussed at the highest levels. “Russian industry minister Victor Khristenko has discussed the proposals with Indian Prime Minister Manmohan Singh during the latter’s recent visit to Moscow. The main issue from the Russian side pertains to allotment of land. New Delhi has assured facilitation of these investments,” the official said.

MMK is Russia’s largest steel company with total steel production of 11.38 million tonne. MMK’s revenues in 2005 was $5.25 billion while its profit before tax stood at $1.41 billion. Rusal’s revenues in 2005 increased 12.8% to $6.1 billion compared to $5.4 billion in 2004.

While Russian companies are investing over $20 billion annually in foreign countries, their investment in India is abysmally low at $120 million a year. Both India and Russia are keen to substantially increase the bilateral trade and investment. An indication to this effect was given by Russian economic development and trade minister German Gref who said the two countries need to expand their mutual trade from $2.9 billion registered in 2005 to $10 billion before 2010.

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Club One Air plans to acquire Boeing 737

Mumbai March 09, 2006

The aircraft will have 25 seat-***-bed with a conference hall and a presidential suite.

Here is some good news for corporate czars looking for their board meeting in the sky.

Now, Delhi-based aircraft fractional ownership company Club One Air is planning to acquire Boeing 737 aircraft for using it as super luxury corporate airliner for non-scheduled operations.

This aircraft will have 25 seat-***-bed with a conference hall and a presidential suite. Manav Signh, chief promoter and Managing Director of Club One Air, confirmed that the company is planning to acquire a VVIP long range private corporate jet.

“We are in talks with our fractional owners for acquiring this special aircraft. We will take a decision with 3 months,” Singh said.

Singh said: “Normally, we acquire an aircraft and then fractional owners come into scene for owning one-eighth of the ownership of aircraft. But in this case, we will take the opinion of fractional owners before acquiring special private jet.”

He added that the company is also exploring Airbus A320 aircraft for the same purpose. According to sources, the lease cost of a long range private jet would cost $150,000 per month.

The aircraft will have 2 bars and flat screen television with satellite telephone facilities.

“The aircraft could be used for flying to non-stop destinations like Mumbai-London. There is no restriction as the company is a non-scheduled operator in the country,” industry analysts said.

They pointed out that the demand is rising for special corporate jet with more space which can be deployed for business visits, corporate roadshows, group holidaying and confidential group meetings. Club One Air has also plans to set up their operations in overseas also.

“The company will be looking at establishing operations in Middle East countries by end of 2007,” Manav added.

Club One Air’s fleet currently comprises 9 aircraft including 5 executive business jets of the Citation Excel and Citation 2 series aircraft and 2 brand new Augusta helicopters, a Turboprop King Air 200 and Eurocopter EC 130.

Meanwhile, the company started its Mumbai operations today.

AI Express may skip Delhi, Mumbai this summer

According to sources, loads on AI Express' flights from Kerala were above 90 per cent, while that from Mumbai and Delhi had failed to pick up to the same extent.

Mumbai , March 9

Air India Express, which offers low-cost services to the Gulf countries, is believed to be weighing the option of delinking Mumbai and Delhi from its new summer schedule, while adding Chennai to its network.

According to travel industry sources, the move by the no-frills subsidiary of the national carrier follows the lower-than-expected load factor on these routes. The summer schedule will begin by March-end.

AI Express is likely to offer six flights a week to Singapore and Kuala Lumpur from Chennai, an informed source said. The airline, which began services last year, now flies to four cities in the Gulf, namely, Dubai, Abu Dhabi, Muscat, and Salalah, from Kozhikode, Kochi, Thiruvananthapuram, Mumbai and Delhi.

Load distribution

According to sources, loads on AI Express' flights from Kerala were above 90 per cent, while that from Mumbai and Delhi had failed to pick up to the same extent.

The low-cost carrier expects to take delivery of its fourth new Boeing 737-800 aircraft in March and the fifth aircraft in the first week of April. A team of engineers from the airline have left for Seattle to take delivery of the aircraft, which are being leased from ILFC (International Lease Finance Corporation).

Air India Express expects to have a fleet of seven aircraft by May and nine by the year-end when it receives the first of the 18, B737-800 aircraft that it has ordered.

According to sources, loads on Air Arabia's flights from both Mumbai and Nagpur are above 90 per cent.

Fleet expansion

After the fleet expansion, AI Express would fly to centres like Bahrain, Bangkok and other South Eastern destination.

The airline is also thinking of starting no-frills service in the domestic sector jointly with parent Air India.

New revenues

According to sources, AI Express also hopes to increase its revenue from the on-board advertisements.

AI Express was the first international airline from India to start a low-cost service last year.

The airline was mainly targeting the large number of passengers to Gulf countries particularly from Kerala.

Air Arabia, the Sharjah-based low-cost carrier, which operates direct flights between Sharjah and Mumbai and Nagpur, is AI Express' competitor in the low-cost segment.

Air Arabia also started the low-cost service last year, immediately after AI Express started the service.

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FII inflows into equity top $3 bn in less than 3 months

MUMBAI, MARCH 9: Notwithstanding their heavy selling in the derivatives segment, foreign institutional investors (FIIs) have pumped in over $3 billion in the current calendar year (CY06) till date in the cash market. As on March 8, 2006, FII net inflows in Indian equities stood at $ 3.086 billion. In fact, FIIs crossed the $3 billion mark in 2005 on March 11, which suggests that the aggression in their buying is still on.
The FIIs have poured in the last one billion dollars in just nine trading sessions as their investment crossed the $2 billion mark on February 23, 2006. The total FII inflow on that day for calendar 2006 was pegged at $ 2.1 billion. Interestingly, in CY06, FIIs remained net buyers on 38 trading sessions, and sold equities only on 8 occasions.

Malcolm Wood, executive director & Research Head, Asia-Pacific, Morgan Stanley said, “The Indian economy has grown by 8% last year. If it continues to grow at this rate, it may need investment of $50 billion.” This investment is expected to come to India through the equity route as more and more Indian companies are raising money through equities.

With the long-term India story being accepted by most of the FIIs, investors with deep pockets and long holding capacity will come to India and thus India’s dependence on “hot money”, the likes of hedge funds and funds routed through participatory notes (PNs) will reduce drastically, he said. Besides, he expects India to attract more long term foreign fund flows.

Ratnesh Kumar, director, India Equity Research, Citigroup Investment Research said the Indian economy is expected to grow in the range of 7-8% over next two-three years. “Even now, 20% of India is rural where a whole lot of development is yet to take place. Looking at the long term India story being intact, more and more overseas institutional investors will get attracted towards the Indian market,” he said.

While January saw total inflows of only US$ 737.50 million, February witnessed the FIIs getting more aggressive and pumping in US$ 1.3 billion. During the said period, the number of FIIs registered with Sebi increased by 10 and as on March 9, stood at 870.

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the youngest billionaire is a Lebanese woman, 22-year-old Hind Hariri, who inherited $1.4bn from her assassinated father, former Prime Minister Rafik Hariri

India's 23 billionaires have a combined net worth of $99bn, surpassing former Asian leader Japan's 27 billionaires with their total worth of $67bn

Russia's 33 billionaires now have a combined wealth of $172bn, based largely on oil and gas prices, compared to a total of $68bn for oil-rich Saudi Arabia's 11 billionaires.

http://news.bbc.co.uk/2/hi/business/4791848.stm


The fastest growing billionaire segment is from India followed by the Russian Bear.

Wal-Mart may enter India with local partner

Pune , March 9

Wal-Mart, the world's largest retailer, which has been waiting in the wings for the government's go-ahead to enter the Indian market, may consider entering it with a local partner. Ms Beth Keck, Director, International Corporate Affairs, Wal-Mart International, said, "We often work with partners and have done so in countries like Japan, Central America, Mexico and China. They have been able to give us a better understanding of local customers, which has helped us to operate more effectively in these countries. We may consider this approach for India too."

She was responding to a specific query from Business Line on the subject.

According to information available, Wal-Mart entered Japan, the world's second largest retail market in 2002, by picking up a minority stake in the Tokyo-based Seiyu super market chain. It spent an estimated $600 million last year to increase its stake to over 53 per cent, making Seiyu a Wal-Mart subsidiary.

Policy hitch

Of course for Wal-Mart, there is still a policy hitch to be over come in India as the present official stance allows only `single brand' retailing to be carried on with foreign direct investment. But here too, Wal-Mart is hoping that things would change.

"We welcome the Indian Government's movement in allowing 51 per cent FDI in retail to single brand companies and hope they eventually will open this sector more broadly to foreign investment," Ms Keck added.

Asked if Wal-Mart would discuss the issue of a broader scope for FDI in retail, Ms Keck said, "The Indian government's policy on foreign direct investment in retail is just one of several topics which we discuss with Indian government officials. As a purchaser of goods, we also are interested in learning about a wide range of areas that affect our sourcing from the country."

The Arkansas-based retailer's interest has to be seen in the context heightened activity in retailing with,corporate heavyweights such as Reliance Industries jumping in on the retail bandwagon to cash in on a market estimated to be worth $350 billion by 2010.

Meanwhile, the retailer with $285 billion in revenues is significantly increasing its global sourcing out of India and will source $640 million worth of home wares, textiles, apparel and fine jewellery this year. .

"Direct sourcing from the region will continue to grow, as suppliers in India, Sri Lanka and Nepal are innovative and respond quickly to new trends for apparel and goods found in Wal-Mart retail outlets," Ms Keck said.

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FDI inflow up 326 pc in Jan

New Delhi , March 9

Foreign direct investment (FDI) inflow into the country has registered an increase of 326 per cent in January amounting to $647.7 million against $152 million in January last.

What is heartening about the growth in FDI is that the inflows are coming in the manufacturing, which we want, will contribute increased share in India's GDP," the Minister for Commerce and Industry, Mr Kamal Nath, said here while releasing the figures.

The Minister indicated that FDI inflow in equity during the first nine months stood at $4.34 billion. This represents an increase of 60.5 per cent over the FDI inflows of $2.7 billion received during the corresponding period of the previous year 2004-05, he said.

The major investing countries during this period have been Germany (35 per cent), the UK (26 per cent), Mauritius (22 per cent), Singapore (6 per cent) and the US (2 per cent).

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Technical textiles market may grow to $7 b by '07

New Delhi , March 9

The domestic technical textiles market, which is poised to emerge as a major growth area in the textiles sector, could grow to around $7 billion by 2007, an industry expert said here on Thursday.

"The Indian technical textile industry can touch $7 billion in size as the market for the sector is expected to see increased growth," IIT Delhi's Head of Department for Textile Technology, Mr V.K. Kothari, said at a meet organised by Business Co-ordination House. The meet had representations from some of the world's largest technical textile companies. These include senior executives from 3M, Henkel, BBA Fiberweb Group, Huhtamaki and Fulflex.

The major growth areas in the technical textiles sector include medical textiles, construction textiles, packaging textiles, baby diapers and home textiles, said Managing Director, BCH, Mr Samir Gupta.

"Though still a nascent industry in India, the technical textiles sector has enormous applications and prospects, especially in the West. The world trade in technical textiles is over $50 billion per annum and it is growing at an accelerated pace," Mr Gupta said.

Realising the export potential of the sector, the Government has undertaken a slew of initiatives for promoting the sector, including a scheme for the setting up of integrated textile parks.

At present, the domestic technical textile industry produces items for all the 12 segments of the industry.

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Forbes: One in 10 new billionaires is Indian

Stock market boom places 23 Indians in hall of fame.

With the unprecedented bull run in its stock market, India has spawned 10 new billionaires in the past year to take its tally in the latest Forbes list of billionaires to 23.

“India, whose BSE Sensex was up 54 per cent in the past 12 months, is home to 10 new billionaires, more than any other country besides the US,” Forbes said on its website, adding that booming markets the world over, except the US, had led to the number of billionaires touching a record 793 this year, up 102 from last year.

With 23 of its 1.1 billion citizens in the list, India has become the seventh largest contributor to the club, behind only the United States, which has a whopping 371 billionaires, Germany (55), Russia (33), Japan (27), China including Hong Kong (25) and the UK (24). It is ahead of countries like Canada (22), France (14), Switzerland (8), Israel (8), Singapore (7) and Taiwan (5).

The 23 Indian billionaires are together worth $98.8 billion.

However, Lakshmi Niwas Mittal, the richest Indian with a net worth of $23.5 billion, has slipped from the third position — regular fixtures Bill Gates ($50 billion) and Warren Buffet ($42 billion) continue their reign on the top at numbers one and two, respectively — to the fifth this year, giving way to Carlos Slim Helu of Mexico ($30 billion) and Ingvar Kamprad of Ikea ($28 billion).

Azim Premji, who owns 82 per cent of the New York-listed Wipro, is at the 25th spot with a net worth of $13.3 billion, while Mukesh Ambani ($8.5 billion) is 56th and Anil Ambani ($5.7 billion) 104th.

Army officer turned property baron KP Singh of DLF ($5 billion) is 114th, Sunil Bharti Mittal ($4.9 billion)is 125th and Kumar Mangalam Birla ($4.4 billion) is 140th.

Notable Indian newcomers to the coveted list include Tulsi Tanti of Suzlon, liquor baron Vijay Mallya, online gaming mogul Anurag Dikshit, who made his fortune when he and two Americans took their partygaming poker company public in London last June, Naresh Goyal of Jet Airways, who took his company public last year, and Indu Jain, matriarch of media house Bennett, Coleman & Company.

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